Latest / Connecting the Dots / Reality Labs Resets, Asus Repositions, and Gaming Goes Free

Transcript

Reality Labs Resets, Asus Repositions, and Gaming Goes Free · Connecting the Dots

• 0:00
  Today's tech news moves fast, but understanding
• 0:03
  it shouldn't be hard. That's why Snarful Solutions
• 0:06
  Group brings you Connecting the Dots, where we
• 0:09
  break down what's happening in tech and why it
• 0:11
  matters to you. Now, let's dive in with your
• 0:14
  hosts. Good morning, everyone, and welcome back.
• 0:18
  It is Monday, January 19th, 2026. You are listening
• 0:22
  to Connecting the Dots. The show where we try
• 0:25
  to find the pattern in all the tech noise. That
• 0:27
  is the goal. I'm Alex. And I'm Morgan. Yeah.
• 0:30
  And wow, it is great to be here. It's great you
• 0:33
  made it here. A little hard to get here this
• 0:34
  morning, I will say. You are not kidding. We
• 0:37
  have a packed show some really heavy industry
• 0:41
  shifts to talk about. But first, we have to talk
• 0:43
  about the view or, you know, the lack of one.
• 0:47
  Right. If you're listening locally here in Sacramento.
• 0:50
  You are probably navigating by sonar right now.
• 0:52
  It is literal pea soup out there in the valley.
• 0:55
  We have a dense fog advisory in effect until
• 0:58
  noon. Visibility is near zero in some spots,
• 1:01
  so if you are on the road, please, please, lights
• 1:04
  on, slow down. Don't be a hero on the freeway
• 1:06
  this morning. Exactly. And for our listeners
• 1:08
  on the East Coast, it sounds like you're dealing
• 1:09
  with the polar opposite mess. Yeah, we're seeing
• 1:11
  reports of heavy lake effect snow causing total
• 1:14
  whiteout conditions around the Great Lakes. And
• 1:16
  there's a coastal... low, I think, dumping moderate
• 1:20
  to heavy snow across southern and eastern New
• 1:23
  England. So basically, whether it's fog or snow,
• 1:26
  it's just a messy Monday morning commute. Definitely
• 1:28
  a day for the extra large coffee. For sure. Speaking
• 1:31
  of things looking a little gray, let's take a
• 1:34
  quick pulse check on the financial markets. Yeah,
• 1:37
  it feels a bit sluggish to start the week, doesn't
• 1:39
  it? It does, like the markets are hitting the
• 1:40
  snooze button. The Dow closed Friday down about
• 1:43
  0 .22%, so it's hovering right around $49 ,359.
• 1:49
  And the S &P? Also dipped a little, down nearly
• 1:52
  0 .3%. And what about crypto? Same story, at
• 1:55
  least for the daily chart. Bitcoin is down just
• 1:57
  a hair today, trading around $92 ,900. OK. But,
• 2:02
  and this is the important context, if you zoom
• 2:04
  out to the weekly view, the trend is actually
• 2:06
  looking pretty healthy. It's up nearly 2 % since
• 2:08
  last Monday. So despite the Monday morning dip,
• 2:11
  The floor is holding. The floor is holding, just
• 2:14
  keeping everyone on their toes? All right. Now,
• 2:17
  before we crack open the Smartful Tech article
• 2:19
  report, the morning star, as we call it, we need
• 2:22
  to give a huge shout out to the folks helping
• 2:24
  us keep the lights on. Old glory. Old glory.
• 2:27
  Oh, absolutely. I was just on their site yesterday.
• 2:29
  If you have that one friend who is, you know,
• 2:31
  impossible to shop for. The music snob, the sports
• 2:35
  fanatic who has every single jersey. You have
• 2:37
  to check them out. They are the iconic fan merch
• 2:39
  store. And we're talking about officially licensed
• 2:42
  band, t -shirts, hoodies, collectibles. This
• 2:45
  is the real deal. Not the cheap knockoff stuff.
• 2:48
  No. And because they love our listeners, if you
• 2:51
  use the promo code SNARFL, that's S -N -A -R
• 2:53
  -S -E -O -U -S -U -L at checkout, you get 15
• 2:57
  % off your entire purchase. Which is a solid
• 2:59
  deal. It is. That's promo code SNARFL. You can
• 3:02
  find them at OldGlory .com. Go get some cool.
• 3:04
  All right. Let's get into it. Let's do it. So.
