Is ‘superfast’ enough to pry an extra tenner from our wallets for 5G?

The US market is one which has suffered in the ‘race to the bottom’ but a $10 add-on for 5G connectivity from Verizon is certainly an interesting way to get ARPU heading the other direction.

With 5G networks officially ‘running’ in various markets around the world, one of the big questions which remained is how much the telcos would actually charge for the superfast bonanza. Verizon has been one of the first to twitch off the starting line with a new offer which will use 5G as somewhat of an ‘added value’ proposition to existing and new subscribers, and only for $10 a month.

“Continuing our track record of 5G ‘firsts,’ we are thrilled to bring the first 5G-upgradeable smartphone exclusively to Verizon customers,” said Verizon’s CTO, Kyle Malady.

“Not all 5G networks are the same. Verizon’s 5G Ultra-Wideband network is built by the company with the nation’s best and most reliable 4G LTE network. It will change the way we live, work, learn and play, starting in Chicago and Minneapolis and rapidly expanding to more than 30 US markets this year.”

Starting in Chicago and Minneapolis the 5G euphoria will quickly spread throughout the US. What is worth noting is coverage will of course be limited in the first instance, but that will unlikely be a roadblock for the early adopters who want to have 5G for the sake of having 5G.

For those who are concerned the network will be available without the compatible devices, Verizon has also partnered with Motorola to launch what the telco is promising will be the world’s first 5G smartphone. The device itself will not be 5G compatible, but users will have the option to purchase a 5G moto mod, which can be attached to the devices to plug into the superfast networks.

What we’re more interested in here is the sales strategy.

This has been one of the big questions which the industry has faced over the last couple of months; how will 5G connectivity be sold to the consumer? As it stands, there are few demands on the consumers digital lifestyle which are not answered by 4G. This will not be the case in a few years when new products and services emerge, but right now, 5G is an answer without a question; it’s a tricky conundrum for the telcos.

This is an interesting approach from Verizon however. We suspect anyone selling a 5G contract to subscribers will face failure, aside from the early adopters, though positioning the superfast connectivity as an add-on to subscriptions could be an interesting way to gain traction. And then there is the price.

$10 extra each month is affordable, and it is a very good play on nuance. If Verizon attempted to sell subscribers 5G connectivity for $60 a month, most would probably ignore it. However, by selling a 4G contract for $50 a month and offering an upgrade for $10, more would possibly consider it. It’s fundamentally the same outcome, but clever manipulation of the customer could achieve the desired results.

Buying something for $60 a month is scary, because that is a lot of money, but adding on an extra $10 onto a necessity becomes much more palatable. It’s the very same reason Netflix or Amazon Prime are priced so low compared to some other premium content platforms; spending $10 a month doesn’t sound like it will break your bank account, but scale of subscribers makes a difference for the provider.

While we still believe consumers are too cash conscious for consumer 5G tariffs to be a roaring success in the immediate future, this is certainly an interesting approach to generating ROI. Other telcos should take note, this is the sort of initiative which will give the best opportunity for success.

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.

Verizon cuts 7% of media jobs as calamitous headache continues

To say Verizon’s efforts to capitalise on the digital advertising revenues have been troubled would be an early contender for understatement of the year.

Following a $4.6 billion write down during the last quarter, Verizon has announced it will be laying off 7% of staff, roughly 800 people, at the media business. In an email seen by CNBC, Verizon Media Group CEO Guru Gowrappan positioned the cuts as part of a broader strategy to turn around the disaster, focusing on three key areas:

  • Growing the ‘member-centric ecosystem’
  • Increasing usage/spending on its B2B products
  • Increasing video supply and distribution

“Last quarter, our leadership team worked to create the strategy that will propel Verizon Media,” Gowrappan said in the email. “We honestly assessed where we are and outlined ambitious but achievable goals that poise us for growth. We shared it broadly with you, and together committed to deliver on our OKRs with meticulous planning, collaboration and rigorous execution.”

In short, the acquisition of Yahoo has been nothing short of a disaster for Verizon. When it was first announced, despite the logical ambition to diversify revenue channels, some were looking at the deal with curiosity. Yahoo certainly had some interesting media properties, the Huffington Post and Tumblr for example, but it didn’t seem like the best way to spend $4.5 billion.

