Techstrong Gang – February 19, 2025

Hey everyone. You know what? We're gonna play a game today of geo Processor politics.

It's part of the New World Order. And Balkanization, you're watching Textron Gang. Hi everyone.

Happy Wednesday. It's Alan Shimel here for Textron Gang. We've got a lot going on in the world as there seems to be going on in the world every day.

Um, got a smaller gang today. We had a couple people between weather and medical stuff, uh, not able to make it. So let me introduce you to, you know, we go to war with the army.

We have not the army we want. Let me introduce you to today's army gang here. Um, first of all, he got a chuckle out of that joining us from down in Austin, where it's a frigid, frigid day in Austin.

He is a FU analyst, CTO co-founder of Visible Impact Guy Carrier. Hey guy, welcome. Thank you.

And a proud member of the Allen Chimal Army. Even if he's not, if he, even if I'm not the army he wants today, well, Only the army he has, you know, me and Robbie. Uh, But, uh, yeah, no, it's good to be here again on this, uh, bridged Austin Day.

It's 19 degrees right now, which is darn cold for central Texas. That is, that's, that's now right frigid for Central Texas. Oh, man.

Joining us also, speaking of frigid up in Harrison, New York. I don't know what the weather is there though. It's our Chief Content officer, Mike Ard.

Hey, Mike. How are you? I'm good.

This is a volunteer army as far as I know. But do we need the institute a draft? Uh, We might, I thought I was part of the draft.

Well, I was thinking about bringing in North Korean troops. All right. Some remote it gang members.

Uh, what the heck? What the heck? It wouldn't be the first time they jumped into someone else's war.

Um, anyway, on that note, Mike, we've got a couple things to go over today. One is this part of a bigger issue that I'm gonna be addressing on my shimmy says this week, tomorrow. And that is, you know, I call it the bulk balkanization of the tech world.

And it's, it has a lot to do. You know, I think we're entering into a new world order, right? The, we're seeing the death now of the post World War II new world order that was kind of modified with the fall of the Soviet Union, but we're going into a balkanization era, and, and it, it's affecting tech in general.

Processors, CPUs of all things in particular. Talk to us about it. Yeah.

Things are, shall we say, a little on the unsettled side. Um, I'm not quite clear what's happening here. And the one minute the President is saying that the Taiwan, when he stole our chip business, and we want it back the next minute, uh, we're talking with TMSC about they're gonna take over parts of Intel and the foundries, but they're gonna build those in the US and return.

And who knows, maybe this is part of some larger exit strategy from Taiwan that we're gonna give back to mainland China someday. But Guy, what's going on here? Well, to start with, um, I, I, I personally don't try, I try to avoid the words strategy or plan when it applies to the current US administration.

'cause I think it's a lot more shoot from a hip, um, approach. Uh, you know, that that's sort of an approach. Just, you know, just get going and do something and say something depending on, um, what the will or wish of the moment is and what sounds like it's gonna be interesting and popular and supported.

Um, I, I think that the broad perspective on this is pretty clear, which is exactly like you said. Um, it, you know, intellectually speaking globally and Europe and the United States, there, there has been this whole globalization push since the b Bretton Woods Conference, right after World War ii. And it was supposed to be this global supply chain and this wonderman and amazingness of, um, all kinds of countries around the world specializing in what they could specialize in and, uh, uh, trade and all that other sort of stuff.

Getting it all over the place on, I think there was already, thanks to the Great Recession, a little bit of concern, let's say popular non-intellectual concern about this. Um, so we, again, you know, people been saying, you know, built in the USA is better and all that other sort of stuff since the seventies, since the sixties when, when a lot of our manufacturing started to move offshore. But I I, none of that had the real effect of slowing or halting globalization.

What did was covid and the global shutdown of the supply chain and the sudden realization that there are certain strategic, uh, products that one does not want to have across an ocean. One would like to have onshore in your own nation, in our case, in the United States, but for other nations in their nations. And one of those big strategic resources, even pre ai, was computer chips of many kinds.

And so that led to the CHIPS act during the previous administration. The CHIPS Act has been this huge investment in onshoring to the United States Manufacturing, even if by a company like TSMC, the biggest chip manufacturer in the world. And let's not forget that their equipment, the key equipment they use comes from basically one country as well in the Netherlands, right?

