On this episode of The Six Five Webcast, hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The handpicked topics for this week are:
- AMD, Intel, Tech Titans Extend X86 ISA
- Lenovo Tech World 2024
- Amazon & Google Go Nuclear
- Adobe Max 2024
- Color Me Amazon Kindle
- TSMC Q3FY24 Earnings
For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.
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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Transcript:
Daniel Newman: Hey, everybody. We are back. It is Friday. This is The Six Five, episode 237. Pat, it’s been a great week. On the road, flying around the world, coast to coast for me. I went west coast, I went east coast. Now I’m on the south coast. It’s race weekend. It’s F1 and sadly my bestie not going to be there with me. How you doing buddy?
Patrick Moorhead: I’m doing great. Just got in, I think, about three hours before you did from Seattle. Yeah, man. I’m sorry I’m going to miss you, but I got to jaunt down to Palm Beach to go to a non disclosed event down there.
Daniel Newman: Mar-a-Lago? Where are you going?
Patrick Moorhead: Well, it’s near Mar-a-Lago. I can’t confirm or deny that I’ll be going there, but anyways, I’ll be jetting down to Florida in a couple hours. I still have to pack, dude, and do my pill packs and get ready and we’ll be on the road for 10 days. I leave Palm Beach at about 4:00 AM in the morning to jet to Maui to the Qualcomm event. Hopefully the Wi-Fi is good on the plane so I can watch the big Cristiano keynote, but hey, I’ll be there in the afternoon. We can fist bump. I think we’re going to get Cristiano and Nicole on The Six Five.
Daniel Newman: Yeah. It’s going to be great. It’s going to be a lot of fun. It’s always great to work incredibly hard against the backdrop of Maui. It’s always funny. I tell people like, “Oh my God. You’re going to Maui.” I’m like, “I’m going to work.”
Patrick Moorhead: Literally it’s a different nicer place to work. The Wi-Fi is never good there, so it’s kind of frustrating. 5G is not good there. The connectivity is. It’s the back hall. Qualcomm has that place pretty much wired with AT&T, Verizon and T-Mo pops pretty much right on top of the hotel.
Daniel Newman: Yeah. Totally. It is a great place to work from a standpoint, it’s relaxing, it’s calm, but it definitely still is a work week. It’s been a whirlwind. I’m going to have been home about 12 hours in a 10-day period of time and it just kind of ’tis the season, my friend. But, speaking of ’tis the season, I mean, it was a big week of tech news, Pat. And this week we cover six topics, five minutes each, on The Six Five, but there was probably about a dozen, at least, meaningful tech moments this week and we won’t be able to get to all of them, but we have been on the road. There is a lot going. There’s a lot coming up. Let’s just kick off the show today.
First of all, just know this is for information and entertainment purposes only. Please don’t take anything Pat and I say as investment advice. We’re going to hit on Intel and AMD. Pat, you and I, big moment. We’ll talk more about that. I’m going to save it so you can share it again. We’re going to talk about Lenovo Tech World. We spent a few days there and then you stayed behind for, there was a big analyst conference. Amazon and Google going nuclear. Adobe had their Max conference. What happened at Adobe Max? And then, we’ll talk a little about what’s going on with Amazon devices and Kindle. Amazon’s getting a little extra play this week and then we’ll hit TSMC earnings, not just because we like talking about TSMC, but it really just is such a bellwether of what’s going on in the chip space. So, Pat, I’m going to call your number first. Get this party started. AMD and Intel, what happened this week? Are they collaborating?
Patrick Moorhead: Yeah. A little backdrop here. So, gentleman named Jerry Sanders and Robert Noyce used to work for a company called Fairchild Semiconductor. The two of them left. Jerry was in sales and Robert Noyce was product kind of engineering. And, Jerry went off and formed AMD and Robert Noyce formed Intel and it’s pretty much been a hate-hate relationship for close to 50 years. It was fun when the two of them were publicly sparring. Jerry Sanders actually hired me into the company in end of 2000, but I was in and around Intel for the previous 20 years as a product manager at Compact computer, the number one computer maker and server maker. But, for the first time in 50 years, the CEOs of AMD and Intel were on a video together and that was The Six Five video and got pictures together. That was in the context of The Six Five. So, history making.
