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Apple is choosing to sit out the smart speaker race with the HomePod (AAPL)

Tim Cook looking worried or sad

  • The reviews of Apple’s HomePod speaker suggest that Apple has made a product that focuses on sound and not on smart features, which are barely present.
  • This means that HomePod is not directly competing with products like Google Home and the Amazon Echo, which are built on a fundamentally different idea and with different aims.
  • By choosing to distance itself, Apple is taking a big bet. The question is whether it’s doing it because it believes it or if it simply has to.

On February 9, Apple will launch the HomePod, its first smart speaker. Some publications, YouTubers, and tech-focused blogs have had the chance to try it beforehand, however, and the reviews are almost all saying the same thing: The HomePod is a great speaker that doesn’t really focus on being “smart.”

Coming from Apple, this shouldn’t be a big surprise. The HomePod is a product, like the dozens the firm has built and sold before it, that touts its design and engineering more than any other feature. It’s a music accessory.

Apple is explicitly advertising the HomePod as a sound-focused device — it sits under the “Music” tab on its website, and its tagline is “The new sound of home.” It also just happens to feature Siri for some added, voice-based functionalities.

Because of this, the HomePod is significantly distancing itself from its main competitors, the Amazon Echo and Google Home families of devices. Apple is willingly sitting out of the smart speaker race.

This is a rather interesting choice, and a significant one. It’s not just noteworthy within the smart speaker race, but also because it paints a larger picture of the tech landscape, and more specifically Apple’s role in it.

The Echo and Home families from Amazon and Google are fundamentally different in nature to the HomePod

The HomePod is a good product that does something very well — playing music — but the Amazon Echo and Google Home products are instruments that serve a larger purpose in their respective companies’ visions.

The logic is straightforward: Amazon and Google are betting big on artificial intelligence (AI) as the single most important, company-wide technology; to fuel AI, you need data; to gather that data, you need a device like Google Home or the Amazon Echo.

The Amazon Echo and Google Home, apart from being standalone products, exist because of their ability to collect data, which in turn will power the technologies of tomorrow; whether they are at the heart of smartphones, tablets, TVs, computers, augmented reality glasses, or indeed smart speakers.

In this vision, the Amazon Echo and Google Home serve two larger purposes: Getting customers used to a voice-based user interface, away from the smartphone’s screen, and hoarding as much data as possible to make their artificial intelligence smarter (which in turn means that Alexa and Google Assistant work better than Siri).

But Apple seems to be completely detached from this logic.

Tim Cook HomePod

Apple is still The iPhone Company, and while its efforts to grow in other areas — most notably the services arm, where Apple Music lives — are noteworthy, the HomePod inevitably feels more like an appendix than anything else.

Apple still makes its fortune from the iPhone, and it doesn’t have any other source of income that comes even close to that. So of course the HomePod inevitably becomes an accessory, another part of its iPhone-centric ecosystem: It’s there to help the iPhone machine grow, or at least to keep people inside the ecosystem.

It’s not too different in scope than, say, the Apple Watch. It likely won’t replace the iPhone as the centerpiece of Apple’s profit machine, and it doesn’t serve any other larger purpose in Apple’s scheme either, like the Amazon Echo and Google Home do.

Did Apple choose to make the HomePod as it is, or was it somehow forced to?

So here’s the question: Did Apple build the HomePod as it is because that’s what it’s always meant and wanted to do, or is the device less Siri-centric than it arguably should be because Apple realised from the start that Siri couldn’t compete with the Echo or Google’s Home devices?

The second explanation would make more sense: Siri is far behind both Alexa and Google Assistant, so a device that’s primarily built around that couldn’t really be competitive. That’s why Apple focused on what it does best: Making a great product and giving it a specific focus, in this case sound quality.

If Apple deliberately chose to make the HomePod as just an iPhone accessory, it’s strange that it hasn’t taken the chance to show Siri off, although the product might work as it is. If instead Apple simply couldn’t make a device that’s actually competitive on the premise of an inferior artificial intelligence, that spells trouble.

AI assistants are most prominent in smart speakers now, but they will likely invade all sorts of devices in the near future. If Apple can’t make its own products better through Siri and AI, that might become a bigger problem — especially if the smartphone in general (and the iPhone in particular) keeps losing its centrality.

Apple may be making a big bet on the importance of AI and digital assistant

There is another possibility, and that’s that Apple simply believes that voice assistants — and therefore smart speakers — are a fad that’s going to remain irrelevant or even go away, and are therefore not worth putting much effort into.

