It was another blockbuster week for tech companies, jam-packed with products, events, acquisitions and more although Alphabet GOOGL, Microsoft MSFT, Amazon AMZN, Facebook FB and EMC Corp. EMC likely had the biggest announcements.
Google Belongs to Alphabet Now
Google completed a complicated restructuring to give effect to a simple change. The total assets/lines of business of the company are now held by Alphabet Inc. and the core Google business is a separate subsidiary of Alphabet called Google Inc. Alphabet ticker symbols remain GOOGL and GOOG for Class A and Class C shares, respectively.
Co-founders Page and Brin continue to head Alphabet while Sundar Pichai is taking over as CEO of Google, as announced earlier. Each of the non-core businesses, i.e high-speed Internet (Fiber), healthcare (Calico and Life Sciences) home automation (Nest), investments (Google Capital and Google Ventures) and Google X (its other efforts including drones, cars, etc.) will have their own CEOs and will report numbers separately. Ruth Porat will be CFO of both Alphabet and Google.
The market is cheering the increased financial clarity, which will be reported for the first time as part of fourth-quarter results. Alphabet has changed its code of conduct for employees to allow greater flexibility to all its subsidiaries and the media was quick to point out that “don’t be evil” has been replaced with “do the right thing,” or in other words, “follow the law, act honorably and respect each other.” More clarity all around, it would seem.
Microsoft: Something for Everyone
This software company had a major hardware event last week, where it introduced a new tablet called Surface Pro 4 (as expected), its first laptop called Surface Book (totally unexpected) and new Lumia phones, new Band and a Hololens update (somewhere in between). First-party Windows-as-a-Service devices are certainly taking shape here.
Microsoft says that its 13.5-inch, 267 PPI laptop, which comes with a pressure-sensitive pen and offers 12 hours of battery life is 2X faster than Apple’s AAPL Macbook Pro. It is however somewhat more expensive. So if you’d like, there’s the 12.3-inch, 267 PPI Surface Pro 4 tablet that runs Win 10 well for 9 hours of battery life and that Microsoft says compares with Macbook Air. The pen is impressive with an eraser at the back that also summons Cortana and you can buy a $130 key board like earlier models.
The new 5.2-inch and 5.7-inch Lumia phones have 8 core processors and a wonder cooling system, 20 megapixel cameras than can shoot 4K video and built-in image stabilization. A 4.7-inch LTE entry level device with a 5 megapixel camera was also launched.
Microsoft Band 2 is something of a pro device with its 11 sensors but also has useful app support to keep you updated while exercising. Price-wise, it’s in the same league as the most expensive Fitbit, but doesn’t quite make it to the Apple Watch.
Google’s Mobile News Solution
Google loves the web. It is its life blood, same as it is for all the publishers increasingly digitizing as the world moves online and on mobile devices. With so many interests at stake it was only a matter of time before Google did something to counter Apple and Facebook’s plans of getting publishers right within their apps.
While those companies wooed publishers with faster loading of stories inside their news apps and controlling the ad experience, Google’s Accelerated Mobile Pages (AMP) solution is for the mobile web at large. It works when websites agree to use an HTML code to build lighter web pages and Google’s (or their own) cache servers to pre-load the pages.
There are other benefits: Google will display a “Top Stories” carousel at the top of the search results page that can be swiped to select and view. Around 30 publishers and tech companies have partnered with Google, of which some of the better-known are The Wall Street Journal, The Washington Post, Vox Media, Parse.ly, The New York Times, The Guardian, Twitter, Pinterest, LinkedIn, Adobe and WordPress.
There will be support for a broad range of user-friendly ad formats although all partners will need to be on AMP standards. Google won’t try to control the ad experience. The idea is to get ad-supported pages to load equally as fast as those without ads, so users aren’t turned away or tempted to use ad-blocking software.
The AMP project is open source and will launch next year. Initial specifications are available on GitHub.
Facebook “Like” Enhancements
Facebook has put to rest fears that a thumbs-down symbol will give trolls leeway to down vote posts, thereby making the Facebook experience less than happy for users. The company is instead launching a host of emojis including love, haha, yay, wow, sad and angry that will allow users to display these reactions to posts. Holding the cursor on the Like button displays these options. This is rather a neat thing because while user experience won’t deteriorate,
Facebook will likely get some insight into how they are reacting to ads. And after all, user experience and ads are the two most important things for the social network.
