Thoughts On The Apple-IBM Partnership & Amazon's Rough Week

The big news this month was the announcement that Apple and IBM have partnered up to deliver better enterprise solutions to large corporations. Essentially IBM will be selling iPads and iPhones with custom apps to help deliver complete enterprise solutions to big business. These devices will include IBM cloud services, a new enterprise focused Apple Care and all the solutions you need for security, analytics, etc. This is apparently putting the best of both companies together – Apple can focus on making great hardware and operating systems, while IBM can focus on enterprise solutions and IT support. While this all sounds wonderful – especially for the apparent 98% of Fortune 500 companies that use iOS devices even though Apple provides sub par solutions for big business – it’s a lot easier said than done. 

Apple can claim that this will be a partnership, but when have we known Apple to give up control of anything? They’ve created a closed operating system that doesn’t allow for user changes, they control what apps are released in the App store, they controlled the global prices of e-books, but now they will allow another company to sell their devices with alterations? Aside from Apple having control issues, I think they are underestimating how difficult of a task this will be. They are asking IBM to design and develop specific applications and security features for an operating system it didn’t build. Will these devices need a customized rollout for each big company? What happens to employees that follow BYOD – bring your own device? Will their phones need to be altered or replaced? I think that Apple and IBM have a long way to go before this partnership is feasible - this announcement is primarily meant as a scare tactic.

I’m sure as soon as they announced this, all the analysts were going crazy trying to figure out who this would hurt the most. Already there were some journalists saying Microsoft would lose its hold on enterprise or that Blackberry’s revival was doomed. Blackberry doesn’t seem too worried – CEO John Chen’s response was to say that the partnership was like “when two elephants start dancing”, whatever that means. Lots of noise, no results? The partnership has certainly started speculation about Blackberry potentially collaborating with another company, with Dell being one of the names thrown out there. As for Microsoft, they’ll be just fine. While they may not be winning on the mobile front, the majority of businesses still use PCs, even if they may not have upgraded to Windows 8. 

However, an interesting point was made by the media. Will Apple and IBM do anything to combine their ‘computer selves’ – Siri and Watson? What kind of outcome can we expect if they do? One of the funniest things mentioned by the media was the fact that businesses are struggling with the complexity of managing big data and that maybe there can be greater insights if they are available on the ‘easy to use iPads and iPhones’. Maybe they think Apple can magically make big data simple enough for everyone to use – good luck with that.

I want to end off by talking about how Amazon has had a rough week. They announced that they lost $126 million this quarter, even though they had a 23% increase in revenue. They’re investing so much in new products and services that they’re simply spending more than they make, even if they continue to make more and more. Investors are starting to get antsy, especially because Amazon announced that they are expecting to lose $810 million next quarter, but CEO Jeff Bezos is trying to explain that it’s about the long haul. Of course investors want to see a return on investment but Amazon just isn’t that kind of company. Bezos has a huge dream and wants to continue expanding – especially now that Chinese giant Alibaba (which is bigger than Amazon and Ebay combined) is trying to get into the U.S. market. I think Bezos is right when he says that this is not the time to slow down – although i’m not sure if there will ever be a time for slowed growth.

As a side note for those avid Twitter/Amazon users, you can now buy things without leaving Twitter. You just sync your two accounts, reply #AmazonCart to any tweet containing an Amazon link and when you wander back to Amazon the item will have already been added to your cart. I’m not sure how useful this will be to most of us, but it’s certainly the start of an interesting trend. 

Apple's Sphere of Influence

Apparently Apple has such a large impact on the world of business, that just the rumour of it releasing a new product is enough to stop competitors and consumers in their tracks. The iPhone 6 is supposedly the most anticipated iPhone ever – maybe because everyone figures that after a couple years of upgrades they must have come up with something new by now. Consumers are said to be holding off on buying new smartphones because they want to wait and see what Apple will release. Apparently the phones that have launched recently are selling below forecast and experts say that the upcoming iPhone could be hurting competitor’s sales by 10-20%. For me, this just demonstrates what brand power can do for a company – they don’t even have to release the product, just talk about it.

