Trump sets Bezos in his sights

Amazon is the latest company to get President Trump’s own brand of condemnation as the Commander-in-Chief takes to Twitter to rant and rave.

The attention from the oval office has seemingly gotten a few people a little bit uncomfortable as share price has dipped by about 2% during overnight trading, as it seems Trump is targeting the interesting tax set up at the internet giants offices. There have been rumours Trump has been stalking CEO Jeff Bezos to figure out how he can claw back some tax dollars.

White House spokesperson Sarah Sanders commented that there “aren’t any specific policies on the table at this time,” but Trump was “looking to create a level playing field for all businesses”.

The issue here is down to physical presence. Legal precedent has been set in the US stating that the individual states cannot claim sales tax where the company does not have a physical presence. Certain states now argue that the world has changed since the original ruling in the early 90s, and therefore the rules should change also.

This is not the first time the President has targeted Amazon however. Last August, Trump criticized the company for causing great damage to smaller retailers causing a 1.2% drop in share price. Amazon may be causing damage to some businesses, but it (as well as other eCommerce sites) are enhancing prospects for those who are digital orientated. The number of potential customers go through the roof and some of the most notable overheads disappear.

The issue here is that Trump wants to protect those who have been making money in the more traditional manner. The real estate gurus who build shopping malls or high streets around the country; these are the people who are becoming increasingly vulnerable in the connected economy. One aspect of the rant which we can’t get our head around is the comment about destroying the US postal system.

Items purchased through Amazon are mostly sent through the public postal system, and while we imagine Amazon would have negotiated favourable rates, the sheer volume would surely kick economy of scale into action. Considering few people send letters anymore, we wonder what the condition of the postal service would be without it being propped up by the eCommerce giant. Last year, revenue from package deliveries increased $2.1 billion (12% year-on-year) which is seemingly the only area of the postal service which is successful. The basic concept of the postal service is in crisis, but Amazon (and other eCommerce deliveries) seem to be the only thing propping up the successful part!

Interestingly enough, Facebook has not received any criticism from the President, so you have to wonder whether there is another reason for the dislike of Amazon. Both companies should tick the box for Trump when it comes to abusing the American people, but only one of the owners owns a major news publication which doesn’t bend to the will of the erratic President.

The next couple of months might be a pretty uncomfortable period for Amazon and Jeff Bezos. Trump might be respected by all as an incredibly intelligent, compassionate or logical individual, but when he makes a promise he almost always follows through with it.

Mission: damage limitation continues for Facebook

Facebook has announced that it will end its Partner Categories to limit the amount of information it shares with advertisers and collects off third-parties.

The practise itself is not necessarily uncommon throughout the industry as many companies which offer advertising solutions source additional data to make products more accurate. Organizations like Experian and Acxiom will provide additional information to platforms like Facebook to create the hyper-targeted advertising which is currently being intensely scrutinised.

“We want to let advertisers know that we will be shutting down Partner Categories,” the company said in a blog post. “This product enables third party data providers to offer their targeting directly on Facebook. While this is common industry practice, we believe this step, winding down over the next six months, will help improve people’s privacy on Facebook.”

Alongside this announcement, Facebook also restructured its platform to make privacy settings and controls more accessible to users. While it might not be the most attractive idea to advertisers or even the Facebook shareholders, the mission to recover the trust of the user is far from over. Cambridge Analytica is only one case which has been unveiled so far, we think there will be more revelations over the coming weeks and months; Facebook will need to do a lot of PR work to steady the ship.

For the moment, Facebook does seem to be doing an okay job when it comes to reassuring investors. There was a steep decline in share price during the immediate aftermath of the scandal, but it does seem to have stabilized over the last couple of days. Investors and shareholders will have an eye on the bigger picture; Facebook is not going to disappear overnight and will continue to make money, but winning back the general public will be a bit more difficult.

Cutting the ties with third parties is a sensible move from Facebook as it cannot control the practises in these organizations. It is an example of the business being proactive in identifying potential problems, as the government and privacy practises of these third-parties has not been put under the spotlight yet. All Facebook needs at the moment is being dragged into another scandal which it does not have direct control or influence on.

With new data regulations on the horizon, and politicians out for blood, Facebook needs to put across the impression it is angelic. The element of control is incredibly important in this projects. Facebook will be held accountable and therefore needs to make sure it is only involved in practises in which it can implant its own influence.

Plantronics gets rolling on $2 billion Polycom acquisition

Plantronics has announced it will acquire unified communications specialist Polycom in a cash and stock transaction worth $2 billion, expected to close by the end of the third quarter.

