Chinese e-commerce giant Alibaba has announced that it will double its R&D spending over the next few years, with the main focus of its $15 billion investment in three areas: AI, the Internet of Things, and quantum computing. Though the Bloomberg piece here suggests this is another front in its competition with Amazon, the reality is that the two compete for very little business, mostly competing against other western and Chinese companies respectively in their major markets, with Alibaba dominant in China but negligible in the US. Rather, this is part of a much broader competition between big tech companies in aiming for leadership in several key new research categories, AI chief among them. That’s a competitive dynamic that has now taken on geopolitical overtones, with the US and China emerging as the likeliest leaders in AI, itself considered critical to future competitiveness in not just business but cyber warfare and other areas. Alibaba is, of course, already growing dramatically as a company, and the increase in planned R&D spending is therefore not wildly out of whack with its overall growth, but it makes for a great press release as the company seeks to burnish its innovation credentials.
Facebook Opens AI Lab in Montreal (Sep 15, 2017)
Facebook Patent Filing Shows Modular Device (Jul 21, 2017)
Google recently got out of the satellite mapping business by selling its Skybox / Terra Bella unit to Planet Labs. That unit had mostly been working on mapping imagery, and Google clearly decided it didn’t need to do that work itself to benefit from the results, and effectively outsourced it. Now two executives from that former team have ended up at Apple, under former Dropcam exec Greg Duffy. Given that Apple has nothing whatsoever to do with satellites today, that raises some interesting questions. While it’s true that Google, Facebook, and others have invested in satellite and other new methods for getting connectivity to remote places, Apple has far less incentive to do so, because its users are typically the kind of well-connected people that can afford premium smartphones and computers, not those in remote emerging markets. And to pursue such a play in a market like the US makes little sense either given how satellite broadband has struggled to compete with wired and wireless services because of limited throughput and high latency (just ask DISH). What makes more sense is some kind of mapping play for better imagery, although even there the same logic that led Google to dump its unit would apply to Apple too. These are certainly intriguing additions to the Apple employee rolls, but I’m not yet convinced that either broadband access or mapping are the explanation here.
There’s not a ton here that’s new about Apple and Facebook’s efforts, but the article does share some new details about Magic Leap, which is said to be getting ready to launch this year at a price point north of $1000. As I’ve said before, for all the complaints from Magic Leap that people are underestimating its technology, until it actually shows more than a few hand-picked people, those complaints are unreasonable. This is a company that has massively hyped its own product (including releasing rendered rather than actual footage) while refusing to share any actual details about its product. There certainly are people (some of them investors) who appear to be very impressed by it, but not until it launches will mainstream tech reporters and others know whether the product lives up to the hype. In the meantime, other companies like Apple and Facebook are ramping up their efforts, and even though Magic Leap may well beat them to market, it’s a small company with no brand recognition, and it will have to blow people away en masse if it’s to take a meaningful lead in the market when it launches.
Two things worth noting here. Firstly, another big commitment by Apple to China, following its billion0-dollar investment in ride-sharing service Didi last year, with the total of these R&D center investments reaching about half a billion dollars in their own right. That signals again that Apple is very serious about continuing to be a big force in China, and is in fact increasing its investment there rather than backing down. That’s important, because in this piece as in other recent ones on Apple in China, the prevailing narrative is that Apple is losing ground there. At a basic level, of course, there’s truth to that over the past year, with declining iPhone sales, though the picture in PRC as opposed to the Greater China region Apple reports as a segment is a little less clear cut. The reality is that the “super-cycle” driven by the iPhone 6 launch led to unprecedented sales everywhere, but nowhere more than in China, and so the comedown has been that much bigger too. But Apple is positioned to start growing in China again in the coming year, and it will continue to be a crucial market for Apple.
Google (now Waymo) partnered with Fiat Chrysler some time ago to use Chrysler Pacifica minivans for testing autonomous technology. This second partnership suggests some momentum, though it’s not yet clear how this fits in with Honda’s in-house autonomous R&D efforts.