Important Note
Tech Narratives was a subscription website, which offered expert commentary on the day's top tech news from Jan Dawson, along with various other features, for $10/month. As of Monday October 16, 2017, it will no longer be updated. An archive of past content will remain available for the time being. I've written more about this change in the post immediately below, and also here.
Facebook is starting to put ads in the middle of its videos – Recode (Feb 23, 2017)
This was reported as being on the way back in January, but now it’s official and expanding. That means Facebook is finally going to start trying to make some real money from all the video it’s been trying to get natively onto its platform, hopefully justifying all the effort it’s put into its video push over the last couple of years. For users, of course, that means you’re going to start seeing ads in yet more places on Facebook, though only on longer videos (ads can’t run until the 20 second mark on recorded videos or the 4 minute mark on live videos). Given that the vast majority of videos I see on Facebook are under a minute, I don’t imagine I’m going to be seeing that many. But that’s also why Facebook has been tweaking its algorithm to help promote longer videos. And of course all these ads can potentially go into the videos Facebook will show on its TV app.
via Recode
Spotify expands its push into original content with new podcasts – TechCrunch (Feb 23, 2017)
It’s becoming increasingly clear that original content is going to be an important part of differentiation in the streaming music space going forward, between Spotify’s earlier video content and now several new podcasts, and Apple’s focus on Beats 1 radio and its TV shows. The difference is, of course, that Spotify has a free tier, where this original content will also be available, while Apple will restrict its TV shows to paying subscribers. For Apple, the cost isn’t that big a deal – it has a much bigger company to fund such investment – but for Spotify such additional costs will push it yet further away from profitability without any big direct revenue benefit.
via TechCrunch
Google Cousin Develops Technology to Flag Toxic Online Comments – The New York Times (Feb 23, 2017)
I love the term “Google cousin” to describe the non-Google companies under the Alphabet umbrella (though confusingly Jigsaw’s website makes it seem as if it’s actually part of Google despite no longer being called Google Ideas). The bigger point here is that this is a clever use of machine learning to solve a real problem, which I’m always a big fan of. Online comments can be horrible and very time consuming to moderate, and this API can be used by publishers to filter out the most “toxic” of those moments. Having said that, the sample comments Jigsaw shows to demonstrate the tool highlight just how inane most online comments are regardless of whether they’re actually toxic, calling into question for me at least whether they’re worth having at all. But this Perspective tool seems to be part of a broader push around technologies for increasing “safety” in various scenarios – that’s definitely the message you get at the Jigsaw website.
Inside Facebook’s AI Machine – Backchannel (Feb 23, 2017)
Backchannel (and Steven Levy in particular) seems to be becoming the default outlet (I was going to say channel) for these access-y pieces on AI and machine learning. Levy previously did something very similar for Apple last August, Amazon in November, and Google in October. And there continues to be a perceived need for this kind of thing because AI continues to be something that’s mostly talked about rather than seen by consumers. That’s not to say that it’s not in products – it clearly is, and the money quote from this article is that “Facebook today cannot exist without AI” – but that it’s not intuitively obvious to consumers that AI is behind a lot of what they use. Companies still need to tell their AI stories, particularly because narratives have emerged about Google being ahead or Apple being behind, and those narratives need to be countered. There are several interesting things in this particular article, but as that quote indicates the biggest thing that comes out of it for me is how central AI and machine learning are becoming to almost everything at Facebook. Secondarily, it’s interesting to see Facebook in some cases do complex processing on the phone itself, something Apple has pioneered but which others have largely eschewed in favor of cloud processing.
via Backchannel
Tesla Reports Q4 2016 Financial Results (Feb 22, 2017)
The last in our trio of financial results today comes from Tesla. This Wall Street Journal piece from this morning does a great job highlighting some of the investor enthusiasm about Tesla in the face of its continued failure to hit expectations and deliver on its own production and other promises. In the end, today’s results were a mixed bag – both production and deliveries in Q4 were down slightly on Q3 but well up on Q4 last year, revenue was up almost double year on year, and the Solar City business looks to be breaking even on gross margin. But overall, the company had big net losses, ate massive amounts of cash in the quarter, and continues to be a long way from its production targets for the Model 3 which is supposed to start shipping in July. It’s also about to embark on a huge increase in battery production, with three additional Gigafactories being planned for construction starting later this year. Meanwhile, the company’s valuation is now ahead of Nissan’s, despite producing losses and massively fewer cars – the power of trajectory and belief in a disruptive business model.