So, a little bit more backdrop. Every piece of software speaks a certain language. It’s called an ISA, an instruction set architecture. There is x86, there is power, there is ARM and even MIPS out there. I’m sure there’s one other historical one, oh, RISC-V, my gosh. So, each one of these speaks different language and they also have extensions for acceleration. What happens if you “fork” an operating system or an application, is you have to write a separate piece of code depending on the fork. And currently ISVs have forks for AMD and Intel so they have to carry two sets of code. The base set is obviously compatible, but when it comes to things like security extensions like AVX and AMX, it is not consistent, even some memory handling stuff. And, the industry wanted it to be easier. And, to the credit of AMD and Intel, they have agreed to collaborate on those things so their ISVs and partners don’t have to do a lot of work.
And, the other backdrop is that ARM is getting a lot more into the x86 space into personal computers with Apple and Qualcomm and soon to be NVIDIA MediaTek and also on the server side, merchant silicon providers like Ampere, but more importantly the homegrown silicon at Amazon, Microsoft and Google enabled by companies like Marvell. So, with that said, there was a huge announcement coming out. It wasn’t just AMD and Intel, it was the CEOs of Dell, it was Broadcom VMware, it was Satya Nadella, it was Meta, it was Google and Red Hat CEO. And, I’m sure I’m forgetting a bunch of other ones but to be determined on what the announcements… I don’t know if it’s going to be public. I don’t know if we’re going to get any more information outside of this, but instead of Intel and AMD kind of working through their ISVs and partners to come, it’s going to be AMD and Intel actually sitting in the same room with those partners to determine the future of x86 and instructions.
Two things though, Daniel, that I still can’t get underneath is the press release talked about x86 growth. We asked the question to Lisa and Pat, “Does this mean that they’re going to get bigger into automotive? Does this mean they’re going to get bigger into smartphones phones?” I just don’t know. And then there’s the comment on chiplets. I still don’t understand why that was part of that. I think we asked point-blank, “Does this mean that, okay, Intel and AMD, you guys might license a chip IP kind of like a CPU IP, kind of like ARM does?” But, to be determined, very provocative though.
Daniel Newman: Yeah. This was a pretty big moment, Pat, and you and I were lucky enough to have them on our platform to talk to them. And, I’m not sure that people realize what a monumental moment it actually was to have Lisa, Pat in the same room on the same video at the same time. But it was really a lot of fun, Pat, to be part of that. You did a great story on Forbes digging into this. I think that was probably the best color I saw. I had a lot of press calls about it. It’s funny how people don’t seem to fully understand the part that you explained in the beginning, how complicated it can be going from x86 to x86, and I think opening the sort of – there, making that simple, which by the way was very intentional, I think, in many ways it created friction from moving from one to the other when that was the only game in town.
Where this cast a mark for the industry more at large though is that we’ve hit the inflection where the power of ARM and the power, and this is indirectly in video too, is becoming so much more significant than the risk of them kind of cannibalizing each other’s market share, that they’re willing to collaborate more to sort of reduce some of that friction, improve the experiences of people on the x86 platform and basically try to protect their current market leadership, Pat. And, you asked about growth, well, it’s probably not going to come from the core businesses because, what do they have? Over 90% of the server market and they still have over 90% of the PC market. Now this is changing. And, of course the AI servers, AI doing more stuff, inferences, XPUs, these new kind of chips are all going to take workloads and take them off of potential x86 and move them to other potential platforms.
And this, of course, it’s the existential risk that x86 is facing right now. So, Pat, I mean, it’s a little defensive, the move, in my taste. I think it’s a little defensive, but I do think it’s the right move. I think it’s the necessary move. And, of course we’re going to see how this all plays out. We’ll see what real value it brings. We’ll see how it continues to manifest itself in the community, Pat. But interesting times, to say the least. I think every part of the country I’ve been in this week, I’ve had somebody say to me, “Oh my God. I can’t believe you guys sat down with Lisa Su and Pat Gelsinger together.” Maybe only more strange would’ve been the original founders that you mentioned sitting down for a conversation like this. But a lot of fun, Pat. I really enjoyed doing that with you. Maybe at some point we’ll have Lisa, Pat, Jensen and Rene on a video together. Who knows?
Patrick Moorhead: Yeah. And just to put the numbers out there, so Intel still has 70% of the data center server market. AMD has a little over 32% of x86. And, this would’ve never happened if AMD weren’t in the power position that it had, where it has upwards of 80% market share at hyperscalers, like Meta and probably 40% to 60% overall at hyperscalers and hyperscalers write their own code. They don’t like the fork either. And VMware live migrations, all that stuff hopefully is out of the window here.
