1. IoT, Security
2. Nintendo #s
3. AR To Rise
4. Ad Bizz
5. VR Tomorrow
6. Content Security
7. Stumbling Block
8. Consumer Storage
9. Ericcson Slide
10. Samsung Chippier
11. Camera Security
12. Speeding Outlook
13. Auto Driving
15. Security Challenges
16. Get to Zero
17. GE Challenge
19. Notebook Shipments
20. Alibaba, MS, ATT, TW,
1. proliferation of IoT devices will lead to more data breaches
The proliferation of Internet of Things devices and technology provides new and transformative opportunities for business and industry alike, connecting everyday objects in order to collect and analyse data.
At the end of 2017, Gartner predicts that 8.4 billion connected devices will be in use worldwide. That number is up 31 percent from 2016 and is predicted to reach 20.4 billion by 2020. But as with any type of rising technology, its growth and development comes with challenges.
As the number of connected devices continues to increase, so too will the volume and variety of vulnerabilities that they are laced with, not to mention the potential impact these could have if exploited.
Here are some security-related IoT trends we can expect.
The changing face of vulnerabilities
Recent vulnerabilities have been discovered that are bigger and more impactful than ever before, i.e. attacks on controller area networks (CAN Bus) systems, which are found in all modern cars and can interrupt vehicle safety functions. Rather than being based on specific products or specific vendors, these vulnerabilities are something bigger, and more wide-ranging.
Some products that have been around for years are now facing the discovery of lurking vulnerabilities, which is causing us to question trust in established products as well as new ones.
Acceleration of consolidation
The number of IoT products and platforms is huge and growing, as well as the number of security bodies, initiatives and standards that are coming out. It is inevitable that we’ll begin to see consolidation and standardization, particularly around IoT platforms, with over 300 to 400 different platform products available now. As the market matures, the shake-out will begin.
Safety and security as one
As we look at the IoT, especially at operational technology (OT) type environments and manufacturing plants, where there are industrial systems that are all connected, we’re starting to see how the operational world and the traditional IT world will come together. We will see continued merging of traditional safety (e.g. safety of employees) and IT security. And the more connected devices we see, the more prevalent this integration will become.
Focus on consumers
We will continue to see product manufacturers, particularly on the consumer side, delivering either no security or very poorly implemented security. Consumer awareness of security issues around the IoT will start to increase, but probably not enough to impact their buying behavior. Consumers are driven by cool features and low cost, and security isn’t going to stop most of them from buying those products just yet – but the same people that enjoy turning lights on or ordering pizza from their couch might start thinking a little more about the privacy of the other things they say around their smart home devices.
On the other hand, product manufacturers that chose to invest more in security (either consumer or enterprise), will learn that it’s harder than they think. Encryption is easy – there’s plenty of open source code out there, as well as guidance on good algorithms and key lengths to choose – but doing it well (protecting the key, separating it from the data it protects, and managing it throughout its lifecycle) is another story.
Expertise in this area is in short supply and great demand. We will continue to see even the well-intentioned people who are trying to build in security stumble, leaving vulnerabilities that can lead to unfortunate consequences.
The exciting tools in IoT right now are the analytics tools that try to make sense of all the data, and the visualization tools that try to bring that analysis to life. Vendors of these solutions are seeing their prospects and customers ask harder questions about data protection. After all, if the data can’t be trusted, any effort and resources expended on collecting it, managing it, and analyzing it is wasted.
Expect the pendulum to swing to put more focus on device identification and authentication, and data protection from the point of collection all the way through intermediate and final points of collection.
Along with all the challenges in the IoT comes great potential. Those that can harness it and use it as a competitive advantage stand to position themselves for big wins. And those that see that security can truly be an enabler might just be the ones to start to separate themselves from the pack.
Data breaches at all-time high as businesses embrace new technologies
Digitally transformative technologies are shaping the way organizations do business and moving them to a data-driven world, with 94% of organizations using sensitive data in cloud, big data, IoT, container, blockchain and/or mobile environments, according to the results of the 2018 Thales Data Threat Report, Global Edition, issued in conjunction with analyst firm 451 Research.
Digital transformation is driving efficiency and scale as well as making possible new business models that drive growth and profitability. Enterprises are embracing this opportunity by leveraging all that digital technology offers, with adoption at record levels. Today, 42% of organizations use more than 50 SaaS applications, 57% use three or more IaaS vendors, and 53% use three or more PaaS environments. Almost all (99%) are using big data, 94% are implementing IoT technologies, and 91% are working on or using mobile payments.
This rush to embrace new environments has created more attack surfaces and new risks for data that need to be offset by data security controls. The extent and impact of increased threats is most clearly shown in levels of data breaches and vulnerability. In 2018, 67% of respondents were breached, with 36% breached in the last year – a marked increase from 2017, which saw 26% breached in the last year. Consequently, 44% of respondents feel “very” or “extremely” vulnerable to data threats.
While times have changed with respect to technological advancements, security strategies have not– in large part because spending realities do not match up with what works best to protect data. The study finds that 77% of respondents cite data-at-rest security solutions as being most effective at preventing breaches, with network security (75%) and data-in-motion (75%) following close behind. Despite this, 57% of respondents are spending the most on endpoint and mobile security technologies, followed by analysis and correlation tools (50%).
When it comes to protecting data, the gap between perception and reality is apparent, with data-at-rest security solutions coming in at the bottom (40%) of IT security spending priorities.
This disconnect is also reflected in organizations’ attitude towards encryption, a key technology with a proven track record of protecting data. While spending decisions don’t reflect its popularity, respondents still express a strong interest in deploying encryption technologies.
Forty-four cite encryption as the top tool for increased cloud usage, and 35% believe encryption is necessary to drive big data adoption – only three points behind the top perceived driver, identity technologies (38%), and one point behind the second (improved monitoring and reporting tools, at 36%).
Close to half (48%) cite encryption as the top tool for protecting IoT deployments, and 41% as the top tool for protecting container deployments. In addition, encryption technologies top the list of desired data security purchases in the next year, with 44% citing tokenization capabilities as the number one priority, followed by encryption with “bring your own key” (BYOK) capabilities. Encryption is also cited as the top tool (42%) for meeting new privacy requirements such as the European Union General Data Protection Regulation (GDPR).
“This year we found that organizations are dealing with massive change as a result of digital transformation, but this change is creating new attack surfaces and new risks that need to be offset by data security controls,” says Garrett Bekker, principal security analyst, information security at 451 Research and author of the report.
“But while times have changed, security strategies have not – security spending increases that focus on the data itself are at the bottom of IT security spending priorities, leaving customer data, financial information and intellectual property severely at risk. If security strategies aren’t equally as dynamic in this fast-changing threat environment, the rate of breaches will continue to increase.”
Peter Galvin, chief strategy officer, Thales eSecurity says: “From cloud computing, to mobile devices, digital payments and emerging IoT applications, organizations are re-shaping how they do business – and this digital transformation is reliant on data. As is borne out by our 2018 Data Threat Report, we’re now at the point where we have to admit that data breaches are the new reality, with over a third of organizations suffering a breach in the past year. In this increasingly data-driven world it is therefore hugely important to take steps to protect that data wherever it is created, shared or stored.”
To offset the data breach trend and take advantage of new technologies and innovations, at minimum organizations should adhere to the following practices:
Leverage encryption and access controls as a primary defense for data and consider an “encrypt everything” strategy
Select data security platform offerings that address multiple use cases to reduce complexity and costs
Implement security analytics and multi-factor authentication solutions to help identify threatening patterns of data use
2. Nintendo to best third quarter in eight years, higher outlook
OSAKA (Reuters) – Japanese videogames maker Nintendo Co Ltd (7974.T) reported its biggest third-quarter operating profit in eight years, driven by smashing demand for its new Switch games console, and said it expected annual earnings to outstrip its previous estimate.
Growing popularity of the hybrid home-portable Switch has led to a near-doubling of Nintendo’s stock price to nine-year highs since the device’s launch in March. Sales have exceeded initial estimates, on track to beat the lifetime numbers of its predecessor Wii U, leaving suppliers scrambling for parts.
Switch console sales will likely hit 15 million units in the year to March and climb to 20 million next year, Nintendo said, fuelling hopes of a repeat of the success of the first Wii that debuted in late 2006 and sold more than 100 million units.
“The momentum for Switch over the last 10 months has been stronger than that of the Wii,” Nintendo President Tatsumi Kimishima said at an earnings briefing on Wednesday.
“The key to Switch’s success in the second year will be to attract non-gamers,” he added.
Analysts believe Nintendo’s plan to launch “Labo”, LEGO-style accessories for the console that kids can build themselves on cardboard sheets, could bring in a younger audience.
“This is exactly the kind of crazy idea that Nintendo is known for which we believe will help expand the company’s audience,” analysts at Macquarie wrote in a recent research note. It will be “appealing to younger audience which has not been addressed by Nintendo for some time”.
Nintendo sold 7.2 million Switch consoles in the three months through December and raised its annual sales forecast by a million from an earlier projection of 14 million units.
That already exceeds sales of 13.56 million consoles for the Wii U that was on the market from late 2012 through 2017.
“Switch sales during the holiday season were stronger than expected in Japan, the United States and Europe,” Kimishima said at the briefing.
Q3 BLOWS PAST CONSENSUS
Stellar demand for Switch pushed Nintendo’s operating profit up almost four-fold to 116.50 billion yen ($1.07 billion) for the third quarter. This was the highest ever it has earned for the October-December period since 2009.
The results beat consensus estimate of around 67 billion yen from six analysts polled by Thomson Reuters I/B/E/S.
The Kyoto-based company raised its profit forecast for the year ending March to 160 billion yen, from 120 billion yen, versus analysts’ estimate of 144 billion yen.
The company’s annual profit hit a record high of 555 billion yen in the year to March 2009, driven by Wii sales.
Shares of Nintendo closed up 2 percent before the quarterly results were announced, versus the wider market .N225 that closed down about 1 percent.
Nintendo, which relies heavily on Switch to drive its earnings, is looking to diversify its revenue sources by moving into new areas such as smartphone gaming and theme parks with its roster of popular characters.
But its efforts in smartphone gaming have produced lackluster results.
It has released four smartphone titles over the last two years, but recently decided to ditch the first one, a social networking service-style application called Miitomo, due to sluggish demand.
Pokemon GO was a phenomenal success, but Nintendo receives profits only through an affiliate which developed the game with a Google spinoff.
“The smartphone business is yet to become a profit pillar for Nintendo,” Kimishima said. “We still have a lot to do.”
3. AR to approach $90bn revenue by 2022
AR (mobile AR, smartglasses) could approach three and a half billion installed base and $85 billion to $90 billion revenue within five years. At the same time, VR (mobile, standalone, console, PC) might deliver 50 to 60 million installed base and $10 billion to $15 billion. That’s a pretty big difference, and it all has to do with AR’s ubiquity and VR’s focus.
Digi-Capital’s Augmented/Virtual Reality Report Q1 2018 base case is that even with 900 million installed base for ARKit/ARCore by the end of this year, AR/VR revenue will only start to scale in 2019)
To understand why the sister markets are shaping up so differently, Digi Capital dug into AR and VR’s installed bases, use cases, app store category revenues (IAP/premium), eCommerce category sales, adspend by industry, enterprise revenues by industry, and geographic splits.
All About The Base
Mobile AR (Apple ARKit, Google ARCore, Facebook Camera Effects, Snap Lens Studio) could hit 900 million installed base by the end of this year, approach three and a half billion by 2022, and dominate AR/VR for the foreseeable future. Yet while VR’s market potential was diminished by the emergence of mobile AR as a rival platform last year, saying “this VR cycle is dead” might be a little harsh.
Mobile/standalone VR (Samsung Gear VR, Google Daydream View, Oculus Go) had its potential reduced by phone makers and developers shifting their focus more towards mobile AR, and might not top a few tens of millions installed base long-term. (Note: hardware installed bases incorporate hard data on device sales, and device attrition.)
Standalone premium VR (neither PC nor mobile tethered, like HTC Vive Focus and Oculus Santa Cruz prototype) could begin to accelerate in 2019/2020 as hardware/software develops and prices come down, but might only deliver around half of mobile/standalone VR’s installed base by 2022. Console/PC VR (HTC Vive, Oculus Rift, Microsoft Windows Mixed Reality, Sony Playstation VR) could grow from today’s low single digit millions, but might only be in the high single digit millions in 5 years’ time.
Smartglasses (Magic Leap, Microsoft HoloLens, ODG, Meta, Vuzix) remain the long-term future of AR/VR. If Apple launches smartphone tethered smartglasses in 2020 as Digi-Capital forecasts, the smartglasses market could grow from a few hundred thousand enterprise users last year to several tens of millions of mass-consumers by 2022. All told, the combined AR/VR headset market could reach an installed base in the high tens of millions to over 100 million by 2022 (or around 3 per cent of mobile AR).
Show me the money
Mobile AR apps in their first few months were largely ports from existing platforms, but AR’s coming scale, flexibility, mobility and ubiquity are driving an explosion of new use cases and business models. eCommerce sales (goods & services, not IAP) could become the largest revenue driver for AR, where Houzz has proven mobile AR can increase sales conversion rates by 11x, and Alibaba has partnered with Starbucks for the world’s largest AR enabled Starbucks Roastery in Shanghai (Alibaba is a leading investor in Magic Leap for a reason). If and when Apple launches smartphone-tethered smartglasses, hardware sales could become AR’s second largest revenue stream. Adspend driven by mobile AR’s scale comes next, followed by app store revenues from a diversity of new non-games IAP/premium revenues and more familiar games business models. Enterprise AR could be significant for both future developments of today’s enterprise focused smartglasses and mobile AR. Lastly, locatio!
n-based AR entertainment could deliver long-term.
VR’s smaller installed base, lower mobility and exclusive immersion (i.e. limited plurality) focuses it on entertainment use cases and revenue streams. Entertainment (games, location-based entertainment and video) could take two-thirds of all VR sector revenue long-term, with hardware taking just over a quarter due to limited unit sales and price competition. There will be enterprise use-cases, but VR’s relatively lower installed base and form-factor could see much lower corporate spending than equivalent enterprise mobile AR and smartglasses. VR eCommerce and advertising revenues could develop, but the scale and fragmentation of VR’s user base limit their significance for now.
Our diversity is our strength
The differences between the two markets become clearer when looking at the 23 app store revenue (IAP/premium) categories.
While AR games could take over two-thirds of AR app store revenue this year (no other category taking more than a few percent), a Cambrian explosion of creativity by developers and investment by VCs could see 20 plus non-games sectors drive over half of AR app store revenue by 2022. Games should remain significant, but the greatest innovation and growth could come from sectors from social to navigation and beyond. Totally new use cases could give rise to new business models, disrupting sectors both old and new.
In contrast, games might take the bulk of VR app store revenues long term. VR looks most like a subset of the video games market, where it has been heavily marketed towards a gamer user base.
As above, emerging AR eCommerce has already proven its worth to market leaders. But the potential extends far beyond lifestyle retailers like Houzz. The biggest AR eCommerce sales could come from clothing, consumer electronics, automotive, furniture, health/personal care, toys/hobby, office equipment, food & drink and media categories. While new players will emerge to leverage eCommerce’s AR potential, current eCommerce giants like Amazon, eBay and Alibaba could see the greatest benefit from more immersive AR sales techniques.
This reality brought to you by [insert advertiser here]
The massive installed base coming for mobile AR could be a boon for Facebook (Messenger, WhatsApp, Instagram), Snap (Snapchat, Bitmoji), Tencent (WeChat, QQ) and other social/messaging platforms. Snap’s Dancing Hotdog pointed to where the company is heading in terms of advertising, and mobile advertising’s 88% of total adspend on Facebook meant that Mark Zuckerberg’s Camera Effects platform was always going to happen. Major brands could take a little time to fully understand mobile AR’s potential, but when they do, expect to see significant adspend from retail, automotive, financial services, telecom, CPG/consumer products, travel, consumer electronics, media, entertainment and healthcare/pharma advertisers.
The business of business
Smartglasses have been enterprise focused to date, as corporate users’ ROI from cost savings allows them to invest in pilot projects. Companies like Microsoft, ODG, Meta and Vuzix are seeing early enterprise traction, although the enterprise smartglasses market remains early stage.
Mobile AR’s ubiquity and low cost could also help enterprise AR adoption from this year. Together with new generations of smartglasses, enterprise AR could see steady growth until it hits an inflection point around 2021 across manufacturing/resources, TMT, government (including military), retail, construction/real estate, healthcare, education, transportation, financial services and utilities industries.
The Asian century
With mobile AR’s geographic distribution broadly similar to current smartphone/tablet distribution, and VR’s distribution broadly similar to current games market distribution, AR/VR revenue could be dominated by Asia (particularly China, Japan and South Korea). This could see Asia roughly equal in size to North America and Europe combined. As smartglasses early consumer revenue could come from mobile tethered smartglasses, its revenues might follow a similar geographic pattern.
If VR is for games, AR is for everything
Since 2015 Digi-Capital said that Apple could own your augmented future, and Tim Cook seems to agree, “AR [is] profound. Not today, not the app you’ll see on the App Store today, but what it will be, what it can be…the real beauty is that [it] is mainstream and…Apple is the only company that could have brought this because it requires hardware/software integration…this is very much like in 2008 when we fired the gun in the App Store. That’s what it feels like to me, and I think it will just get bigger from here.”
Digi-Capital also said that AR/VR is the fourth wave of consumer technology, and that AR could be bigger than VR. That looks like how things might pan out, but we’re still only at the start of what that wave could become – 2018 isn’t the “year of AR/VR” yet. While fellow surfers know that picking (and riding) big waves isn’t without risk, when you get it right there’s little better. So for the patient and brave, it’s going to be a wild ride.
VR and AR Trends from CES 2018
When attending a show as massive as CES, it can be difficult to come out the end and properly digest everything that you just witnessed. Sometimes it can be helpful to find someone else who went through a similar experience and just talk things out with one another to see what they got out of the show, and more or less compare notes.
One of the topics that I attempted to dive deeper into this year was the VR/AR segment of consumer tech. VR had a markedly smaller footprint at CES in 2018, but that didn’t mean it made any less of an impression on attendees. AR, for its part, cropped up in tons of new smart glasses concepts that were on display, and in a variety of unique non-glasses based applications.
