Author: Ben Bajarin

We have been doing a significant amount of research on the consumer cloud as of late and a harsh reality has become clear. Consumers need the cloud — pure and simple. There are known pain points to consumers that cloud solves, yet they are unwilling to pay for it and utilize it to solve some of their technological problems.

As we look across a number of different demographics, we see clear value in the cloud from everything like automatic backing up, picture syncing, file management from many different devices, etc., yet 76% of consumers don’t pay for a cloud service. Most use whatever is free and many seem to navigate with ease a number of free services to keep from paying for it. What baffles me is how the pain point is fully understood.

For example, 20% of consumers in one of our recent studies indicated they manage (delete) photos on a weekly basis to free up more storage to take new photos. 14% engage in this task monthly to make sure they have enough free space for more photos and 5% indicated they have to do this daily. Nearly 40% of smartphone owners manage/delete photos at least once a month to free up more storage so they can take more photos. Similarly, 56% of millennials indicated they have lost an important file due to a computer/OS crash or some other kind of event.

Now, I understand millennials, especially college students, likely don’t have the monthly income to pay for storage. But the point remains, the cloud would solve what is absolutely a known pain point.

When we dig into the specifics of why people are not utilizing cloud services it is a close race between trusting that their data is kept secure and private (44%) and simply not wanting to pay for it (42%).

The cloud would make so many consumers’ lives better when it comes to their devices. One of my theories going forward is companies will start to bundle this cloud service with others like music, TV, or some other kind of cloud subscription which consumers are more likely to pay for and find greater value in. Perhaps what we have concluded is that the cloud, from a storage stand point, is simply a commodity and should be treated and understood as such.

When we dug into this exact idea, we found consumers were quite a bit more likely to pay for a cloud service which delivered entertainment than a cloud service which delivered storage/synchronization. Validating our thought that storage is a commodity and content is king.

Light’s L16 is an Intriguing Camera Concept that Addresses a Shrinking Market – by Carolina Milanesi

This week, Silicon Valley-based startup Light made news as it raised $30m from Alphabet’s venture capital arm. Light claims the L16 will be able to replace professional DSLRs by delivering a lightweight camera unit that contains 16 separate cameras. Software is at the essence of the solution that uses “computational imaging” to combine several pictures into a high-def one. The cost? $1700.

Looking at the number of pictures people are taking and sharing on social media through their smartphones, one would be forgiven to think there is a strong appetite to get better quality images. However, quality is not as key as you would think.

Most pictures are disposable; they live in the social media moment. Just look at the protest by many about Snapchat adding the new feature called Memories. In the recent study we conducted on cloud, and specifically, photo storage, it is clear people just do not do anything with their pictures. The vast majority of the consumers who do store their pictures in the cloud do so because their phone is set to do it automatically. You can find the key dataset here.

Of course, there is still a market for high-end cameras but for those consumers and professional users, the design of the camera, the look and feel as well as the lenses, are very important. While it might be important to have something compact, the quality can never be compromised.

In between these two groups are people who rely on phones for everyday photography but then carry their DSLR with them on holiday or special events. For those people, current smartphones with some of the many lens accessories you can find are more than enough.

I think the money raised by Light says more about how eager investors are to find hardware winners at a time when the underlying tech commentary is on the death of hardware and the rise of services.

While smartphones will always be somewhat limited by their compact form-factor, there are modular options that will come to market soon that will turn them into more powerful cameras at a fraction of the price that Light is marketing the L16. Overall, even without these add-ons, smartphone technology is catching up fast and the focus is also quickly shifting to 360-degree cameras and how those play into the whole VR experience. Consumers will be more excited to spend money there simply because it is new and social media is embracing it.

Snapchat and the Battle For the Camera Roll – by Ben Bajarin
Yesterday, Snapchat released a new feature called Memories. Up to this point, Snapchat had made a name for itself by having users share videos that disappear after a set period of time. They had built in a habit of their users to constantly open the app and see what their friends are posting to make sure they didn’t miss something. You can imagine the embarrassment in a teenager’s life when their friend says, “Did you see what Aleah posted on Snapchat yesterday?” and that person hadn’t opened the app and seen it? The ephemeral nature of snaps are a part of the lure. However, Snapchat knows they need to expand the services features and it is no secret kids screenshot their friends and often save their own snaps to their camera roll. To address this, Snapchat released Memories which now gives Snapchat more direct access to your camera roll and allow you to create stories and save memories in new ways. This is a natural extension to Snapchat, who I also think will add more machine visual processing to their service, as they look to broaden their appeal beyond people under the age of 30.

What this showcases to me is a few things. First, we are moving ever closer to a cloud-based photo world. In a recent post at our Creative Strategies blog, Carolina Milanesi shared some of our cloud data around photos. There appears to be some value in the auto-backup features and people like having their photos everywhere. Snapchat making a play for the camera roll is them making a play to own the camera app and camera roll. This could have some interesting implications as this crucial millennial demographic gives more of their photo life to Snapchat and companies like Apple and Google potentially miss out.

