Google Becomes the World's Most Popular Brand, Apple May Buy Beats, and Microsoft Releases the Surface Pro 3

The big three tech companies are generating all kinds of news right now, and all for completely different reasons.

A research company released their annual list of the world’s most popular brands, and had all the news agencies talking about Apple’s ‘dethroning’. After three years atop the list, they were surpassed this year by Google. Is anyone really surprised? Google Glass, self driving cars, and balloons that bring wifi to everyone vs. iPhones, iPads and iPods that we've all seen before. Which would you choose? As well, 6 of the top 10 brands come from the tech sector (Google, Apple, IBM, Microsoft, AT&T and Amazon) proving that it is alive and well.

Continuing with the Apple buzz, there are lots of rumours going around. They have their keynote speech at the WWDC (Worldwide Developers Conference) on June 2^nd, and lots of sources are saying there is new hardware being released. Ideas that are being thrown around are a smartwatch, Apple HDTV, the iPhone 6 or a version of the MacBook Air with Retina display. Considering that every conference for the past 1-2 years has had rumours that Apple would release a smartwatch, I’ll believe it when I see it. There are also rumours that they are considering releasing iTunes or iTunes Radio for Android, to try and compete with music streaming services such as Spotify. Although Spotify is gaining in popularity, according to their own website, only ¼ of users are paying for the service, and they still haven’t figured out how to make a profit. I suppose Apple is getting worried because single song purchases declined 12% for the first couple months of this year, and they may need to come up with something new.

This brings us to the biggest Apple rumour of the week (although it’s pretty certain). Apple is apparently going to buy Beats by Dr. Dre, for $3.2 billion, which has a lot of people trying to figure out why. Part of it has to do with what I mentioned above, with Apple trying to get into streaming music. Beats Music is a similar service that supposedly has 10,000-20,000 subscribers after 3 months on the market, although some say that’s fairly low considering the extensive advertising they’ve run for it. With this deal Apple also gets a company that is considered both fashion and electronics. The headphones are sold at a high premium, not for the quality, but for the brand name. By 2013, after 5 years on the market, Beats had cornered 59% of the market for headphones that cost more than $99. Some are speculating that Dr.Dre and Jimmy Iovine (who is a huge name in the music producing industry and co-founded Beats) would join Apple’s executive team. There are certainly all kinds of reasons this does and does not make sense, but we will have to see it unfold in the next couple of months. I’m curious to see how Apple will handle managing another brand (since the Apple brand is the key to its success) and how much of Beats it will dismantle. This would definitely be their largest acquisition ever (biggest to date is $400 million for NeXT, which brought Steve Jobs back), although it pales in comparison to Facebook’s $19 billion for WhatsApp.

Now amidst all of the Apple rumours, Microsoft announced the new Surface Pro 3. This is a bit of a surprise considering they released the Surface Pro 2 around 8 months ago (October 2013), and the original Surface Pro a year before that (October 2012). Personally, I have the original Pro, I use it daily and it works great. But if you are looking for something new, the Pro 3 comes with a larger 12” display, has a wide-ranging kickstand and is thinner and lighter. With this model they are really looking to convince consumers that it can be their one and only device, both a tablet and a laptop. They’ve moved the Windows button to the right side, encouraging users to use it in portrait mode (very iPad like), and they’ve released a newer keyboard and stylus. The main theme in their presentation was, why choose between a tablet and a laptop when you can have both in one device?

Lastly, I wanted to mention an interesting piece of news that got hidden amongst everything else this week. China banned the installation of Windows 8 on government computers, saying that they were ensuring computer security. They were previously running Windows XP and have been slowly converting to Windows 7. This is a blow for Microsoft who continues to try and increase the share of computers running Windows 8, which currently sits at around 12%.

Lots to look forward to in the coming months, enjoy!

Positive Earnings, an Evolution for Snapchat, and a Cash Infusion for Yahoo

This was a week of good news for many, with several companies posting better than expected earnings. Disney surpassed expectations, posting a net income of $1.9 billion for the quarter, up from $1.5 billion last year. This was largely on the strength of their blockbuster film ‘Frozen’, as well as the success of their Infinity Disney video game. Electronic Arts (EA) also beat forecasts, posting $100 million more in net revenue than expected ($914 million in the 4^th quarter vs. $812 million expected), with much of this growth coming from the digital side of the business, and the success of their titles on the Xbox One and PS4. Activision, through the success of its Call of Duty franchise and recent Diablo III release, also posted almost $100 million more in revenue than experts forecasted ($772 million earned vs. $688 million forecasted). They look to continue growing with a new game in the COD series being released in November (Advanced Warfare), as well as new first person shooter game called Destiny. However the revenue for EA and Activision was still lower than their previous years. I find it very interesting that companies’ stock prices go up or down based on how much their revenue differed from the experts predictions, not based on how they did compared to the previous year. Presumably it’s because the experts also take into account the health of an industry, overall consumer trends, inflation, regulatory changes, etc. 

Another interesting piece of tech news is the fact that Snapchat has added more features to its app. Users can now chat in-app, as well as send live video if both parties are in the chat. Very similar to the features of Skype, Snapchat is looking to expand its user base, as well as increase the engagement of current users. Although it has no direct competitors, Snapchat knows that they must stay innovative if they wish to remain relevant, and with this update they look to add a new dimension to their app: presence. Now users can see the reactions of their friends to various pictures or events (to see the ad explaining this: https://www.youtube.com/watch?v=Z9h30NcVy4E). From a marketing perspective, it’s very neat to see how they distributed the ad – they snapchatted it to all their users. This makes me wonder if users will start to receive snapchat video ads, considering they already receive “you’ve won xxx contest” snapchats from various brands (who clearly got your snapchat handle without your permission). It will be interesting to see how tolerant users are of ‘snapchat spam’, and what kind of restrictions will be placed on these ads. 

I also want to quickly mention the fact that Alibaba, the huge Chinese technology company, has officially filed its IPO papers. While it may still be several months before the IPO happens, many are predicting that it will be one of the biggest IPO’s in U.S. history. Alibaba accounts for 80% of all Chinese e-commerce, stating revenues of $6.5 billion ($2.8 billion in profits) in the first 9 months of the 2014 fiscal year. It had 231 million active buyers as of the end of December, up 44% from the previous year, and it has been valued between $170 billion and $250 billion. The part that I find quite amusing about all of this is that Yahoo has a 22.6% share in Alibaba (after selling back part of its share in 2012), and depending on the final valuation, their share in Alibaba will most likely be worth more than the entire valuation of Yahoo. By this I mean that, Yahoo is currently valued at $36.7 billion, while their share in Alibaba will probably be worth anywhere between $38 billion and $56 billion. All of this from a $1 billion investment in 2005. It should cause quite a shakeup in the tech industry now that Yahoo will have a large amount of cash on hand to continue its comeback. I’m curious to see how Melissa Mayer (Yahoo’s CEO) will approach the coming months.