The technology sector didn’t have a very good week, although there was no dearth of exciting announcements. Here are the top stories:
Alibaba Results Hit Yahoo Shares
Yahoo’s (YHOO) holdings in Alibaba have been good for its share price, but some of the gains are disappearing because of uncertainty about the amount of gain. First, investors found out that Yahoo’s holdings were in fact slightly less than previously estimated. And last week, Alibaba’s results showed decelerating revenue growth and a declining operating margin. The euphoria around Alibaba is largely because of its dominant position in China where it has grown at astounding rates. So there is some disappointment about its recent performance, especially heading into its IPO.
Amazon Launches Fire Phone
Amazon (AMZN) has finally launched its Fire Phone, which like all its other devices, is based on its own version of Android for the obvious purpose of making media consumption more enjoyable. But other functions are also rather important as far as phones are concerned, so Amazon made sure to tell us that there are currently 240,000 apps in its ecosystem, which while tripling over the past year still remains well behind Apple, Google and even Microsoft. It also commissioned IDC to do a study, which found that developers on Amazon usually made more money.
Wearables Market Heats Up
Apple iWatch: It’s being rumored that the much-awaited iWatch will hit stores in October, with Apple (AAPL) shipping 50 million units this year. The iWatch will come laden with sensors, according to “people familiar with the matter”, enabling it to work with Apple’s recently announced Health app. Quanta Computer will be making the device and LG Display will be supplying the screens. Multiple screen sizes is a possibility.
Microsoft Smart Pants: Microsoft’s first wearables product is likely to be a pair of pants with pockets that can charge phones. Not very flashy admittedly, but the significant thing here is that the company unveiled the item at a fashion show in London. Microsoft Mobile has also signed on Adrien Sauvage, a British fashion designer, which could mean that its wearable devices will be easy on the eye and tough on the pocket.
Facebook announces Wedge
As part of its Open Compute Project (OCP), Facebook (FB) has announced a Linux-based networking switch called Wedge. The “open” networking market is all about using software to control “dumber” hardware, which increases the flexibility of the network and reduces hardware costs. Facebook has said that this is enabling notable reduction in its cost. Recently public Arista Networks plunged following the news, since it derives a significant percentage of its revenue from Facebook.
But networking giant Cisco (CSCO) didn’t appear too worried. The company has reportedly said that SDN comes with its own share of costs (significantly higher labor, network operating systems licensing and per port virtual machine licensing costs) that ultimately increase network cost by as much as 75%. Besides, it is already tackling the SDN problem with its Application Centric Infrastructure (“ACI”), which will help it retain seven of the top ten Internet companies and nine of the top ten largest Massively Scalable Data Centers (MSDCs) in the U.S. as its customers.
|
Company |
Last Week |
Last 6 Months |
|
AAPL |
-0.80% |
+11.63% |
|
FB |
+0.62% |
+11.65% |
|
YHOO |
-2.46% |
-16.48% |
|
GOOG |
+2.03% |
|
|
GOOGL |
+2.12% |
+1.51% |
|
MSFT |
+1.39% |
+13.82% |
|
INTC |
+1.09% |
+19.27% |
|
CSCO |
+0.71% |
+15.11% |
GOOG = Class C shares (new, non-voting)
GOOGL = Class A shares (old, 1 vote per share)
Other stories you may have missed–
Corporate
Zynga Independent Directors Fall Below Nasdaq Minimum: Following the departure of LinkedIn CEO Reid Hoffman and DreamWorks Animation CEO Jeffrey Katzenberg, the number of independent directors on Zynga’s board have fallen below Nasdaq listing requirements. Zynga has until Jul 27 to submit a plan for regaining compliance, which if accepted, will give it further time to Dec 9.
Regulatory
Apple Settles ebook Price Fixing Case: Apple decided to settle out of court with U.S. states and others that were seeking over $840 million in damages. The court requires the parties to submit a filing of the settlement for approval within 30 days. Apple and Amazon are in a bitter fight regarding ebooks and the iTunes store is now listing Hachette favorites (Amazon doesn’t sell digital versions of Hachette books).
Aptoide Takes Google to Task in Europe: Portuguese third-party app marketplace has lodged a complaint with the EC alleging that Google is creating technical difficulties in the installation of its app on Android devices. It is also saying that Google policies favor Google Play. Google’s other revenues have grown rapidly in recent times indicating that the company is seeing strong traction in digital goods sales.
New Technology/Products
Facebook Slingshot Takes On Snapchat
Intel Launches Messaging App: Intel (INTC) has launched an app that uses cartoons to replicate your facial expressions to show the person you are talking to. The app is free for Android smartphones and iPhones. This is a rather cute way of getting you used to facial recognition technology, so when it is used in other ways it doesn’t completely freak you out. For instance, a TV that records expressions and doesn’t tell you about it could be most disturbing.
A Music Service From YouTube: Google has said that its YouTube will soon launch a subscription-based music service. People familiar with the matter said that it will allow ad-free video playback and offline playback on mobile devices. All the three major music labels – Universal, Sony and Warner – as well as hundreds of other smaller private labels have signed on. A few independent artists have not agreed to the terms, so they will be blocked from YouTube (both paid and free versions).
Microsoft Azure Machine Learning: Microsoft (MSFT) has announced its own analytical tool for big data analytics. The company is calling its Azure Machine Learning (“ML”) and it can be used for analyzing data stored on Azure. ML is the process that a machine learns from its own mistakes to become progressively better at predicting outcomes. It is especially useful for analyzing behavioral data, such as in online recommendations, fraud detection and email spam filtering.
M&A
Google’s Nest Acquires Dropcam: Google-owned Nest will acquire home-monitoring camera startup Dropcam for $555 million. Nest already cost $3.2 billion, so it’s clear that Google is extremely serious about the home automation segment.
Some numbers
Google Maps Touches Milestone: Google says that its Maps app has been downloaded a billion times, not surprising considering that its early entry into iPhones and the fact that its Android OS more or less rules the smartphone market. Google could be pushed out of the Apple ecosystem soon, but this may still not hurt the company that much, because the market outside Apple is more diverse and most of it will prefer an ad-sponsored free service. While Apple continued to improve its own app, Google is not sitting back. There could be further improvements to Google Maps in the not-too-distant future.
Microsoft lowers prices of Surface Pro 2 Hybrid: Following the launch of Surface Pro 3, Microsoft has cut Surface Pro 2 prices by $100 to $200, depending on the configuration.
NPD Says PS4 still ahead of Xbox One: Sony’s PS4 was ahead of Microsoft’s Xbox One for the fifth straight month, according to NPD Group. Last month, Microsoft removed Kinect from its console, which enabled it to lower the price to $399, same as Sony. Microsoft started off on the wrong foot because it was unable to gauge user sentiment and the company doesn’t seem to have recovered since. Free games didn’t help it much and now it’s time to see if the lower price will.
Oracle Misses, RedHat Beats, Outlooks Are Encouraging
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