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Tech Stock Roundup: AR/VR and Self Driving Cars Dominate CES

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Top news last week was the Consumer Electronics Show, which started on Thursday and ended Sunday. There were a couple of days of media events before that though. As most of us were expecting, the show was dominated by virtual/augmented reality (VR/AR) and self driving cars, two areas where new technology was showcased and important collaborations announced. Some other developments involved Amazon’s (AMZN - Free Report) Alexa, 5G technology from Intel (INTC - Free Report) and Qualcomm (QCOM - Free Report) and robots from Panasonic and Honda.

In VR/AR, there were announcements from Intel, Alphabet’s (GOOGL - Free Report) Google and privately-held ODG.

Intel sought to instill faith in VR tech, by showcasing VR experiences in the form of attendance at a sporting event, experiencing live surround video from a drone, jumping out of a helicopter in a wingsuit and exploring a waterfall. It also showcased a VR zombie apocalypse video game.

Osterhout Design Group, or ODG unveiled the latest in its line of sleek new smartglass series. The AR glasses called the R8 (for consumers) and R9 (for corporate users) are based on the first Qualcomm 10nm chip called Snapdragon 835. Both glasses have narrower angles of vision than Microsoft’s Hololens but are significantly cheaper.

Google, which has tried to popularize VR technology through its Cardboard platform, launched a VR headset called Daydream View last year. At CES 2017, its hardware partner Huawei announced that two of its phones will work with Daydream and that it is also looking to make its phones compatible with Google’s AR software platform called Project Tango.

Long-time hardware partner Asustek said that its ZenFone AR was already compatible with both. Still, this is a short list and without a broader list of hardware, the technology is unlikely to take off. But this kind of popularity simply won’t happen until there is more content and more apps, so it could take a while.

As far as self-driving cars are concerned, automakers are working on apps of their own. Ford and Toyota for instance have announced that mid-sized automakers like Mazda Motor, PSA Group, Fuji Heavy Industries and Suzuki Motor Corp have joined their SmartDeviceLink Consortium, which aims to develop an open-source software alternative to Apple’s (AAPL - Free Report) Car Play and Google’s Android Auto.

BMW, Intel and Mobileye will test their co-developed self driving car technology in 40 self driving cars by the second half of 2017. Intel also launched Intel Go, which is a package of processors that can range from a basic Atom to the highest end Xeon along with other components and software.

Google partnered with Fiat Chrysler to create an Android-based in-car infotainment system.

Further details on Microsoft (MSFT - Free Report) and NVIDIA’s (NVDA - Free Report) self-driving efforts follow:

 

Company

Last  Week

Last 6 Months

AAPL

+1.19%

+22.70%

FB

+6.07%

+5.75%

GOOGL

+2.77%

+13.41%

MSFT

-0.10%

+19.51%

INTC

-0.49%

+6.75%

CSCO

-0.76%

+2.92%

AMZN

+4.03%

+5.29%

 

Other stories -

Corporate

Apple In South Korea: Apple has confirmed that it is getting ready to open its first retail store in a southern district of South Korea. While the exact location wasn’t mentioned, it did say that the space was under construction and that it was looking to hire people. Speculation is rife that Apple will choose a spot in Gangnam where Samsung has its flagship store. Or it could also go for another spot in the neighbourhood, on the fashionable Garosu-gil shopping street.

Apple Removes NYT Apps In China: Apple has taken down the Times’ English and Chinese language apps in China because of its violations with government regulations. Times spokesperson Eileen Murphy said it was “a deeply regrettable decision” and asked Apple to reconsider. Apple has said that this could happen when “the situation changes.” Apple has been doing all it can to please the Chinese government given that China remains an important market for the company. CEO Tim Cook made wtwo visits to the country in May and October last year and promised a second Chinese R&D center as a result of those visits.

Apple Confirms Softbank Investment: Apple confirmed the investment as did Softbank, according to Benjamin Spicehandler, an outside PR representative for SoftBank. He also said that Foxconn, Oracle founder Larry Ellison's family office and chipmaker Qualcomm said that they intended to invest. Despite the hype, Softbank is putting in only $25 billion with Saudi Arabia's Public Investment Fund putting in $45 billion, thus giving it effective control.

pple In India: Apple supplier Wistron has reportedly applied for permission to expand its Bengaluru plant. It’s expected that this will enable Apple to satisfy the Indian government’s requirement that Apple source 30% of components from within the country if it wishes to have its own stores there. Earlier, Apple promised to open an R&D center.

But Apple also wants tax breaks, which is something the Indian government is unlikely to agree to. India is growing into one of the largest smartphone markets in the world although its 10% share of total consumption still trails China 30% by a mile. But China growth is slowing down while India growth is picking up. Moreover, India is less protectionist, which could help Apple longer term.

Google Targeting Indian SMBs: Google intends to play a role in getting Indian SMBs online. The company estimates that nearly three-quarters of the country’s small businesses currently don’t have an online presence. It intends to launch a new tool that will allow them to build their mobile-friendly websites free of charge. The product will roll out in India first and then to the rest of the world. India-born CEO Sundar Pichai has said that “India shapes how we develop products in so many ways, big and small”.

Alibaba Promises U.S. Jobs: Alibaba’s Jack Ma has promised President-elect Trump that Alibaba would get a million American small business owners onto its Tmall platform over the next five years. This is expected to result in the employment of at least a million people at these organizations to take care of the systems side of things. Of course this doesn’t guarantee jobs because U.S. manufacturing costs are not competitive and Alibaba has its fair share of counterfeits that are usually more cost-effective than the originals. So for SMBs to succeed on the platform, they need to first figure out how they’re going to differentiate themselves.