Samsung’s Blip – by Ben Bajarin
Analysts are calling Samsung’s recent pre-earnings announcement that operating margin is the highest in two years as the return to dominance for the company. Actually, it is anything but. Samsung is enjoying a major part of their base upgrading and it is as simple as that. What Samsung is experiencing is, in a much smaller way, similar to what Apple saw in 2014/2015 as a big portion of their base upgraded to the iPhone 6 and 6 Plus. We track smartphone models by owners, so we knew a large percentage of Samsung’s base was still on older models. We should understand premium smartphone market refresh cycles as a pendulum swing. There will be down years and there will be up years and it will swing back and forth.

In no way is this a return to growth or a new chapter for Samsung smartphones. This industry is mature and it is and will continue to deeply impact refresh cycles. Apple will have a similar pendulum, now sometimes referred to as a “super cycle,” as a huge portion of their base upgrades. The problem is, this is unpredictable. Samsung will be the first to tell you they thought this was the year their base would upgrade. Samsung had two years of drought trying to get their base to move onto new devices. Apple has one year of drought and we will see if they hit a super cycle in 2017, or if they have to wait until their fiscal 2018 (starting fall of 2017).

BlackBerry kills off the Classic, its last QWERTY BB10 device – by Jan Dawson

This week, BlackBerry announced it was killing off its Classic device, the only current representative in the company’s lineup of what was once its mainstay: a QWERTY device running a BlackBerry operating system. The blog post announcing the end of life for the Classic left the door open to replacing the device, but the move is probably best seen in the context of broader trends facing BlackBerry.

The reality is it’s very likely BlackBerry will kill off its devices business entirely over the next couple of years. It’s down to under half a million shipments a quarter at this point and it’s extremely difficult to run a profitable phone business at that scale. The company has now built up its software business both organically and through acquisitions to the point where it can start to build its future around bits rather than atoms. It seems largely a matter of time until it completes that transition.

BlackBerry’s challenge for now is that, small as the device business is, it still provides useful revenue for the company and there are still some loose ties to its service and software businesses. Killing it off prematurely would sacrifice those revenues and potentially damage the rest of the business. But almost as damaging would be signaling the end of either BlackBerry 10 as an operating system or the devices business as a whole before BlackBerry is ready to pull the trigger, because then it will be left with lots of unsold inventory.

The challenging line the company has to walk the next year or two is to convince the market it isn’t giving up right until the moment it actually does so. That means refuting reports like the one last week that it was ceasing work on BlackBerry 10, even as it also sends subtle signals its investment in the platform going forward will likely be scaled back. One thing is for certain: BlackBerry’s future is very much about software, not hardware, so it’s simply a question of timing and percentages at this point.

Amazon Trying a New Approach to Mobile that makes Sense – by Carolina Milanesi

This week, Amazon started offering Prime members a $50 discount on two smartphones models, the Moto G and the Blu R1 HD, as long as they agree to view lock screen ads similar to what the Fire tablets and the Kindle e-readers offer. With the discount, the Blue phone will cost $49.00 and the Moto G will cost $124.00. Amazon will not strip these devices of the standard Google apps as it did with the Fire phone but it will add its own shopping, video viewing, and playing music apps.

When the Fire phone was launched, it was a very confused proposition — high-end hardware with a price-point to match aimed at customers who were not already married to an ecosystem. That was not an easy match as most users who had not yet committed to iOS or Android by the time the Fire Phone launched in 2014 were more price sensitive and technology laggards who would not see the price of the Fire phone as appealing nor would they understand new features such as Dynamic Perspective and Firefly. Needless to say, the Fire Phone was a flop for Amazon.

This week’s proposition seems much more likely to give some good ROI to Amazon:

1. The target is Prime members, a captivated audience who will be more interested than average in Amazon’s services like music and video
2. The devices are a lower cost so they are more likely than not to attract users who are not already heavily engaged in an ecosystem although this might not be their first smartphones
3. Leaving Google services such as the Chrome browser and the app store on the devices while adding Amazon’s apps for shopping and content is a win-win solution. Users will not feel they are compromising on their experience compared with getting the same phones or similar without the deal while Amazon still gets users engaged in what matters to their business: shopping and content consumption
4. Although the fact these users are interested in the deal might point to a more price sensitive type, Amazon will know a lot about them as Prime Members which will help advertisers target their ads to get the highest return despite the price sensitivity
5. Finally, there are consumers out there who are not prepared to pay a lot for a smartphone but that does not necessarily mean they do not have money to spend on anything else. Amazon and advertisers should know that

Amazon needs to widen its reach for its ecosystem but, most importantly for Alexa, this is a good step in the right direction.

Facebook tweaks News Feed to prioritize friends and family – by Jan Dawson

On Wednesday, Facebook announced it was tweaking its News Feed algorithms, with a couple of important implications. First of all, it would prioritize “friends and family” and secondly, it reiterated its commitment to treating news content in an unbiased way, while ensuring that content that purported to be news was, in fact, genuine.