In the months that followed, a monumental data breach emerged, reportedly effecting every single Yahoo account, a decision was made to kill off a very popular news aggregation app, boss Tim Armstrong decided to quit, Verizon had to stomach a $500 million pre-tax charge relating to severance, acquisition and integration costs, and it ditched the Oath branding. All of this was before the December write down of $4.6 billion, and not taking into account the previous acquisition of AOL.

Now in the pursuit of salvaging a gargantuan headache, the team will be trimming 7% of jobs to turn around the business. Verizon might have been searching for alternative revenues and a way to demonstrate to shareholders it can make an impact in blossoming corners of the digital economy, challenging the likes of Google and Facebook for advertising dollars, but this was nothing short of a calamity.

All we now need is a fire, an unplanned pregnancy and Armstrong to appear as the new local pub landlord, and you wouldn’t be able to tell the difference between Verizon’s media business or an episode of East Enders.

You can read the full email below (courtesy of CNBC):


 

Team –

Last quarter, our leadership team worked to create the strategy that will propel Verizon Media. We honestly assessed where we are and outlined ambitious but achievable goals that poise us for growth. We shared it broadly with you, and together committed to deliver on our OKRs with meticulous planning, collaboration and rigorous execution.

As hard as it may have felt at times, we’ve made some great strides to serve our customers globally – from consolidating ad platforms, to expanding the Microsoft partnership, growing live programming and content offerings for our Supers, and prioritizing and launching 8 new or substantially updated products at Build It 2018.

In Q1, we’ll have 3 priority areas: first, grow our member-centric ecosystem with must-have mobile and video products and stem desktop declines; second, increase usage and spends flowing through B2B platforms; third, expand our video supply and overall distribution through partnerships. As we work to deliver on both short-term objectives to stabilize our business, we are also focused on long-term strategies that will accelerate distribution, growth and innovation as part of Verizon.

This week, we will make changes that will impact around 7% of our global workforce across the organization, as well as certain brands and products. These were difficult decisions, and we will ensure that our colleagues are treated with respect and fairness, and given the support they need. Resources and other career support will be provided to help our team members navigate the transition.

In addition, we’ve completed an exhaustive review to prioritize the programs that are currently in our portfolio – consumer products, ad products, platform features, partnerships and data centers.

While every business unit has to manage their P&L, these decisions are being made to streamline resources and invest in opportunities that will help us grow. You all know by now that I deeply believe in an owner mindset and focus as a key ingredient for success – going deep on fewer, key things that will have the greatest impact on our customers and business, and doing them exceptionally well.

I want to be clear that we will continue to scale, launch new products and innovate. We are an important part of Verizon and the $7+ billion in revenue we generate through our member-centric ecosystem puts us among the top tech/media companies in the world. Now is the time to go on the offensive, go deep on our big priorities and do everything we can to advance the business. We will talk more about this and answer questions Friday at Open House.

Our world continues to evolve at a faster pace, and we need to leap ahead of consumer trends. We are reimagining our future, and building new products that will become invaluable to consumers today and in the years to come. That’s the spirit of our company and the spirit we all embody as its Builders.

Best,

Guru

US operators belatedly act to protect user location data

AT&T and Verizon announced that they will terminate all remaining commercial agreements that involve sharing customer location data, following a report exposing the country’s mobile carriers’ failure to control data sharing flow.

Jim Greer, a spokesman for AT&T, said in a standard email to media: “Last year, we stopped most location aggregation services while maintaining some that protect our customers, such as roadside assistance and fraud prevention.” Referring to the Motherboard exposé, Greer continued, “In light of recent reports about the misuse of location services, we have decided to eliminate all location aggregation services — even those with clear consumer benefits.”

This is similar to the position T-Mobile’s CEO John Legere adopted when responding to the criticism from the US Senator Ron Wyden (D-Ore.). Verizon also announced that the company will sever four remaining contracts to share location data with roadside assistance services. After this Version will need to get customers’ explicit agreement to share their data with these third-party assistance companies. Sprint, which was also caught out by the Motherboard report, is the only remaining nation-wide carrier that has not announced its plan on the issue.

This is all good news for the American consumers who are concerned with the safety of their private data. On the other hand, mobile operators have hardly been the worst offenders when it comes to compromising the privacy and security of customer data. Earlier, Google was exposed to have continued tracking users’ location even after the feature had been switched off, while Facebook has been mired in endless privacy controversies.

Monetising user data is only a side and most likely insignificant “value-add” business for the mobile operators, because they live on the service fees subscrbers pay. But it is the internet heavyweights’ lifeline. This may sound fatalistic but it should not surprise anyone if the Facebooks and the Googles of the world come up with more innovative measures to finance the “free” services we have benn used to.

AT&T’s 5G false start backfires

The attempt by US operator AT&T to rebrand LTE-A as 5Ge has quite rightly left it open to ridicule.

It was never in any doubt that a US operator would jump the gun regarding 5G this year, it was just a matter of who. The geniuses in AT&T’s marketing department decided it should be them and, while the rest of us were opening Christmas presents and falling asleep in front of Bond films, they were plotting how to claim 5G victory without actually serving up any 5G.

Inspired, perhaps, by the best wireless technology currently available on the AT&T network, their hours of brainstorming yielded the word ‘evolution’. If you stick a little ‘e’ after 5G, they apparently reasoned, then you’re basically saying it’s nearly 5G. Closer to 5G, in fact, than 4G, so putting 5G on phones is totally justified. Essentially AT&T is saying it has the most evolved AT&T.

Not only has the entirety of the telecoms and tech press been merciless in calling bullshit on this risible move, but AT&T’s main competitors have wasted little time in taking the piss. Verizon CTO Kyle Malady was moved to publish an opportunistic piece entitled ‘When we say “5G,” we mean 5G’.

“We’re calling on the broad wireless industry to commit to labelling something 5G only if new device hardware is connecting to the network using new radio technology to deliver new capabilities,” he said. “Verizon is making this commitment today: We won’t take an old phone and just change the software to turn the 4 in the status bar into a 5. We will not call our 4G network a 5G network if customers don’t experience a performance or capability upgrade that only 5G can deliver.”

As you might expect, T-Mobile US was much less restrained in its response. CEO John Legere collated some of the media dismissals of the move and shared them on Twitter. His marketing department warmed to the theme and posted a video of someone putting ‘9G’ sticker over the top of the network notification display in the top right of an iPhone, to ridicule the cosmetic nature of this AT&T initiative.

The sad thing is that this probably won’t harm AT&T. Yes it looks ridiculous now, but if there’s no such thing as bad publicity then AT&T seems to be getting a fair bit of it. That could change, however, if this move becomes a ‘quirky’ at the end of mainstream news bulletins, and AT&T becomes synonymous with marketing incompetence and duplicity, then that old axiom will be put to the test.

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.

Verizon breaks Oath

Less than two years after coming up with the name ‘Oath’ to encompass all its media properties, Verizon has sensibly concluded it’s a rubbish name.

As a result it’s being rebranded as Verizon Media Group, a much more prosaic, utilitarian name and more of a default description than a brand, but nonetheless better than Oath. We don’t know how much good money was thrown after bad in trying to polish this turd of a name, but Verizon at least deserves credit for not persisting with it indefinitely.

“I’m excited today to share that beginning January 8, 2019, Verizon Media Group will replace the Oath brand, representing our strong alignment as a core pillar of Verizon’s business,” wrote K. Guru Gowrappan, who replaced former AOL boss Tim Armstrong just ten days ago at the top of Oath. The immediate renaming of the group would appear to be a fairly symbolic act by Gowrappan and Armstrong is only hanging around until the end of the year.

The rest of Gowrappan’s post commenced with the standard ‘this just goes to show how well everything’s going’ corporate spin that it’s apparently compulsory to attach to any announcement. After that we got a list of all the specific things that have gone well at the artist formerly known as Oath, in case any doubt remained about how well things are going.

