Category: Analysis

One of the ‘next big things’ in the mobile landscape is going to be the Internet of Things (IoT) – the billions of devices that will be connected to the internet in the coming years. Major categories of IoT devices include the connected home, automotive/telematics, industrial, smart cities, healthcare, and transportation. After several years of analysts talking about and forecasting IoT, the market is starting to become real. Module prices have fallen to under $10 in some cases. Enterprise CIOs are starting to invest in IoT projects.

Most of the major mobile network operators are putting significant resources into developing an IoT business. It isn’t as sexy as the next iPhone or virtual reality – more of a series of base hits than triples or home runs. But Verizon has said it is on track to reach about $1 billion in revenues in 2016 and has acquired three IoT-related companies this year. AT&T reported, in the second quarter of 2016, there are 29 million connected devices on its network (non-smartphones or tablets).

One of the inhibitors to more rapid IoT growth has been the lack of the right type of network to connect these billions of devices. Many of the devices or sensors have different connectivity requirements than the typical smartphone, tablet, or connected car. They need a network that will support low power requirements (batteries that last years, not days), have wide area and strong in-building coverage, and support relatively low and/or bursty data speeds. Historically, legacy 2G networks (remember GSM?) have supported some IoT devices. But the operators are slowly retiring these networks so they can refarm the spectrum to meet the demand of bandwidth-hungry smartphone users. And the typical LTE network isn’t really suited for many types of IoT devices: requiring too much power, not having adequate reach, and costing too much for a sensor that might only consume a few kilobytes a day.

Fortunately, help is on the way. We are seeing the emergence of purpose-built networks for IoT, called [wait for the really unwieldy marketing name] Low Power Wide Area Networks (LPWANs). LPWANs are intended for IoT solutions that need low power consumption (under 1 MB per day), extended battery life (5-10 years), long range (10km or more), and good penetration in buildings and underground. They are an alternative to wide area network technologies (cellular) and to short range networks (Wi-Fi, ZigBee).

But, like most things in tech, it’s complicated. During 2016, we have seen the launch of three types of LPWANs in the United States, all using the unlicensed band (like Wi-Fi), but each employing a different standard and business framework:

• LoRa is an emerging standard for LPWANs and has attracted a fairly diverse group of tech sector players. In the United States, LoRa uses the 915 MHz band. A company called Senet is building a LoRaWAN network in the US.
• Ingenu is a vertically integrated company that uses its own technology, called RPMA, in the unlicensed 2.4 GHz band, branded The Machine Network.
• Sigfox has emerged as a rival to LoRaWAN. The company has raised some $300 million and operates several IoT networks in Europe. It has just started building in the US and also uses the unlicensed 900 MHz band.

Mobile Ecosystem estimates that, as of the end of Q3 2016, LPWANs covered 50-100m POPs in the US, between Ingenu, Sigfox, and LoRa (some overlapping). We predict the number of markets will at least double in 2017. Building these networks isn’t like building cellular: these companies say they can cover a city using only 20-30 towers.

If your head isn’t already spinning, just wait. Mobile network operators also plan to build LPWAN networks, but using the licensed spectrum they own. The first phase, LTE Category M1 (LTE-M), could launch in 2017. A second phase, called NB-IoT, will follow LTE-M, featuring greater range and the ability to accommodate devices with even lower power and transmission requirements.

AT&T says it is testing LTE-M this year. Verizon says it will be commercially available by the end of 2016 in some markets, with a broader launch in 2017. T-Mobile has not announced LTE-M plans but is seeking to capitalize on AT&T’s sunsetting of 2G by aggressively marketing its 2G network for IoT, encouraging ‘stranded’ A&T customers to switch to T-Mobile and enjoy free 2G services until the end of the year. Sprint hasn’t said much but is rumored to be considering a LoRa based deployment (its parent company, SoftBank, is deploying a LoRA network in Japan).

The deployment model for LTE-M is quite different than the unlicensed LPWAN crowd. Mobile operator IoT networks can be deployed relatively quickly (requiring only a software upgrade to existing radio equipment) but it will cost some $15,000-25,000 per base station.

This is all good for growth in the IoT sector but one can already sense a bubble brewing. It’s hard to see how the market can support three different types of unlicensed networks plus the approaching LTE-M networks from the mobile operators. Enterprises considering large scale deployments aren’t going to want myriad devices operating in different bands.

We can already see cracks in the plans. Sigfox splashily announced in May it plans to reach 100 cities in the US by the end of the year but does not appear anywhere close to achieving this goal. Ingenu continues to build out in the US but appears equally focused in licensing its RPMA technology in other geographies. LoRa in the US is relying on venture-backed Senet and a couple of smaller players. Comcast is testing LoRA under the brand MachineQ. All this activity in the unlicensed band will all shake out over the next year or so, depending on how extensively the cellular operators build out LTE-M and how aggressively they try able to sell it.

The good news, however, is the stars are starting to align for IoT: falling module prices; enterprises committing to larger scale deployments; a growing and diversifying supplier community; and the rollout of purpose-built networks and more suitable business framework to connect these billions of things.

A little over two years ago, I wrote a post suggesting several companies Apple, Google, and Microsoft might want to acquire. As I thought about that post this week, I planned to revisit it in a similar format but then decided to approach things from a different angle. So here is a list of businesses I think would make interesting acquisition targets for the major consumer tech companies, in several major categories.

Hardware

The most interesting acquisition targets in the hardware space are those that seem to have cracked a niche but are struggling to grow beyond it and would benefit from being part of a larger ecosystem. The two that come readily to mind are Fitbit and GoPro, both of which I identified around a year ago as one-trick pony consumer technology companies who would likely struggle to find long-term success as standalone businesses. Either would now make an interesting acquisition target for the right consumer tech acquirer but, of course, the big question is who. I’ve often felt the most obvious acquirer is one of the two big camera companies, Canon or Nikon. But I think there’s also potential for Samsung to jump in. The fit (no pun intended) for Fitbit is less obvious but again, Samsung or one of the other big multi-category consumer electronics vendors seems the most likely bet. Both Fitbit and GoPro have done well, to a point, but now seem to be at something of a crossroads.

