In an interview with Bloomberg’s Emily Chang (@emilychangtv) at the Salesforce Dreamforce Conference yesterday, Marc Andreessen said Apple Pay lacks innovation, “[what is] actually surprising about Apple Pay is how many things don’t change with Apple Pay, like you put in your credit card. It’s innovative in a way that is very consistent with the status quo. It’s very clever. It’s very cleverly done… It kind of plugs right into that existing system. I mean it just inserts Apple Inc. (NASDAQ:AAPL) into the middle of the existing system which is why [the Financial industry is] all so freaked out.”
When asked by Chang how Apple’s future looks under Tim Cook, Andreessen said, “It looks incredibly promising. It looks extremely promising… Apple is gaining strength…you kind of get…you can kind of feel it, I think they’re going to do extraordinarily well.”
Andreessen gave Chang two reasons why Apple will steer away from producing TV’s, the first he said is the “upgrade cycle for TVs is like five years or seven years or ten years, and so I think what that means it that they’re just not that attractive relative to the smartphone” and the second reason, the TV is the “dumb peripheral to the smartphone.”
Andreessen also told the Bloomberg Television anchor that breaking up is the only way to survive and any big tech company including Google Inc (NASDAQ:GOOG) and Apple will do it in the next 20 years.
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Marc Andreessen on Apple Pay:
“This is an area where I think there will be more change in the next five years than there were in the previous twenty. And there’s two big drivers of that change. One, Apple Pay, and the other is Bitcoin. Apple Pay is the thing that is freaking out all the financial services companies right now, like the financial services companies are kind of like… whatever… internet…okay. Credit cards, they’ll work fine on the internet, it’s all good. Apple’s showing up to the party and saying we’re going to now be in the center of payments has caused kind of like a collective heart attack. And there are payments companies that are aligned with that and Apple like “yeah we’ve figured it out” and then there are payments companies that aren’t that are basically having a stroke in real-time and trying really hard to figure out what the implications of Apple Pay are. So there’s going to be a lot of change I think catalyzed by that. And by the way, not just Apple but presumably Google…everybody assumes that Google will respond to Apple Pay and that Google Pay will work much the same way with Android.
Marc Andreessen on whether Apple Pay is innovative
“This is what is so interesting about Apple Pay. Apple Pay is viewed by the payments industry as revolutionary but it’s also, it is the most consistent with the existing payments system as any of these new systems yet. It doesn’t require…it’s actually surprising about Apple Pay is how many things don’t change with Apple Pay, like you put in your credit card. [Apple Pay is] innovative in a way that is very consistent with the status quo. It’s very clever. It’s very cleverly done. If anything it’s big selling point is that it doesn’t require massive structural change. So the typical problem of a new payments system is the chicken and egg problem. This is the problem credit cards had when they first came out 15 years ago, it’s the problem that Bitcoin is fighting its way through today which is if everybody has a way to pay, then all the merchants take it, and it’s all great. But until you have universal acceptance on both sides, nobody uses it, right? And so it’s a network effects problem. You have to get through the chicken and egg problem on either side to universal adoption. And so Apple Pay is very cleverly calibrated to basically skip right through that to be very much in alignment with the status quo payments systems, credit card companies. It kind of plugs right into that existing system. I mean it just inserts Apple into the middle of the existing system which is why they’re all so freaked out.”
Marc Andreessen on the future of Apple under Tim Cook:
“It looks incredibly promising. It looks extremely promising. The iPhone 6 is obviously a huge hit and is going to be extremely successful. And you know Apple is gaining strength this is sort of what I talked about earlier, you kind of get…you can kind of feel it, is the company gaining strategic strength or losing it? And you can just feel that Apple they’re gaining strength. I think they’re going to do extraordinarily well. The interesting thing about Apple and TV is that it keeps refusing to build a TV. And everyone keeps predicting that there will be the Apple TV you put on your wall and they don’t build it and I think there’s a bunch of different reasons for it, but I think the big one is that I believe the big reason they don’t build a tv is that it goes back to the power of a smartphone which is that smartphone upgrade cycle is like two years, you basically get a new smartphone every two years, and even if you don’t get anything else new in your life you get a new smartphone. It’s the most important consumer product probably in history. And the upgrade cycles are actually shrinking, and so more and more people are now upgrading once a year. And potentially as these phones keep advancing you could get the upgrade cycle below a year. I think what Apple has figured out is that the upgrade cycle for TVs is like five years or seven years or ten years, and so I think what that means it that they’re just not that attractive relative to the smartphone to build something when they won’t buy a new one every year. The other conclusion from that though is that the TV then effectively sort of faded, it’s going to become a dumb peripheral to the smartphone. The smartphone will be the center of your media universe. And you’ll be able to watch everything on it. And if you have a big screen nearby, you’ll use Apple Play or Chromecast or one of these things and you’ll be into the TV. But the TV will be kind of the dumb recipient of the content. And I think that they think that’s a low-margin business that other people can pursue.”