Not long after returning from Las Vegas, I had the opportunity to sit down with Mike Bloxham, the Senior Vice President of Global Media and Entertainment at Magid, a market research firm that focuses on a variety of different industries, including consumer technology. Bloxham, who attended CES 2018 as well, paid special attention to what was happening in the virtual and augmented reality spaces, and brought some very interesting perspectives to the table on how the space progressed over the past 12 months.
Here’s a look at our conversation.
Dealerscope: What did you think were some of the bigger trends to come out of the AR and VR space, and what really stuck with you as you left CES?
Mike Bloxham: I think some of the things that I came away with, and of course, A) you can never see everything, and B) I think you’re approaching this question in the right way, because it is what sticks with you. It’s probably a reflection of the things that are the most prevalent.
One of the things is, we hear a lot over the last year or so about the, probably increased importance of location-based VR to the growth of VR generally in the nearer term, as headset sales have not necessarily hit targets that people put out there originallyalthough, in fairness, that’s pretty much always the case with emerging technologies and new technology propositions for consumers. But it’s true to say that I think location-based VR was much more prevalent and more advanced than even just a year ago.
There were a lot of propositions there, which were potentially important in all sorts of different places. And the user experience that I witnessed of those kinds of propositions seemed to be very much more advanced as well. The quality of the image, the quality of the immersive experience. Actually, in my experience at least, the total absence of any hint of motion sickness in any of the environments that I ventured into through VR, because people seem to be operating at higher frame rates, technically speaking, was definitely the case. I perceive that there’s been quite a lot of movement forward in that respect over the last year.
Others seem to agreeI mean, more than one person used the phrase “quantum leap” when talking about how far things have come forward in a relatively short period of time. Of course, “quantum leap” is one of those lovely phrases people like to use, and it’s probably something of an overstatement, but I think it’s definitely the case that things have come a long way in a relatively short period.
Did you come across any specific examples on the showfloor?
There were a couple of examples. One would be this thing called HOLOGATE, which probably was one of the most immersive and visceral experiences I’ve had in VR because you were just aware that you were physiologically reacting to this in-game environment, which was staggering. You’ve got two modes of play: one was collaborative, and one is competitive, you’re against the other people in the game, which pairs players in teams of up to for. And basically you’re playing and you’re defending your space against attack from items that come from the sky and on the ground. It’s fast, it’s frenetic, and there’s a huge amount of movement, and you’re listening to each other in the game, and yelling out where the threat is coming from and so forth. It’s phenomenal. You find yourself breaking into a sweat and shaking by the end of it.
I know that they’re getting a lot of traction where people are spending $10 for five minutes at various points where this is installed. That kind of thing, you can see in the Dave and Busters types of environments. You could also see that kind of installation appearing in the likes of cruise ships or resorts, outside the kind of classical arcade environments that we’re starting to see become very big in the far east.
And then, at the other end of the spectrum with regard to the gaming, isI just have this wonderful experience playing, basically, Pong in VR. And for those that are older, we remember as kids spending ridiculous amounts in playing this what is now an almost prehistoric video gamethe father of all video games. And, in VR it really works, it’s great fun because you’re playing in three dimensions. The other person plays a paddle and you play a paddle, and you’re knocking this ball backwards and forwards. So I have to say, it was a rather rude reminder, because I had completely forgotten that as the volley goes on, the ball gets faster, and you actually have to start moving around faster. So you do actually end up getting something of a workout playing Pong.
The game is still very simplethey’ve added a few special effects in there so that it’s a bit more than it was on your screen. But the elemental appeal of that, and the fact that you get it immediately really makes it work. It is, at the other end of the spectrum from this highly immersive, highly action-based, fast-moving, collaborative thing that the HOLOGATE experience was, but still emotionally and physiologically very immersive and a great experience. And I think it speaks a lot to what VR can be but isn’t alwayswhen you can take a game that’s as iconic and as simple as Pong, and make it really satisfying and addictive in VR. So, you know, that was one element that still resonates with me, I still find myself just talking about socially quite a lot.
One of the other things that I think was definitely a thing was the way the untethered experience is advancingthe way the HTC Vive announced that their new headset which is coming out, the increased capacity basically of untethered headsets I think is going to be pretty critical going forward, and the power that those things are actually going to have to take you into a space that otherwise you’ve got to be attached to your computer for thus far.
That combined with 5G, I think is ultimately going to be critical in the advance of VR, and probably to a lesser extent ARdifficult to say on that front. But certainly in regard to VR, 5G is going to be critical to ensuring that the user experience is as rich as it can be, but also as seamlessthat there’s no technical issues with bandwidth in the experience. I think as 5G rolls out, that’s going to facilitate a lot more from a user point of view that is internal just regarding the fact what various storytellers, and brands, and others can actually do as we deploy VR in different areasnot just for entertainment, but in other areas as well, whether it’s educational, engineering, healthcare, architecture, and so on. We’re probably going to see a lot more deployments.
You mentioned the untethered experiencein our coverage of the VR space it’s been interesting to see the widening gap in technology. There’s this kind of lower end smartphone based VR experience that a lot of people are used to. Then you can go all the way out to things like Oculus, HTC Vive, and the higher end tethered experiences. Is that untethered experience intended to fill that gap in the middle? And do you view that gap as a problem for the VR industry?
I don’t know that there’s a gap in the middle. I guess there’s a number of different ways of defining the spectrum here. You can define it by cost, or you could define it by experience. I prefer to lean towards experience because you’re always going to find people that are going to pay top dollar for what is positioned as the most immersive experience at any given time. And we saw that when Oculus first came out. There was a bunch of people who were always going to buy into it. Those are all the people that are already spending a lot of money on technology. They’re likely heavy gamers, and so on. And they sold a bunch when it was first started. But then it slows down because there are those people who say, well, they’re not so convinced, the price tag’s high.
We’ve done a lot of research on this with consumers. We run a consumer research consortium around VR and AR specifically because there is little to no objective research in the marketplace that is wholly consumer centric to get at the awareness, the attitudes, expectations, behaviors, and so on, as it relates to all of these very nascent areas of VR and AR. And one of the things our research has shown is that no one talks about the willingness to buy in at different levels.
A lot of people are doing what always happens with new propositions. They absolutely have been educated to rightly believe thatthey say, “Wait a minute. The proposition is going to get better, technically speaking. There’s probably going to be more content, the experience overall is going to be better. And it’s going to get cheaper.” That’s just what we know on the basis of experience with regard to pretty much every technological development. There are very few exceptions to that.
What we found is that a lot of people bought into the level that suited them, which was either a down and dirty cheap headset, or it was Google Daydream, or it was anything all the way out to Oculus or PlayStation VR. But still a lot of people are saying, “Well, I bought in cheap. I’m going to upgrade when it gets cheaper to do so, and I get a better product as a result.” Or they’re saying, “No, I’m using other people’s. I don’t need to buy mine right now. I got access to it. I’ll buy in when it’s cheap.” And there are others still saying, “Well, I’m aware of it, but I’m not going to take the plunge yet.”
As you say, some consumers are hesitating right now to buy into VR because they’re waiting for costs to come down. Is it cost alone that’s causing them to delay in their decision to purchase a VR system? Or are there other reasons why they’re just not quite ready to make that leap yet?
A really good question. I don’t think it is a matter of just cost. Cost, as a factor, varies in importance for different people. But while there’s uncertainty, a factor like cost is cited more often and it is more meaningful, because if I’m less clear about exactly what the benefits are, and less clear that this thing is here to stay and it’s going to continue to get better and better, then cost is something that I become more aware of. There’s more risk involved in the investment.
That’s another thing that we found through our research, which is that there’s inherent risk in the eyes of consumersconsciously or subconsciouslyin making the decision of which point do I buy into. Do I need to buy an Oculus? Should I do a PlayStation VR? Is Google Daydream the kind of thing that I need? HTC Vive? I don’t know. And with each of those decisions comes a consequence relating to the kind of content that I can get access to.
There’s a lot of walled gardens in the VR content space at the moment, and from a consumer perspective that’s not good, because it limits what I can get access to. I may hear about one piece of content and find that I can’t get to it because of the system I bought into. And that’s a risk.
The equivalent would be like if I subscribed to cable through Comcast but I couldn’t get access to soccer, or ‘The Walking Dead,’ or ‘Game of Thrones,’ but I could if I was a Charter subscriber. That’s, obviously not the case or how things work with cable and entertainment, but it is the case, in some small way, with VR.
People not only have to make the right choice on an economic basis and a technical basis, but they’ve also got to gamble on a content choicenot only what’s available now, but also what might be available going forward.
What was your impression of the different smart glasses that were on display at CES, or of the developments made in the augmented reality space in general?
I’ll be honest, I don’t know which one I was trying on, but I did look at one of those. I thought it was pretty impressive. Obviously, it’s still in the relatively early stages, and I have to confess, I’m a little skeptical about the smart glasses concept generally.
I think, while they’ll work for those of us like myself that do wear glasses once they go into full prescription mode, I do question, with regard to those who don’t wear glassesare we going to adopt that kind of thing? Are we going to become a population of people who wear spectacles? I don’t know.
It’s actually impossible at this point to predict the extent to which that kind of behavioral change is going to take place. I think about all those who wear sunglasses at one point or another, so maybe we will. We wear sunglasses as a matter of utility, even if we don’t normally live in an area where they’re required, but we find ourselves in those areas whether it’s vacation or business travel, or whatever. We don sunglasses and we tend to care what they look like as well, and we have issues around their quality.
So, if the utility of those kinds of glasses is clear enough in terms of how people understand it, and clear enough in terms of the benefit they deliver, which ultimately is going to be about how ubiquitous the content is as we move around, if I can access content when I choose to, and that content is always available to me. And that’s the great challenge.
If people start to assimilate that kind of offering, their appetite and expectation of what it can deliver to them is not necessarily going to relate at all to what can be done and how quickly content can populate the offering. That has been the problem for a number of AR propositions so far. There’s the bigger picture goal of documenting pretty much everything around us and making it available through AR. The challenge is actually doing that, and is compounded by the overall expectation of consumers that as soon as they bought into the idea of something that it all needs to be there.
Of course, if people start using those kinds of glasses and they find that only about 10 to 15 percent of the occasions where they actually wore them they actually take advantage of them, they can, and the experiences is not 100 percent what they’re thinking, then they’re likely to just stop wearing them. Not that it can’t be done, and technically not that it’s not a good ideabut managing consumer expectations and ultimately meeting consumer expectations is going to biggest challenge with smart glasses.
How about, then, the AR space in general? What sort of adoption have you noticed as far asmaybe not on the hardware side of things, but how consumers are using AR through existing devices like their smartphones?
The installed user base for AR has really only very recently taken a huge boost as both Apple and Android have made it possible on phones that people already had. And we haven’t seen a massive and very sudden profusion of AR applications that are available on our phones.
I saw a number recently, and I think it’s very difficult to track, but I saw a number that was only about 1,500 AR apps out in the marketplace at the moment. That sounds like a big number, but when you look at the difficulties of actually getting awareness and downloads and use of those apps that’s probably not very many. And I don’t know how many really stand out in people’s minds. I think until we start to see more very high profile AR apps, probably linked with other things, then it may be that that’s going to stop things from growing.
I think we’re going to see AR linking to, for example, TV content much more, probably in the coming 12 to 24 months as networks and IP owners seek to leverage content and programming through AR with advertisements. I know that AMC have already done that with ‘The Walking Dead’ tying up with Mountain Dew. That was a really interesting promotion tied into on-air advertising of course, but you had a whole load of promotional stuff going on in the environment. I think we’re going to see a lot more of that, which, in turn, will serve to raise awareness and interest in AR functionality with the phone that you’re carrying around in your pocket all the time.
That is what I think AR needs above anything else. There’s this massive installed user base, but it’s largely latent right not. The IKEAs of this world are helping, but again not everybody is in the market for furniture all the time. Many more people are tuning into things like ‘The Walking Dead.’ But it needs to happen on a number of different dimensions with different types of functionality, including just downright entertainment. When you start to see the entertainment industry and brands really starting to adopt this as a was of enhancing relations with consumers and also generating revenue, then I think we can expect to see the awareness increase, and then behaviors stack up and really start to become meaningful.
I know it’s tough to go into CES with a mindset of what you hope to find or expect to see, but now that we’re past the show and able to reflect, was there anything you thought you would see and didn’t? Or even any tech that left you a little disappointed?
I try very hard not to go to CES with too many expectations. Part of that is about being open to being surprised and delighted by what I do see, and that usually happens.
But I looked around pretty hard, and I saw some interesting stuff from Intel on augmented viewing, in effect. They’ve done some really interesting work in their product development around viewing sports, which is the stuff they were actually showing but it would apply to everything else. And, similarly, we’re going to see some of that around the Olympics on NBC this coming year.
But, they had some great demos there, watching motorsports, which I think also shows great potential for in-home enhancements in advertising model around that kind of content. Although, exactly what those enhancements to the advertising model will be and what will work best has yet to be defined. But, nonetheless, the underlying technology is there to facilitate it, so I guess that’s the next step.
I didn’t come away feeling that there were gaping holes in what was being displayed there. Now that could reflect a lack of imagination on my part, but I tend to, I guess by virtue of what I do for a living, I sit at the end of thenot a skeptic, but I’m healthily guarded in what I expect to see. We can all conceive these ideas, and vaporware can be created. But I like to see stuff that is either already kind of hitting the ground and has already started to grow, or that has the very clear and obvious potential to do so as opposed to stuff which is still very much like the concept car of VR or AR which is never going to run.
Internet’s Central Villain: The Advertising Business
Pretend you are the lead detective on a hit new show, “CSI: Terrible Stuff on the Internet.” In the first episode, you set up one of those crazy walls plastered with headlines and headshots, looking for hidden connections between everything awful that’s been happening online recently.
There’s a lot of dark stuff. In one corner, you have the Russian campaign to influence the 2016 presidential election with digital propaganda. In another, a rash of repugnant videos on YouTube, with children being mock-abused, cartoon characters bizarrely committing suicide on the kids’ channel, and a popular vlogger recording a body hanging from a tree.
Then there’s tech “addiction,” the rising worry that adults and kids are getting hooked on smartphones and social networks despite our best efforts to resist the constant desire for a fix. And all over the internet, general fakery abounds there are millions of fake followers on Twitter and Facebook, fake rehab centers being touted on Google, and even fake review sites to sell you a mattress.
So who is the central villain in this story, the driving force behind much of the chaos and disrepute online?
This isn’t that hard. You don’t need a crazy wall to figure it out, because the force to blame has been quietly shaping the contours of life online since just about the beginning of life online: It’s the advertising business, stupid.
And if you want to fix much of what ails the internet right now, the ad business would be the perfect perp to handcuff and restrain and perhaps even reform.
Ads are the lifeblood of the internet, the source of funding for just about everything you read, watch and hear online. The digital ad business is in many ways a miracle machine it corrals and transforms latent attention into real money that pays for many truly useful inventions, from search to instant translation to video hosting to global mapping.
But the online ad machine is also a vast, opaque and dizzyingly complex contraption with underappreciated capacity for misuse one that collects and constantly profiles data about our behavior, creates incentives to monetize our most private desires, and frequently unleashes loopholes that the shadiest of people are only too happy to exploit.
And for all its power, the digital ad business has long been under-regulated and under-policed, both by the companies who run it and by the world’s governments. In the United States, the industry has been almost untouched by oversight, even though it forms the primary revenue stream of two of the planet’s most valuable companies, Google and Facebook.
“In the early days of online media, the choice was essentially made give it away for free, and advertising would produce the revenue,” said Randall Rothenberg, the chief executive of the Interactive Advertising Bureau, a trade association that represents companies in the digital ad business. “A lot of the things we see now flow out from that decision.”
Mr. Rothenberg’s organization has long pushed for stronger standards for online advertising. In a speech last year, he implored the industry to “take civic responsibility for our effect on the world.” But he conceded the business was growing and changing too quickly for many to comprehend its excesses and externalities let alone to fix them.
“Technology has largely been outpacing the ability of individual companies to understand what is actually going on,” he said. “There’s really an unregulated stock market effect to the whole thing.”
Facebook, which is to report its earnings on Wednesday, said its advertising principles hold that ads should “be safe and civil.” It defended the targeted ad business’s overall value, arguing that digital advertising connects people to products and services from small businesses and “creates jobs and helps the economy.”
The company also pointed to several steps it had taken recently. “We’ve tightened our ad policies, hired more ad reviewers, and created a new team to help detect and prevent abuses,” said Rob Goldman, Facebook’s vice president of advertising. “We’re also testing a tool that will bring more transparency to ads running on our platform. We know there is more work to do, but our goal is to keep people safe.”
A spokesman for Google, whose parent company, Alphabet, reports earnings on Thursday, said that it is constantly policing its ad system, pointing out recent steps it has taken to address problems arising from the ad business, including several changes to YouTube.
The role of the ad business in much of what’s terrible online was highlighted in a recent report by two think tanks, New America and Harvard’s Shorenstein Center on Media, Politics and Public Policy.
“The central problem of disinformation corrupting American political culture is not Russian spies or a particular social media platform,” two researchers, Dipayan Ghosh and Ben Scott, wrote in the report, titled “Digital Deceit.” “The central problem is that the entire industry is built to leverage sophisticated technology to aggregate user attention and sell advertising.”
The report chronicles just how efficient the online ad business has become at profiling, targeting, and persuading people. That’s good news for the companies that want to market to you as the online ad machine gets better, marketing gets more efficient and effective, letting companies understand and influence consumer sentiment at a huge scale for little money.
But the same cheap and effective persuasion machine is also available to anyone with nefarious ends. The Internet Research Agency, the troll group at the center of Russian efforts to influence American politics, spent $46,000 on Facebook ads before the 2016 election. That’s not very much Hillary Clinton and Donald J. Trump’s campaigns spent tens of millions online. And yet the Russian campaign seems to have had enormous reach; Facebook has said the I.R.A.’s messages both its ads and its unpaid posts were seen by nearly 150 million Americans.