Conversely, there are those companies that seem to have peaked and are now more clearly on a downward slope. Jawbone was one of the companies I mentioned in that earlier piece and it has seemed to struggle recently. It would likely be a bargain for an acquirer interested in the audio or fitness space (or both). A slightly more long-shot bet is Nintendo, which has occasionally been suggested as a target for Apple, and which has also been struggling quite a bit, though the recent success of Pokemon Go has raised hopes of a comeback. Apple might still be an interesting prospect, but either Microsoft or Sony or a content conglomerate might be able to do something interesting with all the technology and IP Nintendo still owns. We might add HTC to this list of hardware companies past their prime too. The Vive VR business would be an interesting asset even as much of the rest becomes attractive.

Apps and content

This is probably the broadest category here and there’s no shortage of potential acquisitions. The companies in this sector run the gamut from subscription content providers to one-off app makers and across a number of different domains. Netflix is a perennial subject of acquisition rumors but is now getting to a size where the number of potential acquirers is rapidly dwindling – I’ve suggested Apple as a potential acquirer in the past, at least somewhat seriously, but that remains a true long shot. Also in the content space is Spotify, which I mentioned in my piece two years ago as a potential acquisition for Google. It’s heading towards an IPO but the other possibility is an exit by acquisition and I’d say Google has to be the most likely candidate, though Microsoft is another intriguing possibility. The latter hasn’t been afraid to make productivity-centric acquisitions in the consumer market and has largely failed to create content businesses beyond gaming. This would be a big leap forward in that domain.

In the one-off app space are such diverse options as Pinterest (which I suggested as an acquisition target for Google two years ago); Musical.ly, which remains one of the most under-appreciated apps outside of its target demographic; and the Kik messaging app. Pinterest would still be an interesting addition for either Google or Amazon, as either an advertising or e-commerce bolt-on to their existing businesses. Amazon in particular has been willing to buy smaller businesses in adjacent spaces and continue run them independently under their own brands – Audible, GoodReads, IMDB, and Zappos are all existing examples and Pinterest could follow that model while benefitting from some integration behind the scenes. Musical.ly seems almost certain to be snapped up eventually by one of the big social networking or online advertising companies. And Kik is the rare example of an independent messaging app with a big user base.

Car technology

Samsung’s recent announcement of its intent to buy Harman International will likely create further interest among big technology companies in the automotive industry. Harman was a somewhat unique asset here, in that it combined significant market share with a relatively focused scope. It promises particularly good synergies with the rest of the Samsung business. BlackBerry, which acquired former Harman subsidiary QNX six years ago, makes for an intriguing prospect. The handset baggage is minimal at this point, now the company has finally made the hard decision to discontinue making its own devices, so it’s largely a software and services company. Microsoft would be an obvious buyer, though the QNX part would likely raise antitrust concerns given the two companies are the dominant players in car operating systems. An Apple-BlackBerry marriage has always seemed particularly unlikely but is perhaps less so now, while Google would make another interesting buyer. TomTom is another interesting car-related asset which remains independent even as much of its competition has become part of bigger businesses. Apple relies heavily on TomTom for mapping, though it’s building up its own assets in some markets. It would perhaps be the most likely buyer at this point, especially if it wants to get serious about self-driving cars.

Others

There are, of course, plenty of others I could list here, including some from the earlier piece and relative newcomers like Magic Leap. It’s striking that only one of the companies on my list from two years ago has actually changed hands while several remain interesting prospects for acquisition. But I wouldn’t be surprised if a higher percentage of the companies I’ve listed here end up being bought over the next two years.

According to Bloomberg, Amazon is developing a high-end Echo-like device which will feature a better speaker and a seven-inch touchscreen. The speaker is said to be larger and tilt upwards so the screen can be visible when on a shelf or counter and the user is standing. The Wall Street Journal reported earlier this year that Amazon’s Lab126 hardware unit was working on an Alexa-powered device featuring a tablet-like computer screen known internally as “Knight.” The device will be running a version of Fire OS.

The temptation of adding a screen

The people familiar with the product who talked to Bloomberg said the screen will make it easier to access content such as weather forecasts, calendar appointments, and news. It might just be me but I struggle to see this as a solid business driver. The great advantage of using Alexa for my morning briefing is that I can listen to it while I get breakfast ready or pack my daughter’s lunchbox. I would not have time to stop and read or even look at something. Also, Alexa’s voice travels so well across the room over the morning chaos, a screen would have me move close to it to be able to look at it.

I cannot help but think the main task a screen will help with, when it comes to Alexa, is shopping. If I am trying to buy furniture, clothes, gifts, being able to see them is a huge improvement vs. Alexa just calling out the description of the item.

Having a screen could, of course, also help with content and allow Amazon to enrich some of the experiences by adding a visual output to the voice. Music is a good example of this. But the question is whether Amazon needs to add that screen to Echo.

While a screen could add to the overall experience, I strongly believe it should not be an alternative input mechanism. Adding touch to voice would weaken Alexa in an environment where consumers feel very comfortable using their voice. As voice-first is not yet an entrenched behavior, giving an alternative would slow down adoption and negate the considerable progress Amazon has made in this area.

Leveraging Existing Screens vs. Adding a New One

There are plenty of screens we have in the home Alexa could leverage — some might even be “controlled” by Amazon, like a Fire TV or tablet. Others could be exploited by the Alexa app, like our phones. If our interactions with Alexia remain voice-first/only, the screen would be a simple display with no need to interact with it. This would make the Fire tv the perfect companion for Alexa.

The risk of adding touch is, even if Amazon does not intend it as an alternative input mechanism, consumers at this initial market adoption stage might easily revert to old habits. In a way, this reminds me of how people, at the beginning of the tablet market, bought a keyboard to use with their tablets so they could revert to a user experience they had experienced for so long with PCs and that felt familiar and safe.

Over time, as AI continues to develop, I could see a role for a device that intelligently understands what is appropriate to show on the screen and proactively does that by having Alexa suggest, “Do you want to visualize it?” or saying, “let me show you.” There are instances where displaying the content seems easier than an alternative solution. Recipes are often used as an example to illustrate how voice-only does not work. Yet, if you had an app that lets Alexa break down the steps so you could literally have her coach you through the recipe and check, “Ready?” or “Tell me when you are ready”, you would not need to visualize the steps.

