The top news stories from last week are Microsoft’s (MSFT - Free Report) reorganization, and Alphabet’s (GOOGL - Free Report) Dandelion spinoff and Twitter’s (TWTR - Free Report) fake news button.
On Thursday, Microsoft sent out an internal memo to employees confirming that it would cut up to 10% of its 50,000-strong global sales force, or up to 5,000 employees. The CNBC reported number of 3,000 is probably more likely since Microsoft usually reassigns some employees to new roles as part of its now-annual employee reductions (it announced 2,850 cuts last July, 7,800 the year before that and 18,000 in Jul 2014).
The current reduction is aimed at better aligning its sales force to its targeted markets of Enterprise and Small, Medium & Corporate (SMC).
It will now increase focus on Manufacturing, Financial Services, Retail, Health, Education and Government verticals. It will also reorganize the fee structure for enterprises depending on the type of solution desired (modern workplace, business applications, apps & infrastructure, or data & AI). It expects to have focused solutions to address the emerging demand for IoT, AI, voice and mixed reality segments. Microsoft is also working on a strategy to increase sales of support services as a way of increasing overall revenue.
It is also centralizing consumer and device sales teams under its Marketing and Consumer Business (MCB) to facilitate the implementation of sales strategies leveraging ecosystem partners.
Alphabet Spins Off Dandelion
Last week, Alphabet spun off its geothermal system company called Dandelion (incubated by its moonshot unit X Labs) with a seed funding of $2 million to start operations and pursue sales (initially only in New York). The funding came from a collaborative fund that included ZhenFund and Borealis Ventures.
Geothermal heating/cooling is typically an expensive process, which is why it hasn’t been broadly adopted yet. But Dandelion aims to make it easy and relatively inexpensive for households to use. Its system costs $20,000 to $25,000, significantly lower than the $60,000 current systems reportedly cost. Moreover, it can be bought in installments along with a smart thermostat for no downpayment.
Once people sign up for the service, Dandelion’s local installers will get to work digging 1,000 feet deep wells that are a few inches in diameter. Into these will go plastic pipes called ground loops that connect to a pump located inside the house. In winter, water in the pipes absorbs heat from the ground, with the pump dispersing warm air inside the house. In summer, the cooler temperature of the earth is absorbed by the water from which cool air is dispersed inside the house.
While clean energy has become a major goal for all companies, it’s important to remember that our homes are also responsible for carbon dioxide emissions. According to the U.S. Green Building Council as reported in the media, buildings are responsible for 39% of these emissions, most of which is attributable to fossil fuels used in heating, cooling and lighting our homes, and to power appliances and electrical equipment.
Once Dandelion’s solutions are installed, there would be an immediate reduction in energy bills, which should make the solution attractive for customers.
Twitter Considering Fake News Button
There is a rumor that Twitter is developing a Fake News button that twitterati can use to flag fake news. This is easier said than done because who’s to judge what is fake news? Just because someone says something is fake doesn’t make it so. Moreover, it can be used with malicious intent to block or harass opposition thus defeating the purpose of social networking in the first place.
Investigating each report to confirm the allegation within a reasonable time could be an uncalled-for pressure on resources. At the same time, there is quite an uproar about the concept so social networking companies have got to do something to show people that they remain neutral if nothing else. The unnamed folks spinning this story also say that work on a fake news button is going slow because of the above-mentioned concerns.
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First Apple Retail Store in Taiwan: To further its expansion plans in Asia, Apple (AAPL - Free Report) launched its first store in Taiwan. The 14,300-sq. foot store, located at Taipei 101 tower, is designed to offer customers access to its “Today At Apple” programs. “Today At Apple” is an in-store educational program launched in May this year to educate customers about music, photography, video, art, design coding etc through 60 free sessions. Apple is reasonably well entrenched in the country with a 15% share of the smartphone market.
