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Jan 2, 2019 · 33m · a16z

a16z Podcast | Apple Takes on Payments and Your Wrist

Benedict Evans · 21m spoken Frank Chen · 3m spoken Michael Copeland · 3m spoken Zal Bilimoria · 2m spoken
0:00 / 0:00
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In this a16z podcast episode, tech analysts Benedict Evans, Frank Chen, and Zal Bilamoria evaluate Apple's product announcements, including the iPhone 6/6 Plus, Apple Pay, and the Apple Watch. They analyze how these hardware and payment offerings function together to deepen user lock-in and reinforce the core iPhone ecosystem.

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 2.7 Guest teaching 6.3 Guest disagreement 2.3 The host pushing back 2.3
05100:0010:0020:0030:000:00–5:23 · The host as informed peer 3/10 Apple's Cupertino Event & iPhone 6 / 6 Plus Analysis Michael Copeland prompts the discussion by bringing up Apple's historic shift from mocking larger screens to adopting them. Benedict Evans reframes the move as a practical evolution enabled by auto-scaling display software in iOS 8 rather than a defeat, explaining the pixel scaling mechanics and China market pricing strategy.5:23–21:54 · The host as informed peer 3/10 Apple Pay, NFC Mechanics, and Merchant Adoption The host asks guiding questions about Apple Pay and whether it operates like PayPal or iTunes. The panel educates the host on payment rails, explaining that Apple Pay does not process credit or take risk like PayPal, but merely virtualizes plastic cards on top of existing EMV/NFC infrastructure and tokenized secure elements.21:54–29:35 · The host as informed peer 2/10 Apple Watch Impressions and Ecosystem Lock-in Strategy Michael Copeland asks hands-on impressions of the Apple Watch and whether Apple successfully justified why consumers need one. Benedict Evans and Frank Chen breakdown the hardware specs and ecosystem strategy, explaining that Apple is positioning the watch as a flexible wrist computer platform rather than just a notification mirror like Android Wear.0:00–5:23 · Guest teaching 6/10 Apple's Cupertino Event & iPhone 6 / 6 Plus Analysis Michael Copeland prompts the discussion by bringing up Apple's historic shift from mocking larger screens to adopting them. Benedict Evans reframes the move as a practical evolution enabled by auto-scaling display software in iOS 8 rather than a defeat, explaining the pixel scaling mechanics and China market pricing strategy.5:23–21:54 · Guest teaching 7/10 Apple Pay, NFC Mechanics, and Merchant Adoption The host asks guiding questions about Apple Pay and whether it operates like PayPal or iTunes. The panel educates the host on payment rails, explaining that Apple Pay does not process credit or take risk like PayPal, but merely virtualizes plastic cards on top of existing EMV/NFC infrastructure and tokenized secure elements.21:54–29:35 · Guest teaching 6/10 Apple Watch Impressions and Ecosystem Lock-in Strategy Michael Copeland asks hands-on impressions of the Apple Watch and whether Apple successfully justified why consumers need one. Benedict Evans and Frank Chen breakdown the hardware specs and ecosystem strategy, explaining that Apple is positioning the watch as a flexible wrist computer platform rather than just a notification mirror like Android Wear.0:00–5:23 · Guest disagreement 3/10 Apple's Cupertino Event & iPhone 6 / 6 Plus Analysis Michael Copeland prompts the discussion by bringing up Apple's historic shift from mocking larger screens to adopting them. Benedict Evans reframes the move as a practical evolution enabled by auto-scaling display software in iOS 8 rather than a defeat, explaining the pixel scaling mechanics and China market pricing strategy.5:23–21:54 · Guest disagreement 2/10 Apple Pay, NFC Mechanics, and Merchant Adoption The host asks guiding questions about Apple Pay and whether it operates like PayPal or iTunes. The panel educates the host on payment rails, explaining that Apple Pay does not process credit or take risk like PayPal, but merely virtualizes plastic cards on top of existing EMV/NFC infrastructure and tokenized secure elements.21:54–29:35 · Guest disagreement 2/10 Apple Watch Impressions and Ecosystem Lock-in Strategy Michael Copeland asks hands-on impressions of the Apple Watch and whether Apple successfully justified why consumers need one. Benedict Evans and Frank Chen breakdown the hardware specs and ecosystem strategy, explaining that Apple is positioning the watch as a flexible wrist computer platform rather than just a notification mirror like Android Wear.0:00–5:23 · The host pushing back 3/10 Apple's Cupertino Event & iPhone 6 / 6 Plus Analysis Michael Copeland prompts the discussion by bringing up Apple's historic shift from mocking larger screens to adopting them. Benedict Evans reframes the move as a practical evolution enabled by auto-scaling display software in iOS 8 rather than a defeat, explaining the pixel scaling mechanics and China market pricing strategy.5:23–21:54 · The host pushing back 2/10 Apple Pay, NFC Mechanics, and Merchant Adoption The host asks guiding questions about Apple Pay and whether it operates like PayPal or iTunes. The panel educates the host on payment rails, explaining that Apple Pay does not process credit or take risk like PayPal, but merely virtualizes plastic cards on top of existing EMV/NFC infrastructure and tokenized secure elements.21:54–29:35 · The host pushing back 2/10 Apple Watch Impressions and Ecosystem Lock-in Strategy Michael Copeland asks hands-on impressions of the Apple Watch and whether Apple successfully justified why consumers need one. Benedict Evans and Frank Chen breakdown the hardware specs and ecosystem strategy, explaining that Apple is positioning the watch as a flexible wrist computer platform rather than just a notification mirror like Android Wear.

