Data Sheet—Tuesday, January 20, 2015
Happy Tuesday, Data Sheet readers! Google is considering a $1 billion investment in Elon Musk’s new Internet-in-the-sky scheme. SAP expects lower profits for 2017, and Palantir’s valuation is now $15 billion. Read on for loads of news after the long weekend.
Why build a cell tower when you can launch a satellite? Elon Musk’s SpaceX venture is planning a “global communications system” that would deliver high-speed Internet access from space. Google could be ready with $1 billion to help. The crazy thing about this crazy scheme is there’s already potential competition: satellite Internet company OneWeb, backed by Virgin’s Richard Branson (among others). Fortune
SAP cuts 2017 outlook. The software company’s transition to cloud-delivered business applications will weigh down operating profits until at least 2018. Its forecast for 2017 is now 6.3 billion and 7 billion euros ($7.3 billion to $8.1 billion). In case you’re wondering, its previous guidance was $8.8 billion. Things should stabilize by 2018. “We are in a market-share game,” SAP CEO Bill McDermott told reporters. “The more users and the more scale and reach you get, ultimately the more you win on the back-end when you have high renewal rates.” Fortune
UK closes book on Autonomy investigation. Britain’s Serious Fraud Office wasn’t able to find enough evidence for a conviction related to Hewlett-Packard’s botched buyout of the software company. HP took an $8.8 billion write-down in November 2012. HP’s management claims $5 billion was related to what it describes as accounting fraud but what Autonomy CEO Mike Lynch holds was poor management and differences in U.K. and U.S. accounting methods. U.S. authorities are still on the case. Reuters
More money for Palantir? Reports peg the data-mining company’s value at $15 billion, making it the second most valuable venture-backed organization after ride-sharing business Uber and smartphone maker Xiaomi. What’s more, it’s raising another round. Wall Street Journal
IBM earnings watch. The giant technology is on the list to report earnings after the market close on Tuesday. Analysts aren’t holding their breath for a revenue increase: the consensus calls for a 6.2% annual sales decline (an average estimate of $93.5 billion). Stay tuned. Seeking Alpha
Is Google shopping for mobile payments technology? Reports suggest it’s talking to Softcard (formerly known as Isis). Such a move would counter Apple Pay. Right now, roughly 200,000 merchants use the company’s mobile app. Softcard got its start as a joint venture of AT&T, Verizon, and T-Mobile. TechCrunch
Samsung considers stock split. The South Korean company’s market cap on the domestic exchange is $185 billion: five times the weighting of the second-biggest company, Hyundai Motors. Regulators and shareholders are both pushing for the move. In other news, the company is also redrawing its design strategy. Leading the charge is Lee Don-tae, who used to work for Tangerine. Yes, that’s the agency founded by Jonathan Ive that Apple used back in the day for design advice on many now-iconic products. WSJ
$10 billion charge for AT&T. The telecommunications giant is writing off actuarial fluctuations related to its retirement funds as well as outdate network equipment. Neither should affect operating results for the fourth quarter, due out Jan. 27. Reuters
POLICY & STRATEGY
Too little, too late? Let’s be honest. Microsoft’s numerous attempts to claim a piece of the mobile device market—either smartphones or tablets—have been pretty ineffectual. Seriously, exactly what did it get out of its $7 billion investment in Nokia? Windows Phone managed a mere 3% share of shipments for the third quarter. I hear crickets.
That’s why a focus for this week’s launch will be on how easy it is to move Windows apps onto its mobile platforms. “With Windows 10, we’re moving to a more unified Windows platform for phones, tablets and PC, helping developers do more with their code,” company spokesman Frank Shaw told the New York Times in statement.
Right now, the Windows app store hosts more than 560,000. That’s way more than last year, but about half of what’s available for either Apple or Google.
Probably the single biggest threat to Microsoft’s ability to pull this off is the Apple-IBM relationship—focused on making the iPad super useful for businesses. But one should never underestimate the fervor or influence of Windows software developers—especially in international markets.
Google targets $11 billion government contract. It is teaming with Pricewaterhouse Coopers on the proposal for a massive overhaul of the health records systems at the Department of Defense. Also participating on the bid are General Dynamics, Medsphere Systems, MedicaSoft, and DSS. eWeek
Facebook hiring spree. Based on job openings, the social networking giant could expand its workforce by 14% in the near future. Three big areas for recruitment (based on said openings): virtual reality technology, drone geeks, and data center experts. Reuters
RESEARCH & PREDICTIONS
$3.3 trillion and counting. That’s the estimated revenue attributable to mobile technology last year—everything including smartphones, and the mobile apps and services that run on them. Six of the 25 most valuable companies in the world are involved in this market: Alibaba, Apple, China Mobile, Facebook, Google, and Verizon. Re/code
STARTUPS & DISRUPTORS
Sensors in space. Big high-tech companies include Cisco and General Electric are developing analytics services that offer insights into their equipment. Their goal is to generate new maintenance revenue (among other things). A tiny stealth company from Las Vegas called Terbine has even larger ambitions: it is assembling a “Global Sensing Network” (GSN). It wants organizations to buy these feeds for commercial applications such as oil and gas exploration or precision agriculture.
“We’re starting out with industries where this data is being collected, but nothing is really being done with it,” founder and CEO David Knight told me in a recent conversation.
Aside from working with data collected by other companies and communities, Terbine will use drones and miniature satellites to gather metrics about the “physical” world such as greenhouse gas (GHG) emissions, temperatures, ocean salinity, drop density, and so on. So far, Terbine has written software that can interpret the data. Now, it is in the process of forging relationships. It just raised an undisclosed amount of seed capital from hedge fund Incapture Group that will fund pilot tests of its concept, Knight said.
The value of such a marketplace grows over time as more information is added. Terbine is focused on the obvious obstacles: data security and regulatory issues governing privacy.
Terbine is pretty ambitious: Knight envisions using CubeSat satellites since they can help “paint” the atmosphere with collection points at a far lower cost than previously required. By placing readers on container ships (as just one example), the company will be able to read and interpret all sorts of data. “All of a sudden, you have this amazing mobile sensory platform that mathematically aggregates to create these amazing pictures of what is going on all over the world,” he said.
$7 million for better retail analytics. Another would-be disruptor in this space, Rubikloud, just closed a Series A round led by Horizons Ventures, related to Chinese investor Li Ka-shing. TC
How to go from startup to global phenomenon
DocuSign is one company responsible for letting people sign documents digitally. It takes the pain out of receiving an emailed document, printing it out, and then scanning or faxing it back. Started in 2003 by Tom Gonser, more than 48 million people have used DocuSign in 188 countries. At a recent panel in San Francisco hosted by DocuSign, Fortune’s Adam Lashinsky chatted with Gonser about taking DocuSign from idea to global phenomenon. [The transcript was lightly edited for clarity.]
What’s been the biggest challenge for you as a founder?
Challenges are different at different phases of a company, but they are all around people and money. At the start, the challenge is finding some other crazy people who can get passionate about the idea, quit their jobs and risk everything. Then of course, building traction on a shoestring to create value, with the notion of profitability is secondary.
After things are running, the people challenge shifts to working to be sure we get the right people onboard, and create organizational leverage. The money problem shifts to managing spending, and ensuring traction to profitability.
What’s the one thing you wished you knew when you first began this journey?
I wish I fully understood the amount of time it would take, and wish we’d paced ourselves better.
What’s been your biggest mistake?
Mistakes are a part of moving forward. We’ve made many mistakes, but they simply got built into our learning about creating this market. If I had to point out one it would be scaling about two years before we needed to.
Visit Fortune.com for the rest of the Q&A.
MY FORTUNE.COM BOOKMARKS
The 1% will own more than the 99% by 2016, report says By Geoffrey Smith
Meet Yelp’s small business evangelist By Benjamin Snyder
Apple’s Swift is on fire By Philip Elmer-DeWitt
A correction from last Friday’s edition. The $15 million round in Treasure Data—one of the emerging cloud analytics services—was led by Scale Venture Partners (not AME Cloud Ventures). The latter (which is the venture fund led by Yahoo founder Jerry Yang) is an investor, just not the lead one.
Call a spade a spade. Reader Tim Meyer thinks Google’s characterization of the Google Glass status change as a “graduation” is insulting. He suggests that the company has been living in an “alternate reality.” Assigning it to iPod designer Tony Fadell is backpedaling.
“More likely Tony F (being he brings his secrecy genes from Apple) will treat it is as any other project that has to have a proper business plan, pricing, marketing, use cases, production numbers etc. Only then do you launch a project. So it could be a year or several. Even then it can be a flop like the Fire phone, but at least Amazon spent many years in development before launching it. Business 101 would have told them that low volume vertical markets is the way to start and learn, but Google decided to skip that step.”
FOR YOUR INNER TECHNOPHILE
Let me print you a new tooth. Stratasys has developed a 3-D printer for dentists and orthodontics laboratories. It’s intended for creating things like temporary crowns. ZDNet
ONE MORE THING
Oracle board adds former Secretary of Defense. Nope, not Hillary, Leon Panetta. It’s a new position, not a replacement. I’m guessing his expertise in public policy and government bureaucracy will come in handy as the software company grapples with the data security and privacy issues associated with cloud computing.
MARK YOUR CALENDAR
IBM ConnectED: Collaboration and digital experience. (Jan. 25 – 28; Orlando, Florida)
IBM Interconnect: Cloud and mobile strategy. (Feb. 22 – 26; Las Vegas)
Gartner CIO Leadership Forum: Digital business strategy. (March 1 – 3; Phoenix)
Microsoft Convergence: Dynamics solutions. (March 16 – 19; Atlanta)
IDC Directions 2015: Innovation in the 3rd Platform era. (March 18; Boston)
Cisco Leadership Council: CIO-CEO thought leadership. (March 18 – 20; Kiawah Island, South Carolina)
Gartner Business Intelligence & Analytics Summit: Crossing the divide. (March 30 – April 1; Las Vegas)
Knowledge15: Automate IT services. (April 19 – 24; Las Vegas)
RSA Conference: The world talks security. (April 20 – 24; San Francisco)
Forrester’s Forum for Technology Leaders: Win in the age of the customer. (April 27 – 28; Orlando, Fla.)
MicrosoftIgnite: Business tech extravaganza. (May 4 – 8; Chicago)
NetSuite SuiteWorld: Cloud ERP strategy. (May 4 – 7; San Jose, California)
EMC World: Data strategy. (May 4 – 7; Las Vegas)
SAPPHIRE NOW: The SAP universe. (May 5 – 7; Orlando, Florida)
Gartner Digital Marketing Conference: Reach your destination faster. (May 5 – 7; San Diego)
Annual Global Technology, Media and Telecom Conference: JP Morgan’s 43rd invite-only event. (May 18 – 20; Boston)
HP Discover: Trends and technologies. (June 2 – 4; Las Vegas)