Cisco CSCO has decided to invest $10 billion to mend relations with the Chinese, Intel INTC acquired Recon while Advanced Micro AMD is rumored to be contemplating a split.
Cisco Planning $10 Billion China Investment
Similar to Intel, Apple, Microsoft, Google and other technology companies, Cisco is taking a collaborative approach to China. The Chinese government’s goal is to make its high tech industry globally competitive by 2020 and it is doing all it can to build IP and talent. The U.S. has the expertise that can be tapped for this purpose and the carrot China’s holding out is a share of the growth in the country.
Details of what Cisco is getting in return aren’t clear at this point, but this appears to be a tried and tested formula (media reports indicate that the company did pretty much the same thing in India last year, with good results).
Cisco’s China business declines have been monumental over the past few quarters, and the company has reportedly been dropped from the government’s procurement lists. Local players Huawei and ZTE are also strong competitors. So it’s playing ball with China’s National Development and Reform Commission (NDRC), promising $10 billion to be used for innovation, equity, R&D and job creation. And that isn’t all: it’s also signed agreements with the Association of Universities of Applied Science (AUAS) to create training programs for some 100 colleges for the development of local technical skills.
Intel Acquires Recon Instruments
Google may be rethinking its Glass product and Intel may be supporting those efforts. But that didn’t stop the world’s leading chip maker from investing around $17 million to speed up Recon’s glass-building efforts or buying that company soon after its sporty eyewear made its way to store shelves.
What’s more, Intel intends to retain the brand and maybe even promote sales because it’s good to have a successful wearable device out there with more or less the same specs and quality as the Google Glass, but for the sports vertical, where it has so far been well received. Intel needs to find the things that can use its chips and the company is leaving no stone unturned to do just that.
Intel seems to be following a similar strategy with every wearables category. For instance, it bought fitness band maker Basis Science some time before its alliance with Opening Ceremony that resulted in the MICA bracelet. Now it has acquired a successful eyewear company and also has alliances with Google Glass and Luxottica for smart eyewear.
AMD Could Be Splitting Up
Rumor has it that the strongest Intel competitor in traditional markets is contemplating a split to ensure continued investment in its still-strong graphics business and gear up the rest of the business to compete better with Intel. Reuters reported that AMD has hired a consulting firm to help the process.
Reuters conjectured that AMD might be thinking of separating the enterprise and CPU business from the graphics and licensing business. This may, however, be easier said than done because of the many cross-licensing agreements it has with Intel with respect to x86 architecture. AMD could also go for a spin-off after determining the value of the business.
An AMD spokeswoman denied the rumor.
Meanwhile AMD stock rode up last week after the company announced new graphics processors that could give it an edge over NVIDIA in gaming and other graphics-intensive markets.
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Company |
Last Week |
Last 6 Months |
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AAPL |
-0.59% |
+13.25% |
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FB |
+1.19% |
+7.16% |
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YHOO |
-0.04% |
-18.69% |
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GOOGL |
+1.81% |
+8.06% |
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MSFT |
+0.11% |
-1.38% |
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INTC |
+2.39% |
-10.72% |
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CSCO |
+1.72% |
+8.81% |
Other stories you might have missed–
Corporate
Google Maps Exec Joins Uber: An important Google GOOGL Maps executive Brian McClendon has left the search company to join Uber. The taxi-hailing service has been expanding rapidly and is currently in contention for Nokia’s Here maps, so chances are it won’t be using Google Maps much longer. And that isn’t very surprising, considering that the two companies are getting into each other’s business. Google is developing self driving cars and trying out instant delivery through Express, both areas that Uber also trying to expand into.
Facebook Data Center In Ireland: Facebook FB follows Apple AAPL, Google and Microsoft MSFT in setting up a data center in Ireland, where a temperate climate and low corporate tax have attracted many large U.S. technology companies. U.S. surveillance scares have also led many countries to make a local data center mandatory.
The Information Technology and Innovation Foundation (ITIF), a nonprofit organization funded by Intel, Microsoft and others says that international data sovereignty laws will lead tech companies to spend much more than the originally estimated $35 billion on lost sales and other expenses by 2016.
Microsoft Shuffles Engineering Teams
WhatsApp Pulled Up: The Electronic Frontier Foundation (EFF), which produces an annual report on industry wide best practices being followed by tech companies for protecting user data and privacy, says that WhatsApp doesn’t satisfy most criteria. Companies that satisfied all criteria were Adobe and Apple, Credo, Dropbox and Sonic. Facebook, Twitter, LinkedIn, Pinterest, Reddit and WICKR were next, satisfying four of the five criteria. Amazon, Google, Comcast, Microsoft and Tumblr satisfied three of the five criteria.
Amazon’s Latest Delivery Plans: There is generally a lot of hoopla surrounding Amazon’s delivery plans, the latest of which is called “On My Way” (where regular consumers carry parcels for other consumers). The system is unlikely to get off the ground, mainly because there’s a host of problems associated with this kind of delivery, not the least of which is the need for Amazon to vet the delivery folks and cover losses (cash and reputation) in case the product is not delivered or stolen.
But Amazon isn’t sitting back, its other delivery experiment could take off next year, provided the Federal Aviation Administration (FAA) approves. Safety is the main obstacle in the way of commercial drones considering that a large number of unmanned vehicles at low altitudes could result in damages to persons and property.
Amazon VP Misener’s prepared testimony presented to Congress says that the FAA shouldn’t stifle innovation in the small unmanned aerial system (sUAS) space, but should instead focus on performance-based regulation. It’s also pushing for central regulation instead of state (as may be expected), since a multi-state operator would take much longer to get approvals.
