Shock Ericsson report concludes 5G is great

5G kit vendor Ericsson has released a report implying it’s a really good idea to buy loads of the stuff it sells.

The report was written by its ConsumerLab and is titled: ‘5G consumer potential – busing the myths around the value of 5G for consumers’. Insisting it’s ‘backed by solid research’, the report seeks to confront the following claimed industry myths:

  1. 5G offers consumers no short-term benefits.
  2. There are no real use cases for 5G, nor is there a price premium on 5G.
  3. Smartphones will be the “silver bullet” for 5G: the magical single solution to delivering fifth-generation services.
  4. Current usage patterns can be used to predict future 5G demand.

Here’s a summary of the myth-busting:

  1. Loads of people reckon mobile broadband speeds aren’t fast enough and expect 5G to improve that, as well as giving them more domestic broadband choice.
  2. Most people are prepared to pay for premium 5G services such as good video streaming and as yet unidentified novel applications.
  3. Smartphones alone are unlikely to drive 5G adoption, but consumers expect the device market to evolve fairly rapidly.
  4. Consumers expect their usage to increase rapidly once they have 5G thanks to video streaming, connected cars and VR/AR.

“Through our research, we have busted four myths about consumers’ views on 5G and answered questions such as whether 5G features will require new types of devices, or whether smartphones will be the silver bullet for 5G,” said Jasmeet Singh Sethi, Head of ConsumerLab, Ericsson Research. “Consumers clearly state that they think smartphones are unlikely to be the sole solution for 5G.”

Here are some charts from the report. The first shows the main consumer expectations of 5G, with new service second only to improved performance. The second show the kinds of new services consumers are most interested in and the third illustrates their willingness to pay for them, with half of all consumers happy to shell out a 20% premium.

Ericsson consumer survey 3

Ericsson consumer survey

Ericsson consumer survey 2

While of course companies don’t tend to publish reports that don’t support their commercial objectives, that doesn’t mean there’s anything wrong with the underlying research. Ericsson is clearly trying to reassure operators that their 5G investments will yield good returns but a lot of this seems to rely on those operators coming up with exciting new services, which they have historically struggled to do.

If 52% don’t understand data-sharing economy, is opt-in redundant?

Nieman Lab has unveiled the results of research suggesting more than half of adults do not realise Google is collecting and storing personal data through usage of its platforms.

The research itself is quite shocking and outlines a serious issue as we stride deeper into the digital economy. If the general population does not understand the basic principles behind the data-sharing economy, how are they possibly going to protect themselves against the nefarious intentions from the darker corners of the virtual world?

You also have to question whether there is any point in the internet players seeking consent if the user does not understand what he/she is signing up for.

According to the research, 52% of the survey respondents do not expect Google to collect data about a person’s activities when using its platforms, such as search engines or YouTube, while 57% do not believe Google is tracking their web activity in order to create more tailored advertisements.

While most working in the TMT industry would assume the business models of the Google and the other internet are common knowledge, the data here suggests otherwise.

66% also do not realise Google will have access to personal data when using non-Google apps, while 64% are unaware third-party information will be used to enhance the accuracy of adverts served on the Google platforms. Surprisingly, only 57% of the survey respondents realise Google will merge the data collected on each of its own platforms to create profiles of users.

Although this survey has been focused on Google, it would be fair to assume the same respondents do not appreciate this is how many newly emerging companies are fuelling their spreadsheets. The data-sharing economy is the very reason many of the services we enjoy today are free, though if users are not aware of how this segment functions, you have to question whether Google and the other internet giants are doing their jobs.

The ideas of opt-in and consent are critically important nowadays. New rules in the European Union, GDPR, set about significant changes to dictate how companies collect, store and use personal information collected by the service providers. These rules were supposed to enforce transparency and encourage the user to be in control of their personal information, though this research does not offer much encouragement.

If the research suggests more than half of adults do not understand how Google collects personal information or uses it to enhance its own advertising capabilities, what is the point of the opt-in process in the first place?