Daniel Newman: And, to be clear, I was talking about combined market share. I wasn’t talking about any individual. I just meant they still have the vast majority of all data center CPU. Now, if you talk about all data center computing, it’s not 90% anymore because so much AI compute is going to change the way that number is going to be constructed long term. And in PC’s ARM is just starting to really… But, you’re hearing numbers like, in the next three to five years ARM believes it could be at 50%. That is-
Patrick Moorhead: Yeah. That’s right. And that’s the combined Apple plus Qualcomm, MediaTek and NVIDIA coming out. Yeah. Rene Haas made that declaration at Computex this year that you and The Six Five attended.
Daniel Newman: We sure did, buddy. All right. Let’s hit the next thing. Lenovo Tech World 2024 and they also their global industry analyst conference. Pat, this is one of those cases where, how much time do we have?
Patrick Moorhead: Yeah.
Daniel Newman: There’s so much to talk about. Now, Lenovo is an interesting company and you could really kind of hit it from many different angles. They run their business across three different kind of major categories that they measure themselves by. They’ve got their IDG business, which is their devices group, and this is the biggest part of the business. It’s the PCs. I’m on one right now by the way. They also make smartphones. It is the infrastructure ISG group. This is the part that builds big NVIDIA servers and of course traditional x86 like we were just talking about. And, then they have the SSG group, which is kind of one of their growth engines. Well, actually both will add to their growth engines for the future, which is diversification and of course implementation, being able to provide more services. We spent the better part of a couple of days there and we heard across the board… Now, I’m going to surprise everybody out there when I talk about what they talked about at this event. So, nobody would believe me when I say that Lenovo spent a lot of Techworld this year talking about AI. We had to-
Patrick Moorhead: He’s funny. He’s joking, fans out there.
Daniel Newman: Sorry. People don’t get me. You get me? No, but a lot of it was talk about AI and so you can kind of categorize what they were focused on. First of all, very focused on being the manufacturer that has selection and choice across device platforms for AI PCs. It was the start of our event, the start of the keynote with YY. By the way, great picture with him, pat, you guys looked great together, teamwork. Was kind of marching on OEMs, marching on silicon providers, marching on all the right players, whether it was Microsoft, whether it was AMD, whether it was Intel, whether it was Cristiano Amon from… I mean, by the way, star study cast, right? Mark Zuckerberg. You and I were watching Mark up in the green room while we were getting ready to chat with Pat and Lisa but they had this star study cast of hyperscale and leading silicon providers on a set.
And, I think one of the things that I came away with is, look, Lenovo is committed to having choice for its customers right now. And, I think this goes back to why the collaboration’s going on. This also goes with Intel AMD, the impact that Qualcomm’s expected to make. I think last week you and I, on the show, talked about this potential media tech and video partnership and Lenovo is incredibly good at being able to offer diverse platforms across the PC space. So, that was something I definitely took away. Got more positive feedback from the Microsoft camp as well. And, we know how important that’s been marching out at all the different events.
Now, the second part of this for me was how the company’s attacking the NVIDIA situation. And by the way, I apologize, I don’t have it right in front of me, but they came up with their version of the NVIDIA, Lenovo AI on-prem hybrid offering that has been kind of marched out one by one across the Dell AI factory. And, I think you looked at me and you kind of said that the naming on this one is very representative of Lenovo and its Chinese heritage. It was like a very long sort of explanation of what this product is as opposed to maybe Dell coming out with AI factory. And, what it was is it was all the layers. And, of course they’re layering in traditional compute infrastructure, NVIDIA compute infrastructure, all the networking routing, and then they’re saying, “Hey, we have services and solutions here. And, again, we have use cases,” Pat. And, I think that’s the key here, is they’re basically stacking it for use case.
And, this is something, by the way, we’re going to spend a lot of time on. One of the gaps, and I’m going to kind of end here, is they have this interesting services and infrastructure business, very exciting in terms of what they’ve built. Growth has been good. Profit’s been a little lower over the last few quarters. They’re obviously trying to drive back to profitability, but everybody seems to be kind fighting this battle for enterprise relevance. And, why do I say this? Because Lenovo is really good at getting to the hyperscaler, actually has this very kind of similar ethos as AMD, has been extremely successful at getting into a number of these hyperscalers, which has grown their infrastructure business successfully. But, a lot of AI and winning the AI battle, especially if you’re in one of these OEMs, is about solutions development. And so, the service and solutions group is really trying to find, “How do we serve manufacturing, healthcare use cases, finance use cases?” So, that they can convince the end customer to be asking for Lenovo.