• 3:07
  Looking at the Morningstar today, I feel like
• 3:09
  there's a very specific theme just screaming
• 3:13
  at us. Yeah, you see it right. I do. We're looking
• 3:15
  at three massive players, Meta, Asus, and Microsoft.
• 3:20
  And on the surface, these stories look totally
• 3:22
  different. Right. You've got VR layoffs, then
• 3:26
  a company getting out of phones, and then video
• 3:28
  game ads. Yeah. But when you lay them on top
• 3:31
  of each other, A very clear and honestly somewhat
• 3:34
  ruthless picture emerges. A great reshuffling.
• 3:37
  That's a good way to put it. The era of traditional
• 3:41
  hardware ownership in these walled garden ecosystems
• 3:44
  seems to be ending. And what's replacing it?
• 3:46
  A model that is entirely dependent on AI and
• 3:50
  cloud access. It's the pivot. It's the pivot.
• 3:52
  And it's messy. It's causing layoffs. It's killing
• 3:54
  beloved products. But from a business strategy
• 3:58
  perspective, it is terrifyingly logical. Well,
• 4:01
  let's start with a story that has social media
• 4:03
  in a just total meltdown this morning. Meta.
• 4:07
  Right. The news broke that they have cut approximately
• 4:09
  1 ,500 jobs in their Reality Labs division. In
• 4:13
  Reality Labs, for context, that's the division
• 4:15
  that builds the Quest headsets, the Metaverse,
• 4:17
  all that VR stuff. So 1 ,500 people. Yeah. That's
• 4:20
  like 10 to 15 percent of that entire workforce.
• 4:22
  It's a massive number. And of course, the knee
• 4:24
  -jerk reaction online has been, well, that's
• 4:26
  it. The metaverse is dead. Zuckerberg's throwing
• 4:28
  in the towel. But that might not be the whole
• 4:30
  story. Y 'all think so? Well, it's definitely
• 4:32
  not the whole story. In fact, if you listen to
• 4:34
  Palmer Luckey, you know, the founder of Oculus.
• 4:37
  The guy who basically kickstarted this whole
• 4:39
  modern VR thing. Exactly. He has a very different
• 4:42
  take. He's not calling this a retreat. He's calling
• 4:44
  it a correction. A correction. That sounds I
• 4:48
  mean that sounds a lot like corporate spin for
• 4:50
  we ran out of money it does but hear him out
• 4:54
  Lucky's argument is that metas internal game
• 4:56
  studios had become Bloated bloated. Yeah, and
• 5:00
  he used this phrase that I think is really key
• 5:03
  He said they were crowding out the ecosystem.
• 5:06
  What does that mean exactly crowding out? Well
• 5:08
  think about it this way meta was spending billions
• 5:12
  to make their own high quality games. Right.
• 5:15
  They'd market them on their own store, give them
• 5:16
  the best placement, probably sell them at a loss
• 5:19
  just to get people to play. So if you're a small
• 5:22
  third party developer trying to make a VR game,
• 5:26
  how do you compete with that? You can't. You're
• 5:28
  competing against the landlord who also owns
• 5:30
  the biggest shop in the mall. That's a good analogy.
• 5:33
  Lucky used a great one too. He said meta was
• 5:36
  trying to be Nintendo Nintendo makes the switch
• 5:39
  and they make Mario and Zelda It's a closed loop
• 5:42
  where their own stuff dominates but for VR to
• 5:46
  actually become the next computing platform It
• 5:49
  needs to be open. It needs other people to be
• 5:51
  able to make money. It needs to be an ecosystem.
• 5:54
  OK. So the theory is by firing their own game
• 5:57
  developers, they are clearing the lane for everyone
• 6:00
  else. So they stop subsidizing their own content,
• 6:03
  which forces the market to stand on its own two
• 6:06
  feet. That's the idea. OK, that makes sense on
• 6:08
  a white board in Silicon Valley. But we have
• 6:10
  to talk about the human cost here. For sure.
• 6:13
  I don't just mean the people losing their jobs,
• 6:15
  which is awful. I mean the consumers, the people
• 6:17
  who bought into this ecosystem. And there's one
• 6:19
  specific app that's getting absolutely hammered
• 6:22
  by this. Supernatural. Yeah. This is the part
• 6:24
  of the story that really hits home for me, because
• 6:27
  Supernatural isn't just some game. No, it is
• 6:31
  a lifestyle for people. For anyone who doesn't
• 6:33
  know, it's a VR fitness app. Kind of like Peloton
• 6:36
  meets Beat Saber. Exactly. You're in these gorgeous
• 6:39
  landscapes. You know, Iceland, the great wall
• 6:41
  of China, and you're boxing and swinging to music.