Reports like this suggest the opt-in process is largely meaningless as users do not understand what they are giving the likes of Google permission to do. The blame for this lack of education is split between the internet giants, who have become experts at muddying the waters, and the users themselves.

Those who use the services for free but do not question the continued existence of ‘free’ platforms should forgo the right to be annoyed when scandals emerge. Not taking the time to understand, or at least attempt to, the intricacies of the data-sharing economy is the reason many of these scandals emerge in the first place; users have been blindly handing power to the internet giants.

The internet players need to do more to educate the world on their business models, however the user does have to take some of the responsibility. We’re not suggesting everyone becomes an internet economy expert, but gaining a basic understanding is not incredibly difficult. However, it does seem ignorance is bliss.

Ofcom outlines plans for 2019/20

With the country on the verge of realising the promise of the digital economy, the pressure is still on Ofcom to make sure a fair and sustainable landscape is developing. Here, the team outlines its plans for the next twelve months.

“It’s a great way of being able to explain why our work matters and what some of the areas are we want to give a particular focus to,” said Ofcom CEO Sharon White. “And it’s also a way of being able to be held accountable for those areas.

“This year we’re talking about two big consumer themes. Fairness for customers, how do we make sure whether your getting broadband or mobile, you’re getting a great deal, a fair deal from your provider, and the other big these is better broadband, better mobile wherever you live.”

The plan itself actually focuses on four areas. Firstly, better connectivity. Secondly, fairness for customers Thirdly, supporting UK broadcasting. And finally, raising awareness of online harms.

Starting with better connectivity, over the next 12 months the Government’s planned universal broadband service will be getting more attention, while the team will continue to focus on opening up access to BT’s network of underground ducts and telegraph poles. Addressing the mobile not-spots, more airwaves will hit the auction lots and it would be a fair assumption more coverage obligations will be heading towards the telcos.

On the fairness side, work will continue to ensure operators are being more transparent when informing customers about the best available deals and tariffs. One area which has been prioritised is for those customers who pay for their handsets bundled with airtime, or those who pay more because of their contract status.

Looking at UK broadcasting, the message here seems to be value for money and ensuring public service broadcasting is still fit for purpose. A lot has changed over the last five years, look at the growth of OTT streaming services and downfall of linear TV, and there is a feeling something needs to change to ensure public funds are being spent in the best interest of those who pay the taxes in the first place.

Finally, in terms of the final part of the programme, this will be a tricky one. There is of course a need for consumers to be more aware of the dangers of the digital economy, but this is an area which has been largely ignored to date. No-one is particularly to blame here, as without the consequences it becomes very difficult to educate on dangers and be taken seriously. That said, there have been plenty of scandals and data breaches in recent memory to give Ofcom ammunition.

With the 5G dawn breaking and the increased drive for fibre finally hitting home in the UK, there is plenty to be excited about but much work which needs to be done. An excellent example of this is the Which report panning ISPs for failing to deliver on consumer expectations. Telcos are traditionally slow-moving beasts, though technology developments are increasingly speeding up, dominating more of our lives, change might have to be forced through.

Ofcom not only needs to ensure there is an effective landscape for the telcos to thrive, it needs to ensure these benefits are being passed across to the consumer and the economy. The next twelve months promise a very business time for Ofcom employees.

Vodafone makes flying 5G plug

Vodafone has announced the launch of a 5G trial in Manchester Airport, the first of several travel-related 5G initiatives to run over the coming months.

Vodafone 5G masts are now in place at the airport, one pillar of the 5G rollout across the city. Passengers at Manchester’s Terminal One were given a free Entertainment Pass on streaming service Now TV, with the telco promising download speeds which are 4X faster than what could be achieved on 4G.

“We all love to catch up on our favourite TV shows, play games or finish off some work when travelling,” said Nick Jeffery, CEO of Vodafone UK. “5G, with its fast speeds and quick response times, will make that quick and easy, even in busy locations. We are proud to be the first provider to bring 5G to an airport and will be adding more major travel hotspots to our 5G network throughout the year.”

“We are delighted to support Vodafone’s 5G trial at Manchester Airport,” said Brad Miller, COO at Manchester Airport. “As we progress with the design and delivery of our £1bn transformation programme, we are constantly exploring how new innovations and technology can be applied to improve the airport experience.”