Tech Companies Want World Cup Streaming Rights: Companies seem to be following in Twitter’s footsteps as they escalate the bidding war for the rights to stream soccer world cup highlights. 21st Century Fox, which has the world cup broadcast rights, had to dish out $400 million for them, so it will surely weigh its options before it decides on a single exclusive deal or distributes to a number of broadcasters. Bloomberg says Fox hasn’t decided yet.
Petya Virus Attack: A new ransomware attack has affected some European businesses (advertiser WPP, food company Mondelez, legal firm DLA Piper and Danish shipping and transport firm Maersk) and an electricity supplier, the central bank, the state telecom company and an airport in Ukraine. Initially, the virus encrypted the hard disk and shut down the computer, then asked for a ransom to restore access. But later, the code was reportedly altered to wipe out the disk completely. It has been reported that it is now a targeted attack mostly against the Ukraine.
Qualcomm Sues Apple: Qualcomm (QCOM - Free Report) has filed a complaint with the International Trade Commission alleging the Apple has infringed on six of its patents including one that speeds up the battery. It is seeking an injunction to stop the import of phones that use alternative technology (i.e. Intel’s) because they infringe on its patents. Qualcomm says these patents aren’t the standard essential patents that the two are currently fighting over and with respect to which Apple has instructed its suppliers to stop paying Qualcomm.
Apple said in that case that Qualcomm charges it more than what it usually pays others, so its price was unreasonable under FRAND rules for standard essential patents. Apple didn’t say, however, that Qualcomm charged it a differential rate, i.e. more than it charges others based on the higher priced iPhone. So that case remains unresolved. Qualcomm’s current complaint may be to keep Apple’s lawyers busy, in what is a standard practice in patent infringement lawsuits.
Intel-John McAfee Settle: Intel (INTC - Free Report) saw a satisfactory close in its lawsuit with John McAfee after he sold the antivirus company in his own name. Intel said that using his own name in companies violated the trademarks he has already sold Intel after which he went to court.
The two parties have now agreed that John McAfee will not use his name, trademark his name or the phrase "John McAfee Privacy Phone," or use "John McAfee Global Technologies" in connection with cybersecurity- and security-related products and services. He could, however, use his name in advertising, promotions and presentations for other purposes. Intel currently retains a 49% stake in the security company having sold the rest to TPG Capital, which subsequently sold most of its interest to private equity firm Thoma Bravo.
ITC Rules in Cisco’s Favor: Cisco (CSCO - Free Report) won a temporary reprieve in its ongoing legal battles with Arista. Cisco earlier alleged that Arista had infringed on six of its patents, of which the ITC found that there were in fact two violations. The ITC has the authority to ban import of goods into the U.S., so its ruling directed accordingly.
Arista, meanwhile, approached the U.S. Patent Office, and has appealed to the ITC to reconsider its decision on the basis of the Patent Trial and Appeal Board finding Cisco’s claims to be invalid. Arista was formed and is run by former Cisco employees and Cisco has often in the past claimed patent infringements and leakage of technological information.
But Arista has always worked itself around the infringement, so it could never be pinned down. The company is now giving Cisco a run for its money as it grabs a growing number of cloud customers.
Google, NHS Violated UK Law: The Information Commissioner’s Office has said that the National Health Service-conducted trial with Google’s DeepMind for a new app exposed 1.6 million patient’s records to the technology company without the patients’ consent, thus violating their privacy. DeepMind used patient data going back up to five years to design software called Streams.
The software uses blood test results to determine when a patient is at risk of kidney disease to push an alert to medical staff using the app. NHS shared the data under a legal basis called "direct care," which allows data to be shared in order to improve patient treatment. This clause also doesn’t require explicit consent of patients. However, the investigating authority found inconsistencies in the procedure and therefore found the parties guilty.
Apple Face-Scanning Technology: Apple is reportedly testing face-scanning technology to unlock smartphones instead of the Touch ID fingerprint testing it uses currently. It was earlier rumored that the next iPhones would come equipped with 3D sensors, possibly to enable segmented reality experiences. It’s now being speculated that the 3D sensors will also scan and recognize the face to unlock the phone in a few 100 milliseconds. It will also be able to authenticate payments and launch other apps where security information is required.