The pair claim the deal will create the broadest portfolio of communications and collaboration endpoints for the $39.9 billion UCC industry, adding voice and video collaboration expertise to the Plantronics strategy of ‘delivering new communications and collaboration experiences’. Bringing the two companies together will enable Plantronics to target new opportunities in the data analytics and insight services segments, the company said.

“Polycom has returned to growth by focusing on building strong ecosystem partnerships and delivering innovative, smart solutions for our customers and partners,” said Mary T. McDowell, CEO of Polycom. “Bringing Plantronics and Polycom together will broaden the breadth of solutions available to customers and partners and create a consistent end-user experience across many collaboration applications and devices. As one company, Plantronics and Polycom will make it even easier for all customers to solve big-business problems through human-to-human connections.”

“With the addition of Polycom’s solutions across video, audio and collaboration we will be able to deliver a comprehensive portfolio of communications and collaboration touch points and services to our customers and channel partners,” said Joe Burton, CEO of Plantronics. “This will put Plantronics in an ideal position to solve for today’s enterprise collaboration requirements while capitalizing on market opportunities associated with the evolving, intelligent enterprise.”

In terms of the specifics, the $2 billion will consist of an estimated $690 million in net debt and an estimated $948 million in cash and 6.352 million Plantronics shares, valued at $362 million based on the 20 trading day average. Polycom shareholders will own approximately 16% of the combined company. Siris’ Capital’s (an investor in Polycom) Frank Baker, Managing Partner, and Daniel Moloney, Executive Partner, will join Plantronics Board of Directors.

This is not the first time Polycom has been in the news regarding an acquisition. Back in 2016, Polycom was the centre of consolidation talk with Mitel, though the pair parted ways after Polycom received a superior offer from Siris Capital.

Synchronoss delivers the bare minimum in its business update call

Telecoms cloud vendor Synchronoss was obliged to offer a business update call in advance of restating historical accounts on 10 May.

The call was a condition of the decision by the NASDAQ to give Synchronoss some extra time to get its historical accounts in order, following its announcement a year ago that it needed to restate at least two years’ worth of accounts because they could no longer be relied upon. It was made clear from the start that 10 May is when the substantial update will come so this one appeared designed to deliver the bare minimum needed to satisfy the NASDAQ.

Having said that CFO Lawrence Irving, who was also Synchronoss CFO from 2001-2014, and whose departure coincided with the start of the more creative approach to accounting, did serve up some reasonably frank admissions at the start of the call.

“We have preliminarily concluded on our accounting positions and are working with our outside auditors as they review our positions and perform audits for our 2015, 2016 and 2017 years and respective quarters,” said Irving.

“In summary, the primary adjustments result in revenue being spread over multiple periods or netted as part of a related M&A transaction. Over the years of 2014 through 2016, we anticipate that approximately $60 million to $80 million of the approximately $1.2 billion of revenue initially recognized will be reversed and recharacterized as part of the consideration paid as part of an M&A transaction, while the revenue timing adjustments will be recognized in different periods, sometimes being spread over a period of years, including 2017 and 2018.”

So it looks like they need to restate 2014 too, around 5-7% of revenues in the period in question were questionable, and even some of the legit revenue will need to be retrospectively moved to different quarters. Irving was keen to stress that none of these adjustments will have an impact on the company’s cash position. In other words, don’t let the past contaminate the present and future.

This temporal containment exercise was taken up enthusiastically by Synchronoss CEO Glenn Lurie, who summarised at length much of what he had said in his interview with There was very little reference to the past and a lot of emphasis on all the grand plans he has for taking the business forward. That’s all great, but the whole premise of the call is that the past has to be dealt with properly before the company can move on.

There was at least a Q&A and the first questions came from Tom Roderick, who provided so much insight when we investigated the past few years’ fun at Synchronoss late last year. He focused his questions on trying to get some additional detail behind the company’s signature deals with the big US operators and seemed resigned to hearing nothing more about the accounts until the big reveal in May.

Michael Nemeroff of Credit Suisse seemed a bit exasperated when he asked “don’t even know what your business is anymore. I don’t even know what’s left of your business, I don’t know where the revenue is coming from. Could you just, in real simple terms, tell me what the business is, how many divisions you have?” The long answer seemed to amount to: cloud, digital transformation, messaging and IoT, and that Mary Clark is playing a big part in evaluating the product strategy.