I think about that little Lenovo jingle, Lenovo, Lenovo. When you come into the room, are you asking for Lenovo? Because the real risk of all these OEMs and all these cloud providers now is that there’s so much choice. I spent time with IBM this week. They’re saying, “Go with Watson.” Amazon says, “You can do everything in Bedrock.” Dell says, “Use our AI factory with Nvidia,” HPE and Lenovo now have similar offerings. Choice is the key. Use case development and implementation support is going to be the big X factor. That was one of my big takeaways, by the way, from IBM M and that’s not a topic today, but is that they’re consulting business is so important right now because the technology is horizontally so competitive.
So, this is probably the biggest thing I think as an opportunity for Lenovo is how do they build the right use cases, create the right solutions for customers, and then leverage their ability to deliver product hardware at scale and be very price effective and efficient. And, I think that’s something that we will see in the coming months from Lenovo. So, a lot more. Cool partnership with FIFA. I had to mention it because you don’t care, but I’m a soccer guy so I was super jazzed about that. I’m going to the race with them today. So, I’ll pause there. Pat, like I said, I could probably talk for a long time. I realize I only covered this much of all the stuff that they announced.
Patrick Moorhead: Yeah. So, this was the most sophisticated Lenovo I’ve seen ever. What you would normally expect is for Lenovo to come out and pretty much talk about hardware and maybe what they’re doing with a few partners. But what’s very differentiated here with Lenovo is the software it is creating. So, at the very top level for AI, they introduced this thing called the Lenovo AI library, and that’s meshed with NVIDIA NIM blueprints. And, what I mean by horizontal example, legal review. They talked about essentially translation, negotiation, AI review, throwing out, again, kudos to them for bringing out hard numbers. We have not validated those numbers, but it was good to see. 45% increase in accuracy, 80% improved data reuse on this AI legal assistant. They had an AI marketing assistant as well. So, what that is doing is wading into the enterprise SaaS area. Super cool, super unexpected. And then, on the consumer side, it’s this product called Lenovo AI Now where you can do metasearch, you can do rag implementations, and they had this really cool… I think for education. Lenovo is really big in education where you could go in there and, you record a classroom, you throw in presentations and notes and it’ll spit out prompts.
Daniel Newman: That was really cool. Really cool.
Patrick Moorhead: No. I know. And this is created by Lenovo. This is Lenovo branded, not co-branded, not… So, super impressive. Biggest challenge for Lenovo is getting it… They’re super strong in small and medium business on infrastructure. They are big in PCs in the enterprise, but when it comes from infrastructure, they need to be doing a lot more for enterprise. They need the sales, they need the content, they need the proof points and a lot more interaction with CIOs.
So, anyways, I left, super impressed. And what’s so funny, although I was questioning… This is the longest I’ve stayed at any event, Daniel, the entire year. Came in on a Monday and left on a Thursday and that’s a huge time investment for… I run a company, I have 10 analysts but always, the culture is so strong and so good. At dinner, executives aren’t hiding. You’re bumping into them at breakfast, they’re sitting down with you, you’re having hallway conversations. YY is walking around and his L-zeros are walking around the environment at dinner. At dinner, YY personally comes to every table to come and take pictures and shake hands. And, I was super surprising and I hadn’t seen YY in a year. Last time was at F1. He remembered my name. Funny, first thing he talked about was The Six Five. I’m not kidding. And I’m just like, “Wait. He’s never been on The Six Five. How does he know The Six Five? And, there was nobody whispering-
Daniel Newman: Let’s fix that. Let’s fix that.
Patrick Moorhead: There was nobody whispering in his ear at all. And I’m sitting at the table. They sat me right next to Luca who runs the entire devices business. So, anyways, just the Lenovo experience is really good and it’s just kind of an affirmation of how their culture spills over into pretty much everything they do.
