Tech Brew Ride Home - Thu. 04/01 – Microsoft’s Pentagon Deal Validates The AR Industry

Episode Date: April 1, 2021

Microsoft’s big HoloLens deal with the Pentagon is maybe the big bang for the augmented reality industry. Amazon says their folks can come back to work soon, and in fact, they’d prefer if you did. Bearish signs for the work remotely movement? Why these are boom times for chip makers. And why Siri’s new voices think of gender as a spectrum. Sponsors: Today In Digital Marketing Podcast AirMedCareNetwork.com/tech offer code TECH Links: Microsoft wins U.S. Army contract for augmented reality headsets, worth up to $21.9 billion over 10 years (CNBC) Amazon says it expects some employees to return to the office this summer, most will return in fall (CNBC) TSMC to Spend $100 Billion Over Three Years to Grow Capacity (Bloomberg) Apple adds two brand new Siri voices and will no longer default to a female or male voice in iOS (TechCrunch) Comcast Weighs Pulling Universal’s Movies From HBO Max, Netflix (Bloomberg) Thrasio raises $100M for its Amazon roll-up play, appoints retail CFO for its next steps (TechCrunch) 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 TechMeme right home for Thursday, April 1st, 2021. I'm Brian McCullough today. Microsoft's big HoloLens deal with the Pentagon is maybe the big bang for the augmented reality industry. Amazon says their folks can come back to work soon, and in fact, they prefer if they did.

Barish signs for the work remotely movement? Why these are boom times for chipmakers and why series new voices think of gender as a spectrum. Here's what you miss today in the world of tech. Big news for the augmented reality industry. Maybe the biggest news in the history of this nascent industry. The U.S. military says Microsoft will build 120,000 custom HoloLens headsets for the U.S. Army. Validation of the use case for AR in some very serious real-world conditions, yes. But also look at how much this validates the HoloLens as a business. Microsoft says the contract could be worth up to $21.88 billion over 10 years. Think of all those years and billions of dollars spent on moonshots

over at Google and in one fell swoop. Microsoft has been like, yeah, hold our beer. As Brad Sam's tweeted, and just like that, the R&D costs for this product have been more than recovered, end quote. And something tells me if these things prove useful, we could eventually see way more than 120,000 units ordered. Quoting CNBC. This deal follows a $480 million contract, Microsoft received to give the Army prototypes of the integrated visual augmented system, or IVAS in 2018. The new deal will involve providing production versions. The standard issue HoloLens, which costs $3,500, enables people to see holograms overlaid over their actual environments and interact using hand and voice gestures. An IVAS prototype that a CNBC reporter tried out in 2019

displayed a map and a compass and had thermal imaging to reveal people in the dark. The system could also show the aim for a weapon. The IVAS headset, based on HoloLens and augmented by Microsoft Azure Cloud Services, delivers a platform that will keep soldiers safer and make them more effective. Alex Kippman, a technical fellow at Microsoft, and the person who introduced the HoloLens in 2015, wrote in a blog post, quote, The program delivers enhanced situational awareness,

enabling information sharing and decision-making in a very variety of scenarios, end quote. The headset enables soldiers to fight, rehearse, and train in one system, the Army said in a statement. The contract, which was awarded on Friday, has a five-year base period with a five-year option after that, an Army spokesperson told CNBC in an email. The Pentagon did not immediately respond to a request for comment. The deal makes Microsoft a more prominent technology supplier to the U.S. military. In 2019, Microsoft secured a contract to provide cloud services to the Defense Department, beating out Amazon, the leader of the public cloud market. Amazon has been challenging the contract, which could be worth up to $10 billion

in federal court. The deal shows Microsoft can generate meaningful revenue from a futuristic product resulting from years of research beyond core areas such as operating systems and productivity software, end quote. Yeah, interesting points from Daniel Rubino on Twitter, quote, people keep talking about Apple and AR, but as I've said in the past, number one, Microsoft is the only company with AR out in the field being used right now. Schools, operating rooms, factories, and number two, it's the only AR system actually making real money today. Apple will likely nail consumer AR, but for the rest of the working world, Microsoft has a massive head start already, end quote. On the return to normalcy watch, Amazon says it expects some of its employees to start coming back to the office as early as this summer, and most of its staff back at the office this fall. Quoting CNBC, the plan signaled that Amazon doesn't intend to follow in the footsteps of other tech companies by allowing employees to continue to work remotely or via a hybrid model.

