Unpacked for Friday October 7th, 2016

Samsung Buys Viv: Let the Battle Begin! – by Carolina Milanesi 

On Wednesday, news broke Samsung had agreed to buy Viv, the AI and assistant system founded by the creators of Siri. Viv will continue to operate as an independent company that will provide services to Samsung. While the acquisition was lead by the Mobile group, you could see how Viv could appeal to other Samsung lines of business such as TV and home appliances.

From a technology perspective Viv differentiates itself in two key ways:

  • It is interconnected, meaning the information flows more freely so the queries can be more complex and conversational — closer to how humans actually speak to one another
  • A software feature called ‘dynamic program generation” which allows Viv to understand what the user wants and to create programs on the fly to handle those queries

Given Viv is not in any commercial products as yet, I will focus my discussion on what this means for the companies and their competitors.

Samsung has been trying to limit its dependence on Google services for a while. Samsung has also been competing with Apple pretty much feature for feature. Given also their SmartThings play, the Viv acquisition announcement should really not come as a surprise to anyone. The timing of the announcement – a day after Google’s Sundar Pichai announced they are moving to an AI first world from a mobile-first one – could not have been better. Even more so after we heard Google Assistant will, at least for now, remain bundled in Google’s new phone Pixel instead of being pushed through any Android phone running Android 7.1.

For Viv, going with the top smartphone vendor in the world also makes sense although I would urge them not to see all the phones Samsung sells as a possible host for a personal assistant.

While everything on paper makes sense, how this acquisition will work remains to be seen. I struggle to see Samsung aiming to compete with the digital assistants that Google, Apple, Amazon, and Microsoft have been talking about — ones that require powerful back ends and ton of data. Samsung, for me, remains first and foremost a hardware company and I would expect them to use Viv to add value to their hardware. Lately, Samsung has been pushing the ecosystem of products they have from phones to tablets to wearables to TVs. Having a strong voice UI that bridges those devices could be a strong push in the “better together” story.

Twitter looks doomed to go it alone or be snapped up by Salesforce – by Jan Dawson

Rumors started some time ago that Twitter was becoming an acquisition target, largely because its share price was so depressed that it was becoming cheap. Since that time, a number of possible suitors have emerged and the share price has risen sharply, only to fall precipitously again as those suitors have fallen away one by one. At the end of trading on Thursday, its share price was more or less identical to a month earlier, after something of a roller-coaster ride.

The big challenge with acquiring Twitter is the synergies are pretty thin for almost any potential acquirer. Each of the companies floated has had some potential synergy but the combination of the rising price and the downsides to an acquisition have made it tough to justify the purchase. For the ad-centric acquirers such as Google, the ad synergies seemed the most obvious drivers, but Twitter is still such a small business it wouldn’t make much difference to scale for any of the big players. Yes, a Google acquisition would help Twitter by giving it far more scale and a bigger audience, but it’s far less clear a Twitter acquisition would help Google.

Media buyers were among the other strong suitors, notably Disney. The rationale here seems to have been more about distribution and leveraging Twitter as a channel for content. The big problem here is any content owner who wants to use Twitter to distribute content today can already do so – as demonstrated by the NFL, Bloomberg, Cheddar TV and others. Perhaps the integration might deepen a little under an acquisition scenario, but not by much. On the other hand, an acquisition by one media company would make every other media company reconsider its use of Twitter as a distribution channel, for fear of playing second fiddle to, and sharing usage data, with a competitor. Disney’s pullout seemed inevitable, but it was also smart.

Salesforce appears to be the last big company still considered to be in the running but here too the rationale is weak. Salesforce ostensibly wants Twitter for its customer service and data possibilities, but it feels like Salesforce could accomplish much of what it might want by integrating with Twitter rather than absorbing it. One wonders whether this is something of a vanity acquisition for Marc Benioff and Salesforce, as much as a rational one, which is always a dangerous starting point for such a thing.

Lastly, and perhaps most importantly, it’s also not clear that any of these acquisitions would be good for Twitter as a product. None of the companies considered to be in the running had a pedigree that suggested it would somehow run Twitter better than it’s currently being run. And that’s what Twitter currently needs more than anything: better strategy and execution. Yes, ad synergies would help on the monetization side but it’s user growth that’s the real problem (and the real reason for the depressed share price). It’s looking more and more likely Twitter may have to simply go it alone at this point, unless Salesforce really does come through. Neither option seems all that appealing, however.

Facebook Pushes VR Forward – by Ben Bajarin
Facebook announced some interesting things around VR at the Oculus developer conference yesterday.

The first was a social VR experience and a set of developer tools around having people’s avatars join them in virtual reality. Mark Zuckerberg did the demo and had two colleagues on stage in VR with him during the demo.

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There are a number of things going on here that signal some interesting directions for VR. First, notice they aren’t totally in virtual reality. This is basically mixed reality, where you blend the physical and the virtual. There are cameras capturing the room in VR and then showing that video in the headset to the user while placing digital elements over the physical world. The avatars are digital and the room is the physical element. The demo went on to have all three people together underwater and on the moon, all the while interacting with each other while in any number of virtual spaces. Imagine, you are at a sports venue, concert, park, another world, etc., with your friends in VR displayed as their avatars. While you notice the avatars look like cartoons today, that will not be the case in the distant future. At some point, your friends or family will look virtually real in this space as you interact with them from afar.