Apple might simply believe it will keep being The iPhone Company for a long time, and each new accessory will do its job of fueling that machine, in a world where artificial intelligence is important but not as crucial as Amazon and Google are willing to bet.

With the HomePod, its current answer, Apple may be taking such a position, or simply trying to put the focus on music as a fallback. To consumers, the HomePod will live inside the limbo of this unanswered question — one perhaps not even Apple knows the answer to.

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Spotify is vulnerable to bigger tech companies like Apple and Amazon — and its IPO won't change that (AAPL)

Spotify CEO Daniel Ek worried sad

  • Spotify is vulnerable to competition from its better-funded rivals.
  • The company is reportedly about to be overtaken by Apple Music in the US.
  • Spotify can’t compete with Apple’s cash pile, so it’s trying some cool experiments instead.

Music streaming service Spotify is preparing to go public in a direct listing of its stock in the first quarter of 2018. It’s an unusual decision to forego the traditional public offering and instead list shares directly on the stock exchange, but it lets Spotify cut out the middle man.

However, there are underlying issues with Spotify’s business — it’s losing money every quarter and it faces looming competition from tech giants such as Amazon and Apple.

But don’t just take my word for it, here’s Apple Music executive Jimmy Iovine speaking in an interview in November.

“The streaming services have a bad situation, there’s no margins, they’re not making any money. Amazon sells Prime; Apple sells telephones and iPads; Spotify, they’re going to have to figure out a way to get that audience to buy something else. If tomorrow morning Jeff Bezos wakes up and says, ‘You know what? I heard the word “$7.99″ I don’t know what it means, and someone says, ‘Why don’t we try $7.99 for music?’ Woah, guess what happens?”

Apple doesn’t normally let its executives pontificate about the industry and the competition as freely as that, but Iovine is a music industry legend who has worked with people like John Lennon, Bruce Springsteen, and Stevie Nicks, so he pretty much does what he likes.

And Iovine has hit upon a key issue for Spotify — even after its direct listing, it’s still going to be the niche, European competitor to giant US technology companies Amazon and Apple.

jimmy iovine

Just look at how the competition is shaping up in the US: Apple Music is about to overtake Spotify as the dominant music streaming service there.

The Wall Street Journal reported that Apple Music has managed to increase its monthly subscribers at a faster pace than Spotify — increasing them by 5% per month compared to Spotify’s 2% — which will soon put it in first place.

Sure, the US is Apple Music’s home turf. But Spotify losing ground there is a worrying vision of how its fate could play out on a global scale.

Rivals could put the squeeze on Spotify

Spotify simply doesn’t have the massive cash reserves that its competitors do. That’s a key part of Iovine’s point — Amazon could very easily squeeze Spotify on price by hooking in subscribers to its own Amazon Prime Music service for a low price.

Amazon can afford to make a loss on those customers for years to squeeze Spotify out of the market, before upping the prices and starting to make some money in the space itself.

Why pay £9.99 per month for Spotify Premium when Amazon could choose to sell a comparable service for £4.99? The lack of differentiation in streaming leaves Spotify particularly vulnerable.

But surely Amazon wouldn’t be so mean? Well, yes, it would. For years Amazon has been in what Recode calls “a high-stakes race to the bottom” with US retail chain Walmart. The companies are slashing prices to try to win over customers — putting pressure on suppliers.

And Amazon seems to be winning that price war. Analysis carried out in October by Retail Dive showed that Amazon beat the daily online prices of its top competitors, Walmart, Target, and Jet, in 12 out of 13 categories.

Apple isn’t about to start a price war of its own

Carpool Karaoke Tim Cook

Apple is unlikely to engage in a price war — it’s really not its style. The closest it has come is dropping the price from $9.99 (£7.16) a month to $8.25 (£5.91) in a yearly offer that was buried inside the Apple Music app.

But what Apple can do is invest heavily in streaming video and exclusive content to squeeze Spotify on exclusive content rather than price.

Apple had $163 billion (£116 billion) in cash to spend at the end of December, and its CFO Luca Maestri told The Financial Times that “our target over time is to take that $163 billion down to approximately zero.”

One way for Apple to reduce its cash pile is to invest in original content that could win over subscribers to its music streaming service. It already has shows on its Beats 1 internet radio station from stars including Elton John and Drake, but it could ramp up its spending to include more exclusive content.

Right now, Apple includes streaming television in its Apple Music subscription. It has shows including “Carpool Karaoke” and “Planet of the Apps,” but plans to release more. In fact, the company reportedly has a $1 billion (£738 million) budget for shows and movies that it will bring to its streaming service.

