Company / division: Industry
IDC Forecasts Strong Growth for AR and VR Headsets, with VR and Commercial AR Biggest (Jun 19, 2017)
This is a great counterpart to the FuboTV piece I posted earlier, because it illustrates the state of the current over-the-top streaming TV landscape. The survey quoted here from IBB Consulting suggests that nearly half of US broadband customers have at least one streaming TV service, with over half of those in turn subscribing to several. Moreover, nearly two thirds of those subscribing to these over-the-top services also still subscribe to traditional TV. That paints a picture in which subscription VOD (SVOD) services are both complements and substitutes to traditional pay TV, and even then largely fail to meet all of consumers’ needs for video. This is still a very fragmented marketplace, in which even the best providers are only partially meeting people’s needs. That creates both a near-term opportunity for someone to do better at meeting those needs, but also a long-term threat of consolidation as consumers balk at having to pay for and manage multiple subscriptions and long for someone to bring it all together. Given all the assets and relationships held by the major legacy pay TV companies, they’ve certainly in a strong position to aggregate some of this fragmentation on the part of consumers, while platform companies like Apple and Amazon are also positioning themselves in different ways as subscription aggregators, presenting another possible way forward. Regardless, as today’s FuboTV fundraising news suggests, there’s lots of activity still to come here.
Weekly Narrative Video – Maturing Smartphone Market (Jun 3, 2017)
This week’s Narrative Video is on the Maturing Smartphone Market narrative, which has been in the news a couple of different ways this week, with the announcement of Andy Rubin’s Essential Phone, and IDC’s updated smartphone forecasts. The reality is that the smartphone market is maturing in a couple of important ways: both in terms of mature market penetration, which is reaching the top part of the S-curve, and in terms of technology, which is now at the point that smartphones are very good and innovation is becoming more incremental than dramatic. The video talks through these and other trends, and subscribers can see it on the narrative page.
IDC Adjusts Forecast PC and Tablet Growth Downward (May 26, 2017)
IDC has adjusted its combined PC and tablet forecast downwards by several percent, with the overall picture one of shrinkage through next year followed by modest growth from 2019 to 2021. Within that broad category, desktops and standalone tablets are forecast to decline strongly, while laptops will grow slightly and “detachable” tablets (those made to be used with keyboards) will grow the fastest. IDC says it’s revising its forecast downward because those detachables aren’t growing as fast as it had thought. It’s also worth noting that any growth that exists right now in the market is entirely in the commercial market, while the consumer PC market (even including tablets) continues to shrink). It’s also worth noting that even in 2021, IDC forecasts that those detachable tablets will only be 11% of the total market. We’re continuing to see a diversification of the PC market across these various categories as both vendors and consumers try to figure out which combinations of tablet and laptop form factors and features work best, with much of the action so far at the premium end of the market. Things could get interesting (and move off IDC’s forecast trajectory) if we start to see some meaningful competition in that detachable space from vendors targeting the mid market, but there’s little sign of that happening yet.
Mid-Tier TV Networks Dial Back Spending on Original Content (May 25, 2017)
The CDC runs a twice-yearly study to determine how many households use landlines and how many use mobile phones only. That might seem like a strange thing for a government department responsible for studying disease to look into, but it first began doing so to determine whether its surveys needed to start including mobile respondents, as landline-based surveys were going to become less representative of the overall population over time. Well, those landline households are now less than half the overall population, while mobile-only households are now the majority, which has significant implications for polling and especially political polling, where automated dialing often hits only landline households. But the new numbers (and the trend over the last many years) are also a great illustration of how even technology that was once ubiquitous and considered essential can be displaced by something else, even something that on the face of it seems inferior in several respects (in this case, call quality, expense, the need to charge a battery, and so on, though all these things have improved over time). That’s worth remembering when looking at today’s dominant technologies and companies – there’s no reason to believe they’ll stick around forever either.