Daniel Newman: Yeah. I like that, Pat. I do really appreciate the access. They really don’t hide. They do. And, I think they’re going to have a lot of competition in some of these sort of root-level softwares that sits in there. I mean, libraries and devices. Are you going to build your own? Are you going to use a NIM? Are you going to use a Red Hat, OpenShift with… But, the point is they’re there. They’re in the game and that’s been impressive. I don’t know if everyone expected that. So, hey, Pat, let’s talk about taboo. Let’s talk about nuclear power.
Patrick Moorhead: It’s not taboo anymore. Even after nuclear is green. What are you talking about?
Daniel Newman: I don’t know. I thought it was taboo. I was told that one time when I was a kid and then I never… I thought I didn’t want to live by that big reactor. That’s what I was told.
Patrick Moorhead: Yeah. Of course. They wanted to scare everybody until they realized that–
Daniel Newman: You can’t power AI with windmills?
Patrick Moorhead: Coal-fired burning plants are spewing toxic fumes into the atmosphere and solar is great until it snows and they get covered. Same thing for windmills. Our windmill’s all locked up here when we had a huge freeze. But, nuclears are back in power, baby. And why is that? Current estimates say that, right now data centers take 1% to 2% of global power and by the end of the decade, you’re looking at 3% to 4%. We did not do that analysis, but it looks like it is true. And, the biggest driver of that are these power-hungry GPUs, right? Cranking out these large training runs. So, nuclear is in. It was almost like the entire industry was waiting for this, right? And, what happened recently with Microsoft and Google, right? They’re both making huge investments into SMRs, which is basically small nuclear reactors. And, if you remember, you had Microsoft and BlackRock that closed on a $30 billion round going into a $100 billion round. It’s pretty amazing. You and I were both on… I was on Fox Business and Fox News, which was kind of funny, but they were out at Three Mile Island going through pretty much-
Daniel Newman: Pick a MAGA hat, dude.
Patrick Moorhead: Oh, get out of here. God. Good lord.
Daniel Newman: I’ve never done Fox Business.
Patrick Moorhead: Oh, yes you have. Well, I did it on the auspice of Fox Business and they slid my content into a Bret Baier segment and he’s pretty centrist.
Daniel Newman: Yeah. He is. Actually, yeah, they kind of look at him as a… If anything actually… Anyway, no politics here except when there are.
Patrick Moorhead: Yeah. Exactly. But anyways, it just shows you just the how quickly stuff moves in tech, Daniel. And, from nuclear taboo, protest and nuclear good and everybody within two weeks just dropped the hammer on this thing. There had to be some wink, wink, nudge, nudge going on with the government. This has a lot to do with China competitiveness that, in the last decade they put up 72 nukes. We put two in Georgia and there’s one in Western Europe. Germany shut theirs down. France didn’t, but they didn’t build any new ones but it just shows you a couple of things. Also begs the question on GPUs versus accelerators. If accelerators are more efficient, which they are, why aren’t more people doing stuff with accelerators? That’s it for me.
Daniel Newman: Oh, my gosh. I said a tweet yesterday, I don’t know if you saw it, where Arvind Krishna told the group that in five years we’ll have these super efficient ASICS that will be 1% of the power consumption of the GPU today. Now, there’s a lot behind that. I’m not going to tease it all out. We’ll save some of that for later but, Pat, Three Mile Island is reopening, and that’s Microsoft and then Google and then Amazon. I mean, the shoe has dropped. They all have got to get behind this. There’s not enough power on the grid for what we’re going to do here just based on the GB200 order book right now. And, when all these things get stood up and implemented, we’re going to start to see, and we’ve talked a lot on the show about Northern Virginia hitting the peak of it.
Well, that’s data center or central world and this interesting technology, these SMRs. I mean, the thing is we don’t know quite yet how well this will actually work. It’s a not totally unproven, but it’s not something that’s been done at scale. So, there’s still a lot of question marks around this technology, but the industry is going to and has to make a pretty sizable investment, Pat. I mean, there isn’t another way to get there. Interestingly enough though, we are also going to continue to deal with these diametrically opposed AI and the power it’s going to consume versus all these companies. I mean, look, Pat, you and I kind of always said we want to get back to more practical sustainability. We want to get more-
Patrick Moorhead: Always. We have been super consistent on that. Not that we like know coal fire putting crap in the environment, but it’s just like we need to find the alternative and somehow nukes became taboo. How on earth did that happen? I know exactly how that happened. It was environmental groups who quite frankly are anti-commerce and that’s not a political statement. That’s a fact. That is just a fact that we’re consuming too much, therefore we should cut off the ability to consume.
