TSR on tech: your weekly news summary
|April 15, 2012||Posted by Elliot Davies under TSR on tech|
It’s a business-heavy week this time around, with Facebook’s highly priced acquisition of Instagram and the launch of the first major Windows Phone handset. We also have some number stories as usual: this week it’s Google’s Q1 earnings, Apple’s market cap, layoffs at Sony and a patent purchase by Microsoft. Not only that, but Apple is being sued by the American government, Anonymous is unexpectedly topping a poll of influential people, and Google+’s metamorphosis into Facebook is nearly complete. For all this and more, read on!
By far the biggest tech story this week was the sudden announcement that Facebook will be buying Instagram, a popular photo-sharing service, for $1bn. Many are wondering how sensible this was: not yet two years old, with a staff of 13, no clear business model, and only 40 million users, Instagram is a pretty small fish in the grand scheme of things. Facebook, on the other hand, has about 850 million users and a fairly solid advertising model; it really feels as though Facebook showed itself to have more money than sense in this case. Facebook said that Instagram would continue to be run as an independent application, and that its users would still be able to share photos with a multitude of social networks. If all goes well the acquisition should complete before the end of June.
The launch of Nokia’s premier Windows Phone handset, the Lumia 900, got off to a bad start this week. First Nokia chose to launch the phone on Easter Sunday, when most shops were shut, and then a bug was discovered that meant many of the handsets were unable to connect to the internet. These gaffs are bound to sit badly with investors; the Lumia is widely seen as the handset that will either catapult Windows Phone and Nokia into the smartphone market as major players or cause Nokia’s smartphone business to fail (again). Indeed, despite promising sales numbers Nokia announced later in the week that its profits for the quarter would likely not meet expectations, leading to an 18% drop in share price. Nokia’s stock price is currently at an extremely low $4.02, lowering the company’s market cap to $15.05bn – the sort of price that could actually make it an appealing acquisition by a company like Microsoft.
Google released its Q1 2012 earnings this week, turning up decent revenues of $8.14bn and earnings of $10.08 a share compared to analysts’ expectations of $8.15bn and $9.65 a share. Google also announced a stock split, which will give investors one new share of non-voting stock for each share they currently hold, and revealed it has $49.3bn in cash in its war chest – still some way short of Apple’s roughly $100bn.
Speaking of the Apple juggernaut, the company hit a market cap of $600bn this week with shares trading at a 52-week high of $644. Apple is now the second company ever to have such a high market cap (Microsoft made it briefly to $604bn in December 1999), but the most astonishing statistic is that it reached the current cap just a month after it hit $500bn. Rumours of a $1tn market valuation are beginning to look less wild.
Kaz Hirai, the CEO of Sony who recently took over from Howard Stringer, has announced layoffs of 10,000 people at the company, amounting to about 6% of the total workforce. In a statement, Hirai said the company would be moving to focus on mobile devices, cameras & camcorders, and games. In particular, Sony will cut the fixed costs of its television business, which has lost $10bn over the past eight years, by up to 60%.
RIM, the ailing company that makes BlackBerry smartphones, has lost another two executives after its poor Q4 earnings report. Alan Brenner, a senior vice president, and Alistair Mitchell, vice president of BlackBerry Messenger, are the latest in a stream of executives to jump ship following Thorsten Heins’ takeover as CEO in January.
The US Department of Justice and 16 US states have launched an antitrust lawsuit against Apple and a number of publishers, accusing the companies of conspiring to fix ebook prices. Connecticut Attorney General George Jepsen said Apple, Hachette, HarperCollins, Macmillan, the Penguin Group, and Simon & Schuster had engaged in an “anticompetitive price-fixing scheme” when selling through the iBookstore. Hachette, HarperCollins, and Simon & Schuster immediately signed settlements with the DOJ, but the other two publishers and Apple released statements rebutting the charges. Apple’s statement is as follows:
“The DOJ’s accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.”
Microsoft is to pay AOL $1.056bn for a portfolio of 800 patents and non-exclusive licenses to a further 300. AOL has been looking for a way to prop up its finances for some time, culminating in a patent auction that Microsoft won. Interestingly, AOL will retain licenses to the patents it is selling Microsoft, meaning it can continue to use its technology while still making money from the deal. Provided the deal meets regulatory approval it should be completed by the end of 2012.
Hacking & Security
A public poll by Time of the most influential person in 2012 returned an unexpected result: the hacker group Anonymous. With 395,793 votes in favour compared to runner-up Erik Martin’s 264,193, Anonymous is the clear winner, though allegations of gaming the system have been thrown around. The poll has no direct impact on the final list, which is selected by Time‘s editors and released on April 17th.
Valve has announced it is looking to hire hardware engineers to develop prototype models of wearable computers. Valve developer Michael Abrash shot down the idea that Valve might be hoping to compete with Google’s recently announced Project Glass, however: “To be clear, this is R&D – it doesn’t in any way involve a product at this point, and won’t for a long while, if ever – so please, no rumors about Steam glasses being announced at E3.”
Facebook has started to roll out Offers, its system for allowing businesses to display coupon-style offers directly to customers who have “liked” a business’ page. If a user clicks on an offer, it can then be redeemed straight from Facebook’s mobile apps or received by email. Offers will be free to create but will only reach a limited number of people, so it seems as if Facebook plans to continue making most of its money from regular advertising.
Google has updated its Google+ interface to look even more like Facebook’s timeline feature. The new design does make navigation easier, and allows for much more customisation of the layout, but has been criticised for its lack of originality. Google now claims its social network has 170 million users, though many of them did not join voluntarily; signing up for Gmail, for example, will also create an associated Google+ account.
The online Harry Potter experience, Pottermore, is now available for everyone to access. The site was originally due to leave its closed beta last October but has been delayed over server concerns.
Dr Todd Rider, a biologist and engineer at the MIT Lincoln Laboratory, has a plan to stop viruses (of the genetic kind) by causing them to commit suicide.
Web comic XKCD has a very cool to-scale diagram of the ocean’s depths.