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Roku Got Close to $400 Million Revenue in 2016 – Variety (Feb 28, 2017)
Roku has to be pretty much unique as a small standalone player which nonetheless dominates a market in which major ecosystem players also compete. Taking 48% share (per Nielsen) against a combination of Amazon, Apple, Google, Microsoft, Sony, and others is quite the achievement, and it’s especially remarkable given that Roku really doesn’t have any unique features or much unique content at this point. That’s the power of being an early player and one of the most open ones in a market where some of the big ecosystem players have been later to the game and/or offered more closed systems. I’m not sure how sustainable this position will be over the longer term, and that’s why Roku has already begun pivoting to the smart TV licensing model as an alternative to the standalone set top box.
I know I used the phrase “another day, another ugly story about Uber” yesterday, but it’s literally another day and yet another story today. This time, it’s CEO Travis Kalanick recorded by one of his drivers who asked him some questions about pricing for the black car tier Uber offers. I’d actually argue that most of the conversation is pretty reasonable on Kalanick’s part, but right at the end he apparently loses his temper and we get to see how he really feels about all this, reinforcing the sense that Uber doesn’t really care about or understand its drivers and their needs. Here’s the point I made with regard to the sexual harassment allegations, and will make again here: as long as Kalanick himself doesn’t model the behavior he wants to see from his employees, the culture at Uber is never going to change, and it’s starting to feel like he simply can’t model that behavior because he doesn’t believe in it and isn’t capable of behaving in that way. If that’s really the case, that’s a pretty strong argument for him stepping down and allowing someone else to take over who can provide the cultural leadership his company needs – it’s hard to see how any of this gets better unless he does.
It looks like Bloomberg got a pre-brief on the YouTube TV announcement this afternoon, and has posted its article just as YouTube’s event gets underway. The service is called YouTube TV, it’s $35 per month, and the headline is that it includes all four major broadcast networks, but not several big cable networks (no Viacom, Discovery, AMC, A&E, or Turner networks including CNN, TBS, and TNT). From what I’m seeing on Twitter as the event unfolds, it looks like the service will only launch in local markets where the broadcasters have affiliates, which means people like me (I live in Utah) are out of luck. As I predicted a couple of years ago in the context of a potential Apple TV service, local and sports are the big challenges, and YouTube hasn’t really cracked this on a national basis yet. The US TV market continues to be incredibly resistant to real disruption – every over the top streaming alternative to traditional pay TV is handicapped in at least one way, and often several. YouTube TV will offer cloud-based DVR as a differentiator, but the missing cable networks are a big downer. This is basically a four-way deal with the big broadcasters and their cable affiliates, but it means if you want any of the other networks you’re still going to have to buy Sling, DirecTV Now, Sony Playstation Vue, or whatever else comes down the pike later this year. There’s a certain irony to the fact that, though these services are nominally disruptive, they actually offer even less choice individually in many cases than the pay TV services they’re aiming to replace. These companies are each so determined to reach a $35 price point that they’re making decisions on behalf of customers about what should be included, and in all cases they’re excluding some channels a lot of consumers are going to want. We’re still a long way from being able to choose a bundle of channels that makes sense to us, rather than having to buy a bundle someone else configured for business reasons.
HTC is making several announcements at the GDC gaming conference, but to my mind the most interesting is its installment plan for paying for a Vive headset. Instead of paying a lump sump of $799, would-be buyers can now pay $66 per month for 12 months, much as many of us now pay for our phones. One of the criticisms (and limitations) of early high-end VR is the price, but of course an iPhone 7 Plus or Samsung S7 Edge or Pixel XL comes in at $750-770, and we don’t all balk at that price, because none of us pays it upfront. Installment plans make these purchases a lot more palatable, and that’s going to be important for reducing the barriers to adoption here. That doesn’t mean we’re all going to rush out and buy one of these, not least because it still requires a high-end PC as well, but this kind of small step will help accelerate the spread of VR just a little bit.
Amazon cloud issues send Web publishers scrambling – Axios (Feb 28, 2017)
I might update this or post a follow-up later, since the outage is still underway and there isn’t yet an official explanation. But it’s already clear that this outage is having very widespread impacts, not just on a couple of big tech companies but on a variety of news sites and other businesses too. This is a great illustration of the enormous power a single player can have when it takes a dominant market share position, and conversely the danger customers put themselves in by failing to secure adequate redundancy. One of the changes between Snap’s original S-1 and its S-1/A filing was the inclusion of a deal with Amazon (ironically) to provide redundancy for its Google Cloud services, and I think it’s very unlikely the timing was a coincidence: I suspect the investors Snap talked to first were wary of its massive dependence on a single cloud provider. But of course that kind of redundancy can cost an awful lot, especially at scale – Snap’s contractual commitment to Amazon five years out is almost the same as its commitment to Google in the same year, which is not to say it will actually end up spending the same, but it’s indicative of the problem here. Of course, the Snapchat app hasn’t gone down today while many other services and sites have – if it had single-sourced based on Amazon, perhaps it would have done, which would have been disastrous the week of its IPO.