Legal/Regulatory

Google Could Lose Government Business: The Labor Department filed a lawsuit with the Office of Administrative Law Judges asking that Google be forced to supply employee-related information that Google says is confidential. The department says that the evaluation is conducted to ensure contractors do not discriminate in employment on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, disability or status as a protected veteran. So if Google doesn’t comply with the requirements like every other government contractor, all its government contracts should be terminated.

Technology/Products

iPhone 7 Production Cut: Apple has reportedly cut back first quarter 2017 iPhone shipments by as much as 10%. This is according to Japanese daily Nikkei based on changes in supply chain orders and analyst reports. Apple is expected to have three new models next year, so it probably makes sense to get inventories down beforehand. Particularly since iPhone growth rates have dropped off the last few years as it’s gotten harder to add features that would get people to upgrade.

IBM Innovation Goals: IBM has announced its innovation goals over the next five years. Dubbed the IBM 5 in 5, the program focuses on the use of technology to increase our knowledge about various things. Using AI for example, the human brain can be better understood, helping detect, prevent, treat/cure diseases such as depression, psychosis, bipolar disease, mania or schizophrenia. Hyper imaging technology will be used to impart “super hero vision” to portable, affordable and accessible devices that can be embedded on our phones or self driving cars.

Using data picked up by IoT devices, all the information about the earth will be aggregated, organized and analyzed to help people (like farmers) get their jobs done more effectively. Its silicon photonics technology (that transfers data by light) will be embedded in IoT devices. The devices will operate as a cloud-connected network around natural gas extraction sites so methane leaks can be detected immediately, thus helping to control global warming.

NVIDIA Shield TV: At CES, NVIDIA launched the SHIELD TV, a one-of-its-kind experience combining the goodness of 4K HDR video with Amazon Video, Netflix, YouTube, Google Play Movies and VUDU as well as a huge library of games featuring thousands of titles with more being added every day. And that isn’t all: the Android TV powered device brings AI to entertainment by allowing you to send voice commands, also turning the TV to a smart home hub and connecting with a host of home devices (although you’ll need the special mike if you want to use these AI features).

M&A and Collaborations

Intel Buys 15% Stake In HERE Maps: Intel has bought a 15% stake in HERE International from current indirect shareholders Audi, BMW and Daimler thus strengthening its commitment to self driving car technology. Intel and HERE will collaborate on R&D to develop a mapping architecture that will update high definition maps in real time. They will also work on IoT and machine learning. Intel will also nominate one person to HERE’s Supervisory Board of Directors after the transaction closes this quarter.

Cisco-Ericsson Strengthen Partnership: Cisco and Ericsson are adding a Wifi solution called Evolved Wi-Fi Networks (EWN) to their combined product line. The more complete wireless solutions will enable Ericsson to go after bigger customers such as the very large shopping malls. The transaction also helps Cisco expand its reach in a market that is increasingly moving away from specialized hardware by making software more powerful.  

Microsoft Deal With Renault-Nissan: Microsoft, which aims to strengthen its position as a self driving car platform, is now in a relationship with Nissan that will do just that. Nissan is planning more than 10 self-driving car models by 2020 and Microsoft’s Connected Vehicle Platform is likely to get into at least some if not all of them by virtue of its strength in the Azure cloud service, Office productivity suite and Cortana. Renault-Nissan Chairman Carlos Ghosn said that Microsoft’s global reach, its familiarity with compliance issues automakers face and its plans for making the relationship more valuable over time helped him choose Microsoft.

Alibaba Ties With Maersk: This agreement lets business users book a place on Danish logistics company A.P. Moller-Maersk’s containers through Alibaba’s OneTouch platform. It seeks to eliminate freight and forwarding middlemen, digitize the transaction and speed up the process for businessmen. For Alibaba, it’s yet another indication of the company’s growing interest in logistics (it already owns 47% of Cainiao which accounts for 70% of all shipments within China, a minority stake in Shanghai based YTO, which also takes care of a huge amount of merchandise). OneTouch is part of Alibaba’s business-to-business division and has reportedly serviced 20K merchants to date.

NVIDIA Partners With Audi, Here: NVIDIA’s deal with HERE involves incorporating the NVIDIA MapWorks AI technology into its HERE HD Live Map, which can then be used in NVIDIA Driveworks Software to put localization into cars. They will also, in the future, collaborate on the development of an in-vehicle solution to pick up environmental factors that will then be transmitted to the cloud to update the map there. Its relationship with Audi is now being expanded to collaborate on a level 4 driving system that will enable Audi to deliver a self-driving car by 2020. It is also partnering with auto parts suppliers, Bosch and ZF to commercialize its DRIVE PX 2 autonomous driving computer. In Japan, NVIDIA is partnering with the leading mapping company ZENRIN for another cloud-to-car solution.

Some Numbers

Apple App Store Numbers: Apple has announced that its App Store paid out $20 billion to app developers in 2016, a 40% increase from 2015. The company normally takes a 30% cut of revenue but last year, reduced the commission to 15% for those offering their apps on a subscription basis. This made it more lucrative for service providers like Netflix, Hulu, Spotify, Pandora, etc. As more providers move to the SaaS model, this will remain a hot business for Apple. Its biggest day of App Store sales ever was Jan 1, 2017, when customer spending jumped to $240 million. The top markets of the U.S, U.K., Japan and China were up 90% year over year setting the tone for a very strong 2017.

Nielsen App Ranks: Nielsen’s report on the most popular smartphone apps says that the Facebook app tops in average unique monthly users, followed by Facebook Messenger (not surprising since Facebook users were forced to use it). After that come Google’s YouTube, Maps, Search, Play and Gmail in that order. Rounding out the top ten are Facebook’s Instagram, Apple Music and Amazon.

 

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