Daniel Newman: Yeah. Well, yeah. Certainly that is the case. And so, we’re kind of battling these opposing forces right now and these forces essentially mean we have to go down this path. We have to make this investment. We have to do this to stay. And, to your point, so China has all this capacity. They don’t have necessarily all the silicon innovation. We have all the silicon innovation and we’ve failed with the infrastructure capacity to actually handle it. This is the path to get us there. It won’t be windmills and waterfalls. It just won’t happen. But the industry as a whole does have to sort of do this backpedaling exercise right now while suddenly all their green 2040 and 2050 goals are going to get pushed out. Carbon footprints are going to be on the rise. Nuclear can help offset this to some extent, but the amount of power it’s going to take to run what we’re talking about as AI is palpable.
And so, it’s exciting times. It’s interesting times. We’re going to have to see how all this materializes. By the way, there is an energy trade back. There’s an energy trade for the market. Again, not financial advice, but I’m just saying that if it’s things like silicon carbide, things that can make things more power efficient, but there’s also going to be a whole tray in the invertive. These companies like this and these companies that basically are focused on cooling technology and these companies that are focused on powering more data centers. Pat, we got a few more topics. We don’t have a lot of time. I’m going to keep this going. These last few topics will probably be a little bit quicker. You and I always do that. We’re front loaders is what we do. But, Adobe Max 2024, we both had people down there in, I think it was Miami or Miami area in Florida. I like when events go other places than Vegas and San Francisco. It’s nice to see other parts of the world at times.
Patrick Moorhead: Bestie, I’ll be right back. Hang one sec. Keep going.
Daniel Newman: Yeah. No problem. You do your thing. So, Adobe had their big… Max is the creator event. So, that’s what they focus on at this event. And so, of course in the era of creator or the era of creativity, AI is front and center. So, the company basically was looking at and launching new things. Remember, this is the company that’s got Firefly, the image generation, and I’ll talk more about what they’re launching, but they’ve also had some critics challenge how they’ve built their models. And that was a topic that’ll continue to be a concern as creators have been the bread and butter of Adobe but at the same time, creators are facing the challenge of… Talk about an existential risk. Why do you hire a graphic designer or a creator when you can press a button and generate an image of The Six Five dudes looking great on camera in the moment.
And so, that’s a little bit of what’s going on. So, making technology available, embedding it in their tools, and of course trying to manage the risk is a big focus of what’s going on with Adobe, Pat. Probably the biggest thing they launched was this new Firefly model. This and the video. So, they’ve basically created a new Firefly and generative video is now part of the company’s portfolio. So, the beta model for generative video is in the app. Now, again, this uses a ton of cost, a ton of credit. So, when you’re thinking about generating video… And we saw it with Sora, we’re starting to see it come out other places. Noe, this is going to be a big trend line, Pat, but it’s also going to be expensive and it’s going to be resource intensive. This is why we need all that energy. They’ve got Project Neo, which was launched. This was a new app that allows designers to develop 3D graphics before pushing them to Illustrator. So, just streamlining workflow. You had a new generation of Frame IO, a new gen studio for performance marketing. It’s a little different than the traditional creative stuff, but this is where you tie together the content and the results.
So, they’re trying to help companies figure out more what the outcomes are of the content that’s being placed across the internet. And, then a few other enhancements on things like Lightroom, where you can generatively remove things through text. Like, “Hey, we want to take that out of the picture.” “Pat, I want to take these terrible lights over my head out of this image, take the shine off my already shiny head.” Being able to do that. So, this is kind of a continuation. You and I aren’t super focused day in and day out on the creative stuff, but let’s face it, the ability to create… I mean, Pat, when is a world where we have Agentic Dan and Pat’s that can do podcasts all day long on every new launch because they’re able to use RAG, use fine-tuning, use generative video, and eventually, dude, you and I can be watching races, podcasting at the same time and having our metrics managed because of what companies like Adobe are up to.
Patrick Moorhead: Yeah. You did a great breakdown on the announcements. One thing I want to reinforce here is that Adobe is the entrenched vendor for creative on the enterprise side and companies like Salesforce are the entrenched vendor on the marketing management. And, what’s really cool about bringing these two together with marketing and creative, it is just such a natural. It’s something that Salesforce just doesn’t bring. And, on the performance marketing part, adding the Gen AI goodies to that and then combining that with what you’re doing with Creative Cloud is a very, very powerful combination.
