Tech Brew Ride Home - Thu. 04/29 – What If This Is A Tech Inflection Point?

Episode Date: April 29, 2021

Another earnings round up leads me to ask, what if the Covid era really is a historical inflection point for tech? AT&T has decided what to charge for HBO with ads, while Verizon is try to get someone to take AOL and Yahoo of their hands. What if we did streaming gaming, but just for browsing the web? Say hello to Mighty. And odds are, you’ve probably never gotten millimeter wave 5G on you fancy new phone. Sponsors: Red-ID.com/brian calderalab.com use code TECHMEME (all caps one word) at checkout Links: Facebook Revenue Grows 48% as Ad Prices Increase (The Information) Apple warns of supply shortages likely to impact iPad and Mac in Q3 (9to5 Mac) WarnerMedia plans to charge $9.99 per month for ad-supported HBO Max (CNBC) Verizon Explores Sale of Media Assets, Including Parts of Yahoo and AOL (Wall Street Journal) Amazon to spend $1B to boost pay for 500k operations workers by as much as $3 an hour (Geek Wire) Mighty wants to ‘make Chrome faster’ by streaming a browser from the cloud, starting on macOS (9to5 Google) Verizon “leads” all US carriers in mmWave 5G availability at 0.8% (Ars Technica) 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 a Thursday, April 29th, 2021. I'm Brian McCullough today. Another earnings roundup leads me to ask,

what if the COVID era really is a historical inflection point for tech? AT&T has decided what to charge for HBO with ads, while Verizon is trying to get someone, anyone, to take AOL and Yahoo off their hands. What if we did streaming gaming but just for browsing the web? Say hello to Mighty. And odds are you've probably never gotten millimeter wave 5G, on your fancy new phone. Here's what you missed today in the world of tech. Let's do the earnings round up thing once again. The song remains the same. Both Facebook and Apple reported historically

good earnings yesterday. In some cases, their best ever numbers, or at least close to them. Apple, for example, had, I believe its third best quarter ever only behind two recent holiday quarters. iPhone sales were $47.9 billion up from just $29 billion a year ago. Apple has a revenue run rate of over a billion dollars a day at this point. Everything is up with Apple. iPhone sales up 66%. Mac and iPad sales up 70 and 79% respectively, representing obviously that COVID-Times device demand that Microsoft also reported this week.

services for Apple were up 27% and wearables slash home up 24%. Slight concern trolling over the fact that aren't services and wearables supposed to be where Apple intends to get most of their growth going forward. Also, speaking of concerning on the earnings call, Tim Cook was forced to admit that supply shortages will likely impact the Mac and iPad lineups in Q3 of this year due to legacy node chip production that uses older manufacturing methods, quoting 9 to 5 Mac. As for how Apple avoided supply chain constraints in Q2, despite an industry-wide chip shortage and record demand for iPad and Mac, Cook explained, quote, we did not have a material supply shortage in Q2. You wind up collapsing all of your buffers and

offsets. That happens all the way through the supply chain. That enables you to go a bit higher than what we were expecting to sell when we went into the quarter, end quote. The supply shortages in the fiscal third quarter will primarily impact the Mac and iPad lineups, Cook and CFO Luca Mestry, explained during the call, quote, we expect to be supply-gated, not demand-gated, cook told analysts. Apple has largely been able to secure all the necessary five-nanometer chip production it needs, but the issue lies in the production of other components. As noted by analyst Ben Badgerin, the legacy node production issues are affecting a variety of companies and components.

