Tech Brew Ride Home - Mon. 01/28 - An Apple Subscription Gaming Service?

Episode Date: January 28, 2019

An Apple subscription gaming service? Is Facebook Watch still alive? The GDPR floodgates are truly open. And losing to AI’s might have some benefits. Sponsors: DataDogHQ.com/ridehome Tiny.website Links: Apple Plans Gaming Subscription Service: Sources (Cheddar) A Tiny Screw Shows Why iPhones Won’t Be ‘Assembled in U.S.A.’ (NYTimes) China created a unicorn every 3.8 days in 2018 (South China Morning Post) China's smartphone shipments dropped 14 percent in 2018 (TechCrunch) Facebook Watch Isn’t Living Up to Its Name (Bloomberg) Google and IAB ad category lists show 'massive leakage of highly intimate data,' GDPR complain claims (TechCrunch) AI Helps Amputees Walk With a Robotic Knee (IEEE Spectrum) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech Meme Ride Home for Monday, January 28, 2018. I'm Brian McCullough today. An Apple subscription gaming service? Is Facebook Watch still alive? The GDPR floodgates are truly open and losing to AIs might actually have some benefits.

Here's what you miss today in the world of tech. I suppose we had to see this one coming. According to Alex Heath at Cheddar, Apple is planning a subscription service for games. In fact, it has already been holding discussions with game developers about this scheme for some months. The service would function like Netflix for games, allowing users who pay a subscription fee to access a bundled list of titles. Apple began privately discussing a subscription service with game developers in the second half of 2018, said the people, all of whom requested anonymity to discuss unannounced plans. It's unclear how much the subscription will cost, or what kind of games Apple will.

will offer. The service is still in the early stages of development and Apple could ultimately decide to abandon it. The company has also discussed partnering with developers as a publisher, according to two people familiar with the talks, which could signal Apple's ambition to assume distribution, marketing, and other related costs for selected games, end quote. So this obviously makes a lot of sense. Along with subscription video, we've discussed how everyone in the game space wants to move to device. Adagnostic subscription gaming. Streaming gaming.

They want subscriptions because, again, everybody wants that sweet, sweet subscription revenue. Mobile gaming is expected to be a $100 billion industry by 2021, but also device agnostic because if gaming companies can solve that dreaded issue of latency and lag, game makers know you want to be able to play whatever game you want on whatever device is handy. You don't want to be tied down to one specific dedicated console or piece of hardware. Well, who's got a whole ecosystem of super popular devices and a super popular existing app store platform, the majority of which is already games? Oh, and who has a pressing need to move into a new growth market?

That would be Apple. Of course, Apple has dabbled in games before and didn't exactly hit it out. out of the park. Weird little story here. Remember back in 2012 when Apple announced that it would be making Mac computers in the United States once again for the first time in years? Well, the gist of what I'm about to tell you about this New York Times story can be summed up with this quote.

When Apple began making the $3,000 computer in Austin, Texas, it struggled to find enough screws, according to three people who worked on the project and spoke on the condition. of anonymity because of confidentiality agreements. In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not, end quote. The American screw manufacturer that Apple originally contracted with for IMac manufacturing struggled to deliver even a thousand screws a day. The production of the Macs was delayed for months.

By the time the Macs were ready for production, Apple had just ended up ordering the screws from China anyway. The moral of this story, if you will, can be summed up with this quote. The challenges in Texas illustrate problems that Apple would face if it tried to move a significant amount of manufacturing out of China. Apple has found that no country, and certainly not the United States, can match China's combination of scale, skills, and infrastructure, and cost. quote. Actually, the point here is twofold. First, manufacturing in the U.S., while good for PR headlines, is frankly difficult for modern tech companies for a variety of reasons. Manufacturing skill sets and even infrastructure are not evergreen. They can atrophy and be forgotten. You can't just flip a switch and produce everything domestically, even if you want to. But even more