Amazon Re:Invent 2015
Dell Could Buy EMC
Dell has a ton of debt on its balance sheet given that it went for a leveraged buyout not too long ago. But Mr. Market seems to think that it is ready to take on another $50 billion+ to boost its cloud business. All the fuss seems to be about EMC’s 80% stake in VMware, which Dell would like to control (or partly sell to raise some of the cash to finance the deal). If the rumors are true, and most media sites are saying it is, Dell could be looking to pay anywhere between $50 billion and $65 billion. God help us.
Retailers Warm Up to NFC: Last week saw restaurants like Starbucks, KFC and Chilli’s agreeing to adopt NFC-based payment systems, although most of the excitement was related to Apple Pay, whose VP Jennifer Bailey said that the payment service was rolling out already and would be accepted in all U.S. Startbucks stores by next year.Panera Bread, Whole Foods, Coca Cola, Kohl’s and Walgreens among others have already enabled payments through the system.
Cisco Outlines Future Plans: Cisco CSCO has upped the PR work. The company is now telling all who care to listen that it will play a central role in helping businesses utilize the opportunity in the Internet of Things (IoT). Highlighting the fact that businesses, while aware of the technology are still unsure about how to use it to advantage, Cisco is promising to be the savior. It’s starting out laying the path for manufacturing, transportation, utilities and oil & gas companies, which will need extensive software-driven networks that are also highly secure.
Cisco is one of the largest networking companies with one of the largest plays in security and it expects its focus on security will win customers. It will however take an open approach so its technology works with others’ (as may be expected in the new cloud-focused world).
Analysts Positive on Cisco, Yahoo: A Citi analyst initiated coverage of Cisco shares with a Buy rating, expressing confidence in its leading position in networking and share gains in servers and security, and potential for earnings and cash flow increases. Yahoo on the other hand saw a price target increase at Axiom, with the analyst expressing satisfaction that Alibaba spin-off risks were minimal.
Alphabet Buys Huge Domain Name: While it’s true that Alphabet.com wasn’t available, it’s a little hard to understand why Alphabet would choose to buy the domain abcdefghijklmnopqrstuvwxyz.com. It does contain the alphabet, but people would have a hard time typing it in every time. Of course it might simply be Alphabet’s attempt to prevent any of its competitors from acquiring it. In any case, the company is using ABC.xyz as its official website address.
Saudi Prince Increases Stake In Twitter:
Facebook Lawsuit: A lawsuit in the EU by one Max Schrems against Facebook for being unable to protect his data has had far-reaching implications for the U.S. Based on disclosures by Edward Snowden that indicated that the U.S. has mass surveillance programs in place and this specific lawsuit, the highest European court has invalidated a 15-year old Safe Harbor deal between the EU and the U.S.
The deal was important because it allowed for the free flow of personal data between Europe and the U.S. provided companies certified that the data was secure. It appears that the big companies are not dependent on this law and there are other provisions they can rely on for legal data transfer, but there are numerous small and medium companies that depend on this law that won’t be so lucky.
Microsoft on U.S.-EU Ties: Microsoft is not one to let go easily. The company has withstood pressures from U.S. courts to release data picked up offshore, specifically, at its Dublin data center. The company maintains that the data is stored in a foreign country and is therefore subject to rules and regulations of that country while the U.S. courts have held that since the data is held by a U.S. company it should be able to disclose it to the government. Microsoft has one contempt-of-court charge against it on this issue. Last week, it appealed to the Second Circuit Court of Appeals in New York.
Russian Ultimatum to Google: Russia has given Google a month to decouple its free app bundle from Android so competing service providers can get their apps pre-installed. The case is the result of search company Yandex, which complained to Russian competition authorities when it started losing market share to Google.
If Google fails to comply it could be liable to penalties of up to 15% of revenues from mobile apps in Russia. Google may have to pull out of Russia if it can’t monetize Android, or it may have a different strategy up its sleeve. It’s all guesswork at the moment because the search giant isn’t commenting.