Report Shows Unfair Treatment a Major Reason for Tech Departures Among Underrepresented Groups (Apr 28, 2017)
A new report out studies the reasons why people choose to leave jobs in the tech industry, and concludes that unfair behavior or treatment was a factor for many employees, and underrepresented groups reported it was a factor at higher rates than white and male respondents. The findings are disheartening if not surprising given the prevailing narrative about diversity in tech. Women, people of color, and LGBT respondents were all likelier to report unfair treatment and to have left jobs because of it. If the industry is going to keep treating employees from these groups in this way, it’s going to continue to lose them, which is going to make increasing diversity even slower. It’s particularly striking because many employees within the industry don’t seem to think there’s a problem at all. It’s well worth reading the piece linked below for the full details of the survey.
via USA Today
Important update for Tech Narratives RSS feed users (Apr 10, 2017)
An important update for those of you using the Tech Narratives RSS feed:
From launch in January, I’ve said that the site was eventually going to have a paywall which would put much of its content into a subscription service, and as of this week that process has now begun. From today onwards, the RSS feed will only carry the few articles each day which will be freely available, and others will be behind the paywall. The subscription is $10/month and there is a 30-day free trial, so you can try it out before spending any money. You can sign up here, and as part of the subscription you will have access to a private RSS feed which will allow you to keep receiving posts in your feed reader as long as you remain a subscriber. You’ll need to update your RSS reader to reflect that new link if you choose to subscribe.
P&G Chief Brand Officer Renews Calls for Advertising Platforms to Grow Up – New York Times (Apr 10, 2017)
I won’t cover this in depth again here – I covered Marc Pritchard’s remarks in January at the time, and his line hasn’t changed much. But given all that’s happened in the interim it’s worth reiterating that Pritchard remains a prominent voice advocating for change in the digital advertising platforms on behalf of big brands. Specifically, he’s arguing for more transparency in what can be a very opaque value chain from start to finish. None of these issues are going away soon, though it’s arguable that what the brands really want here is more leverage, so I would guess that they’ll keep beating the drum while slowly getting more and more of what they want. The crisis of sorts around ads showing up against undesirable content is likely to blow over soon enough, but the ongoing tension between advertisers and these platforms won’t go away any time soon.
There’s some good analysis here from the FT around a couple of different metrics relating to the performance of larger and smaller companies in the US tech industry. Specifically, the FT suggests larger companies’ shares have performed better, and that they vastly outspend smaller companies on R&D, something that makes it extremely tough for smaller companies to compete on a level playing field. This absolutely rings true: over the last few years, not only scale but also broad scope have become extremely important as competitive differentiators as companies increasingly build not just individual products and services but interconnected ecosystems. Those companies also regularly acquire smaller companies that develop interesting new technology, using M&A as another form of R&D on top of the billions they already spend organically. All of that makes it extremely difficult for smaller companies not only to compete but to grow to any decent size. Snap is one of the few big consumer tech companies to get large enough to reach IPO stage in recent years, and only because it has explicitly rebuffed acquisition offers along the way. Even then, it’s still a tiny fraction of the size of the big players in terms of revenue or user base. Companies that make it this far have always been the exceptions, but that’s only going to become more extreme going forward.
via Financial Times
In tech, the wage gender gap worsens for women over time, and it’s worst for black women – TechCrunch (Apr 5, 2017)
I covered a similar story a while back, but this one has more detail, and focuses more on gender in addition to racial disparities in tech salaries. It turns out that being a member both of an underrepresented gender and race increases your odds of being underpaid significantly, such that black and Latina women earn 79 cents for every dollar equivalently qualified men do. In part, as with that earlier study, this is because women often ask for lower salaries than men, though apparently only after their first few years in a career (in their first four years, they actually tend to ask for more). That, in turn, may reflect both conditioning in terms of what to expect and lower previous salaries. Regardless of the reasons, this is yet another sign of systemic problems in the tech industry when it comes to hiring women and racial minorities and paying them at the same rates as white men.
This is a great summary of a critical element in the disconnect between the Trump administration and the tech industry. Through Trump has Peter Thiel in a liaison role and recently appointed Matt Lira to an advisory role around innovation, he has left largely unfilled the traditional home of science and technology policy-making within the White House, the Office of Science and Technology Policy. The article argues that this, in turn, has made it very difficult for the tech industry to make its voice heard inside the White House on issues such as the executive orders on immigration, which was the first major point of friction between the two. The contrast between the Obama and Trump administrations here couldn’t be more clear, and the big question is whether the current situation will change in time or whether this disconnect will continue.