How the I.R.A. achieved this mass reach likely has something to do with the dynamics of the ad business, which lets advertisers run many experimental posts to hone their messages, and tends to reward posts that spark outrage and engagement exactly the sort that the Russians were pushing..
“You can’t have it both ways,” Mr. Scott said. “Either you have a brilliant technology that permits microtargeting to exactly the people you want to influence at exactly the right time with exactly the right message or you’re only reaching a small number of people and therefore it couldn’t be influential.”
The consequences of the ad business don’t end at foreign propaganda. Consider all the nutty content recently found on YouTube Kids not just the child-exploitation clips but also videos that seem to be created in whole or in part by algorithms that are mining the system for what’s popular, then creating endless variations.
Why would anyone do such a thing? For the ad money. One producer of videos that show antics including his children being scared by clowns told BuzzFeed that he had made more than $100,000 in two months from ads on his videos.
YouTube, which is owned by Google, has since pulled down thousands of such disturbing videos; the company said late last year that it’s hiring numerous moderators to police the platform. It also tightened the rules for which producers can make money from its ad system.
Facebook, too, has made several recent fixes. The company has built a new tool currently being tested in Canada and slated to be rolled out more widely this year that lets people see the different ads being placed by political pages, a move meant to address I.R.A.-like influence campaigns. It has also fixed holes that allowed advertisers to target campaigns by race and religion. And it recently unveiled a new version of its News Feed that is meant to cut down on passively scrolling through posts part of Mark Zuckerberg’s professed effort to improve the network even, he has said, at the cost of advertising revenue.
The tinkering continued on Tuesday, when Facebook also said it would ban ads promoting crypto currency schemes, some of which have fallen into scammy territory.
Yet these are all piecemeal efforts. They don’t address the underlying logic of the ad business, which produces endless incentives for gaming the system in ways that Google and Facebook often only discover after the fact. Mr. Rothenberg said this is how regulating advertising is likely to go a lot of fixes resembling “whack-a-mole.”
Of course, there is the government. You could imagine some regulator imposing stricter standards for who has access to the online ad system, who makes money from it, how it uses private information, and how transparent tech companies must be about it all. But that also seems unlikely; the Honest Ads Act, a proposal to regulate online political ads, has gone nowhere in Congress.
One final note: In 2015, Timothy D. Cook, Apple’s chief executive, warned about the dangers of the online ad business, especially its inherent threat to privacy. I wrote a column in which I took Mr. Cook to task I argued that he had not acknowledged how ad-supported services improved his own company’s devices.
I stand by that view, but now I also regret dismissing his warning so cavalierly. Socially, politically and culturally, the online ad business is far more dangerous than I appreciated. Mr. Cook was right, and we should have listened to him.
5. future of VR is location-based
Virtual reality has been the hottest of industry trends beginning with the Oculus Kickstarter in 2012, but uptake has been slower than the lofty projections anticipated. Bright minds armed with deep pockets have accelerated the development of VR technology, helping to raise the quality bar and bring prices down. However, the most compelling content made available by premium VR content creators is still largely out of reach for most consumers. Content accessible via devices like Google Daydream or Samsung Gear VR has its purpose, but the quality of experience achievable on such platforms is limited by the resolution and technical specs of current mobile devices. Furthermore, VR content creation tools and techniques are still evolving as the industry collectively determines best practices for working in this new medium, and monetization strategies for VR remain up for debate.
There’s certainly no one-size-fits-all approach to navigating VR to success, but location-based VR has emerged as a formidable ambassador to bring premium VR to the masses. Like movie theaters and laser tag, location-based VR gives participants an experience not easily (or affordably) replicated in home. These experiences provide access to high quality content at a relatively low price point, are generally untethered allowing for free roaming, and can accommodate multiple participants for a more social experience. Since the physical setup required for location-based VR is rather minimal, companies can swap out content for new experiences, encouraging repeat customers.
Several innovators in the VR space, including The Void and Nomadic, are already embracing location-based VR, which is in turn driving up the demand, and in some cases reinvigorating retail space as rising online commerce has led to a decline in shopping malls. Beyond gamified content, location-based VR also lends itself to immersive storytelling, and leading feature film directors are beginning to explore the medium. Alejandro González Iñárritu’s visceral Carne y Arena, which takes the participant through an attempt to cross the US/Mexico border, was recently awarded an honorary Oscar “in recognition of a visionary and powerful experience in storytelling.” The installation’s success and positive critical reception will likely inspire other filmmakers to take a closer look at VR. Outside of entertainment, location-based VR also holds potential for countless applications in simulation/training, education, design/manufacturing and real estate, offering a means for co!
mpanies to save time and money through more efficient iteration.
While VR has come a long way in the last five years, there is still road to be travelled on the path to mass adoption. Location-based VR, however, is a step in the right direction – pushing VR as a whole forward by inspiring content creators and technology developers to innovate and capture the interest of the next generation of VR pioneers. As VR tools progress, and as consumer hearts are won, I believe we’ll see the exuberance curve yield to the more moderate but still very robust growth phase with the applications that provide real value.
price of content security
Everyone knows about the threat of piracy and the severe financial consequences that result from a leak. More recently we have seen the growth of cybercrime attacks with companies being held to ransom through content theft and ransomware attacks. There are plenty of scary stories about terrorism and cybercrime so it’s good that there is greater awareness about these issues. Over the last few years, companies have adopted more stringent security such as physical ID checks, cameras, locks and secure log-ins. Studios conduct far-reaching security audits at the facilities that work for them, which forces the pace of change. Fingerprinting, watermarking and encryption have all become more widely used.
Locking your front door is all very well but if the back doors and windows are left open then there’s a problem and this is what can happen in our industry. Some workflows are extremely well-protected and others aren’t protected at all. Encryption “at-rest” and “in-motion” have long been mandated by MPAA guidelines, but surprisingly few companies encrypt their pre-release content while it’s in post-production which means it’s vulnerable.
To fully protect a computer, it would need to be disconnected, switched off, placed in metal box and locked in a room. That would make it safe, but also useless. Today’s media and entertainment industry is built on collaborative workflows across many external organizations and people, consequently with many inherent points of vulnerability. Services such as localization, sound and picture editing (often through freelancers), promotional marketing and distribution, are regularly undertaken by third parties, any one of whose workflows could potentially make a breach more likely.
When I talk with people about security, I often hear, “We don’t have it in our budget,” “We’re too small,” “It’s not up to me.” No one has security in their budget and it’s no one’s responsibility until you are the victim of a hack. Then, it’s amazing how quickly a budget is made available and then it becomes everyone’s responsibility. Companies need to adopt strategies and procedures that reduce risk. And it must be a top-down approach. Lower-level staff often lack the decision making and budgetary authority to set company-wide policy believing, “That’s the board’s job.”
Executives can avoid the risk of cybercrime by assuming greater responsibility for security policy. In the entertainment industry, studios could limit the risk of piracy and ransomware by mandating stronger and more practical security protocols. They could, for example, make funding for each film or TV production contingent on having a line item of security expenditure for measures that will be enforced. Producers and directors, who often have autonomy in running their projects, would be required to make itemized security a part of the package.
The challenge in post-production is how to make encryption compatible with professional editing platforms like Pro Tools, Media Composer, Final Cut and Premier, as well as different file formats from QuickTime and Pro Res through to MXF. Fortium, in collaboration with NBC Universal, came up with the answer in MediaSeal® which is a file and OS agnostic encryption-at-rest solution using access control by individual file and user. MediaSeal software keeps data encrypted while it’s being worked on or stored. If protected files are accidentally distributed or hacked the content cannot be leaked. It’s inexpensive and you pay as you go. Many of the blockbuster movies and TV shows are already using it.
According to a study by NCC Group, only 13 percent of CEOs are directly responsible for managing their company’s cyber risk. When it gets to 50 percent then we will know security is being treated more seriously from the top. There are a range of practical measures that help reduce the risk of cybercrime within an organization. Among the most important is the education, training and awareness of employees, including executives and the board.
Referring to one of the latest ransomware attacks, information security firm Sophos claims, “Thought WannaCry was bad? You ain’t seen nothing yet.” They forecast that the perpetrators’ success will embolden others and ransomware will get much worse in 2018. The WannaCry ransomware attack that appeared last May infected more than 230,000 computers worldwide. The subsequent Petya and Bad Rabbit ransomware attacks produced similar consequences. Criminals who write ransomware and other malicious software are now operating what amounts to profitable franchise businesses, selling their source code to others with criminal intent. They have no lack of buyers because cyber-crime pays. Some 40% of businesses admit to paying ‘affordable’ ransoms to avoid costly downtime and negative publicity.
It’s time for action rather than inertia and the sooner we face up to budgeting the time and cost of comprehensive preventative security measures the less our risk is going to be. We forecast there will be plenty more security breaches in 2018 but less so for film and TV if more proactive measures are taken.
7. issues setting up or operating a connected device
iQor says making smart home more frictionless and less frustrating should be an area of concern for the industry.
More than one in three US adults experience issues setting up or operating a connected smart home device, according to survey data released by iQor.
Consumers experience frustration dealing with issues during installation, and multiple companies during the support process, the survey said.
From connected light bulbs, to plant sensors, to smart locks, and beyond, smart home tech is growing and evolving rapidly. Here you’ll find the latest product reviews, news, and how-tos to help you connect your surroundings to the internet in the smartest way possible.
To resolve a technical issue with a smart device, survey respondents said they went through more than eight steps.
More survey points:
Nearly one in four consumers dealing with a device issue said they couldn’t resolve the issue or simply gave up, and returned the product for a refund.
Consumers deal with an average of 2.1 companies, over 2.7 sessions and with 3.1 different people as they installed and engaged their new connected devices.
On average, consumers are spending roughly 1.5 hours resolving device issues and one hour working with customer service.
More than half of consumers (59 percent) read the instructions/manual provided as their first step to solve an issue.
One in five (14 percent) asked a friend or family member for help.
Typical resolution process is to read instructions, visit manufacturer’s website, searched on Google, visit other websites, call manufacturer’s customer service, and return for repair or replacement.
“Connected devices are improving lives globally but, as devices become more complex and the IoT ecosystem expands, brands need to rethink their service models or else face even more frustrated consumers and unnecessary, costly returns,” Hartmut Liebel, CEO of iQor, said in a statement. “Connecting the consumer and product journeys, and using those insights to make consumer experience more frictionless and less frustrating, is a matter of concern for industry and consumers.”
The study polled 1,004 U.S. adults 18 and up living in a “smart household” environment.
According to analyst firm Gartner, there will be 20.4 billion Internet of Things (IoT) devices deployed by 2020.
U.S. needs to plan next spectrum auction now or risk ceding 5G leadership to other nations
FCC Commissioner Jessica Rosenworcel is not buying the argument that the U.S. can’t hold another major spectrum auction until a financial banking issue gets settled, as FCC Chairman Ajit Pai has indicated.
Pai previously has explained that the Communications Act requires that upfront payments made by bidders in spectrum auctions be deposited in “an interest bearing account at a financial institution designated … by the Commission (after consultation with the Secretary of the Treasury).” But no one is coming forward to serve that role.
Efforts have been underway to change the rules, but until that’s done, there’s no way for the FCC to comply with the law and move forward with a large spectrum auction, according to the chairman’s office.
When asked about it during a press conference on Tuesday, Rosenworcel said the FCC was conducting the 600 MHz auction last year and found a way around that hurdle to the extent it existed at the time. “We should find a way around that hurdle,” she said. “It’s imperative we do that if we want to lead the world in the next generation of 5G services.”
Sitting down, cowering and pretending there is some kind of financial bank issue preventing the U.S. from moving ahead “is ridiculous,” she added, noting that South Korea has already scheduled its 28 GHz and 3.5 GHz auctions. At the minimum, the U.S. right now could identify a target date and put out proposed auction rules, seeking comment on them. “We are not doing that,” she said. “I think our failure is a choice to cede our leadership to other nations.”
Earlier during his appearance with the press, Pai said while there’s no easy way to quantify it, he thinks the U.S. is leading the world in 5G. The FCC has aggressively moved forward to push spectrum into the commercial marketplace and has explored ways to improve the wireless infrastructure siting rules to accommodate 5G. It’s also seen massive investments and trials across the U.S. in 5G.
The chairman yesterday addressed the notion of a 5G network built and operated by the government, characterizing it as a bad idea, as did the other commissioners. But a lot of questions continue to swirl following the Axios article detailing a proposal by a senior National Security Council official to have the federal government build and operate a nationwide 5G network within the next three years.
Commissioners Michael O’Rielly and Brendan Carr both said on Tuesday that they were not part of any 5G discussions with the White House. O’Rielly also noted that the idea didn’t seem to go over well and that it’s not clear there’s enough spectrum in the 3.7-4.2 GHz band to support a full nationwide 5G network.
In fact, in his statement yesterday, O’Rielly said if accurate, the Axios story suggests options that may be under consideration by the administration that are “nonsensical” and do not recognize the current marketplace. “Instead, U.S. commercial wireless companies are the envy of the world and are already rushing ahead to lead in 5G,” he said. “I plan to do everything in my power to provide the necessary resources, including allocating additional spectrum and preempting barriers to deployment, to allow this private sector success to continue.”
Most of the large U.S. wireless carriers have been pushing the FCC to hold a spectrum auction sooner rather than later, saying at least something should be done this year to keep the industry in a 5G leadership position. Industry association CTIA, for example, is urging (PDF) the FCC to promptly seek comment on auction procedures to allow the rapid auction of the 24 GHz, 28 GHz, 37/39 GHz and 47 GHz bands.
8. The future of consumer storage: All the pieces, except one
Seeing all the new storage ideas at CES – and some storage problems of my own – makes me rethink consumer storage. We have all the pieces, except one. Here’s what I see coming.
Consumer storage remains a tumultuous and risky business. It’s price driven, but ease of use is important too.
Iomega was a hit company 20 years ago with their 100MB removable Zip drives. Then USB flash drives surpassed the 100MB capacity and eviscerated the removable storage business.
SSDs have wiped out much of the mobile hard drive business and the low-end (4-8 drive bays) array business. Five years ago I paid $1000 for a 4TB array, and today I took delivery on an 8TB USB drive that cost $160.
The 4TB array still beats any single hard drive on performance and availability, but a single SSD has similar bandwidth and can handle way more I/Os per second (IOPS). So why have an array that, when it does fail, is hard to recover data from and drive replacements are a hassle?
Unbundling storage services
The long-term secular trend in storage is the unbundling of attributes. Back in the 1950’s, before the first disk drive, tape drives handled everything: performance, availability, backup, removability, cost, and archiving.
Then disks came along, and they took over performance, relegating tape to backup, removability, and archiving. But disks, well into the 80s, had terrible reliability – in 1984 an MTBF of 25,000 hours was competitive – so mirroring, and later, RAID helped disks achieve reasonable availability.
Now, SSDs have taken over performance, leaving disks to own cost.
With the late 80s PC explosion, consumers were suddenly thrust into the role of storage managers, and it didn’t go well. Few ever backed up their data, and every dead drive, and in the 90s, dead laptop, was a tearful awakening.
Despite that reality though, few consumers backed up their drives. Backup is an insurance policy, and who wants to think that their shiny new laptop is going to die. The years fly by and then, oops, accident or age takes it toll.
The new unbundle
The unbundling trend continues, and dictates the future of consumer storage. Here’s the breakdown.
Performance belongs to SSDs and the shrinking cast of low-end prosumer arrays.
Availability is still a mixed bag, but I see hope on the horizon, with appliances that automate copy creation across disparate devices.
Backup is moving to the cloud, as few consumers want to manage the process themselves. Automation can make local backup easier, but few consumers will see the need.
Removability is owned by USB thumb drives, and, to a lesser extent, by Wi-Fi and Bluetooth network services.
Cost is the USB hard drive’s key appeal. It’s hard to beat $20/TB, and SSDs won’t.
Archiving is not a consumer’s core competency, and it never will be. But between the cloud and the 1,000 year DVD, that base is well covered.
The Storage Bits take
The missing piece of this taxonomy is the intelligence needed to make all these technologies play together. But, as I look at products such as Filegear, I see the beginning of an automated consumer storage management appliance.
The best storage management is the one you don’t have to think about. We aren’t there yet, but automated management is the missing piece of consumer storage nirvana. I expect to see real progress over the next three to five years.
9. 5th straight quarter of losses, shakes up executive ranks with Ewaldsson leaving Digital Services
Ericsson is seeing increased momentum in 5G, including in North America, but it continues to struggle as the demand for LTE gear dwindles, reporting its fifth straight quarter of losses while announcing a shakeup in the executive ranks.
The Swedish vendor reported sales decreased by 12% in the fourth quarter, with sales decreasing by 10% for the full year 2017 in all segments. Its net loss was $2.4 billion for the fourth quarter.
Shares were trading down about 8%, to $6.40, after the report came out.
“It was a tough year, no question,” said President and CEO Börje Ekholm during a press briefing. In Digital Services specifically, the losses were expected “but unacceptable,” he said. “We clearly need to focus on turning Digital Services around.”
The changes mean Ulf Ewaldsson, currently head of Business Area Digital Services, will leave the executive team effective Feb. 1 after having put that organization in place; he will be assuming a role as advisor to the CEO. Also leaving is Elaine Weidman, currently head of Group Function Sustainability & Public Affairs.
Jan Karlsson, currently head of Solution Area BSS, will step in as acting head of Business Area Digital Services. In the area of emerging business, Åsa Tamsons, formerly with McKinsey & Company’s Stockholm office, was appointed head of Business Area Emerging Business and a member of the Ericsson executive team.
All of this comes as Ericsson cut about 17,000 jobs, both internal and contract, in 2017, of which 10,000 were during the fourth quarter. Ericsson said that to date, the annual run-rate effect of cost savings is approximately SEK 6 billion compared with the target of SEK 10 billion for mid-2018; the impact of the cuts is expected to be increasingly visible in the first half 2018.
While Ekholm said 5G momentum is growing in North America, the 5G business isn’t expected to produce any significant upturn for a while. In mainland China, Ericsson is seeing reduced investments but it’s also growing market share.
While it competes with Chinese manufacturers Huawei and ZTE, it’s also competing with Finnish rival Nokia, whose CEO has acknowledged early 5G positioning in China. During Nokia’s third-quarter conference call, CEO Rajeev Suri said the cost of gaining or maintaining footprint in that country is significant and Nokia is working to address the situation as it wants to ensure the right long-term footprint, “but not at any cost.”
There is some positive news amid the doom and gloom for Ericsson. For 2018, its Radio Access Network (RAN) equipment market is expected to decline by 2% compared with an estimated 8% decline in 2017. The Chinese market is expected to continue to decline due to reduced LTE investments, but there is positive momentum in North America.
In the fourth quarter, Ericsson won a deal with Verizon to provide networking equipment for its commercial 5G launch. Verizon will deploy the pre-standard 5G commercial radio network and the 5G core network in select markets in the second half of 2018.
About a year ago, Verizon tapped Hans Vestberg, who was ousted as CEO of Ericsson in 2016, as its executive vice president for the new Network and Technology team reporting to CEO Lowell McAdam. Last fall, another former Ericsson executive, Rima Qureshi, joined Verizon’s leadership team, taking the role of SVP and chief strategy officer, also reporting to McAdam.
10. Samsung passes Intel in semiconductor business, but mobile revenues slip
Samsung reported a massive operating profit of around $14 billion in the fourth quartergains largely driven by the company’s sales of chipsets. Indeed, research firm Gartner said that Samsung is now the world’s largest semiconductor company: Samsung passed Intel during the period, which represents the first time Intel has lost the leading position in the semiconductor market since 1992.
However, profits fell in Samsung’s mobile business, which includes sales of both phones and network equipment. Samsung blamed the decline in its mobile business on increased marketing expenses and weak LTE equipment sales. But Samsung predicted sales would rise in the coming months.
As CNBC pointed out, Samsung’s operating profit was largely in line with expectations, and was largely due to strong demand for its memory chips for data centers and smartphones. Samsung’s semiconductor business has grown into a major profit center for the company.
Gartner reported that the worldwide semiconductor market totaled $419.7 billion in revenue in 2017, a 22.2% increase from 2016, largely due to demand for memory chips. But Gartner’s Andrew Norwood warned in a release that memory pricing will weaken this year as China ramps up its memory production capacity. “We then expect Samsung to lose a lot of the revenue gains it has made,” he said.
In its mobile business, Samsung reported a 3.2% year-over-year decline in operating profits. But the company offered a bright outlook for its mobile business.
“Looking ahead to 2018, demand for smartphones is expected to rise thanks to growing replacement demand for premium smartphones. In order to expand the sales of premium smartphones, Samsung will strengthen product competitiveness by differentiating core features and services, such as the camera and Bixby, and reinforce the sell-out programs and experiential stores,” the company wrote in its earnings release. “In addition, Samsung plans to continue optimizing its mid- to low-end lineup and enhancing productivity in order to achieve qualitative growth of the smartphone business.”
Samsung is widely expected to announce its new Galaxy S9 flagship smartphone at the upcoming Mobile World Congress trade show in Barcelona, Spain.
And in networks, Samsung also predicted improvements. “Samsung aims to strengthen its business foundation by supplying LTE base stations, mainly in North America, in the first quarter. For 2018, the company will focus on continuing to expand the supply of 5G-ready network solutions into major markets, including Korea, the U.S., and Japan,” the company wrote
11. Camera makers resist encryption, despite warnings from photographers
iPhones, Android phones, computers, and instant messengers all come with encryption. But cameras lag behind the times, putting sources at risk.
A year after photojournalists and filmmakers sent a critical letter to camera makers for failing to add a basic security feature to protect their work from searches and hacking, little progress has been made.
The letter, sent in late-2016, called on camera makers to build encryption into their cameras after photojournalists said they face “a variety of threats from border security guards, local police, intelligence agents, terrorists, and criminals when attempting to safely return their footage so that it can be edited and published,” according to the Freedom of the Press Foundation, which published the letter.
The threat against photojournalists remains high. The foundation’s US Press Freedom Tracker tallied more than 125 incidents against reporters last year, including the smashing of reporters’ cameras and the “bodyslam” incident.
Even when they’re out in the field, collecting footage and documenting evidence, reporters have long argued that without encryption, police, the military, and border agents in countries where they work can examine and search their devices.
“The consequences can be dire,” the letter added.
Although iPhones and Android phones, computers, and instant messengers all come with encryption, camera makers have fallen behind. Not only does encryption protect reported work from prying eyes, it also protects sources — many of whom put their lives at risk to expose corruption or wrongdoing. The lack of encryption means high-end camera makers are forcing their customers to choose between putting their sources at risk, or relying on encrypted, but less-capable devices, like iPhones.
We asked the same camera manufacturers if they plan to add encryption to their cameras — and if not, why.
The short answer: don’t expect much any time soon.
An Olympus spokesperson said the company will “in the next year… continue to review the request to implement encryption technology in our photographic and video products and will develop a plan for implementation where applicable in consideration to the Olympus product roadmap and the market requirements.”
When reached, Canon said it was “not at liberty to comment on future products and/or innovation.”
Sony also said it “isn’t discussing product roadmaps relative to camera encryption.”
A Nikon spokesperson said the company is “constantly listening to the needs of an evolving market and considering photographer feedback, and we will continue to evaluate product features to best suit the needs of our users.”
And Fuji did not respond to several requests for comment by phone and email prior to publication.
Trevor Timm, executive director of the Freedom of the Press Foundation, told ZDNet that it’s “extremely disappointing the major camera manufacturers haven’t even committed to investing resources into more research into this issue, let alone actually building solutions into their cameras.”
“Dozens of the world’s best filmmakers made clear a year ago that camera companies — in today’s world — have an obligation to build in a way for everyone to encrypt their files and footage to potentially help keep them safe,” he added.
“I hope the camera companies eventually listen to some of their most important and at-risk customers,” he said.
12. Microsoft Can Speed Up Search in Outlook
Outlook search presently reviews all the email in the designated mailbox or folder(s). It would search much faster if they just looked at a few desired occurrences first before going off and searching through entire folders. When folders get big, searching can take substantial time. The fix is to simply reduce the number of occurrences when you know it’s a recent email.
If you have a lot of email (as I do), then you likely often need to search through them to find a particular previous email. If you know ahead of time that there are some emails that you later want to review or find, you can store them in a defined folder. While that may work for a few, well-defined subjects, most of the time emails simply come in to your Inbox and build up one after the other. These can mount up to be tens or even hundreds of thousands over a few years.
Searching through tens or hundreds of thousands of emails for that one email you need can take a substantial amount of time. So, you just sit there looking at the search process going on wondering how long it’s going to take to get it to finish. After this happens a few times, you start asking yourself if there is anything you can do to speed up the search process.
The first thing that I do is to select the Current Mailbox drop down tag on the right side and select “This folder” which restricts search and, as a result, it operates faster. But, faster can still take quite a while if there are a lot of entries for the search to go through.
Most of the time, however, you’re just searching for an email from someone and, hence, you know their name or email address. And, more often than not, the email is recent, but you can’t easily find it. You put their name in the From field as shown in the above diagram. Another way to speed up the search is to include a word you know is in the Subject area. Then, the search goes faster because there’s more information in the search criteria.
It appears to me that Microsoft has used a Mack Truck to solve a problem that most of the time only requires a motor scooter. You don’t need to start a search through 100,000 items if you only need the most recent email from someone you know who wrote you in the last few days.
The easiest solution here is to restrict the instances that the search has turn find. You don’t need to see the last 30,000 emails from someone when you only need to find the most recent email. Or, if you’re not sure, you can simply have the search algorithm look for the last 10 occurrences. This is still a lot faster than going endlessly through thousands upon thousands of emails that are not relevant.
Relevancy is the key criteria for measuring search effectiveness: the search algorithm works best when the results of the search are relevant to the goal that you defined for the search process.
How can you easily restrict the instances of a search to help with making the results more relevant? Look at the image above and where the red arrow points. I’ve added three additional search criteria to reduce the instances: 1 10 All. This is one way Microsoft could make searches in Outlook run faster. It’s just my recommendation. Microsoft doesn’t currently offer this.
If you are just looking for the most recent email from someone you know, you enter the From and/or Subject and then just hit “1”. The system would then simply go and retrieve the most recent email from that person which typically would only take less than one second.
If you know it’s a recent email from someone, then enter their name and hit “10”. The system would go find the 10 most recent emails form the entry of their name in the From field. Most of the time, this would work just fine. If for some reason, the email you are looking for is beyond the most recent 10, you should be able to hit the “10” again to get the next 10 emails from that person. Again, this takes far less time that doing an exhaustive search through thousands or tens of thousands of emails.
If you are uncertain about where the right email is located, you can enter All to get all instances displayed. Sometimes that can be the right choice if you need to go back in time or are uncertain where the desired email resides.
This method of reducing the number of occurrences in a search process, of course, if important in mobile where you might have a less powerful processor such as in a smartphone or tablet. And, to be sure, Microsoft isn’t alone in needing to improve their email search algorithms. I’ll give you an example of where Apple’s iOS could make their email search a lot more beneficial for the user in an upcoming newsletter.
My hope is that Microsoft will take my suggestion so that email search can get the desired result much faster and, as a result, improve customer productivity.
P.S. You can prevent your Inbox from having tens of thousands or more emails by limiting the Inbox size to just holding the past years’ worth of emails. You can move older emails to another archive folder every six months or so.
13. 67% Wary Of Riding In Self-Driving Car
Most American are uncomfortable with the idea of riding in self-driving cars, according to a new survey.
The majority (67%) of consumers said the would not be comfortable riding in an entirely self-driving car with 27% would be comfortable.
The Reuters-Ipsos poll comprised a survey of 2,600 U.S. adults.
The were difference based on demographics.
A larger majority (77%) of females than males (55%) would be uncomfortable.
By generation, millennials (55%), gen-x (63%) and baby boomers (79%) are uncomfortable with the idea.
Another recent survey by AAA found that 63% of U.S. drivers are afraid to rude in a fully self-driving vehicle.
Self-driving vehicles are being tested in numerous places, including by Waymo in Arizona and Apple in California.
14. Digital Video Ad Revs Forecast To More Than Double On YouTube, Facebook
Two major digital video platforms will see a continued surge in video advertising in the next few years — more than doubling revenues from current levels.
Advertising spend on YouTube and Facebook will hit $37 billion by 2022, up from an estimated $16 billion in 2017, according to Juniper Research. The research says this will occur despite specific curbs on some channels and programming, due to brand safety concerns.
Changes to YouTube’s Partner Program — in which there is advertising-sharing among its content partners — means it will only accept channels with more than 1,000 subscribers and 4,000 viewing hours acquired across a year.
“This change in strategy results from increased advertiser pressure following several high-profile, offensive, video posts by users,” Juniper says. “Nevertheless, Juniper forecasts YouTube to account for almost a quarter of all FVOD [free video on demand) ad spend by 2022.”
Juniper says YouTube, which reports over 1 billion hours watched per day, will face increasing competition from social-media platforms and that social media will be a growing area.
In addition to Facebook, Instagram and Snapchat will see major increases — especially in live broadcast content posted to these platforms.
The new twist in content marketing using live video
As you develop your 2018 content marketing plans, don’t leave out live video. Columnist Brent Hieggelke explains how live video is changing the way brands interact with their audiences.
It’s no secret that the way brands are trying to deliver messages to consumers has dramatically changed over the past decade. Years ago, I delivered a session to a standing-room-only crowd at SXSW discussing the rise of “un-advertising,” where I documented the collapse of the traditional mass media.
Social media introduced two-way communication between companies and their customers, and it has given rise to the importance of an ongoing content marketing strategy. But the rise of digital video and especially live video is further evolving content marketing and bringing fundamental changes to customer engagement and messaging.
Facebook Live created mass excitement when it launched as brands tried to figure out how to handle this new live medium. Facebook has now shifted its video darling status to highly produced video programming as it tries to outflank Netflix and Amazon Prime, but live content has found other ways to succeed both within and outside its walls. One recent opinion hailed Facebook Live as the “New QVC” a modern showcase for brand-customer interaction, new products and awareness.
Live video is becoming much more than this, though. Brands are figuring out ways to modernize their entire go-to-market process and using live video as an agile way to bring content to audiences. Content marketing is being transformed from static written and designed documents and slide presentations into live video “run of show” outlines, and on-camera hosts and guests are becoming more in demand instead of writers and designers.
Live video brings with it the authenticity of unscripted conversations with product experts or influencers, along with the ability to do live demonstrations and create honest reactions and interactions with the audience. Since it’s digital, it can be consumed on any screen and anywhere, bringing the product or spokesperson directly to the consumer.
Make way for the ‘content conversation’
Live video also allows the audience to interact with the on-camera experience by making comments and asking questions that could be addressed by the presenters. This participatory element is what makes it more of a “content conversation” instead of simply content marketing.
Whether it is sales training for a new product coming to market or a live commerce demonstration to customers, live video is changing the sales interaction from what can be a pushy experience to one that feels like the audience is equal and part of the conversation.
The other major evolution in live video is the ability to own and operate it on your own channels. While Facebook and Twitter make it easy to reach your followers on their platforms, users are typically watching only for a few seconds, which is hardly a win for a content marketer.
Even if these platforms provide access to a wide number of consumers, this same audience is easy to lose with the next shiny object in their news feed. That doesn’t mean you should avoid them, though. It’s just more advisable to host live video events on your own digital destinations and simulcast them to multiple platforms to expand your content’s reach to all of your audiences.
A mixed strategy of social media sites combined with your owned-and-operated site where live videos can sit with direct access to product sales pages is vital to growing a more engaged audience. Consumers are more trusting of content marketing when it’s delivered in a premium environment. A brand’s own site, with links to the products being discussed or demonstrated, helps deliver a more end-to-end content marketing experience.
Live video levels the playing field
Live video also puts a wider customer base within reach for any business, large or small. The internet helped make smaller businesses less local, but they still must consider budgetary constraints with traditional advertising and marketing tactics. Heavily produced sales collateral needs to be properly funded and distributed, and once it’s printed, the content is frozen and no longer agile.
But live video becomes the great equalizer. Quality live video production isn’t necessarily free, but it’s less time- and resource-intensive than the alternatives. Creativity doesn’t need to be expensive to create excitement and buzz. (Think BuzzFeed’s exploding watermelon live segment.)
The equipment needed to go live need not be expensive, and can now be done with a smartphone alone. This opens the door for any brand’s content marketing to get out there live with the right touch and an understanding of current and potential customers’ key issues and questions. That dynamic rewards the savviest marketers, rather than just the ones willing to spend the most on getting the message out there.
Now that the holiday shopping season has ended, consumers will be bombarded with messages from all over the Web. Any social media site you’ve visited since the start of November has probably tried to hawk products to you through retargeting and in-feed sponsored messages.
Live video is putting a modern and exciting spin on content marketing in many positive ways. As companies discover the many internal and external benefits that live video offers, with its agile, authentic content delivery impact, the skill sets within marketing and sales teams will accelerate; you’ll see behind-the-scenes introverts evolving to become on-camera warm, confident and dynamic personalities.
As marketers plan their 2018 marketing plans, they have an opportunity to once again redefine how audiences consume influential content. Consider investing in “content conversations” with live video instead of one-way content marketing plans.
Facebook lost daily users for the first time ever in the U.S. and Canada
It was a small but negative change to daily active users in Facebook’s most valuable market.
Here’s a troubling data point if you’re a Facebook investor: The company may have finally tapped out its most valuable market, the U.S. and Canada.
Facebook’s daily active user base in the U.S. and Canada fell for the first time ever in the fourth quarter, dropping to 184 million from 185 million in the previous quarter.
It’s a very small decline in a market that Facebook already dominates. But it’s also Facebook’s most valuable market, and any decline in usership even a small one isn’t a great sign.
Each user accounted for $26.76 worth of revenue for the company last quarter, and it went up by 35 percent over the same quarter last year.
It’s not clear why that segment got smaller. But it has been a tough year for Facebook in the U.S., and most of the company has been grappling with the fact that Facebook’s service was used by Russian actors to try and sway the 2016 presidential election. Perhaps U.S users are grappling with that, too.
Hot Podcasts In Demand for TV Producers
The $220 million industry is poised to significantly expand as Hollywood offers lucrative new revenue opportunities.
When news broke in the fall of 2015 that Phil Lord and Christopher Miller had optioned the television rights to hugely popular podcast Serial, the audio format was still somewhat of a novelty. The idea that a podcast could be the basis for the next hit TV show was even more unusual.
In the two years since, Hollywood’s hunger for the podcast format has only grown. And while Serial hasn’t made it to TV yet, there are more than a dozen audio-inspired projects in various stages of development across town. Amazon has already debuted Lore, based on the Aaron Mahnke horror podcast of the same name; HBO on Feb. 2 will release a four-part 2 Dope Queens special adaptation of the Jessica Williams and Phoebe Robinson comedy podcast; ABC is prepping the March 28 premiere of StartUp-inspired comedy Alex, Inc.; and on Jan. 30, Bravo announced it was joining the club with a two-season, straight-to-series order for the Los Angeles Times’ true-crime breakout, Dirty John.
The interest has proved a boon to the fledgling companies that are fueling the podcast explosion. Brooklyn-based startup Gimlet Media is creating a film and television arm called Gimlet Pictures to capitalize on the momentum. “There’s definitely a fervor,” says Gimlet Pictures head Chris Giliberti, who will split his time between New York and Los Angeles. “In a lot of instances what you see is a land grab because it’s hot IP. But in our case, we’ve been very judicious about what we’ve taken to market.”
Giliberti will lead a lean, two-person team made up of executive producer Eli Horowitz and a yet-to-be-hired development executive as Gimlet looks to build on its early successes and take a more active role in the development process. In addition to Zach Braff starrer StartUp, Gimlet has its first scripted podcast, Homecoming, set up at Amazon as a Sam Esmail-directed drama starring Julia Roberts. Meanwhile, an episode of tech-centric show Reply All will be turned into an Annapurna film starring Robert Downey Jr. and directed by Richard Linklater. “In a lot of ways, this is a formalization of activity that has been long underway,” notes Giliberti. “It’s a signal to the market that we’re here.”
