Tech Brew Ride Home - Mon. 12/20 – 5G To Ground Airlines?

Episode Date: December 20, 2021

Could a new 5G system lead the FCC to ground flights around some major metropolitan areas? Chipmakers are busting a gut to try to build out capacity. To what degree is Siri holding back Apple? A longtime Metaverse startup you should maybe have your eyes on. And is Microsoft best positioned to realize the Metaverse? Sponsors: RadPowerBikes.com Coinbase.com/techmeme Links: Airlines Brace for Flight Restrictions in 5G Standoff (WSJ) Semi CapEx to Hit $152 Billion in 2021 (AnandTech) Apple Should Make a Giant iPad as Its Smart Home Portal (Bloomberg) Rec Room raises $145M at a $3.5B valuation for its user-generated, immersive gaming platform (TechCrunch) Why Xbox's Phil Spencer thinks Minecraft is a blueprint for the metaverse (Protocol) 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 right home for Monday, December 20th, 2021. I'm Brian McCullough today. Could a new 5G system lead the FCC to ground flights around some major metropolitan areas? Chipmakers are busting a gut to build out capacity. To what degree is Siri holding back Apple, a longtime Metaverse startup you should maybe have your eyes on, and is Microsoft best positioned to realize the Metaverse? Here's what you missed today in the world of tech. I wanted to open today with a story that I've not even though it's been happening over the last several months, it is coming to a head relatively soon. So I figured now's as good a time as any. What if I told you 5G could ground some airline

flights in the U.S. It's something that's been kicked around for the last few months, as I said, but it looks like U.S. airlines have begun preparing in earnest for potential FAA flight limits in or around 46 large American metropolitan areas as new 5G wireless service goes live on January 5th. What's this all about? Quoting the Wall Street Journal. The early steps by airlines are a response to a federal aviation administration order earlier this month. The directive outlined potential restrictions on landing in bad weather in up to 46 of the country's largest metropolitan areas where the new wireless service is scheduled to roll out on January 5th.

The planning comes as U.S. regulators consider two proposals, one from the telecom industry and another from the aviation industry for protecting aircraft from potential 5G interference with cockpit safety systems. Commonplace in modern air travel, they help planes land in poor weather, prevent crashes, and avoid mid-air collisions. The wireless industry has said that the planned service poses no risk to aircraft, while the Federal Aviation Administration has said it is worried that the frequencies the cellular signals use could, possibly disrupt the cockpit systems. Meanwhile, the airlines are in the middle of the dispute. If there's any kind of weather, if there's high winds, if the visibility isn't good because of smog, you can't use that equipment. United Airlines Chief Executive Scott Kirby told reporters December 15, you can't land at airports at Chicago O'Hare, at Atlanta, at Detroit. Just think about

what that means. This cannot be the outcome, end quote. As they game out various scenarios, airlines are awaiting specifics from the FAA about how broad or targeted the restrictions on landings might be, and where, starting January 5th, industry officials said. About a week before that date, the FAA is expected to issue pilot warnings, specifying which airports will be subject to restrictions, people familiar with the matter said. The early planning by airlines is the result of long-simmering conflict between U.S. telecom and aviation regulators, which have been working out of sync for more than a year. The Federal Communications Commission auctioned off portions of the 5G-friendly frequencies,

also known as C-Band about a year ago. Top auction winners, AT&T and Verizon were authorized to start offering some of the fastest cellular service early this month, but the companies delayed their rollout until January 5th to address the FAA's still unresolved concerns. The companies also pledged to dim the power of C-BAN signals, especially near airport runways, for an additional six months. U.S. telecom industry officials have disputed claims about the new technology's safety risks. The aviation industry's fearmongering relies on completely discredited information and deliberate distortions of facts, said Nick Ludlam, a spokesman for the Wireless Industry Group CTIA.

We will launch this service in January with the most extensive set of protective measures in the world, end quote. Regulators are at odds over competing proposals from the U.S. aviation and telecom industries to limit the new 5G signals near airports. At a high-level meeting Wednesday that included Transportation Secretary Pete Buttigieg, and FCC Chairwoman. woman Jessica Rosenworsal, officials discussed both industry's proposals to create buffer zones around airports people familiar with the matter said. Mr. Buttigieg requested that the FCC consider the aviation industry's proposal. Some of those people said FCC officials described that proposal as a non-starter. That would amount to a no-5G option, another person familiar with the meeting said. The FCC's Ms. Rosenworsal has said she believed officials would find a solution to allow