For example, a report from Niki last month. said that iPad assembly is being held up by a shortage of display components. Meanwhile, suppliers of MacBooks are said to be stuck at a key bottleneck, the mounting process of components onto circuit boards, end quote. Again, Apple is the best in the world in terms of supply chain, so if the lean times are coming even for them, dot, dot, dot. Then on to Facebook. Again, I could overwhelm you with a whole bunch of numbers, but just know this. Facebook revenue grew more in this past quarter than what Snap, Twitter, and Pinterest did combined all of last year. The key metric for Facebook was that the average ad prices that they were able to get

on their ad platform rose 30% year over year. This allowed Facebook's operating margins to grow to 43% up from 33% a year ago. So Facebook's core business is actually becoming more efficient as it grows. quoting the information. Facebook reported 1.88 billion daily active users for its main app, up 8% from the prior year, while daily users across its suite of apps, including Instagram and WhatsApp, grew 15% to 2.72 billion. Management said the company benefited from a 30% rise in ad prices from the year ago period, along with a 12% increase in the number of ads delivered across its apps. In prepared remarks, CFO David Wenner said that ad revenue growth is expected to be primarily driven by

price for the rest of the year. As we reported in March, ad prices on Facebook and Instagram have already risen to higher than they were before the pandemic started. Wienner said revenue growth is expected to remain stable or accelerate slightly in the second quarter, even as Apple's recent software change makes it harder for Facebook and others to track users across iPhone apps, end quote. One more quick note, Facebook's non-advertising revenue category, which is largely just sales of Oculus hardware and software grew 146% to $732 million in the quarter. In other words, Oculus is already becoming a pretty big business. After all of that and after all of the big numbers from yesterday, let me summarize, or at least paraphrase a conversation I had last

night with someone I consider to be very smart about these big tech platforms. Isn't it interesting that all these big tech companies are doing these blowout quarters. at the beginning of 2021, when ostensibly everyone assumes we are at the end of COVID times. All the tech players did well in the heat of the COVID times for reasons that we know and are obvious. And yes, we all know the cliche that COVID times might have accelerated secular trends that maybe would have played out over a decade or more. But maybe it's more than that. Maybe this is the point we should be paying attention to. You know, an Instacard or a DoorDash, might have taken a decade or more to find their ultimate success. But will my 70-year-old mother

stop getting groceries delivered now that she has been converted to that way of life? So take that analogy and make it writ large across all things, all of tech. Tech was already ascendant in our economy, in our society. Tech was already killing it financially. Sure, everyone is hedging in their earnings reports saying that with life, in quotes, returning back to normal, Maybe they won't be able to show as much growth as they had in this artificially pumped up period of the last 16 months or so. Or what if this is a historical inflection point? What if large swaths of the economy have been evangelized or pilled into the life that tech is best able to deliver? Might this just be the beginning, not the end of a period of hypergrowth for tech?

for thought. Warner Media has announced it will charge $9.99 a month for its ad-supported tier of HBO Max, which is slated to debut in June, quoting CNBC. The ad-free version of HBO Max, which debuted nearly a year ago, costs $14.99 per month. That's the same price HBO charges pay TV subscribers who add the premium channel to their bundle. AT&T said last week, HBO and HBO Max have a combined 44.2 million U.S. subscribers. AT&T has completely restructured WarnerMedia to better compete against Netflix and other streaming services. In advertising-supported service at $9.99 will allow HBO Max to stand out as significantly cheaper than Netflix, whose standard price is $13.99 per month. AT&T expects HBO Max and HBO to have between 120 million and 150 million subscribers by the end of

2025. AT&T, Chief Executive John Stanky, told CNBC last week that HBO and HBO Max's average revenue per user of $11.72 in the U.S. has been, quote, really impressive. He also noted the ad-supported HBO Max will expand the product's potential audience to more cost-conscious consumers, end quote. Meanwhile, over at Verizon, surprising absolutely no one, sources are telling the Wall Street Journal that Verizon Communications is exploring a sale of its media assets. which include whatever is left of Yahoo and AOL, as well as verticals that are near and dear to our hearts, such as TechCrunch, they're going to try to sell these properties to, well, whoever will take them, I guess. Verizon is reportedly seeking a price in the $4 to $5 billion range, quote,

