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Apple, Samsung, Intel, Facebook, Twitter, Amazon: Telco 2.0 News Review

Apple’s mediocre Q1; Samsung beats the Street; smartphone shipments drop; Google Devices; Xiaomi

Apple Q1s are in, and it was a significant down quarter. Revenue was off $8bn year-on-year, 13 per cent, while net income was down $3.1bn, 22 per cent, as gross margins dropped from 40.8% to 39.4%. (The document is here.) ZDNet digs into the operational volumes, and discovers a surprise - not only does the iPad seem saturated, but it was a horrible quarter for Macs, the worst since Q2 2014. iPhone numbers weren’t all that bad - it was still the fourth-biggest iQuarter ever - but the average selling price has slipped by almost $50 a phone. Because Apple derives a lot of margin from selling the extra Flash storage in a 64GB iPhone, customers trimming on the specifications is a disproportionate hit to profitability.

2016-04-2622-15-41.jpgNaturally, the punditsphere is racing to explain this with artificial intelligence, drones, bots, and the like. But it could just be good old-fashioned competition.

Samsung Q1s are in, and Sammy beat the consensus by $670m, with net income up 14% at $4.56bn on strong sales of the Galaxy S7s. It wasn’t just a miss for the analysts - they ended up pointing the wrong way entirely, as the Bloomberg consensus was a negative quarter. That wouldn’t explain the Mac problem, but it would certainly explain pricing pressure on iPhone.

Strategy Analytics and IDC have both published Q1 smartphone estimates showing a year-on-year decline in smartphone shipments, for the first time ever. SA reckons the crisis in the Chinese economy is the market-moving factor, and both Apple and Xiaomi suffered at opposite ends of the market.

Tomi Ahonen argues that this is basically noise, driven by the enormous sales of the iPhone 6S reverting to the mean, and the combination of iPhone SEs and Galaxy S7s at scale with continued featurephone-smartphone migration in the low-end will cause a strong Q2.

ABI Research reckons that Google is making some progress against the forkdroids with Android One. Meanwhile, Sundar Pichai used a letter to shareholders to predict that devices will fade away in the AI future, and further announce the creation of a new Google Devices division. Nexus phones and tables, Chromebook and Pixel C laptops, the Project Tango phone, OnHub router, and Google Glass (remember that?) will be rolled into Devices, led by former Motorola president of devices, Rick Osterloh.

And after a bad Q1 in China, Xiaomi is apparently going to launch a smart watch and, more interestingly, an in-house mobile CPU. Seeing as Lenovo chose to start by repackaging someone else’s, and Huawei chose to concentrate on RF technology, it’s going to be interesting to see what Xiaomi, a company which would seem to have less engineering capacity than either of those, comes up with.

Intel gets out of smartphones, again, for the IoT; satellites at AT&T; Ericsson Accelerator; data points from Jasper

Intel, meanwhile, is getting out of mobile again, at least if by mobile you mean smartphone Systems on Chips (SoCs). Only the Apollo Lake tablet/netbook platform is staying, while the Braxton and SoFIA smartphone chipsets have been cancelled. The three SoFIA-based devices that shipped in China earlier this year are therefore immediately obsolete. Intel seems to be getting tired of investing in phone projects to create a market for their chips, and it’s possible that the Client Computing division, where the PC chips live, is equally tired of having to eat mobile’s losses after the mobile projects were rolled into the division. Also, it’s an Intel strategy to set a target time-to-market and enforce it strictly, and the SoFIAs were running late.

Where is it going from here? Well, it’s the industry cliché of 2016, “5G, the cloud, and the Internet of Things”. 5G here meaning infrastructure, via the ex-Altera FPGA business, the cloud meaning data centre products, and IoT meaning, well, the IoT. That said, they’re also very much interested in going to war with Qualcomm for more RF modem business - Intel has recently hired Qualcomms’s former VP of Mobile - and this is likely to be an important field as we look towards 5G.

Intel’s CEO Brian Krzanich explains himself a bit more in a blog post.

AT&T has signed up Globecomm in an effort to integrate satellite connectivity into their IoT products. Globecomm already provides the uplink teleports for DirecTV, so the company is no stranger. AT&T, for its part, has been showing much more interest in non-cellular solutions lately - presumably as its M2M volumes increase and its revenues don’t so much.