Microsoft, Facebook, Salesforce, Twitter, and Square have all embraced the possibility of more remote work. after the pandemic, quote, our plan is to return to an office-centric culture as our baseline, Amazon told employees in the memo. We believe it enables us to invent, collaborate, and learn together most effectively, end quote. Some of Amazon's employees in Asia are already back in the office. Roughly 10% of its corporate population, quote, currently works from an office each day, the company said. Amazon emphasized in the memo that it expects the return to work process to be gradual. The timelines for returning to the office will vary by country, depending on the infection and vaccination rates, Amazon said. The company will continue to require social distancing,

face mass, office occupancy limits, temperature screenings, and other safety measures at its offices, end quote. Well, remember, all along I've remained skeptical that the work remotely revolution would be as revolutionary as some people seem to think it will be. And I think I've said several times that, you know, how can you be sure your boss will let you skip out on showing your smiling face every day? Like, bosses like the ability to, you know, supervise you. So whisper it softly, but might this be an early sign that you maybe want to take the under on this work remotely bet? This news comes after a memo leaked from Google telling its employees that it expects some U.S.-based workers to return to the office in April, but won't require employees to come

until at least September. Quoting the New York Times. Workers at Google will have the option to return in April, Fiona Sikoni, Google's chief people officer told employees in an email seen by the New York Times, offices will operate at a limited capacity and reopenings will vary state by state based on the number of coronavirus cases in the area, Ms. Sikoni said. Quote, offices will begin to open in a limited capacity based on specific criteria that includes increases in vaccine availability and downward trans in COVID-19 cases. Ms. Chikoni wrote, we advise you to get a vaccine, though it will not be mandatory to have one in order for Googlers to return to the office, end quote. Workers who do opt to return will be required to wear masks, practice social distancing, and pass a health survey, Google said,

end quote. Remember that 52-week high, an all-time high stock screener that I set up to give us an early warning about what tech companies are killing it before the rest of us know they're killing it. Well, since the beginning of the year, those screeners have been screaming chip companies. For example, TSM over the last month, has rocketed so much in value. It is now one of the 10 most valuable companies in the world. But even applied materials and Lamb Research have seen their stocks gain 191% and 148% respectively over the last year. Texas Instruments in an all-time high today, on Semiconductor, all-time high today. We've been talking about the chip shortage globally, so it's not like this should come as much of a surprise. You shouldn't need a stock screener to tell you

that everything needs Silicon now, so the overall addressable market for Silicon producers has expanded beyond just computers and electronics like cell phones to basically everything. And a shortage of supply means, of course, a lot of demand. So problem is, ramping up to address the demand for semiconductors is an issue because in the semiconductor and chip space ramping up production is a notoriously capital-intensive problem. So it should probably not be a surprise either that TSM has announced plans to spend $100 billion over the next three years to expand its chip fabrication capacity. That's huge, quoting Bloomberg. TSM, the world's leading manufacturer of advanced semiconductors, already planned.