Most of those focused on Yahoo sub-brands, which must surely remain a work in progress. In basing its move into digital media on a couple of very faded internet brands – Yahoo and AOL – Verizon created a branding challenge for itself that it attempted to solve with Oath. Having acknowledged that mistake it wouldn’t be surprising to see further rebranding done within the Verizon Media Group.

Qualcomm pumps Snapdragon 855 in Hawaii

The chipset company Qualcomm just unveiled the newest Snapdragon SoC product to power 5G mobile devices.

On the first day of its annual “Snapdragon Tech Summit” in Hawaii, Qualcomm introduced its first commercial 5G chipset, branded as Snapdragon 855. The system is compatible with Qualcomm’s X50 modem with antennae supporting 5G on both sub-6GHz and mmWave frequency bands. On a 7-nm silicon will also be its 4th-generation multi-core on-device AI engine (said to deliver 3X faster AI performance than its predecessor the Snapdragon 845), Computer Vision Image Signal Processor (CV-ISP) for new photo and video features (“true 4K HDR video capture, cinema-grade photography capabilities”), and 3D Sonic Sensor. The sonic sensor can be used for under-display fingerprint reading using ultrasonic waves (instead of the current optical under-display sensors using light), which, Qualcomm claims, is safer and more accurate.

Qualcomm expects the first smartphones using the new chipset to hit the market in the first half of next year. “The Snapdragon 855 will define the premium tier in 2019,” said Alex Katouzian, SVP and GM of Mobile for Qualcomm, who unveiled the new chipset. Earlier Cristiano Amon, Qualcomm’s President, said he expected to see a lot of phone announcements at CES in January and a lot of actual phone launches at MWC in February.

“Today marks a massive and exciting step forward underscoring how Qualcomm Technologies and ecosystem leaders are driving 5G commercialization, a journey that went from R&D, accelerated standardization and trials, the launch of innovative products and technologies, to the imminent launch of 5G networks and smartphones across the globe starting in early 2019,” said Amon at yesterday’s event. “Together we are demonstrating our role in transforming the mobile industry and enriching consumer experiences with 5G mobile devices on live 5G networks at this year’s Qualcomm Snapdragon Technology Summit.”

Executives from mobile operators including AT&T, EE, Telstra, and Verizon were present at the event, so were representatives from Ericsson, Samsung, Motorola, NETGEAR, and Inseego. The 5G smartphone from Samsung to be launched by both Verizon and AT&T is likely to be the first of its kind to be built on Snapdragon 855.

“At Samsung, we have a vision of a connected world powered by 5G that will benefit consumers, communities, industries and governments,” said Justin Denison, SVP for mobile product strategy and marketing at Samsung Electronics America. “5G will fuel collaboration, connectivity and productivity worldwide, and we’re excited to be at the forefront working alongside partners like Qualcomm Technologies to make the transformation to 5G a reality.”

The event will last three days till Thursday, and Qualcomm promised more announcements and more details will be released.

Verizon reworks the corporate jigsaw puzzle in the name of 5G

Verizon has unveiled a new corporate structure in an attempt to make a lean, mean, money-making machine at the dawn of the 5G era.

While many of these announcements are usually coupled with some form of job cuts, there doesn’t seem to be one in this case. We’ve been unable to locate the relevant forms on the Securities and Exchanges Commission website, though considering there have been numerous ‘streamlining’ initiatives already announced, it might be a case of fitting the business around the new headcount.

“This new structure reflects a clear strategy that starts with Verizon customers,” said CEO Hans Vestberg. “We’re building on our network transformation efforts and the Intelligent Edge architecture to deliver new customer experiences and optimize the growth opportunities we see as leaders in the 5G era. We’re focused on how our technology can benefit customers’ lives and society at large.”

The new Verizon business will be organized into three business functions (Consumer, business and Media), supported by a network and IT organization, and corporate-wide staff functions. The consumer group will feature both the wireless and the broadband business units, as well as wireless wholesale, led by Ronan Dunne, who is currently President of Verizon Wireless. The business unit will include the wireless and wireline enterprise, small and medium business, and government businesses, as well as wireline wholesale and Verizon Connect, the company’s telematics business, headed up by Tami Erwin, the current EVP of Wireless Operations. The media unit will essentially be the Oath business, with current CEO Guru Gowrappan in charge. Kyle Malady will lead the network and technology department, while there will no changes to the management team on the corporate side.