While the earliest handsets will not be available for a few months, Vodafone has installed a ‘Gigacube’ in the airport, effectively a hotspot, to allow passengers to connect and experience the 5G euphoria. Trials to date have made use of Massive MIMO technology to create a fixed wireless access experience for devices connected to the hotspot.

Although the 5G buzz has been accelerating elsewhere around the world at a much faster pace, the UK telcos are beginning to catch on. This trial will be one of several transport related usecases around the UK for Vodafone, Snow Hill railway station in Birmingham is another, EE has seemingly been targeting the East London hipsters, while Three recently plugged its own fashion-orientated trial.

The UK was always going to be one of the fast followers when it came to 5G, though this is not necessarily a bad position to be in. The US and South Korea might be streaming ahead, though what should be noted is the limited expanse of these initiatives. Another important factor to take into account is the assault on enterprise organizations.

As it stands, there are few usecases built for the consumer 5G ambitions, aside from downloading movies in a fraction of the time. Telcos will struggle to justify the expense of 5G with the consumer alone, but whoever most effectively engages enterprise will reap the promised rewards. For Vodafone, this means IOT, most notably the connected cow which has been paraded about tradeshows over the last couple of months.

We’ve been waiting for years, but the 5G craze is finally starting to hit the UK shores.

Who’s got the stones to buy Netflix?

Apple, Disney, Microsoft or Apple; one of the biggest questions which has circled the technology industry over the last couple of years is who could possibly acquire Netflix?

The streaming giant, Wall Street’s darling, has almost constantly been talked up as an acquisition target. However, another year has passed and it’s another year where no-one managed to capture the content beast. You have to start to wonder whether it will ever happen, but here we’re going to have a look at who might be in the running.

Netflix numbersWith subscriptions totalling more than 148 million, 2018 revenues exceeding $15.7 billion and operating income up to $1.6 billion, Netflix would certainly be a useful addition to any company. However, with market capitalisation now roughly $143 billion and debt which would make your eyes water, an acquisition would be a scary prospect for almost everyone.

First and foremost, let’s have a look at some of the players who might have been in the equation, but alas, no more.

Disney has been a rumoured acquirer for almost as long as Netflix existed. This is an incredibly successful company, but no-one is immune to the shift tides of the global economy and consumer behaviour. Getting in on the internet craze is something which should be considered critical to Disney, and Netflix would have given them a direct-to-consumer channel. However, there was always a feeling Disney would develop its own proposition organically and this turned out to be the case.

AT&T is another company which might have been in the fray, but its Time Warner acquisition satisfied the content needs of the business. All telcos are searching to get in on the content cash, developing converged offerings, and AT&T is a company which certainly has a big bank account. As mentioned above, the acquisition of Time Warner completes rules this business out.

There are of course others who might have been interested in acquiring the streaming giant, but for various reasons they would not be considered today. Either it would be way too expensive, wouldn’t fit into the company’s objectives or there is already a streaming service present. But now onto the interesting stuff, who could be in the running.

Microsoft logo

Microsoft

From doom to gloom, CEO Satya Nadella has certainly turned fortunes around at Microsoft. Only a few years ago, Microsoft was a shadow of its former self as the declining PC industry hit home hard. A disastrous venture into the world of smartphones was a slight detour but under the cloud-orientated leadership of Nadella, Microsoft is back as a lean, mean tech heavyweight.

Alongside the cloud computing business, Microsoft has also successfully lead the Xbox brand into the digital era. Not only is the platform increasingly evolving into an online gaming landscape, but it also lends itself well to sit alongside the Netflix business. If Microsoft wants to compete with Amazon across the entire digital ecosystem, both consumer and enterprise, it will need to expand the business into more consumer channels.

For Netflix, this might be an interesting tie up as well. Netflix is a business which operates through a single revenue stream at the moment, entertainment, and might be keen to look at new avenues. Gaming and eSports are two segments which align well with Netflix, opening up some interesting synergies with Microsoft’s consumer business.

“Microsoft is at a crossroads,” said independent telco, media and tech analyst Paolo Pescatore. “Its rivals have made big moves in video and it needs to follow suit. The acquisition addresses this and complements its efforts with Xbox. The move also strengthens its growing aspirations in the cloud with Azure, firmly positioning itself against Amazon with AWS and Prime video.”

However, while this is a company which could potentially afford to buy Netflix, you have to wonder whether it actually will. The Netflix culture does not necessarily align with Microsoft, and while diversification into new channels is always attractive, it might be considered too much of a distraction from the cloud computing mission. Nadella has already stated he is targeting the edge computing and AI segments, and considering the bounties on offer there, why bother entertaining an expensive distraction.

Apple Store on 5th Avenue, New York City

Apple

Apple is another company which has billions floating in free cash and assets which could be used to leverage any transaction. It is also a company which has struggled to make any effective mark on the content world, excluding iTunes success. With Netflix, Apple could purchase a very successful brand, broadening the horizons of the business.

The last couple of months have shown Apple is not immune to the dampened smartphone trends. Sales are not roaring the same way they were during yesteryear, perhaps because there has been so little innovation in the segment for years. The last genuine disruption for devices probably came from Apple a decade ago when it ditched the keyboard. Arguably everything else has just been incremental change, while prices are sky-rocketing; the consumer feels abused.

To compensate for the slowdown, CEO Tim Cook has been talking up the software and services business unit. While this has been successful, it seems not enough for investors. Netflix would offer a perfect opportunity for Apple to diversify and tap into the recurring revenues pot which everyone wants to grab.

However, Netflix is a service for anyone and everyone. Apple has traditionally tied services into Apple devices. At CES, we saw the firm expand into openness with new partnerships, but this might be a step too far. Another condemning argument is Apple generally likes to build business organically, or at least acquire to bolster existing products. This would stomp all over this concept.

Alibaba Logo

Alibaba

A Chinese company which has been tearing up trees in the domestic market but struggled to impose itself on the international space, Alibaba has been hoping to replicate the Huawei playbook to dominate the world, but no-where near as successfully.

Perhaps an internationally renowned business is exactly what Alibaba needs to establish itself on the international space. But what is worth noting is this relationship could head the other direction as well; Netflix wouldn’t mind capitalising on the Chinese market.

As with any international business a local business partner is needed to trade in China. Alibaba, with its broad reach across the vast country, could prove to be a very interesting playmate. With Netflix’s Eastern ambitions and Alibaba’s Western dreams, there certainly is dovetail potential.

However, it is very difficult to believe the current US political administration would entertain this idea. Aside from aggression and antagonistic actions, the White House has form in blocking acquisitions which would benefit China, see Broadcom’s attempted acquisition of Qualcomm. This is a completely different argument and segment but considering the escalating trade war between the US and China, it is hard to see any tie up between these two internet giants.

Google Logo

Google

If you’re going to talk about a monstrous acquisition in Silicon Valley, it’s difficult not to mention Google. This is one of the most influential and successful businesses on the planet with cash to burn. And there might just be interest in acquiring Netflix.

Time and time again, Google has shown it is not scared of spending money, a prime example of this is the acquisition of YouTube for $1.65 billion. This might seem like pocket change today, but back in 2006 this was big cash. It seemed like a ridiculous bet for years, but who is laughing now?

The issue with YouTube is the business model. Its advertiser led, open to all and recently there have been some PR blunders with the advert/content alignment. Some content companies have actively avoided the platform, while attempts to create a subscription business have been unsuccessful. This is where Netflix could fit in.

“Google has made numerous failed attempts to crack the paid online video landscape,” said Pescatore. “Content and media owners no longer want to devalue their prized assets by giving it away on YouTube. Acquiring Netflix gives Google a sizeable subscriber base and greater credibility with content and media owners.”

Where there is an opportunity to make money, Google is not scared about big cash outlays. Yes, Netflix is a massive purchase, and there is a lot of debt to consider, but Google is an adventurous and bold enough company to make this work.