• 6:45
  It was one of Metta's flagship acquisitions.
• 6:47
  And now, under these new cuts, the report says
• 6:50
  there is no new content planned. Zero. No new
• 6:54
  songs, no new coaching routines. The team has
• 6:57
  basically been dissolved. But, and this is the
• 6:59
  part that is just infuriating. The price. The
• 7:02
  subscription price is staying exactly the same,
• 7:04
  still a hundred bucks a year. For a product that
• 7:07
  is effectively frozen in time. It's a zombie
• 7:09
  app now. And the users are grieving. I'm not
• 7:12
  even using that word lightly. We've got this
• 7:15
  story about a user named Stacy Goff Johnson.
• 7:18
  She lost over a hundred pounds using this app.
• 7:20
  Wow. Over two years. She credits it with getting
• 7:23
  her off of blood pressure medication. I mean,
• 7:25
  it changed her life. That's huge. It is. And
• 7:27
  when she heard this news, her reaction was just
• 7:30
  heartbreak. She said, quote, it can't all just
• 7:33
  be AI, AI, AI. That quote. It can't all just
• 7:35
  be AI. That just sums up the tension we're seeing
• 7:38
  across the entire tech world right now. It really
• 7:40
  does. And Stacey isn't just missing a workout.
• 7:43
  She's missing a community. The article mentions
• 7:45
  other users who would meet up in VR to high five
• 7:48
  after workouts. Chip and Elisa. Right. They said,
• 7:50
  we're all in this together. And now they're on
• 7:53
  Facebook and Reddit writing eulogies for a piece
• 7:56
  of software. It just highlights the risk of falling
• 7:59
  in love with these closed corporate ecosystems
• 8:01
  when the strategy shifts. The community gets
• 8:05
  evicted. And the strategy is shifting. Meta isn't
• 8:07
  just saving money here. They're moving it. So
• 8:09
  where is it going? It's going to the new Golden
• 8:11
  Child, Meta AI, the super intelligence labs,
• 8:15
  and the Ray -Ban Smart Glasses. Meta has decided
• 8:19
  the future isn't you in a bulky headset punching
• 8:21
  virtual balloons. It's you wearing lightweight
• 8:24
  glasses that whisper AI answers into your ear.
• 8:27
  So they are sacrificing the fitness community
• 8:29
  to chase the AI dream. Ruthlessly. Which brings
• 8:33
  us directly to our second story. Because if you
• 8:36
  think meta -stamping game production is a big
• 8:39
  shift. How about a major electronics giant just
• 8:41
  stopping production of smartphones entirely?
• 8:43
  This is a huge deal for the hard word geeks out
• 8:46
  there. We are talking about ASUS. Yeah, ASUS.
• 8:49
  The maker of the Zen phone and the ROG phone.
• 8:52
  Chairman Johnny Xi confirmed it in Taipei. The
• 8:55
  company will not be releasing any new smartphone
• 8:57
  models in 2026. And this is significant because
• 9:00
  ASUS was one of the last holdouts serving these
• 9:03
  like very specific niches that the big guys just
• 9:06
  ignored. I have to admit, I'm kind of sad about
• 9:08
  this one. The ROG phone. The Republic of Gamers
• 9:11
  phone was just wild. It was like a spaceship
• 9:14
  in your pocket. It was. It had cooling fans.
• 9:18
  It had ultrasonic trigger buttons on the side.
• 9:20
  Two charging cords so the cord wouldn't get in
• 9:22
  your way. An engineering marvel. And the Zen
• 9:25
  phone was loved because it was one of the last
• 9:27
  compact flagships. A powerful phone that you
• 9:30
  could actually hold. So why kill them? If people
• 9:32
  love them, why get out of the market? Well, loved
• 9:34
  and bought can be two different things. The inventory
• 9:37
  in the US is already dry. The ROG Phone 8 and
• 9:40
  9 are out of stock. The Zenfone 12 Ultra never
• 9:42
  even launched here. Right. But the reason for
• 9:45
  the exit is deeper than sales. It's about what
• 9:48
  you could call the growth trap. The growth trap.
• 9:50
  The smartphone market is mature. Everybody has
• 9:53
  one. People are keeping them longer. Chairman
• 9:55
  Xi called it indefinite observation of the market.