It's this onshoring of the ability to create these chips. The arrival of AI made that even more acute made that need even more acute. So that's kind of what's been going on this whole time.

And it's been joined by this popular movement when people couldn't get basic goods like toilet paper and stuff during the, during the pandemic that we needed to be, have more stuff, more jobs, more manufacturing, more capabilities within the United States, in the case of some other kind of supply shock, like what occurred at covid. Now, when I go and say like, I don't really pay attention to plans, the strategies and all that other sort of stuff, the basic strategy such as it exists as this tariffs strategy, this idea that you're going to force other countries to do what you want by making it more expensive for them to import stuff into the United States. The pre the statement by the president of Taiwan.

I, I'm a little confused and maybe you can now clarify for me or for us, how this state somehow that Taiwan is gonna invest more in the United States. And I scratch my head as much as you do. See now I say that all the time.

Thanks, Steve. Mike, I scratched my head as much as you do with this idea that we're gonna onshore everything, but we're gonna have TSMC, which is a foreign company, own and run it, which was what was being discussed like with respect to Intel's Intel Foundry business. Again, that's onshore manufacturing, but it would be run from Taiwan.

It's, that's all very confusing. But in the end, um, what we're talking about is, uh, uh, threats through tariffs to force something that's already happening and has been happening for the past four years, which is this move of manufacturing, chip manufacturing in particular, into the countries that use them so that they don't have to worry as much about the global supply chain. And that is a retrenchment like Alan and Mike.

You said that's a retrenchment away from the world order of the previous 50, 60 years of increased globalization, 75. Well, I think, I think after Canada, Canada becomes the 51st state, TMSC will just move there, right? Is that how that works?

I'm not gonna take the day. Maybe Depend on, it'll become the 52nd state. I it's worth noting incidentally, that just recently, like within the last week or something, the State Department removed in, in its Taiwan information page or whatever it is, it removed a, a, a flat out statement from the US government that it does not support Taiwanese independence from China.

They removed that and China reacted as well. So there's this also this other piece of it of like sort of this nationalist Taiwan support side, or whatever you want to call it, that has not existed since Taiwan was created. So I don't know what's going on here.

Alan, Step in for guy. I have to tell you, first of all though, kudos for you for the historical context and laying this all out. You built a beautiful taste there.

Um, that was, that was really well, really done well, professorial, even I might say in terms of the Theq strategy, I, I think, you know, we all kind of know what the strategy of the administration is. I call it T-S-O-T-W throw s**t on the wall. Oh, for sure.

Yeah. And see what sticks. I mean, I used to call it MSU, like I'd say I went to MSU people.

Oh, Michigan State. No. Make s**t up.

Yeah, Well that's basically what they do. But, but you know, it, it, again, This tariffs thing Don land on this tariffs thing really is a strategy. It is a simple one step strategy.

But, but here's the problem. Threaten tariffs put on tariffs. But it is, And they, yes, it is a strategy.

This strategy would've worked real well in 1958, which is just about where Donald Diff Trump is stuck in, okay? When, when the US is the predominant market by 10 x over the rest of the world, and you put the barriers into doing business in the us, the, the rest of the world has to march in block step. Unfortunately, that's not the case anymore.

And when you do tariffs, you are forcing other countries to do tariffs. I've said this before. It's not an America first, uh, strategy.

It's an America alone strategy because you are gonna put up tariffs. And then so is Canada. So is Mexico, so is China, so is Europe, so is Brazil, so is South Africa.

So is every other country in the world. And so what do you have, you have the balkanization here, and Donald Trump says, well, we still have the biggest market. Everyone wants to do business with us.

Yes and no. We have 330 million people. 4 billion.

Let me say it again. 4 billion. India.

India has more children in honors programs in school and math and science honors programs that we have children, period. So what's gonna happen here in short order is when the rest of the world says F you, and they put up their own berries and say, we don't want American goods. There's only so much we're gonna make in America that we can consume in America.

At the end of the day, a good part of our economy is still based on exporting food materials. Are we gonna have corn rotting in the, in the fields? 'cause we don't know what to do.

Oh, maybe we'll make ethanol out of it. I don't know. Are we gonna have crops rotting in the fields?

Because no one will buy our food. No one will take our meat. No one.

