It was a miserable week for tech stocks and a horrible start to the year. From Intel INTC, Cisco CSCO, Apple AAPL and Yahoo YHOO to Microsoft MSFT and Alphabet GOOGL, none were spared as investors braced for another roller-coaster ride in 2016.
Here are the top stories:
Apple Fears
Apple is adjusting iPhone inventories as holiday season sales appeared to have been below expectations. Nikkei Asian Review says that the company is cutting output by 30%. Since the need to lower inventories has been quite unheard-of in case of Apple (it usually isn’t able to meet demand), this has sent alarm bells across the industry.
Apple’s own share prices took a tumble as may be expected since the company is majorly dependent on iPhones. Shares of its suppliers in Asia (Sharp and Pegatron, Europe (Dialog) and the U.S. (Avago, Skyworks, InvenSense, which dropped double-digits and Cirrus Logic) have followed. The stronger dollar appears to have played spoil sport.
Amazon Chips
Amazon acquired Israeli semiconductor startup Annapurna Labs some time back and the company has now launched its own brand of ARM-based general purpose chips called Alpine. Annapurna originally focused on IoT and connected home devices where compute power is still somewhat limited.
But with Amazon holding the reins, it is now getting into the low end of the server business and some networking as well. In IoT, the goal seems to be to remove/reduce the need for hardware acceleration and software optimization while on the data center side, it is probably gunning for the cloud, where there is a growing demand for low-cost high-density data processing and storage.
Facebook Rifts
CES this year was mostly about VR and considering the number of partnerships and announcements, I’ve dealt with them separately in the section below the table. Given Facebook’s FB advances and its market position that can drive adoption perhaps faster than some others, this is the announcement that stole most of the limelight.
Facebook said that its Rift, which comes with built-in headphones, a mic and sensor and an Oculus remote and Xbox One controller (initially) will be priced at a whopping $599. It will also require advanced graphics that only come in computers priced at around $1000. Needless to say, it is not for everyone, but something that hardcore gamers are making a dash for (the site crashed soon after pre-orders started). That’s not such a bad thing, since the company will be able to recover some costs while it takes steps to reach more users. Shipping in 20+ countries is expected to start by quarter-end.
Twitter Stretches
The long-awaited and anticipated change is here. While some Twitter loyalists took to the network to protest the stretching of the word limit to 10K from just 140, it’s already well-known that many have criticized management in the past for not doing this sooner. Management backed up its decision saying that this was the result of observing how people tend to use the service.
Users have been working around the word limit by posting screen shots of text because of the word limitation. So good or bad, like it or not, the change is here, along with a host of other changes including hearts, Moments and so forth as the social network doubles down on customer acquisition and growth.
|
Company |
Last Week |
Last 6 Months |
|
AAPL |
-7.81% |
-19.25% |
|
FB |
-7.00% |
+11.50% |
|
YHOO |
-7.91% |
-22.21% |
|
GOOGL |
-6.04% |
+33.53% |
|
MSFT |
-5.67% |
+17.85% |
|
INTC |
-8.52% |
+3.12% |
|
CSCO |
-8.75% |
-9.33% |
Other stories you might have missed–
Corporate
Yahoo Job Cuts in the Offing: Yahoo is reportedly getting ready to trim its workforce by a thousand, or around 10%. While Yahoo continues to call this “rumor and speculation,” the company has been struggling for a while now in its attempt to turn around and the death blow was struck by the IRS when it failed to give the Alibaba spinoff its prior approval.
The company is now battling with Starboard, which is calling for the removal of Mayer as its CEO and a spin-off of the core business. Yahoo expects to give details of its future plans at or around the time of its fourth quarter earnings results later this month.
Yahoo Screen Shuts Down: The go-to video destination that housed Yahoo’s entire video effort (original and licensed shows) has closed down. Yahoo is integrating these programs with its other products, such as its magazines. Yahoo called the shakeup regular, because it is “constantly reviewing and iterating” on its products as it strives “to create the best user experience.” Reportedly, Yahoo Originals cost the company $42 million in write-downs last year.
Yahoo May Sell Santa Clara Property
Google Robotics Rehash: Google has already spun off the unit that will make surgical robots in collaboration with J&J. But the broader robotics effort (mainly comprising the bunch of companies it acquired over the years and internally called Replicant) is apparently in need of introspection so it can focus on real-world problems. The unit has now been moved into Google X Labs to make this happen. It makes perfect sense since its head Andy Rubin left the company last year and stand-in chief James Kuffner has now joined Toyota’s AI division.
AWS Launches Korean Data Centers: Seoul is the fifth Amazon infrastructure region in Asia-Pacific and will be operated as two zones, each with redundant power, networking and connectivity, making operations relatively resilient to issues in other zones. Another four AWS Regions (and nine availability zones) are planned this year in China, India, Ohio and the UK.
EMC Job Cuts Coming Up: EMC filed a restructuring plan with the SEC on Dec 31, according to which it will reduce its workforce by an unspecified number to reduce costs by $850 million. The restructuring, which will be mostly complete in the first quarter itself will entail charges of $250 million, including cash payments of around $200 million.
Legal/Regulatory
German Publishers vs Google: A consortium of 200 German publishers called VG Media has filed a complaint against Google for not paying them to display their content online. They are viewing Google’s refusal to make payments as a copyright infringement. While Google representatives weren’t available to comment on the news, the company has successfully dealt with these problems in the past.
In its encounter with leading German publisher Axel Springer, Google said that the snippets of news it displayed helped drive users to the publisher’s sites and articles. And sure enough, after it restricted Google’s access to content on four of its sites, the traffic to these sites dropped, so the publisher again started playing ball.
New Technology/Products
Watches from Samsung, Huawei: CES 2016 saw Samsung launch two new Gear S2 watches in 18 carat gold and platinum, respectively. It also promised fancy new bands and watch faces with artwork. No, don’t roll your eyes because there really seems to be a market for this! Huawei launched watches called Jewel and Elegant for “women who sparkle and shine,” no less. Gold plated and bearing Swarovsky zircona, they have pale white and sapphire blue Italian leather bands.
Cisco with New Cloud Video Solutions: Cisco VNI forecasts that 80% of IP traffic on service provider networks will be video and 42% will be viewed on mobile devices. With that in mind, it announced its software-managed Virtualized Video Processing (V2P) platform in September last year. At CES last week, Cisco added its take on cloud-based content delivery called Open Media Distribution platform for managed and unmanaged devices of any screen size. It also announced its software-based Cloud Object Storage platform that can assist in video services such as cloud DVR and time-shift TV.
Microsoft Ends IE Support: As further evidence of Microsoft’s objective of cleaning up its product palette, the company has announced that it will withdraw support to most versions of its popular Internet Explorer browser come Jan 12, 2016. Not only will this reduce costs, but it will also facilitate faster software development, improve security and bring support for web standards like HTML5 while increasing compatibility with Microsoft’s other offerings including Office 365.
M&A and Collaborations
Apple Acquires Emotient: It’s no secret that tech companies are scrambling to recognize your faces and expressions to offer you surreal experiences of machines that can recognize you, read your thoughts and live with you as your shadow. Notwithstanding the loud cries of privacy advocates, Google and Facebook are already using machine learning techniques on the photos you expose to them.
Apple is rarely behind in these things, and has acquired a host of startups exploring the field. Emotient’s technology detects emotions from facial expressions and according to psychologist Paul Eckman who pioneered this technique, the technology could reveal people's emotions without their consent and their feelings could be misinterpreted.
Partnerships Galore for Intel: At CES, Intel announced a number of partnerships to boost its IoT presence. While most products from these partners aren’t expected until year-end, its better late than never. Some of the partners that have promised to use Intel’s Curie, Quark modules and Atom processors include sports network ESPN, shoemaker New Balance, the pop music Grammys, Vox Media, a Lady Gaga foundation, eyewear maker Oakley and drone company Yuneec in products including sports bikes, shoes, entertainment products, drones, and fashion and eyewear.
Google-GoPro: Google and GoPro have an agreement to get virtual reality to more people. GoPro has a new spherical camera in the works that will enable the creation of 360 degree video content. When uploaded on YouTube, the VR effect can be experienced on Google Cardboard devices or on Facebook Rifts.
Sky Chooses Cisco: One of Europe’s leading entertainment companies Sky is using Cisco’s VideoGuard Everywhere security solution for video delivery, content sharing, device compatibility and rights management. Cisco is one of the leading providers of network security applications.
Harman Joins with Google, Microsoft: Connected technologies company Harman International is set to a play a bigger role at both Google and Microsoft. Its agreement with Google creates an IoT collaboration that uses Google’s Brillo software development platform and Weave communications protocol. Harman will support device makers building on the Google standards. Its agreement with Microsoft will bring elements of Office 365 right into Harman infotainment systems. It is also expected to improve driver productivity, safety and reliability by integrating cloud-based services, product, technologies and telematics.
Amazon, Ford in Partnership: At CES, Ford CEO Mark Fields said that the companies would soon be synchronized with Amazon’s Alexa personal assistant and Echo device to get the connected home and smart vehicle connected.
Watson Deals: AT CES 2016, IBM CEO Ginni Rometty mentioned a number of partnerships with companies using its Watson artificial intelligence. Medtronik will be using Watson for diabetes management in a new app to be available this summer. The app will track sugar levels and warn of hypoglycemic events three hours in advance. Softbank Robotics’ humanoid robot called Pepper will use it in some Mizuho bank branches and Nestle coffee shops. Medical diagnostic firm Pathway Genomics and home appliance maker Whirlpool are other partners.
HP Ties with HTC: Just as Facebook is gearing up to launch its Rift VR device, HP has announced a VR ready desktop PC in collaboration with HTC. The HP ENVY Phoenix as it’s called powers the VR device called Vive from HTC with photosensors and controllers that can also track the user's movement inside a 3 dimensional enclosure such as a room.
Some Numbers
Facebook Messenger Touches 800 Million Users: Facebook Messenger has taken six months to grow its monthly active users by a 100 million. Nielsen credits the app with being the fastest-growing last year and App Annie says it’s the all-time favorite app on iOS after Facebook. This is an important development for Facebook, which is bringing more shopping and experiences to Messenger that will greatly improve its monetization.
Amazon Cloud Price Cuts: Amazon is taking 5% off three on-demand instances (server processors) running on Amazon or Ubuntu versions of Linux. Windows, SUSE (Linux) and Red Hat (Linux) systems aren’t getting the benefit. And just in case we forget, Amazon tells us that this is the 51st price reduction. So if you’re getting really confused with all these prices, you should make the most of its Cost Explorer tacking tool that now allows you to monitor usage based on both region and instance type.
Holiday Season eCommerce Growth: According to final numbers from ChannelAdvisor, Amazon saw a 16.8% increase in volume, eBay 4.8%, Google Shopping 31.7% and other third party retail marketplaces 48.7%. Considering Amazon’s size, it appears to have seen the greatest increase in dollar terms. Total ecommerce sales grew 13.3%.
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