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.

Each post below is tagged with
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  • Topics
  • and
  • Narratives
  • as appropriate.
    Amazon is building a $1.5 billion hub for its own cargo airline – Recode (Feb 1, 2017)

    Yet another story about Amazon’s deepening investment in shipping infrastructure (see also ocean liners). Its Prime Air freight investment is an existing strategy, but Amazon is leasing the planes and has been using existing hubs, whereas this new $1.5 billion investment is to create its own hub in Kentucky. Amazon’s claim that it isn’t looking to compete with UPS gets harder to believe all the time.

    via Recode


    Pinterest introduces Search ads with Keyword and Shopping campaigns – Marketing Land (Feb 1, 2017)

    I don’t follow Pinterest closely, but this has been a long-anticipated change to its ad products, and an important one – search advertising continues to be the best way to deliver the killer combination of timeliness and relevance to a user. Most of Pinterest’s ad products so far have been focused on relevance – pins within the context of a topic-based board or within the overall feed of new content, which are somehow related to other things the user has looked at or pinned recently. This move also reinforces the idea that search is in some specific categories migrating off general purpose search engines and into specialized ones, with Amazon and shopping being the most prominent example. The article says that Pinterest sees two billion searches a month already, and that’s a massive base to insert ads into.

    via Marketing Land


    Snap Is Working on Smarter Lenses (AR) — The Information (Feb 1, 2017)

    AR has seemed an obvious area for Snap to invest in, given its focus on cameras and camera-centric experiences, and its existing Lenses product. So it’s not that surprising to hear that the company is working on AR-style lenses for something other than mere selfies, using the rear-facing camera. It sounds fairly basic for now, and very much in keeping with the idea of superimposing objects onto the real world for taking and sharing pictures. But of course once the technology is there it could theoretically be repurposed for other things too, including a potential future version of Spectacles with AR capability which would overlay virtual content onto the real world seen through its glasses. Lots of potential here, and as ever it’s still very early days in AR (and in the broader AR/VR battle).

    via The Information


    Comcast Is About to Sell You Cable TV Without the Cable Box – Bloomberg (Jan 31, 2017)

    This announcement was very well timed given the apparent death of FCC set top box reform reported earlier today. Comcast has argued all along that market forces will bring the choice in set top boxes consumers want, and this announcement is a useful token of that vision. It’s limited – it’s Roku only for now, and customers still have to have an old-style STB in the home as well until later this year. It also appears customers will still have to pay something for the privilege of using a box they own rather than one of Comcast’s. This is progress of a sort, but very much the kind of progress the cable companies are willing to go along with – with control, fees, and more still in place to some extent. The more interesting question is whether Comcast might use this experiment as the basis for a broader rollout of over-the-top Xfinity TV services outside its footprint – that would be far more disruptive.

    via Bloomberg


    Facebook Tunes Into Television’s Market – WSJ (Jan 31, 2017)

    Facebook’s quest to find new places to put ads continues. It’s far from clear what this Apple TV app will actually look like yet – whether a simple feed of all the videos from the user’s News Feed, or something more. Making the jump to TV from mobile is really tough – Facebook on a smartphone neatly fills all those moments during the day between things: waiting for a bus, killing time during a commercial, and so on. I’m not convinced it can make the transition from the thing you do while watching TV to watching TV itself. It’s another one of those cases where the reasons why Facebook would do it are obvious, but the reasons for people to actually use it are far less so.

    via WSJ


    Sprint Continues Year-over-Year Growth in Net Operating Revenues and Postpaid Phone Net Additions with Third Quarter of Fiscal Year 2016 Results – Sprint (Jan 31, 2017)