And how the farmer's gonna feel about that. We could buy American, but there's only so much Americans could buy. There's a lot more of them than there are of us.

And that's the basic fallacy in this strategy, if you wanna call the strategy that's, you know, not to mention what it's gonna do for inflation and everything else. Yeah. Coming back to the chips thing though, the part that I don't get guy is like, we seem to be talking like we can put up a, a semiconductor manufacturing facility in six months.

And last time I checked, it'll be like closer to the end of the decade before any of these things come online. Okay. I try to, I try to stay pretty open-minded in terms of, I'm, I'm not a big supporter of this administration's moves or actions.

Um, I'm not a supporter at all in general, but I do understand that there's a lot of people who support it and liked what they're seeing. And so I want to be respectful towards that point of view, even if I disagree with it. Um, so what you're referring to, Mike, however, is a classic political move, which is to take credit for something that has already been done by somebody else.

Chip, the CHIPS Act is already creating, I mean, it's a, it's a roughly 18 month accelerated timeline to go from, from field to factory to to, to, to fab, right? So, yeah, it's not gonna be six months, but you know, most of these, if not all of these new fab facilities, um, are are not going, or, you know, they're, none of them are online yet, due to the CHIPS Act, as far as I know, at least if there are any, it's few. And so they are gonna come online this year, and the current administration's gonna take credit for it.

Well, I even though had nothing to do with it, Guy. I don't know. I you're assuming they're gonna leave the money in the CHIPS Act.

The problem is the Chip Chips Act is part of, uh, this, they refer it the Green New Deal, and they want to cut the Green New Deal. Okay, so hold on, Alan. The CHIPS Act doesn't exist anymore in Newspeak.

Right? Okay. The CHIPS Act has been, you don't hear anything about the CHIPS Act anymore.

I think they called the Truth speak. If we're gonna go Orwell in here, You don't hear about the Infrastructure Act or what was it called? The Inflation Reduction Act.

Whatever, right? You, they, they, they don't exist anymore. What happened in the past four years doesn't exist unless there's a beneficial outcome, in which case it is thanks to the current administration.

It, it's, it's, like I said, it's an old political move, however, correctly, uh, uh, executed this time. So, but Mike, that's where it comes from. They can say all kinds of stuff.

People say all kinds of stuff, and when they get away with it, 'cause they get away with at least some of it, then Well, if you say it enough and loud enough, We don't speak truth then Yeah, if, if you say it enough times and loud enough. But here's the thing, I don't think it's just a question of building a foundry. I think it's, it's having the right people, the right training, the right materials, the right everything else.

And, and again, if, if other countries aren't gonna buy what you're outputting because you've tariffed them, That's not so, so, I, I get where you're coming from, Alan, but I think the primary initial impact of the tariffs should they stick, um, is to the American Consumer's, no doubt about it. Inflation prices up Tax on Americans. So and so, so the, the reciprocal tariffs on are going to affect the citizens of those s good choice the consumers in those countries.

No, it, it's Gonna, the biggest impact on the world economy comes from the United States, you know, business and consumer not buying as much because it's more expensive. All right, so let me come back to this other point then. 90 More.

We have, we have talked about Intel as this national treasure in the past. So is Intel not so much a national treasure at this point? And we're kind of be happily slicing it up with some sort of strange arrangement with TMSC?

I mean, what's going on here? Suddenly the tenor and the tone has changed. Um, I think it started to change 12 months ago.

And then, was it five or four months ago when Peggy Inger quit that? Was this sort of one of those moments in the news that suddenly causes everybody to take notice? Intel's um, main position has been in data center CPUs, um, less so in on the, on, on desktop and client devices, but still there as well.

I only say less so 'cause A MD ha has had long inroads into there and it's a lower margin business. Um, and, uh, um, when Intel got creaky in, its in its, you know, sort of combo BAB and micro architecture strategy, when it started to get creaky in that and sort of slow moving, um, it wasn't so much notice because it was still a good default choice, especially for cloud instances. Uh, and it was just understood, right?

Um, what AMD's end run did in the end, combined with the sudden attention on the GPU. It just sucked all the wind out of Intel's sails. And I, I, I think you're right.