Second, there are facial expressions happening as well. This gets interesting as the headset will look to capture the person’s facial expressions in real time and display them virtually so you can see their reactions as well. Capturing the body as well will be coming in the future so, not only would you see friends or families facial expressions, but all of their body movements as well.

Every major player in VR hardware or components talks about all the additional facial and body expressions which will be enabled in the future so we can have physical representations of us inserted virtually into any environment we choose.

Secondly, Facebook announced a standalone VR headset that will be better than a Gear VR device but not as good nor tethered to a high-end gaming PC.

screen-shot-2016-10-06-at-10-30-29-am

This product has all the major components integrated into the headset and is code named Santa Cruz. There aren’t many technical details available == like what the processor or GPU specs are — but this is the direction the industry needs to go to take VR mainstream. Wireless, head-mounted VR units are where the market is headed but we need a lot of development still to make it happen.

Overall, we are making great progress in VR and even the mixed reality technology. Mixed reality is what I think has the biggest potential and makes the most sense for us to spend significant amounts of time in spaces that blend the physical and the virtual.

Published by

Carolina Milanesi

Carolina is a Principal Analyst at Creative Strategies, Inc, a market intelligence and strategy consulting firm based in Silicon Valley and recognized as one of the premier sources of quantitative and qualitative research and insights in tech. At Creative Strategies, Carolina focuses on consumer tech across the board. From hardware to services, she analyzes today to help predict and shape tomorrow. In her prior role as Chief of Research at Kantar Worldpanel ComTech, she drove thought leadership research by marrying her deep understanding of global market dynamics with the wealth of data coming from ComTech’s longitudinal studies on smartphones and tablets. Prior to her ComTech role, Carolina spent 14 years at Gartner, most recently as their Consumer Devices Research VP and Agenda Manager. In this role, she led the forecast and market share teams on smartphones, tablets, and PCs. She spent most of her time advising clients from VC firms, to technology providers, to traditional enterprise clients. Carolina is often quoted as an industry expert and commentator in publications such as The Financial Times, Bloomberg, The New York Times and The Wall Street Journal. She regularly appears on BBC, Bloomberg TV, Fox, NBC News and other networks. Her Twitter account was recently listed in the “101 accounts to follow to make Twitter more interesting” by Wired Italy.

4 thoughts on “Unpacked for Friday October 7th, 2016”

  1. Regarding Samsung’s Viv acquisition, I have to challenge the assumption within the statement

    I struggle to see Samsung aiming to compete with the digital assistants that Google, Apple, Amazon, and Microsoft have been talking about — ones that require powerful back ends and ton of data

    Does the AI provided by Google, Amazon, Apple and Microsoft really need powerful back ends and tons of data?

    1. Amazon launched Echo without any data about their users except their shopping preferences. Still, the Echo’s speech recognition and other AI capabilities have been highly praised.
    2. Apple thinks that they can provide significant AI capabilities without a ton of data. Furthermore, for tasks like photo image recognition, they don’t rely on powerful back ends, but instead on the silicon inside the phone.
    3. Dragon NaturallySpeaking has been pretty good at voice recognition, without relying on the Cloud and powerful back ends.

    Google wants us to believe that a ton of personal data needs to be collected from you to give you a good AI experience. However, I bet that for every piece of private data that you give them, they have 90 uses related to advertising but less than 10 for your own benefit. Google wants the data mainly for themselves and not really for you. Google also wants us to believe that advanced proprietary AI algorithms are a huge differentiator, as well as huge data centres, not necessarily because that is true, but because it suggests that Google is uniquely positioned. There is little reason to take Google’s messages at face value.

    On the other hand, as I listed above, there are clear cases where the company with less data or that uses less compute power can provide satisfactory results.

    Therefore, even though Viv may not have as much data as Google nor the Cloud compute power of Amazon, I would not dismiss them on these grounds. On the contrary, I would very much welcome another example where a company with less data managed to create good AI, and I hope Viv becomes one.

    1. Maybe my statement was not clear. Samsung can certainly deliver good voice recognition and a good UI with Viv. What i am not sure is Samsung basically getting into full blown AI to deliver a powerful assistant not just a voice first experience

      1. I’m sure that you would acknowledge that the canned response to your comment would be “Define ‘Full blown AI’.”

        I think you mention in the latest podcast that no single company is positioned to provide the full range of functions. Amazon cannot access your location every time of the day, nor can they read your emails. Google, although they can certainly read your emails from Amazon, cannot actually place an order. Each has strengths and weaknesses.

        We also know from your research that people like to use their assistants for extremely basic thing like setting timers, getting the weather info, and entertaining their kids with jokes. We don’t know yet what features of AI assistants people would actually use.

        By “Full blown AI”, are we referring to the least common multiple of Google and Amazon, or are we referring to the greatest common divisor? If it is the former, it is something that does not exist yet, something for which there might not be a market for, and something that even Google and Amazon may fail to realise. If it is the latter, then I would say Samsung has a good chance of getting there.

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