Most of the top technology stocks didn’t have a very good start to the year, but innovation remains the focal point, driven by trends in mobile, IoT and the cloud. Here are the top stories-
Google Would Like to Buy Softcard
It’s being rumored that Google (NASDAQ:GOOGL) is in advanced talks to acquire Softcard (previously Isis), which is basically a JV between wireless carriers AT&T, Verizon and I-Mobile to deliver a payments service. It would be no more than a tuck-in acquisition for Google, but would bring in 120 patent applications plus existing deals with carriers and a platform that is already popular with consumers.
Moreover, the NFC technology that Softcard uses is already a part of Google’s Wallet, which could make integration of the technology easier. It has been reported that both PayPal and Microsoft Corporation (NASDAQ:MSFT) are also interested in the company although Google could be the ultimate winner.
Development of the technology has been an expensive business for the company, which has had to streamline operations and lay off some 60 people. It’s also likely a long-term project that the carriers are unwilling to invest in.
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Other stories you might have missed-
Corporate
Apple Settles Employee Wage Fixing Case: Apple Inc (NASDAQ:AAPL) has agreed to pay $415 million to settle this case, $90 million higher than the amount offered earlier that was rejected according to media reports. Apple, along with other big technology companies, had an illegal understanding not to poach each other’s employees. This limited employees' options and contained wage rates.
Yahoo Moves Headquarters, Reorganizes Ad Business: Yahoo! Inc (NASDAQ:YHOO) has taken a long-term lease on 130,000 square feet of office space at Collective Campus, Playa Vista and media reports are saying that its proximity to LA will help Yahoo acquire talent, as it leverages the quality of development and ambience in the area. Both Google and Microsoft have offices in the area.
Prashant Fuloria, who joined Yahoo as a part of its Flurry acquisition, has been promoted to the position of SVP of advertising products reporting directly to CEO Marissa Mayer. Former ad technology head Scott Burke and Brightroll founder Tod Sacerdoti will report to Fuloria. Mayer said in a memo that the change was necessitated by the need to reach revenue goals. Mayer and Fuloria had worked together earlier at Google.
Google/Microsoft Bickering Match: Google’s “Project Zero” team that identifies security loopholes in new software and allows 30 days to the developer before making them public, published a bug in Windows 8.1. Google says that Microsoft was informed on Oct 13. Microsoft said it was scheduled to post the update on “Patch Tuesday” as a part of its regular security updates and Google knew about it. Microsoft could have done without the publicity, but Google’s zero tolerance policy doesn’t allow for such understandings.
Legal/Regulatory
Monster Sues Apple’s Beats: Noel Lee, a manager at Monster Worldwide Inc (NYSE:MWW) and part of the team that developed “Beats by Dr. Dre” has sued Beats Electronics and HTC for the fraudulent transfer of a 51% stake to HTC and facilitating its sale thereafter to Apple for $3 billion. Beats co-owners Jimmy Iovine and Dr. Dre allegedly made off with the Monster technology on which its premium headphones are based along with its distribution chain, resulting in significant revenue loss for the company. Lee’s lawyer Joe Cotchett says that his 5% stake in the company could be worth as much as $100 million today.
Apple and Ericsson Sue and Countersue
New Technology/Products
Xiaomi’s New Phone Could Trump iPhone 6 Plus: China’s Xiaomi has a new phone called Mi Note Pro, which goes for $515 (compared to $849 for iPhone 6 Plus). Not only that – Xiaomi is packing as much storage, more memory, a better camera, a larger display, faster download and a Snapdragon processor into the device, making it a very attractive alternative to Apple’s device. Of course, Xiaomi doesn’t make as much money from devices as Apple does, but this kind of competition could just increase the pressure on Apple, especially in the all-important Chinese market.
Apple Pay Getting Larger: The addition of 8 credit unions to Apple Pay is a positive for the payment platform. Not only does it make the system more ubiquitous, but each addition amounts to a vetting of the security of Apple’s system (banks are usually hesitant to sign on to such a service, because fraudulent transactions could prove expensive for them). Apple is expected to launch Apple Pay in Europe this year and already Dutch bank ING has announced support for the product.