I I think that, you know, the mighty half fallen at this point, and, um, it's a pretty open, uh, CPU market, especially with arm jumping in. And instead of just being a, uh, a design firm, not only Mai Mai son is saying, wait a minute, like, we gotta get in on this manufacturing game too, because there's just so much money out there. So, well, I I think part of that is I wouldn't trust what anybody is telling me about the foundry, so I want to take control of my own destiny.

Absolutely. Absolutely. Well, there's, there's more to that too though, right?

Um, look, let's, let's say the emperor has no clothes. Intel missed the boat on mobile chips and, and GP use, and, and everyone knew this for a long time already, uh, certainly on mobile, right? You wouldn't have Qualcomm as, as powerful as it is, had Intel had a, a mobile chip alternative.

And as a matter of fact, when you go buy laptops now, it's not uncommon to see SNAP J and laptops, right? So in Intel kind of missed the boat on that. I mean, and quite frankly, when you talk about their server processes, processors, right?

You had xons, but you know, they, they just, they kept doing incremental of what they were already doing, incremental improvements on it, and they, and they missed markets. It happens. It's a rare bird like Microsoft that could miss the internet initially and still regain position that can maybe, you know, but didn't miss ai certainly, but Microsoft has been late to some of the big tech innovations in its space and still been able to recover kudos to them.

Intel missed these and, and, and frankly, their ability to recover is in doubt. Now, PSMC though has a history of making promises about moving stuff to America and doing stuff in the US and then not quite following through on it. There's already some T-S-M-T-S-M-C foundries in various stages of construction in the US that have never Thanks to the CHIPS Act Continue.

Yes, and absolutely with CHIPS ACT money. Thanks. The CHIPS act, because they were basically bribed, they were sent a buck a bucket load of money by, by the United States, So to speak.

But I don't believe those are functional or anywhere near functional yet. No, no, no, they're not. No.

They take, they, like Mike said, they take, they take two years to, to go online. Yeah. And, and when you have acts of Congress, like the CHIPS act or any act of Congress, it takes 12 months to just even like, get their ducks in order to ensure that the money's being spent correctly in the right places and all that other sort Of thing.

So, but that's the way government functions. That doesn't mean you come in and gut it. It is.

But all of that being said, you know, in, especially as it relates to Taiwan, if you are TSMC, what do you do here? You, you are in essence buddied up with the Taiwanese government, right? You want to maintain that status quo.

You recognize that long term present administration may or may not do anything to prevent Taiwan becoming part of, uh, China. Um, you know, there's patriotism and there's money, and they don't necessarily come into the same fist or hand here. And, and so that's gonna be some decisions that are made.

But again, you know, this, this is CHIPS in particular, I think we're going to see this throughout tech, right? We, you know, the, the concept of data, sovereign sovereignty is, is something we all recognize, right? I wanna keep my data within the borders of my country.

What we're gonna enter into is tech sovereignty. I want my tech here, and it's not just in the us. 'cause don't underestimate, the EU in mass is not that much smaller than the US market.

The Chinese market is not that much smaller than the US market. The Indian market is, is probably the fastest growing in the world. 'cause just of sheer numbers.

So short term, it may sound like a good thing a year, two years out, this whole tech sovereignty thing. And, and who loses for it? We all lose for it because as consumers, we're better off in a worldwide competition where we get to choose the best and the most efficient and the right tools for the job.

Not what only I could get. Like, you don't want to be a rush like a Soviet citizen. What was the name of the Russian cars, Mike, do you remember?

No idea. But we're gonna be coming back to talk about tariffs later this week. So, all right, we'll take a break here on Textron Gang.

I, I got, I hear the music playing. We're going to take a break. We're coming back and we're gonna talk about an Apple encryption angst here on Textron Gang.

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Alright, folks, we're back with a, maybe a topic that's slightly less contentious, but probably not much less contentious. Um, the United Kingdom, the land of the Official Secrets Act is once again pushing Apple for access to encrypted data from in the name of security, oddly enough, uh, in this country at different times. The FBI has kind of echoed a similar sentiment, but now we have, uh, people in Congress basically wagging their finger at the UK saying, how dare you want access to this information?

And this story is kind of a continuing, uh, adventure because law enforcement says we need access to encrypted data to catch the bad guys. And then other folks are saying, we have a fundamental right to privacy. And Alan, you've been watching this, can this ever get resolved?

Or is this, is there some middle ground here? Or is this like, we just gotta one side's gotta suck it up? Or, or, or whether they like it or not.