Google Drive Backing Up WhatsApp Chats: WhatsApp owner Facebook enabled iCloud storage for iOS users some time back, so it only makes sense to do the same thing for Android. Particularly since the majority of WhatsApp/Facebook users use Android devices. So last week, it was announced that WhatsApp chats on Android devices can now be backed up in Google Drive.
Facebook Wants To Do Handymen Too
Amazon Live Streaming
Twitter Now Has “Moments”
M&A and Collaborations
Google Invests in Symphony: Google has participated in a fresh funding round in Symphony that values the secure messaging service for financial companies, corporate customers and even individuals at $650 million. Top banks including Goldman, Bank of America, Citigroup and JPMorgan have already invested in the service since it was discovered that the extremely expensive Bloomberg terminals were used by its reporters to spy on their activities. Symphony doesn’t charge for organizations with less than 50 members and if it’s over 50, the charge is $15 per user per month.
Pandora Buys Ticketfly: Pandora is paying $450 million in cash and stock for Ticketfly, a popular destination for event and concert tickets in the U.S. and Canada. The ad-supported radio service says that the deal will build on its Artist marketing Platform (that displays most popular shows by geography) and Next Big Sound acquisition (an analytics-type service studying listening and searching patterns). Ticketfly, which sold 16 million tickets last year, takes this a step further because it can help artists sell concert tickets to Pandora users.
Microsoft Acquires Intel’s Havok: In a push to boost its entertainment offerings, Microsoft acquired an illustrious, if lesser-known 3D physics company called Havok. Intel paid $107 million for the company back in 2007, so it must be paying at least that much (although details remain undisclosed). Havok enables special effects in games and video (it has been used by developers inthe “Halo,” “Assassin’s Creed,” “Call of Duty” and “Destiny” games as well as in the movies “The Matrix” and “Charlie and the Chocolate Factory”).
Cisco Gets into Robotics: Factory automation is reaching new levels. Last week, Cisco announced a collaboration with FANUC America, which will be using its big data analytics to determine robot maintenance schedules that will minimize their downtime. The technology is now being tested on 1,800 robots, some of which are currently being used by FANUC customer GM. Fanuc says the technology has saved its customers $38 million thus far. It plans to roll it out to 2,500 robots by year-end. GE has also signed up to use Cisco’s technology in 100 of its factories.
Alibaba, Tencent Getting Cozy: Two of the BAT companies (Baidu, Alibaba and Tencent) that represent the largest chunk of Internet business in China continue to get cozy. Last week, Alibaba and Tencent entered into an agreement to merge their competing group buying companies Meituan.com and Dianping.com in a deal worth $15 billion. The idea is to reduce competition in the already-crowded online-to-offline market, much like what they did by merging their ride hailing services Didi and Kuaidi to better compete with Uber.
SanDisk-HP In Memory Making Partnership
Apple Mac Sales Slowdown: IDC and Gartner didn’t agree on this. According to IDC, Apple saw Mac sales grow 16.1% year over year in the second quarter and decline 3.4% in the third. Gartner says that Mac sales fell 2.5% in the second quarter but grew 1.5% in the third. But both agree that it currently has around a 7.5% share of the worldwide PC market. While growth rates are slower than they were a couple of years ago, Apple is growing off a larger base now. Also, like other PC vendors, it should be feeling the effects of the stronger dollar.
Apple Offshore Cash: It was reported last week that Apple tops the list of tech companies holding significant cash overseas. Apple has $181 billion overseas, followed by GE with $119 billion, Microsoft $108 billion, IBM $61 billion, Cisco $53 billion, Google $47 billion, Hewlett-Packard $43 billion, Oracle $38 billion and Intel $23 billion.
Google Says Mobile Search Crosses Desktop: Google head of search Amit Singhal has said that worldwide Google searches on mobile devices (excluding tablets) surpassed those on desktops this summer. Google addresses more than a 100 billion queries a month, not all of which are typed into the search box. As auto and wearable device search increases, voice search will become a more important factor. As a result, Google is currently working on improving speech recognition. It is also rethinking advertising strategies (i.e. other than keywords-bases search) given that screen sizes are often smaller these days.
Netflix Raising Prices: New Netflix NFLX customers in the U.S., Canada and some Latin American countries will have to pay a dollar more for the standard plan as the company tries to recover the high costs of content acquisition while sticking to its ad-free model.