Competitors are also holding off on releasing new models because they don’t want to compete directly with Apple. If they didn’t want to compete with Apple, they shouldn’t have entered the high end smartphone market. I’m curious to see how long it takes other companies to realize that it’s all about brand name – at this point the phones are all virtually the same. By buying an iPhone or a Nexus (Google) or a Galaxy phone (Samsung) or anything else that’s out there, you’re telling the world something about yourself. Each brand needs to represent something specific, to help customers tell their story to the world.

The last aspect of the market that Apple’s potential new phone is affecting, is the supply side. With most top component makers busy trying to fill Apple’s orders, other companies are worried they’re won’t be enough product for them. Many smartphone companies go to the same sources for their components, including screens, chips, batteries, etc. These companies are backlogged trying to make enough iPhone 6’s for Apple’s supposed launch in September. According to rumours, we’re going to be seeing a 4.7” iPhone 6 and a 5.5” iPhone Phablet.

Continuing with the theme of Apple affecting everyone around them, they are currently in a dispute with Sharp – who makes the displays for iPhones. All of the output from particular factory in Japan goes to Apple, who also owns a large chunk of the production, and Sharp wants to buy it back so that they can make screens for other companies as well. This is due to the fact that Apple’s demand varies drastically from quarter to quarter (think about how much higher the demand for screens is during the couple months before a launch, during a launch, and directly after a launch), and Sharp wants to make sure it’s facilities are always get maximum use. They’re apparently offering $293 million – but Apple has one condition. They are insisting that Sharp doesn’t sell displays to Samsung, which eliminates a huge potential customer for Sharp.

My last Apple affecting the industry story has Apple on the defensive. Nuance Communications, maker of the Dragon Speaker software, is one of the most advanced speech recognition companies in the world. It is also the company that is behind Siri, Apple’s voice recognition software (and a company that my mom worked for!). Recently Nuance has run into financial troubles and is potentially up for sale. One of the first companies to show interest, is Samsung. This creates an interesting situation – would Samsung then own Siri in some capacity? Nuance is currently valued at $6.1 billion (twice what Apple paid for Beats), but if it is purchased by another company if would presumably put Apple in a similar situation to what they did to HP when they purchased Beats (HP has exclusive rights to Beats which end after 2014 so they are putting Beats on almost every laptop they are making for back to school – they are allowed to continue selling these devices until the end of 2015). Maybe Apple will use its immense influence (and some of that $150 billion cash pile) to retain Siri and avoid this problem altogether.

Amazon's Fire Phone, Facebook's Slingshot App and Blackberry's Passport

As expected, Amazon announced that they are indeed entering the phone market, with a device called the Fire Phone. It’s running a very specialized version of Android that they call Fire OS, similar to what is running on their e-reader. It’s got a 4.7” screen, putting it somewhere between an iPhone (4”) and the Galaxy S5(5.1”). But let’s talk about what really makes it different.

The Fire Phone has four front facing cameras equipped with facial recognition which allows the screen to produce 3D effects. The screen moves with you, changing the view based on the angle of your face. It also allows you to tilt and swivel the phone in various applications, instead of having to scroll or swipe (http://gizmodo.com/how-amazons-fire-phone-cameras-know-where-your-face-is-1592859925). Amazon is calling this technology ‘Dynamic Perspective’, and it seems similar to what Samsung was trying to accomplish when it allowed you to scroll down with your eyes. Most people turned the feature off, viewing it simply as a gimmick, so we’ll have to see what the world thinks of Amazon’s 3D screen capabilities.

The phone also has a ‘Firefly’ button which allows you to take pictures of items or listen to songs and purchase them instantly from Amazon (or add them to your wish list). I’m not sure that being able to buy things should be that easy, but it definitely makes sense for Amazon from a business perspective. Another feature that isn’t necessarily new to Amazon, but new to the phone world, is the Mayday button. This is a feature that Amazon has on their Kindle’s, which calls a customer service representative to help you live. The response time is 15 seconds! Here’s a video if you haven’t seen it in action: https://www.youtube.com/watch?v=PFYHF1w8w3g. It’s certainly setting the bar high for customer service, and it will now be available on the Fire Phone.