Well, Look, they can always go buy that program from the Israeli company that breaks the Apple encryption. But that being said, you know, I thought we did find, uh, sort of middle ground on this back around, you know, after nine 11 when under the w George W. Bush administration things were a little saner back then.

And, and they set up like a whole separate court system for when, uh, government can go in and demand these kinds of things. Now, breaking apple encryption was, was a different story, but, you know, but there was a, a court set up, right? And then that was obviously abused during subsequent administrations, and, and that kinda went away.

But, but here's the bottom line. Well, the court's still there, Alan, The, the court is there. Yes.

I, I just don't know. Yeah. How much, you know, it's used.

In any event, what complicates this is, it's, it's crossing borders again, right? Data sovereignty, tech sovereignty, those us congressmen who were p****d at, at the UK with only two gladly approve US agencies being able to do it right Now, I Don't Know, Ron Wyden is one of 'em, and He's been in a, well, Rob, they're, they're the minority now, guy. Fair enough.

Yeah. He could yell and scream from the back benches, as they would say over in London, right? But the, the fact is, this is really an issue of do we have a fundamental right to privacy?

And yes, there are times when every one of us would say The heck with it, we need to get that information. I need to know if there's more attacks planned in a nine 11 kind of scenario, I, and I, that's a life or death for thousands per, you know, catastrophe prevented. But should it be up to an Apple, a Google, a Microsoft to be the, the defenders of that right.

To privacy, right? Because it's an individual's, right? Does, you know, to put it in legal terms, does Apple have standing to talk on our behalf or to represent on our behalf and say, no, you can't have the ability to unencrypt this, even though we have that ability, we can't give that to you.

Right? And that, that I think is, is a fundamental issue here. There's two issues.

Number one, do individuals have that, right? And when is the rights of the government aid government supersede that individual, right? So a classic balancing right of, of, of responsibility here.

And then number two, what standing does Apple, Google, or any of these companies have and standing in the way? So to me, that's, that's the, the pivotal issue issues here. It's not much different than a wiretap.

And when the phone company would put the wiretap in as long as there was a court order, and they weren't gonna stand up and say, no, that phone is your private reserve, even though theoretically your home is your castle. But, um, guy, I mean, is this kind of just, you know, legal grandstanding. I am really curious what the origin of this, um, strategy, uh, on the part of the labor government in the UK is.

Um, but let's let, let, let's start by being clear about the difference between what you described Mike and what you are reacting to Alan, because you said the, the key two words, court order, court order is a process. There is a warrant for wiretapping. There's a warrant for going into my personal safe to see what's in there, uh, or for script searching me or any of those violations of privacy.

There is a process for that, a process, a due process, meaning one that involves, for example, a grand jury, uh, you know, 25 of my peers, um, evaluating the reasons and, and, uh, that sort of thing. I know a lot of court orders happen on a more administrative basis from like a judge overnight or whatever. And that's, there's all of these are part of a process that weigh the safety of the public and, and the enforcement of laws against privacy.

That's not what we're talking about here in the uk because the access that they're demanding is on demand access at any time with no particular press surveillance. In other words, the ability to go in and take a look any old time they want, um, maybe that's unfair to say any old time they want, maybe they have a process as well. But there is a difference there.

Uh, there have been cases, and I I'm not as expert in this particular field as as many, but there have been cases where at least in the United States, the the government has, uh, or through process, there has been a warrant or a request for information from encrypted information held in the cloud. And I think the companies have resisted or refused Apple's contention is that it has created a system where Apple itself cannot provide that access, but nonetheless, warrants can be issued and the demand can be made, and the target of the warrant can be, you know, compelled to comply, um, by decrypting or putting in their password or whatever it is that they do, or they go to jail in just for not complying. That's not what's happening here in the uk.

I think that, Alan, this question of whether or not people have the right to privacy is a question that needs to be brought more public and discussed more publicly. Because I think most people in the United States at least just assume they do have the right to privacy. But there is a long arm of legal argumentation that there is no such right to privacy in the US Constitution that some states do have, some US states do have the right to privacy in their constitutions, but that the United States constitution does not have it.

Um, this is a really, But guy, there, there is an amendment bill of rights, undue search and seizure and, and, and, uh, due process clauses that you, you do have rights. I mean, they might not call a right to privacy. Oh, Yeah.

