In the top stories last week, Alphabet (GOOGL - Free Report) launched its Chrome Enterprise subscription to challenge Microsoft (MSFT - Free Report) , Apple (AAPL - Free Report) is likely beefing up Apple Music while Western Digital (WDC - Free Report) looks set to acquire a stake in Toshiba Memory and prevent its sale to competitors.
Here are the details:
Google’s Chromebook Heads for the Enterprise
Google has announced a service called Chrome Enterprise for $50 per chromebook per year. This compares with Microsoft’s $84 per user per year for Windows 10 Enterprise E3. Theoretically, Microsoft may be slightly cheaper because a person may be able to use the service on more than one device. We don’t know yet if Google will offer bulk discounts.
But Microsoft didn’t win many friends when it withdrew XP support because not everyone was ready to upgrade. Moreover, enterprises increasingly want to keep their options open and not become overly dependent on any one technology provider. These factors work against Microsoft and seem to indicate that the Google service will lead to chromebook penetration at the enterprise.
The Chrome Enterprise service offers a cloud-based management portal that can help administrators manage a fleet of Chromebooks. It also supports virtualized desktop applications and authentication through Microsoft Active Directory, threat prevention and a host of other features. Additionally, Google is partnering with VMware at launch, meaning that it has the ability to run VMware Airwatch’s enterprise mobility management software and through which it will allow chromebooks to run Microsoft applications as well.
RBC Positive About Apple Investment
Apple’s billion dollar earmarking for content has got a lot of speculations going. While a WSJ report earlier said that the amount would be spent for Hollywood content to help Apple compete with stuff from Netflix, Amazon and the like, RBC analyst Amit Daryanani says this is unlikely to be the case. And it makes sense what he says, that the amount is small compared to the $6 billion Netflix is spending or the $4 billion Amazon is spending for content. And Apple’s earlier attempts in the area also haven’t been so successful. So it will most likely be used to beef up Apple Music to better compete against Spotify.
True enough, Spotify with its 50 million subscribers and free tier remains well ahead of Apple Music. On the other hand, it’s been around much longer and Apple Music has been growing very fast to its 27 million strong current subscriber base. So Daryanani figures that it will take Apple just three years to recover the cost if it can add 7-8 million more people. Apple already has a larger catalog and more exclusives, so further boosting content could even help it steal away some Spotify customers and help it double services revenue by 2020 (as targeted).
Western Digital Consortium To Buy Toshiba Chip Unit After All
Kyodo News reports that Toshiba is finally on the brink of approving a deal to sell a majority stake in its memory chip business Toshiba Memory to Western Digital, KKR & Co., Innovation Network Corp. of Japan, Development Bank of Japan and others. Western Digital has agreed that its voting rights will be limited to a third so it doesn’t play a major role in deciding management issues. Toshiba is in a hurry to sell the business after its American nuclear power unit went bankrupt and the company was forced to report a huge loss.
Toshiba Memory will sell for nearly 2 trillion yen, which will help the company stay afloat. It’s expected that Toshiba Memory will also be listed some time in the future. Western Digital may have won this round because it went the litigation route, which generally takes time. Toshiba doesn’t have that time, which is probably why it ultimately chose the WDC-led outfit despite the fact that it took a hard stand against it earlier.
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Apple Iowa Data Center: Apple is all set to build a 400,000 square-foot state-of-the-art data center in Waukee, Iowa. It will spend $1.3 billion on the structure and also contribute up to $100 million towards a Public Improvement Fund for community development, including the revitalization of streets, libraries and parks. The center itself will employ around 50 people, but setting up the structure on the 2,000 acre plot will also create around 550 temporary construction and operations jobs. Apple will get $208 million in state and local tax breaks.
Facebook Selects Hardware Chief: Facebook (FB - Free Report) veteran Andrew Bosworth, who previously worked as Facebook's VP of ads and business platform, and played important roles in the development of Messenger and News Feed, has now been made the head of its hardware efforts. These include at the moment, its Oculus unit and the secretive Building 8. Oculus is spearheading Facebook’s VR/AR efforts while Building 8 is reportedly working on a video chat service called Aloha as well as an Amazon Echo equivalent.
Apple Finds Use for Self-Driving Technology: Like Google’s Waymo, Apple has now decided to sell self-driving technology rather than self-driving cars, given the difficulties of getting a new car to market, especially since it is far from its core expertise. According to employees familiar with the matter, the company will be testing its technology to shuttle employees inside the campus.
The project is called PAIL (Palo Alto Infinite Loop, after its Cupertino headquarters near Palo Alto, situated on a road called Infinite Loop). Veteran Bob Mansfield was recently put in charge of Apple’s self-driving unit, called Project Titan, after another Apple veteran Steve Zadesky quit in Jan 2016 over disagreements with design chief Jony Ive.
Facebook to Broadcast College Football: Facebook has a deal with Stadium, a joint venture between Sinclair Broadcast Group, Silver Chalice, and 120 Sports to live stream 15 games (nine Conference USA matches and six Mountain West games) on its platform. People around the world can catch the games on the Stadium: Live College Football Show Page on Facebook. U.S. users can also see them on Watch, the new Facebook tab dedicated to original video. Needless to say, there will be social elements such as a live, curated chat from football personalities alongside the stream and a team of people to interact with the audience.