importantly, as the story notes, China is not even the lowest cost manufacturer anymore. There are other corners of the world where various goods can be produced cheaper. So why is everybody still ordering all their stuff from China? Why persist even in the face of feared disruption caused by trade wars? Because no one can do everything that China can now do. Here's a quote from no less than Tim Cook. The skill here is just incredible, Mr. Cook said, in China in late 2017. Making Apple products requires state-of-the-art machines and lots of people who know how to run them, he said. Quote, in the U.S., you could have a meeting of tooling engineers, and I'm not sure we could even fill the room, he said. In China, you could fill

multiple football fields, end quote. We spoke last week about how China wants to evolve beyond just being the workshop that produces the parts and gizmos and gadgetry that all the big tech companies come to to produce the technology of the future. China wants to produce that future itself. Homegrown. Doesn't need your guidance or input or even participation anymore. They're not quite there yet, but don't expect it to take much longer. And to that end, interesting data from the South China Morning Post.

Over the course of 2018, 97 Chinese startups achieved unicorn status, bringing the grand total of Chinese unicorn companies to 186. Together, those 186 unicorns have a combined estimated valuation of around $736 billion. This, of course, comes amid concerns that China's growth is slowing and also that this unicorn expansion might have gotten ahead of itself. While a total of 24 Chinese unicorns went public in 2018, some of those are now trading below their initial public offering prices like smartphone giant. Zhao Mi and on-demand local services provider,

Mituan Dian Ping. That has resulted in investors weakened confidence in Chinese unicorns and triggered concerns about these firms being overvalued, end quote. But the piece also notes that of those 24 IPOs, 70% beat their pre-IPO valuations when they hit markets. So as an analyst says in the piece, that might, quote, show there is less of a bubble in the valuations than some people

suggest, end quote. And on that is China slowing down beat for one more second, although this might be a unique case. NVIDIA's stock was down 12% this morning after it lowered its revenue guidance from $2.7 billion to just $2.2 billion for Q4 2019 due to, quote, deteriorating macroeconomic conditions particularly in China, end quote. So add NVIDIA to an august list of companies blaming China for bad performance, Apple, of course, but also Caterpillar recently. But a drop of $50 million in just one-quarter's revenue guidance, that's not peanuts. And of course, there's that little matter of demand from crypto rigs falling off a cliff and perhaps self-driving vehicles not quite arriving in significant numbers yet.

In somewhat related news, panelists reported today that smartphone shipments in mainland China dropped 14% in just the last year. 396 million units were shipped in mainland China in 2018, making that the lowest level since 2013. Smartphone sales are dropping all over the place, of course, but when the largest market in the world is down 14%. Sarah Fryer checks in with Facebook's YouTube killer, Facebook Watch, and her report is grim.

Despite spending by some estimates as much as $1 billion last year to produce content for watch. Friar reports that today's watch is just a jumble of ads, naturally, that's the whole point, but also no-hit shows and frankly a

tiny slice of overall video revenue. In other words, Tumbleweeds. It all comes down to time spent. Facebook knew that users spent on average 45 minutes inside their apps every day, but only in

90-second quick hits on average. So Zuckerberg and Co. turned to video because Americans still spend an average of two hours watching video every single day in some form or other, still mostly traditional television. But so far, quote, while researcher e-marketer estimates that Facebook as a whole will take in nearly double YouTube's $4.3 billion in video ad sales this year, it expects watch to account for a single-digit percentage of that figure. I don't think it's yet become a must-buy for brands, says Abby Classen, chief marketing officer at New York Marketer 360I. They are in a stiff competition for this kind of advertising and inventory, end quote.

Last summer, a year after Watch went live in the U.S., half of consumers hadn't heard of it, and three-quarters hadn't used it, according to researcher diffusion group, end quote. think the biggest indication of that is, I mean, if you stepped outside and stopped a person on the street right now and said, have you heard of Facebook Watch, they'd probably think Facebook made a watch like the Apple Watch? No, Facebook Watch is that annoying tab that you never open, even though it never stops prompting you to do so. It's just weird about tech companies. For various reasons, they always want to be what someone else is. No one can ever concentrate on just what they're good For years, Microsoft wanted to be Google.