But they're not, they don't have to do with privacy. So then in other words, It's your right to Property. The circumspection around It comes out of a right to property, right?

That's your Property. I'm not sure there's a right to property in the constitution, UE search and seizure. I get the, the, you know, what, what had created the FISA courts, what created the situation where there was a process, however, secret before, you know, uh, doing surveillance, which is not something pursuant to a criminal investigation, it's just surveillance had to do with the, the principle that if it's, if a US citizen could be surveilled, could be spied on, there should be a process to ensure that that's not just done, you know, willy-nilly.

Mm-hmm. But there, there is maybe no Probable cause is, is the term, right? The constitutional foundation for that.

And I don't know how the UK law works. I think that is, I think you've, you, you've hit on exactly the main issue here, which is outside of the process of courts and adjudication and all that other sort of stuff where there's suspicious suspicion of a crime or a lawsuit or any other, outside of all of that, just as a general rule, should the government be, any government anywhere be allowed to simply spy on anybody? Yep.

So bega, you're talking about a very US specific probable cause, undue search and seizure, you know, these are cons, us con UE process itself, very US centered view now happens to be the UK may in fact have a more evolved system of that than we do. And Then no constitution, however, No constitution, but they have their common law, not A written constitution. Yeah.

They have their common law. They have a longstanding, you know, going back to the Magna Carter of, of rights of individuals versus the monarchy, you know, the government. But what happened?

And, and so let's assume the UK has US style safeguards in place, right? To show probable cause before they would do such a thing. What happens to the next country when Libya wants to do it, or Syria or, or North Korea or whatever.

There's a lot of, there's 200 and something countries out there, right? And that I, you know, you, you're gonna start picking which countries really do have probable cause, which ones don't, and that's the ones I should do it to. If you're in Apple, you can't be in that position.

You don't wanna be the arbiter of which country is, is really doing it right or wrong, right? So I think Apple's tried to take a, a smarty pants kind of excuse the term, but a smarty pants kind of thing saying, you know what, we don't have the ability to do it. It's encrypted and it's at our hands.

And now the UK's coming in and saying nonsense. I want you to build that back in there. I want that.

Yeah. So, so, so here's the second step, right? Which is that a DP, the, the, um, the, uh, encryption and protection data protection technology from Apple is not enabled by default.

You have to go in and positively say like, I want this on my system. Um, but essentially it's kind of like Apple has invented or designed or created something in the UK saying, oh no, you can't even have that. You can't offer that here, right?

Because that's Really the, the, that's the issue Here. That, that, but, but, but I don't get it. Like I still don't get it.

Apple doesn't want to be the UK If they have any process at all, but for any specific case, they can run through whatever process they have to compel, you know, discovery or whatever the word is of whatever's been protected. And Apple doesn't have to have anything to do with it. The the end user does, but the end user won't give it to 'em.

If you remember back to, and They go to jail, Remember when Peak, But if I have like a terrorist situation, I can't just call up the End user. Well that, that's what happened in nine 11. Sharif Khali or whatever his name is, isn't giving it up no matter how much we water tortured him.

Um, but that, but, you know, go back for, let, let's drop the politics for a second. Go back to when PKI first came on the scene. You guys are all of an age, you remember that was one of the cool things about PKI is once I set up that public private key, no one, no one could get to that without me saying, okay, apple, Google, none of those people stood in in the way it was my encrypted data.

And that was why that was one of the big draws for PKI one of the big. Yeah. And, and that's you, you're hit.

That's what it is. 'cause Mike, um, uh, in a terrorist situation, if the terrorists are dumb, they're going to get caught. If they're not dumb, they're gonna use PKI or whatever the modern equivalent is, and Apple, Google, whoever, you know, who cares.

The, the, the information will still be encrypted end to End. And I think to a certain degree, apple and Google, wish we'd go back to that and they get, but Yeah, my first reaction to the UK doing this was, this is dumb, but it was just a gut reaction. Now I'm coming back to that.

It's kind of dumb. What are they trying to do? They want Apple to build it.

Now that Silk Road is back. They just, you know, just everybody can just use, you know, find some, some hacked encryption method on Silk Road if they wanna, Until, until, until, uh, quantum breaks that. But who knows?

Oh Man. I was gonna mention Quantum. Well done, sir.