For now the phone also includes one free year of Prime, which gives you access to Amazon’s huge database of movies, TV shows, songs, books, and free 2 day shipping. It all sounds pretty great so far but there are some downsides to not being Apple or Samsung. First off, the Fire Phone will only have around 240,000 apps to start (about a quarter of what Apple and Samsung have). It will also have some distribution challenges because it is only available on AT&T in the states for now (although you can purchase it directly from Amazon for $649 USD). A lot of experts thought that Amazon would go for the cheaper end of the smartphone market, but they’ve loaded up their phone and are ready to compete with the big names – including pricing their phone the same, $199 USD with a two year contract. It will be interesting to see how many current Amazon customers will buy a phone, or if the phone will help increase Amazon’s overall sales.

Something else new this week is Facebook’s Slingshot app. It’s drawing a lot of comparisons to Snapchat because of the way it allows you to send pictures to friends. However, it’s different because to see what someone sent you, you have to first send something back. This strikes me as kind of strange because that’s not how a conversation flows – you don’t respond before someone has asked you a question.  The pictures also don’t self-destruct, they stay there until you swipe them away. This is Facebook’s third attempt at making a new app, preceded by Poke and Paper (the newspaper like app), not to mention that they tried to buy Snapchat for $3 billion.

The last new thing I want to mention is Blackberry’s potential attempt at a Phablet called “Passport”. It’s the strangest phone I’ve ever seen, a square blocky phone with a physical QWERTY keyboard and a 4.5” screen. They will also be releasing the Z3 (an all touch device) and the Classic (which looks very much like the original Blackberry’s). I’m curious to see how all these devices and applications do, especially considering how saturated the current market is. 

WWDC14: iOS8, OS X Yosemite and Swift

So Apple’s WWDC event has come and gone….and did they release any of the ‘rumoured’ devices? Nope! Instead they focused solely on software, which is quite a shift from their usually hardware centric model. Apple’s release focused on iOS8, OS X Yosemite, and their new programming language, Swift.

First let’s talk about iOS8. It’s going to be released in the fall, but only on the iPhone 4S and newer, as well as all the iPads, except for the original. If you’ve got an iPhone 4 or older, you’re out of luck (probably time for a new phone anyway). They started off by mentioning a whole bunch of features that are already available on Android/WhatsApp, such as now having the ability to send audio and video in iMessage and a predictive text keyboard. Their main focus for iOS 8 seems to have been making the experience between an iPhone/iPad and a Mac seamless, as well as allowing users to use apps within apps. Ex: the photo editing app can be used within pintrest. However, I will admit that some of the features were pretty neat. You can connect your device to several smarthome devices, and set certain moods so that if you were to say ‘time for bed’ to Siri, it would for example, shut off lights, turn the temperature down, and whatever else you have set to that mood. As smart devices become more common, this will be a really great feature.

Apple also unveiled a HealthKit, which allows medical data to be shared more easily, and allows the user to track things such as blood pressure and exercise. Some health experts were very critical of this, saying that they were wary of user tracked data. Apple has also expanded the use of the TouchID, allowing developers to use it in other apps, while promising to keep your information safe and inside the phone only. As well, the notification centre now lets you text without leaving the app you’re currently in. The other big feature was the amount of ‘continuity’ between your Apple devices, meaning that you can answer text messages from your Mac if your phone is nearby, easily transfer photos, etc. They demonstrated this at the conference by calling Dr.Dre through a Mac, to welcome him to Apple (it’s pretty funny because they refer to him as Doctor, as if that’s his first name - https://www.youtube.com/watch?v=AeWMueqxH_s).

Next is OS X Yosemite, which is the new operating system for the Mac (instead of being named after cats, they are now being named after things in California). The biggest changes are to make it look more like iOS8 and to increase the compatibility with Apple’s mobile devices. Tim Cook made sure to throw in some barbs about how high the adoption rate is for Apple’s operating system vs. Windows 8.

Lastly (and probably the biggest surprise), was Apple’s announcement of a new programming language, called Swift. It’s apparently way faster and cleaner than the old one. One of the ‘great’ features about it is that it runs the code as you type it – although I read a post where the developer said this was a terrible idea because if you click any links it will automatically run and you can’t stop it. He also said if you accidently run a certain line of code it will delete everything on your Mac. Overall, I’m sure developers were pretty pleased with the WWDC considering all the new tools and developer kits that Apple has made available. Now we get to listen to more speculation about when the next hardware will be released…

Stepping outside of Apple’s world, Amazon released a video today inviting everyone to their special launch announcement on June 18^th, and from the video it seems like they will potentially be releasing a 3D phone (at least that’s what the experts think). Watch the video and see what you think - https://www.youtube.com/watch?v=erUZQ9GK0sE. And lastly, the WiiU may have found it’s saviour in Mario Kart 8. The game sold 1.2 million copies over the weekend, giving the gaming system a much needed boost.