And with that budget comes new, high-profile hires from the entertainment world. It brought in Jamie Erlicht and Zack Van Amburg from Sony and has tasked them with bringing in original content.

Video could be the ideal way for Apple to compete with Spotify’s streaming offering. If Apple can offer a lineup of streaming music, radio shows, and TV and movies, that’s going to be a strong offer.

Spotify knows it can’t compete with the giants — so it’s going for the ‘cool’ factor instead

So what is Spotify doing to compete with its bigger, better-funded competitors? Well, it’s sticking to what it knows best: Cool, interesting products which don’t cost giant amounts of money.

Take Spotify’s “2017 Wrapped” campaign which saw people share their listening habits with their friends. It’s cool, cheap, and shareable. 

Then there’s Spotify’s latest app, Stations. The free app is essentially a minimalist version of Spotify that lets people navigate through playlists and listen to songs from them on shuffle. Again, it’s cool and cheap.

Let’s be real: None of these cool stunts are going to overthrow Apple Music and convince people around the world to switch to Spotify en masse. But the company is throwing stuff at the wall and seeing what sticks, and that’s exactly the kind of approach it should be taking. 

Apple and Amazon can pontificate about the future of the industry all they like — Spotify has the “elusive” cool factor and is trying to break new ground in tech. It could face uncertain times ahead, but for now it’s doing what it can to stay ahead of the pack.

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NOW WATCH: These inventions will help save the earth

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10 things in tech you need to know today (SNAP, AAPL)

Snapchat hotdog

Good morning! Here is the tech news you need to know this Wednesday.

1. Former Uber CEO Travis Kalanick has made his first public appearance since being pushed out of the company. Kalanick took the stand on the ongoing court battle between Uber and Waymo, with his testimony set to continue today.

2. Reviews for Apple’s high-end HomePod speaker are in, and they’re unusually brutal for an Apple product. Reviewers universally criticised how poorly Siri performed on the smart speaker, but did praise its sound quality.

3. Snap reported higher growth in revenue and users on Tuesday, convincing investors that the Snapchat redesign can help it fight off InstagramRevenue rose 72% to $285.7 million (£204 million), beating analyst expectations of $253.2 million (£181.2 million).

4. There’s an internal fight at Airbnb between employees and investors over whether the company should go public, according to Bloomberg. Ex-CFO Laurence Tosi expected the firm to go public in 2018, but the plans were reportedly nixed by CEO Brian Chesky.

5. Facebook employed a pollster to track CEO Mark Zuckerberg while he toured the US — but the man quit after six months. “I couldn’t change the values. I couldn’t change the culture. I was probably far too optimistic,” Tavis McGinn said.

6. Russian trolls used Tumblr to pose as black activists and spread anti-Hillary Clinton and pro-Bernie Sanders memes, according to BuzzFeed research. This is the first time Tumblr has been implicated in the wider scandal around Russian groups using social media to spread misinformation around elections.

7. Alphabet’s fiber broadband group has appointed its third new CEO in 16 monthsDinesh Jain is an industry veteran who will now run Access, which operates Google Fiber.

8. Apple’s acquisition of Shazam has triggered a competition review from European authorities. Seven countries have requested the EU’s Competition Commission to scrutinise the takeover over concerns it could affect competition. 

9. Apple may offer rebates to customers who bought new batteries for their slowing iPhones at full price, before the firm began offering discounts. Top Republican lawmakers are investigating why Apple throttled iPhones without telling consumers first.

10. Tech sites including Twitter and Pornhub have banned AI-generated porn, a disturbing new trend where users create fake porn featuring celebrities’ faces. Both sites said such content was non-consensual.

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NOW WATCH: These inventions will help save the earth

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Forget millennials — Alibaba is swooping in on a surprising consumer market in China that's already 222 million strong

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  • Taobao, the Alibaba-backed online retailer, has launched a customized version of its app for elderly users.
  • China has 255 million people aged over 60, a largely untapped market potentially worth billions in revenue.
  • The company recently began recruiting for two elderly workers to improve its app for older users.
  • Nestle, IBM, and Apple have all begun targeting older consumers in China and Japan.

While most companies are still figuring out how to capture the millennial market, Taobao, the Alibaba-backed online retailer, has its focus set on China’s growing population of senior citizens.

Last week the company launched an “elderly-friendly” version of its app that the company hopes will capture the attention of aging Chinese. There are currently 222 million people aged over 60 in China and, by 2020, that number is expected to hit 255 million— almost 20% of the country’s population.

To gain access to this growing consumer base,Taobao’s customized app is designed to be easier for older shoppers to use and can link straight to their children’s account who have the “pay-for-me” option if they are inclined to cover their parents’ purchase costs.