Amazon Echo May Get Voice ID Feature – Time (Feb 28, 2017)
From the first time I heard about Google Home at I/O last year, I assumed it would have multi-user support, and yet it didn’t. Now it sounds like it’s Amazon that may bring this feature to its home speaker first, which is yet another example of how Google seems to be punching below its weight in this fight. Google is all about individual user accounts: email, calendar, to-do lists, YouTube subscriptions, Android device identities and lots more are all tied up in personal accounts. Amazon, by contrast, probably works mostly at the level of the household, with families sharing Prime shipping and video accounts. So it’s ironic that Amazon would be the first to market with something that provides individual identification by voice. At the same time, I think there are going to be severe limitations around voice identification that may well make it inappropriate for anything security related – voice recordings are much easier than fingerprint cloning, for example. And in both the household I grew up in and my own home now, there were several people with very similar voices – it will be very important for Amazon (and Google) to be able to tell apart even voices with shared genes.
This piece is a good reminder of three things: not all testing of autonomous vehicles is being done in California (or even the US), not all testing is being done by tech companies and startups, and countries, states, and cities are competing to be friendly to this testing. Old established carmakers are a long way down this road too – something that was borne out to me by conversations I had with a lot of them at the Detroit Auto Show in January – and they’re testing in their home markets as well as others. And cities like London are competing to be attractive to this testing, because it brings economic activity as well as a reputation for being friendly to technology in general. I learned to drive in central London, and wouldn’t really wish that on anyone, human or machine, but it sounds like the testing is mostly taking place in some of the less busy parts of the city, which makes a lot of sense.
Google calls time on the Pixel laptop – TechCrunch (Feb 28, 2017)
This is a minor news item, but a slightly surprising one – the first product to bear the Pixel brand at Google was a laptop, but the company won’t be making any more of those in the foreseeable future, apparently. With the big hardware push underway at Google, I had been anticipating that we might well see updates to both the laptop and the tablet that also bear the Pixel name alongside a revision of the Pixel phone this fall, but it seems Google’s hardware vision isn’t quite as expansive as I thought. It would be great to hear from Google at some point some sort of specific vision of why it’s in the hardware business, and why it wants to be in some categories and not in others (even some it’s done in the past).
Apple’s Next iPhone Will Have a Curved Screen – WSJ (Feb 28, 2017)
This report is written by a reporter in Tokyo rather than the US, suggesting that it’s a firm in the Japanese supply chain which is the source of the data. The headline doesn’t seem to be specifically supported by any of the actual reporting in the article, though – the article itself mentions that OLED can be bent into curved screens, but then only says that Apple has placed orders for OLED screens without confirming that it actually intends to use a curved screen. And of course, OLED screens have been reported for at least some of the new iPhones for ages now. I’m still very skeptical about the $1000 price point this article repeats, however. The other major point from the article is that Apple will replace Lightning with USB-C for the port on the new phones. I’m not as skeptical on this as some, but I don’t think it’s a certainty either. Between wireless for headphones and potential wireless charging, the port will just become a lot less important over the next few years, so at some point it doesn’t matter all that much what technology that port uses. There would be a certain symmetry, too, in abandoning the Lightning port after five years, just as Apple abandoned the old 30-pin connector after the first five years of the iPhone. Apple clearly isn’t wedded to particular ports or technologies for nostalgic or other reasons, and is willing to make changes where the upside outweighs the downside. And there’s a frustration right now to having to buy a whole new cable to charge your brand new iPhone from a brand new MacBook, which could be resolved somewhat by standardizing on USB-C. So I see the logic here, especially in making this change in the context of a big upgrade to the device, and I think this change may be inevitable in the long term, but it could easily be a year or two out still.