Verizon splashed out billions of dollars assembling a portfolio of once dominant websites, including AOL in 2015 and Yahoo in 2017, paying more than $9 billion in total to acquire the pair. Verizon, the country's largest wireless carrier in terms of subscribers, bought the websites intending to resurrect brands that had lost traffic since their heyday, but still counted a base of hundreds of millions of account holders. It reorganized the businesses in 2017 under former AOL chief executive Tim Armstrong, dubbing the combined division oath, and signaling its intention to go head-to-head with digital advertising powerhouses

like Alphabet's Google and Facebook. The digital media business ultimately failed to reach its target of 10,000, billion dollars in annual revenue by 2020, and Verizon in 2018 wrote down about four and a half billion dollars worth of its value. Verizon has cut jobs in the unit and in November agreed to sell its Huff Post News Division to BuzzFeed. That followed a 2019 agreement to sell the Tumblr blogging platform for a nominal sum to the owner of WordPress. The business, which also includes Yahoo Finance and Yahoo Mail, as well as news sites, TechCrunch and Engadget, generated $7 billion of revenue in 2020, down 5.6% from the previous year due to a sharp advertising pullback during

the early months of the coronavirus pandemic. Business picked up in the second half, and the unit has logged two consecutive quarters of double-digit growth, including a boost of 10% to $1.9 billion in the first quarter, end quote. Question really is, though, who would want any of these assets now? And I say that with a heavy heart. Amazon says it will invest more than a billion dollars to increase wages for more than 500,000 of its warehouse workers, raises in a range of an additional 50 cents to $3 an hour, rolling out from mid-May to early June, quoting Geekwire. Amazon currently offers workers in those positions a starting wage of at least $15 an hour, which it's set in 2018 after facing pressure to boost compensation in its fulfillment centers

and other facilities. The Seattle-based tech giant has been lobbying for other U.S. companies and the federal government to match that wage. The current minimum wage in the U.S. is $7.25 an hour. Amazon now employs 1.3 million people worldwide and is the second largest employer in the U.S. behind Walmart. The company says it directly created 950,000 full and part-time jobs in the U.S. as of Q4 2020. In Washington State, Amazon employees 80,000 people. The company brought on 500,000 workers in 2020 to help meet increasing demand for its online shopping and cloud computing services fueled by the pandemic.

Amazon is currently hiring for tens of thousands of jobs across its operations network in the U.S., end quote. Interesting debut that has gotten a bit of chatter. A startup named Mighty has debuted a premium, chromium-based MacOS web browser that entirely streams from the cloud. Thus, basically, you could load hundreds of tabs and keep them open, and your Mac would be just fine because it's not happening locally. This is currently invite only, so if anyone could hook a brother up, quoting 9 to 5, Google. With the underlying concept popularized by Stadia and other game

services, Mighty wants to stream an entire chromium browser from the cloud. The effort emerged this week after two years of development with a tagline of Make Chrome Faster. Mighty wants to address the often-heard complaint that Chrome is slow. Over the past few releases, Google has been working to address this through various techniques and optimizations, but this new company's approach is to stream your browser from a powerful computer in the cloud. Over the last two years, Mighty designed a custom server to keep costs low, built a low latency networking protocol, and forked chromium to, quote, integrate directly with various low-level render-encoder pipelines. The browser also interoperates with macOS features, and all demos today are on Apple devices.

The baseline internet speed mentioned on the launch post today is 100mbPS. For comparison, Stadia in 4K requires 35 mbPS or greater. The company originally set out to stream Windows, which would have been similar to shadow.tech, but eventually opted for just a browser, given how the OS is becoming increasingly irrelevant as we near the end of a multi-decade's shift from desktop to web apps, and quote, that was quoting the company. Each browser instance is powered by 16 V-CPUs running on dual Intel Xion processors that clock up to 4 gigahertz, Nvidia GPUs, and 16 gigabytes of RAM. This cloud implementation is said to let you load anywhere from 50 plus to hundreds of tabs

without it stalling, freezing, and slowing down your computer, while also speeding up renders for graphics-intensive workloads like Figma. You install a thin client on MacOS that locally uses 10X. less memory than Google Chrome, specifically no more than 500 megabytes of RAM, because you're just streaming and interacting with a video window. The cloud browser runs at 4K and 60 frames per second, with mighty promising that you, quote, won't feel lag while typing, moving your mouse, or scrolling, end quote. As a chromium fork, the UI is relatively unchanged from Chrome, while a number of custom shortcuts have been implemented, like Option Plus Tab to move between open pages, and Command Plus