And, what’s interesting is that something Salesforce doesn’t have is the ability to really have that entire pipeline there. And, creative people, a lot of the times, are put in the position that they have to do marketing. Trust me, I know. I ran a very large corporate marketing group at AMD a while back, and I had funnel management too. I wish I had tools like this that could go one to the other. They did a pretty good job rolling out big customers like Gatorade, Mattel, Oliver, Red Hat, and IBM. They did a big IBM rollout last year. I don’t know if the IBM results are public or not, but they are absolutely astounding at the amount of cost savings that the IBM… It’s an IBM consultant-
Daniel Newman: I believe it is. But, yeah. We won’t overstep. Leave it as public.
Patrick Moorhead: Yeah. But, it was absolutely astounding. Moving forward, I’m super interested to see when this starts getting into their earnings. Adobe really hasn’t seen a pop from this like you would expect. But, then again, neither as Salesforce, the big Salesforce pop has been around data Cloud as opposed to actually the Gen AI tools. And, when I mean pop, I mean, where it actually impacts the earnings. Same for SAP, Adobe, Salesforce. Probably the biggest company that’s had a pop so far has been ServiceNow, but I don’t know if that’s generative AI or that’s just creeping, being the system of experience across all these enterprise SaaS platforms. I don’t know, Daniel, you may have met somebody at ServiceNow this week?
Daniel Newman: Yeah. I spent time with some bigguns. I was with a few people. Andre Agassi and Steffi Graf.
Patrick Moorhead: No. Come on. Who from ServiceNow? Say it.
Daniel Newman: Oh, oh, oh-
Patrick Moorhead: Bill. Come on.
Daniel Newman: Oh, Bill. I’m joking. The picture’s on the internet. I was smiling. I was giggling. Anyways, he was very funny, very jovial this week. I also met Dan Lowe. He was there.
Patrick Moorhead: Wonderful.
Daniel Newman: Yeah. It was kind of like everyone’s name bag. I met the guy that founded Kava, the founder of Kava. I really like Kava, by the way. I don’t know if you’ve ever had it, but it’s healthy. It’s pretty healthy, actually. It’s kind like your-
Patrick Moorhead: They still use seed oil, so, no.
Daniel Newman: Nevermind. They’re terrible.
Patrick Moorhead: I’m out of there.
Daniel Newman: I’m kidding. I have no stake in that game but my kids like their food better than most. All right. Only have a handful of minutes left. I’ve got to run and deliver a keynote right after. I’m going to literally run off. That’s why I’m so fancy today.
Patrick Moorhead: You are very fancy. And, this is the third week in a row I’ve showed up in my workout clothes but-
Daniel Newman: Dude, you’re freaking crushing it, dude. Next week you’re going to do a tricep shot for everybody. I got to say, Pat, you’ve made incredible progress. What do you-
Patrick Moorhead: Hey, check out that picture that I put on X this morning of me as a fat pig about 14 months ago. It’s pretty so embarrassing. I can’t even tell you.
Daniel Newman: It’s good to reflect on what you’ve accomplished. All right. We got a few minutes. Color me Amazon Kindle. Pat, this one’s all you.
Patrick Moorhead: So, guys, we all knew that Panos Panay, right? He was the king of Windows and Surface among other things. Just passionate. So thoughtful. Takes everything that him and his team to put out as personal. He brings that into his keynote. Unfortunately, I could not attend in New York City, but he came out with a bunch of different Kindles here. First and foremost, I mean, Kindle is a single-use device and it has stuck to its guns forever. And, here’s the great part. You typically think of a Kindle as, “Oh, that’s a boomer device.” Guess what the fastest-growing segment for Kindles is right now?
Daniel Newman: Gen Xers?
Patrick Moorhead: Gen Z.
Daniel Newman: Oh.
Patrick Moorhead: And Gen Z, it’s kind of the anti-social media and is growing where you want to chill, where you want to have peace. And, Daniel, as part of my health comeback here, part of that is managing my stress. And, sometimes when it gets too high, I’ll pull up my Kindle and I’ll start reading and I’ll see my stress just go way down as I’m pouring through that. So, probably the biggest thing, Kindle, since its inception, has been black and white, but we now have a new Kindle and oh, guess what?
Daniel Newman: What?