New Intel Chips for Laptops: The first of Intel’s (INTC - Free Report) eighth generation chips are here, and they’re targeted at thin and light devices like notebooks, laptops, tablets, convertibles, etc. The new “U” series chips double the cores from two to four and supporting threads from four to eight (than its predecessor released last year), meaning that Intel’s new chips are much more powerful now although they consume the same power. Distant rival AMD, which made waves with its Zen architecture, is set to launch its quad core chips called Raven Ridge for laptops later this year. Intel says its chips offer 10 hours of battery life.
Microsoft Breakthrough on Speech Recognition: Microsoft’s speech recognition system is reportedly doing better than humans when translating spoken words to transcripts. THE current word error rate is 5.1%, which the company believes is similar to a human error rate and much better than Microsoft’s previous 5.9% error rate achieved a year ago.
Microsoft and IBM are going neck to neck in this battle, with IBM having touched 5.5% this March (its previous rate was much higher at 6.9%). Voice recognition technology and the eco system it serves are interdependent and more accurate interpretations by voice assistants will increase their usage. This in turn will help to improve the technology further.
Microsoft Building Own AI Hardware: Microsoft has built an artificial intelligence system based on Intel’s Stratix 10 FPGAs to minimize latency and thereby solve artificial intelligence queries in real time. It’s expected that Microsoft and Intel will be able to further improve speed as the technology is further developed. Brainwave, as the deep learning acceleration platform is called consists of a high-performance distributed system architecture; a hardware deep-neural network engine running on FPGAs; and a compiler and runtime for deployment of trained models, according to Microsoft’s blog post.
Project Brainwave will be available through Azure cloud services. It currently supports trained models created using Microsoft’s CNTK and Google’s TensorFlow frameworks with other tools like Facebook’s Caffe2 likely to be added soon.
Google Search for Indonesia: Google is launching a slimmed down version of its search app in Indonesia, where users are primarily mobile only. Despite the low penetration of desktops in the region compared to mobiles, Cisco (CSCO - Free Report) says the market will grow eightfold from 2016 to 2021, at a compound annual growth rate (CAGR) of 53%. Google estimates that smartphone usage will propel the country to the 4th largest market of Internet users by 2020. So it’s a big opportunity that needs to be tapped. If successful, the app can be taken to other emerging markets where Internet connections are spotty.
Collaborations and M&A
Cisco Goes After Hyperconvergence Startup: Cisco is spending $320 million in cash and additional retention-incentive awards to acquire hyperconvergence startup Springpath. Cisco has in the past helped the startup with finances and based its Hyperflex hyperconvergence platform on Springpath technology. The two have been working together for a while and after a deal to supply its technology was reached last year, Springpath stopped distributing its technology to other players.
So the acquisition was always in the cards. It also makes perfect sense given the growing need to wrest market share from Nutanix, Hewlett Packard’s Simplivity, Dell, VMware, etc. and especially as the core hardware business continues to shrink.
Microsoft-Halliburton: Microsoft has a deal with oil and gas giant Halliburton, under which it will host its iEnergy service for exploration and production. Microsoft is offering its Hololens and Surface devices to deliver voice and image recognition, video processing and AR/VR to create a digital representation of a physical asset.Credit Suisse’s Michael Nemeroff said in a note titled “Not your father’s Microsoft anymore,” that “While the economics of this deal were not disclosed, we view these types of announcements and this one in particular, as a prime example of how MSFT is purposely steering its long-term corporate strategy away from its legacy tools and cyclical PC business, and towards the next generation of software technology that will foster incremental productivity gains to create wider competitive advantages for its early adopter customers, which we expect to become technology standards over time.”
Google-Walmart: Walmart’s ecommerce head Marc Lore, who joined the company upon its purchase of jet.com, is doing all he can to grow the retail giant’s ecommerce business. That’s why the company is now partnering with Google, so customers can use Google Assistant, which powers Google Home and also millions of Android devices, to order groceries online. Now, people shopping on Google Express can also order what they need from Walmart, whether they want it delivered or prefer to pick up at the store or curb. So Google is bringing voice technology, which to be honest hasn’t really picked up (because of rotten experience mainly) while Walmart is bringing products and data to the partnership. Both have a common rival is Amazon, which has a 75% share of the voice ordering ecommerce market according to eMarketer, with Google accounting for most of the balance.
Gartner Data on Smartwatches: Gartner appears to be quite optimistic about smartwatches, saying that the segment will grow at the expense of simpler wristbands from 13% of total wearables in 2017 to 16% by 2021, at which time it will generate $17.4 billion in revenue. Research director Angela McIntyre says, “"The overall ASP of the smartwatch category will drop from $223.25 in 2017 to $214.99 in 2021 as higher volumes lead to slight reductions in manufacturing and component costs, but strong brands such as Apple and Fossil will keep pricing consistent with price bands of traditional watches."
Other important wearables categories include Bluetooth headsets, which will be 48% of the total wearables market this year (dropping to 41% in 2021) and head mounted displays, which the firm says is only in its infancy and will generate just 7% of wearables shipments in 2017 (growing to 13% of the market by 2021). Other fitness monitors are also expected to grow strongly.
Facebook Gets Back Its Teens: The market has been speculating for long about whether Facebook has a teen problem or not. A recent report from eMarketer continues this argument. The research firm says that while Facebook usage by teens between 12 and 17 years of age dropped 1.2% in 2016, the number was expected to decline 3.4% this year. But this may not be such a problem for the social network, which has done a pretty good job of aping Snapchat with its Instagram offering. Instagram also has the kind of content that might be easier to monetize than Snapchat. So while Facebook appears to be losing a few teens on its app, it’s also gaining back a few through Instagram.
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