The Risk of Turning Alexa from Leading Actress into a Supporting Role

Echo was successful because people bought it for what it was: a speaker with a digital assistant. Actually, a digital assistant in a speaker would be a better description of what consumers were buying. Users did not have other options but to talk to Alexa to get her to do anything. There was no old behavior to revert to.

Ironically, Alexa being trapped in the little cylinder allowed her to be free. Free of any limitations that being part of a more traditional device, such as a smartphone or a tablet, would have imposed on her. Trying to turn Echo into a glorified Fire tablet could demote Alexa to a mere feature vs. the genie in the bottle she is known for. For people who bought Echo, there was nothing else the device could do other than allowing them to interact with Alexa.

Amazon needs to penetrate our homes more as well as expand beyond them to grow engagement but this needs to be done in a way that leaves consumers deeply connected with Alexa so their reliance feeds their loyalty. Voice needs to remain the main input as this is ultimately how our assistant will become personal.

While competition in this space is growing, the battle will not be won by adding features that, while differentiating in looks, weaken the core experience. Accelerating Alexa integration with other devices, continuing to expand her skills, and improving her knowledge will help to stay ahead of the curve and keep users engaged and loyal.

As someone who has tracked the tech market for the past 35 years, there is one major theme I have seen over and over again when it comes to the goals of many tech innovators. They believe and have faith that the technology they create has the possibility to change the world. I have frequently heard tech executives say how they think their inventions or technology are world changing devices or services.

From a historical perspective, that is very true. Technologies like the Gutenberg Press, the Steam Engine, Edison’s light bulbs, Alexander Graham Bell’s telephone or more recent inventions like the semiconductor, PC, and smartphones have indeed been world-changing in what they do and how they drive new industries and the world’s economies.

Steve Jobs was one of the most vocal on this topic and, in many speeches, he talked about Apple’s goal to change the world. Some of his products, especially the iPod, iPhone and the iPad have been world-changing devices in terms of how they expanded personal computing, communications, and entertainment. Products like Facebook and Twitter have had a huge impact on connecting people around the world in ways we could not have imagined even 10 years ago.

However, I have been wondering if Silicon Valley, with its innovative thinkers and problem-solving skills, took a stronger aim at some of the huge problems we have in healthcare and especially in finding cures for diseases like cancer, diabetes, and other major illnesses, how this could impact the fight against life-threatening problems.

I think most of us either know of people who have had cancer or have it themselves and surely want a cure for this awful disease. Vice President Joe Biden’s son died from cancer and he has devoted his life to what he calls a “moonshot” to try and find a cure. There has been great work and serious strides in the world of health science done to deal with cancer but, even with these advances, there is still no actual cure.

It turns out, Silicon Valley has been pretty active already and I recently found out about one of the newest initiatives of a major Silicon Valley company called NVIDIA who, along with key government and private organizations, has made finding a cure for cancer a high priority.

NVIDIA recently announced it is teaming up with the National Cancer Institute, the US Department of Energy (DOE) and several national laboratories on an initiative to accelerate cancer research. The research efforts include a focus on building an AI framework called CANDLE (Cancer Distributed Learning Environment), which will provide a common discovery platform that brings the power of AI to the fight against cancer. CANDLE will be the first AI framework designed to change the way we understand cancer, providing data scientists around the world with a powerful tool against this disease.

One of NVIDIA’s claims to fame is their incredible Graphical Processors (GPU) that help power some of the fastest supercomputers in the world. These processors are also at the heart of NVIDIA’s major push around something called Artificial Intelligence Deep Learning. These processors can handle billions of transactions per second and are central to a new data science technology used to mine data at its deepest levels and use AI and deep learning to try to find answers to big problems.

I have known NVIDIA’s founder and CEO Jen-Hsun Huang for 15 years and he is one of the most energetic and visionary leaders in Silicon Valley. He is very passionate about deep learning and its potential impact on our world. “GPU deep learning has given us a new tool to tackle grand challenges that have, up to now, been too complex for even the most powerful supercomputers,” he said. “Together with the Department of Energy and the National Cancer Institute, we are creating an AI supercomputing platform for cancer research. This ambitious collaboration is a giant leap in accelerating one of our nation’s greatest undertakings, the fight against cancer.”

The cancer moonshot strategic computing partnership between the DOE and NCI to accelerate precision oncology includes three pilot projects that aim to provide a better understanding of how cancer grows; discover more effective, less toxic therapies than existing ones; and understand key drivers of their effectiveness outside the clinical trial setting, at the population level. Deep learning techniques are essential for each of these projects.


NVIDIA is not the only tech company taking aim at the cancer “moonshot.” IBM’s Watson has joined with the Veterans Affairs to launch a public/private partnership to provide veterans who have cancer a better chance for recovery. Watson is the supercomputer that won Jeopardy and is one of the most powerful AI-based computers in the world.

One of Silicon Valley’s giants, Intel, has invested heavily in AI and deep learning research and is creating a new AI framework around their most powerful processors which will help power some of the biggest data projects in the world. In terms of cancer research, Intel has teamed up with the Oregon Health and Science Institute-Knight Cancer Center, the Ontario Institute of Cancer Research, and the Dana Farber Cancer Institute to create a collaborative “cancer database” they will use to help advance the research on finding better ways to treat cancer as well as find a cure someday.

Given Silicon Valley’s quest to change the world and its immense problem-solving skills, having the Valley turn their technology and skills to target these diseases perhaps can help speed up the search for treatments and, ultimately, cures for cancer, diabetes and other major health maladies.

There are moments in time where one can sense important shifts going on in an industry. I think now is one of those times in wireless. First, some historical context – what have been the other ‘big shift’ moments?

