Tech Brew Ride Home - Tue. 01/08 - Smartphone Recession?

Episode Date: January 8, 2019

Are we in a smartphone recession, mooooaaaar tv new from CES, AT&T wants to make 5G confusing, and why WeWork is now, simply, We (company). Sponsors: Metalab.co go.bitrise.io/ride Links: Sorry, Samsung. Seems nobody is immune to peak smartphone (The Register) Apple’s Errors (Stratechery) Sony doubles down on 8K TVs and the entertainment to play on them (VentureBeat) AT&T decides 4G is now “5G,” starts issuing icon-changing software updates (ArsTechnica) Uber’s Confidential Documents Show Path to $90 Billion IPO (The Information) Exclusive: WeWork rebrands to The We Company; CEO Neumann talks about revised SoftBank round (Fast Company) Amazon's new ad strategy: Free samples based on what it knows about you (Axios) 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 Tuesday, January 8th, 2019. I'm Brian McCullough today. Are we in a smartphone recession?

More TV news from CES. AT&T wants to make 5G confusing. And why we work is now simply we. Here's what you miss today in the world of tech. This won't get half the attention that Apple's recent revenue forecast warning got, but Samsung is itself forecast. a decline in Q4 operating profits to around $9.65 billion, which is below analyst estimates of $12.4 billion. Samsung says this is due to weak memory chip demand and competition in smartphones.

Or as the register put it, sorry Samsung, it seems like peak smartphone is here and no one is immune to the industry's first ever recession. Now, another reason that this won't make as many headlines is that device makers in the Android ecosystem do tend to swing wildly between periods of profitability and the opposite. And Samsung's share of profits in the smartphone industry actually peaked years ago. But that points to the other thing. Samsung is more diversified. Its direct exposure to smartphones as its core business is not as intense. Apple's problem is the iPhone is so much of everything to their business.

And I do want to come back to that. But first, to point out what I just said, that Samsung has a ton of other business lines. A smattering of Samsung headlines from CES. Samsung says Google is bringing some of its services to Bixby, Samsung's horse in the personal assistant race. Those Google services that are coming to Bixby reportedly include Gmail, YouTube, Google Maps, and Google Play. So this is an interesting mirror to Apple's decision yesterday to go platform agnostic in search of services revenue. Google 2 just wants you to use its services.

It doesn't care how you use them and is not going to force you into ecosystem lockdown just to do so. Also, Samsung unveiled two 12-inch laptops, the Notebook 9 Pro, and the Notebook Flash. Price of the higher-end Notebook 9 Pro was not announced, but the more affordable Notebook Flash starts at $350, sports Windows 10 home, and even a fingerprint scanner for that price. Samsung also announced the notebook Odyssey gaming laptop coming with Nvidia RTX 2080 graphics and a 15.6-1080P display with G-Sync support. So again, some follow-on from a couple of the things

that we discussed yesterday. But yes, back to Apple real quick because Ben Thompson finally came back from vacation to weigh in on the whole revised revenue estimate thing and Ben says that yes, Apple has made some strategic market errors, especially in China, and especially with the S cycles of hardware updates. And yes, even with the confused place of the 10R in Apple's smartphone lineup. He noted that, as we discussed yesterday, you almost have to wonder about the future of some of Apple's lesser-known

hardware products like the Apple TV, like even the HomePod, as it seems like Apple has made the decision to let these struggling hardware lines sort of dangle in the wind in favor of chasing that services and subscription revenue. Ben's key graph from this piece is, I think, quote, this gets at the rest of the miss, the non-China parts, especially. Cook cited the end of carrier subsidies, largely an old story at this point, to be fair, a stronger U.S. dollar, and customers getting new batteries instead of new iPhones. It's a bit of a hodgepodge with one primary takeaway. Convincing customers to upgrade good enough phones

is both challenging and unpredictable, and Apple simply can't assume it will happen at the rate it has previously, end quote. And back to CES. Sony joined the cavalcade by announcing that its slate of new 4K and AKTVs launching later this year will support Apple's Airplay 2 and HomeKit. This is notable because those Sony TVs run Android TV software. So if you're keeping track, Samsung, LG, Vizio, and now Sony have added Airplay 2 to their TVs, and LG, Vizio, and Sony have also added HomeKit support.