The customized app also displays a photo of their child on every page so users can easily share products or start a conversation via phone or text. Italso has a larger, less crowded interface, and uses more shortcuts for navigation.

“By launching this simple and user-friendly option for the Taobao App, we will make online shopping easier for our senior citizens and help them stay connected with the younger generation and the community,” said Ding Jian, Senior Product Manager at Taobao, who heads the development of this new channel, said in a statement emailed to Business Insider.

It’s a sound financial move by Alibaba.

Last year, according to Taobao, shoppers over age 50 in China bought, on average, 44 products spending nearly $800 shopping online. Accounting for just senior citizens over 60 puts a possible total spend at around $200 billion a year.

Currently, Taobao has just 6 million users aged 60 to 69.Last month it began recruiting for two employees aged 60 or over who will work to get feedback from elderly users to improve the customized app.

But the company isn’t alone in trying to tap the “silver economy.”

After Nestle previously launched a milk line for Chinese drinkers over age 50 and in Japan, where senior citizens account for more than a quarter of the population, Apple and IBM developed a modified iPad for the elderly which also had larger text, simpler interfaces and a modified FaceTime to easily speak to family.

SEE ALSO: Alibaba said it would hire staff older than 60 and received 1,000 applications in 24 hours

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There's one big problem with Snap CEO Evan Spiegel's latest indictment of Facebook (SNAP, FB)

Evan Spiegel and Mark Zuckerberg

  • Snap CEO Evan Spiegel took a veiled shot at Facebook on his company’s earnings call on Tuesday.
  • When asked about the issue of smartphone addiction, Spiegel tried to distinguish between Snapchat and Facebook, noting that his company, unlike the latter, hasn’t focused on encouraging users to “like” posts or follow other users.
  • But Snap encourages users to keep coming back to its app in other ways — most notably through streaks.

Snap CEO Evan Spiegel loves to take a dig at archrival Facebook when given the opportunity.

And who can blame him? After all, Facebook has been shamelessly copying Snapchat, Spiegel’s app, for years now. 

But in rushing to condemn Facebook on Tuesday, Spiegel may have left himself wide open for some harsh criticism.

During Snap’s fourth-quarter earnings conference call on Tuesday, an analyst asked Spiegel for his thoughts on the recent debate about smartphone addiction and apps that encourage users to waste time. The question was a clear reference to Facebook, which has recently come under fire for allegedly promoting such things.

During Facebook’s earnings results last week, CEO Mark Zuckerberg took pains to drive home the message that his company was now dedicated to ensuring its users are spending “meaningful” time on its social network, rather than brainlessly scrolling through junk content.

Snapchat’s Spiegel must have been looking forward to this question because he didn’t skip a beat before launching into this response [bolded for emphasis]:

“From the beginning we’ve been really thoughtful about how we approach these issues. It’s one of the reasons why we never had public-facing metrics around followers or ‘likes’ and why we always try to control who distributes content very widely on our platform.

“I think if you look at the evolution with the redesign, what we’re trying to say is that there’s a really big difference between talking to your friends on the telephone and broadcasting on a TV channel. And I think our society has noticed that difference for a really long time, and that’s why there’s different regulations and rules around communicating with your friends and broadcasting media.

“For us, as we evolve the product, this allows us to really reinforce the great things about our communications products, bring friends closer together, and at the same time provide more distribution to really high-quality content. So I think we’re trying to stay way ahead of the curve on this stuff, and it’s something we care a lot about.”

Sounds like a pretty reasonable perspective and a trenchant critique of Facebook, where the line between what’s public and what’s private is often blurry. 

Not as innocent as it sounds

There’s only one problem: When it comes to apps that encourage users to waste time, Snapchat is one of the worst offenders.

Sure, Snapchat might not traffic in the “likes” and follower counts that Instagram, Facebook, and Twitter employ to keep their users hooked. But Snapchat has its own flavor of digital nicotine — the streak.

As anyone with kids knows, Snapchat has a special counter that keeps track of the number of consecutive days two friends have exchanged messages — a streak. The messages don’t need to be a meaningful interaction — often times, someone will point the phone camera at their feet or at the sky and perfunctorily fire off the photo to keep the streak alive. 

Many teens have multiple streaks going with their various friends, and consider a broken streak something akin to a personal slight. The obsession is so real that many younger Snapchat users will even entrust their accounts to a friend to maintain the streak if they expect to be away at summer camp or someplace else where unfettered smartphone use is restricted. 