• Introduction of the portable phone (early 1990s) – made this the ‘mobile’ industry, not the ‘car phone’ industry
• Move from analog to digital (mid 1990s)
• Introduction of AT&T Digital One Rate – all but eliminated domestic LD and roaming
• First popular smartphones (mid-2000s) – starting with Blackberry and Palm Treo, culminating in the introduction of the iPhone in 2007
• Apple launching the App Store (2008)
• Launch of LTE (2011) – the first real ‘mobile broadband’ network

This particular shift is different, in that it is not rooted in the introduction of a signature new product or service or a major technical advance. On the surface, wireless looks like business as usual: the carriers are still raking in the dollars; the latest iPhones haven’t wowed but are still selling well; and the industry has started on a path toward the ‘Next G’.
So you have to read between the lines to see a developing trend. Just look at what has happened in 2016:

• Major operator moves. The mobile operators have realized growth in core wireless has slowed. Yes, IoT represents an important next area of opportunity but it’s going to take a while to get to those ‘billions of connected devices’. IoT is more a series of base hits than doubles or homers. As an example, total US wireless operator revenues from IoT (outside of tablets) are likely to be about 3% of total wireless revenues. Even if that grows 50% year-on-year for the next several years, investors want more. Which is why we’ve seen AT&T and Verizon aggressively expanding into new and adjacent areas of business in the hunt for top line growth and not betting all their marbles on IoT.

• A wave of acquisitions. In addition to Verizon-Yahoo (and three IoT companies) and AT&T-Time Warner, we are seeing a spike of acquisitions across the mobile ecosystem, including Qualcomm-NXP, Broadcom-Brocade, CenturyLink-Level 3, and a large number of smaller deals. A combination of consolidation and horizontal integration.

• Diminishment of hardware. The iPhone 7 is selling fine but, let’s face it – there has not been a new ‘must have’ phone since the iPhone 6 two years ago. Look at how hard it is for a smartphone OEM to gain share, regardless of how good the device is. The theme can be extended to the tepid reaction, in my opinion, to Apple’s new Macs, slowing tablet sales and the industry still figuring out how to blend the PC and the tablet where, ironically, much of the innovation is coming from Microsoft. It is really now about software and ecosystems.

• Layoffs and disappointing spectrum auction. Major industry bellwethers are going through a fairly painful round of layoffs: Verizon, Sprint, Qualcomm, Ericsson, Cisco, and others. Earnings last quarter weren’t so great and the lower than expected bids in the 600 MHz auction show that spectrum values might have peaked. At the same time, momentum toward spectrum sharing opportunities has intensified.

• The results at Facebook and Alphabet. A contrast to 3Q earnings in the core mobile business and perhaps the most jolting statistic: Facebook and Alphabet command nearly 70% of all mobile advertising.

These trends show we are now moving toward a new set of industry drivers and the emergence of some new players. Rather than one ‘mega-development’, such as the iPhone or launch of LTE, I believe the next phase of developments in mobile will center around five themes – maybe a bit different than the drumbeat around IoT and AR/VR that you have been hearing from other prognosticators.

1. Shifting Power Centers. This trend has been developing for some time. Leading operators are diversifying their business. Apple and Samsung are less dominant. Google, Facebook, and Amazon are innovating and ascending. Microsoft is coming back. Some of the hot Silicon Valley startups are about messaging and chat! In advertising, Verizon has its work cut out, but there is pent-up demand to break up the Alphabet-Facebook juggernaut.

2. Content. We are in the midst of a multi-year re-imagining of how content is developed, distributed and monetized. Mobile is poised to play an important role, especially in the development of shorter form, democratized content where the latest YouTube sensation can become a media star in a fortnight. A new/old player to keep your eye on here: Comcast (cue the eye roll). They are creating a new UI and ecosystem around the X1 Platform that others – notably Apple – have failed to do. Look at the softly launched Netflix integration on X1 and you’ll see my point. There has been some worry that network neutrality might get in the crosshairs of zero rating for video content, which is one way for wireless operators to gain some competitive advantage. We expect the Trump administration and a Republican-dominated FCC to either overturn net neutrality or tread very lightly.

3. The Rise of Artificial/Intelligent Assistants. This has its parallel with the rise of the mobile revolution, which was driven by the confluence of hardware, networks, processing, and app ecosystem. Here, it’s processing (per usual), cloud, big data, and voice-related technologies. We’re in the early innings of a re-imagined way in which we interact with devices – phones, TVs, and so on – and software/apps that are more proactive and do a much better job of talking to each other. This is one of the main reasons Google has intensified its push into the hardware business (Pixel phone, Google Assistant, Google Wi-Fi, Daydream VR headset and platform, new 4K Chromecast stick), with Google Assistant becoming more pervasive throughout the products.

4. New Network Economics. Leading network operators are in a race toward an evolved network. More agile and ‘internet like” is what you’ll hear AT&T’s John Donavan talk about when discussing ECOMP, which is AT&T’s new ‘network operating system’ it hopes other operators will adopt. Another important part of this is altering network economics, which I still think needs to be a bigger part of the discussion. Mobile networks are going to have to handle much more video traffic in the coming years and at a substantially lower cost per GB delivered than they do today. A related question is how fixed and mobile networks coalesce as we move toward 5G and to consider whether, circa 2020, households will still be paying for separate fixed and mobile subscriptions.

5. Back to the Future With Chat and Messaging. While the internet and telco giants work on their respective AI and SDN moonshots, the biggest thing in 2016 is turning out to be messaging and chat (here is a good piece in the WSJ from a couple of weeks ago by Christopher Mims). With apps getting into the game, these past few years have seen the messaging/notification world trending toward overload. Yes, these tools are becoming more important for workplace collaboration (Slack, Teams) but I think the longer game is about simplification and contextualization. And, over time, more functionality – paying for things, ordering things, predicting things – as an evolution from today’s app-driven framework that is starting to feel a bit cumbersome and stale. Uber’s new app provides a glimpse of where things are headed.

There’s no catchy term or moniker for this new phase because it applies to developments within the mobile ecosystem and to adjacent sectors that have a big effect on mobile. But these themes, added together, spell the biggest changes to the mobile sector since the iPhone/App Store/LTE perfect storm that emerged in the 2008-2011 timeframe and will define the mobile space for the next several years.

“Fake news” is the phrase du jour across the political, media, and technology domains over the past couple of weeks, as a number of people have suggested false news stories may have swung the result of the US presidential election. There seems to be widespread agreement something more needs to be done and, though initial comments from Facebook CEO Mark Zuckerberg suggested he didn’t think it was a serious problem, Facebook now appears to be taking things more seriously. Even with this consensus on the nature and seriousness of the problem, there’s little consensus so far on how it’s to be solved.

As I see it, there are four main approaches Facebook and, to some extent, other companies which are major conduits for news can take at this point:

• Do nothing – keep things more or less as they are
• Leverage algorithms and artificial intelligence – put computers to work to detect and block false stories
• Use human curation by employees – put teams of people to work on detecting and squashing false stories
• Use human curation by users – leverage the user base to flag and block false content.

Let’s look at each of these in turn.

Do nothing

This is in many ways the status quo, though it’s becoming increasingly untenable. But, through a combination of commitment to free and open speech, a degree of apathy, and perhaps even despair at finding workable solutions, many sites and services have simply kept the doors open to any and all content, with no attempt to detect or downgrade that which is not truthful. Mark Zuckerberg has offered in Facebook’s defense the argument that truth is in the eye of the beholder and that to take sides would be a political statement in at least some cases. There is real merit to this argument – not all the content some people might consider false is factually so and, in some cases, the falsehood is more a matter of opinion. But the reality is that much of the content likely to have most swayed votes is demonstrably incorrect, so this argument has its limits. No one is arguing Facebook attempt to divide one set of op-eds from another, merely it stop allowing clearly false and, in some cases, libelous content.

Put the computers to work

When every big technology company under the sun is talking up its AI chops, it seems high time to put machine learning and other computing technology to work on detecting and blocking fake news. If AI can analyze the content of your emails or Facebook posts to serve up more relevant ads, then surely the same AI can be trained to analyze the content of a news article and determine whether it’s true or not. I am, of course, being slightly facetious here – we’ve already seen the failure of Facebook’s Trending Stories algorithm to filter out fake stories. But the reality is computers likely could go a long way to making some of these determinations. Both Google and Facebook have now banned their ad networks from being used on fake news sites, so it’s clear they have some idea of how to determine whether entire sites fit into that category. It shouldn’t be too much of a leap to apply the same algorithms to the News Feed and Trending Stories. But it’s likely computers by themselves will find both false positives and false negatives. The answer almost certainly isn’t to rely entirely on machines to make these determinations.

Human curation by employees

The next option is to put employees to work on this problem, scanning popular articles to see whether they are fundamentally based fact or fiction. That might work at a very high level, focusing only on those articles being shared by the greatest number of people but it obviously wouldn’t work for the long tail of content – the sheer volume would be overwhelming. Facebook, in particular, has tried this approach with Trending Stories and then, in the face of criticism of perceived political bias, fired its curation team. Accusations of political bias are certainly worth considering here – any set of human beings may be subject to their own personal interpretations. However, given clear guidelines that err on the side of letting content slip through the net, they should not be prohibitive. The reality is, any algorithm will have to be trained by human beings in the first place so the human element can never be eliminated entirely.

Crowdsourcing

The last option (and I need to give my friend Aaron Miller some credit for these ideas)  is to allow users to play a role. Mark Zuckerberg hinted in a Facebook post this week the company is working on some projects to allow users to flag content as being false, so it’s likely this is part of Facebook’s plan. How many of us during this election cycle have seen friends share content we know to be fake but were loath to leave a comment pointing this out for fear of being sucked into a political argument? On the other hand, the option to anonymously flag to Facebook, if not to the user, that the content being shared was fake, might be more palatable. If Facebook could aggregate this feedback in such a way the data would eventually be fed back to those sharing or viewing the content, it could make a real difference.

Such content could come with a “health warning” of sorts – rather than being blocked, it would simply be accompanied by a statement suggesting a significant number of users had marked it as potentially being false. In an ideal world, the system would go further still and allow users (or Facebook employees) to suggest sources providing evidence of the falsehood, including myth-debunking sites such as Snopes or simply mainstream, respectable news sources. These could then appear alongside the content being shared as a counterpoint.

Experimentation is the key

Facebook’s internal motto for developers for a long time was “move fast and break things” though it’s since been replaced by the much less iconoclastic “move fast with stable infrastructure”. The reality is news sharing on Facebook is already broken, so moving fast and experimenting with various solutions isn’t likely to make things any worse. The answer to the fake news problem probably doesn’t actually lie in any of the four approaches I’ve proposed but in a combination of them. Computers have a vital role to play but need to be trained and supervised by human employees. For any of this to work at scale, the computers likely also need training from users, too. But doing nothing can no longer be the default option. Facebook and others need to move quickly to find solutions to these problems. There will be teething problems along the way, but it’s better to work through some challenges than throw our hands up in despair and walk away.

Earlier this week, Bloomberg reported Apple is evaluating moving into digital glasses. According to “people familiar with the project who did not want to be identified” (when do they ever want to be?), the device would connect wirelessly to iPhones to show images and other information in the wearer’s field of vision. If there is a product and if Apple decides to actually bring it to market, it won’t happen before 2018.

It was not the news itself that made me think about this but rather the different comments I saw pop up on social media and in press commentary. They quickly pointed to a couple of interesting underlying misconceptions I thought it would be worth fleshing out.

Google Glass is not the Benchmark for Smart Glasses, Let’s Move On!
When we started talking about wearables, the list of devices was pretty long: bands, watches, pendants, straps, helmets, smart-fabrics, adhesive strips, cameras, and glasses. The initial vendor excitement was met with limited interest by consumers and, as vendors were trying to figure out what worked, we saw the focus centering more and more around the wrist. Google Glass very much helped that process of elimination.

But Google Glass’ flop does not mean there is no role for smart glasses. The key differentiating point between success and failure is the focus. Google Glass was not only early to market but it was also trying to be too many things at once, leaving users confused about its reason to exist. Google thought of Glass as a wearable in the same way we now think of a smartwatch – something we have on all the time. Yet, rather than focusing on a few specific tasks, Google Glass attempted to replicate many of the tasks our smartphones were performing. Glass was a camera, a search engine, an assistant, and one of the initial voice-first devices.