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. 

Scratching the Surface of Google

Today saw the wrap up of the Samsung vs. Apple patent lawsuit, as both sides gave their closing arguments. Each company says that the other infringed upon its patents and stole the technology in their devices to gain a large share of the smartphone market. Apple, being its usual self, claims that their products had been created by ‘true geniuses’ and that Samsung stole key features such as the slide to unlock and the search functionality, to help them keep up. Samsung claims that Apple infringed on their patents to make FaceTime possible and points out that they used Google’s Android operating system to run their devices. Interestingly, Google is not named in this suit, although one could argue that if anything is infringing on Apple’s patents its Android, and not Samsung’s hardware. I wouldn’t want to be one of the eight jurors who now have to decide who’s infringing on whom.

This brings me to my topic for today, which is the ever present Google. Is there anything Google is not involved in? First think about the obvious ones, which is Google’s online presence. Google includes its initial function as a search engine; its widely popular email service, Gmail; its venture into a social network with Google+; Google Maps, Google News, Google Scholar, Google books, Google Image, Google video, Google translate, Google Docs, Google Calendar, Google drive, etc. You get my point. Now think about operating systems, they invented the most widely used phone operating system in the world, Android; as well as a laptop operating system called Chrome OS that gives users an alternative to Windows, Mac or Linux. As for hardware, they’ve got tablets and phones (the Nexus series), as well as the Chromebook (laptop) and Chromecast (media streaming device). 

But it is the products that Google makes that fall outside of these categories that are truly interesting. Developed in a facility called Google X, Google works on projects that most of us have only heard of in science fiction movies. Some of the things that are supposedly worked on at this facility include things such as a space elevator, a hover board, contact lenses that monitor glucose levels, and a project that is trying to bring internet to everyone through balloons flying in the stratosphere. Two things however, have become very real products that may have a huge impact on our society.

The first, is Google Glass. Essentially a head mounted computer, it allows wearers to interact with the internet through voice commands. Users can search the internet, take photos and videos, sends text messages and emails, use google maps, etc. (To get an idea of what Google Glass can do: https://www.youtube.com/watch?v=v1uyQZNg2vE). While this is an amazing device that has endless possibilities, it seems our society is unprepared for it in many ways. Huge privacy concerns have been raised considering Glass wearers can take pictures and record video of others without their permission or their awareness. The legal system also seems to be unsure of how to deal with Glass, considering the implications of using the technology and driving (distracted driving?), filming arrests, etc. There is also the fact that these users are walking around talking to themselves (although is that much different than those talking into their Apple earbud mics?). I think people aren’t quite sure how to adapt to these devices and that they will eventually gain traction.

The second product that is becoming a reality is Google’s driverless car. They have logged over a million kilometers in self-drive mode, although much of that is on the freeway. Yesterday Google released a video showing the kinds of obstacles their cars have overcome when it comes to city driving. They can now deal with things such as cyclists, construction, rail way tracks, pedestrians, parked cars, etc (to watch the video: https://www.youtube.com/watch?v=dk3oc1Hr62g#t=66). However these cars are a long way from being ready for the public, and Google isn’t quite sure how to market or sell them (adopt an Android like attitude and give away the software?). Think about the benefits! Drivers could read or sleep or do anything while heading somewhere. The transportation industry would be transformed because you could replace drivers with driverless trucks. They wouldn’t need to stop to sleep or eat or rest. Imagine being picked up by a driverless taxi late at night, would you feel safer? Similar to Google Glass however, lawmakers aren’t quite sure how to deal with these cars. Some states have allowed them on the road for testing purposes only, and they still require a person in the car at all times. 

With all of this said, is Google well on its way to being a constant presence in our lives? Is it already there? Is Google really out to help make the world a better place? Even with good intentions, are all of these products going to make our lives better? It will be interesting to see in the coming years how much of our lives include the entity that is Google.