• 9:59
  Which is polite corporate speak for we don't
• 10:01
  see a way to make money here anymore. Exactly.
• 10:03
  But he also mentioned a very specific technical
• 10:06
  reason. Memory prices. Memory prices? Like for
• 10:10
  storage? Specifically, DRAM, the high -speed
• 10:14
  memory chips. The price for those has skyrocketed,
• 10:18
  and do you know why? Let me guess. AI. You nailed
• 10:21
  it. The AI boom requires massive amounts of high
• 10:25
  -end memory for all those servers running things
• 10:27
  like chat GPT. So that demand is driving up the
• 10:30
  cost of components. The AI industry is literally
• 10:32
  eating the supply chain. So building a high spec
• 10:35
  phone like the ROG phone has become incredibly
• 10:37
  expensive. So once again, AI is the culprit.
• 10:41
  Meta pivots to AI. Asus gets squeezed out by
• 10:44
  AI prices. And I'm guessing Asus isn't just firing
• 10:46
  these engineers either. Nope. reallocating that
• 10:48
  talent. They're moving their R &D resources into,
• 10:51
  wait for it, smart glasses, robotics, and commercial
• 10:54
  AI PCs. There it is again. It is the exact same
• 10:57
  pattern. It's the same bet. Why fight Apple and
• 11:00
  Samsung for 1 % of a shrinking market when you
• 11:03
  can pivot to robotics and AI, which might be
• 11:06
  the boom market of the late 2020s. It makes business
• 11:09
  sense, but as a consumer, it feels like the end
• 11:11
  of the weird gadget era. It certainly reduces
• 11:15
  choice. Now you just buy a slab of glass from
• 11:18
  Apple or Samsung or Google, and that's it. The
• 11:21
  innovation and form factor seems to be dying.
• 11:23
  They did promise to support existing phones with
• 11:26
  updates and warranties, so it won't be a brick
• 11:28
  tomorrow. But yeah, the lineage ends here. Alright,
• 11:31
  let's connect the final dot. We've talked about
• 11:33
  VR content drying up. We've talked about unique
• 11:35
  hardware disappearing. Now let's talk about Xbox.
• 11:38
  Because they're changing the fundamental way
• 11:40
  we access games, and this might be the most futuristic
• 11:43
  business model of all three. This story has been
• 11:45
  rumored for a while, but the evidence is finally
• 11:47
  piling up. Microsoft appears to be prepping a
• 11:50
  free ad -supported tier for Xbox Cloud gaming.
• 11:54
  To launch this year, 2026. This came out because
• 11:57
  users spotted a pop -up message on their screens,
• 12:00
  right? Exactly. A message that said, one hour
• 12:03
  of ad -supported playtime per session. So the
• 12:07
  reporting suggests it'll be, what, like two minutes
• 12:09
  of pre -roll ads before the game starts? Yeah.
• 12:11
  Commercials you have to watch, and then you get
• 12:13
  an hour of game play. OK. Help me understand
• 12:15
  the play here. Xbox has Game Pass. That's their
• 12:19
  big subscription. Why give the product away for
• 12:21
  free for just a few pennies of ad revenue? It's
• 12:25
  about expanding the funnel. Right now, to play
• 12:27
  cloud games, you need Game Pass Ultimate. That's
• 12:30
  almost 20 bucks a month. That's a barrier for
• 12:32
  a lot of people. A huge barrier. This new tier
• 12:35
  would let you stream games you already own digitally
• 12:37
  without the subscription. But there's a bigger
• 12:39
  global play here, isn't there? Massive. Think
• 12:42
  about markets like India, Southeast Asia, parts
• 12:45
  of Africa. An Xbox Series X costs $500. And that's
• 12:50
  before tariffs and other costs. It's prohibitively
• 12:53
  expensive for most people. But almost everyone
• 12:55
  has a smartphone. So if Microsoft can just bypass
• 12:57
  the console and deliver the game to the phone
• 12:59
  for free, as long as you watch an ad, they unlock
• 13:02
  billions of potential new users. The console
• 13:06
  becomes optional. Exactly. But there is an even
• 13:08
  deeper layer to this, which I think is just fascinating.
• 13:11
  It's what analysts are calling the idle compute
• 13:14
  theory. Idle compute. OK, break that down for
• 13:16
  us. Right. So Microsoft runs Azure, these giant
• 13:19
  data centers filled with expensive chips for
• 13:22
  AI, co -pilot, chat, GPT, all of it. Right. When
• 13:26
  you ask an AI a question, it uses those chips.