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Sharpest disagreement ▶ 3:05 Benedict rejects Apple hypocrisy narrative

When the host suggests Apple is acknowledging past error by adopting big screens, Benedict abruptly brushes off the premise with 'who cares' and reframes screen size as an evolving balance of usability.

 Hardest push from the host ▶ 3:05 Host challenges Apple's reversal on screen sizes

Michael Copeland calls out Apple's past habit of publicly dismissing larger display form factors until market demand forces them to adopt them.

 Biggest teaching moment ▶ 14:09 Explaining Apple Pay vs PayPal network rails

Benedict corrects the host's assumption that Apple Pay operates like PayPal, clarifying that Apple is replacing plastic cards while riding existing bank/network rails rather than operating as a financial institution.

 The host holds their own ▶ 3:05 Host cites Steve Jobs' finger-sharpener quote context

Michael Copeland demonstrates knowledge of Apple's historical PR tactics regarding screen sizes, pointing out how Apple consistently dismisses form factors right up until launching them.
the scores for every segment, with the reasoning behind each
ChapterTopicThe host as informed peerGuest teachingGuest disagreementThe host pushing backWhy
Apple's Cupertino Event & iPhone 6 / 6 Plus Analysis 3633 Michael Copeland prompts the discussion by bringing up Apple's historic shift from mocking larger screens to adopting them. Benedict Evans reframes the move as a practical evolution enabled by auto-scaling display software in iOS 8 rather than a defeat, explaining the pixel scaling mechanics and China market pricing strategy.
Apple Pay, NFC Mechanics, and Merchant Adoption 3722 The host asks guiding questions about Apple Pay and whether it operates like PayPal or iTunes. The panel educates the host on payment rails, explaining that Apple Pay does not process credit or take risk like PayPal, but merely virtualizes plastic cards on top of existing EMV/NFC infrastructure and tokenized secure elements.
Apple Watch Impressions and Ecosystem Lock-in Strategy 2622 Michael Copeland asks hands-on impressions of the Apple Watch and whether Apple successfully justified why consumers need one. Benedict Evans and Frank Chen breakdown the hardware specs and ecosystem strategy, explaining that Apple is positioning the watch as a flexible wrist computer platform rather than just a notification mirror like Android Wear.

