Perhaps because I work for one, I’m obsessed with the challenges big companies face trying to reinvent themselves. I knocked Intel recently for not having gotten there yet and praised Cisco for being on the right path. On Wednesday I visited Flex, the contract manufacturer formerly known as Flextronics International. It also is trying to refashion itself. It wants to be known as a “sketch-to-scale” engineering design shop that develops independent intellectual property both on its own and on behalf of the companies whose products it makes. (Alcatel-Lucent, Cisco, and Apple are some of Flex’s biggest customers.)
From my brief look, I’d say Flex’s reinvention looks promising. The company has a venture arm, Lab IX, so it can invest in some of the startups that buy its services. Its innovation lab in Milpitas, Calif., is a facility where customers can look at Flex’s offerings, including sensors embedded in fabric for dazzling new “wearable” applications. The company also has highly secured, confidential work areas so customers can pursue top-secret projects without anyone, including all but approved Flex employees, knowing what’s up.
Deciding what belongs and what doesn’t also is a critical role for established companies. Flex developed software for its own use that maps and organizes important information from the company’s vast supply chain. It liked the software so much it decided to create a separate company, with venture-capital investors, on the theory that others, including Flex competitors, would buy its wares. The startup is called Elementum, and it aims to fill a void it thinks Oracle and SAP left in the market. “The capabilities we created weren’t unique to Flex,” says CEO Mike McNamara. “They were unique to supply chains.”
Spinning out a valuable creation—as EMC has done and Dell is considering—is a smart move, as is making one’s offering richer in pursuit of higher margins. Flex’s margins are still small, as Bloomberg BusinessWeek recently described, but they are moving in the right direction.
Adam Lashinsky
Your usual curator Heather Clancy is away on vacation. Fortune reporter Robert Hackett here, subbing in. You can reach me on Twitter (@rhhackett) or email robert.hackett@fortune.com. Feedback welcome.
TOP NEWS
Facebook tests virtual assistant. The social network announced that it is developing a personal digital assistant dubbed "M," similar to Apple's Siri or Microsoft's Cortana. One big difference between them, says Facebook VP of messaging products David Marcus, is that M will have a human element and will be able to complete tasks, such as buying and shipping gifts on a person's behalf. (Wired, Fortune)
Monsanto drops Syngenta bid. The board of the world's largest agrichemical company unanimously rejected the genetically altered seed giant's $47 billion offer. Monsanto, apparently frustrated, has abandoned pursuit of a takeover. (Reuters)
Blackrock acquires FutureAdvisor. The asset management giant will advise banks and financial institutions using the startup's algorithm-based service. While FutureAdvisor currently manages about $600 million in assets, rivals with robotic advising tech, such as Betterment and Wealthfront, manage more than $2 billion each. (Fortune)
Snapchat partners with publishers. The ephemeral messaging startup is adding three new publishers to "Discover," its money-making media content section. The newcomers are Tastemade, Mashable, and IGN. (Mashable)
Server sales are strong. In the second quarter of this year, server sales grew to $13.6 billion from $12.7 billion during the same period last year. Leading the market is Hewlett-Packard, followed by Dell and IBM. (Fortune)
Indians are succeeding in Silicon Valley. Sundar Pichai at Google. Satya Nadella at Microsoft. Nikesh Arora at SoftBank. Rising to the top in the tech sector isn't just a function of meritocracy, it requires access. (Financial Times)
Y Combinator appoints COO. The tech startup accelerator has named 33-year-old Qasar Younis as the company's second in command. An alum of the program's 2011 class, Younis previously sold his business feedback platform TalkBin, which he developed at the seed fund, to Google. (Fortune)
Amazon lays off consumer device engineers. After the failure of the online retailer's Amazon Fire phone, the company is dismissing dozens of engineers at its secret hardware center called Lab126. The sackings are a first at the 11-year-old division. (Wall Street Journal)
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THE DOWNLOAD
Fortune contributor Chris Morris analyzes what impact Youtube's gaming channel will have on Twitch.
"As curious as it might seem to some, gamers spend a lot of time watching other gamers play video games online. And the field has exploded since the launch of Sony’s PlayStation 4 and Microsoft’s Xbox One.
For the better part of the past two years, Twitch has had the field of video game livestreaming to itself, but YouTube’s entry into the field today sets the stage for what could be a titanic battle." Read more on Fortune.com.
BITS AND BYTES
Thy neighbor's wife. A planned Ashley Madison app. (Daily Dot)
Merkeln (v). To remain silent, or „...“. (NPR)
Tesla road trip. 452 miles on a single charge. (Fortune)
The Bitcoin family. "For me, it’s like a never-ending blockchain." (Vice Motherboard)
Knockoff Goldman Sachs. A Chinese counterfeit? (Time)
ALSO ON FORTUNE
Social media gives us a front-row seat for the Roanoke shootings, whether we want it or not by Mathew Ingram
These women paved the way for the first female army rangers by Nina Easton
Real estate agents may be colluding to rip you off by Chris Matthews
ONE MORE THING
Your computer may have secret memory stashes. GCHQ—the UK's NSA equivalent—may have tipped its hand when it asked Guardian journalists to obliterate their laptops. (The Intercept)
FINAL THOUGHT...
"Today we're beginning to test a new service called M. M is a personal digital assistant inside of Messenger that completes tasks and finds information on your behalf. It's powered by artificial intelligence that's trained and supervised by people."
Facebook VP of messaging products David Marcus, introducing the social network's new virtual assistant in a Facebook post. The digital aid now in development will compete with the likes of Apple's Siri, Microsoft's Cortona, and Google's Google Now. (Facebook)