For Los Angeles-based podcast network Wondery, producing projects with an eye toward film and television adaptation has been baked into the business plan since the beginning. “We knew that listening to a four- or five-hour podcast would paint a more accurate picture of what a story could look like as a TV or movie than a script would,” says CEO Hernan Lopez, who spent years as an executive at Fox International Channels before making the jump to digital. Wondery has optioned four of its projects, including Sword and Scale and Tides of History, which are both at Ben Silverman and Howard Owens’ Propagate.
While still small, the podcasting industry is growing quickly. The Interactive Advertising Bureau estimated last spring that revenue would hit $220 million in 2017, up 219 percent in two years, with advertisers spending more in the space and ad rates increasing (the average CPM is $25 but can more than double to $50 and up for the most popular shows). A Recode report has pegged Gimlet’s 2017 revenue at about $15 million and its valuation (after a $15 million cash infusion last summer) at $70 million.
Yes, the money in film and TV can be lucrative. But Gimlet co-founder and president Matt Lieber says that the company is focused on remaining audio-first. “Developing Gimlet Pictures is interesting for the business on multiple fronts,” he explains. “One is a new flavor of revenue, and another is growing the brand and growing the audience that we can send back to our podcasts.”
The podcasting boom couldn’t have happened at a better time for the TV industry. With 487 scripted originals airing in 2017, networks have never had a greater need for a fresh new hit that will rise above the noise. “Buyers are desperate for something that feels proven in any format,” says one top rep. One of the selling points is that podcasts come with performance stats that help prove that audiences are not only tuning in week after week, but also sticking around for episodes that can run over an hour.
The agencies are also getting in on the scramble to scoop up rights to the latest Serial, Dirty John or Missing Richard Simmons. CAA counts Gimlet as a client. UTA, through emerging platforms agent Oren Rosenbaum, represents Lore’s Mahnke as well as This American Life, Serial and S-Town. WME, which works with Pod Save America producer Crooked Media and negotiated the Dirty John deal, also will have a pipeline of projects through its IMG Original Content group, which has hired Panoply Media veteran Moses Soyoola to spearhead its podcasting effort.
There’s no telling how long the podcasting land grab will last. But for many in Hollywood, it’s not just about finding a new source of audience-approved IP. It’s also about identifying and nurturing a new generation of writers and filmmakers. “If I’m the next Quentin Tarantino, I’m probably not working at a video store anymore,” says Brett-Patrick Jenkins, head of development at Propagate, which shepherded production on Lore and counts Up and Vanished as among the podcast adaptations it is currently developing. “I’m probably trying to make my own podcasts.”
No Commercials? No Problem. Brand Integrations Thrive On Streaming Platforms
Streaming services like Netflix and Amazon Prime Video may be commercial-free, but that doesn’t mean they’re off-limits to marketers seeking exposure to relevant consumers.
Brand integrations are thriving on these new platforms. According to data from Branded Entertainment Network (BEN), in 2016 100% of original productions on Amazon Prime Video feature branded integrations, as do 91% of Hulu originals, and 74% of Netflix originals.
While 10 or 20 years ago, producers or prop-masters might heave created fake brands or labels for shows, that won’t fly in a world where brands are global and ubiquitous.
“Younger viewers, in particular, grew up in a world where they have been inundated with brands from every side,” Gary Shenk, the CEO of BEN, tells Video Insider. “If you show a world that does not include those brands, the world looks unrealistic.”
Consider the new streaming series “Bartlett,” which premieres today on Vimeo On Demand and Amazon Prime Video. The show, executive produced and starring Anthony Veneziale, is a “musically inspired” comedy about an advertising agency executive juggling personal challenges with winning a major new account.
The main character, Roger Newhouse (Veneziale), uses HP computers to try and secure the big new account.
“I think what it really provides is story,” Veneziale tells Video Insider. “Anytime you have a brand that is a part of your narrative, then what it is they bring to the table really imbues the environments and the characters that are interacting with it.”
In the case of Bartlett, the deal came together after Veneziale was seated next to HP’s global chief marketing & communications officer Antonio Lucio on a flight. Lucio was reading Ron Chernow’s biography of Alexander Hamilton, and Veneziale told him about his friendship and work with Lin Manuel Miranda, who adapted the book for Broadway (and appears in “Bartlett.”)
“The conversation very much led itself to the fact that it was a story about agencies and technology, and we had technology to provide,” Lucio told Video Insider.
It also fit with HP’s motto, “Keep Reinventing.” “Any activity that we participate in has to have several components: It needs to be relevant to the target, it needs to have reinvention at the center of it, and technology needs to be part of the story, in many cases powering the story,” he says.
In the case of “Bartlett,” all the pieces fit.
Of course, not all brand integrations can start from a chance meeting on a plane.
BEN CEO Shenk says most streaming deals have a six-month “gestation period,” and many can take longer. His company reviews scripts to determine what integrations make sense for the characters and the plotlines, working with producers and propmasters to pair the right brands to the right shows.
“From a producer’s and writer’s perspective, they are really interested in brands that will add flair to characters… cars that are emblematic of cars that the characters would likely drive, clothes they would likely wear,” Shenk said.
For brands, BEN utilizes an array of sources to try and measure the impact of the integrations, from how many people watched a show to how many people watched a particular integration.
“We build rich profiles around the viewers of any particular show,” Shenk said, giving an example of a show that might be popular with females 18-24 who were interested in online dating.
Whether it’s a big-budget streaming show on a service like Netflix or a more independent project like “Bartlett,” marketers, it turns out, have options if they want to reach cord-cutters. They may just need to think outside of the 15- or 30-second commercial pod.
“Our clients are very interested in streaming, because there is no other way to reach viewers of streaming shows unless they are in the content, because there is no advertising on the majority of the platforms,” Shenk said.
Remove Objections And Speed Up The Sales Process
Many of us have been taught for years that the key to sales is overcoming clients’ objections and comforting them when they express concern over your product or service. Your organization might, in fact, spend a great deal of time teaching salespeople what to do when a customer raises an objection.
Unfortunately, at that point, you’ve more than likely already lost. You’re dealing with objections as they come and operating from a position of self-defense. What if, instead, you could practically ensure that by the time you’re negotiating a deal, your client doesn’t mention any new problems? This is where the Same Side Selling approach becomes extremely relevant.
The Problem With Handling Objections
The idea that a client’s foresight, worries, or fears must be “handled” is a self-centered point of view that exemplifies all that is wrong with how many business entities deal with objections. Instead of empathizing and acknowledging the validity of their concern so you can work together on a constructive solution, you sidestep the problem. This is a highly counter intuitive way to do business. When you should be building mutual trust, you’re playing the sly, overly enthusiastic salesman.
In fact, most traditional “objection-handling” involves the salesperson trying to manipulate the client through distraction and persuasion. For instance, if they feel that your product is flawed, you might dodge the issue by pointing out one of the product’s great attributes or explaining why the flaw doesn’t matter. Obviously, this doesn’t work. If the client thought it was a big enough issue to bring up, it clearly matters to them and they are unlikely to be convinced otherwise. Attempting to do so erodes trust and comes off as sleazy.
The better way to do this is to spend time before the principal negotiation working together to reach a mutual understanding of the truth about your product. You want to discuss how important of a problem the client is facing, and whether you’re the best company to give them the results they need. If you’ve thoroughly talked about these points, you’ll know how valuable your services are to them, and you’ll both have clarified in advance whether any objections they might have would actually outweigh the truthful benefit of what you’re selling.
Hone Your Communication
When it comes to approaching a problem with your client on a mutually supportive basis, your communication strategy is just as important as your actual message. Preventing major objections is all about creating trust so you can discuss potential roadblocks from the start. You want to sound like a genuine, unselfish friend, not a self-interested “salesperson.”
Your body language during these discussions is essential. Sales should not be a fight or an argument, so make sure that you’re coming across as collaborative instead of combative. If you’re speaking across a table, keeping your hands on or above the table with your palms up signifies transparency and can help your client feel less guarded. If you’re simply standing near each other, make sure to let your customer maintain plenty of personal space a close and intrusive stance can make people feel pressured. And in any situation, nodding, listening actively, and subtly mirroring your client’s body language can make them feel heard and understood.
You also want to avoid combative verbal communication. Instead of asking what their concerns about your product are with the clear intention of defending the product at all costs, center your conversations around constructive questions that will help you create a plan that makes them feel secure in their choice to work with you. “What does success look like for you on this project?” and “What could potentially get in the way of achieving our ideal results?” are great things to ask.
The Prime Example
The most typical and prominent example of an objection is a client claiming that they’d love to work with you, but someone else is offering your service for cheaper. Frankly, the truth behind this obstacle is almost certainly one of three things. Either they don’t think their problem is that important, they like you but want you to drop your price anyway, or they’re using price as an excuse because they’re not confident in your ability to elicit ideal results.
If you have enough of a comprehensive conversation with your client in the first place, you should be able to avoid this objection. You’ll ideally have already distinguished whether their problem is big enough to merit your effort, agreed upon the value of your services to them, and become mutually confident in your ability to deliver fantastic results. But if price does come up, simply ask, “How much less would you have to pay for it to be a good deal if you didn’t get the results you needed?” If they understand you can guarantee what they want, the price becomes less of a factor.
It’s Your Turn
Nobody likes to hear objections when they’re making a sale, but clients like hearing a dishonest, manipulative, and selfish sales pitch even less. It behooves you to work on your client’s concerns as a team instead of as two sides in a confrontation.
15. ‘Rapidly Evolving’ Security Threats Among ‘Key Challenges’ in Protecting Cloud Workloads
“Rapidly evolving” cybersecurity threats are among the “key challenges” that media and other organizations have today when it comes to protecting their cloud workloads, according to Adwait Joshi, senior product marketing manager for Azure Marketing at Microsoft.
The other main challenges that he cited during the Jan. 24 webinar “10 step action plan to protect cloud resources” were “visibility and control,” as well as “management complexity” that requires a “consistent” security policy to be in place for each organization.
“This is the most common question that we see,” he said of visibility and control, explaining: “If you don’t have visibility if you don’t know what has been spun up” within the cloud, “then it is difficult to protect it.”
He went on to explain: “One of the things that we always see is breaches are common. We live in a world where attacks happen. Breaches happen and then the key is detecting those quickly. We have seen many reports and research that once a breach happens, depending on the maturity of an organization, that threat – that breach can sit in the network without being detected for almost 90 to 120 days.” And, he noted, “that’s a lot” of time for a threat to be within an organization’s network and do damage.
The first two parts of the 10-step plan he cited to protect cloud resources were monitoring the “security state” of one’s environment/cloud resources and making sure that all of an organization’s virtual machine configurations are secure and updated with the latest patches, he said.
Sarah Fender, principal program manager for Azure Security Center, went through the other eight steps of the plan: “ensuring that you have the right data protections in place” by encrypting disks and data, controlling network traffic, collecting security data, limiting exposure to “brute force attacks” against management ports, blocking malware and unwanted applications, using advanced analytics to quickly detect threats, quickly assessing the scope and impact of an attack, and automating the threat response because “the volume of attacks is growing.” Microsoft Azure is “using machine learning to get the job done,” she noted.
Companies that use Azure cloud services can “leverage” Microsoft’s “vast global threat intelligence,” she said, adding: “We can see emerging threats impacting one resource and use that intelligence to help protect another customer’s resource.” Additional tools that it uses include anomaly detection and behavioral analytics, she said.
As many organizations “push forward on their digital transformation through increased use of cloud services, understanding the current state of cloud security is essential,” Microsoft Azure said in a statement ahead of the webinar.
“Cloud security is a shared responsibility model” and different than on-premises security, Joshi said at the start of the webinar. He explained: “The cloud provider maintains security for your cloud infrastructure. It’s a benefit that you can leverage – from physical data center to operations to securing the infrastructure itself.” But there is also a shared responsibility involved and organizations using a cloud service like Azure “get control of securing” their own workloads, he said.
Microsoft Azure can help companies address all the challenges in protecting cloud workloads, in part, because it has more than 3,500 cybersecurity experts who understand all the new threats that are out there and offers solutions that can address each organization’s specific needs, he said.
Artificial intelligence and cybersecurity: The real deal
AI will have a growing impact on cybersecurity technology as a helper app, not as a new product category.
If you want to understand what’s happening with artificial intelligence (AI) and cybersecurity, look no further than this week’s news.
On Monday, Palo Alto Networks introduced Magnifier, a behavioral analytics solution that uses structured and unstructured machine learning to model network behavior and improve threat detection. Additionally, Google’s parent company, Alphabet, announced Chronicle, a cybersecurity intelligence platform that throws massive amounts of storage, processing power, and advanced analytics at cybersecurity data to accelerate the search and discovery of needles in a rapidly growing haystack.
So, cybersecurity suppliers are innovating to bring AI-based cybersecurity products to market in a big way. OK, but is there demand for these types of advanced analytics products and services? Yes. According to ESG research, 12 percent of enterprise organizations have already deployed AI-based security analytics extensively, and 27 percent have deployed AI-based security analytics on a limited basis. These implementation trends will only gain momentum in 2018.
What security professionals think about AI-based cybersecurity technology
What’s driving AI-based cybersecurity technology adoption? ESG research indicates:
29 percent want to use AI-based cybersecurity technology to accelerate incident detection. In many cases, this means doing a better job of curating, correlating, and enriching high-volume security alerts to piece together a cohesive incident detection story across disparate tools.
27 percent want to use AI-based cybersecurity technology to accelerate incident response. This means improving operations, prioritizing the right incidents, and even automating remediation tasks.
24 percent want to use AI-based cybersecurity technology to help their organization better identify and communicate risk to the business. In this case, AI is used to sort through mountains of software vulnerabilities, configuration errors, and threat intelligence to isolate high-risk situations that call for immediate attention.
22 percent want to use AI-based cybersecurity technology to gain a better understanding of cybersecurity situational awareness. In other words, CISOs want AI in the mix to give them a unified view of security status across the network.
It’s important to point out that in each of these use cases, AI-based solutions don’t operate in a vacuum yet. Rather they provide incremental analytics horsepower to existing technologies, driving greater efficacy, efficiency, and value.
This tends to happen in one of two ways. In some cases, machine learning technologies are applied to existing security defenses as helper apps. For example, Bay Dynamics and Symantec have formed a partnership that applies Bay’s AI engine behind Symantec DLP to help reduce the noise associated with DLP alerts. Fortscale does similar things by back-ending endpoint detection and response (EDR), identity and access management (IAM), cloud access security brokers (CASB), etc.
Alternatively, some AI-based solutions work on a stand-alone basis but are also tightly coupled with the various other technologies of a security operations and analytics platform architecture (SOAPA). Vectra Networks and E8 security are often integrated with SIEM and EDR. Kenna Security works hand in hand with vulnerability scanners. Splunk and Caspida are tightly integrated as are IBM QRadar and Watson, etc.
There’s no doubt that AI-based security analytics are invading the industry, but it’s worth noting that CISOs really don’t care or even understand how the sausage is made. ESG research indicates that only 30 percent of cybersecurity pros feel like they are very knowledgeable about AI/machine learning and its application to cybersecurity analytics. That means cybersecurity vendors that tout AI concepts, algorithms, and data science chops are barking up the wrong tree. CISOs want to enhance security efficacy, improve operational efficiency, and help deliver highly secure business-enabling IT initiatives. AI will be welcomed with open arms if it can help them achieve those goals.
16. hit inbox zero
Keeping your email inbox completely empty can help decrease distractions and increase productivity.
It’s common knowledge that professionals tend to be on the lookout for ways to increase efficiency and productivity, whether that’s through a company-wide effort or in a personal space like their email inbox. It’s also common knowledge that professionals receive a lot of email.
Enter inbox zero. Developed by productivity expert Merlin Mann, inbox zero is a way to manage email by keeping the primary inbox empty. Instead of having several emails waiting in the inbox, the concept encourages professionals to either act on or organize emails into subfolders.
“Aiming for inbox zero makes life far less stressful, and once it’s achieved it’s easy to maintain,” IT consultant and self-proclaimed inbox zero devotee Ben Taylor said.
Here are 11 ways business professionals achieve and maintain inbox zero.
1. Get an early start
Christoph Seitz, CEO of CFR Rinkens, says he begins each day with about 30 minutes of going through emails. The early start, along with working on emails periodically throughout the day, helps reduce inbox anxiety and push business forward, Seitz said.
2. Try out some plug-ins
A variety of tools and plug-ins exist to help better manage emails. Seitz recommends Boomerang, which lets people set times for emails to reappear in their inbox. The tool essentially allows a user to delete an email until they truly need it, and can help schedule necessary follow-ups.
3. Utilize filters
Set up filters to automatically send emails with certain words in the subject or from specific senders into folders. This could also act as a catch-all spot for newsletters or social media notifications that you don’t need to get to immediately.
“The most important thing you can do to avoid inbox clutter is to prevent messages that don’t require your action or immediate attention from reaching your inbox in the first place,” Chris Brantner, Certified Sleep Science Coach at SleepZoo.com, said. “Your inbox should only hold important emails. Think of it as a sacred space.”
4. Only leave emails you need to deal with in your main inbox
“You don’t strew every single piece of business paperwork across your desk, so you shouldn’t do the same with your email client,” Taylor said. “Emails that don’t require action, or have already been dealt with, should be dragged immediately to their subfolders.”
5. Check email on your mobile device
A key part of achieving inbox zero is deleting emails, and a person can delete a lot of their emails after a quick glance or reply. Use brief periods of downtime, like waiting in a line, to get rid of emails, Taylor suggested.
6. Set up keyboard shortcuts
David Emerson, Deputy CISO at Cyxtera Technologies, uses custom keyboard shortcuts to quickly move emails from the inbox to popular subfolders. Shortcut setup depends on what computer software you usehere’s how to set them up on OS X El Capitan.
7. Have a tab or folder for everything
The goal of inbox zero is to have your primary inbox empty, but additional tabs or folders are fair game. Most people who subscribe to inbox zero use these to organize different kinds of emails, ranging from action categories to a holding spot for shipping notifications. Think of what folders you need the most, and create them.