Here’s an interesting case study of LoRA in a municipal context, from Benoit Felten. Note that it seems to be viable to deploy your own LoRA down to a scale of 1,500 people and a €50k annual power bill.

On the other hand, you’ll look in vain for any non-cellular options in the announcement of Ericsson’s IoT Accelerator, a big comprehensive IoT platform it says will launch in Q3.

Jasper Wireless reckons between 35 and 50% of OPEX in a typical enterprise IoT deployment is network service, and a typical ARPU is $1.25/machine/month, derived from 2MB of data and 19KB of SMS.

Facebook’s massive Q1, Twitter’s mediocre Q1; Yahoo! conundrum; robots, DNA, etc

It was Q1s week in the Valley, and Facebook had pretty much nothing but good news. Although it seemed to experience a post-Christmas slump, its operating income seems to have settled above $2bn/quarter, dominated by North American mobile advertising. Even more impressively, the company is throwing off cash, with $2.83bn of FCF in Q4 and $2.98bn in Q1. Although CAPEX has doubled year-on-year, their capital spending is covered 2.64 times by FCF.

Facebook achieved an ARPU for the US and Canada of $12/mo, really very impressive for an ad-funded business. That drops to $3.21/mo worldwide, with Europe at $3.87 and APAC at $1.54. Interestingly, though, the other lines of business from things like payments are shrinking, and Europe makes up basically all the shrinkage. That said, it’s a trivial amount of money in context.

Twitter, on the other hand, isn’t going anywhere fast. User growth is down to 3%, but in the key US market, it’s at zero. Its adjusted EBITDA is apparently up 73% at an adjusted EBITDA margin of 30%, but if you leave out the “adjusted” bits, the company is still losing money. Traffic-acquisition costs are burning a ferocious amount of revenue - 57% of the cash coming in the door - and CEO Jack Dorsey’s remark that logged-out advertising cost-per-click is roughly the same as logged-in (transcript here) seems to imply that all its data gathering is worthless.

A personal experience here: one Telco 2.0er has a personal Twitter account that recently went through the 1,000 follower mark. Since then, Twitter has suddenly started pestering him with e-mail about advertising on Twitter. So the finely honed machine learning algo is “if followers > 1000 then send more e-mail”.

Here’s a deep Bloomberg Businessweek piece about Yahoo! One of its biggest problems is that the stakes in Alibaba and Yahoo! Japan and the cash pile between them are so valuable that their valuations imply the rest of the company has a negative net worth. But they can’t cash out the stakes because that would trigger an enormous tax bill.

This is interesting - there might at last be some actual evidence of a boom in robotics, as opposed to hype, vapourware, and toys.

Theranos as a twisted creature of the contemporary VC ecosystem.

A preview of Google I/O.

“Ten million DNA strands, thanks.”

And here’s a found poem made from Quora questions in the “Silicon Valley” category. We recommend reciting it aloud for the full effect.

Amazon Q1s: AWS crushing it; Verizon exits public cloud; Juniper, ZTE Q1s; EE’s open network in a box

Amazon.com announced its Q1 results, and there’s a surprise - they declared a $513m net profit! Digging into the data, we find that North American retailing is profitable, but only just, with an operating margin of 3.5%, while international is losing money, and AWS is crushing it, at 24% on sales of $2.5bn. Who says there’s no money in public cloud?

Well, Verizon, for one. The carrier is getting out of public cloud, giving the customers two months to move their data, and only saying in public that it’s stopped accepting credit cards. Meanwhile, VZ has also got into a much geekier version of John Legere vs Marcelo Claure - last week it claimed to have the biggest OpenStack NFV deployment, and AT&T disagrees quite strongly. Also, AT&T’s telegraphing that it may be getting the OpenStack Superuser award.

An interesting quote about Amazon:

It’s the trib­al knowl­edge: How to build Cloud in­fras­truc­ture that works in a fal­li­ble, messy, un­sta­ble world.

Juniper’s Q1 was a bit sticky, down sharply sequentially and flat year-on-year. It is hoping for an uptick in US telecom capex later this year. Meanwhile, ZTE’s net profits were up 16% despite the US trade row.

