Apple’s Service, Vietnam’s Boon

Apple made plenty of moolah in its fiscal Q3, some $53.3B, nearly half of that ($26B) from iPhones. The story: Its services was up 1% YOY to $10.2B. Wearables, Home, and Accessories generated $5.5B, a 50% YOY increase. Diversification for Apple, good, dependency on iPhone moolah, bad.

Contrast those numbers with Samsung’s, which posted an operating profit of $5.6B on revenue of $47.4B, down 4% YOY. Hurry up and make that Fold fold faster!

Some crypto news that caught my eye: Coindesk is reporting that Chinese importers in Russia are buying up to $30M a day of tether from Moscow’s OTC trading desks. They apparently use the cryptocurrency to send large sums back to China, and they use tether instead of bitcoin because tether is designed to maintain U.S. dollar parity.

Speaking of China, who’s now benefiting from Chimerica? Good morning, Vietnam!, where Samsung already assembles half its handsets. Vietnam has greatly benefited from the U.S. tariffs on China, and even Apple and Nintendo are also said to be shifting certain workloads from China to Vietnam. 

What’s In Your Wallet?

“What’s in your wallet?”

Too soon?

The Capital One hack, a breach of 106M U.S. and Canadian customers, gave me flashbacks of the Equifax hack…you know, the one that led so many of us to freeze our credit reports.

What we know so far: A female software engineer in Seattle hacked into a server holding customer information for Capital One and obtained over 100M credit applications, as well as 1M+ Canadian social insurance numbers.

The New York Times is reporting that the bank expected the breach to cost up to $150M, including credit monitoring costs for affected customers.

The Capital One hacker, one Paige Thompson, was a former employee of Amazon Web Services and dropped signals in online fora and Slack that she might be the person behind the hack.

Back to Equifax: Just last week that company settled claims from the 2017 data breach for roughly $650M.

What’s in Capital One’s wallet? Ask again once the regulators are through with them.

The GitHub Sanctions

TechCrunch is reporting that GitHub (owned by Microsoft) has officially confirmed it is blocking developers in Iran, Syria, N. Korea, Cuba, and the Crimea from accessing private repos and paid accounts due to sanctions.

Hello, world.

Over the weekend, GitHub CEO Nat Friedman wrote on Twitter that like any other “company that does business in the US,” GitHub is required to comply with the U.S. export law. The confirmation comes months after work collaboration service Slack, too, enforced similar restrictions on its platform.

Public repos will apparently remain available to everyone.

On the funding front…Sales enablement platform MindTickle gets a $40M Series C led by Norwest Venture partners…On demand transport app Grab will invest $2B in Indonesia over the next five years…and the U.K.’s Just Eat is merging with Dutch rival Takeaway.com in a £9B deal that will see the creation of one of the world’s biggest online food delivery companies.

And finally…on the Chimerica front, Chinese social media ByteDance said today that it is developing a smartphone, as part of its deal with device maker Smartisan Technology.

Who needs an Android when ya gotta ByteDance?

T-Mobile Doesn’t Fold

Apple’s deal for obtaining the majority of Intel’s smartphone modem business is a done deal. Estimated transaction value: $1B

To help pay for the deal, Bloomberg is reporting that Apple and Goldman Sachs are issuing a credit card targeted to launch as early as the first half of August.

When Apple starts issuing credit cards, it could be time to start looking for a new phone.

Alphabet (Google) announced earnings yesterday PM, reporting Q2 revenue of $38.9B, up 19% YOY. On its earnings call, the company said its sound business now has an $8B annual revenue rate, double that reported last year.

And Amazon reported Q2 revenue of $63.4B, up 20% YOY, with AWS up 37% YOY – the first sub-40% growth rate since Amazon began sharing AWS figures.

Following up on the revitalized Samsung Galaxy Fold, don’t look for it at T-Mobile, a spokesperson for which indicated that “T-Mobile will not carry the Galaxy Fold because we already offer customers a wide range of the largest smartphones.

Yes, but do any of them fold when they fold?

The Fold Unfolds Again

Psych!

Samsung’s Galaxy Fold is unfolding once again.

According to a report from The Verge, Samsung says it has made improvements to protect the Fold’s screen and will release it in September (after having first delayed its April launch).

That sounds like a lot to unfold in just a few short months.

What’s new?

The top protective layer of the Infinity Flex Display has been extended beyond the bezel, making it apparent that it is an integral part of the display structure and not meant to be removed.

Galaxy Fold features additional reinforcements to better protect the device from external particles while maintaining its signature foldable experience.

The top and bottom of the hinge area have been strengthened with newly added protection caps. Additional metal layers underneath the Infinity Flex Display have been included to reinforce the protection of the display. The space between the hinge and body of Galaxy Fold has been reduced.

We’ll see how the emerging Fold unfolds.

Meanwhile, Facebook earnings came out for Q2, reporting $16.9B, up 28 percent YOY, and average DAus up 8 percent YOY (to 1.59B). 

So if you thought everyone (including all your teens and tweens) were leaving Facebook, think again.

Some venture deals: Cashierless retail store solution provider Standard Cognition has raised a $35 Series B by EQT ventures, and Toyota has invested $600M in Didi Chuxing (China’s Uber equivalent).

Don’t Send in the Telegram!

On the subject of Puerto Rico and the Telegram chat hacks: Am I the only person out there wondering how this happened if Telegram is supposed to be so secure?

I’ve looked on Telegram’s Twitter feed and blog, and it’s a major no comment, bury your head in the sand.

Rumors have abounded today that PR Gov. Rickardo Rossello will be resigning, but I’ve received no telegrams to that effect just yet.

Did nobody everywhere learn anything from Iran Contra??!  If you don’t want it to become a scandal, don’t write it down. ANYWHERE!  The Nation magazine went long on this story a few years ago now.

On to the much bigger story of the day: The U.S. Federal Trade Commission has hit Facebook with a $5 billion fine and new privacy checks, reports a lot of outlets, including The Verge.

In the agreement filed today, the FTC alleges that Facebook violated the law by failing to protect data from third parties, serving ads through the use of phone numbers provided for security, and lying to users that its facial recognition software was turned off by default. In order to settle those charges, Facebook will pay $5 billion — the second-largest fine ever levied by the FTC — and agree to a series of new restrictions on its business.

Aside from the multibillion-dollar fine, Facebook will be required to conduct a privacy review of every new product or service that it develops, and these reviews must be submitted to the CEO and a third-party assessor every quarter. As it directly relates to Cambridge Analytica, Facebook will now be required to obtain purpose and use certifications from apps and third-party developers that want to use Facebook user data. However, there are no limits on what data access the company can authorize to those groups once the disclosure is made.

NOTE: I own a few Facebook shares, but I still have four words…fox (still)…guarding…henhouse.

On the streaming wars front: Netflix is launching a $2.80 per month mobile-only subscription plan in India, although it’s restricted to one mobile device at 480p def.

Will Netflix expand this option to the U.S. and other markets to gain more share? Stay tuned!

And on the funding front: Payroll and HR software maker Gusto raised a $200M Series D co-led by Fidelity and Generation Investment Management, and camping listing/booking platform Hipcamp raised a $25M Series B led byy Andreessen Horowitz, bringing its total take to $41.8M. 

Don’t forget to bring the marshmallows!

Apple Pie and Salsa Verde

Greetings. I’m just back from a week’s vacation in Mexico City, where I slurped tequila like it was beer and where I (largely) ignored the tech industry.

I DID manage to get a TelCel SIM card while I was at the Mexico City airport, and I have to say, I’m not sure how I would have managed my trip if I hadn’t had a smartphone with Internet connectivity.

From the dating apps like Bumble and Tinder which I used to meet all those nice women from Mexico, to Google and Apple Maps to find my way around, to Uber to get my way around, to Yelp to find good restaurants (HINT: I didn’t find any BAD restaurants in all of CDMX!)