    Sprint reported its results this morning, the third of the four major US wireless carriers to do so (see AT&T and Verizon comments – T-Mobile reports on Valentine’s Day). Sprint is going through something of a renaissance lately, though only in relative terms. It’s still the smallest and least profitable of the big four, but has made lots of progress improving churn and therefore improving its customer growth numbers. The focus for both T-Mobile and Sprint is postpaid phone growth, and they’ve led the market there lately, while AT&T grows strongly in prepaid and things like connected cars, and Verizon tries to hold onto the customers it has without sacrificing margins too much through price wars. This is a fiercely competitive market, and one with relatively little growth in traditional phones. Sprint has done well to recover here lately, but has also begun to grow more strongly in connected devices (cars, machine-to-machine, and so on), while its prepaid business is falling apart (it removed over a million subscribers from its rolls in Q4 due to a change in churn standards, on top of the hundreds of thousands it reported as official prepaid subscriber losses). There’s a long way to go still for Sprint to turn itself around, not least on its network performance, where it continues to argue that it can produce the best network while spending far less on network capex than any of its competitors.

    via Sprint


    Apple Reports December 2016 Quarter Results – Apple (Jan 31, 2017)

    This was an important quarter for Apple – it had predicted a return to growth, and it delivered on that promise, though the growth was helped by the extra week in the quarter due to Apple’s quirky reporting calendar. The highlights were iPhone, Mac, and Services growth, with the latter being by far Apple’s most consistent and fastest growing segment. The lowlights were the iPad, Other Products, and Greater China, all of which were down. Both total revenues and iPhone shipments (which are closely tied) have been within a remarkably narrow range the last three years in the December quarter, suggesting at least something about supply constraints and natural limits. The Mac had its best revenue quarter ever, helped hugely by the new MacBook Pros, which are more expensive than the average Mac Apple sells and boosted ASP a lot. Services was mostly driven by the App Store as usual, but music (Apple Music and iTunes combined) grew for the third straight quarter, and iCloud and AppleCare also helped. Apple Watch had a record unit and revenue quarter too, apparently, though we have to guess at the actual numbers. I’d guess it was marginal growth year on year, for around $2.1 billion in revenue and 6 million units. iPad dropped significantly both in unit shipments and revenue (and ASP), though some of that was down to channel depletion, and the large iPad Pro had launched a year ago, boosting that quarter. Overall, a pretty decent quarter for Apple, but no strong growth here yet (especially when you strip out the extra week). Foreign currency isn’t helping either unit sales or reported revenues or profits, and arguably roughly offset that extra week in several regions.

    Lots of real-time tweets from me in this thread, and I’ll be updating the Jackdaw Research Quarterly Decks Service deck for Apple in the coming days once the 10-Q is out.

    via Apple


    Facebook Improves Transparency and Deepens Partnerships Around Metrics (Jan 31, 2017)

    The other bit of news from Facebook today addresses the recent problems it’s had with unreliable metrics for advertisers and publishers. Some of this is just about providing more metrics for measuring performance on Facebook across various channels (Facebook, Instagram, and Audience Network within its own products can be compared with TV and/or print data from wider campaigns), but there’s also news on the third party verification front, which advertisers have been asking for. It now has deeper partnerships with Nielsen and ComScore, and is deepening its viewability measurement tools, as well as adding some additional partnerships. There’s lots here, the detail of which won’t be all that interesting unless you’re directly involved in this stuff, but Facebook is showing some promising willingness to open up more to outside measurement platforms its partners trust as a way of offsetting the embarrassing errors which turned up late last year.

    via Facebook


    New Signals to Show You More Authentic and Timely Stories – Facebook (Jan 31, 2017)

    This is one of two bits of news from Facebook today (the other concerns metrics), this one about dealing with fake news (though that’s a term Facebook continues to eschew in favor of talking about genuineness and authentic communication). Facebook is tweaking its algorithms again to provide better feeds with fewer sensationalist or inaccurate news reports, for example. It looks like this is mostly about ordering within the feed rather than whether something appears there at all, however, which is a nice way of avoiding perceptions of outright censorship, though of course the lower something appears in the feed, the less likely people are to see it. It’s good to see that Facebook continues to tweak its strategy for dealing with fake news, and as with previous moves around news it’ll be very interesting to see how it’s perceived by users and publications.