The media has predictably responded to the news with more handwringing about Facebook’s role as both a major source of referral traffic and a major gatekeeper for content of all kinds. Though many news publications have gotten on board with Facebook’s Instant Articles program, almost all worry, to some extent, about Facebook’s power to dramatically reduce the amount of traffic they receive through the service. The latest changes only fuel those fears.

However, what’s likely motivating Facebook is a reported reduction in what it calls “organic sharing”, or the more personal posts member create organically, as opposed to third party URLs, videos, and other content members might share on the site. At least some members appear to feel that this content is less worth sharing because their friends and family are less likely to see it. Facebook clearly wants to assuage those fears by prioritizing this content in the News Feed, in an attempt to get this kind of sharing growing again. Interestingly, the news site, The Information, reported this week that average sharing per user is also down on Instagram recently, although it’s not clear this is as problematic as it seems.

For users, these changes should be subtle and many likely won’t even notice. By definition, Facebook’s algorithms only show us some of what our friends share, so it’s very hard to know what we’re missing and how well the stuff we do see reflects the broad range of content our connections are posting to the site. That also makes it tough to know when changes are made. However, Facebook absolutely needs to ensure people still have a sense of true connection to friends and family on the site or it simply becomes another repository of content, much easier to compete with than a true social network. The social element may have become less important to some users and to Facebook’s ability to monetize usage over recent years, but it can’t be ignored entirely.

From a media perspective, this is just another reminder of the immense power Facebook now has – something Ben wrote about earlier this week on the site. Facebook is both a massive source of traffic and an unpredictable (and therefore unreliable) partner as news sites try to grow traffic and monetize. Facebook readily admits that at least some Pages (and therefore some sites) will see reduced traffic as a result of the changes but it remains to be seen how hard it will hit various publications.

Windows 10 Anniversary Edition – by Bob O’Donnell

Microsoft announced the official launch date and availability of its next version of Windows 10 this week. On August 2, the company will release the Anniversary Update, a free update to all 350 million existing Windows 10 users that brings a host of new capabilities approximately one year after the first release of the OS.

Notable additions include extended support for inking and pen support across the OS and applications; more capabilities for Cortana, its voice-driven digital assistant (including access on the Windows 10 Home screen); and the ability to use its Windows Hello identity and authentication services across websites and supported applications (such as VPNs).

The Cortana additions should help make the service more useful, including the ability to ask questions when you aren’t logged into the PC (theoretically, a la Amazon Echo), as well as further integrating with Outlook and other personal information for more “assistant-like” capabilities.

The part I’m most excited about, however, are the extensions of Windows Hello identity management into the Edge browser. Leveraging extensions to the FIDO Alliance spec (previously dubbed FIDO 2.0, but now called Web Authentication), this is a major step towards a password-less world, finally. Essentially, the credentials from Windows Hello can be passed from the Edge browser to websites that require them, including online banking and commerce, and many more.

Everyone in the tech world acknowledges how horrendously broken passwords are and yet, there has been little real progress to solve the problem. While this development won’t fix everything, it does bring together biometric authentication and password management in an important way. In addition, the advanced FIDO 2.0 support in Windows 10 will enable the use of third-party devices, such as wearables, to pass authentication credentials over Bluetooth to a PC (or smartphone) in order to log in securely and automatically. (Apple announced some similar capabilities for the Apple Watch and iOS devices in the forthcoming version of iOS 10, so it looks like all the major players are finally moving in the direction of a less password-dependent world.)

The bottom line is the Anniversary Update for Windows 10 looks to be a useful one that should make the process of using a PC, both on its own and with other devices, a better one.

The First Autonomous Driving Fatality – Ben Bajarin

Unfortunately this past week, history was made in a very sad way. Tesla confirmed the first fatality involving a self-driving car occurred. Tesla put the event into perspective with the following paragraph:

We learned yesterday evening that NHTSA is opening a preliminary evaluation into the performance of Autopilot during a recent fatal crash that occurred in a Model S. This is the first known fatality in just over 130 million miles where Autopilot was activated. Among all vehicles in the US, there is a fatality every 94 million miles. Worldwide, there is a fatality approximately every 60 million miles. It is important to emphasize that the NHTSA action is simply a preliminary evaluation to determine whether the system worked according to expectations.

The point here is to underscore that self-driving cars are actually doing slightly better per million miles driven than human-only operated cars. But there are far fewer self-driving cars on the road compared to human operating ones, so it really isn’t a fair comparison for now. The reason for the crash may be the most interesting part. According to Tesla’s account of what happened:

What we know is that the vehicle was on a divided highway with Autopilot engaged when a tractor trailer drove across the highway perpendicular to the Model S. Neither Autopilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky, so the brake was not applied. The high ride height of the trailer combined with its positioning across the road and the extremely rare circumstances of the impact caused the Model S to pass under the trailer, with the bottom of the trailer impacting the windshield of the Model S. Had the Model S impacted the front or rear of the trailer, even at high speed, its advanced crash safety system would likely have prevented serious injury as it has in numerous other similar incidents.

