Data Sheet—Facebook Is Playing Catchup With ‘Portal’ Video Screen

The market for connected speaker-video caller-Internet devices is getting crowded.

Already Amazon, Google, and Apple have somewhat similar-looking and functioning devices on the market, as we’ve discussed in Data Sheet before. They play music, grab information from the Internet, broadcast messages, and perform other mundane, voice-activated tasks previously confined to smartphones, computers with keyboards, or living room appliances with remote controls.

Now, with the derivative battle cry of “Hey Portal,” Facebook has entered the field. Facebook’s new device, due out in November, comes with a twist. It’s primarily a video calling toy, intended to facilitate video chats between groups of people. Facebook’s gadget can do many of the things its competitors do, too. It comes loaded with Amazon’s Alexa voice assistant, a sign of battle lines being drawn among the tech giants.

Facebook is counting on its users to trust it with their video calls. (I wouldn’t install the thing in my home.) It says the system only turns on when users utter its “wake word” and that the device isn’t intended to browse the Internet.

Non-device makers in tech long have introduced prototype products to demonstrate the power of their technology. Microsoft and Intel made demo units, for example, to show PC makers what they could do. As well, computer maker Apple thrived because its software was superior, even though it wasn’t a major revenue generator relative to its hardware.

Amazon changed this by introducing market-changing hardware (Kindle, Echo) and some clunkers too (the Fire phone). Devices are a major product line now for Amazon, if only to move merchandise elsewhere on Amazon’s platform. But they are well beyond demos.

The model is tough to resist. Facebook is playing catch-up. But it has an awful lot of users on which to experiment.

NEWSWORTHY

Unannounced. It's debut day for new Google hardware, but first the search giant is making headlines for other, less positive reasons. After quite the hullabaloo from its employees over AI, Google said on Monday it would withdraw its bid for a $10 billion cloud services contract for the military due to objectionable terms and potential conflicts with its AI ethics policy. Amazon is widely expected to win the deal for the project called the Joint Enterprise Defense Infrastructure cloud, or JEDI. Google also announced it was shuttering its failed social network, Google+, while disclosing for the first time a security flaw at the service that could have allowed outside developers to view private profile data from hundreds of thousands of Google+ users. The company said there was no evidence of misuse of the data.

Double dealing. Dealmakers at Microsoft have been busy of late. The company says it is investing an undisclosed amount in Southeast Asian ride hailing service Grab in return for Grab using its Azure cloud platform. Separately, Microsoft's LinkedIn unit said it bought employee survey startup Glint for an undisclosed amount that some reports put at over $400 million.

One giant leap for mankind. After private companies have sent many unmanned rockets into space, Virgin Galactic owner Richard Branson says he's ready to send people up “within weeks, not months." The company has successfully conducted three manned test flights within the Earth's atmosphere this year.

Reintegration. Is the Hollywood studio system coming back together after splintering into a million pieces? Streaming video king Netflix has spent billions financing original productions. Now it's buying a vast studio complex in Albuquerque, New Mexico, where movies such as Sicario and The Avengers were shot. Sign the top talent, produce the shows in-house, distribute the shows...sounds familiar.

Ahead of the curve. Venture capitalist Kirsten Green announced a new $360 million fund at her Forerunner Ventures, about triple the size of her prior fund. Green, who has focused on consumer businesses like Warby Parker and Birchbox, says she'll look for startups that embody values consumers favor. "The consumer is leading the charge, and if the consumer is anchored around values and things that matter, that’s good for business," she tells Fast Company in an interview.

Melting monster. Video gamers and videographers should be happy with Monday's announcements out of Intel regarding new, ninth-generation desktop CPUs. Leading the class may be the i9-9900K, with eight cores and a top speed of 5 GHz at a price just under $500. Intel's stock price was unchanged on the day but the slumping stock of rival AMD dropped another 3%, with its loss over the past week hitting 16%.

FOOD FOR THOUGHT

Harvard prof Clayton Christensen gets most of the ink when it comes to disruptive technologies in business thanks to his 1997 tome The Innovator's Dilemma. But the more fitting explanation in most cases of dominant companies being overtaken by new tech may be from a different Harvard scholar. Prof Rebecca Henderson's 1990 article, co-written with Kim Clark, faults corporate organizational structures and incentives rather than companies overlooking inexpensive, underwhelming products, as Christensen argues. In a lengthy and anecdote-filled review of the debate, Financial Times columnist Tim Harford sides with Henderson. He explains:

Dominant organisations are prone to stumble when the new technology requires a new organisational structure. An innovation might be radical but, if it fits the structure that already existed, an incumbent firm has a good chance of carrying its lead from the old world to the new.

Consider, for example, IBM—the giant of mainframe computing...A case study co-authored by Henderson describes the PC division as “smothered by support from the parent company”. Eventually, the IBM PC business was sold off to a Chinese company, Lenovo. What had flummoxed IBM was not the pace of technological change—it had long coped with that—but the fact that its old organisational structures had ceased to be an advantage. Rather than talk of radical or disruptive innovations, Henderson and Clark used the term “architectural innovation”.

“An architectural innovation is an innovation that changes the relationship between the pieces of the problem,” Henderson tells me. “It can be hard to perceive, because many of the pieces remain the same. But they fit together differently.”

IN CASE YOU MISSED IT

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Microsoft Will Roll Out Video Game Streaming Service in 2019 By Chris Morris

DirecTV Now Went Down, Suffering a Nationwide Outage By Erin Corbett

Marc Benioff Is Backing a Bill to Fight Homelessness in San Francisco By Hallie Detrick

Sony Will Be Releasing a Successor to the PlayStation 4—But Don't Call It the PlayStation 5 Just Yet By David Meyer

Musk Honors Pledge, Donates Cash to Bring Clean Water to Flint, Michigan Schools By Glenn Fleishman

Amazon Has a Massive New Division—and No One's Paying Attention to It By Alex Salkever

BEFORE YOU GO

The home phone is disappearing, as more and more people rely solely on the mobile variety. But let's celebrate the past before it fades from view completely. The latest chapter in HiLo Brow's "Fossil" series recounting "objects that bear witness to a vanished way of life" is the lowly rotary dial telephone. Recalls writer Ian Bogost:

Slipping two fingers in the housing indentation under the cradle to carry it feels no less retro-chic than smoking a cigarette or sipping whiskey from a silver-rimmed tumbler. But actually using the phone, alas, does not. Their transformation to midcentury-design prop is complete.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.