a record capital expenditure of as much as $28 billion this year, but recent trends and developments have pushed for even more capacity. Now at the center of a global chip supply crunch, Taiwan's biggest company has pledged to work with customers across industries to overcome a deluge of demand. It's unclear how TSM, with $28 billion of cash and equivalence on its balance sheet at the end of December intends to finance that record outlay, which underscores the enormous capital required to stay at the forefront of the industry. Relyed on by everyone from Apple and Qualcomm to invidia and advanced microdevices, TSM is the world's go-to semiconductor foundry or producer of chips designed by others. The silicon, it turns out, goes into practically

every modern piece of electronics from smartphones and smart fridges to connected cars. In a letter to customers obtained by Bloomberg News. DSMC chief executive officer CCWay wrote that the company's fabs have been, quote, running at over 100% utilization over the past 12 months, end quote, but demand still outpaced supply. Thousands of new employees are being hired and multiple new factories are under construction, he added, and TSMC will suspend wafer price reductions for a year from the start of 2022, end quote. Apple is introducing two new Siri voices for English speakers and eliminated the default selection

of a female voice as part of iOS 14.5 beta 6, quoting TechCrunch. In some countries and languages, Siri already defaults to a male voice, but this change makes the choice the users for the first time. Quote, we're excited to introduce two new Siri voices for English speakers and the option for Siri users to select the voice they want when they set up their device, a statement from Apple reads. This is a continuation of Apple's longstanding commitment to diversity and inclusion, and products and services that are designed to better reflect the diversity of the world we live in. The two new voices use source talent recordings that are then run through Apple's neural text-to-speech engine, making the voices flow more organically through

phrases that are actually being generated on the fly. I've heard the new voices, and they sound pretty fantastic with natural inflection and smooth transitions. There'll be a welcome addition of choices to iOS users, end quote. Actually, John Gruber posted a recording of the new voices, which I grabbed from Twitter. There's a total of four voices you're about to hear. The first and the last are the existing Siri voices. It's the middle two that are the new ones. I'll play it twice. Hi, I'm Siri. Choose the voice you'd like me to use. Hi, I'm Siri, choose the voice you'd like me to use Hi, I'm Siri, choose the voice you'd like me to use

Hi, I'm Siri, choose the voice you'd like me to use Hi, I'm Siri, choose the voice you'd like me to use Hi, I'm Siri, choose the voice you'd like me to use Hi, I'm Siri, choose the voice you'd like me to use Hi, I'm Siri. Choose the voice you'd like me to use. Streaming war is gonna war, or something. Sources are telling Bloomberg that Comcast-owned NBC Universal is considering pulling its movies from HBO Max and Netflix and keeping future content releases as Peacock-only exclusives.

Currently, HBO Max pays for the rights to show Universal Pictures movies about nine months after they leave theaters, while Netflix has a similar deal for animated films from Illumination Entertainment, the affiliated studio behind The Despicable Me features. Both of those deals expire at the end of this year. NBC Universal hadn't made a final decision about what to do, said the people who asked not to be identified discussing internal deliberations. Senior executives are open to new deals with third parties like HBO Max and Netflix, which generated hundreds of millions of dollars a year.

But they are also struggling to rationalize giving some of their most popular titles to competitors. The outcome of the deliberations will say a lot about Comcast's commitment to Peacock, a year-old streaming service that has 33 million accounts. The company has yet to commit as much money to original programming as some rivals. As recently as last summer, Universal was leaning towards licensing its movies to other companies, but the pandemic has delayed and complicated negotiations that began more than a year ago. Some executives at NBC Universal have also discussed a hybrid deal in which Peacock would share rights with another service. as it does with Disney's Hulu on the sitcom Modern Family. That way, NBC Universal could use the movies

to boost its own service without surrendering all of the licensing money, end quote. Yes, they don't call it the innovator's dilemma for nothing. When do you kill your darlings? Eat your young, kill your golden goose, pick a metaphor. If you do it too soon, you basically starve your business of the revenue it needs to make a successful transition, but wait too long, and you might miss it. the boat entirely. Finally today, I can't remember if we've spoken about this on the show before or not, but we have an interesting raise today from a startup with a business model that I find absolutely fascinating. Thrasio is one of those startups that goes around acquiring third-party sellers that primarily do their business on Amazon's third-party platform, everything from mom-and-pop shops