    via Facebook


    Pokémon GO Has Grossed $1 Billion Worldwide Since Launch – Sensor Tower (Jan 31, 2017)

    I’m including this today mostly because it’s an interesting counterpoint to the Nintendo results and related data about Super Mario Run from earlier. There’s such an interesting juxtaposition between the $53 million Nintendo has generated from Super Mario Run so far, and this billion-dollar gross figure from Sensor Tower for Pokemon Go since it launched. On the one hand, Nintendo only owns a minority stake in Pokemon Go, but the game has probably still generated more revenue overall for Nintendo than Super Mario Run, which it owns outright. And of course Pokemon Go’s business model is much more along the lines of the fairly standard in-app purchase model. It’s still early days for Super Mario Run, but it’s interesting for Nintendo that the game which appears to have been a far bigger success on mobile is the one it doesn’t own outright, and which adopted the standard IAP model rather than something different.

    via Sensor Tower


    Uber, Daimler Strike Partnership for Self-Driving Vehicles – Bloomberg (Jan 31, 2017)

    This is Uber’s second partnership with a carmaker around autonomous driving – it already has one with Volvo, under which Volvo supplies the base vehicle along with redundant power supply and other features which is then plugged into Uber’s autonomous driving “brain”. It looks like the Daimler/Mercedes relationship will be similar. Both Alphabet’s Waymo and Uber have now made clear statements to the effect that they don’t see value in trying to build cars, a topic on which Apple still seems to be somewhat uncertain. What’s less clear is whether Uber, like Waymo, sees a role for itself in designing the hardware to go into cars, such as LIDAR. These tie-ups between carmakers and ride sharing services make plenty of sense: if autonomous driving is going to have a role in the near term, it will likely be as part of ride sharing or ride hailing services, which have narrowly defined geographic areas in which they operate – that’s the same reason Ford’s aggressive 2021 goal is designed for a fleet scenario rather than retail sales. It’s also interesting to see a premium brand like Mercedes associated with Uber here – though limos were an important part of the early value proposition for Uber, the focus has since shifted well down market towards UberX and Uber Pool.

    via Bloomberg


    Nintendo’s ‘Super Mario Run’ Scores Revenue, but CEO Wants More – WSJ (Jan 31, 2017)

    This is the first real indication we’ve had directly from the source of how Super Mario Run has performed for Nintendo since it was released in mid-December, and it came in the context of Nintendo reporting its results for the December quarter. Overall revenue for the quarter was 174 billion Yen, or around $1.5 billion, while total revenue from Super Mario Run so far (including January) is around 6 billion Yen, or $53 million. So even though Super Mario Run has done well in its own right, it’s a drop in the bucket in terms of Nintendo’s overall business. The other key number is that around 5% of those who have downloaded the game have paid $10 to unlock the full functionality. As a frame of reference, King (maker of Candy Crush) reports that around 2% of its monthly users make some kind of payment, with the average paying user spending a lot more than $10 per month. Zynga sees a conversion rate of just under 2% and again sees spending per paying user per month well above $10. So although a 5% conversion rate may seem high, that’s a one-off payment, whereas competing game maker’s smaller number of paying users pay repeatedly over a period of time for a much larger total amount. So far, Nintendo’s business model, which attempted to buck the usual IAP model for games, has both annoyed some users while delivering a lower payout than competing games. I’m not convinced it’s done figuring out the right business model for its mobile offerings.

    via WSJ


    FCC Chairman Ajit Pai Scraps Set-Top Proposal – Variety (Jan 31, 2017)