Apple Considering News App Change: Apple is reportedly planning to tweak its popular news app, which had 40 million users as of Oct 2016. The news app is a news aggregator that allows iOS users to access all their media content in a single place. According to AdAge, this has been a good thing for Apple but not so much for its publishing partners, meaning that they aren’t seeing the dollars that would keep them on the platform.
Apple is apparently making two changes to rectify the situation. The first is a payment system that would allow paywalled websites to charge a few cents to access a page. The second is allowing the publisher to use its own advertising tools including Google’s DoubleClick. This would mean that publishers could earn from Apple News just as well as they do on their own sites. It isn’t clear yet if the change will roll out with iOS11 this year, but that would seem to be a reasonable expectation.
Facebook’s “Find Wi-Fi” Feature: Facebook now has a tab called Find Wi-Fi that once enabled, allows a user to locate nearby coffee shops, malls and other businesses that have Wi-Fi hotspots. The goal is of course to keep people using the app longer, especially in remote areas and places with inconsistent connectivity although it serves the dual purpose of locating nearby places that were earlier found through Google Maps. The feature is rolling out globally and is already available in some countries but it will become more useful only after more businesses opt into the program.
Amazon Patent for Adjustable Fashion Mannequin: Amazon has patented a design for an adjustable fashion mannequin that uses electric motors, hydraulic systems or magnets to change hip, waist or chest size as required. It also has a camera that can efficiently take a picture once a garment has been fitted on the mannequin.
Amazon says that testing showed that it takes about four hours to fit and photograph a mannequin in different sizes of a single garment. But using the adjustable mannequin, it was possible for a single person to take 3,000 to 4,000 photographs a year, thus significantly reducing the required time and money. The patent is expected to facilitate Amazon Fashion sales as it races to push traditional retailers out of the space.
M&A and Collaborations
Apple May Invest in LG Display: The Korea Herald and MacRumors say that Apple is getting ready to put $1.75 billion to $2.62 billion into LG’s dedicated OLED facility. Samsung is currently Apple’s OLED supplier from which the company has already ordered 70 million units for the next iteration of its flagship iPhone (the first version using OLED). Second sourcing would definitely be a good idea, especially since the Samsung also competes with Apple in the very smartphones that will consume the OLED screens.
Google Accelerator Program in Brazil: Google has picked Contratado.me, which focuses on recruitment of up-and-coming skills in areas such as business intelligence; Guichê Virtual, which offers a bus ticketing app; Contabilizei, which offers online accounting resources and Arquivei, a venture providing archiving management service for tax documentation for its accelerator program covering 33 startups from 16 countries.
After a two-week "intensive" mentoring period at Google's offices in Mountain View there will be six months of technical support and training. The startups also qualify for up to $50,000 in equity-free financing and $100,000 worth of credits to buy Google products.
Alibaba Invests in Bike-Sharing Startup Ofo: Following Ant Financial’s small investment in Chinese bike sharing startup Ofo earlier this year, Alibaba itself has led a funding round that raised over $700 million. Other investors in this round included Hony Capital and CITIC Private Equity as well as existing financers Didi and DST Global. The bike sharing market in China is heating up with the two companies at the forefront being Ofo and Tencent-backed Beijing Mobike Technology.
Both these companies claim over 100 million users but while Ofo says it’s reached 150 cities across 5 countries, Mobike says it’s reached 100 cities. Both are targeting 200 cities in the near future across all continents. Users can scan the QR code to avail a ride and leave the bike where they reach their destination. The GPS chip in the bike signals its availability to the next user.
NVIDIA Partners with BAIDU: The companies are partnering on four emerging opportunities involving artificial intelligence: self-driving cars using NVIDIA DrivePX, AI-powered personal assistants from Baidu in NVIDIA Shield TVs, NVIDIA’s GPU accelerators in Baidu’s cloud, and NVIDIA’s GPU technology in Baidu’s AI framework Paddle Paddle.
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