to multi-million dollar retailers, and then rolls them all up into one big enterprise. Thrasio, was early to the space now says it is acquired and consolidated around 6,000 third-party Amazon sellers, and to keep its foot on the gas, it is adding a $100 million extension to its six-week-old, $750 million series C round, quoting TechCrunch. Josh Silberstein, who is the co-founder and co-CEO with Carlos Cashman, said Thrasio is not disclosing valuation except to note that it is 50% higher than it was a month ago, and that the company is probably. on $100 million in revenues, he said. For some context, when we reported on the $750 million round, we noted that the valuation was potentially between $3 billion and $4 billion. All a spokesperson would

tell us at the time was that it was less than $10 billion, though a debt round in January put the valuation at around $3 billion. It now has raised a total of $1.85 million in equity and debt. Silverstein said the latest $100 million is coming from previous backers that didn't get the allocation they hoped for in the previous financing. The list of passbackers includes Oak Tree Advent, Peak 6, Western Technology Investment, and Jason Finger, the co-founder of one of the early players in the food delivery space, seamless. By one estimate, there are about 5 million third-party sellers on Amazon today, a number that appears to be growing exponentially, with more than one million sellers joining the platform in 2020 alone. The Racio's business model is based

around the premise that most of them are not that well prepared to scale, when and if the most successful of this lot see their products take off. Silberstein and Thrasio estimate that there are probably 50,000 businesses selling on the Amazon platform with FBA, which is fulfillment by Amazon, that are making $1 million or more per year in revenues. What happens when you get into that price range is that it gets hard to grow your business and manage it, he said, citing SEO, marketing, and supply chain management as some of the challenges.

That means as you grow from $1 million to $10 million, the margins would decrease and it's even harder to make returns. We simply observe that reality that all these great companies had reached a point between a lack of access to capital and simply not being able to keep doing what they do. We thought if we acquired 10 to 20 of these, we would have the scale to build best inbreed supply chain, marketing, and so on. We would fix the problem, end quote. They realized quickly, though, that there was an opportunity to take that even further and make that the business itself. And so Thrasio has been building a huge analytics engine that digs into Amazon data and a lot more to determine which companies are interesting, how to help them sell better, and eventually to conceive of even bigger businesses outside of the Amazon ecosystem, covering other marketplaces, other sales channels, and direct-to-consumer sales, end quote. And as I mentioned, they're not the only ones to notice this angle, though, as one of the first, maybe they inspired the half-dozen or so well-capitalized competitors.

in this space, including branded, Berlin Brands Group, Cellar X, Hayday, Heroes, and Perch, which have collectively raised over $1 billion in the last couple of years alone. We did not do our Twitter Spaces experiment last night, but we will tomorrow night, Friday night. I'll give you the official time at the end of tomorrow's show, so you can tune in on Twitter tomorrow night if you choose. But before then, I do have yet another experiment to announce. The folks at Shuffle have apparently been listening to all of our ongoing experiments

with audio rooms as a new sort of podcast experience, and they reached out to see if we wanted to sample a completely different experience from a completely different angle. And I was like, why not? So try this. If you have an iPhone, go to the app store and download the podcast app called Shuffle. You'll be able to listen to today's episode while discussing it with other members of the Mutant Podcast Army in real time. It's sort of like SoundCloud maybe, but for podcasts, or maybe think of it as a Discord channel or like a chat room where if you leave comments and questions and the flow of the show itself, others can see and respond. Or think of it as a space, a room devoted just to this episode where you can commiserate with each other, but it lives tied to

each individual episode. So if you have a comment about, say, today's AR story or the returning to offices again story, you can leave comments in real time with the segment. You can comment segment by segment minute by minute tied to what I'm actually saying as I'm saying it on the show. It's frankly a cool, cool concept. So I thought, why not give it a try? Search the app store for Shuffle podcast. It's just a podcast player. But then search inside Shuffle for TechMeme right home. play today's show, and you'll be able to be in a room dedicated just to today's show, and you can leave comments, questions, gifts, the lot. Try it out. I will be on there all night and tomorrow to respond and lurk and leave some gifts myself, so check it out. Cool little feature.

Talk to you tomorrow.