However, you have to question whether the US competition authorities would allow two of the largest content platforms to be owned by the same company. There might not necessarily be any direct overlap, but this is a lot of influence to have in one place. Authorities don’t generally like this idea.

Verizon Logo

Verizon

Could Verizon borrow a page from the AT&T playbook and go big on a content acquisition? Perhaps it will struggle to justify the expense to investors, but this one might make sense.

Verizon has been attempting to force its way into the diversification game and so far, it has been a disaster. While AT&T bought Game of Thrones, Verizon went after Yahoo to challenge the likes of Google and Facebook for advertising dollars. A couple of data breaches later, the content and media vision looks like a shambles. Hindsight is always 20/20 but this was a terrible decision.

However, with a 5G rollout to consider, fixed broadband ambitions and burnt fingers from the last content acquisition, you have to wonder whether the team has the stomach to take on such a massive task. Verizon as a business is nothing like Netflix and despite the attractive recurring revenues and value-add opportunities, the integration would be a nightmare. The headache might not be worth the reward.

You also have to wonder whether the telco would be scared off by some of the bold decisions made from a content perspective. Telcos on the whole are quite risk-adverse organizations, something which Netflix certainly isn’t. How many people would have taken a risk and funded content like Stranger Things? And with the release of Bandersnatch, Netflix is entering the new domain of interactive content. You have to be brave and accept considerable risk to make such bets work; we can’t see Verizon adopting this mentality.

Softbank Logo

Softbank Vision Fund

Another with telco heritage, but this is a completely different story.

A couple of years back, Softbank CEO Masayoshi Son had a ridiculous idea which was mocked by many. The creation of a $100 billion investment fund which he would manage seemed unimaginable, but he found the backers, made it profitable and then started up a second-one.

Son is a man to knows how to make money and has the right connections to raise funds for future wonderful ideas. Buying Netflix might sound like an absurd idea, but this is one place we could really see it working.

However, the issue here is the business itself. While Son might be interested in digital ventures which are capable of making profits, the aim of the funds have mainly been directed towards artificial intelligence. Even if Son and his team have bought into other business segments, they are more enterprise orientated. There are smaller bets which have been directed towards the consumer market, but would require an investment on another level.

Tencent Logo

Tencent

Another Chinese company which has big ambitions on the global stage.

This is a business which has been incredibly successful in the Chinese market and used assets effectively in the international markets as well. The purchase of both Epic Games and Supercell have spread the influence of the business further across the world and numerous quarterly results have shown just how strong Tencent’s credentials are in the digital economy.

Tencent would most likely be able to raise the funds to purchase the monster Netflix, while the gaming and entertainment portfolio would work well alongside the streaming brand. Cross selling would be an option, as would embedding more varied content on different platforms. It could be a match made in heaven.

However, you have to bear in mind this is a Chinese company and the political climate is not necessarily in the frame to consider such as transaction. Like Alibaba, Tencent might be viewed as too close to the Chinese government.

No-one

This is an option which is looking increasingly likely. Not only will the business cost a huge amount of money, perhaps a 30-40% premium on market capitalisation, the acquirer will also have to swallow all the debt built-up over the years. There will also have to be enough cash to fuel the content ambitions of Netflix, it reportedly spend $7.5 billion on content last year.

Finally, the acquirer would also have to convince Netflix CEO Reed Hastings, as well as the shareholders, that selling up is the best option.

“If I was a shareholder or Reed Hastings, I’d be wondering whether it is better to be owned by someone else or just carry on what we’re doing now,” said Ed Barton, Practise Lead at Ovum.

“These guys are going down in business school history for what they have done with Netflix already, do they need to sell out to someone else?”

Netflix is growing very quickly and now bringing in some notable profits. The most interesting thing about this business is the potential as well. The US market might be highly saturated, but the international potential is massive. Many countries around the world, most notably in Asia, are just beginning to experience the Netflix euphoria meaning the growth ceiling is still years away.

What this international potential offers Netflix is time, time to explore new opportunities, convergence and diversification. Any business with a single revenue stream, Netflix is solely reliant on subscriptions, sits in a precarious position, but with international growth filling the coffers the team have time to organically create new business streams.

