Anytime a big iconic company has executive turnover or reshuffling, people take note. Yesterday, Intel did just that with some very senior executive movements at the company.
There are many ways to interpret this, from doom to gloom to appropriate restructure and build. But the commonality of the news is a result of Intel’s struggle at finding any bright spots beyond the data center. The PC category continues to be a mess and our consumer studies on the segment do not suggest it is getting better.
Intel needs to position itself to ride the next waves of computing but, even here, their continual struggles on the graphics side of things remain an issue. Having just attended NVIDIA’s keynote, where founder Jen-Hsun Huang painted a picture of all things AI, VR, and cars, NVIDIA’s approach to high-performance computing has been paying off as the elements of computer graphics remain a critical component for next generation computing. I’ve long said Intel made a mistake not acquiring NVIDIA many years ago and I still believe that’s true.
I remain bullish on Intel’s process technology and their upside in manufacturing. The problem is, part of Intel is still stuck in the past and, hopefully, the churn will be good and fresh blood and fresh thinking emerge and start pushing a new culture at Intel.
Apple’s Challenge in India
For everyone who is keeping a close eye on India, Apple’s road here will be long and challenging. Unlike China, where we knew the pieces would fall together and Chinese consumers would fuel a big cycle for iPhones, India is a very different market.
While a key part of Apple’s strategy in India likely starts with approved Apple retail stores, iPhones are currently sold through approved distributors. These distributors can be flexible with the price they sell iPhones based on what margin they are willing to take. If they are willing to take less margin to sell more, they have some flexibility to do that or they can price high and keep margins. When I was discussing the state of iPhone sales in India with a few tech journalists based there who were attending the last Apple event, they explained they saw the price of the iPhone 6s drop relatively quickly as these resellers were looking to be aggressive. This fluctuating pricing can both help and hurt since it is essentially fluctuating with demand. This is not terribly unlike the China grey market, which I have studied in depth, where merchants move the price of a used iPhone based on what is hot at the time. For example, if on any particular day white iPhone 5s are popular, vendors will hike the prices of just that SKU. Grey markets are a wild west and the Indian market, while regulated with approved iPhone vendors, has some similarities as pricing can vary.
While the iPhone SE is a major part of emerging market discussions, I think too much emphasis has been put on the 4″ form factor and not enough on pricing as of late. When Apple states 30m iPhones sold were 4″ or that many first time iPhone owners are buying the 4″ device, the reality is it is the price of those phones, not the size, that is drawing many of those consumers. I’d wager if a 4.7″ iPhone was priced at or near the price of the 5s, the 4.7″ would outsell the 4″ dramatically. The iPhone SE is a tremendous device at $399 but it is the price that is attractive, not the size for a large chunk of the market.
Apple’s story in India needs to be a value-centric message. Apple has not really had to market to a pragmatic buyer and this is the mindset they face in India. Spec-wise, with all but the screen size, the iPhone SE is attractive and competitive. But we do have to take the screen size into consideration in a value-centric market. To an Indian buyer who has already established a 5″ screen or so is a good value device (more screen, more value), what are the tradeoffs they are willing to make to go smaller? Meaning, by sacrificing screen size, what other benefits will they get beyond what any other competitive device offers? This is where Apple will have to spend their time marketing the total value to Indian consumers if they hope to gain more share in India.
Twitter to Stream the NFL
An interesting bit of news about Twitter hit yesterday morning. They have acquired the rights to stream Thursday Night Football.
This is an intriguing move but it carries with it both a question of the agenda and the monetization. Twitter paid less than $10 million for the rights and it likely includes rights to both desktop and mobile streaming, although this has not been confirmed. It appears Twitter can add some production of their own to this stream including live periscope streams, proprietary highlights (perhaps for Moments), and other associated video. However, they can’t place national ads as those are retained by the main networks. So Twitter’s monetization is limited to local ads which are not paid at a premium.
The agenda question remains. Is this to drive ad revenue or increase user growth? The monetization angle seems a larger uphill climb so I’m guessing this is an attempt to convert new users to Twitter. I don’t expect people to all of a sudden stop watching this game on their big screen TVs. But, if Twitter can more tightly integrate the second screen experience around the game on smartphones, tablets, or PCs, then they may give people reasons to try Twitter or, at least, check out the non-logged in experience in a browser. Again, a major factor for this to work is Twitter layering on production value on top of the broadcast. If this is done right, I can see it being quite interesting and perhaps successful in driving users. At the very least, at $10m, this is a fairly low-risk proposition which Twitter may learn some very valuable things from and use to grow in the future.