Also notable is that Sony is definitely pushing 8K TVs, doubling down on them, in fact. Thus far, one of the wraps on 8K as a technology has been, yeah, they're super, they're amazing screens, 33 million pixels as compared to 8 million pixels on 4K screens. But as of yet, there's not a lot of 8K content out there. So Sony said yesterday it is going to aggressively upscale the 4K content that it has in its library, that content created by its movie studio and creative arm, to 8K, quoting, Venture Beat, Tom Rothman, chairman of the motion pictures group at Sony Pictures Entertainment, and Christine Belson, president of Sony Pictures Animation, talked about how combining entertainment and intellectual property is key to Sony's vision for technology. And they pointed to how

Sony's Cinaulta camera and other tech were used in the creation of shows and films, end quote. Shows and films that apparently are going to be 8K going forward. I hate stories like this. telecoms do this sort of stuff all the time, and it really burns me up every time they do it. It's not enough for a new standard like 5G to come around. The telecoms can't wait to sell you the latest and the greatest. And I mean that. They literally can't wait. So instead of waiting for the rollout to begin selling you the latest and the greatest, they start to muddy the waters.

They did this with 3G, with 4G, LTE. They do this all the time, and they're doing it again with 5G. AT&T has apparently been pushing out software updates to some Android phones changing what it calls the signal that you're getting. So if you have been seeing that little LTE notification at the top of your phone, AT&T is now branding that as 5GE. And AT&T says that actual 5G with millimeter wave technology, whenever that rolls out widely, will be called 5G plus.

Quoting R's Technica, calling these LTE technologies 5G is ridiculous and seems designed only to mislead consumers into thinking AT&T's network is somehow better than the competitions. It's not. For now, the real battle is to see who can mislead, manipulate, and confuse consumers the most, and this generation AT&T is crushing the competition, end quote. And indeed, AT&T's competitors wasted no time in dragging the company for making this move. Verizon got all formal with a press release that was serious and almost morally offended. The potential to overhype and under-deliver on the 5G promise is a temptation that the wireless industry must resist, its missive said. We're calling on the broad wireless industry to commit to labeling something 5G only if the new device hardware is connecting to the network

using new radio technology to deliver new capabilities, end quote. T-Mobile was a bit more teasing. they tweeted a video of someone just taping a 9G sticker onto an iPhone with the message didn't realize it was this easy. BRB updating. And as he has wanted to do, T-Mobile's John Leger was more aggressive, tweeting the AT&T logo with the death star behind it and saying, quote, does AT&T really think that customers would fall for their mountain of 5GEBS?

their 5GE is just LTEA, and guess what? T-Mobile has way more than they do, end quote. Of course, all of this faux outrage will only last as long as it takes the other carriers to dream up some way to confusingly rebrand their own fake 5G networks. This whole story might seem silly or trivial to you, but looked at a certain way, I want to point out that this is straight-up consumer fraud, and in a perfect world, the FCC or the FTC, would bring the hammer down on whoever does this.

The information has gotten its hands on some leaked Uber docs from last March that sheds some more light on that company's strategic path towards its hopefully successful IPO later this year. Last year, Uber projected net revenue of $14.2 billion by this year, 2019, which is up, 2x since 2018. and the company projected its 2019 EBITDA losses would shrink to 500 million from around $1.7 billion in 2018. The article goes into some detailed math showing how Uber thinks it can convince investors to value the company once it's public, somewhere in the neighborhood of $90 billion,

which it will really want to do because that would be about $14 billion more than the valuation it raised at during its most recent funding round. So how can Uber make the cash? case, well, actually it's touting its platform as something more than just ride hailing. In other words, they are really doubling down on Uber Eats. And also, quote, in a presentation distributed in March 2018, Uber said it had clear levers it could pool in order to turn the cash spigots on if it wanted to by reducing its marketing spending both in the U.S. and developing markets and by finding partners to help finance its self-driving car development documents show. Pulling those lever would slow revenue growth by a third, from a 33% growth in net revenue to 22% growth in net revenue in 2019.

But it would save Uber $2 billion annually, the company said. And that would mean Uber could generate earnings before interest, taxes, depreciation, and amortization of $1 billion this year, end quote. But as the eternally Uber skeptical Shira Ovide pointed out on Twitter, even using the math, the information pulled out in this story, that $14.2 billion in 2019 net revenue, that's a growth rate of around 30%. But in the first nine months of 2018, Uber was supposedly growing at 55%. So is growth slowing?