Ultimately, Hastings and his management team have to ask themselves a simple question; is it better to control our own fate or answer to someone else for a bumper payday? We suspect Hastings’ bank account is already bursting and this is a man who is driven by ambition, the need to be the biggest and best, breaking boundaries and creating the unthinkable.

Most of these suitors will probably be thinking they should have acquired Netflix years ago, when the price was a bit more palatable, but would they have been able to drive the same success as Hastings has done flying solo? We suspect not.

Garmin has a go at reigniting smart watch enthusiasm

To date, it seems only the fitness brands can make the smart watch segment work for them, and while attention might have been diverted elsewhere recently, Garmin is having another crack.

Despite the fact revenues are increasing, shipments are increasing, and the usability of the devices are constantly improving, this segment has never really taken off. All positive steps forward have been small rather than industry shaking. Perhaps this was a product which was just ahead of its time, waiting for other technological advancements to catch up. One of these advancements is featuring prominently in the new Garmin launch.

“The vívoactive 3 Music with 4G LTE connectivity gives you everything you need from your phone – safety features, text messaging and the ability to download and listen to music – now on your watch, so customers can leave their phones behind with confidence,” said Dan Bartel, Garmin VP of Global Consumer Sales.

“Designed for customers who lead an active lifestyle, we’re excited to introduce these new safety and communication features to the Verizon-connected vívoactive 3 Music to give added peace of mind on the go, so leaving your phone at home can be a choice instead of a cause for panic.”

This new device, the vívoactive 3 Music, will be priced at $299.99 (the north-end of affordability for mass market) and will run on Verizon’s 4G network. The device will feature the same fitness and tracking capabilities as previous generations, as well as a contactless payment solution enabled by FitPay and the ability to download playlists from from third-party music services like Deezer and Spotify. Battery life is up to five days in smart watch mode or four hours when running the GPS.

While it has now been addressed, standalone connectivity was the first barrier to adoption for the smart watch segment. Why would you bother having a smart watch when you had to carry your phone around with you? It tells you the time, so does your phone. It plays music, so does your phone. It took phone calls and replied to messages, so does your phone. If the watch is tethered to your phone, what was the point in it?

In years gone, the fitness niche found success. Fitness tracking, both geographical and health monitoring, was an area of success allowing companies such as Garmin and Fitbit to make profits while others who focused on communications features or attempting to appeal to the fashion conscious struggled to make any notable progress. What Garmin and Fitbit did was not to compete with traditional watchmakers or smartphone manufacturers but create an additional segment. It might have been niche but has been growing steadily over the last couple of years, alongside the much slower (but increasingly more prominent) mass market acceptance of smart watches on the whole.

When you look at the smart watch segment, there certainly has been growth. IDC forecast the worldwide wearables market to ship 122.6 million units in 2018, up 6.2% from the 115.4 million units in 2017, and estimates growth in this segment to hit total shipment volumes of 190.4 million units by 2022. While this is progress, these are not revolutionary sales numbers or even growth which suggests the segment is about to take off.

Nowadays standalone connectivity is not a new thing, however Garmin has an established (and successful) brand in the smart watch segment, as well as a loyal customer base to push the new features onto. Whether this is enough of a pull to take smart watches to the next level remains to be seen, but if experience is anything to go by, the niche players will certainly help validate the smart watch in today’s society.

Facebook hit with Italian fine as share buy-back ramps up

The Italian watchdog is the latest to slap a fine on Facebook for misleading and abusing consumer confidence.

The Autorità Garante della Concorrenza e del Mercato (AGCM) has imposed a €10 million fine on Facebook after a lengthy investigation which begin in April. The watchdog has come to the conclusion the social media giant has violated articles 21 and 22 of the Consumer Code, misleading the consumer on how data would be collected, what information would be sourced and the commercial purpose.

To rub salt into the wounds, the AGCM also believes articles 24 and 25 of the Consumer Code were also ignored. These violations are a bit more nefarious as the AGCM has stated Facebook implemented an aggressive practice as it “exerts undue influence on registered consumers, who suffer, without express and prior consent”. A rather devilish picture is being painted by the Italian watchdog, with Facebook portrayed as the antagonist of a fair and transparent society.

For Facebook, this is simply another example of a government turning against it. It wasn’t that long-ago Facebook was a business every government wanted to get into the good books of and a brand which was admired by the majority of consumers. The Cambridge Analytica scandal has sent the reputation of the social media giant into freefall, pulling back the curtain on the terrifying complexities of the data economy. The difference between how the machine functions and how these billionaires have educated the masses who provide the fuel is quite staggering.

Despite the world turning against Facebook, it seems the management team is embracing the phrase ‘no such thing as bad publicity’.

Last week, an 8-K filing was made by David Kling, Facebook’s General Counsel and Secretary, to the Security and Exchange Commission, which authorises an additional $9 billion in the share buy-back scheme which commenced in 2017. This is the second time the management team has bolstered the chest, taking advantage of a decline in share price to seemingly take back more control of the business from investors.

Facebook Shareprice

As you can see from the image above (courtesy of Google Finance), Facebook share price has fallen by almost 37% since the summer, as the fallout of the Cambridge Analytica continues to scare investors. The management team clearly believe Facebook shares are being undervalued by the market, pumping cash into the share buy-back scheme perhaps to dilute the influence external shareholders can have on the business.

There are of course numerous reasons a company would repurchase shares. It might believe there is simply too much exposure on the market, it might be trying to reduce the influence on the business from external factors or it might not know what else to do with the free cash which it has available.

With Facebook increasingly coming under scrutiny by regulators and governments, it makes sense the management team want fewer shares on the exchanges. This minimises the damage which can be struck by negative press and unfavourable regulations, but also reduces the scrutiny which can be placed on decisions and future strategies. The management team have been under pressure recently for, what the market believes are, poor growth prospects.

However, there is a downside. Sometimes investors might consider the ramping up of a share buy-back scheme as a lack of ideas from the firm. Firstly, it is trying to protect itself for future earning calls, and secondly, it perhaps indicates the business does not know what to do with free cash, of which Facebook has a lot of.

Facebook has not been an innovative company for some years now. Most of the ‘new’ products and services introduced by the team are reinventions of something which already exists with the Facebook brand slapped on (marketplace, enterprise communications etc.), or are a blatant rip-off of a competitor’s idea. The Stories feature on Facebook and Instagram is clearly an imitation of the My Story feature on Snapchat. Some believe share buy-back programmes are evidence a firm has run out of new ideas.

Facebook is increasingly coming under pressure from consumers, governments, regulators and investors, though little is being done to reverse this trend. Posters have been displayed across the major cities promising the consumer it does care, and while executives have been meeting with governments, the answers being provided are increasingly unsatisfactory. The release of 250 Facebook emails and memos by the UK government has shed further light on the deception, though the response has been on par with Facebook’s form.

It’s almost like Zuckerberg and his cronies don’t care anymore. Instagram seems to be offsetting (at least partially) the decline in engagement on the Facebook platform, so there are still prospects to participate in the digital economy. The image of the company which is being created right now is one of arrogance. Facebook seems to think it is untouchable, and perhaps €10 million fine demonstrates it is.

How long will it take Mark to pay off this fine? Is Facebook actually going to be held accountable for wrong-doing?

BT hatches a cunning new multiplay plan

UK operator group BT has unveiled a bunch of initiatives for its consumer business unit, focusing on a new ‘BT Plus’ converged plan.

The point is apparently to offer BT punters the best combination of services across its three UK consumer brands: BT, EE and Plusnet. It’s all about keeping them connected regardless of the brand and the connectivity method – whatever gets the job done. There’s also a fair bit of posturing about customer service and improved retail.

“BT runs the UK’s most advanced mobile and broadband networks, but our customers demand better connections, and the best service no matter where they are,” said BT consumer CEO Marc Allera. “We’re investing across BT, EE and Plusnet so that we can provide our customers with the widest choice of products and services, on the best networks, and with the best service in the UK.

“We’re beginning our journey to create one converged, smart network built on our world-leading fixed and mobile networks – going beyond 4G, 5G, wifi and ultrafast broadband to seamlessly connect our customers wherever they are to the things that matter most to them.”

All this amounts to ‘the UK’s first converged, smart network’ apparently, a process BT expects to complete by 2022. In practice this seems to be the stitching together of a few initiatives that were already underway, including fibre rollout, improved 4G coverage and an expanded public wifi footprint.

BT Plus groups broadband and mobile into one plan – something that has been anticipated ever since BT bought EE. “The announcement of BT Plus marks the launch of the UK’s first fully converged service offering,” said Paolo Pescatore of CCS Insight. “Positioned as a premium offering, it is a modest start but we expect more competitive offers to emerge. The slew of more than 20 announcements was impressive and reinforced BT’s commitment to be a leader in converged offerings delivering innovative services.”

Pescatore was especially moved by some of BT digital partnership announcements. “Arguably, the biggest partnership announcement is with Amazon,” he said. “BT will be the first UK telco to offer Amazon Prime video to its customers. The move to support Amazon Prime video positions BT TV as an aggregator of content services including Netflix and Now TV from next year.  We believe that this will turn around its fortunes given that BT TV has recorded losses for the last two quarters and subscriber growth over the last couple of years has been lacklustre.”

This set of announcements seem designed to offer a narrative of Allera having an immediate impact as overall head of consumer at BT. It also needed to generate some positive vibes after the recent announcement of redundancies, etc. BT has an enviable array of assets and products at its disposal and if Allera can get the best out for them in terms of consumer offering, that could go a long way to improving the company’s fortunes.

Look, a vid.

 

Consumers not convinced by the price-point of new smartphones – report

The smartphone is central to our lives, but it doesn’t seem like we are being bought by the latest fads as easily anymore.

According to research from Counterpoint (first spotted by the Wall Street Journal), the idea of buying a refurbished or second-hand smartphone is becoming more attractive to consumers, while refreshment cycles are getting longer. Such news could not be worse for a segment which is struggling with profitability and sluggish sales already. The report indicates one in ten devices now being purchased are refurbished models.

Of course Apple is generally excluded from such misery, though there have been rumours that the new iPhone X didn’t meet internal expectations. This is a brand which is usually able to contort it customers into all sorts of uncomfortable positions, but it seems not even the iCultists could swallow the $1000 price tag. This might be a worry for other brands who don’t have the luxury and robust brand positioning of Apple.

According to the research, refreshment cycles are up from two years, pushing towards three, while additional research from Baystreet Research suggests Equipment Installment Plans could also be a contributor to the misery. As these payments are hidden in monthly plans the consumer is less aware of how much a new device actually costs. With telcos becoming less inclined to push the subsidized device model nowadays, more consumers are leaning towards buying devices outright and perhaps getting a shock at the price. Realistically, refurbished or second-hand devices are almost as good, while substantially cheaper. It seems consumers are starting to accept this trade-off.

The iPhone X at $1000 is very expensive, as is Samsung’s Galaxy S9 at $840 which was launched at MWC this year, but what do customers actually get. There are few revelations when it comes to new flagship devices so what is the point in spending such extortionate amounts of cash. Refurbished devices are pretty much the same, unless you are a photograph buff but we question how many people there are who care that much about exceptionally detailed photos and videos.

The slump device manufacturers are in is perfectly demonstrated by the euphoria at MWC this week. Samsung might have launched its device, but HMD’s re-release of the banana phone, grabbed a lot of attention. This is the second year in a row where nostalgia have triumphed over the new and adequately demonstrates our point.

When we were at the event, Heavy Reading Analyst Steve Bell pointed towards graphene batteries which can be charged quicker and last longer as possibly the next big buzz for devices, while Light Reading’s Dan Jones is keeping an eye on the on-device storage improvements. Improvement to batteries is long overdue in the space while improved storage could drastically change the way content is consumed, stored and cached. Both areas could drastically improve performance of the devices.

These are two areas which could reinvigorate the refreshment cycle and get consumers excited again, but right now the trends are going the wrong direction for manufacturers who want to charge more for less value.