Data Sheet—Thursday, December 8, 2016

Dec 08, 2016

An especially amusing inside-baseball moment for journalists is when competing bigfoot publications come out with lengthy articles—we call them thumbsuckers—on the same subject. Witness the near-simultaneous posting of significant works Wednesday by The Wall Street Journal and The New York Times that come to the same conclusion: Tech companies are hopeless at hardware.

Both articles are exceedingly well done, and I recommend them highly. The WSJ's Jack Nicas writes expansively in a deeply reported piece, “Silicon Valley Stumbles in World Beyond Software,” that focuses largely on the hardware foibles of Google. As we all know, Google is a software company, and its exertions on drones, phones, robotic cars and the like so far have largely come to naught. Nicas concludes that this is because physics is so different from computer engineering. What works in software is far messier in the real world.

Farhad Manjoo, tech columnist at the NY Times, elegantly takes the argument a step further, writing that gadgets themselves are things of the past. “Thanks to GoPro we realized that people really wanted to take videos of themselves doing underwater handstands,” he quips. But once the novelty wears off—and no-name manufacturers knock off GoPro’s innovation—there’s no profit margin left over.

I read these articles with a bit of bemusement. My first cover story in Fortune—in November 2003—was called “Shootout in Gadget Land,” an article about how the likes of Dell, Virgin, Gateway and others were moving into consumer electronics. It included a section on the “rise of no-names,” featuring a DVD maker named Apex Digital that was eating the lunch of more established brands, like Sony. Nearly every manufacturer I highlighted in that article is out of the consumer-electronics game today. One company that dominates it, Apple, whose only gadget entry at the time was the iPod, got the briefest of mentions.

My conclusion: Yes, tech companies are better at software than hardware. But that doesn’t mean they’ll stop trying to make it or that new hardware categories won’t emerge to delight consumers. There’s still just too much money to be made.

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

BITS AND BYTES

Intel on notice as Qualcomm throws down the gauntlet. The world's biggest supplier of smartphone chips has entered an alliance with Microsoft that is intended to inspire a new line of tablet and notebook computers. It has also introduced a new processor meant to power computer servers. (Wall Street Journal, Wall Street Journal)

Slack and Google get friendlier. The two will collaborate on technology that links Slack's messaging service, used by more than 4 million workers and counting, more closely with Google's cloud software applications. Slack has similar relationships with IBM and Salesforce. (Fortune)

Sorry Pebble fans, Fitbit plans to kill its smartwatches. The fitness band maker confirmed its plans to buy the struggling startup, which built early support for its Core and Time products on the Kickstarter crowdfunding site. Fitbit just wants Pebble's software, which it plans to use to improve its own smartwatch lineup. (Fortune)

U2's frontman backs food-tech startup. Bono, along with U2 lead guitarist The Edge, has invested an undisclosed amount in two-year-old Irish startup Nuritas. The company uses artificial intelligence and DNA analysis to discover food molecules that can be used to develop supplements and drugs. (Fortune)

Citibank's fintech division releases first mobile app. The financial services giant has released an updated iPhone application that combines banking, wealth management, and money transfer services. The catch is that it's only available for Citi's most elite banking customers. (TechCrunch)

ONE MORE THING

Jack Dorsey on Donald Trump's Twitter addiction. It's "complicated." But Twitter's CEO recognizes the responsibility his social media platform plays in helping society "really get to the truth." (Fortune)

This edition of Data Sheet was curated by Heather Clancy.
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