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Google vs Apple, Downturn, VZW, 5G, Indonesia, AR: Telco 2.0 News Review

Google shares surge before Apple Q4; the enormity of bad advertising; iRumours; Oracle leaks Android “numbers”

Ahead of Apple’s results tomorrow, Google, or rather the holding company Alphabet, was trading within 10 per cent of Apple’s market capitalisation. The investment thesis is apparently that the iPhone has peaked, while digital advertising can only grow. How this matches up with the on-going shakeout of ad-tech companies and massive adoption of adblockers is an interesting question. Also, Apple ‘bears’ have notoriously managed to predict the end of the iPhone ahead of every Apple quarter for years, in the same way Paul Samuelson said the market predicted 9 of the last 5 recessions. So… tomorrow’s results will be interesting.

Speaking of the ad business, Google itself is now paying over a thousand people just to police deceptive, creepy, or malware-laden ads. Last year, 780 million of them were shot down, which is up 49% year-on-year. The worst offending sector was pharma, with 12.5m unacceptable ads. No fewer than 17 million ads were caught mimicking operating system prompts in order to trick users into installing dodgy software. And this doesn’t even include mobile, although at least 25,000 apps were turned down for in-app ads for shonky tricks like “placing ads so close to user-interface elements users would click them by accident”. Google exec Tom Siegel says the volume of refused ads is going up as the total volume of ads does, but you can’t tell because they don’t give a percentage number.

The case to buy Alphabet and sell Apple, such as it is, is laid out here but another way to look at it is just the old stock exchange wisdom “buy the rumour, sell the fact” - it makes perfect sense to talk down the share ahead of the results, jump in on the cheap, and get out again when they turn out to be OK or indeed outstanding. For what it’s worth, this week’s leading Apple iRumour is that a new small-factor iPhone, the 5SE, is coming that would backport the new stuff from the 6S in a smaller gadget.

Meanwhile, an Oracle filing in the Google/Oracle patent lawsuit (yes, it’s still a thing) leaked some numbers about Android revenues and Google distribution payments. Actually it didn’t leak them so much as get Oracle’s own estimates of them out there for their own purposes; although Bloomberg Businessweek  got a look at the documents before Google issued a takedown notice, there are no details of how they arrived at the estimates and therefore it’s hard to say how much credence to give them. The factoids are that Oracle reckons Google derived $31bn in revenue from Android since 2008 and $22bn in profit (i.e. a fascinating 70% gross margin), and that they think Google pays Apple about $1bn/year to be the default search provider in iOS and OS X.

Google has agreed to pay £130m in back tax to the UK government over that whole thing where the ad sales team in London wasn’t technically making sales, only introducing them to someone in Ireland who closed the deal. Charles Arthur tries to estimate how much profit they actually make in the UK - their second biggest market - and concludes the tax bill is low by a factor of ten.

Here’s a piece on Larry Page and the Google trainset projects. With luck, we’ll actually know something by the next News Review, as the first Alphabet quarterly numbers drop next Monday and the Apple Q4 will be in by then too.

Docker creator goes bust; Twitter execodus; Samsung may exit white goods - and smart home? Wearables startups are so last season; Softbank turns to India

Here’s a flavourful piece on the top of the market in Silicon Valley. This quote is pure gold:

“Things have been frothy, and you see a lot of dumb money. The music’s going to stop and not a lot of people will have a chair,” said 48-year-old Suchet, a 500 Startups mentor who says he’s been seeing companies now with $10m valuations and no product. “There will be a lot of dead bodies. A lot of dead bodies. There’ll be a lot of blood.”

But the really telling bit is the awful character of the products they do have. A marketplace for investing in your favourite poker players?

Meanwhile, dotCloud, the company that started the vastly popular Docker project, is going bust - apparently there just isn’t room for another platform-as-a-service company, which we can well believe. At least it left something useful behind.

Over at Zappos, they’re seeing the effects of CEO Tony Hsieh’s now-legendary philosophy of anti-management, Holacracy. As in, one in five of the staff have taken a buyout and quit rather than spend another minute in Utopia. About half of those seem to be over-and-above their average annual turnover. This quote is gold, again:

We offer every new hire several thousand dollars to quit and leave the company before they start the actual job they were hired for.

Right…over at Twitter, meanwhile, four execs including the head of engineering, the head of product management, the head of HR, and the head of media have quit in the old-fashioned way. And the boss of their video streaming business, Vine, has been poached by Google to work on a VR project. The shares are in the basement.

Brendan Eich, Mozilla founder and JavaScript co-inventor who was sacked as Mozilla CEO for not supporting gay marriage, is back with a new Web browser designed to exclude advertising and tracking. Weirdly, the main-line app is a fork of Chromium but the iOS app is a fork of Firefox.

Rackspace has got rid of Jungledisk, the online backup service it acquired in 2008, after its management raised enough VC money to buy it out. At one time STL Partners used it quite extensively but moved on. It’s not you Jungledisk, we said, it’s just not the right time for us, and it appears Rackspace has gone through the same emotional journey.