As people commented on the Apple rumor this week, many were quick to remind us of what Tim Cook said about Glass back in 2013 in an interview at D11:

“I wear glasses because I have to. I don’t know a lot of people that wear them that don’t have to. They want them to be light and unobtrusive and reflect their fashion. … I think from a mainstream point of view [glasses as wearable computing devices] are difficult to see. I think the wrist is interesting. The wrist is natural.”

As someone who has been wearing glasses since the age of three, I can certainly relate to what Cook meant. Glasses are not something you want to wear every hour of your day. Yet, I have no problem wearing glasses for specific tasks like sunglasses or swimming goggles. The difference here is shorter periods of time, focused tasks, and high return from the experience. This is what I think Apple would have in mind if they move into this space. Plus, of course, a design that would appeal to the mass market and would not scream “tech”.

Snap – formerly known as Snapchat – has taken part of the idea of Google Glass and made it commercially appealing to millennials. Spectacles have a funky design without being obnoxious, they are affordable, and the task they perform is perfect for the device. Snapping videos without being intrusive so as to capture the true moment and doing it fast (all you need to do is look in the direction of where the action is) sounds very simple and perfect for how Snapchat is used.

I Say Wearables, You Say Smartwatch

While one wears Spectacles, I would not put them in the wearables category, the same as I would not put a GoPro among wearables. When Cook said, “The wrist is natural”, he was looking at the Nike FuelBand he was wearing. So it would be safe to assume that, while he voiced his concerns about convincing people to wear something on their wrist, his focus was more about delivering a device that could be with us all the time so that it would learn from us and increase its value to us over time.

When we talk about wearables today, we really mainly talk about fitness bands and smartwatches and I see their role being very different from Google Glass. Their focus is to capture data as much as to display data. To be transmitters more than receivers. Think about all the sensors these devices have that help capture information which is then processed and used in different ways. Today the best showcase is fitness but, with time, the use cases will increase. They are certainly not portrayed as an all-powerful computing device. They are a companion device, especially for Apple, that might alleviate some of the load our smartphone has been carrying for so long. Interestingly, this view was not initially shared by the Android Wear team, who seemed to pitch wearables in a very similar way to Google Glass when it came to a do-it-all approach to replace most, if not everything, your phone does. The longer and more consistently you wear these devices, the greater the benefit. Which means they have to be extremely comfortable, somewhat fashionable and, if failing on the fashion part, they should almost disappear. While they might take over from your phone at times, they are not designed to be your main computing device for any long periods. The wrist is the ideal location for both collecting heartbeats and allowing you a quick peek of short and timely information.

AR and VR goggles are very different. Similarly to Spectacles, while you wear Oculus Rift, Gear VR, Google DayDream, Microsoft Hololens, their main function is to display content. For that reason, the proximity to your line of vision is critical. If you think about the main difference between VR and AR/Mixed reality, the former is about you being in a fully immersive world different from the one you are actually in and the latter is about enhancing your current world. You can see how different kinds of glasses or goggles will be required. Given Tim Cook’s public position on how AR is more interesting than VR, I can see how some of his comments about designing something people want to wear still apply.

More than the design, however, I would expect Apple to prioritize the experience in regards to safety and privacy. This might mean the use cases, at least initially, might be limited either by experiences or locations – like your car DVD player not playing on your dashboard screen when you are driving.

If true that the glasses will connect to your iPhone, it seems Apple is trying to avoid the battery issues Google Glass faced while, at the same time, showing it does not think slapping your phone in front of your face is the right thing to do even when that phone is an iPhone.

The Wearable Market of the Future
Many make projections about what the wearable market will look like by 2025 and the definitions of what is included are almost as many as the numbers thrown around. The wearable market will be much more complex than the PC and smartphone market ever were when it comes to devices that should and should not be included.

Whether or not Apple is really working on glasses will be confirmed in due course. But the fact they might be considering glasses does not negate what Cook said back in 2013. To be a wearable device in the strictest sense you need to be able to wear it 24/7 or very close to it. Wearing a device for part of the day does not make it a wearable, no more than being able to move an all-in-one desktop from room to room makes it a mobile computer. I see wearable technology as the next phase of “connected anytime, anywhere” — the main task of the devices we will be wearing will be to more clearly feed into AI and big data than feed off of them.

With Amazon Echo and Google Home now both in the market, dedicated device-based personal assistants have been in the news quite a bit lately. I’ve been called several times by reporters asking me whether Apple, Microsoft, or other companies need to have similar devices. But if there’s one thing the reviews and my own experience with these devices has taught me, it’s there’s a danger in equating your digital assistant with a device.

Note: this isn’t a review – but Carolina did a great review of her early experience with the Home yesterday.

Equating the assistant with the device

Amazon’s Echo began life as the only home of its personal assistant, Alexa and, although Alexa is now available on several other devices, my guess is the vast majority of users still equate the assistant with the device. Google, meanwhile, has made Google Home the entry point for its own Google Assistant and, for many people, Home is the only place they’ll be able to experience the Assistant for now, given the low uptake of the Allo messaging app and the high barriers to smartphone switching.

The downside here is, as people equate the assistant with the device, they will also equate failures by the assistant with failures of the device. When the entire purpose of a device like Echo or Home is to act as an assistant, to the extent the assistant fails to do its job, the device becomes useless. This is, importantly, very different from the likely reaction to failure by Siri or Cortana, which are mere features on devices that do much more. If we’re unhappy with Siri’s performance, we might well fall back on other ways to interact with our devices or be more selective in the scenarios for which we use Siri rather than the touchscreen because we have options. We may also choose to try again at a later time when the software has been updated because the assistant is still there on the device we’re using for lots of other things. But a device whose sole purpose is to be a good voice assistant and fails at that one job fails entirely and we will likely be tempted to return it or, at the least, put it away.