Self-driving cars have a tremendous amount of technology in them. Thanks to advancements in computer vision and very powerful GPUs in these cars, they are able to essentially scan the roads for all cars, anticipate and model their movement against their own system, and react faster than humans can in many situations. Except in this scenario, the trailer and light combination made the oncoming car relatively invisible to the sensors and computer vision systems on the Tesla. This showcases one area, among others, where there is a blind spot (excuse the pun) in our current machine learning and computer vision technology for autonomous cars.

As far as computer vision has come, it still has a way to go. But most technology and science points in a direction where technology can and will help prevent more accidents and protect humans better than if we were driving ourselves. This point is hard to argue with. However, unfortunate moments like these remind us of how far we still have to go and how much innovation is still needed in this area.

Instagram’s New User Numbers Demonstrate Continued Strong Growth, Engagement – by Jan Dawson

Instagram released new user numbers this week including 500 million monthly active users and 300 million daily active users. Symbolically, the fact Instagram’s daily active user number is very close to Twitter’s monthly active user number feels pretty important. That’s an indication of just how fast Instagram has grown even as Twitter has stagnated and, of course, Twitter has consistently refused to provide a daily active user number. That’s telling because, as a measure, monthly active users tells you very little about true engagement with a platform. Using an app every 30 days isn’t much different from never using it at all. For social and communication apps, the key is daily usage. “Time spent” is an even better measure because it tells you how people are really engaging. Facebook has provided those numbers for the core Facebook experience and now for Instagram usage and both numbers are impressive. Aside from Twitter’s lack of growth in user numbers, a key concern remains how engaged its reported users are (and how many of them are automated or spam accounts rather than real human users).

It’s hard to look back on Facebook’s acquisition of Instagram and see it as anything but an astounding success. Both the idea of the acquisition and the execution post-acquisition have worked well for Facebook, which has exercised admirable restraint in leaving the core experience intact while evolving it in meaningful ways. The same arguably goes for WhatsApp. Across the messaging and communications space, Facebook has created or acquired great properties, giving them the freedom to keep doing what they’re doing, at least from a user perspective. From an advertiser perspective, they’ve had more cross-pollination but there’s been very little homogenization across the various apps, which have retained their own distinctive branding and user experiences. Obviously, it failed to acquire Snapchat and that’s a continued thorn in Facebook’s side given how well it’s doing, but their other bets have all paid off nicely in terms of user growth and, at Instagram, in terms of revenue growth as well.

A lot of the growth is still coming from the expansion of the overall smartphone market, which is really the key enabler of all these apps, but some of them are also benefiting from rapidly increasing share either broadly or within certain demographic or geographic segments. Apps focused on visual media are benefiting from significant growth in interest in those areas, whether that’s photos and videos at Instagram, private Snaps or Stories and Discover on Snapchat, or live video on Facebook. Now that our devices have the capability to create high-quality content and ubiquitous bandwidth to both upload and view it, that whole category is taking off. This certainly explains why Twitter is so focused on video at the moment and tweaked its Vine app in important ways this week too. Yet the focus on visual media at Twitter doesn’t seem to be helping address its growth problem.

HTC Nexus 2016 Leaks: Why does Google Has a Nexus Program? – by Carolina Milanesi

On Thursday, Mobipicker published some pictures of what they believe to be one of the two Nexus products HTC will bring to market later this year. HTC is expected to sell the HTC S1 “Sailfish” and the HTC M1 “Marlin”, with the latter described as a cross between the HTC M10 and the Huawei Nexus 6P.

The Nexus One, the first device coming out of the collaboration between HTC and Google, was released in 2010 and it really took the market by storm as it delivered a high-end device at a very aggressive price point — around $500. With the next Nexus device, Google moved from HTC to Samsung. The Nexus S performed poorly compared to the Nexus One so, with the following Galaxy Nexus once again by Samsung, Google opened up to carrier partnerships as well as an unlocked version in the Play Store. It was not until the LG Nexus 4 in 2012 we saw a Nexus device really performing well thanks to a very aggressive unlocked price that started at $299. The success was such LG retained the Nexus baton for the Nexus 5 in 2013, also aggressively priced at around $350. So, for the first three years, Google used Nexus to show off the relationship with different vendors, a new version of the operating system, and mostly drive the price point down while improving quality so consumers could engage more and more with these devices. While selling direct has been a great limitation on the Nexus effort, the new data plans rolling out in the US over the past couple of years have certainly helped consumers be more aware of the real price of these smartphones and helped them appreciate “good value for money” devices like the Nexus 5. The Motorla Nexus 6 was a clear departure from previous years and with a price of over $600 it had very limited sales. LG brought to market the Nexus 5x many saw as a good upgrade opportunity for Nexus 4 and 5 users in 2015 and Huawei brought the Nexus 6P in 2015.

Over the years, Nexus sales have never been anything to write home about. While devices such as the Nexus 5 helped LG regain credibility in the smartphone market, Nexus volumes were always too low to really make an impact on vendors’ overall performance.

Aside from the initial Android One, it also seems vendors are doing less and less to differentiate these devices from their current flagship products. So the Galaxy 6 looked very much like a Moto X and the Nexus 6P looks like a Huawei Mate 8. So it is no surprise the new HTC Nexus will look like the HTC M10. If the channel remains limited and the devices are not bringing in true innovation, why is Google continuing to pursue these efforts?

Google is between a rock and a hard place at the moment, with rumors Huawei is considering coming up with a separate OS as a plan B and Samsung has started to reinvest in Tizen. Google needs to be careful about antagonizing its partners. At the same time, as vendors like Samsung and Huawei are focusing more on their own UI and ecosystems, Google needs hardware to show off Android as it was intended. The latter would call for hardware designed by Google and gets the widest possible channel opportunity but the former calls for a more subdued approach. The results of the two approaches would be considerably different from the opportunity to go WOW with the first and end on MEH with the second.

Live Streaming is Hot Again – by Ben Bajarin
It is has been a little over a year since the Meerkat and Periscope live streaming craze. A year removed, I’m still convinced there is a role for live streaming content but it will largely only be popular during a social moment. Meaning, something big happens socially that a community, a city, a nation, or the world tunes into and is able to see from many different perspectives, not just what professional news crews create. Of course, the other value is when there are no cameras. Or, in the case of our mid-week debacle here in the US where the Democrats took over a congressional meeting and demanded legislation for more sane gun control laws. Cameras were ordered to be turned off, yet people broadcast the protest live via Periscope. Millions tuned in between Facebook Live Video and Twitter’s Periscope to watch the whole thing unfold. Reality TV at its best.

Live certainly works in this case and many others but the area that appears to be hot is celebrity content. The most popular content with the highest views is that from celebrities. It opens the door to their own business empire of celebrity endorsements and the like. So it isn’t surprising YouTube/Google wants to get in on this action. It appears you can now live stream directly from the YouTube app.

The big takeaway is we are entering a point in time where accessing any number of live streams is only a click away. But these streams have the potential to go viral in much larger ways than live television ever could, thanks to the social graph of Facebook, Twitter, and many other social networks. No one is fooled to believe this is the only and constant way we will consume live video but it certainly is going to be one of our options. Seems like Snapchat will be the next to offer Live and it’s only a matter of time, in my opinion.

HP Offers Thinnest Notebook – by Bob O’Donnell
Since the breakup of HP last fall, there have been many questions about what kind of innovations the PC and printing divisions of HP—called HP, Inc.—would be able to deliver to the market. Even though HP Labs went along as part of the deal, much of the press around the split handicapped HP Enterprise as the bigger beneficiary of the split. Clearly, those predictions didn’t have the benefit of seeing HP’s new Spectre 13, officially the world’s thinnest notebook at just 0.41” and, in its extremely limited gold-plated, Swarovski crystal-encrusted $25,000 version, likely the world’s most expensive as well.

In person, the new Spectre 13, which actually starts at $1,169, is an extremely attractive machine, with its reflective copper trim and clever hinge design combining to create a high-end design at a respectable price point. The notebook features a full HD 1,920 x 1,080 resolution display, as well as an Intel Core i5 CPU, 8 GB RAM and three USB-C ports in its base configuration. Importantly, two of those USB-C ports support the 40 Gbps high-speed data transfer rates offered by Thunderbolt 3.0 and all three support alternate modes for USB-C, including power delivery and display. Given the competitive nature of the PC business, others are likely to match the specs before too long. For now, it’s clear HP Inc. still has plenty of innovation to bring to the market.

Don’t Mistake the iPad Lack of Stage Time at WWDC as a Sign Apple is done with Tablets – Carolina Milanesi

At the end of WWDC, I read a few articles by disappointed reporters regarding the lack of an iPad presence during Apple’s WWDC keynote. The iPad was, of course, mentioned in the keynote either directly as in the case of Swift Playgrounds – the new app that teaches children how to code – or indirectly as in the new and improved Apple News app and split screens that will look very nice on an iPad.

Specifically, Swift Playgrounds is not only empowering the next generation of developers but is reaffirming Apple’s vision of the big role iPad has in education.

Apple focused a lot on the fact developers now have four different platforms to develop for: iOS, watchOS, tvOS and macOS. Thus far, iOS has catered to both the iPhone and the iPad but, over time, many users see these devices as serving different purposes.

Is this difference in usage enough to justify two separate operating systems? Some argue it is. However, adding a separate OS for iPad at this point in time seems to me like the wrong thing to do and here is why:

– iPad sales are down year over year and developers would not necessarily see a dedicated iPad OS as a priority vs. a watchOS which has the opportunity to grow to a larger market than tablets. Right now, the iPad is still getting diversified apps with little work required by developers.

– I have a feeling Apple sees the iPad’s real potential more and more as a productivity tool for consumers and IT managers alike. To grow in that space, the iPad needs more enterprise, go to market and device management apps and a new OS might set the iPad back at this point considering the process that most enterprises go through to integrate a new OS.

iOS 10 will come to the iPad of course and, with it, all the new features we have heard about on the keynote stage. Yet, the biggest concern investors have with Apple at the moment is iPhone sales, not iPad sales. Rightly or wrongly, many have already written off that category. So focusing on the iPad too much during the keynote would have sent the wrong message. It also makes more sense, considering the number of people using iPhones vs. iPads to focus on points a larger audience will understand. This does not mean Apple has changed its mind on this segment and that we will not see more differentiation going forward.

Snapchat Opens Up New Options for Marketers – by Bob O’Donnell

Like many messaging platforms, Snapchat has managed to capture an impressive number of users to its popular platform but questions about monetization have dogged it for some time. The company tackled many of these concerns head-on this week with several announcements related to new advertising programs, as well as a new API to allow the purchase of full advertising campaigns. In and of themselves, these developments are modestly interesting and somewhat expected from a platform everyone knew would eventually move to inserting various types of ads. But where Snapchat continues to stand out is in the types of advertising it is offering and they’re apparent effectiveness. Leveraging the fun, flashy style of the service itself, Snapchat has pioneered things like brand-sponsored Lens’, which overlay graphics of brands like Taco Bell or Gatorade onto your smartphone’s photos and videos. The end result is things like taco faces and other types of silly, crazy yet very engaging “snaps” that the decidedly younger demographic of Snapchat users are viewing as eagerly as the results from their friends and others.

Up until now, most of these clever types of campaigns required custom work and hence were limited in their ability to scale. With the variety of announcements Snapchat made this week, the idea is to bring these new advertising models to a much wider audience. The opportunity becomes doubly attractive to advertisers because of the millennial-heavy demographic of most Snapchat users. This gives advertisers access to an enormous number of exactly the people they want to talk to using advertising models and ideas significantly more effective than traditional ones. For many marketers, it’s a match made in heaven. As a result, Snapchat’s business prospects are starting to look as compelling as its user growth story, making it a formidable competitor in the growing world of messaging.

Microsoft acquires LinkedIn for $26 billion – by Jan Dawson

Microsoft managed to keep its acquisition of LinkedIn very quiet but decided to make the announcement the morning of Apple’s WWDC keynote this week. That timing made for a fantastic juxtaposition of Apple’s and Microsoft’s relative strategies and the moves that flow from them. While Apple updated all four of its major platforms and introduced new developer tools, almost all of them aimed at consumers, Microsoft doubled down on its increasingly enterprise-centric strategy with the LinkedIn buy.

I’m not convinced this move is a good idea, given all the ways Microsoft could have spent that chunk of money. $26 billion could have bought a number of smaller companies that would have been easier to integrate and bake into Microsoft’s core experiences without the scale of risk attendant to such a large purchase. But this is Satya Nadella’s first really big strategic gamble since he took over and a great indicator of where he wants to put Microsoft’s money. It seems he has been very directly involved in the discussions with LinkedIn board chairman Reid Hoffman from the beginning, which makes him even more pivotal to the deal than his CEO role alone would suggest.

LinkedIn is an interesting combination of strengths and weaknesses. Its stock had fallen quite a bit over recent months due to various concerns about its trajectory and the price Microsoft is paying isn’t even a premium over its peak share price earlier this year. Among the concerns are a lack of engagement from users (less than a quarter of members use the site regularly), slowing growth in site traffic, net losses for the past four quarters, and others. In general, LinkedIn has suffered from a sort of benign neglect when it comes to the user experience, in which new features are launched constantly while the core features of the site remain permanently broken. The cynic in me wonders to what extent extra page views are generated by people frustratedly clicking around the site trying to find things that should be much easier to find.

To my mind, the three biggest opportunities for Microsoft with this acquisition are:

– Fixing the core user interface, by allocating sufficient resources to the problem to really improve things rather than tinkering at the edges or getting distracted by shiny new things instead

– Executing much more quickly on LinkedIn’s vision for its future, which has always been compelling on paper, but which it has been very slow to bring to fruition

– Integrating LinkedIn deeply into Office, Dynamics, and other Microsoft functions.

The first two of these are primarily about throwing Microsoft’s money at LinkedIn’s problems. Microsoft clearly has more money to spend than LinkedIn did, but simply leaving the same people in charge may not be enough. With both CEO Jeff Weiner and Hoffman staying involved, it may be hard to make the kinds of changes in execution needed. The third is both where the greatest promise and the most uncertainty lie. In theory, bonding LinkedIn’s professional graph to Microsoft’s tools makes tons of sense but the vision here relies on the accuracy and completeness of the information supplied by LinkedIn. Though some users undoubtedly keep their profiles absolutely up to date and only accept connection requests from those they really know in real life, that’s far from universally true. A big test for Microsoft’s vision here will be whether the LinkedIn data is good enough to be truly valuable in this context. That problem becomes even greater outside the US, where 60% of LinkedIn’s revenue and a substantial portion of its users come from.

