Hi, this is Chris Dixon. This is the A16Z podcast. I'm here today with Benedict Evans.

We're going to talk about Apple. Hi, Benedict. Apple had their earnings yesterday. What do you think?

It was a set of puzzles. The iPhones say unit sales were better than expected, and the stock shot up, not surprisingly.

And China's doing well, and the iPad isn't.

And so there's a set of interesting questions in there.

The iPad is the thing that certainly I'm looking at most in those numbers.

Because if you look at unit sales on a trading 12-month

basis, which strips out the spikes from new product releases, basically the sales went up in a

straight line until about a year ago, and they've been flat for the last year.

And for the first quarter or two, you could say, well, you know, every Apple product has a sort

of product cycle, and the new one comes out, and the sales go up, and then they go down a bit, and then they go up for the next one.

But that isn't actually what's happened. It's just been flat, and that's never actually been

the case for the iPhone. And so, and some people say that's because the upgrade cycle is longer?

Well, I mean, so there's a couple, there's a bunch of things to sort of talk about in order. There is Android competition, there is the upgrade cycle, there is the extent to which it's a useful product for people coming from a PC or for people coming from a smartphone. The thing about upgrade cycle is on a kind of purely mathematical basis. If the upgrade cycle is any given number, that shouldn't change the growth rate.

If the upgrade cycle lengthens, then that should pull the sales down. But it shouldn't of itself

suddenly cause a halt in growth. For that to happen, you have to kind of run out of new people

to be buying the thing. And that's really what happens. Isn't it true that it's, at least the tablet appears to be more expensive to people

because it's not subsidized the way mobile is.

And therefore it could just be a rich person's device.

Yeah, but you say that, but it's, but it's also only what, $300.

So it's not. I mean, what's $400 so it's not I mean a luxury device

but then compare that to a PC

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