8. Answer your emails right away
“I don’t just skim through my box for fires that I need to put out,” Sylvie Stacy, a physician fulfillment expert, said. “I read each email deliberately and then stop and think, ‘Can I take whatever action is needed right here and now, in the amount of time I have available?’ If the answer is yes, then I do it. Otherwise, I make a plan to address it later, which might involve putting an item on my to do list.”
9. Rely on the archive button
Archive emails and trust that you’ll be able to find an email later via the search bar, several professionals said.
“I’ve learned to trust the search function,” entrepreneurship writer Fiona Adler said. “Years ago, searching didn’t work well and some of us came up with elaborate filing systems for our email. With today’s technology, there’s no need to do this.”
10. Don’t use the inbox as a to-do list
Treating your inbox as a to-do list nearly guarantees emails will always be there. Instead, read the email and figure out the best course of action. If there is an appointment to be made or task to be completed, create the appointment or task in a separate area.
11. Learn to be OK with deleting.
“It’s amazing how many people equate deleting emails with some sort of mass personal affront – and instead take the time to meticulously file away those old meeting briefs, dial in reminders, and pictures of cats,” Rob Mead, head of marketing at Gnatta, said. “If you’re never going to re-read an email don’t store it in your inbox, bin it now.”
17. GE Went From American Icon to Astonishing Mess
Famous for great management, General Electric is staring down a plunging share price, a federal investigation, and possible breakup.
In the century following the Civil War, a handful of technologies revolutionized daily existence. The lightbulb extended the day, electric appliances eased domestic drudgery, and power stations made them all run. The jet engine collapsed distance, as, in other ways, did radio and television. X-ray machines allowed doctors to peer inside the body, vacuum tubes became the brains of early computers, and industrial plastics found their way into everything. All those technologies were either invented or commercialized by General Electric Co.
For most of its 126-year history, GE has exemplified the fecundity and might of corporate capitalism. It manufactured consumer products and industrial machinery, powered commercial airliners and nuclear submarines, produced radar altimeters and romantic comedies. It won Nobel Prizes and helped win world wars. And it did it all lucratively, rewarding investors through recessions, technological disruption, and the late 20th century collapse of American manufacturing.
That long, proud run may have come to an end. It happened, as Ernest Hemingway wrote of going bankrupt, “gradually and then suddenly.” GE hasn’t inspired awe for some time now: The company had to be bailed out in 2008 by the federal government and Warren Buffett, and across the 16-year tenure of recently departed Chief Executive Officer Jeffrey Immelt its stock was the worst performer in the Dow Jones industrial average.
The past year, however, has seen GE enter new territory. Since Donald Trump’s election in November 2016, during a stock market boom in which the Dow is up 41 percent, GE has lost 46 percent of its value, or $120 billion. A few months after Immelt retired as chief executive last summer, the company shocked Wall Street by announcing earnings that were barely half of analysts’ already lowered estimates. Soon after, GE said it would halve its once-sacrosanct stock dividend because it was short on cash. It also said it would sell or spin off $20 billion in businesses, including its lightbulb division. (The appliance business was sold to the Chinese manufacturer Haier Group in 2016, along with a license to use the GE brand.)
Then in January came news of a $6.2 billion charge related to costs incurred more than a decade ago by GE’s financial-services business, an announcement that triggered a U.S. Securities and Exchange Commission investigation. GE’s new CEO, John Flannery, has grimly promised that “all options are on the table,” including the once-unthinkable option of dismembering the company entirely.
And yet, little of this has to do with the stuff GE makes. Its jet engines still dominate the global market. Its turbines, whether in gas, coal, or nuclear power plants, still provide a third of the world’s electricity. Its CT scanners and MRI machines are still the state of the art. So what happened?
Unlike General Motors Co., Boeing Co., and other American manufacturing icons, GE isn’t associated in the public imagination with just one industry or one product, but rather with industrial innovation itself. Famously co-founded by Thomas Edison, GE was actually run in its early years by another co-founder, Charles Coffin. The former shoemaker saved the young company from insolvency by negotiating with J.P. Morgan, untangled key patent rights with Westinghouse, and established the industrial research laboratory that would bring so many good things to life.
Since Coffin, GE’s secret weaponand in a way its dominant producthas been its managers. The company brought organizational rigor to the process of scientific discovery, and scientific rigor to management. In the postwar years, GE hired psychologists for a personnel research department. It also bought an estate on the Hudson River an hour north of New York City and turned it into the world’s most famous management training center. Crotonville, as it came to be known, was a place where current and future leaders would retreat to be taught, tested, and imbued with the company’s values. GE’s courtly CEO and chairman in the 1970s, Reginald Jones, was the most admired business executive of his era, pushing into international markets and serving as an adviser to four U.S. presidents.
The Giants of GE
The men who’ve made the company what it isfor better or worse
Charles Coffin, 1892–1922
GE’s first president talked his way out of corporate bankruptcy during the Panic of 1893. Without him, there would be no GE.
Reginald Jones, 1972–1981
He started in the company’s Business Training Course in 1939 and never left, taking GE global along the way.
Jack Welch, 1981–2001
His favorite saying was “Fix it, close it, or sell it”basically the 20th century equivalent of “Move fast and break things.”
Jeffrey Immelt, 2001–2017
He had a tough act to follow, not least because he took over at the beginning of a series of bear markets.
John Flannery, 2017–
The Man Who Could Break Up GE has spent his first six months working to streamline the aging behemoth.
Jones’s successor was a chemical engineer named John Welch Jr. who’d risen through the ranks of GE’s plastics division. You may know him as Jack. Under Welch, GE came to be seen as a factory for elite corporate talent. The new boss placed a premium on leadership development and the ruthless culling of underperforming employees. He became the highest-profile evangelist for Six Sigma, a management philosophy based on the systematic pursuit of otherworldly flawlessness. Promising young executives were moved between distant poles of the GE empirefrom medical devices to locomotives to NBC (GE bought the television network in 1986)so they could inject fresh ideas and test themselves. Armed with Six Sigma, inspired by Jack, honed by the breakout sessions at Crotonville, GE’s organizational officer corps could run anything, the thinking went.
The company’s mandarin confidence was reflected in the tradition of allowing chief executives tenures that measured in the decades, so they could lift their eyes from the daily fever line of the stock market to more distant horizons. Over time, Welch’s management teachings became a best-selling literary subgenre. Fortune magazine named him manager of the century, and other business periodicals were no less fulsome in their praise (this one gave him a regular column). Such was the premium placed on GE managerial talent that when Immelt, with papal pomp, was unveiled as Welch’s successor, the other two longtime GE executives who’d been finalists for the job were quickly hired as CEOs by 3M Co. and Home Depot Inc.
GE became the great counterexample to a growing skepticism among investors and economists about giant diversified companies. During the 1980s, as conglomerates were increasingly written off as lumbering and opaque, GE was lauded as what researchers at the Boston Consulting Group called a “premium conglomerate”focused despite its diversity, nimble despite its scale, and armored against cyclical downturns in individual industries. And if GE also became known for eschewing generally accepted accounting principles in favor of more exotic and less informative measures, investors and analysts could at least take comfort that the company was in capable hands.
Under Welch, GE’s net income swelled from $1.65 billion in 1981 to $12.7 billion in 2000, even as its workforce shrank from 404,000 to 313,000. But over time, less and less of that income came from technological innovations or manufacturing prowess or even the productivity gains Welch had wrung out early in his tenure. Instead it came from GE’s financial-services arm. From its humble beginnings financing family purchases of refrigerators and dishwashers during the Great Depression, GE Capital had ballooned into a behemoth whose global stable of investments ran from insurance to aircraft leasing to mortgages, giving GE a share of the action during a period when the financial sector was the fastest-growing part of a fast-growing U.S. economy.
In the hands of GE’s financial executives and tax lawyers, earnings from this division had special powers. GE Capital could borrow money in the U.S. to fund offshore businesses in countries where corporate taxes were much lower (or nonexistent), then turn around and use the interest charges on those loans to offset the income from GE’s onshore manufacturing businesses, making its U.S. tax bills disappear. And unlike a factory, GE Capital’s highly liquid assets could be bought or sold at the ends of quarters to ensure the smoothly rising earnings that investors loved. The term accountants use for earnings from these sorts of one-off asset sales is “low-quality,” but through the historic bull market during which Welch had the good fortune to run the company, investors tended not to get hung up on questions of quality. GE’s market capitalization grew from $14 billion in 1981 to more than $400 billion when Welch retired in 2001.
The risks became clear only under Immelt, who took over the company in the wake of the dot-com bubble and right before the attacks of Sept. 11 (a particularly acute shock to a company that did billions of dollars in business with airlines). As the years went on and GE’s stock price fell to a third of its Welch-era peak, Immelt came under pressure from Wall Street to do something. He embarked on a series of splashy acquisitions, for example paying $5.5 billion for the entertainment assets of Vivendi Universal and $9.5 billion for the British medical imaging company Amersham. There were bargains such as Enron Corp.’s wind-turbine business, picked up in a bankruptcy auction, but for the most part the deals proved more expensive and less synergistic than promised. Scott Davis, a longtime GE analyst and the CEO of Melius Research LLC, has calculated that GE’s total return on Immelt’s acquisitions has been half what the company would have earned by simply investing in stoc!
k index mutual funds.
Immelt also publicly pledged to return GE to its industrial roots (with a new concern for environmental impact) and reversed the deep cuts Welch had made to research and development. Still, under Immelt GE Capital only grew. Its profits quadrupled as it gobbled up credit card companies, subprime lenders, and commercial real estate. These weren’t businesses GE had much experience in, but the company had long taught its young executives that they could manage anything.
A problem in one business is exactly what a premium conglomerate should be able to shrug off
The 2008 financial crisis revealed this not to be the case. In the first quarter of that year, a month after Immelt had reassured investors that all was well, GE’s profits fell short of analyst expectations by a then-unprecedented $700 million. “It seems like something’s broken here,” Davis, then a Morgan Stanley analyst, said on GE’s quarterly earnings call. The company, it turned out, had been relying heavily on short-term debt to ensure those rising earnings, and when that market froze, GE lost its magical tool. Within months there were worries that the company wouldn’t be able to pay its debts, then worries that it might collapse entirely. In October, GE had to raise $15 billion through an emergency stock sale, $3 billion of it from Buffett’s Berkshire Hathaway Inc. GE only survived the year intact thanks to $139 billion in loan guarantees from the federal government.
In the decade after that harrowing experience, GE Capital was severely downsized. But elsewhere, Immelt kept on acquiring, spending $10 billion for the power business of French company Alstom, for instance. He also poured money into GE Digital, an ambitious effort aimed at perfecting a software language to handle the torrents of information created and captured by next-generation industrial machines. Immelt talked about making GE a “top 10 software company” whose code even its competitors would have no choice but to use.
These efforts failed to forestall the next round of troublesand in the case of Alstom, they helped precipitate it. With that deal, GE had made a massive investment in natural gas power plants just as the market for them was contracting. Part of the decline was due to the falling cost of renewable energy, a competitor to natural gas, part to a drop in oil and gas prices, which hurt demand from the petrostates that are some of GE Power’s biggest customers. GE was left with a bunch of turbines on its hands. It was a costly mistake: The combination of higher inventory and lower earnings reduced the company’s cash flow by $3 billion. This past August, with the stock price burrowing ever downward, Immelt stepped down as chief executive, saying he would stay on as chairman until the end of the year. By October, though, he’d stepped down from that post, too.
GE wasn’t the only company to miss the slowdown in the gas-turbine marketso did competitors such as Siemens AG and Mitsubishi Heavy Industries Ltd. But a problem in one business is exactly the sort of thing that a premium global conglomerate should be able to shrug off. Instead, just as in 2008, the opposite is happening, with robust GE businesses being dragged down by stressed ones. And now as then, investors and analysts who’d been reassured by GE executives that things were fine have found themselves blindsided. GE’s decision to cut its dividend wouldn’t have been so surprising if it hadn’t spent $49 billion on stock buybacks over the previous three yearssomething companies typically do when they’re flush with cash and looking to return some of it to shareholders.
The dividend cut also brought renewed attention to GE’s $31 billion pension shortfall, which dwarfs that of any other U.S. corporation. GE’s January announcement that it was setting aside billions of dollars for payouts on long-term care policies from an insurer it shed years ago only added to the uncertainty. “It makes you wonder what’s next,” says Nicholas Heymann, an analyst at William Blair & Co. and a former corporate auditor at GE.
What’s additionally baffling about GE’s difficulties is that there’s no surrounding global financial crisis, no chorus of sober-minded people fearing for the future of capitalism itself. Rather, the company is flailing while the world’s major economies are all robustly growing. It’s the exact sort of moment when GE’s global scale should be an advantage. “It’s like their sails are all torn when they’ve got the perfect wind,” Heymann says.
Aviation Is Still Flying High
Jet engines would likely be the last business to go
Of the three businesses GE is most likely to hang on topower, aviation, and health-careaviation is the most valuable. Aside from being GE’s most profitable division last year, it’s also responsible for the company’s current star product, the Leap engine, a quieter jet turbine used on both the Airbus A320 and the Boeing 737.
–11% Change in GE’s 2017 profit
+9% Change in GE Aviation’s 2017 profit
45% Aviation’s share of GE’s positive operating income
John Flannery has a reputation at GE as a fix-it man. A company lifer, he made his name by turning around its health-care division after spending most of his career at GE Capital. Already, Flannery is moving decisively to address the problems he inheritedsomething his predecessor, in hindsight, waited too long to do. He has replaced the leadership of GE Power as part of a broader exodus of senior executives and board members, and announced that GE Digital will be scaled back to pursue “a much more focused strategy” selling a few applications to existing GE customers. He has also indicated that the company will forgo big acquisitions, pointing out that the Alstom deal “has clearly performed below our expectations.” The blizzard of unorthodox accounting metrics is being replaced by more-traditional measures. There will be fewer businesses, and some of those businesses will do fewer things.
The changes Flannery has promised so far also point toward making GE more comprehensible, not only to investors but also to its own managers. The message is that the company, even if it isn’t broken up entirely, will get smaller and simpler. “Complexity hurts us,” he said in November. “Complexity has hurt us.” He’s betting on a future where GE doesn’t require management wizardry to run properly, because wizards turn out not to exist.
If all goes well, GE will become a more mundane brand. It will be less about spreading the gospel of innovation, managerial excellence, or digital disruption and more about making really good jet engines, gas turbines, and medical equipment, selling as many units as possible, and upselling clients on software and maintenance plans. Perhaps it will be liberating. Being an icon isn’t worth what it once was.
Conglomerates Are Broken
The idea that a single company can manage many disparate businesses well is under assault. Ask GE.
In September 1967 the cover of Time magazine featured a grinning portrait of industrialist Harold Geneen underneath a banner headline declaring, “CONGLOMERATES: The New Business Giants.” It seemed appropriate for the era. During the ’60s, Geneen had used hundreds of acquisitions to build International Telephone & Telegraph Corp. into a dizzying collection of businesseseverything from Wonder Bread to Sheraton Hotels & Resorts to timberland giant Rayonier Inc., one of the largest private landowners in the U.S. ITT’s constituent parts had little in common beyond their parent. But after being heralded as the cutting-edge model of American business, the giant shrank. Over the next few decades, a series of splits and sales whittled away most traces of ITT, leaving what is today a smallish manufacturer of industrial and aerospace parts.
To Jerry Davis, a business professor at the University of Michigan who studies corporate organization, the decline of ITT wasn’t an anomaly. Conglomeratesaka multi-industry companies or business groups, if you preferonce provided efficiencies that investors couldn’t get from unsophisticated capital markets. Sprawling outfits such as ITT, Litton Industries Inc., and Ling-Temco-Vought Inc. essentially operated partly as actively managed mutual funds and partly as private equity shops in an age before concepts such as “synergy” and “competitive advantage” chipped away at their raison d’être. Once investors started to question whether deal-savvy managers truly could manage everything from soup to nuts, their fall was swift. “We loved them in the ’60s and ’70s,” Davis says, “and then we hated them.”
General Electric Co. is belatedly learning that lesson. The quintessential American conglomerate was supposed to be the one that proved the expansive business structure could really work. The company that traces its history to Thomas Edison changed domestic life in the 20th century with the electric lamp and toaster, and formed the industrial backbone for America’s growth into a global superpower with its jet engines and power plants. Jack Welch, its sharp-penciled chief executive officer in the ’80s and ’90s, who became arguably the country’s most admired management guru, gave the myth of the conglomerate even more credibility when he built one of the nation’s largest financial-services companies alongside GE’s manufacturing operations.
That highflying reputation has come crashing down: GE’s stock price has fallen by half since December 2016, the company is considering ditching key units such as lighting and locomotives, and the U.S. Securities and Exchange Commission is investigating its past accounting practices. At the very least, GE seems headed for a dramatic reshaping, and its days as a megaconglomerate appear numbered.
GE isn’t the only outfit still sporting the conglomerate tag. There are industrial holdovers such as United Technologies Corp. and Honeywell International Inc., which were never as expansive as GEand are often mentioned as candidates for breakups. The Digital Age also has emerging conglomerates such as Amazon.com Inc. and Alphabet Inc. (Berkshire Hathaway Inc. is often called a conglomerate, but it’s more akin to a holding company of independent businesses.)
The model still has particular resonance overseasthink India’s Tata Group, whose operations span from steel to hotels to beverages. Harvard Business School professors Tarun Khanna and Krishna Palepu proposed in 2010 an “institutional voids” theorythat the size and resources of multi-industry companies can make up for emerging markets’ lack of high-quality institutions. After all, someone needs to facilitate business transactions and relay market informationa role American conglomerates filled in the ’60s.
In the U.S., investors can still get behind a conglomerate: All it takes is a name. To Wall Street, Amazon’s Jeff Bezos can do no wrong. Ditto for Warren Buffett. “There’s nothing wrong with conglomerates in and of themselves,” says Richard Cook, a fund manager in Birmingham, Ala., who’s been a longtime investor in Buffett’s Berkshire Hathaway. “It’s just unusual to find a CEO with the skill set necessary to run one.”