On balance, I remain skeptical about the wisdom of this acquisition but the rationale is reasonably solid. The price paid seems high and I continue to think ruefully about what Microsoft might have done with that money instead. But we’ll see if Microsoft can really justify the investment – it’ll be one of the biggest tests of Nadella’s leadership yet.

The War for Your Messaging App – Ben Bajarin
Any way you look at it, there is a war brewing for your messaging app. Without a doubt, messaging apps are one of the central experiences to our smart devices. These apps represent one of the largest blocks of time spent with our devices and are up there with social media and watching movies in terms of time spent. So it makes sense there is a battle to own that experience. In China the biggest app is WeChat, in the US and parts of Europe it is iMessage, in India it is WhatsApp and for many other parts of the world, it is Facebook Messenger. Both Facebook and Apple made announcements this week to deepen their messaging app experience. Microsoft also got in on some of the messaging app news by acquiring Wand Labs.

The theme of all of this, of course, is the idea that a conversational experience can function as a platform. Messaging apps becoming platforms for experiences that are beyond simply talking to friends and family is one of the largest trends out there and it is only accelerating. The concept that we can order food, book a ride, check movie times, buy tickets, check our bank account, pay someone and more through a conversational center like a messaging app is an extremely natural progression for a platform that better fits with how human beings function.

The key to watching these platforms evolve is to see what hooks they aalow outside parties to have into the core experience. That is why what Apple did with iMessage and launching an iMessage app store is interesting to watch. I’ve never evaluated WeChat’s development guidelines but others I have spoken to suggest Apple’s may be the most robust API offering in a messaging app available today. I am sure others will open up more to compete but it is fascinating how absent Google is from this extremely important theme.

There is long way to go and I’m slightly concerned that, in some markets, this trend may be confusing and hard to understand for consumers but, if the focus is on the customer experience, then I’m optimistic consumers will embrace the new found functionality of the conversational platform.

Twitter – by Jan Dawson
Twitter this week announced that, in the coming months, it will start exempting some forms of content from its traditional 140 character limit, including pictures, usernames, videos, and polls. The news has been a very long time in coming as users have long demanded these changes. Twitter has hinted several times they were debating them, but it’s remarkable it has taken this long to finally announce the change (which won’t come for several more months as developers need time to adapt their apps).

However, these changes really do nothing to solve any of Twitter’s core problems, especially when it comes to attracting and retaining new users. This change really only benefits existing power users, who are more likely to be struggling with the character limit on long multi-user threads, for example. As a power user myself, I’m grateful for the change, but the change itself will arguably make Twitter even more complicated for people unfamiliar with the service and its quirks. Even some reporters who are regular Twitter users themselves botched their reporting of the change, which is indicative of how impenetrable some of these Twitter features can be.

What Twitter should be focused on above all else is making Twitter easier and more appealing for people who hitherto haven’t seen value in the service. That means getting away from single user accounts as the atomic unit of the service, moving towards “channels” based on topics and interests, and allowing users to tune to these different channels at will without having to explicitly follow many accounts on a permanent basis. Twitter now holds vast amounts of content and is particularly relevant for breaking news. Yet getting at that content continues to be very difficult without a significant prior investment in personal curation. That simply shouldn’t be the case – with all the data Twitter has about its content and its users, tuning to a topic should be as simple as changing channels on a TV remote. Indeed, I and others have used the TV analogy previously.

My biggest worry about Twitter at this point is that it’s going to continue to sharpen certain product elements while leaving the broad features of Twitter unchanged. The risk here is it continues to stagnate along with its user base even as other services and apps capture the vast majority of available ad spending and advertisers continue to target those other platforms. The set of priorities Twitter outlined at its shareholder meeting this week gives me little confidence this will change. The priorities include refining the core, live-streaming video, creators and influencers, safety, and developers, none of which sound like they’re about growing the base. Has Twitter finally given up?

Microsoft retrenching its smartphones focus to enterprise – by Carolina Milanesi

On Wednesday this week, Microsoft announced it was scaling down its smartphone business and refocusing its efforts on the enterprise and, in the process, cutting another 1850 jobs, most of which are in Finland.

I pointed out last week, commenting on the feature phone news, that I thought the mention of supporting current Lumia devices and continued development of Windows 10 mobile sounded like a pre-warning of Microsoft walking away from consumer smartphones. As it turns out and, sadly for the latest round of people who lost their job, I was right.