Statements from this episode (13)

Opinion
Evans: iPhone 6 launch poses a direct competitive problem for Samsung
“And the obvious takeaway is that this is a competitive problem for Samsung.”
Benedict Evans Jan 2, 2019 ▶ 2:11
Assertion Supported
Evans: Apple holds only half of the high-end smartphone market
“When you look at the high end segment, that Apple is really the only place Apple competes they've probably only got around half of that segment, and the other half is high end Android, and almost all of that high end Android is with bigger screens.”
Benedict Evans Jan 2, 2019 ▶ 2:51
Opinion
Bilamoria: iPhone 6 Plus phablet is Apple's true Asian market strategy
“Apple's, you know, foray into China was supposedly the five C, and that really didn't go anywhere, and the six plus with fablet seems to be the right way to potentially go into and get into Asian markets finally.”
Zal Bilimoria Jan 2, 2019 ▶ 4:01
Assertion Supported
Chen: US EMV migration will drive merchant NFC terminal adoption
“The good news on the NFC readers is that the United States is about to go through a massive deployment of EMV, which is chip and pin credit cards. The same reader will also support NFC, so merchants won't need two different or two different upgrades, so it loo…”
Frank Chen Jan 2, 2019 ▶ 7:52
Assertion Not publicly verifiable
Evans: Apple's 40% US market share forces bank and merchant alignment
“And because of the market scale that Apple has uniquely kind of in the USA with 40% of smartphones, They could then go to all the banks and all the retailers and say, this is all going to work, and let's all just, you know, get behind and push, which is kind o…”
Benedict Evans Jan 2, 2019 ▶ 9:03
Insight
Evans: Apple operates like a club funded by biannual hardware upgrades
“You can describe Apple as a sort of club where the price of membership is buying a new box every two years, and the benefits of being a member of the club keep expanding in terms of all these sort of incremental services around the edges.”
Benedict Evans Jan 2, 2019 ▶ 13:22
Opinion
Chen: Apple's single wallet model will outperform fragmented Android payments
“And if you contrast what's happening in Apple land with what's happening in Android land, if you've tried NFC payments in Android land, you have lots of stakeholders with their own applications clamoring to be your wallet. So you have ISIS now known as soft ca…”
Frank Chen Jan 2, 2019 ▶ 15:19
Opinion
Bilamoria: Apple Pay and NFC are bridging vitamins, not painkillers
“So, one can kind of think about Apple Pay, NFC, you know, this idea of facilitating offline commerce, you know, brick and mortar commerce, as a bridging solution until kind of, you know, maybe 10, 20, 30 years from now, when, like, everyone's got mobile apps a…”
Zal Bilimoria Jan 2, 2019 ▶ 18:05
Assertion Supported
Evans: Apple never sees health data stored in iOS 8 repository
“So Apple is making this repository in iOS eight that stores all the health information from a watch, from any wearable that you have, anything you input into it. Any app on the device can ask for that with permission. Apple never sees it”
Benedict Evans Jan 2, 2019 ▶ 21:05
Assertion Not checkable as stated
Chen: Apple monetizes via upfront hardware, not advertising revenue streams
“Apple's made the money it wants to make from you as soon as you buy the iPhone. It doesn't need an ongoing stream of advertising revenue on back, on the back of that for it to make its business model work.”
Frank Chen Jan 2, 2019 ▶ 21:44
Assertion Not checkable as stated
Evans: Smartwatches cannot fit 3G chips and maintain all-day battery
“You cannot stick a three G chip in a device that small with a color screen and have it last all day.”
Benedict Evans Jan 2, 2019 ▶ 23:15
Prediction Open · timeframe Sep 2019
Chen: Apple will never make an Apple Watch compatible with Android
“So you're never, you're not going to see watch that works with an Android phone, right? Like, they're just not going to do that.”
Frank Chen Jan 2, 2019 ▶ 27:29
Assertion Not checkable as stated
Chen: Apple's internal community and social product efforts have failed
“Most of Apple's community and social efforts have failed, right? They took ping out of iTunes Game Center. I still don't know anybody who uses Game Center. So those things have not worked”
Frank Chen Jan 2, 2019 ▶ 29:57
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