This answer didn’t seem to salve Nemeroff’s frustration, as he followed up with “And I just want to understand what do you want us to take away from this call because we’re not getting any financials. We’re not — I mean, we barely have an idea of what’s going on. What would you like us to take away from this call? And what would you like us to do?”

“The goal of this call was just a business update, and the goal of the call was to make sure we gave yourself, others the opportunity to hear kind of the direction of the company, where I want to take the company as far as strategically,” said Lurie. “We do understand, as we said a couple of times, we really can’t share what we will be able to share hopefully on May 10 and after that. And I think what you’ll hear on May 10 will be a full update that you would expect from a company that obviously has refiled and met the guides that NASDAQ has asked us to meet.”

Sterling Auty from JPMorgan asked about the relationship with AT&T and Lurie indicated he expects to be able to draw heavily on the relationships he has from working there for 27 years which, while probably true, is not really the basis for an ongoing business partnership. Or is it?

And that was that. The easy conclusion to make is that if Synchronoss is able to file clean accounts by 10 May then we’re all good, can put the past behind us and leave Lurie, Clark et al to get on with growing the business again.

That may well turn out to be the case but, to the best of our knowledge the class action civil law suit is still live and will presumably only be assisted by the historical accounting revelations. They might also catch the attention of a regulator such as the SEC, which has a rich history of behaving uncharitably towards people who cook the books.

But Lurie can quite reasonably claim not to be focusing on what he can’t control. The people in charge in the 2014-2016 period will be the focus of any fall out from that period, while he and his new team should be insulated. Equity analysts seem to have given the call a resounding ‘meh’ and are reserving judgment until the grand refiling, so we will too.

5G is a security risk right now – ENISA

The European Union Agency for Network and Information Security, ENISA, has released a research papers which highlights the security flaws of yesteryear are still a threat in the 5G world of tomorrow.

The concern is based on the idea mobile networks are still dependent on SS7 and Diameter for controlling communications (routing voice calls and data), protocols which were designed for the 2G/3G era with little attention paid to security. While there has been progress made, ENISA believes the protocols are fundamentally flawed, leaving potential vulnerabilities open on the networks of tomorrow. As connectivity is now one of the foundations of today’s economy, the consequences of this oversight could be considerate.

“In this context, ENISA has developed a study, which has examined a critical area of electronic communications: the security of interconnections in electronic communications, also known as signalling security,” said Udo Helmbrecht, ENISA’s Executive Director. “An EU level assessment of the current situation has been developed, so that we better understand the threat level, measures in place and possible next steps to be taken.”

Initial 2G and 3G networks relied on SS7, though this protocol was designed decades ago without conception of today’s threats. 4G technology uses a slightly improved signalling protocol called Diameter, which was based on the same interconnect principles, and this proved to be theoretically vulnerable. As the industry moves forward, using the same principles again could be a major issue when 5G networks become prevalent over the next few years.

The issue here is scale. As our lives become more dependent on connectivity and the digital economy, problems are compounded. A vulnerability might have led to a minor issue a decade ago, but considering the dependence we have on digital nowadays (which is continuing to increase) the issues are growing exponentially.

This is not a challenge which will be new to those in the telco space, as despite the preaching, security is still an afterthought. Various companies will claim security is top of the agenda, though few have backed up these promises with action. ENISA is now suggesting the European Commission and national regulators consider new legislation and regulation, so that signalling security is covered in terms of incident reporting and adoption of minimum security requirements.

As it stands the industry has been working to tackle the basic principles of security, which will protect an organization from basic attacks. But considering the complexity of the threats is only increasing, a trend will only get faster with the normalization of artificial intelligence, industry needs to take a much more stringent approach.

Three use cases for brain machine interfaces

Basic forms of Brain Machine Interface (BMI) technology have already been utilised in the medical field for a number of years. This existing use focuses around the cochlear implant, a medical device which uses BMI technology to provide a sense of sound to a person who is profoundly deaf or severely hard of hearing.

However, further applications in the medical field and in other areas - as an entertainment device, for use in industry, for integration with automobiles or as a control mechanism - are becoming increasingly possible, as the science and research develops.

Brain machine interface market development

According to the latest worldwide market study by Juniper Research, global hardware sales revenue from BMI will reach $19 billion per annum by 2027 - that's up from an estimated $2.4 billion in 2018.

BMIs bridge the gap between technology and the brain, interpreting brain signals for the purpose of interpretation or control. The study found that medical uses will account for 78 percent of shipment revenues by 2027.

This will be due to development of advanced medical uses, such as artificial vision and prosthetic control. Juniper’s study examined the emerging market, analyzing metrics such as expected user impact, key barriers and ecosystem readiness.