Hindsight is always 20/20 but let’s try and make sense of how we got to this news:

1. Two years ago, Nokia was the only vendor with viable Windows devices and still had a considerable installed base of users across regions and a relatively strong brand in many emerging markets
2. Nokia was deciding between Windows and Android. For Microsoft to leave Nokia to Android was too much of a risk. Had that happened, Microsoft would have lost the consumer market and could have also lost the enterprise market and not just in smartphones. Nokia knew how to sell to enterprise and how to work with IT managers. The Finns could have made inroads with Android faster than Samsung is doing today. With Android phones more rooted in enterprise, other devices would have had an easier entry path
3. Two very different cultures and two different goals kept Lumia in limbo for almost a year after the acquisition. Microsoft was all about enterprise, Nokia was all about consumers. Microsoft was about software driving hardware, Nokia was about returning to being the top dog in mobile
4. Last summer, Microsoft narrowed the scope of its smartphones to enterprise, Windows fans and smartphone value buyers. However, since then. market share in the consumer space has been free falling
5. The app gap Windows has been suffering from would only get bigger as sales drop

Fast forward to this week and it is really hard to see any other outcome.

Windows 10 is enjoying good momentum in enterprise, making some IT managers wanting support across different form factors. Let’s be clear, Microsoft’s focus on enterprise does not mean they think they can be the third smartphone OS in the world just by playing in enterprise. It means Microsoft wants to cater to those IT managers that see an opportunity in a Windows 10 device that is not a 2-in-1 or a traditional PC. It also caters to IT managers looking at Microsoft Continuum as a cost savings for users who hotspot or for road warriors.

The end of Lumia as a consumer offering does not mean we will not see anything else coming from Panos Panay’s devices team. A smaller form factor that takes advantage of inking and Cortana could be a very compelling device. Not having to worry about a full consumer portfolio of products allows Microsoft to concentrate on what matters; software, universal apps in particular, and the next big computing paradigm, VR.

Microsoft still has a role to play in mobile and has the opportunity to own the engagement with consumers through apps and services running on iOS and Android.

Why Maker Faire’s are important to America’s Future – by Tim Bajarin

I have been following the Maker Movement as a part of my overall interest in STEM (Science, Technology, Engineering and Math) education. These shows have become an increasingly important catalyst to introduce kids all over the world to various aspects of STEM education. This is done through a hands-on approach to getting them acquainted with semiconductors, designing electronics, soldering and various scientific principles that are part of making things. There are demo stations as well as actual working stations all over these Faires where kids can play with robotic kits, try a hand at making a drone or a Arduino or Raspberry Pi-based vehicle of some type as well as tinker on various electronic or building projects available to them.

These shows include dozens of seminars and speakers who share what they are doing as it relates to the Maker Movement and are used to help people get ideas on how to become makers or better makers in the future.

The Maker Faire focus on getting kids interested in making things and especially STEM is where Maker Faire’s real importance lies.

Over the last few years, I have written multiple pieces on STEM, particularly how the NFL’s San Francisco 49ers, Intel, Boeing, and many companies around the world are backing STEM-based programs. All of them see the importance scientific disciplines will have in the future and, more germane to them, is the real concern that, if we cannot get kids trained in the sciences, we will not have the engineers and scientists to work in our companies in the future.

Indeed, just about every business is having to rely more and more on the role technology plays in their world and the need to get this generation of students interested in STEM and tech has become more and more a priority for companies, educators and parents. To that end, these Maker Faires can plant seeds of interest and help cultivate these future scientists and engineers and hopefully create the next generation of leaders who will guide and power our future businesses.

One concern of mine about the Bay Area Maker Faire though is very few minorities attend this show. This is not the fault of the folks who manage the Maker Faire as they try extremely hard to make this event inclusive to all. In fact, on the first day of the show they, along with sponsors Linkedin, Robo Terra and Think Logix, brought over 4000 students on 70 buses from underserved communities to the show to see demos and play with the various projects at the Maker Faire. However, this underscores the fact the tech community has to work overtime to get kids of all genders, races and ethnicity interested in STEM as these scientific disciplines will be more and more important to them and our world in the future.

Apple’s Set Back in India – Ben Bajarin
Despite Tim Cook’s visit to India, it did not help their case with local regulators. Indian officials dealt Apple a blow to opening local stores there by deciding not to wave a mandate that foreign brands source at least 30% of local goods in order to open a store in the region. Fascinatingly, local officials justified their decision by deciding Apple’s products did not fit the “state of the art” or “cutting edge technology” classification. To come to such a conclusion is objectively false and only underscores the truth that much of this decision is political.

Apple either has to come up with a creative way to source or sell in-store local goods or regulators need to bend the rules. Local stores are essential to Apple’s strategy in India and, without them, it will be a very slow uphill climb. Indian consumers have no doubt Apple makes quality products and has a quality brand. However, the value comparison away from a pure on paper spec, to ecosystem, experiences, quality of software, total cost of ownership, support, etc., are all things which can help change the equation and local stores are essential to this message.

Bottom line? A local store strategy is the cornerstone to Apple growing their presence in India and the way things look now, it will move very slowly.