Patrick Moorhead: Hello, color Kindle. I have one and I’ve had one for two weeks. How can I have one for two weeks if was just brought out in New York? Well, I get stuff early and I might be giving feedback to some of these folks but here’s the cool part. So, it does improve the experience in certain areas for me, personally. I know it’s not all about me, but maybe it’s about me. But, here’s a Time Magazine example, which-
Daniel Newman: I was in the Time 100. I was at the-
Patrick Moorhead: I know. You were at the dinner. Maybe someday you and I, maybe we will be on the list. The other thing, for kids books, it brings a lot of value and richness than are ever had before. The freaking page turns are so much faster and so much better. And I’m pretty sure this is because of a brand new media tech chip that they put in here. It’s very, very noticeable. So, it’s $279. I know some people are like, “It’s too expensive.” I got to tell you, man, an extra few bucks to have color to have a richer experience and it just has much faster page turn is great. They did deprecate Kindle Paperwhite without the buttons, which I like. We’re going to see how I like that but they brought a new Kindle Paperwhite, 25% faster page turns. Dude, we talk about battery life. Three months of battery life, okay? And, that is just absolutely bonkers, okay? I know we’re debating twelve-hour battery life out there on a PC. 30 days. It’s completely ridiculous. Entry-level Kindle, baby, $110. I mean, pretty much affordable for anybody in the western world.
And, last but not least, a brand new Kindle Scribe with a lot of generative AI features. Not just made up ones, but the ability to go in and do a lot of fancy tricks with note-taking, converting notes into digitally searchable and saveable notes. Also, redesigned display. White borders. The cool part is this active canvas. When you have a book up or something like that, you can actually take notes on it. It’s hard to describe it. You check should check this stuff out. So, Kindle Colorsoft available October 30th. Kindle Scribe starts shipping December 4th, and then you’ve got the entry level Kindle coming in around the same time. I want to use the Kindle Paperwhite. I’ve never used it before. I have been a PC note taker since Evernote was invented, I think, back in, gosh, 2009, 2008, and I never looked back. But, for the history books and the health books that I like to read, I think having the ability to scribe would be a net add there.
Daniel Newman: All right. I got two minutes to get on stage, so I’m going to hit topic six. I don’t have anything to add. Kindle, cool. TSMC earnings, absolute blowout, Pat. ASML put some fear of God in the industry. You saw the crazy sell off. The AI trade is well intact. The demand for Blackwell, the demand for AI chips, but everything else is still suffering, and that’s kind of what’s going on. But for TSMC, it just doesn’t matter because there’s no other game in town right now at scale and they have incredible control over their pricing. They’ve been raising prices as needed, which has led to record revenue, record margins, strong growth. Operating margin is up 6%, Pat. They are seeing significant beats across the board. They’ve now seen their leading edge nodes 5 and 3 exceed 50% now of their revenue.
So, the company’s in really incredible shape. Now, Pat, the interesting thing, as you know, is 51% of the revenue now is flowing through what they call high performance compute, which is AI. You’ve seen that waffle, but areas like automotive, flat, consumer electronics, it’s 1% of revenue, other categories, 2% of revenue, automotive, I said was flat, internet things, 7%. So, the TLDR here on this is that the demand for AI, huge. The demand for smartphone seems to be growing a little bit over there. The movement to their leading edge nodes very strong, and that the company is doing incredibly well, which reversed the entire ASML sell-off because apparently TSMC is a better bellwether than advanced lithography. And, we will talk about that more later but I had to hit this one quick. Any adders on this one? I apologize. I’ve just got to run and give a speech. So, my lateness is… Again, I’m penalizing you because I-
Patrick Moorhead: No. Let me come in here. So, I think it also shows the reliance on node shrinks. I think you should look at applied materials with areas like backside power to make this happen. TSMC is raising prices as well, which I think puts an opportunity to Intel. Samsung is having a hard go right now, but ASML reduction was a 100% on the back of Samsung and having challenges getting two nanometers going. That’s all I got, buddy. Let’s get you out there.
Daniel Newman: Hey, safe travels. I know you’ve got to run. I will see you in Hawaii. Thank you, everybody, so much for tuning in, being part of The Six Five. Hit that subscribe button. Join us for all of our other episodes. More to come, some great conversations in Hawaii than another great show next week. Earning seasons is back. Lots of big news on AI. See you later. Bye-Bye.