via Tesla (PDF)
Square Announces Q4 2016 Financial Results (Feb 22, 2017)
Square’s results were much better than those for Jack Dorsey’s other company, Twitter, earlier this month. All the important numbers are heading in the right direction, with revenue growth strong year on year, margins steadily improving and heading towards breakeven, the Starbucks business in the rearview mirror, and new more profitable businesses ramping up nicely. I tweeted quite a few of my Square charts earlier in this thread following release of the results – overall, there’s a lot to like here, and the long-term challenge continues to be driving scale while leveraging the payment processing business to drive new, higher margin revenue.
via Square
Fitbit Reports Final Q4 2016 Earnings (Feb 22, 2017)
I covered Fitbit’s preliminary earnings release a little while back, and we already knew these results weren’t going to be pretty. This was the first quarter of year on year declines, and also featured the company’s first meaningful losses since 2013, when it recalled its Force device. Its costs, especially its sales and marketing costs, rose considerably as a percentage of revenue, and its cost of revenue in particular was well up on last year’s despite the much lower revenue. As I said a few weeks ago, though Fitbit is downplaying these results as a temporary setback and promising a recovery, I see little evidence to support that assertion. Interestingly, some of the metrics Fitbit only provides once a year around user numbers suggest that it’s sold relatively few second devices to the same users – its registered user number is over 80% of its total number of cumulative devices sold, suggesting under 20% were sold as second devices to the same users; in addition, its active user number is now under half its total registered user number, suggesting an over 50% abandonment rate. Those two combined, together with the relatively small addressable market for dedicated fitness devices, are why Fitbit is having such trouble.
via Fitbit (PDF)
T-Mobile Continues to Boost Capacity for Customers with LTE-U Launching in Spring 2017 – T-Mobile (Feb 22, 2017)
T-Mobile has been touting LTE-U as a potential extension of its current LTE capabilities for several years now, but needed FCC permission to begin actually deploying the technology, which operates in some of the same bands as WiFi. It now has that permission and will apparently begin rolling out the technology to customers in the Spring, though none of the devices currently in T-Mobile customers’ hands actually support LTE-U – those will start arriving later this year, CTO Neville Ray told me. The technical marketing lead for Qualcomm’s LTE and 5G modems tells me that devices carrying the new Snapdragon 835 chip and X16 LTE modem will support it. So until there’s widespread adoption of new devices capable of supporting the technology, and widespread support in the network, this isn’t going to have much consumer impact. In the meantime, there’s good marketing fodder here about being first (as with Verizon’s 5G announcement earlier).
via T-Mobile
How Messenger and “M” Are Shifting Gears — The Information (Feb 22, 2017)
Facebook’s M assistant in its original conception was a virtual assistant a la Siri or Cortana which lived in Messenger, but one which was being trained by humans while it was available to a very limited number of users. Over time, it became clear that the process of handing off from humans to AI for the broad set of tasks M was supposed to be able to handle wasn’t going well, and it appears Facebooks somewhat went back to the drawing board on that. At the same time, the bot strategy within Messenger hasn’t gone well either, with limited developer and user adoption. Facebook now seems to have decided to combine these two failing projects into a new one which it presumably hopes will go better – M will pop up from time to time in Messenger conversions between friends to offer to complete certain tasks based on context. That’s probably a better, narrower use case for an AI assistant, but it also has serious potential to be creepy to users having what they will perceive to be a private conversation. And herein lies one of the biggest challenges with AI and bots – in order to be useful, they need to insert themselves into private conversations, which means they need to listen in on private conversations, much like Google’s advertising within Gmail has always been context based. In theory, only computers are eavesdropping, but that doesn’t stop people from objecting. I’m not convinced yet that this is the right answer either for Facebook’s M or bot strategies.
via The Information
Google and Intel had the most active corporate VC firms last year – Recode (Feb 22, 2017)
Corporate venture capital in Silicon Valley is always fascinating: these are the things big companies choose to invest in indirectly rather than directly, which often leads to fairly complex relationships between some of these companies (notably Google’s relationship with Uber). My Beyond Devices Podcast co-host Aaron Miller did a great breakdown of this feature of the tech industry a while back – have a listen to this episode if you’re interested. It appears Google and Intel were the biggest investors in 2016, with some really sizable bets made by Google in particular during the year. I wish I could see more details from the report, but CB Insights pulls a bait and switch in which it first asks for just an email address and then follows up with a demand for a phone number and job function, so I’m not downloading it.
