Data Sheet—Tuesday, October 25, 2016
The very best technology companies excel at saying no. This was, after all, the mantra of the late Steve Jobs, who liked to say that Apple said no to more good ideas than it said yes to. He prized focus and discipline almost as much as smooth edges and elegant presentations.
With all the dealmaking hullaballoo going on right now in tech and many other industries, I got to thinking about the importance of saying no. After all, the M&A game is all about saying yes: Yes to combining, yes to doing more, yes to debt, yes to growth for the sake of growth.
So it was that two nuggets of negation jumped out at me Monday night, both from a tech-industry conference that The Wall Street Journal is hosting in Southern California. Reed Hastings, CEO of Netflix, suddenly a showbiz-industry pipsqueak valued at a mere $55 billion, said his service would maintain its focus on entertainment. Netflix, which seemed batty when it started commissioning quality TV shows and the like after starting out as a DVD rental service, will eschew news and sports, said Hastings. (Read and watch coverage of The WSJ’s conference here.)
Similarly, Satya Nadella, CEO of Microsoft, had a demonstrative response when asked about his company’s self-driving car strategy. No one would have thought to ask that question if Microsoft competitors Apple and Google weren’t both gaga over autonomous vehicles. Nadella’s car strategy, according to The WSJ’s estimable Greg Bensinger, is Azure, Microsoft’s cloud-computing business. Translation: Microsoft is saying no to this fad and instead will hope to sell computer time to those who feel compelled to say yes.
A corollary to being overly agreeable is outright hubris. A gripping blow-by-blow description, also in The WSJ, of how Samsung blew the recall of its woeful Galaxy Note 7 reveals that Samsung was so keen to best Apple that in naming its newest smartphone “the company decided to skip the number 6 and jump straight to 7, a name change that would invite direct comparisons with Apple’s model.” In hindsight, saying no to that idea would have been prudent.Adam Lashinsky @adamlashinsky firstname.lastname@example.org
BITS AND BYTES
It looks like Twitter is still shrinking. The social media company may be planning to cut around 300 employees—or 8% of its workforce—with the sales team bearing the brunt of that reduction, according to several news reports. Twitter is scheduled to report its latest earnings on Thursday morning. (Bloomberg, Fortune)
Smartwatch sales are crashing. Shipments for this wearable device category were off more than 50% for the third quarter to just 2.7 million units, reports market research firm International Data Corp. Apple claimed about 41% of the share. Part of the problem was Google’s decision to delay its Android Wear 2.0 operating system for smartwatches until 2017. (Fortune)
Keep your eyes on this Google acquisition. The company is paying an undisclosed sum for Eyefluence, which makes technology that tracks where people are looking when they’re interacting with a computer. The idea is to improve navigation for augmented reality or virtual reality applications. (Fortune)
There are definitely mixed feelings about the AT&T-Time Warner mashup. Many skeptics believe the proposed union will be quashed by regulators. The stock market didn’t exactly greet the news. On the bright side, Netflix CEO Reed Hastings thinks the deal might inspire more innovation and competition among cable TV companies. (New York Times, Fortune, Bloomberg)
Corporate spending on software R&D accelerates. According to an annual innovation survey by PwC, the fastest-growing companies spend 25% more of their research budgets on software than slower-growing ones. And by 2018, healthcare organizations should overtake computer and electronics hardware companies as the biggest spenders, with anticipated spending of around $165 billion. (Reuters)
WATCH FOR IT
Apple is on the hot seat. The tech giant is due to report its fourth fiscal quarter ended Sept. 24 after the stock market close Tuesday. Analysts project revenue of about $47 billion, which would make for its third consecutive quarterly decline. The big question: how much did Apple benefit from the Samsung Galaxy Note 7 recall debacle? (Wall Street Journal)
How T-Mobile’s customer focus beat rivals once again. Over the last year, the wireless industry has seen Verizon buying up popular—if faded—Internet properties, AT&T making huge bets on video, and Sprint engaging in some of the savviest financial engineering moves ever seen just to manage its heavy debt load.
But what of T-Mobile? Under outspoken CEO John Legere, the third largest carrier hasn’t bought any cable, satellite, Internet, or smoke signal-based media companies. Instead, following Legere’s “Uncarrier” strategy, T-Mobile has simply focused on giving wireless customers more of what they want. That’s meant lower prices and features like free roaming and music streaming that doesn’t count against data caps. That focus is paying off with customers.
IN CASE YOU MISSED IT
Lyft Is Testing Monthly Passes for Discounted Carpool Rides, by Kia Kokalitcheva
Businesses Must Secure Connected Devices to Win Consumer Trust, by Jeff John Roberts
Here’s Why The New York Times Is Buying This Gadget Reviews Site, by Mathew Ingram
Apple’s iPhone Share Is Static, But iPad Is Tumbling, by Don Reisinger
ONE MORE THING
Uber makes a beer run. In the first “application” of the ride-sharing company’s self-driving truck technology, Anheuser-Busch moved a truckload of Budweiser 120 miles in Colorado. (Reuters)