Nikesh Arora Becomes Softbank President: Former Chief Business Officer at Google, Nikesh Arora, has been appointed President and COO of Japanese telecom conglomerate Softbank Corp. Arora has had a meteoric rise at the company and spent 200 billion yen on strategic investments including in India-based Snapdeal and Ola Cabs.
Legal/Regulatory
Facebook Could Settle In Belgium: Belgian authorities are concerned about Facebook’s ability to track medical information, as well as religious, political, sexual and other preferences of users from their interactions. The country’s Commission for Protection of Privacy is also considering issues like Facebook’s ability to track logged out members and non-members from the “like” button, considering Facebook’s methods more intrusive than other cases of third party tracking. Facebook’s position remains that it is governed by Irish regulations alone since it is headquartered in Ireland, so maybe the EU will step in.
Google Critics Can Comment on EU Charges: Google critics (the 19 companies that complained against Google, including Microsoft, Expedia, Yelp, French comparison site Twenga, British comparison site Foundem and German publisher Axel Springer) have received a copy of the EU’s statement of objections against Google on which they can comment within four weeks. Google has until July 7 to submit a written reply. It can also ask for closed-door proceedings to present its side of the case.
French Authority on RTBF: When Google agrees to scrub its results in the EU upon request based on the right to be forgotten, results shown to Europeans are scrubbed, but the results aren’t delisted entirely, meaning that while google.fr might not show some results, google.com might. The French authorities have objected to this practice, giving Google 15 days to comply. Microsoft and Yahoo have reportedly complied and if Google doesn’t, it faces sanctions from the French authority. Google says it complied with the letter of the law but it may decide to do as requested and save itself some trouble.
New Technology/Products
Apple Advertising Tool Can Make “Gobbling” Organized: Apple CEO Tim Cook recently accused rivals of gobbling user data and almost simultaneously announced a Facebook-like news-reading service. Last week it went a step further by patenting a system of tracking a user’s name, address, age, likes, dislikes and previous history whenever users share ads or other content from Apple devices and also store this information in a database.
Nokia Branded Smartphone in 2016: Nokia CEO Rajiv Suri has announced that a Nokia designed and branded phone will make it to the market next year. Nokia will license the design and brand name to a hardware partner, which will also be in charge of marketing. Further details weren’t available, but it’s likely that Foxconn will be interested (it already does the job with Nokia’s N1 and is returning to India for a significant amount of factory space). Chances are the device will be Android powered if the N1 and Z-launcher are any indication. The Nokia brand still has value in several Asian countries and there could be a few European loyalists as well.
Google Launches YouTube Newswire: YouTube has launched a new channel called Newswire in collaboration with Storyful, an Irish company News Corp picked up in 2013 for $25 million. The channel will have a curated feed of the most newsworthy verified videos by eye witnesses from around the world. Storyful will check for authenticity so news organizations can then pick up and use in their stories.
Google Nest Announces Security Camera
Twitter Launches Autoload Videos
M&A and Collaborations
Touchpal Yahoo Partnership: At MWC this year, Yahoo promised to give us “Yahoo Search In Apps” and the company is delivering true to its word. The Touchpal keyboard app, which reportedly has 16 million U.S. users, comes preloaded by many Android device makers, will now integrate Yahoo search, taking the user directly to Yahoo results pages, which could include links, images, videos and translation of up to 40 languages. It’s too early to tell if it will eat Google’s lunch, but seems like brilliant move directionally.
Microsoft and Box Get Closer Together
Google Could Be Considering Dunnhumby Acquisition: provides data to retailer tesco/
Amazon Signs New Book Deal with PRH: Penguin Random House, the last of the big five publishers that were publicly critical of Amazon’s book pricing policies, has signed an agreement with the etailer. But both are mum on details, with Amazon simply saying that the agreement was “long term”, and PRH saying that “we are still in business with Amazon, and with all our retail partners, and will continue to be”.
Alibaba, Foxconn Working Together: Alibaba and Foxconn, which last week decided to invest in Softbank’s robotics unit, are apparently considering a $500 million investment in Indian ecommerce company Snapdeal. Earlier it was rumored that Alibaba would invest $500-700 million. Alibaba earlier valued the company at $4-5 billion, while the Alibaba-Foxconn combination is valuing it at $5 billion. Snapdeal is looking for a $6-7 billion valuation, so the deal may not materialize this time either. Snapdeal is looking for foreign investment to boost technology on its platform and has therefore avoided an IPO thus far.
Some Numbers
Apple Watch Numbers: Data from Slice Intelligence as quoted by Reuters indicates that Apple Watch sales touched 2.8 million units since the device launched in April. Apple Watch buyers are also spending on accessories, further boosting profits for this extremely profitable product. Around 17% of the people buying a Watch also bought additional bands, with the $49 black sports band being the most popular, followed by the $149 Milanese loop. An apples to apples comparison isn’t available, but its estimated that Android Wear watches in all of 2014 did about 750,000 units.
Analysts Weigh in on Intel: Goldman says ODM data for May suggests that shipments are tracking below expectations putting Intel’s second quarter estimates at risk. Estimates for the sell-rated Intel were therefore lowered. The Deutsche Bank agrees that Buy-rated Intel’s second quarter estimates are at risk, but adds that Win 10/Skylake benefits are likely being pushed out into the second half of the year. The Credit Suisse analyst has an Outperform rating on Intel and believes that the company might make second quarter guidance, but believes that 2015 guidance is possibly at risk.
Amazon’s KDP Tastes Success: Amazon has said that Kindle Direct Publishing or KDP select authors will receive $60 million in the first half of 2015. Total sales for these authors (95% of whom have renewed their titles with KDP) will double from the first half 2014. Kindle Unlimited (all-you-can-read for $9.99 a month) and the Kindle Owners’ Lending Library have made this possible.
Oracle, Red Hat Report Results
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