This was a bad week for Google GOOGL despite its new Chromebit and Chromebook line, but there was some good news for Apple AAPL and others.
EU Heat On Google
The EU is reportedly preparing a Statement of Objections, going by its letters to companies filing secret complaints against the search giant. This time around, Google may not be able to wiggle out of the situation since the new EU head prefers to deal with things in court so legal precedents are created.
Google’s settlements over the last few years have yielded progressively larger concessions, but its sheer dominance in the region is seen as a threat to the development of local players. Protectionism is not exclusive to China, it seems. If found guilty of anti-competitive behavior, Google will have to part with some of its cash, a big chunk of which is held overseas.
Google Launches Cheapest Chromebooks Ever
Two new $149 Chromebook laptops from Haier and Hisense became available last week to target the low end of the market including education and emerging markets. Microsoft’s MSFT devices of the same range haven’t actually started shipping yet, but they will be in time for the 2015 back-to-school season, so there should be a good fight at the low end of the market this year.
Google’s Chromebooks have done exceptionally well in recent times, but Microsoft’s Surface appears to have done better in the last holiday season. (Gartner’s quarter-four PC market estimates say PC shipments grew 1%, while IDC estimates they declined 2.4%. Gartner includes Windows tablets and excludes Chromebooks while IDC includes Chromebooks and excludes Windows tablets.)
Apple-IBM Partnership Takes Step Forward
Apple Trade-Ins Have New Flavor
For the first time, Apple will allow Android, Windows and Blackberry users to trade in their phones in exchange for credit towards a new iPhone. Of course all makes aren’t eligible: "certain Samsung, HTC, LG, Nokia, Sony and BlackBerry models” will be exchanged for store credits that can be used to buy iPhone 5c, iPhone 6, or iPhone 6 Plus. This is the first time it has announced such a program, and in the past, only older iPhones would qualify for a trade-in.
The amount to be credited continues to be determined by the store however and is based on the age and condition of the device handed in. The move should boost iPhone retail sales not only in the U.S., U.K., Canada, France, Germany and Italy, but also in other countries like China and Korea where it is likely to spread.
|
Company |
Last Week |
Last 6 Months |
|
AAPL |
-0.47% |
+25.80% |
|
FB |
-1.75% |
+4.16% |
|
YHOO |
-0.72% |
+13.06% |
|
GOOG |
-3.54% |
-7.84% |
|
GOOGL |
-3.96% |
-8.43% |
|
MSFT |
-2.23% |
-13.47% |
|
INTC |
+2.43% |
-10.49% |
|
CSCO |
+0.15% |
+9.83% |
GOOG = Class C shares (new, non-voting)
GOOGL = Class A shares (old, 1 vote per share)
Other stories you might have missed–
Corporate
GlobalFoundries to Make Chips for Apple: The iPhone maker has picked GlobalFoundries over Taiwan Semiconductor Manufacturing Company TSM as its foundry for next-gen chips. Despite the enmity on devices, Samsung remains Apple’s foundry partner. And that isn’t surprising because Samsung and GlobalFoundries are in a collaborative relationship, under which Samsung’s 14nm FinFET technology is licensed by GlobalFoundries, which is what makes this deal at all possible.
Intel-backed Startup Expands Base: Intel INTC Capital (Intel’s investment arm) has investments in startup SmartZip Analytics, which generates leads for real estate brokers on potential sellers of residential property. Media reports indicate that SmartZip has leased 36,000 sq feet of office space in Pleasanton. The East Bay area has been under development in an attempt to attract technology and bio-technology companies.
Yahoo Buying Back $2 Billion of Shares: Yahoo YHOO has announced plans to buy back an additional $2 billion worth of shares with Alibaba proceeds over the next three years. There is $726 million outstanding under the existing authorization. The announcement could lend stability to the shares, which have been impacted by the news that it will soon trade as its stripped-down core business alone.
GoDaddy (GDDY) Debuts At $20 A Piece
Legal/Regulatory
EU Probe Into Apple Music Streaming: The European Commission is scrutinizing Apple’s deals with music labels and digital streaming companies to determine if the company has engaged in any unfair or anti-competitive practices versus existing free ad-supported streaming companies reports FT.
Google to Be Sued Over Privacy Concerns in the U.K.: A group called “Safari Users Against Google’s Secret Tracking” has won the approval of a UK Court of Appeal to go ahead with a privacy lawsuit against Google for tracking them without their consent. Other Safari users can also join the party, according to the Google Action Group, which was set up to deal with consumer claims against Google. Earlier in 2012, Google lost a similar case in the U.S. when the FTC found it guilty of wrongdoing.
New Technology/Products
Facebook Enables Video Collaboration: Facebook FB has launched a new app called Riff in 15 languages on iOS and Android, which enables users to make videos up to 20 seconds long and string them together according to some pre-set theme. For instance somebody could start a thread called “birthday wish” and have everyone else join in with their contributions. Of course there are a few rough edges (inability to edit being one), but those will no doubt get ironed out in time. At the moment, it looks like a product that could make a difference.
Microsoft Launches Surface 3: Targeted at businesses and schools, the Surface 3 and Surface 3 (4G LTE) models are similar to their Surface Pro 3 brothers with respect to the quad-core Intel Atom x7 processor, up to 10 hours of video-playback battery life, HD multi-touch display with 3:2 aspect ratio, stereo speakers with Dolby Audio-enhanced sound and magnesium design. However, it’s just slightly smaller (10.8 inches), slightly thinner (8.7 mm) and slightly lighter (1.37 pounds). The Windows 8.1 OS can be upgraded to Windows 10 for free when it becomes available. The starting price is $499.
Google Launches Chromebit: Google has launched a small device (like the Chromecast), which its calling Chromebit. Just like Intel’s Windows-based Compute Stick, it can be plugged into any monitor (including your TV) that includes an HDMI port. The Rockchip 3288 SoC, 2GB RAM, 16GB eMMC memory, USB 2.0 port, WiFi 802.11 ac support, Bluetooth 4.0, Smart Ready controller and ARM Mali 760 quad-core GPU turn it into a computing system running on the Chrome OS. To be priced at less than $100 when it launches this summer, it is expected to extend the life of existing computer systems and therefore appeal to budget users in education and emerging markets.
Collaborations and M&A
Yahoo-Microsoft Search Deal Negotiations Extended: Yahoo has filed a statement with the SEC that it is extending the Microsoft search deal negotiation period from 30 to 60 days. The agreement entered into between the two in 2009 entitled Yahoo to end the contract after 5 years if its RPS didn’t at least match Google’s. In return, it handed over its search technology and agreed to be powered by Microsoft’s Bing. Further details aren’t available so it’s unclear whether Microsoft satisfied the criteria, but Yahoo CEO Marissa Mayer has onj several occasions voiced her dissatisfaction with the deal.
Google-J&J Making Surgical Robots: Google will be working with a Johnson & Johnson medical devices company called Ethicon to develop robots that can assist surgeons in the operating room. Healthcare robotics has seen some criticism because of unwanted complications in some cases, but the overall response has been positive because of the increased accuracy it can potentially provide. For instance, Intuitive Surgical, which uses robotics in colorectal and hernia repair surgeries, has seen procedures increase 9% in 2014 and expects a 7-10% increase this year.
Alibaba Signs Digital Distribution Deal With BMG
Analyst Opinion
iPhone 7 In the Works: Fresh rumors from KGI Securities indicate that the next iPhone won’t be an upgrade but a new device altogether. Analyst Ming Chi Kuo has a good track record with predictions, so this just might be a little bit more than a rumor. The analyst says there will be three new iPhones this year, one of which will be a 4-inch version of the iPhone 6 called iPhone 6C. The others will be called iPhone 7 and come in 4.7-inch and 5.5-inch models.
The Force technology is likely to require a completely new design, which is the reason for the iPhone 7. Later versions could remove the metal shielding, an additional modification to the design, according to the analyst.
Citi Raises Apple Estimates: Citigroup analyst Jim Suva raised both revenue and earnings estimates for Apple for the current fiscal year while retaining the Outperform rating and $145 price target. The optimism stems from stronger-than-expected sales of the iPhone 6 and 6 Plus, which continue to sell out in some areas.
Piper Apple Watch Estimate for Launch Weekend: Piper Jaffray’s Gene Munster expects 300,000 per orders for the Watch in the first 24 hours and a million units sold in the launch weekend. This is 8% of iPhone 6/6 Plus pre-orders (with pre-orders assumed to indicate loyal customers). By calendar year 2017, the analyst expects Apple to sell 40-50 million units, or 8-10% of iPhone units.
Some Numbers
Google/Baidu Search Market Share: eMarketer estimates that while Google continues as the search market leader, Baidu is gaining ground, backed by its strength in China. eMarketer’s numbers are based on revenues instead of volumes. The fact that China with its weaker currency is impacting revenue-based share numbers indicates even more significant declines in query volume share for Google.
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