All right. Hey, we're gonna take a break. Let's come back and talk about, uh, HoloLens and Microsoft, you know, pushing that off the table.

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Hey folks, we're back. We're gonna shift the gear a little bit, but we are now going on with the continuing saga. What happened with, uh, Microsoft HoloLens, the latest is that they have taken the HoloLens that they were selling to the government and the military and shifted it over to an outfit called Andro.

Um, I guess they will service that particular market. There are other niche markets that are using these headsets for various training use cases, but Guy, it seems like the notion that, um, really in these virtual reality headset things are gonna become a consumer product. Is that dead at this point?

What's going on? Well, uh, so this is really interesting, right? When we talk on this show about, um, the, uh, Microsoft sunsetting, uh, uh, um, what, what it HoloLens two, um, uh, I, my reaction was Microsoft's got so mu I mean, their, their core strength is really in the business market and the enterprise market and, and public sector too, actually.

And, uh, there's so many commercial and, and, and industrial applications to augmented reality or virtual reality. I don't get it. It doesn't make sense to me.

And I speculated at the time that, um, that HoloLens was being run outta the consumer side of Microsoft and, you know, is, uh, one, another one of these Mars and Venina situations where they just didn't know how to market it into the business and public sector side. And so now we come all the way around here, and we, we find out there's some, again, I'm gonna speculate, there's some enterprising sales scheme over at Microsoft that in 2018, so quite a while ago, um, went and sold, uh, augmented reality, uh, to military, which is just about the most obvious application. If you've ever played a video game ever of augmented reality, um, would be military uses.

And so this same sales team or the delivery team on it was like, wait, you can't shut this thing down because, you know, we, we, we, we got a military contract here, we got the nine figure deal, blah, blah, blah. Okay, so what do they do? Well, Microsoft still wants to get rid of it, so they're giving it, well, I'm not giving it, they're selling it to Andal, which by the way, um, uh, how many of these, the Lord of the Rings named, uh, secret Military, whatever, we have planter, we have Andre, I, there must be a bunch more out there.

In any case, it both validates my contention that these things are, um, really best in industrial or public sector or commercial use, um, that Apple's own approach is, which is very consumery, is, um, you know, bound to, you know, fail or be so niche. It's whatever. And then we, I think we have a new one from Google, if I remember right.

There's, you know, there's a fair amount of new activity going on here, but that in the end, kind of like, you know, uh, driverless cars and, and driverless vehicles, it's really commercial that's ultimately gonna build that market. This is one particular contract in one particular instance. Um, but, um, Microsoft has a long history of supporting in and enabling and selling, uh, software into the US military, um, knows how to do it.

Um, I imagine there's a lot of personnel who are gonna move over from Microsoft over to Andrew to help them out with this. And, uh, in the end, I, I, was there a licensing agreement here as well? I mean, they're not just simply selling the technology wholesale.

9 billion. Well, it's, it's the startup course of the program. Theoretically, when you buy more, it'd probably get cheaper per, per per headset.

Yeah. And, and come on, Mike. This is the, this thousand dollars two Up.

Let me, let me, let me, let me dive in here, guys. You do it. You do it Personal time.

All this Andrew, all industries. This isn't some kind of dummy corporation set up in Budapest, Hungary, is it? Correct?

No, no. I think Andrew from longstanding Military by soldiers one day. Is it like most sod operation?

What are we talking here? No, no, they're, well, They're well known defense Contractor. Okay.

That was number one. 9 billion to the US Department of Defense? You know, this is one of the things that I, I really think we, Over six years incidentally, just 'cause this started in 2018, continue.

The real issue is, you know, a lot of us are ringing our hands about, or or joyfully clapping our hands in glee about what this do dodge, whatever Elon Musk and his merry band of Renegades are doing, but they're doing it on the civilian side of government for the most part. And, and here's the reality of the US government expenditures and, and budget when you take Medicare and Social Security and the Department of Defense budget and all its related agencies and all that good stuff, right? I think something like 80 to 90% of the US budget on those three things, Medicare, social security, DOD, everything else is peanuts.

So you are sitting and, and, and trying to crack peanuts here, but you're not going to really affect the trajectory of this thing unless you really hit where the, where the real money is. And no one's gonna stand. I don't think anyone, well, I should never say that, but unless you're willing to take, you know, some knives to some sacred cows, like a $22 billion virtual reality goggle set, you're never gonna, everything else is just peanuts.