An assistant trapped in a box

The other challenge with equating an assistant with a device is users can easily have the sense the assistant is effectively trapped in the box. This is very much the case with Alexa, which doesn’t yet exist on smartphones or mainstream wearables. Leave the house and you effectively leave Alexa behind where she can’t do you any good at all. The Google Assistant has been designed with a much broader eventual footprint in mind but, for now, Google has limited its availability to this home device, a smartphone that will sell in small numbers, and an obscure messaging app. That’s a deliberate decision on Google’s part to sell more devices but it also means the Google Assistant will be similarly trapped in the home for many users.

Even when they venture out of the home, having many people’s first experience with the Google Assistant be tied to a larger device with far-field voice recognition technology risks disappointment when people then try it on a smaller device which is less effective at interpreting commands. Conversely, if Apple or Microsoft ever bring their existing virtual assistants to in-home devices like the Echo and Home, users may be pleasantly surprised at the improved voice recognition and will also enjoy a more mobile experience with assistants also present on their other devices.

An assistant that needs an assistant

The other thing that’s struck me again as I’ve been using the Home over the last few days is how important the companion mobile app is, something I noticed with the Echo as well. It’s almost like my assistant needs an assistant, not just for the initial setup but also for other subsequent experiences as well. One of the great advantages Google has in this space is the massive trove of web data it has to tap into but, of course, much of that data is visual in nature – having the Home read you a recipe all in one go is a terrible experience if you actually want to cook something and, of course, image search is also completely useless on the Home. You need the companion app to make sense of those things but, if that’s the case, then why not just use your phone? And, once you’re using your phone for some of these interactions, why not use it for all of them?

I’ve found that what you really want in quite a few of these interactions is to have voice interaction as the primary interface but with some kind of screen as a confirmation or feedback interface as well. A phone (or an Apple Watch or Android Wear device) gives you that combination but the Echo or the Home don’t. One of the frustrations I’ve had with the Home is that, when it fails, it’s often not clear whether that’s because it misinterpreted what I said or because it simply hadn’t been programmed to deal with the request, even when properly understood. A screen of some kind can eliminate that ambiguity.

Best as part of an ecosystem of devices

It’s early days in the history of these assistant-speaker devices for the home and I’m sure we’ll see some meaningful advances in the future. But I’m still finding the utility and performance of these devices is more limited and frustrating than transformative in my home. And I’ve been reinforced in my belief these devices have to be endpoints, not the endgame when it comes to virtual assistants and that such virtual assistants will only be truly effective when they’re part of an ecosystem of devices and not just a single device.

When a new product is introduced at a company event, it’s the executives, design engineers, and industrial designers that get the all of the credit. But behind every new product is engineers that focus on quality and reliability that rarely get much recognition.

Their role is not a glamorous job; it requires more discipline and less creativity than the designers. They often focus on the negative, trying to find problems with a product before it’s shipped. They’re also the ones that can require the designers to go back and redesign and delay a product’s introduction, subjecting themselves to lots of pressure.

Their job is to simulate the worst cases the product will experience before it’s shipped, taking on the role of the customer. They’re not the most popular members of the team; they are sometimes seen as a traffic cop. Design engineers focus on creativity and invention. The product is their baby and no parent wants to be told their baby is flawed or has a wart.

If a company’s executives or board wants to know how a new product is really doing, the quality engineers are the ones to ask. They have all of the statistics because their job is not only to be sure the product will last but to monitor how well the product is performing once it ships. They’ll tabulate the complaints, analyze the returns, and report back to the design team what needs to be improved.

Yet, in spite of their efforts to provide an objective account of a product’s performance before it ships, they’re occasionally overruled. Companies often ship products with the expectations of getting returns, based on a calculated decision. You just hope that doesn’t happen when safety is involved.

When Samsung shipped the Galaxy Note 7, both the initial and the redesigned versions, it’s hard to believe the quality engineers were happy and not overruled.

I’ve often thought how valuable it would be if we, as consumers, had access to the quality information before buying a new product. Our buying decisions would be much more informed.

We’d know the likelihood of a product needing to be repaired, see a list of the most frequent failures, and be able to make a clear comparison between competitive products before purchasing. But, of course, this information is closely guarded and rarely available. The best we can do is to consult things like Consumer Reports who tabulate experiences of their customers for a few category of products.

The next best alternative is to access customer reviews, surveys, and complaints from the web. While it’s impossible to determine the specific percentage of returns, there’s plenty of anecdotal evidence that can help. It’s easy to Google a problem we encounter and see if others have had similar problems.

A case in point. Almost a year ago, my daughter gifted me a Fitbit Charge as an incentive to be more active. But, after nine months, I’m on my fourth unit. The silicone rubber band on two units simply peeled apart, and a third unit had a defective battery that lasted less than a day. The products were never abused or used near water. While statistically surprising, I initially assumed I just had bad luck. When I mentioned this to others, two relatives and a friend, each of the three had to replace theirs several times. And, after searching through the company’s blogs and online reviews, I’ve found scores of users experiencing similar issues with many of the models.

Now, any product can expect to have a small percentage of defective units and, when you sell millions, the actual number of defects can be large. Typical return numbers for defects in the first year for a well-designed and manufactured product range from about half a percent to 2%. More than 3% is considered very high.

It’s hard to know what the true percentage of Fitbit defects are from this anecdotal evidence. Based on my experience, I bet it’s very high.

But considering the poor performance of the company’s stock in recent days, if I were a stock analyst, I’d want to understand how big a problem this is. Ask the quality engineers and you’ll get a better predictability of Fitbit’s fortunes than asking the CFO.

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Fitbit offered this response when I asked them about their product quality issues:

The quality of Fitbit products and the health and safety of our customers are our top priorities. We conduct extensive testing and consult with top industry experts to develop stringent standards so that users can safely wear and enjoy our products. We also are committed to delivering a superior customer experience. We respond quickly when customers report issues and strive to work closely with them through our customer service channels to ensure their satisfaction. If consumers have any questions or concerns, they can contact us at help.fitbit.com.

While much of this may be true, their product reliability is not there yet.

The Obama presidency and the FCC, under Chairman Tom Wheeler, have been among the more activist and ambitious in recent memory. There have been some big victories — successful spectrum auctions, innovative spectrum sharing and 5G initiatives, the National Broadband Plan — and some acrimonious proposals, notably around network neutrality and cable set-top boxes. Justice has been a bit mercurial: opposing major consolidation in mobile and broadband (AT&T/T-Mobile, Sprint/T-Mobile, Comcast-Time Warner Cable), but allowing Charter’s acquisitions of TWC and Bright House and Comcast’s acquisition of NBC Universal.