I want to thank the good people of Mexico, and mi amigos who I was traveling with (you know who you are) for a great week of downtime. I don’t think we left many stones unturned, and we capped it all off by seeing the inaugural game of this season’s La Liga season with a match between America and Monterrey.

So now that I’m back to reality, what IS going on in the world of technology? I haven’t even tried to backtrack as to what I missed, but what I see going on at the moment caught my eye was that Apple is in advanced talks to buy Intel’s smartphone modem chip business (in a deal valued at worth $1B).

From the WSJ: “[The deal] would give Apple access to engineering work and talent behind Intel’s year’s long push to develop modem chips for the crucial next generation of wireless technology known as 5G, potentially saving years of development work.”

So there you go, it’s all about (and will increasingly be about) 5G.

Also on the Apple front, Apple app developers beware: Apple’s own mobile apps routinely appear first in search results ahead of competitors in its App Store. Like that’s a surprise.

On the Chinamerica front: Huawei has laid off more than 600 workers from its US-based Futurewei research arm, as a result of being put on a trade blacklist by the U.S. government. That’s more than 2/3s of the workforce.

They must be picking up the slack in Mexico City, because every other billboard I saw had “Huawei” on it.

A VC round to note: Autonomous Industrial robotics firm Fetch Robotics raised $46M in a Series C round led by Fort Ross Ventures. Fetch’s robots are powered by cloud-based software systems, which means their ‘bots are likely ready to scale.

The question I have is, is the world ready? Ready or not, here they come!

And speaking of robots, despite Tesla having a giant new machine that helps the company more quickly produce the Model Y, the company’s higher-end sales are being eroded by Model 3 gains.

What was it Clayton Christensen or someone said about chewing your own leg off?

Just so long as I can have some of that infamous CDMX salsa verde with it!

Amazon’s AI Coalmine Canary

Happy Thursday.

So Amazon has announced that it is going to spend $700M to retrain 100K of its workers (a third of its workforce) by 2025, and seems to be doing so as an acknowledgment partly due to the impact of technology and automation on jobs.

Plus, it’s just good, smart business.

Subheads directly from the Amazon press release:

Programs will help Amazonians from all backgrounds access training to move into highly skilled technical and non-technical roles across the company’s corporate offices, tech hubs, fulfillment centers, retail stores, and transportation network, or pursue career paths outside of Amazon

Based on a review of its workforce and analysis of U.S. hiring, Amazon’s fastest growing highly skilled jobs over the last five years include data mapping specialist, data scientist, solutions architect and business analyst, as well as logistics coordinator, process improvement manager and transportation specialist within our customer fulfillment network

Employee upskilling investment builds on Amazon’s $15 minimum wage and comprehensive benefits including medical insurance, 401k savings plan, and generous parental leave

I like BI’s headline: “Jeff Bezos just sent a clear signal that AI will remake American jobs.”

Deadend Jobs – Skills Retraining + Artificial Intelligence and/or Robotic Automation = Canary in the Coalmine.

Retrain, or become a Luddite.

Meanwhile, the French have passed a 3 percent digital services tax on sales in France for large Internet companies with over 25M Euros in French revenues. 

Expect U.S. retaliatory tariffs from Monsieur Trump, tout suite!

Next: Bird scooters are losing money hand over handlebars, some $100M in the first quarter, with revenue shrinking to about $15M. 

But hey, go ahead and continue stringing scooters across the downtown Austin landscape in a bid to drive up your next Series round.

You’re gonna need it if you only have $100M left in the scooter piggy bank!

Finally, I said to anyone who would listen in 1999 that one day, privacy would be considered a competitive differentiator. Well, I finally feel vindicated, and not dealing with privacy and data protection is finally carrying a hefty price that business can no longer ignore.

OneTrust, a company which builds tools to help companies navigate data protection and privacy policies both internally and with its customers, has raised $200M in a Series A and that values the company at $1.3B.