Google wanted to be Facebook, but, you know, how many times can they fail at social before they understand that that's just not a lane they can swim in? Facebook now wants to be YouTube or maybe Netflix or something, anything. Zuckerberg just wants to own videos as well. Who's going to be the one to tell him he's not very good at it? It looks like the floodgates have well and truly opened. A GDPR complaint. new one has been filed against Google and, in this case, also the IAB by privacy advocates in Europe. What is the trouble this time? Well, every time an advertiser bids to show you an ad on

the internet, they choose from, or at least the algorithms choose from, a dizzying array of advertising categories, ranging from everything including mental health, sexually transmitted diseases, right or left wing politics, religious affiliation, cancer, mesothelioma, male pattern baldness, on and on and on. This is what I always describe as slicing and dicing advertising on this show. These are incredibly intimate and sensitive labels, but they can't be used to identify you specifically, right? These are just categories in aggregate, except they are trying to identify you specifically. That's the whole point of how this sort of advertising works. So this new complaint is about that, about real-time bidding on advertising,

and it, quote, alleges wide-scale and systematic breaches of the data protection regime by Google and others in the behavioral advertising industry. It argues the personalized ad industry has spawned a mass data broadcast mechanism which gathers a wide range of information on individuals going well beyond the information required to provide relevant adverts. And also that it provides that information to a host of third parties for a range of uses that go well beyond the purposes which a data subject can understand or consent or object to. There is no legal justification for such pervasive and invasive profiling and processing of personal data for profit, the complaint asserts, end quote. That's from TechCrunch, which notes the complainants say these advertising

systems allow no way for users to exercise their rights to data privacy or ownership under GDPR. The crux of the matter, though, are those categories termed highly sensitive information that have special protection under GDPR. So categories that advertisers can choose to advertise against like incest slash abuse victim, substance abuse, cancer, eating disorder, sexual health, troubled relationship. It's unclear what the remedy would be, either the elimination of these types of categories as advertising pots, or perhaps more explicit opt-in buttons to pop up literally every time an ad targeting sensitive personal categories is served, which given the nature of the way these automated auction systems work would mean multiple requests for consent every

time you went to a new web page. Not every new website, but every web page. Finally today, remember that story from last week about the AIs that can now beat humans at StarCraft 2? Well, it looks like some good might come out of our ritual humiliations at the hands of our coming robot overlords. Say you're an amputee, and you're lucky enough to get one of those newfangled robotic limbs. It turns out that it can often require hours and hours of even the most minute tweaks to the devices before you can use them regularly and comfortably. Well, quote, researchers are exploring how the reinforcement learned

technique that helped Deep Mind's Alpha Zero conquer chess and go could tackle an even more complex task, training a robotic knee to help amputees walk smoothly. This new application of AI, which is based on reinforcement learning, an automated version of classic trial and error, has shown promise in small clinical experiments involving one able-bodied person and one amputee whose leg was cut off above the knee. Normally, human technicians spend hours working with amputees to manually adjust roeful. robotic limbs to work well with each person's style of walking. By comparison, the reinforcement learning technique automatically tuned a robotic knee, enabling the prosthetic wearers to walk smoothly on level ground within 10 minutes, end quote. The researchers quoted in the story said this is very early days,

and they're not quite ready to bring this out into the real world beyond their clinical research labs yet. But again, I saw this, and I wanted to share it, because I'm tired of always reading stories about being inferior to AIs. If they're just going to be flat out better than us in everything going forward, the least they can do is help us better ourselves as well. I particularly like this paragraph, quote, training a robotic limb is a complex process of co-adaption that requires the limb to learn how to cooperate with the human brain

controlling most of the body. That process can involve much initial clumsiness, not unlike the first time people strap skis onto their feet and try to move around a snow-packed surface, end quote. Co-operation. Co-adaptation. Co-existence. Those are the words that I want included in every story I read about AI going forward. Peaceful coexistence, hopefully. That's all for today. Nothing especially witty to leave you with, although I was on the Twit show this past weekend. Thank you, as always, to Leo and the gang for having me once again.

Do a search for the latest episode of This Week in Tech, because as always, Twit puts a video of the recording up if you search around. So you could take a peek inside the podcast cave. Talk to you tomorrow.