5G deployment swiftly and safely, quote, I have confidence in the mitigations that have been offered up by the wireless industry, she said, at a December 14th press conference, end quote. Well, we better hope something works out soon. I've been trying to read both sides, read as much as I can to see if I can get a sense of who is in the right here. Canada apparently has gone through a similar controversy, but it's unclear if 5G limits are in effect there. I might have a long read about this later this week, but for now, I'll leave you with PCMAG analyst Sacha Sagan, who tweeted, quote, the whole FCC-FAAC-C-Band dilemma is because the previous administration didn't see any need for interagency diplomacy, and this one never bothered to appoint any agency leaders. Not a tech

problem, pure government incompetence, end quote. We've been talking all year about the chip shortage, lots of discussion of that coming on our end of the year wrap-up episode, which is still coming soon. You didn't miss it this weekend. I didn't release it. But look, everybody knows about the chip shortage, right? That's why chipmakers are on track to have spent $152 billion on new fabs and production equipment in 2021, which was up 34% year-over-year. This is the strongest year-over-year growth for the industry building out new capacity since 2017. Problem is, this isn't like flipping a switch. It's going to take a while for this capacity to spark to life, quoting Anantec. It took 50 years for the semiconductor business to turn into a half a trillion dollar business,

said Caldoun al-Mubarak, CEO of Mubadala, the main stockholder of Global Foundries in an interview with CNBC. It is going to take probably 8 to 10 years to double by 2030, 2031, and it's going to double right after that probably in 4 to 5 years, end quote. contract fabs like TSM, Samsung Foundry, and Global Foundries will lead the whole industry in terms of Cappex spending, as they will pour in $53 billion in new fabs and equipment, 35% of all semiconductor capital spending in 2021. TSM, the world's largest foundry, intended to spend between $25 billion and $35 billion on new manufacturing capacities as demand for its services is setting records. Furthermore, the company is preparing to ramp up production of chips using its 3-nanometer

fabrication technology in 2023 and then two nanometer node in 2025, which requires buying new tools and building new fabs. IC Insights expects TSMC to be the CAPX champion among all contract makers of chips this year, followed by Samsung Foundry. Meanwhile, memory and flash manufacturers are expected to spend $51.9 billion on new fabs and production equipment this year, since usage of NAND memory is increasing. Spending on new flash production capacities is forecasted to reach $27.9 billion, whereas investment in DRAM production will total $24 billion. Interestingly, CAPEX on NAND will grow by 13% year-over-year, whereas expenditures on DRAM will increase by 34% year-over-year, end quote. Forget an Apple car or an Apple VR headset. One of the other

new product lines from Apple that there have been rumors about lately is some sort of a competitor to Facebook's portal or the Echo Show, all those smart screen portal-like devices. In his newsletter, Mark German this week says, the case for Apple to offer a 15-inch iPad Home Hub is made clear by devices like the portal and Echo Show 15, as well as Apple's less than 5% smart speaker market share. Quote, Apple knows that the success of its product ecosystem depends on being everywhere its customers are. It has iMacs on desks, iPads and MacBooks and backpacks, Apple Watches on wrists, iPhones and pockets, Apple TVs and living rooms, and AirPods in ears. In the future,

it may have headsets on faces and self-driving cars on roads, but Apple has been a laggard in one key area. The Home. It's way behind rivals such as Amazon and Alphabet's Google in smart speakers and related devices, but not by design. Apple knows the importance of the home market. Still, Apple has just 5% of the smart speaker market, according to Consumer Intelligence Research Partners. Amazon, with its Alexa voice assistant, accounts for 69% of sales, with Google coming in second at 25%. And Apple lacks a do-it-all home hub, a device with a screen, making it all the harder to catch up. While this is obviously a lot simpler on paper than in the engineering lab, turning the iPad into a home device won't be as hard as inventing the original iPhone, say. Apple already has most of the components figured out.

You can imagine the company stretching out the iPad to 15 inches, something I've reported that Apple is exploring, making the device a bit thicker to fit more powerful speakers and relocating the camera to a landscape-first orientation. Throw in a rear-facing power plug and wall-mount support, and you'd have Apple's take on the Echo Show. Apple would immediately have an edge over Amazon and software because it has the app store, and including a high-end camera system and speedy processor should be no issue. The company could even create a new software layer, let's call it home mode, that optimizes the device for stationary usage. The best part is that the product could double as a regular iPad and laptop replacement that you can take anywhere. But there are two major caveats. First, if Apple decides to turn the iPad into a giant home device, it won't want to compromise on quality and features. That means it's going to be expensive.

The Echo Show 15 is $250. A 12-inch iPad Pro starts at $111.11. Imagine the price of a $1,000. 15-inch version. Second, Siri still needs work-understanding users, tapping into third-party services, and taking the desired action. Apple has many thousands of people working on this, but Siri's quality and capabilities still lag behind those of Alexa and Google Assistant, end quote. So, speculative point here, but what if it is Siri that has been holding Apple back all this time on doing a product like this? Like, what if Apple knows it needs to get Siri up to snuff before it

even attempts something like this. This is an interesting raise from the Metaverse beat that fits into two narratives we've been plowing for a while now. Number one, the Metaverse is a hot area for VC investment. And number two, existing Metaverse-like experiences are sort of like, hello, is this thing on? We're already here. Just look around.