I commented on the reports a couple of weeks back that Xiaomi would be building its own chips, and guessed that Xiaomi would likely start at the low end of its device range and work up from there, and that’s exactly what they’re doing: the Mi 5C is the first phone using Xiaomi’s homegrown chips, and sells for a little over $200. It’ll be interesting to see what if anything comes out of the reviews of the phone about its performance relative to Xiaomi’s earlier low-end phones – a solid early performance is critical for building confidence that Xiaomi knows what it’s doing here. The company also said it had spent a billion yuan – around $145 million – on building its capability, and that it received some help from the Chinese government, though it’s not clear how much. To put that in context, Apple’s acquisition of PA Semi alone cost $278 million, and that’s before all the additional work and money it put in organically following the acquisition to build its own chips. So though Xiaomi is splashing out somewhat here, it’s still a small investment in the context of earlier similar investments.
This is an interesting one – Mozilla is mostly still the Firefox browser company, despited repeated recent attempts to become something more, and so I wonder whether the Pocket functionality will end up being embedded into the browser as an equivalent of Safari’s Reading List feature. For now at least, it’s also going to continue to be a standalone app, which is good because I’ve been using it recently as a way to gather links from Twitter and other services to include in Tech Narratives! It’s also fascinating to think of this acquisition as being essentially funded by Yahoo, which of course now provides much of Mozilla’s revenue since it won a bidding war with Google a couple of years back. That’s another relationship that will be very interesting to watch as Verizon takes over, although the deal doesn’t expire until the end of 2019.
Uber’s SVP of engineering is out after he did not disclose he left Google in a dispute over sexual harassment allegation – Recode (Feb 27, 2017)
Another day, another ugly story about Uber. This time, it’s that its brand-new SVP of engineering, who joined Uber just last month, appears to have left Google under a cloud surrounding allegations of sexual harassment. There was an initial investigation and apparently some planning towards firing Singhal, but as he resigned proactively those plans were never carried out, which certainly helped keep the allegations under wraps. But Singhal apparently failed to inform Uber of these circumstances when he left, and he’s now been asked to resign from Uber. I suspect that, were Uber not having the month it’s having, Singhal might have survived, but in the circumstances there was no way he could be allowed to stay. Singhal’s hiring was seen as a coup when he arrived (see the comment linked above), and it’s into such a senior role I wonder how Uber is going to fill the gap. Clearly, it though that was less important than making a quick, clean break here.
Though Facebook bears the brunt of criticism among the tech industry’s largest players for its role in spreading and/or failing to stem the spread of fake news, it’s worth noting that others play their roles too. Though Google search has been mentioned quite a bit, YouTube hasn’t been mentioned nearly as much, and yet this article argues there’s tons of fake news video content on YouTube, which goes essentially un-policed by the site. YouTube itself responds that it only curates legitimate news sources for its official channels, but of course many of the creators of this fake news content are making money off that content through YouTube’s ad model. Since Google shut down its ad platform on third party sites which focused on fake news, it’s arguable that it should apply the same policy here too, something it so far doesn’t seem willing to do.
I think there’s actually more going on with these new plans than most of the coverage I’ve seen suggests. Firstly, the unlimited plan AT&T currently sells is going away as an option for new customers, so these two new plans are AT&T’s unlimited offer going forward. Secondly, I suspect it’s also going to lead with these over its tiered data plans going forward, even though those tiered plans will remain available for at least a while. What’s really happened here is that AT&T jumped in quickly by opening up its existing unlimited offer two weeks ago when Verizon opened that can of worms, but this is the offer it really wants to put in the market from here on out. And that’s important, because when AT&T opened up its offer, that had two implications: no more benefits from bundling AT&T and DirecTV service, which had been an important driver of net adds for DirecTV, and a cap on revenue per user for those switching to unlimited. These new deals restore the benefit for bundling with DirecTV (it’s now a $25 bill credit every month), and provide a structure which allows for an up-sell over time between two tiers of unlimited service. That allows AT&T to continue to differentiate on its unique selling point, which is wireless-TV bundles, while also creating the idea that all unlimited isn’t created equal. For now, there’s basic unlimited with SD video and a 3Mbit/s speed cap, and then premium unlimited with tethering, the bundle discount, and HD video. That opens the door to other unlimited tiers or options down the line as well, and therefore increasing ARPU over time. I do think competitors are going to aim at that 3Mbit/s speed cap in their advertising, and if you look at the details of these plans they’re still overly complex, but these new plans should definitely help AT&T sell both more wireless and TV subs.