Those in glass houses…

The streak habit is a great thing for Snap, which measures its success in large part by how often users are on its app. Indeed, the company’s number of daily active users is one of the most important bits of data that Snap reports to investors every quarter. 

Spiegel can brag about not showcasing “likes” in his app, but streaks achieve a similar end — and the value of his business is built around them.

If the debate over addictive apps ever reaches the point where government regulators intervene — and some members of Congress are already scrutinizing these services — Spiegel’s glass house won’t offer much protection at all. In fact, unlike Facebook, which is acknowledging its mistakes, Snap could end up looking like it willfully ignored the problem.

SEE ALSO: Snap’s revenue growth blew everyone away in Q4 and the stock is soaring

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NOW WATCH: These inventions will help save the earth

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After years of neglect, Snapchat wins in the developing world

 Snapchat doubled its Rest of World revenue this quarter. That’s a surprise, considering CEO Evan Spiegel never seemed to care about anyone but U.S. teens. Snapchat’s Android app was buggy. Its videos loaded too slowly on weak connections. And Spiegel even admitted “Historically we’ve really focused our efforts on markets where [high-end phones and broadband mobile… Read More

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Snap shares skyrocket on first earnings beat with revived user growth

 Snapchat is starting to turn things around, boosting its sluggish user growth rate and beating Wall Street’s expectations for the first time with today’s blockbuster Q4 2017 earnings report. It added 8.9 million daily active users, to reach 187 million, with a quarter-over-quarter growth rate of 5.05 percent percent in Q4, compared to 2.9 percent in Q3. Read More

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Early Uber investor Shervin Pishevar has been ranting for 21 hours in one tweet storm but it's unclear what the point is

Shervin Pishevar

  • Early Uber investor Shervin Pishevar went on n elaborate Twitter rant this week predicting the decline of the US economy. 
  • It’s the first major public statement from Pishevar, who founded Sherpa Capital, since mid-December when he left the company following multiple allegations of sexual misconduct. 
  • Among his predictions: Bitcoin will drop to $2,000-$5,000 but slowly rise again.  

Shervin Pishevar has long been a man of many words, so it’s no surprise that the venture capitalist and Uber investor went on an 50-message Tweet storm this week. 

But something was a little different on Tuesday when the founder of Sherpa Capital, who stepped down in December following multiple allegations of sexual misconduct (including rape), continued his two-day extravaganza, which touched on every topic from bonds and bitcoin, to immigration and SpaceX.  

Pishevar’s latest diatribe is difficult to parse. He started off with a promise to explain the “financial storm” he sees coming, which includes a 6,000 point drop in the stock market over the next few months. He took a break for dinner, and then moved onto the death of Silicon Valley. 

But, beyond its 21-hour lifespan, the storm is significant because Pishevar has been more or less out of the limelight since Dec. 14, when he posted a resignation letter on Twitter explaining that sexual harassment allegations were getting in the way of the Sherpa Capital’s success.

“My truculent opponents are out to settle scores that have nothing to do with Sherpa, and I refuse to allow my enemies to drag my Sherpa family into their fight with me,” Pishevar wrote. 

It’s unclear why Pishevar decided to come back, or whether this return has any connection to yesterday’s news that he had dropped a lawsuit accusing a company called Definers Public Affairs of running a smear campaign against him. 

Motivations aside Pishevar paints a dim picture for the future of the US economy. Here are a few of his key predictions:

The markets will drop 6,000 points

Volatility in bonds will ripple through the rest of the markets

The bitcoin crash isn’t over

California’s stronghold on tech innovation and culture is over

The US will lose to countries like China, especially when it comes to infrastructure…

…unless you’re Elon Musk 

With few US-based startups, the biggest companies will continue to hold too much power

 

SEE ALSO: Here are annotations to decode everything in Shervin Pishevar’s epic Uber diatribe

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NOW WATCH: I’ve used the iPhone for 10 years and these are my favorite tips and tricks

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Patreon Lens is Snapchat for creators’ paid fans only

 Exclusive content is how creators get patrons to pay them a monthly subscription fee on Patreon, so the startup is equipping them with a Snapchat-like tool to turn their private lives into “behind-the-scenes” footage. Patreon Lens launches today so creators can share photos and videos that disappear in 24 hours just with those who pay them at least a $1 a month. Read More

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The NYT debuts its first augmented reality-enhanced story on iOS

 Apple’s investment in AR technologies has been ushering in a new wave of apps, from those that let you perform more practical tasks – like visualizing furniture placement in rooms – to those with mass consumer appeal – like AR gaming, including Niantic’s upcoming Harry Potter: Wizards Unite. But AR can also be used to create unique experiences within more… Read More

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