In the wearables and IoT space, meanwhile, it’s pretty damn ugly: Jawbone’s market value has halved and they just had to take a down-round of $165m compared to a reduced valuation of $1.5bn, while Fitbit has gone from $10bn to $3.7bn and is getting sued, because its gadget encouraged some users to push it just a bit too hard.

This has mostly been Valley stuff so far, but look at this: Samsung is considering selling its home appliances business, which does make you wonder whether they’re repenting of the SmartThings smart home/IoT project. And no bad thing, too, if this comment is anything to go by. The e-mail fridges must die!

Nothing daunted, Intel leaps in with its own platform for IoT in retailing.

Imagination Technologies issued a profit warning in December and now it’s looking at selling its digital radio business. This was meant to be the year their MIPS-based chips broke into the smartphone market…

If you dare to deal in the Russian stock market, Megafon shares are down 26% and frankly cheap…if you dare to deal in the Russian stock market.

General consternation reigns after Sprint’s announcement they’re redoing the network, again. CEO Marcelo Claure is tempting fate by publicly needling T-Mobile, but the Samurai Son is looking West towards India. Is it too crazy to think Softbank might give up on the whole mess, or at least cut off the CAPEX pump, if they want to invest heavily in India?

Sprint kept Huawei gear; VZW Q4 results, VES hit by cable; AT&T FTTB build is done; what are they planning with satellite?

Interestingly enough, it turns out that Sprint never did get rid of its Huawei kit as it promised the authorities back in 2013. The offending machines are somewhere in the network it acquired from Clearwire, which is also interesting as it suggests they’re still using that network. That said, as a result it might well be more secure rather than less; it’s a different world since Edward Snowden did his thing.

Verizon Q4 and full year results are out. Net-adds are down year-on-year, but no-one’s complaining about 1.5m postpaid in Q4. Similarly, when you’ve net-added 4.5m postpaid users in the year, you can be philosophical about net-losing 550k prepaid users. Drilling down a bit, Q4 saw 960k tablet net-adds and 713k smartphone net-adds, which implies a substantial number of the additional smartphones were basic phone users who upgraded. Again, no-one’s complaining about that.

Revenue, meanwhile, was up 1.2% in Q4 and 4.6% for the whole year. Out of that, service revenues were down 3.1% and equipment sales up 54%. OPEX was up 1.3% for the full year, but fell 5.6% in Q4, implying VZW’s service margins are opening out as LTE adoption increases. At the year-end, 90% of data traffic was on the 4G network. CAPEX was up 11% for the full year, to $11.5bn, expected to be flat next year.

CFO Fran Shammo says whatever AT&T does, unlimited plans aren’t coming back. That sponsored-data/zero rating project, aka your new favourite regulatory row, is launching this week under the name FreeBee. Has anyone wondered, by the way, how that will work given that so much of a typical commercial web page is made of adverts?

All is great at VZW, but as we know, VZ Enterprise has been doing it tough ever since 2012. According to a FCC filing of theirs, 77% of their footprint is now subject to competition from the cablecos in the business segment. The point is to lobby against the FCC’s review of the special access segment, but it does as well to point out how effective Comcast’s move into wholesale and enterprise has been.

Over in fixed, FiOS TV has hit a rock. Q4 net-adds were only 20k, after 42k in Q3. At the same time, AT&T’s U-Verse net-lost 92k subscribers in Q3, but they have the excuse that they’re moving to DirecTV’s platform. Moffett Nathanson analyst Craig Moffett argues that what’s happening is that cablecos are winning video customers again.

AT&T, meanwhile, says it’s completed the fibre rollout to 1 million buildings its then Business Solutions division started in 2012. FierceTelecom points out that its pricing on the FTTB Ethernet network is very sharp, in line with its residential FTTH.

In West Virginia, there’s an interesting debate going on about a proposal to build a state-owned regional fibre network.

Meanwhile, CEO Randall Stephenson seems to suggest that they plan to use DirecTV’s satellites and associated spectrum to deliver video to customers on the new unlimited plan. Does he mean some sort of mobile-satellite hybrid in 5G?

Future Network: CapEx, 5G, Flat Distributed Cloud, Future Data Centre

The ITU reckons we have 1.5bn net-adds to go to achieve the goal of universal connectivity, and it will take $450bn of investment to get there by 2020. It’s got to be 2020 because it’s a round number! Less flippantly, what will we be spending all that money on?

Verizon, Swisscom, DTAG, and Cisco think it might be full-duplex radio. They have invested $25m between them in Kumu Networks, a startup that develops the self-interference cancelling filters central to the technology. Telecom Italia has it under test around Milan.

In the meantime, ZTE seems to be doing rather well selling bread and butter 4G and optical networking kit.