Amazon’s Twitch acquisition was one of the most interesting it’s made, and one of the few big ones it’s made which weren’t in the e-commerce space. Since the acquisition, it’s pursued two separate tracks with Twitch, one focused on the core gamer space it’s always served, and the second broadening its reach and appeal beyond gaming and becoming something of a YouTube clone. This announcement belongs in that first strand, though it also ties in the online sales angle by putting a buy button next to video game video encouraging viewers to buy the game being played in the video. This is a unique take on the ad revenue sharing model YouTube popularized, and could be pretty lucrative for at least some channel owners over time. It’s also a great way to provide very relevant advertising around a video platform, something that’s often tough to do beyond broad demographic profiling.
via The Verge
Comcast is integrating YouTube into its set-top box — just like it did with Netflix – Recode (Feb 27, 2017)
Comcast’s Netflix integration seems to have gone well – both companies have talked about it on recent earnings calls, and although Netflix has downplayed the significance of the partnership from a user growth perspective, it’s really Comcast that benefits the most from this integration. That’s because this is basically just a way to keep people on the Comcast set top box instead of jumping to a different box to watch Netflix, and it’s very much the same strategy that applies with YouTube here. Keep people on your box, in your interface, and you at least have the opportunity of showing them more of the programming you bring to them (and for which they pay over $80 on average per month). Do that, and there’s a greater chance that they stick with your product (and your bundle) rather than canceling it or scaling it back. Keep them in your recommendations interface, and they may even in some cases become less aware of where the content is coming from, further cementing your role as the primary video provider.
I’ll keep this brief – as I’ve argued previously, what happens with stock prices (and purchases of stocks) is at best a secondary indicator of what’s going on with a company, and at worst an entirely separate game that’s more about confidence in a stock than the company itself. Warren Buffett and Berkshire Hathaway are slightly different animals though – he’s notoriously conservative and long-term in his thinking about his investments, and only recently made his first tech investment in IBM, which is about as blue chip as they come. So the fact that he’s added Apple to his holdings and then doubled his stake recently is worth noting for the fact that even someone as conservative as him sees a long time upside in owning Apple stock. More interestingly, he’s invested on the basis of seeing how real people feel about the Apple products they own, which Apple itself also argues is one of the most important metrics you can look at when it comes to predicting its future.
5G Schedule Moves Up to 2019 – PCMag (Feb 27, 2017)
As I expected, 5G seems to have been a big theme at MWC this year, with lots more marketing type announcements but also some actual products being announced, albeit ones which should technically be described as pre-5G. The headline here is a bit funny, because of course it’s in these companies’ interests to suggest 5G is more imminent than previously thought, but it’s not up to them how quickly the technology gets deployed – that’s entirely up to the carriers, and I’m still very skeptical that we’ll see 5G available to more than a handful of locations before 2020 in the US (or probably anywhere else). And of course the idea that Qualcomm’s 5G modem would premiere in an iPhone seems laughable – Apple has been deliberately slow to adopt both previous wireless generations (3G and 4G), because the early trade-offs between performance and battery life make early entry unappealing. I don’t see that changing with 5G. But as a previous piece suggested, 2017 is going to be the year of pre-5G commercial trials, which is an important step along the path to eventual mainstream rollout and adoption.
Apple and SAP today announced that the partnership they first unveiled last year is beginning to bear real fruit. Last year, they had announced plans for an SDK, a training academy, and some sample apps from SAP itself designed to show third party developers what could be done. All of those things have now made enough progress at this point to justify a second announcement about imminent launches and progress made since. Several of the elements of what the companies announced originally are going to be available in the next few weeks, and all that should help SAP’s enterprise customers and their partners develop better iOS apps that tap into the SAP back-end. This is part of Apple’s broader push into the enterprise over the last few years, something that’s critical for squeezing additional growth out of an increasingly saturated smartphone market in mature economies. But it’s also a good reminder that the announcements Apple makes in the enterprise space are very different from its usual product announcements – they’ll take at least months to come to fruition, and in many cases will take even longer after that to deliver really meaningful results – this is a long game.
via Mac Rumors
Historic Oscar victories for ESPN, Netflix and Amazon – CNN (Feb 27, 2017)
Amazon and Netflix both won their first Oscars this year, though Amazon seems to have got most of the attention because its awards were for features, whereas the sole award Netflix received was for a short documentary. Interestingly, though, as far as I can tell the two Amazon wins were for properties it had nothing to do with until it acquired the distribution rights, whereas Netflix backed its short The White Helmets as one of several production companies behind the film (and was also the main backer of The 13th, Ava DuVernay’s feature-length doc, which lost out in that category). That’s an important difference – Netflix can claim that it was behind a winner from the beginning, whereas Amazon only acquired its two movies when they were finished and showing at festivals to strong positive responses. Still, it’s great validation for both platforms and a further indication that they’re increasingly important powers in the movie and TV worlds.