Data Sheet—Wednesday, November 4, 2015
The most impressive accomplishment an established company can achieve is growing when its core business has slowed. At the Fortune Global Forum this week in San Francisco, a recurring theme has been how many champions have lost the fight over time. Chip Bergh, CEO of Levi Strauss, said his company not so long ago was the same size as Nike. Today Levi’s is the same size it was then, around $5 billion in revenue, as Nike has soared past $30 billion.
Comcast, the cable company, has thrived, partly by dominating a slow-to-no-growth business, partly by adding on products to its core offering (like broadband Internet), and partly by acquiring well.
Brian Roberts, CEO of the company that now owns NBCUniversal, spoke Tuesday at the Fortune conference. After a tough year in which his quest to buy Time Warner Cable died, he has a good story to tell. (Fortune Senior Writer Michal Lev-Ram wrote up the interview I did with Roberts here.) Cable customer defections, known as “cord cutting,” have slowed as Comcast is growing its overall customer base through other products. The company has injected financial and marketing rigor to its acquired companies, particularly the Universal film studio.
To hear Roberts tell it, Comcast even has improved its customer service, a black mark on the company’s reputation. He said Comcast is chipping away at its problems with customers by encouraging phone representatives to spend more time on calls. That goes against years of conventional wisdom that less time on the phone is best for a company’s expenses. Yet the new practice has resulted in lower customer churn, which has obvious financial benefits.
Roberts said the biggest boon to customer service is its X1 service, which includes voice-activated commands to rival the features of the new Apple TV. Improving the customer experience is as important as boosting customer service, he said. Imagine that.
BITS AND BYTES
San Francisco voters hand victory to Airbnb. City residents have rejected Proposition F, a measure that would have limited short-term housing rentals to 75 nights every year. Airbnb spent $8 million on a political campaign to defeat the proposal, arguing that passing the legislation would have eliminated a source of supplemental income for middle-class families. But opposition is growing around the world. (Wall Street Journal)
Competitors Microsoft and Red Hat collaborate. A new partnership will make Red Hat’s Linux software available on Microsoft’s Azure cloud service, which provides businesses with access to servers and digital storage on demand. Red Hat is a longtime champion of the open source software model, which Microsoft resisted for years. Its Linux software underlies many mission-critical applications, and the move will make it far simpler for companies to move those apps to the Azure service. (Fortune)
Google to EU: Remember, search is free. In its complaint (filed earlier this year, but viewed this week by Reuters), European Union antitrust regulators insist they're ready to fine the Internet giant heavily for abusing its dominant market position. The amount could reach $6.6 billion, based on Google's 2014 results. Google's counter from August to the EU complaint hinges on this argument: Because it doesn't charge consumers for its search service, there's no "trading relationship." Hence, it can't be accused of abuse. (Reuters)
SoftBank chairman promises deep job cuts at Sprint. Masayoshi Son wants the scrappy wireless carrier to cut expenses by at least $2 billion after another lackluster quarter. That could amount to "thousands" of layoffs, he said during a presentation on Wednesday. SoftBank owns close to 80% of Sprint's shares. (Wall Street Journal, Fortune)
Groupon replaces CEO. After missing third-quarter revenue expectations—and promising more of the same for the current quarter--the daily deals company is moving co-founder Eric Lefkovsky into the role of chairman. His successor as chief executive is Rich Williams, currently chief operating officer. Groupon will spend at least $150 million more in marketing in 2016 to support its transformation into an online marketplace. (Reuters)
Microsoft reneges on offering free cloud file storage. Last year, the software giant promised "unlimited" space in its OneDisk service to subscribers using cloud applications such as Office 365 Personal. The idea was to help build up its user base, at the expense of rivals including (but not limited to) Google and Dropbox. But Microsoft said a small number of users abused the offer, so it's now limiting account space to 1 terabyte. (Fortune)
Hilton faces fine over Wi-Fi blocking incidents. The FCC doesn't take kindly to businesses that prevent visitors from using personal wireless hotspots to gain Internet access on their property—just so they can make them pay for their own services. It has proposed a $718,000 fine against a Baltimore convention company that has commonly used this practice. The Hilton investigation, which started with one California property, is still ongoing. However, the hotel company may have to pay $25,000 for being uncooperative. (Ars Technica)
Intel stakes claim in Internet of things. The chipmaker is launching three new microprocessors, part of its Quark line, that will collect data from everything from cars to doorknobs. The technology was designed to use very little power and to withstand extreme temperatures, so that they can be used anywhere from farms to factories. (Wall Street Journal)
Apple nears settlement with sapphire supplier. Bankrupt GT Advanced Technologies, which Apple was grooming to make smartphone screens, will be allowed to auction off much of the idle equipment at Apple's plant in Arizona. The two companies will split the proceeds, and Apple will take ownership of whatever isn't sold. The money will be used to erase GT's $439 million debt. (Wall Street Journal)
eBay enterprise business taken private, broken up
After months of negotiation, eBay has divested its enterprise e-commerce division in a transaction valued at $925 million. The new buyers—led by Sterling Partners and Permira Funds—are already breaking up the business.
The biggest chunk of the organization, formally (and formerly) known as eBay Enterprise, manages e-commerce activities for a surprisingly large number of brands ranging from apparel company Abercrombie & Fitch to jewelry specialist Zales. The plan is to integrate that business, which is headquartered in King of Prussia, Pa., with a similar operation from Innotrac, which is a Sterling Partners portfolio company based in Atlanta. The union will create the world’s largest specialist in e-commerce operations, with more than 7,500 employees and more than 27 distribution centers across North America and Europe.
Other assets associated with eBay Enterprise include customer relationship management applications and an array of marketing services that were part of GSI Commerce (bought by eBay in 2011), as well as the Magento e-commerce software line (popular with many small and midsize businesses). These businesses have met with two very different fates—the former was sold, while the latter is branching out on its own. Read more in Fortune.com about their fates.
MORE FORTUNE TECH COVERAGE
Facebook's Sheryl Sandberg has a few ideas about improving education by Kia Kokalitcheva
Why GoPro is getting sued by Polaroid maker by Michal Addady
Virtual reality is stunning. But is it a business? by Jonathan Vanian
Google's new AI will replay to your emails so you don't have to
by Stacey Higginbotham
Tech titans score abysmally on data-privacy rights by Robert Hackett
Can't watch 'CodeGirl' in theaters? Watch it free on YouTube
by Rick Broida
MakerBot promises faster 3-D printing speeds. So what? by Andrew Zaleski
ONE MORE THING
Co-founder of personal computer pioneer Gateway dies of unknown causes. The Iowa-born company, known for its iconic cowprint boxes, was a fierce rival of Dell's back in the day. It is credited with helping kickstart the consumer computing movement. Michael Hammond, who met co-founder Ted Waitt at a University of Iowa football game, was 53 years old. (New York Times)
This edition of Data Sheet was curated by Heather Clancy: