Google made friends with Cisco and SaleForce, who in turn made friends with AWS and Facebook. Can these partnerships truly add value when the players keep shrinking?
Photo: Sneaky Elbow
Google announced several partnerships over the last two weeks that seem to conflict with other relationships they, or the other suppliers, have with each other. This prompted me to look back at some of the strategic partnership announcements over the last few years to connect the dots and see how they worked out for all parties involved.
This week is the tech-industry equivalent of a bad romance movie. First Google and SalesForce announce a partnership, and in the same week, SaleForces announces a partnership with Facebook that could negatively impact Google.
T-Mobile and Sprint are definitely (maybe) off again… probably.
Another acquisition that might go sour is the AT&T and Time Warner agreement. Customers don’t love the idea and there is a certain President of the United States that is potentially using his influence to get revenge on CNN (probably not).
AI is getting smart enough to realize it needs to grow on its own.
The cash-and-stock deal carries a value of roughly $103 billion and includes about $25 billion of debt. In a news release, Broadcom said it valued the deal at $130 billion.
Broadcom offers to acquire Qualcomm for $70 per share
Specifically Broadcom is offering to pay $70.00 per Qualcomm share, with $60.00 being in cash and $10.00 per share in Broadcom shares. It’s intending to use debt financing if it gets agreement for the deal.
Although a Nomura Instinet analyst, cited by Reuters, suggests that a $70 per share offer won’t be sufficient for the proposal to fly.
As malicious groups continue to become more sophisticated in their hacking techniques, cybersecurity efforts are attempting to expand in their reach, and that is leading to some consolidation in the field. Today, cybersecurity firm Proofpoint — which provides SaaS products to protect businesses’ email, social media and other services — announced that it would pay $110 million to acquire Cloudmark, another firm that provides security protection for messaging services, focusing specifically on serving the ISP and mobile carrier markets.
The decision came after Sprint Chairman Masayoshi Son, Sprint CEO Marcelo Claure, T-Mobile CEO John Legere and Tim Höttges, CEO of T-Mobile parent Deutsche Telekom AG, met for dinner at Mr. Son’s house in Tokyo to try to reach a final agreement, a person familiar with the matter said.
In a joint statement, the companies said they couldn’t settle on mutually agreeable terms. They didn’t go into specifics.
Instead of a merger, Sprint parent company SoftBank Group Corp. plans to buy shares of Sprint on the open market. SoftBank’s stake is around 80%, and it intends to keep its stake below an 85% threshold that would trigger a tender offer.
Continental said that Argus would now become part of Elektrobit and would continue to engage in commercial relations with all automotive suppliers globally.
The purchase price was not disclosed though Israeli media reported earlier this week that Continental would pay about $400 million (£305.4 million) for Argus.
Marvell is based in Bermuda but run from Santa Clara, Calif. Its chips are used primarily in storage devices, printers and wireless products, and can be found in cars. The company had long been run by husband-and-wife co-founders Sehat Sutardja, who was chairman and chief executive, and Weili Dai, who was president.
Last year, activist investor Starboard Value LP took a 6.7% stake in Marvell and pushed for the company to cut costs and consider exiting its mobile-devices business. Marvell initiated a restructuring that would eliminate around 900 employees, or approximately 16% of its workforce. It also hired a new CEO to run the company.
Cavium, based in San Jose, Calif., makes products that are used for networking, data-center and wireless applications.
A combined AT&T-Time Warner could pass along the massive acquisition costs, which include billions of dollars in Time Warner debt, to consumers, just as AT&T did after acquiring DirecTV. Even if you subscribe to a different service for cable or satellite TV, you could wind up paying more, because AT&T could raise the prices it charges competitors for HBO, CNN, and other highly desirable Time Warner programming.
Meanwhile, AT&T-Time Warner would have every incentive to favor its own content over that of others, meaning that AT&T users might not have access to the programming they want – like the competing content of Netflix and Hulu – on the same terms. Because of AT&T’s large footprint in the wireless internet market, their acquisition of a massive content provider poses a serious threat to net neutrality.
And that’s not all. Should regulators sign off on this deal, it could have enormous long-term implications for the media landscape, as other major industry players — of which there are fewer and fewer — will increasingly argue that greater scale or their own vertical deal is necessary in order to compete with the behemoths of AT&T and Comcast.
Their start-up, Embodied Intelligence, is backed by $7 million in funding from the Silicon Valley venture capital firm Amplify Partners and other investors. The company will specialize in complex algorithms that allow machines to learn tasks on their own. Using these methods, existing robots could learn to, for example, install car parts that aren’t quite like the parts they have installed in the past, sort through a bucket of random holiday gifts as they arrive at a warehouse, or perform other tasks that machines traditionally could not.
“We now have teachable robots,” Mr. Abbeel said during a recent interview at the new company’s offices in Emeryville, Calif., just across the bay from San Francisco.