Juniper has identified three use cases with the highest potential: Concentration Monitoring, Cochlear Implants and Sleep Modification Tools.

The research also found that the greatest impact of BMIs will be when used for concentration monitoring, where EEG (Electroencephalogram) technology can be leveraged to monitor fatigue. This is crucial for industrial businesses, which strive to improve safety and productivity.

Juniper predicted that heavy industry will use EEG to replace more expensive existing monitoring systems. "EEG is more accurate than current wrist-based optical sensors for concentration monitoring, so adoption where concentration is crucial in high-risk environments is anticipated to be a big driver in the market," said Nick Maynard, research analyst at Juniper Research.

Outlook for brain machine interface apps

The research found that while shipments of BMI devices for consumer uses such as guided meditation account for a very low proportion of device shipments presently, of under 1 percent in 2018, the proportion will climb to over 6 percent of a much larger market in 2027.

Juniper predicted that technology advancement in tandem with consumer virtual or mixed reality uptake would facilitate new interface paradigms when integrated. This higher proportion will be aided by the lower average sales price of these devices, just $270 in 2027, compared to $11,570 in the medical area.

Alliance for Open Media aims to reduce network demand of video by 30%

The Alliance for Open Media has released the AOMedia Video Codec 1.0 (AV1) specification which promises the delivery of 4K UHD or higher online video for lower data usage and no royalties.

One of the major trends we have been witnessing as the digital economy sets in is the growth of video consumption. From increased accessibility of content, through to the growing popularity of user-generated video, the network is fast becoming clogged with cats chasing laser pointers and vlogs of online ‘celebrities’, with the challenge will only get bigger. Cisco estimate by 2021, 82% of all the worlds internet traffic will be video, placing huge strains on already suffering networks. AV1 could be a welcome break.

The Alliance for Open Media, which counts the likes of Apple, ARM, Netflix and Google as members, has released the new specification which claims to reduce data usage by 30%, all without those pesky royalties. The technology is said to be able to match the compression quality of incumbent tech, HEVC and VP9 for example, throwing a threat out to the patent segment of the industry.

“Nearly three years after launching AOMedia, the AV1 codec addresses real bottlenecks for unleashing the highest-quality video for the entire ecosystem, allowing for better viewing experiences across all screens and data networks,” said AOMedia Executive Director Gabe Frost. “By listening to the industry’s feedback in an open and collaborative manner and bringing together leading experts to develop AV1, an entire ecosystem can begin creating video products and experiences that customers love.”

By offering greater compression over competing codecs, AV1 enables more screens to display the vivid images, deeper colours, brighter highlights, darker shadows, and other enhanced UHD imaging features that consumers have come to expect, all while using less data. With the number of 4K televisions set to increase, and the users expectations continuing to grow, an open-source codec will certainly be welcomed.

“AV1’s royalty-free and compelling compression technology, once optimized, has the potential for broad adoption that will benefit customers all over the globe,” said Greg Hart, VP of Amazon Video.

“AV1 reflects the hard work of many technical experts, the success of open collaboration, and our commitment to royalty-free products that are accessible to everyone,” said Matt Frost, Head of Strategy and Partnerships, Chrome Media, Google. “Critically, the technology arrives with the support of partners throughout the web video ecosystem – content distributors, web platform providers, application developers and hardware manufacturers. AV1 is poised to power the future of media experiences consumers love to watch, upload and stream.”

“Visual computing is at the core of our business,” said Matt Wuebbling, Head of GeForce Marketing at NVIDIA. “With ever more computing moving to the cloud, video compression is essential to delivering server-generated content to consumers. The AV1 codec enables streaming video at a higher quality than any other codec over networks with limited bandwidth — and it’s royalty-free, so there’s no barrier to incorporating it into consumer devices.”

There will of course be a scrap from the incumbent technologies to prevent the widespread adoption of AV1, but don’t expect this to be anything more than a footnote; free is usually best.

Ericsson CEO plays the ‘strong and stable’ card

Börje Ekholm, CEO of Ericsson, laid out his updated strategy at this company’s AGM and seems to have taken inspiration from the world of politics.

A lot of what Ekholm said echoed what we heard in our interview with his second-in-command Fredrik Jejdling. Last year was all about consolidation, streamlining and trying to sort the wheat from the chaff. “We are confident that the strategic choices we have made will create a strong and successful Ericsson over time,” said Ekholm. “But as you know, we are not there yet.”