The RIAA just released its annual report on the financial state of the US music industry, and it appears that streaming crossed the 50% mark of recorded music revenue in 2016 for the first time, landing at 51% for the year, up from just 34% a year earlier, an increase of around $1.5 billion year on year in total streaming revenue. Apple Music was clearly part of that picture, as it grossed around $1.5 billion globally last year by my calculations, but once you spread that number across the countries where Apple operates and subtract its cut, it clearly wasn’t the only contributor to growth, with Spotify obviously another big contributor. Other things worth noting: this is really about paid streaming, which dominates overall streaming revenue, with around two thirds of the total despite far fewer users (around 25 million at the end of the year versus a likely 150 million for ad-based streaming). This streaming growth actually helped drive digital and overall revenue growth significantly higher this year after a fairly stagnant 2015 too. Also, based on my analysis of the three major music labels, streaming is still under 40% of their recorded music revenue globally, so the US is ahead of the global curve here.
Treasury Secretary Steve Mnuchin said in an interview that he felt AI taking Americans’ jobs was 50-100 years away, and it wasn’t a concern in the present. Predictably, a whole raft of tech folk who work on AI and are very much aware of jobs being lost to AI today reacted rather poorly to that statement. At best, this feels like yet another government official who doesn’t have a good grasp on technology, something that’s been a worry with the current administration since before it took office. But at worst, this means the government is far less likely to take any meaningful action on helping protect American jobs that might be lost to AI or to retraining workers so that they can find new ones if their old ones go away. Whether you believe either of those things are the government’s job or not is largely a matter of your philosophy on the proper role of government, but at the very least you’d want the government to have a realistic sense of what kind of impact AI will have on jobs and when, in order to make an informed decision.
I’ll refer readers back to last week’s comment on this topic, even though the news has moved on a little. That item was about telcos lobbying for a change in laws regarding user data, whereas today’s news is about the Senate pushing through a bill that would enact the change, but the issues are the same. At root, the telcos have argued that they shouldn’t be regulated more tightly than the internet companies that already gather and sell lots of data on users, and that therefore regulations introduced last year should be overturned. Of course, both web companies and other entities like data brokers already gather, aggregate, and sell masses of user data, so there’s some merit to the argument that telcos shouldn’t be the only ones singled out here. ISPs have also argued that they’ve voluntarily agreed to codes of conduct which would bind them in similar ways without this regulation. Regardless, the optics of a move such as this bill are terrible both for the ISPs and for the (mostly Republican) senators who have backed it.
This survey is a great illustration of one of the biggest challenges in increasing diversity in the US tech industry: most employees feel there’s already enough diversity. Reading through the various bits of insights in the article here, it appears that it’s a combination of most employees by definition not being in the minority or underrepresented groups and therefore not being personally affected by it, and a sense that the problems are systemic in the industry and their particular employer is doing its best. But it’s obviously very hard to change workplace cultures in favor of diversity when most of the current employees don’t even see a problem. Moreover, I suspect many individual employees are so focused on doing their day jobs that they rarely give a second thought to cultural issues in general, whether diversity specifically or something else.
via USA Today
I’m not sure if it’s admirable restraint not to mention Amazon once in this article, or if it’s denial. The retail apocalypse described here is clearly driven by growing e-commerce spending, and indeed a number of the specific companies cited are closing physical retail stores while maintaining an online presence. Amazon is of course not the only online retailer, but it’s a major force in both the growth of e-commerce in the US and in the decline of physical retail stores and demise of certain physical retail brands (Sears looks to be the next – and one of the biggest candidates for that category). Of course, though Amazon’s success is one cause, retailers’ own inability to transform their businesses to compete more effectively is another major one.
via Business Insider
Almost 20% of digital ad spending could be wasted – Axios (Mar 22, 2017)
The first thing I thought of when I saw this headline was the famous quote from John Wanamaker about half his advertising dollars being wasted, but not knowing which half (and Sara Fischer told me she had included a reference to it, but removed it for brevity’s sake). The difference here is that the “waste” referred to isn’t poorly targeted advertising, but fraud and “invalid traffic” – in other words, ads that no-one sees at all but which are nonetheless recorded as having been seen and therefore paid for. Fraud – especially in programmatic, where 29% of dollars are apparently wasted – is one of several big issues for online advertising at the moment, and it isn’t going away soon, even though the authors of this report have a proposed solution.