Indeed, part of GE’s success was investors’ unshakable faith in Welch, who seemed to hit quarterly numbers like clockwork. The model faltered under successor Jeffrey Immelt, particularly after the 2008 financial crisis exposed the risk in the increasingly bloated financial operations Welch had built. Immelt tried to reinvent GE againas a digital companybut his luck was running out. He stepped down in mid-2017 under pressure from shareholders.
New CEO John Flannery has tried to right the ship by cutting costs and changing management, but it hasn’t worked: The stock fell 45 percent last year, even as the broader market hit record highs. With few options left, Flannery said he’d consider a once-unthinkable breakup of the company. He’s already shedding $20 billion in assets and could separate the remaining businesses into publicly traded companies. “The question is not, Why is GE possibly being split up now,” says Davis, “but, Why did it take so damn long?”
There was a time when it made sense for a company simply to buy the earnings of another, as a low-cost way to grow in an era of low interest rates. The conglomerate structure also let companies smooth out earnings among volatile industries. For GE, another justification was its ability to turn out world-class leaders. At its legendary Crotonville, N.Y., management training center, promising executives endured boot camps to learn how to lead large organizations, honing skills that were widely applicable whether they ran a business making microwaves or trains or TV shows. Its graduates and other GE veterans went on to run major companies including Boeing, Honeywell, and Home Depot.
“We loved them in the ’60s and ’70s, and then we hated them”
Today, many corporations have their own management training programs. But more significantly, questions have emerged over the universality of leadership skills. Is knowing how to structure an organization and read a balance sheet enough reason to put, say, a retail CEO in charge of an aerospace manufacturer instead of someone who’s spent his entire career in the field?
Technological change and the increasing specialization of businesses make it harder for executives schooled in general management to effectively allocate resources, says Paul Elie, chief of U.S. industrial deals for consultant PwC. “We’re seeing management teams really evaluate what their core strengths are and where they think they can really generate a return on their capital,” he says. “It’s very difficult to do that across a vast portfolio of businesses.”
Investors are asking if GE’s problems were exacerbated by sprawl, letting small issues grow unnoticed. If so, maybe a breakup is needed. Some investors seem to think so: When Flannery said on a recent conference call that “there will be a GE in the future, but it will look different than it does today,” the stock price surged 6 percent within minutes.
GE no doubt will continue to exist in some form. The question is whether it will exist the way ITT still does. “The conglomerate is dead,” says Michael Useem, a management professor at the University of Pennsylvania’s Wharton School. “Long live the conglomerate.”
Can GE Bring Good Things to Its Business Once Again?
It would have been considered a turbulent stretch for any company, but the recent fall of General Electric has struck many as especially unsettling. The venerable multinational firm is experiencing a cash crunch, has seen the evaporation of more than $100 billion in market value over the past year, and recently cut its dividend for only the second time since the Great Depression. “Downright staggering,” is how one analyst quoted in a December Barron’s article described GE’s stock decline of more than 40% in a year when its Dow Jones brethren added 25% in value.
The article’s headline asked the question on the mind of many: “General Electric: Where’s the bottom?”
Poor timing has something to do with GE’s troubles, says Wharton emeritus management professor Marshall W. Meyer, noting its move into energy as the sector has slumped. But GE’s woes also beg a larger question, he says. “GE is the last of the conglomerates, and there’s a large literature that frowns on unrelated diversification,” he says. “There was a while when we applauded the conglomerates, that goes back to the 1970s. But they’ve almost all dropped away and surprise the last one runs into trouble. And so, what business are you in?”
It’s a question the company, with new leadership now in place, is asking itself. John L. Flannery took over as CEO a few months ago with the tall order of restoring stability and growth following the controversial leadership of Jeffrey Immelt, who defended his more than decade-and-half tenure in a Harvard Business Review essay as “one of progress versus perfection. The outcomes of my decisions will play out over decades, but we never feared taking big steps to create long-term value.”
“It’s a fascinating case,” says Wharton management professor John R. Kimberly, “with lots of questions about [Immelt’s] approach to transformation, his beliefs about the importance of personal fortitude, and, ultimately, about the viability of the hugely complicated organizational entity that GE has become in a world that is changing so fast. The notion that GE can ‘pivot,’ for example, seems a stretch at best.”
“The notion that GE can ‘pivot’ seems a stretch at best.” –John R. Kimberly
So jarring have the events of the past few years been that many wonder whether General Electric’s best days are behind it. Says Meyer: “At some point, there is a question of whether the breakup value is larger than the share price, and someone comes along and separates out the pieces and sells them off or keeps them. There are a lot of assets in the company the jet-engine business, the power business, the medical business. These are the core businesses, and they basically look pretty good in the long run, so there is value there. But how they grow the organization to realize the value is another issue entirely. Here’s my worry. The focus on bottom-line metrics, on short-term value for the shareholder, can’t be good for long-term health for the business. It’s an old story.”
Wharton emeritus professor George Day, who has consulted with GE in the past, is “as shocked as anyone to see the collapse of the stock price recently,” but beyond the short-term problems, which he says are serious, there is cause to be bullish. “I think the more interesting story is about their prospects for the future. [Because it is] such a complex and diversified firm, most people struggle to really understand GE. There’s always been a diversification discount to their share price they’ve long wrestled with. My sense is that it’s going to be a slow turnaround. They’ve probably hit close to the bottom now, and I would argue that there is significant upside from what they have already put in place.”
Day adds: “It goes back to the question that people have struggled with as they try to understand GE, which is: what is the glue that keeps the pieces together? How much added value is there to combining rather than separating the pieces?”
GE is now looking at that question. Just in the past few days, breaking up one of America’s oldest and most widely admired conglomerates has emerged as a distinct possibility as Flannery himself has signaled it as an option.
Leadership and ‘the Heavy Lift’
“No one likes to look at their stock price go down and say, ‘I feel good about that.’ It goes without saying,” said Flannery on CNBC in November, just after taking over GE. “But there’s a lot of pent-up energy and desire for redemption and improvement, so my job is to channel that as a leader. And obviously, people look at how I feel about the prospects ahead, and I recognize the heavy lift, but I feel great about the prospects.”
“The focus on bottom-line metrics, on short-term value for the shareholder, can’t be good for long-term health for the business. It’s an old story.” –Marshall W. Meyer
On leadership, Kimberly says it is easy to catalogue the negatives a “stock price way down, dividend slashed by 50%, the usual press frenzy when a visible CEO exits under duress, etc.” But he points out that it is also important to remember the macro forces Immelt encountered, and how they differed from those encountered by his superstar predecessor, Jack Welch.
“I’ve always believed that while leaders certainly make a difference – and frequently a substantial difference – in how and why firms performs as they do, there is a tendency to over-attribute outcomes to their impact,” says Kimberly. “Given that it is much easier – and more newsworthy – to focus on what leaders say and how they manage their public face than to ask the larger questions; and given that answers to the larger questions are often not immediately available or only become evident long after the fact, this is not surprising.
“None of this is to suggest that GE under Immelt was a high performer and that the negative press that surrounded the announcement of his exit from the CEO position was undeserved,” Kimberly continues. “But it is to suggest that both his critics and his supporters are partly right. It is a fact – assuming that facts still matter – that GE’s financial performance on Immelt’s watch was disappointing, to say the least.
And it is a fact that GE has invested heavily in attempting to transform itself into an enterprise designed to thrive in the 21st century, with all that that implies. Will the transformative bets pay off? How will John Flannery reconfigure what Immelt started? And then, ultimately, how will his legacy be viewed? That will depend largely on who you ask and when, because the payoffs from transformation won’t be visible any time soon.”
“What is the glue that keeps the pieces together? How much added value is there to combining rather than separating the pieces?” –George Day
Could the right leadership have averted some of the missteps of recent years? There is no shortage of rueful decisions and deferred maintenance – matters that have enormous consequences for GE’s nearly 300,000 employees, hundreds of thousands of retirees and millions of shareholders. GE began to fall behind on its pension obligation after the recession, and by the end of 2016 had run up a shortfall of $31.1 billion the biggest shortfall among S&P companies, according to a Bloomberg analysis. To meet its pension obligation in 2018, the company plans to take out $6 billion in debt.
GE’s decision in 2015 to buy the power business of Alstom, maker of coal-fueled turbines for power plants, is now seen as badly timed and, with a $9.5 billion price tag, a conspicuous case of overpaying. “If we could go back in the time machine today, we would pay a substantially lower price than we did,” Flannery told CNBC.
Day says the question of the company’s lack of focus became a pressing issue when they had lines as disparate as NBC and major appliances, “which did not fit well at all. And then GE Capital kind of swallowed the company.” After a review of GE Capital, the company recently decided to take a $6.2 billion charge on the finance unit.
Flannery plans to sell off, over the next year or two, about $20 billion in assets, including GE’s lighting division. That act, more than any other, telegraphs a willingness to forfeit pride of legacy for new frontiers. It means the company that traces its roots to Thomas Edison would no longer sell light bulbs.
Evolving the Culture
Once widely admired for its ability to “bring good ideas to life,” General Electric under Immelt started calling itself “a 125-year-old start-up … a digital industrial company that’s defining the future of the Internet of Things.” Some believe that the new corporate aphorism is becoming more than just an expression of aspiration. But change requires a cultural shift, and Meyer says the sale of GE Appliances to Chinese manufacturer Haier in 2016 (for $5.6 billion) has been instructive about what is needed.
“[In] the era of the Internet you move quickly or get left behind, and there is a question of whether the GE culture which was so fabulous two decades ago fits the new era.” –Marshall W. Meyer
“GE culture is known world-wide as the model of methodical operations as well as methodical personnel management, but Haier buys it and their management system is very different,” says Meyer, who has studied Haier for nearly two decades. “They cobbled together a Chinese term, rendanheyi, which means either people- or customer-integration, the basic idea being that anyone who makes anything has to have a direct line of sight to the customer. There are two mantras – one is zero distance to the customer, and the other is compensation as a function of the value created for the user – Haier calls it pay by user. Now, GE is very methodical and process-oriented, while the new model is almost the opposite, because it demands speed, it demands agility, it’s comfortable with experimentation, with entrepreneurial ventures.
“From the Haier perspective, in the era of the Internet you move quickly or get left behind, and there is a question of whether the GE culture which was so fabulous two decades ago fits the new era,” Meyer notes. “I very much hope it can.”
Flannery says the new era at GE will focus on three lines of business: energy, aviation and medical technology. In fact, there is quite a bit of connective tissue GE brings to these disparate businesses, says Day. “The first one is a long-term willingness to invest in talent development, particularly executive talent development. They’ve always had a pretty deep bench. The second one is a strong problem-solving culture. Third, they have rigorous financial controls supporting a strong focus on earnings. The fourth one is to me the big long-run play, which is for at least five years they have focused on using digital technologies to integrate and extend the complex systems in their core businesses. As a glue it means that they can take everything from big data and data analytics, to the Internet of Things, to AI and blockchains, and deploy them for complex business solutions, which I think is an exciting long-run opportunity.”
GE, for instance, has recently upped its ownership in Arcam AB, a Swedish 3D printing company, from 77% to 95%. The move, combined with the acquisition of another European 3D printing firm, will support a number of GE businesses, including its jet-engine manufacturing business. A decade’s worth of research and development appears to be on the verge of paying off for GE Aviation. A new GE Advanced Turboprop (ATP) engine has been produced using 35% 3D-printed and related techniques, reducing 855 components to just 12, making it lighter and more fuel-efficient. The engine completed its first-run testing in Prague in December.
Day see the potential for GE to become a leader in digitally integrated systems – scenarios in which “they can put together hardware with software and build deep relationships with customers and provide the financing, and then offer risk-sharing. Customers love it when you can figure out a way to share some of their operating risks,” he says.
“There’s a big talent war going on out there. But I think in large systems, GE stands a good chance of winning the talent war.” –George Day
“Think of power-by-the-hour for aircraft engines – they shifted from a purchase-lease to a pay-for-what-you-use business model. I think you’ll see that in some of their other businesses. Why couldn’t you, for example, in medical imaging systems have a model where customers pay only for the images that they take? You’ve got these digital capabilities on hand, and they’ve invested a lot in creating these capabilities in Silicon Valley. It is getting harder to find the scarce talent you need to do a digital deployment, because there are not that many people good with AI or big data analytics. There’s a big talent war going on out there. But I think in large systems, GE stands a good chance of winning the talent war. As immigration shuts its doors from talented people outside, GE can go to a number of facilities in Canada, in Europe and Asia. They have a global advantage.”
Day continues: “I can’t think of another company as well positioned to participate in the big Internet of Things, to create digitally integrated solutions across as many sectors and the ability to share their learnings. While they are pretty focused on quarterly earnings, they also famously want to play in the long-run – and have to, given the scale of investments they have to make, which raises the barrier of entry for others.”
While GE’s latest quarterly earnings report didn’t surprise analysts it had a $9.8 billion loss in the last quarter the company also disclosed that it is facing an S.E.C. accounting inquiry into its insurance business. General Electric faces “very difficult short-term problems,” Day concedes. But those eventually will be fixed. “Over the long term, many of the pieces appear to be in place.”
Get Your Point Across To These Five Personality Types
Not everyone thinks the same way. Here’s how to repurpose a three-decade-old management theory to tailor your message to just about anybody.
The VP of finance for a major multinational company recently came to me with a problem. “I’ve been trying to start a conversation with the VP of marketing, and he won’t talk to me,” he said. “Whenever I try to ask him what he thinks about my ideas, he doesn’t respond.”
I asked him to describe the marketing VP to me. As he talked about his personality, I thought of a potential solution: “Don’t ask him what he thinks about your ideas,” I said. “Ask him what’s wrong with them.”
A few weeks later, I heard back from my client. “Your advice was amazing!” he said. “We spent two hours discussing issues, and he wants to meet with me every week now!”
Why did I give him that advice? Because as he described the marketing VP to me, I realized what type of speaking approach would most likely resonate: one that appealed to his colleague’s problem-solving personality.
While psychological research has progressed quite a bit since Edward de Bono released his influential book Six Thinking Hats in 1985, I find framework still offers a handy set of metaphors for adjusting your speaking style to fit listeners’ thinking styles and personalities (though I typically prefer sticking to just five). Here are five ways to frame your message, riffing on de Bono’s 33-year-old idea, according to the people or person you’re communicating with.
1. Problem Solvers
A “black hat” approach to speaking is all about solving problems. When you’re addressing someone who thrives on figuring out puzzles (like that VP of marketing), you need to focus on what’s wrong with something–usually in solutions-oriented, technical terms.
Let’s say you’re tasked with giving a presentation about productivity. With a black hat approach, your key message might be, “By reducing the gaps in our sourcing systems, we can increase productivity.” Then you’d go on to point out what those gaps actually are, and guide your audience toward brainstorming ways of closing them.
2. Data Geeks
Analytical thinkers typically require a slightly different approach. The “white hat” approach to speaking is objective and straightforward. Rather than emphasize the problem areas, you lay out all the relevant information you’ve got–focusing on data and analysis. You’ll also want to rely more on charts and statistics to get your message across than you otherwise might.
So if you’re taking a “white hat” approach to your productivity presentation, you’d analyze your team’s output in terms of amount of hours saved, money saved, and forecasted benefits–all backed up by hard facts and concrete numbers. Your key message might be, “By improving our system, we can increase productivity by x and contribute y to the bottom line.”
3. Team Players
Sometimes you’re speaking to people who aren’t exactly number crunchers but think in terms of shared purpose and teamwork. In that case, your goal is to connect with the hearts of your listeners with an emotional appeal that inspires belief, propels action, and instills a feeling of togetherness.
A “red hat” approach to the productivity issue would be more of a pep talk; you’d discuss how increasing morale and building team spirit can increase productivity. Your key message might be, “By working together, we can conquer new frontiers and build an organization that keeps getting better and better.”
4. Creative Types
The “green hat” approach to speaking focused on creativity. If your listeners are “outside the box” thinkers, you’ll need to use visual imagery to get your audiences to imagine possibilities they may not have even considered.
In your productivity presentation, you’d want to discuss potential innovations that could help increase productivity. Rather than analyze the past, you’d brainstorm programs and initiatives you could try in order to boost productivity in the future, encouraging your team to think inventively. Your key message might be, “By innovating, we can propel the organization to better results and discover new opportunities we haven’t even imagined yet.”
Finally, if you’re speaking to glass-half-full thinkers who are good at looking at the bright side, you should do the same. Stress the positive and focus on what’s ahead–like a bright beacon guiding everyone to safety and security.
Taking this “yellow hat” approach for your productivity presentation would mean focusing on what’s going right already, and where it’s bound to take you if you stay the course. Your key message might be, “By capitalizing on our strengths, we can catapult our company to new heights with our customers.”
As de Bono himself realized, these strategies are all about being flexible. Our personalities are highly contextual–more tendencies than fixed properties–and people change “hats” all the time. Your room full of yellow hat optimists might turn into black hat problem solvers when the going gets tough. So always think about what your message is, and to whom you’re delivering it. You’ll find a little color can go a long way.
18. Run Effective Meetings So You Can Get on With Your Day
Stop wasting your time in meetings that drag on and on. Make the most out of them so you can maximize your day.
Let’s face it, meetings can be a real drag. We all hate doing them, but we also feel they’re a necessary evil to ensure people work well together. For such a straightforward concept–essentially a bunch of people in a room discussing an idea–we really do make a meal out of it sometimes.
With an average of 11 of our working hours spent in meetings each week, we really need to reduce the number of unnecessary meetings we’re in and increase the productivity levels in the ones we simply can’t avoid.
At Radiate, we initially found ourselves meeting happy. Then, we realized quickly 15-minute meetings had turned into two-hour-long talkfests.
We’ve since implemented some guidelines around meetings to maximize outcomes.
Materials are dispersed beforehand, so people can read up and be prepared. This also helps make the meetings about exchanging thoughts and ideas versus catching everyone up on background.
Each meeting is given 30 minutes max, except for creative/brainstorming ones, which tend to go on for longer.
And as much as we like to chat, we keep the small talk to a minimum. I don’t know how many meetings I’ve been in where 10-15 minutes of valuable time is spent talking about family, food, and vacations before getting down to business. We tend to leave that talk to the end when, miraculously, we may have finished on time!