While job losses have been an unavoidable topic in the telco world over the last couple of years, Verizon made a pretty weighty announcement last month. In an effort to trim the number of lifers and dead-weight in the management layer, Verizon offered 44,000 staff a redundancy package of three weeks of severance pay for every year worked, though it is not entirely clear how many heads the telco want to count rolling out the front door.

As it stands, Verizon currently employs 153,000 people across its various markets, though this figure was as high as 183,400 in 2012. What is worth noting is that it would be unfair to point the finger of destruction at Verizon alone, the trend is clearly visible across an industry rocked by OTTs, and a North American market which has consistently and aggressively sought to undercut rivals.

With many telcos around the world attempting to take advantage of the convergence trend, perhaps this new structure will offer Verizon a leg-up. The launch of its 5G fixed wireless access business certainly gives the business something to talk about, though with both the consumer wireless and broadband units now on the same branch of the family tree, a more consolidated approach on products, tariffs and marketing can be taken. How this impacts the Verizon message remains to be seen, though an aggressive 5G assault is almost guaranteed with new devices promised over the next 12 months.

Research from RepeaterStore suggests only 41% of US consumers were aware 5G is just around the corner, and while the conversation for many telcos is now focusing on the enterprise side, in the US the 5G p*ssing contest appears to be circling the consumer. With such low consumer knowledge of 5G, the telcos will have to do a considerable marketing push to communicate the benefits of 5G.

Verizon might have launched 5G, but new iPhone pulls subscribers

Verizon published Q3 results, beating market estimates on earnings and subscriber adds.

Verizon published Q3 results today, narrowly beating market expectations. On the wireless side, Verizon Wireless added 510,000 net postpaid smartphone subscribers, with the postpaid churn rate at 0.8%. The strong marketing activities following the launch of the new iPhone, including an offer of up to $750 off new models, has helped attract new subscribers. As an important operation landmark right at the end of Q3, Verizon launched fixed wireless access service on 5G in four cities, therefore could claim to be the first to offer 5G in the country.

“Verizon has posted a third quarter of strong operational and financial performance,” said CEO Hans Vestberg. “With the beginning of the 5G era in this fourth quarter, we expect that trend to continue. We are investing in networks, creating platforms to add value for customers and maintaining a focused, disciplined strategy. Verizon is best positioned to take full advantage of the opportunities offered by the new game-changing generation of technology.”

On the broadband and TV side, Verizon’s Fios gained 54,000 new internet users, slower than the 66,000 it gained the same period last year, and lost 63,000 cable TV subscribers, faster than the 18,000 it lost last year, another indication that the cord-cutting trend shows no sign of abating.

Verizon Wireless continued to make the largest financial contribution. It generated $23 billion revenue (70.5% of group total) and brought in $11 billion EBITDA (90% of group total). The wireline business’ total revenues went down by 3.7% to $7.4 billion. The consumer side of the wireline business largely held at $3.1 billion (-2.1% year on year), with the corporate business dropped by over 5%.

On the group level, the total revenues of $32.6 billion, up 2.8% from last year, beating market expectation by $110 million, with non-GAAP earnings per share of $1.22, beating expectations by $0.03. GAAP EPS of $1.19 was right in line with market expectations.

Like most telecom operators, Verizon is a mature business that does not often disappoint but seldom excites. The management guidance pointed to low-to-mid single-digit percentage of full-year consolidated revenue growth and low single-digit percentage growth in EPS, which makes us pay some attention to another area of interest, Oath, the Media & IoT business mainly comprised of AOL and Yahoo.

If Verizon was to bank on this division to herald its future growth then it might be disappointed. Total revenues went down from $2 billion a year ago to $1.8 billion. More importantly, Verizon does not expect Oath to hit the $10 billion revenue target it set for the division earlier.

Verizon’s share price gained by 1.4% in pre-market trading.