Unpacking the Week’s News: Friday, March 17, 2017

Google Learns Quickly how People Feel about Ads on Google Home – by Carolina Milanesi

On Thursday, Bryson Meunier posted to Twitter a video of his interaction with Google Home. Many publications were quick to report it and you can see it here.

After asking, “Ok Google, what’s my day like?” Google Home delivered the time, the weather, the drive to work as you would expect but then followed that with a commercial. The delivery was cute: “By the way, Disney’s live-action Beauty and the Beast opens today.” Piano music is played and then the ad continues with, “For some more movie fun, ask me something about Belle. Have a good one!” Despite the cuteness of the topic, it was an unsolicited ad and that’s the problem.

The reaction on Twitter echoed the sentiment of a recent study on Privacy and Security we did at Creative Strategies. It came out, loud and clear, that consumers do not expect much privacy from Google and they feel they are the product – their information is sold to advertisers.

Google denied this was an ad by providing a statement:

“This wasn’t intended to be an ad. What’s circulating online was a part of our My Day feature, where after providing helpful information about your day, we sometimes call out timely content. We’re continuing to experiment with new ways to surface unique content for users and we could have done better in this case.”

Giving Google the benefit of the doubt, it is clear they heard loud and clear how people feel about having ads played by Google Home, especially in the same voice as Google Assistant.

Just in case Google was still contemplating running ads on Google Home, let me highlight why the tolerance level would be so much lower.

The ads are coming into MY home. This is my computer screen where I can ignore them (most of the time) or play them with my volume down while I am doing something else, waiting for them to let me get to my content or even bypass with an ad blocker.

But you let ads come to your TV and that’s in your home too, I hear you say. Clearly, I do, when I do not have an option, but I know the ads are appropriate to the content I am watching so my child does not get exposed to content I need to spend 20 minutes explaining afterward. I am also used to TV advertising. I cannot remember a time without ads; they were more limited but they were there. As a matter of fact, I remember growing up in Italy and knowing that the ad time was my bed time.

Google Home, however, belongs to a new category of devices where, so far, we have not had any advertising. Voice is also much more intrusive than video content. In the case of Bryson, he was receiving information to get his day started before heading out the door. The timeliness of that ad was poor and, most likely, the relevance was as well, although I did hear a little kid in the background being ecstatic about it which would just make the ad creepy. A voice-enabled ad gets in the way much more than a video one as people who listen to the radio or any free music service know very well.

The other concern Google should have is about the relationship consumers might want to create with their personal assistant. It already feels like the name “Google Home” and the awake word “OK Google” is a barrier for users to feel as close as they do to Alexa. Having to be concerned about getting a pitch every time you ask your assistant something would be huge barrier to developing a meaningful relationship. Think about fearing to get an ad for solar panels every time you go and pick up your phone to make a call.

An opt-in model would probably be the only one that works in this case but, even then, I would argue the expectation of the relationship I will build with Google Assistant would be very different and not one that should be what Google aspires to.

Microsoft Unveils Teams Chat App – By Bob O’Donnell

Microsoft took the wraps off the newest member of their Office 365 application suite this week with the release of Teams, a multi-platform, persistent chat application design to encourage collaboration in the workplace. Perceived as a direct competitor to Slack, Teams provides an environment where co-workers can communicate in real time via chat, document sharing and editing, calendar and contact integration, and more. Thanks to integration with Skype for Business, Teams also simplifies the process of creating and initiating voice and video conferencing as well.

One of the key attractions of Teams versus something like Skype is the fact it seamlessly integrates with all the Office applications. Document creation and editing occur with the “real” versions of Word, Excel, PowerPoint, etc. In addition, Teams works with SharePoint to allow workers to find and store documents on shared company storage.

As potentially capable as tools like Teams (and Slack) may be however, there can be challenges in getting individuals to use them on a regular basis. While startups and newer companies that don’t necessarily have much communications infrastructure in place have been quick to jump on these tools—and many would absolutely swear by their capabilities—things are tougher in larger and more established companies. In these organizations, email and voice calls are still the primary means of communication and collaboration.

Recent research I completed on workplace trends, in fact, showed while approximately 30% of companies said they currently had some kind of persistent chat tool available to them, only 4% of their collaboration with people outside their company and 5% of these efforts with co-workers are done using this kind of tool. Clearly, some education and awareness training needs to come with the installation of these new tools to drive wider usage.

In the case of Teams, Microsoft has helped grease the wheels by making it a free add-on to existing Office 365 customers. Obviously, this will reduce some basic sources of potential friction but research indicates that, to move away from old communication and collaboration habits, companies need to have strong internal advocates at the management level to essentially force the transition to these new tools. As with many important new technologies, simply having a better widget (or application, in this case) isn’t good enough to guarantee the kind of success that comes with widespread usage. Instead, it takes a long-term education and awareness training regimen to get people to realize the new tools can make their work lives more effective and productive.

Tesla Raises More Money to Fund Model 3 Manufacturing – By Jan Dawson

Tesla this week announced it will raise a little over a billion dollars in additional funding in order to help pay for the manufacturing process for its new Model 3 cars, scheduled to begin production in July.

If there’s one thing that has characterized Elon Musk as CEO of Tesla, it’s a combination of an uncanny ability to execute on a long-term plan while simultaneously repeatedly failing to hit short-term targets. It’s almost the exact opposite of many other business leaders, who tend to hit short-term targets but fail to make adequate long-term strategic plans. Elon Musk is clearly something of a visionary, who famously outlined his “secret master plan” for Tesla on his company’s website back in 2006 and then spent the next ten years successfully executing on it.

But it’s on the short-term targets — production numbers, launch timeframes, and the like — where Musk has often fallen short. The Model 3 launch looks to be, by far, the most ambitious attempt to beat that run of poor forecasting. Production is supposed to begin in July and quickly ramp to 500,000 cars in 2018, which would be a more than five-fold increase over production last year and require a much faster ramp than it has ever attempted before in so short a time. On the one hand, it’s no wonder the company needs more funds – it will spend $2-2.5 billion on capex in the first half of 2017, versus around half a billion dollars in the same period in 2016. But, on the other hand, it feels almost shockingly unrealistic to expect to pull that off.

It is possible Musk will finally deliver on one of these longer-term objectives and his investors so far seem pretty forgiving of these missteps. They seem unusually long-term in their thinking relative to other technology investors and buy into the eventual ideal of mass market, high-performance electric cars as much as short-term financial and production targets. There’s no doubt a car priced as low as the Model 3, with the performance it’s promising, could transform Tesla from a niche manufacturer into a mainstream one. But I’m betting it will take rather longer than Musk says to deliver that half a million milestone.

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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.

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