via Recode (CB Insights report here)
Verizon offers taste of 5G as it expands network trials – CNET (Feb 22, 2017)
Though the headline doesn’t do it, the article itself makes appropriate use of quotation marks around “5G” – there is no official standard for 5G yet, so everything being rolled out or trialled in the meantime is pre-5G based on companies’ anticipation of what the standards will say. We’re very much in the marketing phase of 5G at this point – for the reasons just stated, no-one can actually roll out 5G yet, and everything that is being rolled out is very much in the trial stages rather than production rollout, but that’s not stopping companies like Verizon from issuing lots of press releases about it as a way of establishing perceived leadership in this space. As with previous generations of mobile technology, there are multiple phases that need to happen before real people start seeing real benefits in real numbers: the standards have to be finalized, network equipment vendors need to release standards-based equipment, carriers have to deploy that equipment into their networks at scale, and most importantly end user or customer premise devices need to begin incorporating the technology. We’re years away from mass deployment still. The good news is that LTE has tons of runway left ahead of it in terms of increased speeds; the bad news is that we’ll all get so bombarded with 5G marketing in the interim that many people won’t recognize it when it actually arrives.
via CNET
Microsoft launches Skype Lite Android app for India and other emerging markets – TechCrunch (Feb 22, 2017)
This looks like a great bit of innovation from Microsoft – both well customized for a local market and the first really compelling implementation of its bot strategy that I’ve seen. Facebook has been doing well for a while with its Lite offerings, which have expanded its reach in emerging markets, and this Skype version seems to offer some of the same benefits. The future integration with the government identity scheme sounds particularly interesting. There’s obviously strong competition in India for the services Skype provides, many of which already cater for users with limited bandwidth, and Microsoft continues to struggle to monetize its consumer efforts including Skype, but it’s great to see it innovating in this very localized way.
via TechCrunch
Uber launches self-driving car pilot program in Tempe – Phoenix Business Journal (Feb 22, 2017)
A good reminder that even when an announcement is made, it often takes weeks if not months for it to actually take effect – Uber announced its move from San Francisco to the Phoenix area in December, but only now is it launching self-driving rides for paying customers in Tempe, a Phoenix suburb. In addition, we still have the disingenuous claims from the governor of Arizona that California was somehow not “open to business” for self-driving cars, despite being the home of the biggest trials in the country. The reality is that Uber wouldn’t comply with applicable regulation and made the decision to leave the San Francisco area rather than comply as others have done. For now, that must feel like good news for Uber – it gets to test its cars without the scrutiny or reporting requirements which would have been imposed in San Francisco. But whether this ends up being a good thing for the drivers and pedestrians of Arizona remains to be seen.
via Uber launches self-driving car pilot program in Tempe – Phoenix Business Journal
U.S. iPhone users are spending more on apps – Axios (Feb 22, 2017)
Here’s the second item on apps from Axios today. Whereas the first was about Pokemon Go, this one is about App Store performance in general, and shows that average spending on the App Store continues to rise in the US. That spending is dominated by games, a long-standing trend, and the game spending is likely in turn dominated by in-app purchases. For now, this is great for Apple and its partners: IAP is growing, and that in turn is driving App Store and Services segment growth, something that’s critical to Apple’s growth narrative. However, I continue to find the IAP model troubling – it exhibits characteristics of addiction and relies on a very small number of players paying huge amounts per month. That works as a business model, but it feels predatory and I’d love to see game developers come up and popularize new ways to pay for games – so far, we’ve seen one or two companies do this successfully including UsTwo’s Monument Valley, but Nintendo’s attempt to find a different model with Super Mario Run has been disappointing from a revenue perspective. Still lots of work to be done here.
via Axios
Pokémon Go is again Apple’s top-grossing app after releasing new characters – Axios (Feb 22, 2017)
This is one of two quick pieces from Axios on apps that I’m going to cover this morning. This one shows that Pokemon Go has had a little resurgence off the back of the new characters it released recently, making it a top app again on iOS. To my mind, that again reinforces the point that Nintendo has done far better with the app it only owns a minority share in than with the app it owns outright (Super Mario Run) and likely even makes more money from Pokemon Go despite that minority share. That’s something it’s going to have to think hard about as it prepares to launch additional mobile games in the coming months.