    This was inevitable – the STB proposal was one of two issues, along with net neutrality, which the incoming chair of the FCC was expected to dump as he took the helm. And along with net neutrality, these were popular issues championed by consumer rights groups and some big consumer technology companies. However, it’s also true that the impact of ditching these policy issues may not be as widespread as feared – I wrote a piece last week about the real likely impact of net neutrality rules being dismantled, and I’ve always been skeptical that the STB reforms proposed would actually bring about meaningful change in the industry. Previous attempts (see CableCard) had failed, and it wasn’t clear to me that the new approaches would be more user friendly or likely to deliver greater openness around the boxes we get to use to watch TV. Realistically, positive change in the TV market is more likely to come from increasing competitive pressure leading to concessions by major legacy players to the new world order (though we’re not there yet) – and now that the FCC has dropped STB reform that’s the only kind of progress we’ll see regardless.

    via Variety


    Twitter To Roll Out Anti-Harassment “Fixes” This Week – BuzzFeed (Jan 31, 2017)

    One of the most baffling aspects of Twitter’s inertia over the past couple of years has been its refusal to take the issue of abuse and harassment on the platform seriously. This late-night tweet storm by the company’s VP of Engineering suddenly revealed that Twitter had decided to take the issue much more seriously and move much more quickly to resolve it (“days and hours not weeks and months”). When essentially everyone outside Twitter HQ has recognized that this was an issue that needed swift resolution for years now, why did it take Twitter so long, and what has changed now? One answer is that Twitter’s earnings are coming up next week, and making a strong statement about this now helps neutralize awkward questions about it then, even if Twitter hasn’t announced anything more concrete. Another is that Twitter is responding to the thorny questions about President Trump’s usage of Twitter and calls for him to be booted off the service by dealing with abuse more broadly. And perhaps some people at Twitter that have wanted to move faster on this issue but been blocked by Jack Dorsey or others finally managed to break through whatever barriers existed. Regardless, it’s good news assuming some meaningful change does come out of all this, but it still says nothing good about Twitter’s internal culture that it took this long to get to this point.

    via BuzzFeed


    Walmart is going after Amazon Prime with free two-day shipping and no membership fee – Recode (Jan 31, 2017)

    Walmart is making two changes to its free shipping program: eliminating the $49 annual fee, and lowering the minimum purchase amount that qualifies for free shipping from $50 to $35. This doesn’t give the impression of Walmart coming from a position of strength, but rather one of weakness, where it has to keep making concessions and changes to try to make its equivalents to Amazon’s Prime service look more enticing. Of course, there’s also an argument to be made that Amazon’s Prime service works so well psychologically precisely because it has a hefty annual fee – once you make that commitment, you’re more likely to purchase lots of things through the site to justify and make use of the money already spent. Removing the membership fee means that users have no special reason to prefer Walmart over Amazon for any given purchase. At this point, I don’t think many people are choosing Amazon for shipping alone – they likely just think of Amazon as the default option for online retail, and if they happen to be Prime members (which many American households are) that seals the deal. Short of going all-in on free shipping a la Zappos, I’m not sure that any changes Walmart makes to its shipping policies and prices will move the needle meaningfully.

    via Recode


    Facebook Is Trying Everything to Re-Enter China—and It’s Not Working – WSJ (Jan 30, 2017)

    This is a great in-depth take on Facebook’s efforts to get back into China following the 2009 moves that saw it effectively blocked from operating in the country. The phrase I saw repeated most frequently in the article? Some version of “[Facebook executive] declined to to be interviewed,” which is indicative of just how carefully Facebook is treading in China – it would clearly like to get back in and compete for those billion-plus potential users along with the local social networks, and has even suggested that it’s willing to put up with a certain amount of censorship, but doesn’t yet seem to feel like the time is right. There would certainly be a big backlash against any censorship-based re-entry, especially if it felt like Facebook was willingly complicit rather than doing the bare minimum to comply, just as Google and Yahoo faced criticism over their activities in China in the past. This is definitely a double-edged sword for Facebook, though it’s not even clear at this point that it would be allowed back in even if it decided to give it a try. The whole piece is worth a read – lots of interesting detail here, much of which is also applicable to other big US tech companies that would like to be more active in China (or already are).