Billion, with a “B.”  That should buy lots of privacy.

Slackers?

Happy Hump Day.

If you’re a Nintendo fan of any sorts, you should know this: The Nintendo Switch Lite is arriving September 20th, and it will only put you back $200.

That’s $100 less than the original Switch. The new Switch won’t have detachable Joy-Con controllers and can’t plug into a TV, which is why C|NET posed the inevitable question: What’s the point of a Switch that doesn’t Switch?

Methinks that could be getting a bit too philosophical, especially when it comes to video game systems. The original Switch sold 34 million systems (and counting), so I suspect there’s a market out there for a slimmer, even more portable version.

Meanwhile, back on the enterprise ranch, the IBM Red Hat deal has finally closed. The  $34B deal was IBM’s largest ever, and we now know the Red Hat brand will operate as a unit inside IBM’s Cloud and Cognitive Software segment.

From Barron’s:

IBM asserted in its announcement today that most enterprises are about 20% through their transition to the cloud. The next phase for many companies, IBM says, “Is about shifting mission-critical workloads to the cloud and optimizing everything from supply chains to core banking systems.

In its announcement, IBM emphasized that it remains committed to open-source software and to keeping Red Hat as a neutral vendor.

Also on the enterprise front…here’s a provocative headline from Recode: “Microsoft might crush Slack like Facebook crushed Snapchat.”

Subhead: “Microsoft Teams isn’t better than Slack, but it is freer.”

Remind anyone of browser partying like it’s 1999??

The lede:

Tech workers’ favorite communications tool, Slack, is losing ground to its biggest rival, Microsoft Teams, which has copied its way into popularity. In other words, Slack has the same problem as Snapchat, which has suffered from its bigger rival Facebook’s relentless appropriation.

Slack’s market share among the world’s largest companies is mostly flat, adoption rates are declining, and a bigger portion of these companies indicate they plan on leaving the service, according to a new survey by market research firm ETR, which asks chief information officers and other leaders at the world’s biggest organizations* where they plan to spend their company’s tech budget.

Meanwhile, Teams is seeing increased market share, relatively higher adoption rates, and low rates of defection, according to the data.

Good thing Slack floated like an IPO before it got stung by the Microsoft Teams bee!

AI Fail, Perot’s Passing

Been wondering how all those AI deployments are going in the enterprise?

According to a story reported by VentureBeat, and a study conducted by IDC, of all the organizations already using AI, only 25 percent have developed an “enterprise-wide” AI strategy. 

And, the study found among those in the process of deploying AI, a “substantial number of projects are doomed to fail.”

The background:

IDC’s Artificial Intelligence Global Adoption Trends & Strategies report, which was published today, summarizes the results of a May 2019 survey of 2,473 organizations that use AI solutions in their operations. It chiefly focused on respondents’ AI strategy, culture, and implementation challenges, as well as their AI data readiness initiatives and the production deployment trends expected to experience growth in the next two years.

The analysis:

“Organizations that embrace AI will drive better customer engagements and have accelerated rates of innovation, higher competitiveness, higher margins, and productive employees,” said IDC Artificial Intelligence Strategies vice president Ritu Jyoti. “Organizations worldwide must evaluate their vision and transform their people, processes, technology, and data readiness to unleash the power of AI and thrive in the digital era.”

The blockers:

Firms blamed the cost of AI solutions, a lack of qualified workers, and biased data as the principal blockers impeding AI adoption internally. Respondents identified skills shortages and unrealistic expectations as the top two reasons for failure, in fact, with a full quarter reporting up to 50% failure rate.

Also today, the passing of an icon in the IT industry, H. Ross Perot, one-time IBM salesman, self-made Texas billionaire, 1992 and 1996 U.S. presidential candidate and founder of Electronic Data Systems Corp.

We’ll never forget those colorful charts, or your unique manner of communications. RIP, Mr. Perot.