via Axios
Apple files 14-point appeal against European Commission’s $14 billion tax edict – AppleInsider (Feb 21, 2017)
Long story short: Apple has filed its formal appeal of the EU’s action against Ireland regarding Apple’s tax treatment in the country, and it argues for the dismissal of all charges on the basis of a number of different points. That’s not surprising – Apple immediately after the ruling said it would appeal, so this is just that process rolling along. I’ve never been a huge fan of the ruling – it felt like judicial overreach and part of the ongoing spat between the EU and US on taxes and on competition between US and European tech companies rather than something based on actual legal merit. Nevertheless, as I admitted at the time, neither I nor the vast majority of other tech industry commentators are actually experts in EU tax law, and even admitted experts like the Irish authorities, Apple’s accountants and lawyers, and the European Commission’s investigators can actually agree on what the right answer is. We can state opinions all we want, but they don’t actually matter – this case will go to court and at some point a conclusion will be reached which all the parties will have to live with. A move to enable lower-tax repatriation in the US would certainly go some way to bolstering Apple’s case that it already pays adequate taxes in its home market on what it earns in Europe, but Apple has no direct control over that outcome either.
via AppleInsider (Apple’s filing here and some fairly Euro-skeptic analysis by Florian Mueller here)
BMW, Mobileye, and HERE Partner to use Car Data to Update Maps (Feb 21, 2017)
I’ve seen this announcement referred to as being about crowdsourcing in at least one place, and that’s exactly the wrong word to use, because this isn’t about a crowd of people at all, but about real-time data from vehicles. In contrast to crowd-sourced map data, which can easily be manipulated for humorous or nefarious ends, this is a closed-loop system in which anonymized data from BMW cars will help update HERE’s increasingly detailed and real-time maps. And that kind of up-to-the-minute map data will be critical for autonomous driving in future – it’s no good knowing what the road looked like six months ago (or even yesterday) if there’s construction, an accident, or a roadblock today. Putting this technology into one manufacturer’s new cars by itself isn’t going to generate that much data – there simply aren’t enough brand-new BMWs to be useful. But if HERE strikes similar partnerships with other carmakers, then over time it could end up with some of the best real-time map data out there. It’s a little hard to tell from HERE’s release, but the BMW/Mobileye release certainly suggests that the latter will also get to aggregate and use the data. This announcement also highlights the fact that, no matter how clever the technology from Silicon Valley startups, the companies with by far the most and best data will be the car companies and those that partner with them.
via HERE and BMW/Mobileye
Intel’s 7560 Modem Could Push Next iPhone to 1Gbps – PCMag (Feb 21, 2017)
There’s some conjecture here on two points: that simply because Intel has added CDMA/EVDO capability to its next LTE modem Apple will use it globally, and that a modem capable of delivering peak throughput of a gigabit per second will actually do so in real world environments. The latter is an obvious stretch, given that real-world performance is always a fraction of the theoretical peak, but the former may well be a stretch too. I’m not convinced that Intel could ramp up production quickly enough to be the supplier for all of the next generation of iPhones – that would be a massive step up over its iPhone 7 supply. And I’m not convinced that Apple, having finally gained a measure of redundancy by dual sourcing modems for the iPhone 7, would so quickly jump back into single sourcing, especially given the performance limitations of the current generation Intel modems. That’s not to say this would never happen, and it’s obviously a very interesting point of leverage in the context of the current bad blood between Apple and Qualcomm, but I still think it’s somewhat far fetched at this point.
via PCMag
How Uber got into this human resources mess – Recode (Feb 21, 2017)
Some great reporting here from Johanna Bhuiyan, with lots of digging behind the scenes into not just the corporate culture at Uber but more specifically the HR department and its lack of resources over the last several years, which likely contributed to the events Susan Fowler wrote about this week. It’s fairly clear that Uber underinvested in some of the aspects of HR not related to hiring and firing, but also that CEO Travis Kalanick continues to drive the company culture very much from the top down, including in a number of negative ways.
via Recode
Google Agrees to YouTube Metrics Audit to Ease Advertisers’ Concerns – WSJ (Feb 21, 2017)
It’s interesting to see Google working with the MRC around auditing now too – Facebook just announced MRC auditing a couple of weeks ago, but it had of course had an embarrassing series of screwups relating to metrics for advertisers and content providers, whereas YouTube didn’t. However, this is reflective of a broader mistrust of online advertising by big brands and marketers, and an inconsistency in the use of major metrics like viewability. From what I’ve read, the MRC standards are pretty minimal as far as what counts as a view, but at least there’s consistency there, which is a start.
via Google Agrees to YouTube Metrics Audit to Ease Advertisers’ Concerns – WSJ