And I think that's what's needed to be done here. I'm sorry, guy, go ahead. Can I pile on a little bit?

Yeah, no, sure. Go ahead. So somebody muted me, I don't know.

Who was it? Me? Uh, yeah, no, it was me.

Um, so 22 billion, roughly 21 point something billion. For how many? 150,000, or is it 300,000?

I don't remember. No, I don't think it's, I think it's 120,000. How many headset?

120,000 headsets. Okay. Alright.

So first of all, it's over, like I said, it's over six years, not counting 2025. But I think, Mike, what you were scratching your head about is, you know, dude, that's like $170,000 per headset. That's More than the apple.

That's lot of money per headset. Headset. That's more than the Apple headset.

Little bit, little bit. That's why I alluded to the famous $2,000 toilet or whatever, because the, when, when, whoever it is the, the, uh, some defense agency probably that calculates the cost of things and that figures out what the right amount is to pay. And like all that other sort of stuff.

They put every single bit into these programs. So it's not just the manufacturing, it's the development, it's the support, it's the training, it's the this, it's the, that over and over again. And when you add all that stuff, uh, like, you know, the $2,000 toilet, it turned out that the equipment itself, that piece of the toilet itself cost a hundred bucks or whatever, and all the rest was the assumed lifetime of the toilet maintenance installation, the hours for the personnel, other sort of stuff.

7 million or $17 million or whatever. It's just not how it works. And especially for, like Alan said, essentially brand new technology that's supposed to be used on the battlefield, but, or something like that by people or who are flying things or like whatever it is that they're doing, there's a lot of expense and investment that needs to go into that.

And unlike a private company, you don't write it off. You have to account for every bit of it, all self-contained what's in the program. So that's how I unscr your head if it's possible to do so much.

Fair enough. Well, look, maybe we could use the Apple headsets. They're a little cheaper.

Um, anyway, well, The Apple headsets might wind up with that commercial, with that commercial. I mean, I, I, I really, you know, maybe I'm just p*****g into the wind. Oops.

No said the s We're, we're, we're not a family Shark. Maybe I'm just open smoke or something. But, but I think that, that a lot of the action, lot of the real action, the real market making that happens happens with these things happens through B2B commercial applications, public sector investment, that sort of stuff.

And we tend to get distracted by people walking around wearing goggles instead of just like seeing reality around them with their own two eyes normally. Um, it's very distracting, but it's just, you know, it just points to the kind of innovation and creativity, um, that helped, you know, the capitalist world go around. Mm-hmm.

So just to be clear, Alan, do you think that the level of scrutiny being applied by the Doge set is gonna be applied to these military Contracts? Whoa, whoa. Hell no.

Those are sacred cows. It's sacred cows. It might be applied to potential blue origin contracts.

That would be interesting. But no, he, he wrote his check. He wrote his check.

Anyway. Well, so, so did we discuss on this show or I, maybe I wasn't on it on the, um, the 50 million, 200 million or so, 400 million going to Tesla for all electric Cyber trucks, military vehicles, the State department or something? No, It was military.

It was for military, it was for electric, uh, Cyber trucks, Tanks or something like that. Cyber trucks for the, for diplomats, I think. Yeah.

I thought it was armored cyber trucks. No, No, no. This is Different.

That was a d is different this 400 million. Oh. Anyway, look, we're overtime.

Put a few Of those together and you got a viable business Almost. Well then you gotta whatever. Don't get me started.

Just a quick parental warning. We do have strobe lights in adult language, so you're warned. Uh, Mike Guy, thanks for joining today on The Gang.

We hope you've enjoyed this. Happy Wednesday to you. Uh, we will be back tomorrow with another Textron gang.

I think we also have a, uh, a Tech Field Day presentation on live today on Techstrong tv as well as the rest of our tech strong TV lineup. So check that out. Hey, you could download the Techstrong TV, mobile app on Apple and Google if you'd like.

Go check that out. Our O-C-C-O-T-T app is is coming soon as well. Um, Is that encrypted or not?

You know, only if it has to be. Uh, but until that, thanks, we need the Peanut gallery. Here's another episode of Text Joint Gang.

Have a great day everyone. We're out.