M to search Google Drive, end quote. They've thought of the privacy angle as well. Keystrokes are encrypted while being sent back to the cloud, but this won't be cheap. It looks like pricing will be $30 a month, as Dan Wenn snarked on Twitter, quote, call me old-fashioned, but I feel like the solution to Gmail is slow on my computer should be something simpler than pay $30 a month to rent a cloud supercomputer from which you stream a Gmail tab in Chrome. I pay quite a bit more than $30 a month for streaming services, but to pay another $30 a month just to have a faster web browsing experience is utterly bananas to me, end quote. Finally today, I can't resist going back to an oldie but goody theme on this podcast, the theme of we spent all this money to get 5G phones, and yet I bet

most of us have probably not been on 5G very much yet. Let's say this one is, from the greatest trick the devil ever pulled file. According to OpenSignal, 5G capable devices access millimeter wave 5G less than 1% of the time across all U.S. carriers. Verizon leads with just 0.8% availability. When 8 tenths of 1% gets you the lead, quoting Ars Technica. U.S. mobile customers are almost never able to connect to millimeter wave networks, even though the cellular industry and Verizon in particular have spent years hyping the fastest form of 5G. AT&T and T&T mobile customers with devices capable of using millimeter wave networks were only connected to MMWave 5G one half of one percent of the time during the 90-day period between January 16th and April 15th,

2021, according to an open signal report released today. Even on Verizon, the carrier with the most aggressive rollout of MM Wave 5G, users, with compatible devices spent 0.8% of their time on the high-frequency network that uses its large capacity to provide faster speeds than low and mid-band spectrum. The average time connected to MM Wave 5G chart represents the percentage of time connected to MMWave among users who have an MMWave 5G capable device and have connected to MMWave at least once. Open signal told ours today, that means the numbers aren't driven down by devices that simply aren't new enough to use MMWave 5G. The percentages for all three major carriers are under

1% when evaluating users who definitely have devices compatible with the MMWave networks. Another report released by OpenSignal today said that when counting 5G on all spectrum bands, not just MMWave, 5G was available 33.1% of the time on T-Mobile, 20.5% of the time on AT&T, and 11.2% of the time on Verizon. OpenSignal speed test apps collect billions of individual measurements every day from over 100 million devices worldwide producing, quote, the vast majority of our data via automated tests that run in the background, the testing firm says. Verizon's lead in MM Wave 5G is not surprising because Verizon's 5G deployment strategy has placed a strong emphasis on MMWave, while T-Mobile has focused on its 600 megahertz and its 2.5

gigahertz spectrum assets for 5G services, and AT&T has mainly used low band for 5G so far. Open Signal said, end quote. One quick ask, has anyone read a really good long read or explainer of MRNA technology, especially in regards to what I keep hearing about them possibly being able to use mRNA to produce actual cancer vaccines? If you've got like the best New Yorker style long read, please send it my way. I just want the best general explainer of the whole thing, the whole technology, how it was developed, how it works, what the possibilities for the future are. Send it my way. And if we find a

really good one, I'll, of course, share it in the Long Reads tomorrow. Anyway, red-letter weekend for the McCullough family this weekend. As soon as I get this show out the door, I'm out the door myself to LaGuardia. They pick up my folks so that they can see the grandkids for the first time in a year and a half. Beyond excited. Get those jabs, everybody. Talk to you tomorrow.