Jan 2, 2019 · 30m · a16z
a16z Podcast | Software is What Distinguishes the Hardware Winners
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In this episode of the a16z Podcast, industry experts Benedict Evans and Steven Sinofsky join host Michael Copeland to analyze key trends from the Consumer Electronics Show. They discuss how the commoditization of hardware components via the smartphone supply chain makes software, cloud integration, and user experience the ultimate differentiators for modern tech products.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 2.0 Guest teaching 4.8 Guest disagreement 1.2 The host pushing back 1.2
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 15:45 Evans mocks concept cars as bloated feature phones
Benedict dismisses car show concept vehicles as unusable feature phones from 2006 and compares their design aesthetic to giant transparent cough sweets.
Hardest push from the host ▶ 1:05 Copeland challenges Sinofsky's affinity for CESCopeland directly challenges Sinofsky's premise by calling his love for CES baffling and pressing him to explain his viewpoint.
Biggest teaching moment ▶ 24:00 Evans breaks down Samsung's strategic OS dilemmaEvans clearly articulates the structural trap facing hardware manufacturers who do not own their operating software, contrasting Samsung with Apple.
The host holds their own ▶ 9:54 Copeland brings up Nest and Dropcam case studiesCopeland demonstrates relevant industry knowledge by citing specific hardware pioneers to question whether exclusivity windows have permanently shrunk.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Why CES Matters: The Whole Tech Ecosystem at Once | 1 | 4 | 1 | 1 | Host Michael Copeland admits he finds Steven Sinofsky's love for CES baffling, prompting Sinofsky to explain how the event offers a unique snapshot of the entire technology supply chain from ingredient parts to finished booths. | |
| The Smartphone Supply Chain as Tech's Lego Kit | 2 | 5 | 1 | 1 | Benedict Evans and Steven Sinofsky reframe modern hardware production around smartphone components and Shenzhen manufacturing, using lapel cams and hoverboards as examples. Copeland facilitates the discussion while the guests draw analogies between modular hardware and open-source software. | |
| Creating Value Beyond Commodity Hardware | 3 | 5 | 1 | 2 | Copeland cites specific hardware cases like Nest, Dropcam, and GoPro to ask if temporary hardware exclusivity has vanished. Evans and Sinofsky explain how commoditized hardware shifts long-term value creation strictly into software and cloud network effects. | |
| Autonomous Passenger Drones and Chinese Hardware Innovation | 2 | 5 | 2 | 1 | The guests discuss passenger drones and auto tech at CES, with Evans comparing bloated automotive dashboards to 2006 feature phones. Sinofsky and Evans elaborate on how legacy corporate org structures create fragmented user experiences that software will eventually collapse. | |
| Consumer Tech Giants and Hardware Delineation | 2 | 5 | 1 | 1 | Copeland asks whether traditional consumer electronics giants like Samsung can break out of hardware commoditization. Evans educates the audience on how Samsung remains squeezed between Apple and low-cost competitors due to its lack of operating system ownership. |
Statements from this episode (12)
Sinofsky: CES offers an unmatched view of the tech supply chain
“What I really do love is just, it's an opportunity to sort of see everything at once. Now, it's not quite everything, because a bunch of the big companies don't go, you can't really see a ton of startups, but it really is like a snapshot of a massive amount of…”
Benedict Evans: Smartphone supply chain components power most consumer electronics at CES
“The thing that you see, the sort of, the thing that grounds everything, is that this is kind of all about the smartphone supply chain. I mean, not, you know, there's a few things like TVs and so on that aren't, but a huge proportion of what you see is basicall…”
Benedict Evans: Bosch displayed 15 diverse products using identical sensor components
“Bosch had this great display where they had, like, 15 different consumer electronics products from the surface to an iPhone to a drone to a Nest, and they all had the same Bosch component sensor, sort of tilt sensor switch or something in them.”
Sinofsky: Shenzhen hardware entrepreneurs execute fixed production runs without venture capital
“Yeah, it's worth actually just highlighting for folks, like, exactly how that works, because in the startup world, that doesn't often make a lot of sense. You're like, wow, you raise capital, you build a company, but what these people are doing is they're tapp…”
Evans: Shenzhen hardware manufacturing functions like open-source software
“In a funny kind of way, you could almost, it's kind of an imperfect analogy, but you can also Almost argue that like the user experience and the injection molded plastic and so on has become software. That is to say in a kind of, there's a sort of analogy in h…”
Sinofsky: Hardware differentiation is sustainable for only ten minutes
“You might think you could pick a special part, like, you could pick the best four K camera available, and think that that will be sustainable, but it'll be sustainable for, like, 10 minutes. Because that, that camera will be everywhere, or the capabilities in …”
Evans: Flip Video failed because smartphone camera capabilities rapidly caught up
“It was the little handheld camera just at the point that camera tech had become commoditized, but not at the point that you could get a good one into a smartphone, and so there was a window of like two years where it took better pictures than you got on, and t…”
Sinofsky: China enables passenger drone testing far better than US regulations
“You gotta give credit To the China market for letting this thing up in the air. And learning to test it, and that's like a huge thing, because like, I don't even know where, you'd have to go to like White Sands, New Mexico to test something like that in the US…”
Evans: Electric vehicles will collapse discrete hardware systems into unified software
“What happens to cars is, as you go to electric, among other things, is that an awful lot of the things in a car that is discrete systems from discrete vendors or discrete teams is, Get collapsed into software running on just one box, or just two boxes, or some…”
Evans: Panasonic is getting out of consumer electronics
“Panasonic is getting out of consumer electronics.”
Evans: Sony has been failing in consumer electronics for 20 years
“Sony has, you know, been failing in this for 20 years.”
Evans: Commodity smartphone chips dramatically reduce consumer hardware development costs
“Yeah, but, you know, again, that's the kind of thing that would have taken, like, five years of hardcore technology development. And now it's just, and now it's, you know, it's 50 dollars, and it's just smartphone chips inside, so you can make all kinds of, it…”