While companies like Google, Facebook, and Microsoft can throw money at the problem and pay “millions of dollars a year to A.I. experts,” per the Times, other companies are taking matters into their own hands and developing tools and neural networks to help companies build their own AI software. That’s where technologies like Google’s new AutoML come in. It hopes to automate the AI-building process by outsourcing it to AI itself. Per the Times: “Google said AutoML could now build algorithms that, in some cases, identified objects in photos more accurately than services built solely by human experts.”
It’s not just algorithms either, but AI is getting really good at teaching itself skills like speech recognition, machine translation, and all sorts of other things thanks to a process that experts call “learning to learn,” or “meta-learning.”
The deal, slated to be announced Monday at the start of Salesforce’s Dreamforce customer conference in San Francisco, comes a year and a half after the cloud-based business software vendor said it would move some computing operations to data centers run by the market leader, Amazon Web Services. Salesforce also operates its own data centers.
World-wide revenue for the business of providing cloud infrastructure—that is, computing processing and storage service—hit $22.2 billion last year, and is expected to climb to $67 billion by 2020, according to industry research firm Gartner Inc.
What about the AWS deal?
It’s unclear exactly how using Google Cloud Platform fits into Salesforce’s overall infrastructure and global expansion plan. Salesforce is already using Amazon Web Services’ infrastructure to power a couple of its international cloud regions, and doesn’t have plans to move away from that investment. AWS will remain a “preferred” cloud provider for Salesforce, as it was when the two companies announced their partnership almost a year and a half ago.
Facebook and Salesforce are teaming up against Microsoft Office and Google
The cloud-software provider and the social networking giant are expected to announce Tuesday that they are enhancing the integration of Salesforce’s Quip productivity app with Facebook’s Workplace, which is a version of the company’s social network that was designed specifically for businesses. The collaboration is designed to make it easier to share Quip documents in Workplace and see there a list of all documents shared.
The partnership could help the two companies better compete with Microsoft’s Office and Google’s G Suite.
But the deal could have other benefits. The partnership will give both Salesforce and Facebook a way in with each other’s customers.
Previously, Microsoft had been bundling cloud services, such as Azure for storing and running data and cloud applications, with many of its multiyear deals. Althoff said the shift in pay incentives is a significant change.
“We did have ill-informed behaviours,” he said. “We tried to sell Azure the same way we tried to sell everything else at Microsoft, which is adding it into our enterprise agreement. People were like ‘Do you want fries with that? Do you want Azure with that?’ That didn’t drive any meaningful work.”
IBM has been emphasising selling cloud infrastructure services and software and tools geared toward specific business processes and industries such as health care and finance. Oracle has been turning its focus to the cloud as well and investing in staff. The company said in August it was adding more than 5,000 people, including in sales, for its cloud business – following other related hires earlier in the year in the US.
IBM Cloud Private takes middleware and other legacy applications, places them inside Kubernetes containers and transforms them into contemporary applications using Kubernetes container orchestration. The software itself is already containerized, including IBM tools and most major open source databases.
Cloud Private also provides tools and APIs to connect cloud services like Salesforce with a company’s on-premises data center and share data from the cloud services with those legacy applications.
Former Yahoo CEO Marissa Mayer has reportedly been subpoenaed to testify to the Senate Commerce Committee about the massive cyber hack that compromised 3 billion accounts. The U.S. has charged four alleged Russian spies with the breach, which is now being investigated by the government for insight into Russia’s cyber espionage activities.
Issued Oct. 25, according to a report by The Hill, Mayer’s subpoena reportedly came after the former Google employee and Yahoo chief executive declined multiple invitations to appear before the committee voluntarily. Since being served, she has agreed to testify willingly, says The Hill, though she has also reportedly asked for the court order to be lifted. A Mayer representative has refuted these events, The Hill reports.
Today, AWS announced a new set of five tools designed to protect customers from themselves and ensure (to the extent possible) that the data in S3 is encrypted and safe.
For starters, the company is giving the option of default encryption. That means every object that gets moved into an S3 bucket will have encryption on by default. What’s more, this will happen without admins having to construct a rejected bucket for unencrypted files. It’s not exactly foolproof, but it gives admins a good solid way to ensure the data is always encrypted in a much smoother way than before.
If that’s not enough, Amazon is putting a signal front and center on the administrative console that warns admins with a prominent indicator next to each S3 bucket that has been left open to the public. If something slips through the cracks at the end user level, this should at least give admins an additional level of protection that something is amiss.
But Mr. Barros stumbled when asked by Sen. Cory Gardner (R., Colo) whether Equifax was now encrypting the consumer data it stored on its computers—a basic step in hiding sensitive information from hackers, and one the company previously had admitted it didn’t take before the breach.
“I don’t know at this stage,” Mr. Barros said.
The answer was disappointing, said Avivah Litan, an analyst with the research firm Gartner Inc. “He should have asked his staff that the day he took over,” she said.
You know, look. They’re 1 percent of the CRM market. You know the numbers. I like having competitors. But what I just get blown away with is how they just can’t keep, you know, that management team in place. They just keep leaving Microsoft. You know that. And I think they don’t have confidence in that ability to execute in that business. So that has weighed to our favor, and customers feel that.