    via WSJ


    Phone startup Nextbit has stopped production and is selling its assets – Recode (Jan 30, 2017)

    Chalk another one up to either the Hardware is Hard or Android is Hard narratives (I’ve tagged this against both). Another Kickstarter-backed hardware company which had an intriguing approach to an established category and got lots of interest from tech bloggers and reporters calls it quits and gets bought by a bigger existing hardware player. I was always skeptical on Nextbit – it just didn’t feel like its few unique features and design were enough to overcome the massive barriers to entry that exist around scale, distribution, and dominant existing players in the Android market. I can’t say I’m surprised to see it fail, though it’s disappointing because the team had some interesting ideas and the design was definitely more interesting than your average phone. Razer seems an unlikely buyer – this Recode piece says the group the Robin team is going to has been focused on gaming, so it doesn’t sound like we’re going to get a Razer phone from these guys anytime soon.

    via Recode


    Instagram Stories is stealing Snapchat’s users – TechCrunch (Jan 30, 2017)

    This would be very bad news if it turns out to be true – celebrities and those who manage celebrity and other accounts on Snapchat claim they’re seeing a significant reduction in views of their Stories on Snapchat as a result of both Instagram’s launch of its own Stories feature and Snapchat’s move to kill the Auto-Advance feature for Stories in its own app. This kind of thing is always worth taking with a pinch of salt – the ranges discussed here are very broad, and some of the data might be outliers – but the trend seems to be consistently downward, and is backed up by some app download data as well. The positive spin from Snap here would be that it’s actually focusing engagement more by only showing users the Stories they actually choose to see, but I’m not sure investors will buy that. Again, any day now we should have some real data from Snap to go on to evaluate engagement and usage, but this is another specific concern they’ll need to address in the S-1 filing. In the meantime, more evidence that Facebook and Instagram’s strategy here is paying off, and that when Facebook broadly launches its own Stories feature the impact could be even more severe.

    via TechCrunch


    There are too many ways to Google on Android – The Verge (Jan 30, 2017)

    I’ve tagged this post against three different narratives, because this little mini-review taps into several broad threads. Firstly, this is about Google and parent Alphabet’s tendency to allow lots of people to work on the same thing in different parts of the company in different ways, which results in a confusing user experience because there are many ways to do the same thing (see especially messaging). Secondly, there’s the fact that on Android Google’s own messy set of services is often duplicated (or worse) with competing services and apps from OEMs and/or carriers. And lastly there’s the fact that even on Google’s own hardware, the Pixel, which is supposed to represent the epitome of Android at its best, this confusion still reigns. I was half-tempted to tag this post against the Google is Ahead in AI narrative too, because though Google does fantastically well at the back-end AI piece, it often falls short on the user interfaces and experiences that present the functionality to the user. The point is, the situation described in this article is far from ideal, but it grows out of several cultural quirks at Google/Alphabet combined with several of the downsides of the approach Google has always taken with Android, and a solution doesn’t seem imminent.

    via The Verge


    Dropbox finally brings its Google Docs competitor out of beta – The Verge (Jan 30, 2017)

    Dropbox is one of those companies I’m constantly surprised (and yet delighted as a power user) has managed to stick around. By focusing on document storage and syncing, it’s arguably at the feature level – something other ecosystems do in the course of offering a much more complete feature set – and yet it’s managed to find a niche for itself, generating an annual run-rate of $1 billion in revenues in the process. It’s survived in recent years largely by moving in the direction of its major rival Box, which has always been enterprise focused, while Dropbox has straddled the consumer-enterprise divide in the past. Though it seems pushing into adjacent areas would be critical for the company’s longer term survival, I’m not at all convinced that it can be competitive against Google Docs or Office, and therefore also not convinced this is where it should be focusing its diversification efforts. I’m still somewhat skeptical that the company can survive in the long run, and it feels like the exception rather than the rule among one-trick pony companies, most of which continue to either die off or be absorbed by one of the big players.

    via The Verge