Facebook At Work Launches
Microsoft Launches Cheapest Lumias To Date
Google Translator App Gets Better: The latest update to the Translator app will allow people speaking in two different languages to converse. The languages need to be selected prior to the conversation. Tapping the mike to speak one of the languages automatically gets the app to translate to the other language and convey to the other person, who has to click the mike again to speak.
While the app already allows translation between most of the widely-spoken languages across the world, offline add-on packs can effectively add more languages. The Word Lens app for Android was also integrated into the Translator app as part of the update. Word Lens allows a user to scan anything in French, German, Portuguese, Italian, Russian and Spanish with the camera and then automatically convert it to or from English.
Google Could Sell Car Insurance Next: Google Compare Auto Insurance Services is an entity licensed to sell insurance in 26 states, according to the Wall Street Journal. Google Compare and auto insurance comparison site CoverHound appear to be collaborating for the purpose.
Google Self-Driving Cars in 2-5 Years: Google’s self-driving car project director Chris Urmson has said at the Automotive News World Conference that the company would be working with leading automakers to make these automobiles a reality in the next 2-5 years. Google’s partners are likely to be Daimler, Ford, GM, Toyota and Volkswagen, and GM has already expressed interest in working with Google.
Other than the self-driving car, Google’s auto initiatives include an Android-powered dashboard (like Apple’s Car Play) and a new Android infotainment system to run the dashboard that will not require a smartphone for operation.
Google Explorer Glass Program Ends: Google is rethinking its Glass Strategy and the consumer version of the controversial device is going to be shelved. Privacy concerns made the device unpopular in the two years since its launch, but Google now has Intel marketing and chips behind it, so it could pick up business clients. Glass At Work is now a separate Google Team focusing on Glass-related innovation for work environments.
Chrome Remote Desktop for iOS Devices: The app allows users to remotely access and control Windows or iOS PCs after entering the security code. They can then access any file and folder on the PC, execute any app, watch movies and surf the internet from the PC’s existing browsers and watch flash based content that can’t be played in normal iOS devices. Users will need to install and run the Chrome browser and Chrome Remote extension for the purpose.
Google’s Home Initiative Getting Connections: Media reports indicate that Google has partnered with 15 gadget makers including Whirlpool and LG with their smart electronic products, Philips with its hue light bulbs, August with its locks, etc. Google paid a hefty sum for the smart thermostat maker Nest and applied the brand to its home platform. Other acquisitions to build the platform included DropCam and Revolv. There is tremendous growth in this market where Google appears to have pulled ahead of the pack.
Analyst Opinion
Apple Pay Set To Take Off In 2015: Sterne Agee analysts Thomas McCrohan and Leonard DeProspo are predicting that 2015 will be the year that Apple Pay becomes the dominant mobile payments platform. The analysts expect the technology to feature in a major TV show this year, speeding up its adoption by both customers and merchants. It will also launch in Europe.
Following its spin-off from eBay Inc (NASDAQ:EBAY), the analysts expect PayPal to acquire Movenbank and launch a personal checking account to cater to low-end underserved segments. Despite the new Square Reader being compatible with new chip card technology, Square’s growing focus on the small business POS segment and the need to drive scale in the area will likely push the company to a sale of its business. They also expect Visa Checkout to garner 10 million users by the end of 2015.
M&A and Collaborations
Intel Invests In Vuzix: Intel Corporation (NASDAQ:INTC) $24.8 million investment in fashion accessories maker Vuzix may appear to be in conflict with its Google Glass goals, but this may not be true since Vuzix develops technology in not just smart glass devices, but also gaming devices, virtual reality devices and so forth. Moreover, even on the glass side of things, Vuzix specializes in aesthetically pleasing designs with a “cool” factor that is missing in the more bulky Google Glass.