AT&T has been working with ON.Labs’ ONOS project for open-source NFV for some time, and it makes up a core element of their Central Office Rearchitected as a Data Centre (CORD) project.  Verizon now wants in, perhaps realising they’ve let the cloud slide, but then they’ve now confirmed they’re selling the data centres.

OpenStack, which also plays an important role in the AT&T NFV projects, has issued a survey it claims shows a surge of telco interest in the technology.

Cloud integration in the radio network is the taste of 2016, and the UK’s 5G Innovation Centre is proposing a new architecture called the Flat Distributed Cloud.

TeliaSonera, meanwhile, has pencilled in 2018 as its target for 5G launch. They were first to deploy 4G, in December 2009, although it’s not obvious they got much benefit from being first. That probably needs the European Union to get its skates on with low-band spectrum - Digital Single Market VP Andrus Ansip is pressing to get the 700MHz band cleared, but he’s not the only one who decides.

Mitsubishi claims to have solved some of the problems with massive MIMO antennas.

Telstra has acquired a cloud consulting company and is opening an SDN portal to let users set up their VNFs.

Some startups are still pulling in big VC money: here’s Big Switch, a SDN monitoring and management company, raising a $48m Series C.

Quortus’ software core network is now compliant with the ETSI MEC architecture.

Here’s an interesting overview of new local networking and storage technologies.

Amazon Web Services published this blog post about their preparations for Storm Jonas. It was a head-on-the-block decision, and ironically it only paid off in part - AWS made it through the storm without downtime, but as far as we know, so did all the other cloud providers.

10 operators down to 4; place no Reliance on these forecasts; M&A update; MTN in more trouble

Indonesia’s minister of telecoms has the classic emerging market problem where you’ve got six - in Indonesia’s case, ten - MNOs but none of them have any coverage beyond the international airport. As a result, he’s threatening to revoke the smaller operators’ licenses unless they either build out more infrastructure, or quit and sell up to a consolidator. A figure of 4 national MNOs is mentioned. At the moment, the top three have 80% of the subscribers.

Perhaps we should look at this announcement in that light. Indosat, controlled by Ooredoo, and XL Axiata have agreed to share infrastructure via a so-called MORAN (Multi-Operator Radio Access Network) arrangement. Are they trying to free up cash to acquire smaller operators when the shakeout begins?

Reliance Comms’ Q4 numbers are out and they’re disappointing. Revenue is down 3.1%, EBITDA down 2.6%, and bottom line profit by 15%. ARPU is flat, so there’s no mystery what’s happening - they’re losing subscribers. In Q4 2014, they had 107.5m customers. In Q3 2015, they peaked at 111.6m, and by the year-end, they were down to 102.1m, so they net-lost almost ten million subs in three months, the same period when Bharti, Idea, and Vodafone turned up 4G service. The big bet on 2.3GHz LTE in RJio starts to look very dear indeed.

It looks like any Orange/Bouygues deal would be left to French regulators rather than referred up to the feds in Brussels. This is being read as a positive for the deal, on the grounds that the French politicians whose call it is believe in less competition > more investment, or perhaps just that they consider Stéphane Richard one of Our Guys.

On the other hand, the feds certainly do want to see 3UK and O2’s papers, and they may be going to impose serious conditions, like those proposed for Telia/Telenor Denmark.

In other UK news, Virgin Media is sacking 900 call centre staff. 121 MPs write demanding the break-up of BT. BT picks a new CTO. Former OFCOM director Ed Richards doesn’t want to be the UK’s financial regulator. The British advertising regulator says you’ve got to include line rental in headline prices.

Brazilian consolidation is back on - Oi just signed up for a $1bn loan from a consortium of banks to finance a move for TIM Brasil.

MTN Nigeria’s court case over the $5bn fine has been adjourned to give time for negotiations. In Cameroon, meanwhile, MTN and indeed both the other MNOs have been accused of tax evasion.

Apple hires AR/VR expert; CarPlay vs Android Auto; designing WebRTC apps people actually like

An interesting hire at Apple: Doug Bowman, professor of computer science at Virginia Tech, world authority on AR and VR systems, and co-author of 3D User Interfaces: Theory and Practice. (Mobile World Live has been watching 2001: A Space Odyssey again - they called him “David”. Dave Bowman is of course the astronaut who battles HAL the insane computer. “You can’t do that, Dave…”) What are they up to? Something with maps?

Ars Technica reviews Apple’s CarPlay and Google’s Android Auto together, and points out that Apple has chosen to replicate the iOS look-and-feel while Google went with a fundamentally different, notifications-centred design.

&yet and AT&T have a series of blog posts about UX considerations in WebRTC apps.

Zendesk is using Twilio for its Advanced Voice features.

The Skype app is getting more and more like Skype for Business, as it grows more integration with MS Outlook.

IBM acquires a livestreaming app, Ustream.

Chris Kranky is having one of his WebRTC get-togethers in Bangalore.

APIs are the new interoperability.

An interesting reading list on conversational UX.

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