• 13:29
  But what happens at three in the morning when
• 13:31
  fewer people are using AI? The chips are just
• 13:34
  sitting there? They're sitting there. They are
• 13:35
  idle. And an idle server is burning electricity
• 13:39
  and losing money. It's like a restaurant with
• 13:40
  empty tables. You're still paying rent. So the
• 13:43
  theory is... Fill the empty tables with gamers.
• 13:46
  Exactly. Even if that gamer isn't paying a subscription,
• 13:49
  if they watch a few ads, it monetizes that server
• 13:52
  time that would have otherwise just been wasted.
• 13:54
  That is actually pretty brilliant. Yeah. So the
• 13:56
  gamer is basically the filler content to keep
• 13:59
  the servers warm for the AI. In a sense, yeah.
• 14:02
  It keeps the infrastructure active, pays the
• 14:04
  electric bill. So the capacity is there when
• 14:07
  AI demand spikes again. It's a perfect symbiosis
• 14:10
  between their gaming and AI businesses. It really
• 14:13
  is all connected. Meta cuts VR to fund AI. ASUS
• 14:18
  cuts phones to build AI robots. Xbox uses gamers
• 14:22
  to monetize AI servers. It's the singularity
• 14:24
  of business models. Everything is gravitating
• 14:27
  toward the black hole of artificial intelligence.
• 14:30
  We're going to wrap up with some final thoughts
• 14:31
  on what this all means for you, the person actually
• 14:34
  buying this stuff. But first, I want to mention
• 14:36
  our other partner for today, Skoney. Ah, Skoney.
• 14:40
  You know, with all this talk about VR and sitting
• 14:42
  on the couch playing Xbox, we should probably
• 14:44
  encourage people to go outside. A good idea.
• 14:47
  And if you're going to go walk on some grass,
• 14:49
  whether it's a golf course or just a park, you
• 14:51
  should know about Skoney. They make premium golf
• 14:54
  shoes, but they don't look like those old school
• 14:56
  stiff saddle shoes. No, they're incredibly comfortable,
• 14:59
  stylish. They look like high -end sneakers, but
• 15:01
  with the grip you actually need. I've seen them.
• 15:03
  They blur that line between athletic wear and
• 15:06
  casual fashion really well. They do. And just
• 15:08
  like with Old Glory, our listeners get a hookup.
• 15:11
  If you use the promo code SNARFUL again, that's
• 15:13
  S -N -A -R -F -U -L at checkout, you get 15 %
• 15:17
  off your entire purchase. Ice. That's sconide
• 15:20
  .com. Check them out. So putting this all together,
• 15:24
  Meta, ASUS, Xbox, what is the takeaway for 2026?
• 15:28
  To me, it feels like the year of the trade -off.
• 15:31
  We are trading ownership for access. That's the
• 15:33
  perfect way to frame it. Think about it. Meta
• 15:35
  is saying you don't need a library of curated
• 15:38
  games. You need an AI agent. ASUS is saying you
• 15:41
  don't need a specialized phone. You need a generic
• 15:44
  portal to our cloud services. And Xbox is saying
• 15:46
  you don't need a console. You just need to watch
• 15:48
  this ad. It's the service -ification of everything.
• 15:51
  The hardware is becoming harder to find, or more
• 15:53
  expensive, or just generic. And the value is
• 15:56
  moving entirely into the cloud. For people like
• 15:58
  Stacey, the supernatural user, or the die -hard
• 16:00
  ROG phone fan, it feels like a loss. Because
• 16:03
  it is a loss. We are losing the era where the
• 16:06
  device in your hand was king. Now, the device
• 16:08
  is just a dumb terminal, a window looking into
• 16:10
  the AI brain. And as we rush toward that future,
• 16:14
  we have to ask if the server goes down or the
• 16:18
  strategy shifts. What do we actually own? As
• 16:21
  we learned with Supernatural today, maybe nothing.
• 16:23
  On that cheery note, that is it for us today.
• 16:26
  We're here to help at Snarful, so reach out on
• 16:28
  our website if you have any more questions. Bye
• 16:29
  everyone. That's a wrap on today's top stories.
• 16:36
  Remember, tech doesn't have to be complicated
• 16:38
  and we're here to help connect the dots. If you've
• 16:41
  got questions or want to learn more, visit us
• 16:43
  at snarful .com. Thanks for listening and we'll
• 16:47
  catch you next time.