Some Numbers
Tablet User Growth Rates to Decelerate: A new report from eMarketer suggests that tablet users will touch a billion by year-end, with user growth rates decelerating over the next three years. The research firm says that increased penetration in developed markets, relatively slower adoption in emerging markets, longer life-cycles of existing tablets and a certain amount of cannibalization by large-screen smartphones are expected to contribute to this.
User growth rates will fall from 29.1% in 2014 to 17.1% this year, to 13.3% in 2016 and 7.9% in 2018. China and the U.S. are expected to remain the biggest markets through 2018 with China growing 55% from 2014 and the U.S. growing 17%.
iPhone 6 Drives Apple’s Smartphone Market Share: November was a great month for Apple, with share gains across most markets surveyed by Kantar. In the U.S., its market share increased from 32.6% in September (before the iPhone 6) to 47.4% in November. In the all-important European countries of Great Britain, Germany, France, Italy and Spain, Apple saw its market share increase from 13.6% in August to 23.8% in November. The increase in China was less significant (from 14.2% to 18.1%) although Japan was very strong (from 27.1% to 53.8%). The emergence and growth of local player Xiaomi tempered Apples fortunes in China.
Apple Says iBooks Doing Very Well: At the recently held Digital Book World Conference, Apple said that its iBooks platform is gaining an average of a million users a week. Most of the gains are coming from iPhones rather than iPads, on which iBooks first launched. Apple’s strategy of bundling iBooks into iOS 8 and giving it greater visibility appears to be doing the trick. Similar to Amazon, the company is also warming up to independent publishing.
2015 Could Be Tough on Tablets: Media reports quoting MediaTek said that tablet growth rates decelerated sharply in 2014 with current-year projections dropping to 9% (ABI Research previously estimated 16% growth in 2015). The emergence of wearables and larger-screened smartphones could be the reason. Google’s Android-based tablets took the leading share in 2014: 170 -175 million units compared to Apple’s 70 million iPads and Microsoft’s 15 million Surfaces.
Facebook’s WhatsApp User Base Touches 700 million
Facebook’s Video Numbers Rise: Facebook Inc (NASDAQ:FB) said that video uploads to the site increased 75% globally and 94% in the U.S. so far in January. Videos in user newsfeeds increased 3.6X with 50% of users watching at least one video every day. Video creators are being offered tools to make more successful videos. The recent acquisition of Quickfire Networks, which has developed video compression technology for quicker video delivery while maintaining quality, could be particularly helpful in emerging markets where connectivity is not as robust.
Another Xbox Price Cut
Google’s Search Market Share: Google remains the dominant search engine on both mobile and desktop although the extent of its dominance has become somewhat unclear given that research companies are presenting different figures (worldwide, U.S. only, mobile-desktop combined and mobile-only or desktop-only).
The excitement was fueled by Google parting ways with Mozilla in a few countries including the U.S. and its default search agreement for the Safari browser coming up for renewal. But the bottom line has not really changed materially: Google retains roughly 90% share of the mobile search market worldwide and a 67% share of the desktop search market. Moreover, its TAC costs (amount shared with partners) continue to increase.
Google Losing Cloud Market Share: The WSJ reported a recent survey of 112 CIOs by Piper Jaffray. The numbers were encouraging for Amazon.com Inc (NASDAQ:AMZN) since 35% of CIOs were going with AWS, Microsoft’s Azure was next with 21%, followed by Rackspace Hosting with 16%. Google entered the market with a 12% share last year, which shrank to 7% by year-end. The other major players gained. Its early days yet: this is a multi-billion dollar market and Amazon could very well lose its first mover advantage, not just to Google but also to a much stronger and focused Microsoft.
Google’s Play Store Gets Bigger Than Apple’s App Store: Analytics provider AppFigures says Google’s Play Store now has 50% more apps than Apple’s Store, with 2014 seeing a huge surge in apps. App Annie says that Play Store had 17% more apps but iOS developers made 60% more money in the third quarter of 2014.