At Radiate, we’ve asked our Experts how they run meetings effectively and here are some of my favorite answers:
Keep it small. Have the “minimum number of people that must be there to accomplish that purpose,” says Brad Keywell, the co-founder and CEO of Uptake Technologies.
Have a purpose. Ask the question: “Was this meeting helpful, and what should we do differently in the next meeting?” says chairman and CEO of Alleycorp Kevin Ryan. This approach should help you practice the best meeting habits to get the most out of the room.
Be strict. “You go to the table, and you get every single mind engaged,” says legendary business leader Jack Welch. “If you have a meeting and somebody’s there that can’t contribute or won’t contribute, don’t have them in the meeting.”
Keep it clear. “We are very clear of what our goal is in the meeting and what our deliverables are coming out of the meeting,” says Mellody Hobson, president of Ariel Investments. “We need an agenda to really be able to keep us on track.” Another way to keep meetings tight is to pre-read all the material needed before a meeting. “We’ve pre-read the same material before we walk into the meeting,” she says.
Create a sense of urgency. “Set a time that’s short, set an agenda, have people standing up, and be very aware of the time,” says Kat Cole, the group president of Focus Brands. This tactic makes meetings go a lot faster.
Talk fast. Talk quickly so that people in the meeting will pick up on your urgency cues, says Chris Burch, founder of Burch Creative Capitol. “If I need people to move fast, I move my language fast.”
Have a leader. Choose one person to keep focus in the meeting. “Whoever is the leader in the room has to drive the pace of the conversation,” says Ed Bastian, CEO of Delta Air Lines.
Keep a follow-up list. It is easy to go on tangents in meetings, Gail Mandel, head of Wyndham Destination Networks, says. She finds that follow-up lists are extremely effective for her meetings. “I don’t want to squash innovation, but I also recognize that we have to respect each other’s time, and that’s the way I make sure that we stay on point.”
Best Practices Are Dead
Digital transformation may be a trendy phrase. And there’s a good reason for that. Companies want and need fundamentally to change how they do business in a world increasingly powered by pervasive technology.
As a consultant, I see both the upside and downside to digital transformation projects. On the upside, we know that companies can truly benefit from our advice and guidance on how to remake their businesses so that they can be positioned to succeed in the decades ahead. The downside? Technology and standards are changing rapidly, and companies are operating in more niche categories. That means consultants can’t simply apply a standard set of best practices to digital transformation. They need to think bigger.
Best practices have been very good to consultants. Understanding established approaches that consistently deliver results is, in many ways, what has enabled the consulting industry to grow and flourish during the past 30 years. When an effective approach based on an established set of best practices is introduced to new industries and specialties, it enables scale, predictability, and consistency. If we figure out the right way to do something in a particular situation, it should work again in a similar situation. Consultancy is the poster child for pattern recognition at its finest.
But relying solely on best practices is no longer a viable strategy for companies or for consultants. Best practice models are great for incremental improvements; they will reliably help companies get from 95 percent accuracy on billing to 99 percent. But for transformations, in particular digital transformations, they’re less helpful. Ten or 15 years ago, a digital transformation might have included telling a marketing department to emphasize direct email campaigns over direct mail efforts. But had the advisors truly been thinking in transformational terms, they would have suggested dispensing with direct email altogether and instead investing more in Facebook advertising, or using social media to build a grassroots campaign. Sure, it wasn’t obvious in 2007 just how impactful social media marketing would turn out to be. But consultants are paid to scout out trends and envision how businesses can benefit from them.
Imagination + Experience = Innovation
The pace of change makes it dangerous to rely on best practices. Technology is so quickly shaping the future that using only your own personal and professional experience to inform your counsel will make you look behind the times. Advisors and leaders have to be ready to build business models that don’t necessarily have a precedent, and to imagine customer and employee experiences in ways that haven’t been seen before. A good foundation of experience will serve as a great starting point. But to be truly innovative, we need to imagine how technology will transform industries in the months and years ahead.
Advisors and leaders have to be ready to build business models that don’t necessarily have a precedent.
This practice may be unnatural at first especially to professionals who were schooled on data, metrics, lived experience, and best practices. Consultants long have approached a problem by bringing prepackaged solutions to the table. (Here are the five steps you can take to reduce IT costs 25 percent. How do we know they work? The leading companies in your industry have taken the same steps!)
But companies are now demanding innovation in every part of the business. Developing and issuing one-size-fits-all recommendations not only no longer works it also cultivates the wrong mind-set. Here’s why. We are always looking for ways to streamline processes and optimize efficiency. And outlining “best practices” is a faster, easier, and efficient way to drive enhanced performance. Oftentimes, this works for clients in the short term.
However, showing up with probing questions that challenge the client and his or her entrenched beliefs is far more productive and likely to provide more powerful results in the long term. Asking the right questions builds credibility and a rapport between the advisor and client it shows that we truly want to understand their challenges. And the discussion it facilitates can lead to a better, more personalized long-term solution.
It’s also becoming clear that clients don’t want consultants to bring general best practices and methods to the table. Rather, they want specific and individual guidance that is most relevant to their specific circumstances. In 2013, Clayton M. Christensen and two coauthors wrote in Harvard Business Review that at “traditional strategy consulting firms, the share of work that is classic strategy has been steadily decreasing and is now about 20 percent, down from 60 percent to 70 percent some 30 years ago.” The same study found that clients were more likely to divide up projects and funnel them individually to consultancies rather than rely on one-stop firms. As a result, “consultancies are shifting from integrated solution shops to modular providers, which specialize in supplying one specific link in the value chain.” In other words, clients are now demanding expertise tailored to their individual challenges. Even within the same departments, teams may use multip!
le consultants to help guide different projects. Consultants need to be able to offer up a range of experts with diverse experiences in order to meet these niche demands, experts who are still able to work collaboratively to push forward big-picture company goals.
When you take a step back, these development makes sense. What’s happening in consulting mirrors the larger changes in technology. Data, for example, has brought personalization to consumers and business, whether it is in developing customized workout routines, tailoring advertising based on past purchases, or enabling dynamic pricing of hotel rooms and plane tickets. It’s therefore no surprise that our clients are demanding the same kind of personalized guidance when it comes to rethinking their business. The real surprise is that it’s taken us consultants so long to realize that best practices are no longer what’s needed or wanted.
19. Global notebook shipments lower than expected in 4Q17, says Digitimes Research
Worldwide notebook shipments, not including detachable 2-in-1 devices, performed weaker than expected and arrived at only around 41.15 million units in the fourth quarter of 2017, resgistering their first on-year decline after four consecutive quarters of on-year growths.
The iPhone X only had limited impact on demand for notebooks during the year-end holidays, but notebook replacement demand in mature markets’ enterprise sectors during the fourth quarter weakened compared to the first half of the year.
However, Digitimes Research expects notebook shipments to return to the growth trend in the first quarter of 2018 and will see a single-digit percentage increase on year, fueled by new Chromebooks, the China gaming market, and the recovery of enterprise demand.
Hewlett-Packard (HP) will remain the largest notebook vendor worldwide in the first quarter of 2018, but its shipments will also suffer the highest decline among the top vendors due to the weak seasonality in Europe and North America.
Second-place Lenovo will enjoy its first on-year shipment rise in the first quarter of 2018 after six consecutive quarters of declines. Apple will be in third place, with the iPhone X’s impact on the notebook market dwindling. Acer will return to the fourth position, surpassing Asustek Computer because of the positive results from its business re-organization and strategy adjustments.
As for Taiwan-based ODMs, Inventec is expected to see rising shipment share in the first quarter of 2018 thanks to increased orders from HP, while Compal will see a shipment share decline with HP and Lenovo shifting away their orders.
20. Alibaba’s Online Growth Surges, Even as It Looks Offline
HONG KONG The Alibaba Group, the Chinese online shopping giant, has become so big that it is looking for growth by forging into new territory: the offline world.
Alibaba has snapped up stakes in grocers and in an electronics chain over the past three years, a perhaps counterintuitive series of moves for a company that helps consumers in China buy products with their smartphones. In part, the push is driven by the eventual maturation of its online business.
For now, however, online shopping still rules the roost.
Alibaba on Thursday reported a one-third rise in profit for the three months that ended in December, on revenue that rose by more than half. The revenue growth rate was its slowest in a year but still came in better than expected.
Investors are betting that Alibaba’s run will continue. The company’s stock more than doubled last year, installing it firmly in the technology world’s major league. Alibaba’s market capitalization now exceeds half a trillion dollars, making it smaller than Alphabet and Amazon but comparable to Facebook and China’s other internet colossus, Tencent Holdings.
Still, a pullback in growth is inevitable for a company with Alibaba’s reach.
The company will have a harder time finding Chinese consumers who aren’t already online. Smartphone sales are flattening out. Although economic growth still looks strong at least if the Chinese government’s figures are to be believed Alibaba will have to work harder to rake in more revenue from its online marketplaces. Its other businesses outside retail, like online video and cloud computing, still lose money, and its overseas expansion hasn’t yet paid off.
The company has lifted its recent results by offering more and better services to the vendors on its platforms. But it is also eyeing the 84 percent of physical goods sales that still take place offline in China.
Alibaba has been pouring cash into experiments in what its founder, Jack Ma, calls “new retail”: a kind of teched-up re-envisioning of how people shop in store. In particular, it hopes to gather more detailed user data, which could help it offer more personalized services and ads to its customers online and off.
In that respect, the company has a head start on Amazon, which paid more than $13 billion for Whole Foods last year. In 2015, Alibaba struck a deal to buy a stake in Suning, an electronics retailer. It took control of Intime Retail, which runs department stores and malls, early last year. In November, it bought a $2.9 billion slice of Sun Art, one of China’s largest grocery operators.
These brick-and-mortar partners are being fitted with Alibaba’s technology. At the same time, the company is building its own chain of stores, called Hema Xiansheng the name is a Chinese pun on “Mr. Hippopotamus” that combine a fresh-food market, a restaurant and facilities for home deliveries. Alibaba also debuted a cashier-free minimart last July well before Amazon opened its own automated convenience store last month.
“Some of Alibaba’s ‘new retail’ initiatives have shown quite promising signs of initial success,” said Jialong Shi, an analyst with Nomura, singling out Hema. Still, he said, “these initiatives may require a few more years of incubation before we can see profits.”
Another challenge: Tencent, Alibaba’s biggest rival, is getting into fresh food and traditional retail, too.
Tencent is the world’s largest video game company. It also runs WeChat, China’s most popular messaging and social media app.
But Tencent is also charging into the old-fashioned shopping business. In December, it bought a stake in Yonghui Superstores, a large supermarket chain. It is weighing an investment in the China operations of Carrefour, the grocer and retailer headquartered in France. It is also leading the purchase of a $5.4 billion stake in Dalian Wanda Commercial Properties, a mall operator and part of the troubled Dalian Wanda conglomerate.
For now at least, analysts do not expect Alibaba and Tencent to end up owning rival alliances of stores. Tencent primarily seems to want to create more opportunities for people to use its mobile payment service, WeChat Pay. It is also hunting for new clients for its cloud computing business.
“It’s very hard for me to imagine that Tencent would fully own and operate a supermarket on its own,” Mr. Shi of Nomura said.
For both Alibaba and Tencent, though, creating more points of contact with their customers helps them amass more user data. This is one reason the companies are investing heavily in artificial intelligence, which helps them make sense of the boatloads of user information they are hauling in every minute.
“They not only have the largest data sets, but they have data sets tied to customers that they can identify,” Kirk Boodry, an analyst with New Street Research, said. “The potential for A.I.-led monetization growth, we think, is still at a very early stage.”
Also on Thursday, Alibaba said it would acquire a one-third stake in the parent company of Alipay, one of China’s two main online payment services. The two sides agreed in 2014 to give Alibaba the right to acquire the stake. The two companies used to be one until Mr. Ma took the Alipay operations out and formed a separate company.
Microsoft Sales Lifted by Cloud Computing
SEATTLE Microsoft has spent years adjusting its business to reflect a shift from traditional software sales to cloud computing services delivered over the internet.
It is a bet that continues to pay off for the company as was evident in its quarterly earnings released Wednesday.
The report was blemished by a charge of $13.8 billion related to recent changes in tax law in the United States, which caused Microsoft to report a net loss. But putting aside the tax-related charge, which was widely expected and will probably impact other tech companies, Microsoft’s business showed the kind of growth that has attracted investors in recent years.
The portion of Microsoft’s cloud business that involves selling to companies called commercial cloud grew 56 percent, to $5.3 billion, in the quarter that ended on Dec. 31. Like many legacy software companies that cater to the huge corporate computing market, Microsoft was caught off guard by the emergence of cloud computing in the form of online storage and computing services offered by the internet retailer Amazon.
After Satya Nadella took over as chief executive in 2014, the company redoubled its efforts. Microsoft is now widely considered the No. 2 cloud provider after Amazon
Microsoft’s overall revenue last quarter rose to $28.92 billion, up 12 percent from the same period a year earlier, as everything from its Office applications business and Xbox gaming console both buoyed by cloud computing services showed growth.
The company reported a net loss, including the tax charge, of $6.3 billion, or 82 cents a share, down from net income of $6.27 billion, or 80 cents a share, a year earlier. Without the tax charge though, Microsoft said it earned 96 cents a share.
Microsoft’s shares dropped about 1 percent in after-hours trading following the release of the results, though both revenue and the adjusted earnings figure were significantly better than Wall Street forecasts.
One of the company’s oldest businesses, Office, saw its commercial revenue grow 10 percent in the quarter. Even the number of consumers who subscribe to a cloud version of the application suite, called Office 365, rose to 29.2 million from 24.9 million during the same period a year earlier.
The company’s gaming revenue jumped 8 percent, primarily as a result of hardware sales resulting from the introduction of a new console, Xbox One X.
Microsoft and other big tech companies like Intel and Apple have been struggling over the past several months to mitigate a critical security flaw known as “Spectre” which exists at the chip level and has no simple patch.
Microsoft has attempted to mitigate the flaw without dinging performance, but security experts like Paul Kocher, one of the researchers who discovered the flaw last year, say Microsoft’s solutions still do not sufficiently address all the ways it could be used by an attacker.
In a phone interview, Microsoft chief financial officer, Amy Hood, said Microsoft has not yet seen a financial impact from the recent critical security flaws.
AT&T profit beats, CEO upbeat on Time Warner deal
NEW YORK (Reuters) – AT&T Inc (T.N) reported quarterly profit that beat analysts’ estimates on Wednesday, helped by tax cuts and new wireless subscribers, and its chief executive voiced confidence the company will complete its $85.4 billion acquisition of Time Warner Inc (TWX.N).
An AT&T logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni
The U.S. Department of Justice sued to block the deal last year on grounds that it was anticompetitive. A trial is slated to begin on March 19.
“While we remain open to finding some reasonable solutions to address the government’s concern, we do expect this case will ultimately be litigated in court,” Chief Executive Randall Stephenson told analysts on a conference call. He added, “We remain very confident that we’ll complete this merger.”
Shares were up 3.8 percent to $38.87 in after-hours trading.
AT&T reported a net addition of 329,000 phone subscribers who pay a monthly bill in the quarter, helped by lower customer attrition and a “buy one, get one free” promotion for the iPhone 8. The No. 2 U.S. wireless carrier lost 67,000 subscribers a year earlier.
AT&T, which owns satellite television service DirecTV, said it lost 207,000 traditional U.S. video subscribers in the quarter as more consumers drop their pay-TV packages. It added 368,000 to its cheaper DirecTV Now streaming service.
Providing video entertainment on phones has taken on greater importance as AT&T slugs it out with industry leader Verizon Communications Inc (VZ.N) and smaller rivals Sprint Corp (S.N) and T-Mobile US Inc (TMUS.O) for customers in a saturated wireless market.
AT&T’s planned acquisition of Time Warner, originally announced in October 2016, reflects an effort to turn itself into a media powerhouse that can bundle mobile service with video.
Net income attributable to AT&T in the fourth quarter was $19.0 billion, or $3.08 per share, in the fourth quarter ended Dec. 31, up from $2.4 billion, or 39 cents a share, in the year-earlier period.
Excluding items, the company reported earnings of 78 cents per share, which included a 13-cent impact from tax cuts signed into law by U.S. President Donald Trump late last year. Analysts on average were expecting earnings of 65 cents per share, according to Thomson Reuters I/B/E/S.
Revenue was $41.7 billion, compared with $41.8 billion in the year-earlier period. Analysts had expected $41.2 billion.
For 2018, AT&T said including impacts from tax cuts and a new accounting standard, it expects earnings per share in the $3.50 range, free cash flow of about $21 billion and capital expenditures of $25 billion.
Time Warner’s Q4 revenues rise as HBO Now reportedly hits 5M subscribers
Time Warner’s fourth quarter revenues rose 9% amid strong performance from Turner and HBO, the latter of which saw its streaming service reportedly reach 5 million total subscribers.
Total revenues hit $8.6 billion and operating income increased 13% to $1.9 billion.
Turner’s revenues rose 10% to $3.1 billion as subscription revenues rose 14%, content and other revenues rose 32%, and advertising revenues rose 2%. As is the story with many cable programmers, subscription revenues benefited from higher domestic rates but were offset by domestic subscriber declines.
The increase in advertising revenues was thanks to more ad money from MLB postseason games and growth at Turner’s international networks.
Turner’s operating income rose 22% to $1 billion, despite programming expenses rising 10% mainly due to higher costs associated with airing MLB postseason games.
HBO’s revenues increased 13% to $1.7 billion as a 16% rise in subscription revenues helped fight off a 17% decrease in content and other revenues.
Time Warner CEO Jeff Bewkes credited HBO series and the awards they garnered for record subscriber growth at the network.
“Led by its great content, Home Box Office delivered its highest increase in domestic subscribers ever in 2017 and its best subscription revenue growth in over 20 years,” said Bewkes in a statement.
According to Bloomberg, HBO Now, the network’s standalone streaming service, now totals 5 million subscribers. Last year at around the same time, the service had 2 million subscribers.
HBO’s operating income increased 13% to $486 million as revenue growth outpaced increases in programming and marketing costs. Programming expenses increased 13% due to higher original and acquired programming costs and marketing costs rose due to original programming and HBO’s OTT products.