In a few days, there will be a new President-elect and transition teams will begin strategizing for the post-January 20, 2017 world. What might be the impact of the election on comms and media regulation? I’ll start with a broad view and then drill down to a few of the more prominent items.

Of course, who is elected President will potentially have a significant bearing on tech. Hilary Clinton has a pretty detailed and well-articulated platform, with a particular emphasis on expanding broadband availability. She is likely to continue many of President Obama’s initiatives and priorities. If Secretary Clinton is elected, it is likely FCC Chairman Wheeler stays on until July or so. If she is true to form, expect FCC Commissioners and senior-level FCC staffing to take on a ‘FOC’ (Friends of Clinton, and by that I mean Hilary and Bill) flavor. On the other hand, President Clinton could signal intent to bridge gaps with the Republicans by ensuring a balanced FCC. The current FCC has three Democratic and two Republican commissioners, but the Democrats (especially Commissioner Rosenworcel) have not always been in lockstep with Chairman Wheeler.

If Donald Trump is elected, things are more of a wild card. To begin with, he has said little about this sector during the campaign and there isn’t much to glean from his policy platform. Trump is likely to be much more hands off than President Obama (who was very hands on). He will also be more pro-business and anti-regulation, which is why his off-the-cuff remark about the proposed AT&T-Time Warner deal was surprising. If he ends up being Delegator in Chief, his appointments could have an outsized influence.

What happens in terms of control of the House and Senate, as well as the overall post-election ‘tone’, will also be important. If the temperature remains highly acrimonious, there will be contention and delays in the naming and confirmation of senior staff. This could affect the process, prioritization, and timing of some big ticket items on the FCC’s docket. The FCC has a lot going on already. The AT&T-Time Warner deal will land at least partially on its plate, at minimum as an important litmus test for network neutrality.

Here is a quick run-down of some of the issues a new Administration is likely to face.

Network Neutrality — This is something President Obama strong-armed through the FCC. So far, the FCC been fairly hands-off in its application of NN. For example, allowing zero-rating services such as T-Mobile’s Binge On. The AT&T-Time Warner deal will be an important test, given AT&T’s current practice of zero-rating DTV content for AT&T subscribers and plans to do the same with the upcoming DirecTV NOW service. I think the FCC’s tone will continue to keep the application of NN at a high, “B to B” level. For instance, ensuring combined distribution and content companies (AT&T-Time Warner, Comcast-NBC Universal) do not discriminate against new media and OTT players (Netflix, Amazon).

Spectrum — There is a lot going on in the spectrum department right now. The new Administration is likely to inherit the 600 MHz auction – both its final rounds and its implementation. It’s a complex undertaking. Hot on the heels of that is the re-auctioning of DISH’s AWS licenses. The 3.5 GHz ‘shared spectrum’ (CBRS) initiative also has some important milestones hitting sooner rather than later, such as selecting and certifying the Administrators and coming up with an auction framework and other procedures. There is still some opposition to the FCC’s April CBRS Report and Order that the next FCC will have to address to keep this moving forward.

Another priority will be keeping the early momentum going on 5G. This is important from the standpoint of the US continuing its leadership in advanced wireless networks. A lot of innovation and work needs to happen to make the millimeter wave bands usable for commercial wireless services.

Broadband — The National Broadband Plan was one of the signature tech initiatives of the Obama presidency. Its implementation has been somewhat of a mixed bag. Broadband availability expanded and average speeds steadily improved. But there was also a lot of squandered money, the broadband market is not very competitive, and US average speeds are still very much middle of the pack.

A Clinton administration would be more likely to keep the broadband gravy train going. Fixed wireless/5G and deployment of large numbers of small cells will become a bigger part of broadband evolution over the next four years. The FCC’s Mobility Fund II, which is wireless’ version (and contribution) to the Universal Service Fund, is part of the equation, too.

Business Data Services — These are the FCC’s new ‘special access’ rules, which would impose price caps on what telecom companies can charge other companies or businesses for bulk data connections — often referred to as backhaul. The FCC is racing to get this done by the end of the year. BDS is important to the evolution of broadband and 5G, because bigger pipes are needed to deliver the capacity required by those services. Backhaul prices can be prohibitively expensive in un-competitive markets. If the FCC doesn’t vote on BDS by the Inauguration, its status could be in limbo and/or its proposed rules could be revisited.

Set-Top Boxes — The vote on this controversial Wheeler initiative to open up the set-top box market to competition has been delayed, after FCC commissioners could not come to an agreement. The FCC could try to get this done by the end of the year and before a new Administration takes power in January (although the expiration of Rosenworcel’s seat in December adds a tasty plot twist). But it is equally likely this will land in the new Chairman’s lap. The direction of the winter of 2017’s political winds, plus the new Administration’s having to deal with the AT&T-Time Warner deal, could affect the direction of this proposal.

M&A and Industry Consolidation — The approaching election has certainly been a factor in the accelerated pace of tech M&A activity during the second half of 2016. The new Administration will have to rather quickly deal with the proposed AT&T-Time Warner deal. This will be an important litmus test for future deals because it touches on many fractious issues that both the DOJ and the FCC will have to deal with more broadly: cross-ownership of assets, media consolidation, and the Internet’s impact on traditional distribution channels.

I also believe the wireless industry will revisit the consolidation issue early-ish in the new term. Sprint and T-Mobile could try again to get a deal done, or one of them could get acquired by a cable company. DISH is also a factor here.

Congress might be on hold between November and January, but the FCC still has a lot on its plate. From a tech industry perspective, Obama’s eight years were certainly active on the regulatory front, which no doubt angered those preferring a more hands-off public sector. But Obama’s initiatives, particularly with regard to broadband and spectrum, will be almost universally viewed as laudable. There is a lot—a lot—going on in our sector and, regardless of who wins on November 8, we will need some minimal level of government effectiveness to keep our fast-changing market moving forward.