The example this time is another company that should maybe be on your radar. free to download and cross-platform social gaming startup Rec Room has landed $145 million in new capital, led by KOTU, at a $3.5 billion valuation, which is up from a $1.25 billion valuation back in March. Rec Room says it has 37 million players up from just 2 million back in March, quoting TechCrunch. Rec Room is a social gaming company in a couple of regards. The key to its growth, interestingly, has been not just the ability to create games and play those created by others and to join in rooms and play together, which is perhaps the most obvious social aspect, but also the ability to provide a well-used virtual social space for users to hang out in Beyond Gameplay. Unlike a lot of other social gaming companies,

which relied on other platforms like Facebook to carry out the social aspect of their gaming experiences, Rec Room says it's already been used for virtual wedding. business meetings, and more casual meetups, all activities that have most likely been given an extra virtual boost as a result of the COVID-19 pandemic and the dampener that it has had on in-person social meetings and travel. That rec room provides a variety of experiences catering both to novices and more experienced gamers gives it and its rec life concept a very low barrier to entry with all demographics of users. Rec room has been around for just five years, launched in 2016 in Seattle, and it has, at least for now, avoided the fast rise and then precipitous fall that has characterized so many other social gaming hits.

It now has racked up 37 million users who build and play games in rooms where they virtually hang out with other users. There are some 12 million rooms on the platform already, Rec Room said. Rec Room can be used on both PCs and VR headsets. Operating systems and platforms supported include iOS, Xbox, PlayStation, Oculus, Steam, and as of August, Android. Although it's not clear how many active users there are out of that 37 million figure, Recrum said that monthly user count has grown by almost 450% in the last year, since November 2020, and that mobile users are driving some of that growth up tenfold in that period. The company is not disclosing any revenue figures today,

but back in March, it said it was paying out some $1 million to games creators on its platform, end quote. Oh, so it's a creator economy play as well. ticking all the boxes, I guess. Finally, today, let me chase that with this. Again, existing Metaverse players want you to know they're already here, and so, you know, there's no real need to reinvent the wheel, really. Microsoft's Phil Spencer says the success and growth of games like Microsoft-owned Minecraft show the ingredients required for the Metaverse to shed its dystopian roots,

quote. For Spencer, who is among the core group of executives at Microsoft's empowered to steer the company forward. The lessons learned from Minecraft's success are informing where he believes gaming needs to go from here. In particular, the growth of player-created virtual worlds illustrates what ingredients Spencer said are required for the Metaverse to shed its dystopian roots and succeed as more than just a buzzword being slapped onto existing products and platforms and used to sell promises about the future. Quote, I draw some analogies to the web, Spencer said. We felt like we had this really open platform for creation and consumption, but,

Frankly, there were some companies that really created and captured some of the control of that web, whether it's the control of the discovery or the monetization or the social, which meant some of what happens on the web today doesn't necessarily feel as open as I think we would all like it to be, end quote. Spencer pointed to discourse around the metaverse and how it harkens back to ideas the gaming industry has been kicking around for decades. Games like Second Life and influential massively multiplayer online titles like Ultima Online and World of Warcraft help give form to ideas from science fiction around virtual worlds, digital alter egos, and entire social systems mediated through screens and systems. But Spencer said it is Minecraft and the power and agency that it hands players to become architects of their own online experiences that provides the most promise.

We're spending a lot of time as leaders coming together talking about the learnings that we've had and how the technical underpinnings might come together. But more fundamental to me is why Microsoft? Like, why is this metaverse that a lot of people are focusing on? Why is it better for players. Why is it better for creators, Spencer said? I think it's easy for a lot of tech companies to describe why the Metaverse might be better for their company, but we've just learned that if we put the player at the center to use my gaming vocabulary again and try to build an ecosystem that works around their needs and creator needs, that the platform dynamic will take off, end quote. Microsoft, more so than perhaps any other tech or gaming company already owns and

operates many of the pieces that may play an instrumental role whatever shape the Metaverse takes. The company runs Xbox, a global gaming platform and digital store-serving software now on virtually any screen with an internet connection, and it has the HoloLens Hardware Group, and Alt-Space VR and Mesh platforms for AR, VR, and mixed reality experiences. It has Windows, Office, and Teams, its trifecta of productivity and workplace collaboration tools, and the Azure cloud platform powering it all. It raises the question, what's stopping Microsoft from building this all itself? connecting it together and doing corporate battle with Meta and Mark Zuckerberg's grand ambitions to keep his social networking company at the forefront of the attention economy. Spencer said the teams in charge of these various divisions are indeed meeting weekly

to develop, for instance, new games that make use of the mesh platform's 3D digital avatars, end quote. Microsoft battling meta for dominance of the Metaverse? If I had written those words 12 months ago today, would they have made any sense to anyone? Yes, coming at you from Northern Michigan as planned. I don't know if you can hear the sound quality difference. Hopefully it's not too bad. Anyway, we're still not out of the woods up here yet, though,

due to us finding out yesterday that both kids were directly exposed at their schools. Last week, we're about to leave to get more PCR tests today. PCR tests for everybody. Talk to you tomorrow.