Thus, the focus on Uber Eats. Better pull those levers fast or get the IPO out the door fast or some combination of both. There's a long-running debate among the tech meme editors about to what extent we should cover WeWork at TechMeme, or even if WeWork should be covered by TechMeme at all.

The anti-argument is that WeWork is not tech. Sure, a lot of tech startups use WeWork, but in the end it's just real estate. Well, I'm going to barge past that debate to make note of the fact that it's not even WeWork anymore. The company has decided to rebrand itself as the Wee Company. This comes after rumors have been swirling that Masasan's SoftBank, already a major WeWork investor, has radically scaled back plans for a fresh investment in Nay, WeWork,

now planning on a $2 billion investment this year, down from the $16 billion that SoftBank was planning to invest last year. That follows previous rumors that investors in the SoftBank Vision Fund were growing uncomfortable with WeWork finances and prospects as a company going forward. forward. The wrap in some circles is that WeWork has expanded too fast and has been reckless with the leases it has been signing around the world. The company generated $1.25 billion in revenue in the first three quarters of last year, but reportedly also lost $1.22 billion in that same period. Given the recent weakness in the stock market, WeWork's longstanding playbook of just raising gobs more money, looks to have played itself out. If Masasan is closing the purse strings on you, the worm might finally be turning. Nine-year-old WeWork was born in the aftermath of the housing crisis and housing bust and thus was able to expand on the cheap as real estate recovered. It has never had to turn headlong into a down real estate market itself. And skeptics point out that WeWork has acknowledged that leasing prices in all but two cities it operates in are declining. Adam Newman, CEO of WeWork, addressed all this in an interview with Fast Company. Quote, when 2019

comes and if the world goes into a real downturn, the one thing you are not going to see us do is be afraid or slow down or take less risks, he said. For me, a downturn is not scary. It's an opportunity, end quote. But why the rebranding? Why now the we company? Well, because the company formerly known as we work is expanding beyond office space. There is already, we live, a fledgling residential unit, and We Grow, which is some weird hybrid arm that includes at this point in elementary school and a coding academy. And we bank, according to Newman, quote, it's coming. I want to end today by shoehorning in a couple of shorter stories that maybe wouldn't make for full segments, but I found super interesting today.

The first is that Amazon is quietly piloting a program for brands like Folgers to pay Amazon to send free samples to Amazon, users who are likely to enjoy their product based on past Amazon order histories. So yes, this is more of Amazon exploring and flexing its marketing and advertising muscles. And yes, this is finally turning on the information that Amazon has on you, weaponizing it in a way, that information that it has, which no one else has, unless they spy on you, of course, which is essentially what everyone else does anyway. But quoting from Axios, analysts see this as a big advantage. for Amazon in its efforts to take on Google and Facebook's ad dominance.

The tech giant has the purchasing data and logistics infrastructure to offer samples of actual products which could be more effective than display ads on Facebook or search ads on Google for certain kinds of consumer packaged goods brands, end quote. The other little nugget is, finally, as someone who converted my whole digital life to two-factor authentication last year, well, everything that I could convert anyway. not everybody is caught up with that. This is welcome news. Ubiko, which already makes those popular physical security keys,

has announced a new version for use in Lightning ports. The device is Apple approved, thus making it the first physical token that you can use for authentication on iPhones. Now the key is not available yet because Ubiko needed to get the word out so that app developers could prepare to support it. So get writing U-Devs,

because I would love to add 2F-A to my iPhone usage sometime in 2019. Oh my God. How come none of you told me about Calendly before? C-A-L-E-N-D-L-Y. Calendly. How did I run the Internet History podcast for five years and not know about Calendly? I've been working on booking and recording the weekend bonus episodes all week, and man, Calendly has changed.

my life because in one simple step, it took out all of that Mishigas, that back and forth, the email, follow up email, follow up to the follow up email that is required just to schedule a phone call with somebody. Oh, I can't do Friday. I can do Monday. I can't do three o'clock. Oh, shoot, I forgot about this meeting. Can we reschedule? Again, they're not paying me to plug them like this. It's just when you find one little hack or tool that shaves literally, literally, hours off of your work week. It is legit life-changing. Calendly, everybody. Anyway, weekend bonus episodes are coming. Talk to you tomorrow.