When I mused last week that hardware is hard, I didn’t even mention the difficulty of surviving in that peskiest and most profitable segment of the hardware business: smartphones. It’s worth pausing to ponder the challenge, given that two new players, Huawei and Google, have set their sights on the high end of the U.S. market.
First, consider for a moment how many have stumbled. Samsung is all but imploding before our eyes. First, it lost its commanding lead in China. Then its Galaxy Note 7 phones began blowing up in the U.S. Now it is recalling its washing machines. Motorola as we knew it no longer exists. Nokia is a fraction of its former self. Microsoft tried and failed in phones for years. Apple, still dominant in profits, is moving in reverse. Even the newbies can’t keep it together, as Fortune’s Scott Cendrowski ably illustrated in his summertime feature on China’s Xiaomi.
The market is so big for smartphones, though, that new players can’t seem to help themselves from trying. Google has taken many runs at making a phone, from the Nexus it outsourced to several manufacturers to the Project Ara modular phone that never made it to market. Now it is trying again with its high-end Pixel, which it is making under its own brand and selling through Verizon, Best Buy, and its own online store. Next, the surging Chinese manufacturer Huawei plans a pricey phone for the U.S. According to The Wall Street Journal, Huawei plans to sidestep wireless carriers altogether as a distribution channel, instead relying on e-commerce sites. Not even Apple tried that.
If hardware is hard, making small but powerful computers in a veritable commercial graveyard is really hard. Consumers will no doubt be the biggest winners.
Please have a restful day today; tomorrow is going to be a long one.
BITS AND BYTES
Oracle prevails in $9.3 billion NetSuite takeover. Over the weekend, the software giant said enough shares were tendered under its offer to close the deal. This despite resistance from big shareholder T. Rowe Price, which believed the $109-per-share purchase price offered for the cloud business software company wasn’t high enough. (Fortune, Bloomberg)
Apple scrambles to remove fake shopping apps. Hundreds of “rogue” mobile applications, pretending to be from retailers ranging from Dillard’s to Nordstorm, somehow managed to make it through the company’s App Store review process. Many of them are annoying pop-up advertising engines, but some were designed to steal credit card information. And yes, most were released by Chinese developers. (New York Times)
Add Microsoft to the list of big companies now using WeWork for office space. The software giant plans to use the co-working service for approximately 300 employees in New York. WeWork’s corporate account list now includes Dell, Salesforce.com, IBM, General Motors, Marriott, and several dozen other giant U.S. companies. (Fortune)
Expect Twitter to focus more on customer service applications. The social media service is testing new ways to automate company-to-customer communications. One Brazilian airline, for example, has developed a way for passengers to check in for flights via a direct Twitter message. (Reuters)
Samsung is counting on artificial intelligence to revive its smartphone business. The next edition of its handheld, the Galaxy S8, will include voice assistant software that Samsung acquired through its buyout of Viv Labs, the startup founded by one of the co-creators of Apple’s Siri. Viv’s software will also factor in Samsung’s appliance business, allowing consumers to control them via voice commands. (Reuters)
At Snap Inc., it’s the Evan Spiegel and Bobby Murphy show. According an analysis, the CEO and CTO of the parent company behind the Snapchat messaging service will control close to 74% of the voting rights after its initial public offering. For perspective, that’s far more influence than the co-founders of Google or Facebook enjoyed when they went public. (Bloomberg)
What drove Microsoft and Salesforce apart. Remember back in spring 2015 when the two software giants were mulling a merger? Apparently, they discussed combining forces twice. Now, however, their fight over Microsoft’s $26.2 billion acquisition of LinkedIn—Salesforce was also trying to buy the social networking company—has strained their relationship almost to the breaking point. (New York Times)
PEOPLE AND CULTURE
Magic Leap struggles to maintain the illusion. The secretive augmented reality software startup, which is valued at around $4.5 billion, confirmed the October departure of its top marketing executive Brian Wallace. Despite many flashy demonstrations of the technology ability to overlay 3D images over a view of “reality,” the company hasn’t managed to release a product yet. (Bloomberg)
IN CASE YOU MISSED IT
E-Commerce Startup Wish Is Raising Another $500 Million, by Erin Griffith
Apple Car Changes Course as the Spaceship Takes Shape, by Don Reisinger
ONE MORE THING
The ‘other’ Gawker settlement that changes the history of the Internet. According to reports, Shiva Ayyadurai—the self-proclaimed creator of email, despite evidence to the contrary—reached a reported $750,000 settlement against the news service for a series of articles that refute his claims. (Fortune)