EE is sponsoring a fascinating project under Facebook’s TIP, Lime Micro. This is an open-source SDR device that can be configured as a network-in-a-box for basically any radio interface technology, based on the Ubuntu Core IoT-focused distribution of Linux. EE wants to use them to extend 4G coverage in the Highlands and Islands, but also wants to distribute them to developers.

Carrier Q1s: AT&T, T-Mobile, Sprint, America Movil, Telefonica, Orange, Telenor, Ooredoo, China Tel

AT&T Mobility’s Q1 numbers are in. The total looks encouraging - 1.8m net-adds - but the breakdown is much less so. That number includes 1.5m M2M devices and 500k prepaid, so there has to be a loss in there somewhere, and it’s wholesale, which shed 400k net users (does anyone find these numbers rather round?). And the key retail postpaid segment was lacklustre, although at least positive at +129k, compared to +640k for VZW. Digging down further, to the retail postpaid smartphone core market, AT&T net-lost 363k of the highest-value users on the planet. Service ARPU, postpaid ARPU, and postpaid phone-only ARPU are also significantly down. That said, profitability is up, probably driven by a pause in CAPEX, less smartphone giveaway spending, and some cost cutting.

T-Mobile USA, meanwhile, caught a whale in Q1 +2.2m net-adds in total, of which +1.1m was retail postpaid. Of that, 877k were retail postpaid smartphones, and 164k were mobile broadband devices. There were also 807k prepaid net-adds and 373k wholesale. Postpaid ARPU was $46.21, still a few dollars below AT&T’s. Net income was $479m for the quarter, compared to a $63m loss the year before.

Sprint, meanwhile, announced it had snagged another $1.1bn in cash from device leasing and a $2bn loan from Mizuho Bank. It also had Q1 numbers, and they’re like this.

264k prepaid net losses, 655k M2M net-adds, and 56k retail postpaid net-adds left them up 447k net-adds, but with a substantial adverse compositional shift. Postpaid churn was 1.72%, prepaid 5.65%, close to the levels we saw at Leap and MetroPCS just before exit. Postpaid ARPU is down $5.36/user/month over the last 12 months, while prepaid is flat. The company made a $554m net-loss - the last time it was in profit was Q2 2014.

Compare, if you will, the release, in which everything is apparently perfect.

Meanwhile, Verizon has announced its “best, final offer” to the CWA and IBEW workers out on strike, while also cutting the strikers’ health insurance off and hiring more contractors.

America Movil may be feeling AT&T’s arrival in Mexico. Revenue in Mexico was off 2.6% in Q1 and group-wide EBITDA was off 17%, apparently as voice prices dropped sharply.

Telefonica, meanwhile, announced a return to growth in Spain. You may have heard this one before. Revenue was indeed up year-on-year, by 0.2%, while operating income was up 2%. That’s the “organic” version of both metrics; in reported terms, that would have been an 8.6% surge in revenue and a 1.2% drop in operating income, or price-slashing with a vengeance.

Orange had a similar story to tell. Revenue was up, for the third quarter in succession. However, it was only up by 0.6%, while EBITDA was flat. Very interestingly, Orange says their mobile service revenue in France was up ex-national roaming, but the national roaming business saw a “more pronounced downturn”, and as a result, it’s not. This means Free Mobile has rolled out its network faster than they were expecting. Who would have imagined that the Orange CEO would be complaining that Free were rolling out too quickly?

Interestingly, though, Orange’s Spanish opco reported revenue up 1.8%, which is more like it. Meanwhile, it looks like Zegona, the team of ex-Virgin Media execs who were looking to buy Yoigo, has missed a key deadline to come up with the cash. TeliaSonera may now throw the deal back to Masmovil, which Zegona outbid substantially.

Telenor’s revenues were up 5% in Q1. Even better, its net income was up 19%. It also reported 5.4m net adds. 42m of those are in India, where CEO Sigve Brekke threatened to pull out if they don’t get a break on spectrum. Telenor probably won’t do anything dramatic until the whole awkward business of the CFO and the general counsel resigning over corruption at Vimpelcom’s settled down, though.

China Telecom’s quarter was solid and unremarkable. So was Ooredoo’s.

The IPv6 specialist and transit price-disruptor Hurricane Electric is setting up its first points of presence in Africa. Dave Burstein reckons this will bring wholesale pricing in Africa down towards European and North American levels quickly.

And BT, having signed up to £5bn worth of football, is putting up its prices, both by inching up the fixed broadband bundle price-points, and by upping line rental and voice prices.

Charter/TWC/BrightHouse nearly there; Comcast Q1; AT&T broadband Q1 just positive

The Charter/TWC/Bright House deal is nearly done, as the US Department of Justice signs off and Lawman Wheeler commends the report & order to the other FCC commissioners. Wheeler’s conditions require “New Charter” to build out broadband to another 2 million homes, to refrain from imposing any kind of usage-based Internet pricing, and to refrain from any new video interconnect fees. Presuming the FCC commissioners don’t overrule Wheeler - he has, after all, a majority - that just leaves the California Public Utilities Commission, which votes on it next month.

Comcast, meanwhile, reported Q1 customer numbers including 438k broadband net-adds and 53k TV net-adds, a big surprise on the upside. ARPU was up 4%, as the uptake of faster broadband and the X1 video platform improved. They also saw 102k voice net-adds, although revenue from this fell 1.1%. At the top level, cable revenue was up 7%. Oh, and they bought Dreamworks.

Comcast Business, meanwhile, saw revenue up 17.5%, with an especially strong performance from the mid-sized enterprises they’re targeting. Not surprisingly, they’re suddenly opposed to special access regulation.

Technicolor says its modems are the ones in Comcast’s DOCSIS 3.1 gigabit trial. Arris seems to have missed out, but it did get in on the network side, with the E6000 converged edge router.

AT&T fixed-line Q1s are in, and the carrier saw 186k net-adds to its “IP-based broadband platform”. That turns out to mean FTTC/FTTP as opposed to DSL, so the obvious question is whether it has managed to get the net-add on FTTx above the net-loss on DSL. Although FTTx net-adds are slowing down (413k a year ago), the answer is that DSL net-lost 181k subscribers and therefore AT&T’s broadband subscriber net-adds are positive, 5k. Cable competition has been fearsome, and it looks like Google Fiber is also dragging down pricing.

On the other hand, it net-lost 382k U-Verse TV subscribers and net-added 328k DirecTV subscribers, so if the broadband domain has just managed to hit positive territory and the mobile domain is losing quality, the TV domain of the quad-play is soundly negative to the tune of 54k net losses.

Verizon, Telstra, KT, and EE have formed an alliance to promote LTE Broadcast. SoundCloud has launched a Spotify-like paid option. Video mixing and editing in JavaScript, like HTML5 WebAudio but with video.

European 700MHz drafts; roaming caps hit; FCC 3.5GHz rules; TalkTalk’s femto wheeze

The European Commission has published draft regulations on how to open up the 700MHz band on a Europe-wide basis, including carve-outs for broadcasting and annoying corner-cases such as wireless microphones and the like. This kicks off the European legislative process that will eventually produce a Euro-regulation; not before time.

The FCC, meanwhile, has signed off a complex set of rules for shared use of the 3.5GHz band.

Meanwhile, the EU roaming price caps have gone into force.

Nobody’s idea of a surprise here, after 3UK/O2 was spiked - the EU is likely to object to the 3 Italia/Wind deal.

TalkTalk, it turns out, has a low-power licence for the old DECT guard band at 1780MHz, and it wants to alter the licence and use it for 4G femtocells. There’s only 3.3MHz of it, so the output is a bit underwhelming (16Mbps at 60ft), but presumably they’re either thinking the WiFi will do the heavy lifting, or else targeting not-spots.

CityFibre is planning a major fibre deployment using BT ducts under the new Duct & Pole Access product.

WhatsApp banned in Brazil, again; SWIFT hacked; Apple services out of China; Internet of Targets

A Brazilian judge has ordered WhatsApp to suspend its service for 72 hours, or hand over data it says it can’t decrypt. Some Brazilian politicians are pushing for a law to support this sort of thing, rather oddly claiming that the US does this routinely.

Meet Ran$umbin, a one-stop platform for everything you need to earn money from your ransomware attack.

You’ve heard of Swift on Security, now what about Security on SWIFT? The banks’ private network got hacked.

China does not like Apple’s services.

Samsung’s SmartThings IoT platform is horribly vulnerable. Someone in comments says it’s the Internet of Targets.

And, er, Google seems to have millions of Londoners’ medical records.

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