Ekholm seems to be a fan of the ‘rule of three’. While the title of his AGM presentation was ‘stabilize and simplify’, he explained the strategy is all about three cornerstones: technology leadership, product-led solutions, and global scale and skill. All this is designed to help service providers with their three big challenges: decreasing the cost per gigabit, becoming fully digital, and finding new revenues.

Ericsson sales were down 10% last year and Ericsson shelled out SEK 40 billion on restructuring costs, impairment, provisions and adjustments in customer projects. “2017 was a tough year with a continued declining market,” said Ekholm. “We are far from satisfied with our performance and have taken a number of actions to turn around the development and improve profitability, to build a strong Ericsson for the long term.”

Here are some of those actions:

  • 42 non-strategic contracts identified in Managed Services, of which 23 has been either exited or renegotiated during the year.
  • In Digital Services, product roadmaps and project delivery have been stabilized, and 45 non-strategic or unprofitable contracts have been identified, of which around 50 percent should be either concluded or exited during 2018.
  • Large cost savings in the media business, a majority of Media Solutions divested.
  • Ericsson Power Modules and around 20% of the US number portability business divested.
  • Completely or partly left non-strategic areas, including fiber roll-out, field services, and Industry & Society.

The underlying narrative is all about a change of momentum, with declines in both the underlying markets and Ericsson’s relative performance starting to head back into positive territory. “We have been working hard to turn around the development,” said Ekholm. “It is therefore satisfying that we, after several years of decreasing market share, have started to increase our share, and doing so with improved gross margin.”

Ekholm’s concluding comment was a summary with an underlying plea for continued patience as he tries to turn the supertanker around. “In 2017 we stabilized and simplified the company, we took out significant costs, and invested in the future,” he said. “We have a clear strategy and clear targets for turning Ericsson to profitability and a strong long-term development.”

Facebook is changing privacy practises three years too late

Facebook’s announcement that is has refreshed its privacy and transparency is a good step but the whole saga just shows the internet industry doesn’t care about you unless it has to.

Back in 2006, your correspondent joined Facebook and it was great. The news feed was filled with photos of the previous night, updates from friends and prods about upcoming events; how things have changed. Finding a post from someone you actually know between adverts, promoted news stories or the latest meme is a tricky business. But this is demonstrative of Facebook’s attitude towards the platform; commercial objectives trump the user.

In a blog post written by Chief Privacy Officer Erin Egan and Deputy General Counsel Ashlie Beringer, Facebook has announced it is changing its privacy policies to help users understand how Facebook works and the choices they have over their data. Privacy settings and other important tools will also be easier to find as the social media giant has apparently heard the cries of the community.

This is all well and good, but don’t be fooled by the good intentions plea; Facebook has always known what it was doing and it still does.

Going on face value, some might assume the internet giant simply made a mistake. It lost its way and is now trying to rectify its well-intentioned oversight. Privacy was always a concern of the team but hindsight is 20/20 and it is correcting errors. This is perhaps the biggest load of BS we have come across in months.

The platform started in 2004 in a dorm room of Harvard University, initially limiting the website’s membership to Harvard students. It was a project which allowed students to be creative and soon caught on before being launched across the US and then globally. In the early days, the creators might have had innocent intentions to make a social platform which engaged people, but since then investors arrived and prompted the rise of the money-machine.

How engaging the platform actually is should be a measure of how much emphasis is being placed on user experience; it’s going down. As mentioned before, the platform is almost unrecognisable compared to what it was back in 2006, hence the reason younger generations are flooding to platforms such as Snapchat which has a greater emphasis on experience as opposed to monetization.

The problem is Facebook is very good at making money. It is very good as developing a platform which places content in the right places. It is exceptionally good at managing the user journey, guiding individuals towards the right areas and the relevant tools. In terms of presenting information in a digestible context, it is incredibly good, this is the reason advertisers have flooded onto the platform.

The Facebook team knew it wasn’t easy to access the relevant information or tools to control privacy, or manage your own digital profile. If a platform is able to identify you are about to get married and effectively present useful information about venues, caterers or stag organizations, it almost certainly was capable of educating the user on privacy and the process of relaying your personal information onto other parties.

Facebook is making corrections to its policies, which is long overdue, but not because it wants to, because it is backed into a corner and this is one prong in the PR strategy to re-earn the users trust. This is the reality of the internet industry; these guys care about you about as much as an oil company.

The changes are a positive step forward, but they could have been made three years ago. Any sensible person would have known the advertising machine and dissemination of personal information would have been negatively received by the general public. A choice was made years ago because the path Facebook took was better for the spreadsheets.