You know because you go to these conferences just like I do. There is no conference like this that they do and that’s the — in my opinion, the mark. That is — why is it that they don’t have anything like this? That when they put on a conference like something — it’s always the resellers who come together, and then — where are these people? Now, that isn’t to say they don’t have, like, Build, where they get these really high-end developers using the IDE. You know what I mean? Is that the conference I’ve been to where I’m like, Oh, yeah, these are all the — and they’re all Windows — they have a Windows fever. And they have Windows API fever at the conference. But I haven’t seen that in any other part of their business, other than the Windows API. Maybe they’ll get it in Azure — I don’t know. But I haven’t seen that yet. Because the last time that I went to the conference, I didn’t see that. I only see that fever around the Windows API. And the Surface laptop.
Today, IBM has 10,000 staff working with clients on design thinking and 1200 doing work internally. “That started us on the journey of getting to that business-to-person approach,” she said.
To answer the question of whether IBM could be big as well as fast, the business commenced on an agile journey where small multidisciplinary teams work to produce a minimum viable product and iterate.
“What I realised is that our employees can’t work faster unless we changed the way they work,” Rometty said. Today, 200,000 employees are doing agile, a change that led to 170 building renovations globally, and a rethink of appraisal systems.
Photo: Jon Asato
The keystone topics that drive this blog (AI and cloud) were quiet this week, while concepts like security and software claimed more space.
WannaCry was a dominant topic early in the week highlighting the need for IT security focus throughout the entire organization.
IBM has been making headlines not for cloud or AI, but for their remote work policies (again) and product line retirements.
AWS is getting good press for showing the value of experience in a culture that “doesn’t trust anyone over 30”.
Codenvy is the company built on top of the open source project, Eclipse Che, which fits with Red Hat’s overall strategy to build commercial tools on top of open source projects. It offers a cloud-based integrated development environment (IDEs) for individual developers, teams or enterprises. IDEs are essentially workspaces for coding, building and testing apps.
The company did not reveal the purchase price.
Hexadite has to date raised $10.5 million in funding, according to Crunchbase, with investors including HP Ventures, YL Ventures, TenEleven Ventures and Moshe Lichtman of Israel Venture Partners. Notably, Lichtman is a ten-year veteran of Microsoft, which could point to one connection between the startup and its alleged acquirer. Its last round, of $8 million, was raised last year.
If accurate, the Hexadite acquisition would be one of a series of security acquisitions that Microsoft has made in Israel. Past deals include Aorato, Adallom and Secure Islands.
When Softbank announced the first close of its Vision Fund this weekend — securing an initial commitment of $93 billion, from investors including Apple, Qualcomm and Foxconn — it also quietly disclosed it had taken a stake in Nvidia.
Bloomberg is today reporting the size of that stake is $4 billion, for 4.9 per cent of the company, which it says would make Softbank the fourth largest investor in the chipmaker.
On Wednesday, he announced the launch of the bipartisan Congressional Artificial Intelligence Caucus, which will look to inform lawmakers on the current state of AI and then push for policy that could boost economic activity around AI and help citizens whose jobs are being replaced by automation.
Regarding potential job loss:
Despite some fears about the effects of automation and AI on the workforce, Delaney is optimistic. “Data clearly demonstrates that innovation creates more jobs than it takes away,” Delaney told CNBC. The trouble is that people don’t understand the nature of the jobs that will be created, he said. The caucus will focus on these issues, as well as education, immigration reform and funding basic research.
Delaney is familiar with the idea of universal basic income, where the government would pay all citizens a basic stipend to let them buy necessities. Some Silicon Valley leaders have discussed this as a way to help workers whose jobs will increasingly be replaced by automation.
It is now clear that Salesforce sees AWS as a strategic ally as it battles all of those rivals. Salesforce had formerly been quite chummy with Microsoft, but that relationship soured fast when Microsoft outbid Salesforce in its $26.2 billion bid to buy LinkedIn. While Microsoft had always competed somewhat with Salesforce in sales software known as customer relationship management or CRM, the competition has heated up since that development. Speaking with Jim Cramer on CNBC Thursday, Benioff made sure to say that 21st Century Fox is moving 20,000 employees from Microsoft Office to Quip, business software that Salesforce acquired two years ago.
According to data released today by Kaspersky Lab, roughly 98 percent of the computers affected by the ransomware were running some version of Windows 7, with less than one in a thousand running Windows XP. 2008 R2 Server clients were also hit hard, making up just over 1 percent of infections.
For WannaCry Victims, a Possible Way Out (not really)
By Friday, a second French computer-security researcher, Benjamin Delpy, built a tool called Wannakiwi that does the heavy lifting of unscrambling the encrypted files. Europol, the European Union’s police agency, said Friday its cybercrime center had tested the tool and succeeded in recovering data in some circumstances.
Because the Wannakiwi tool works by grabbing data from the computer’s memory, it only will work for a small number of fortunate users.
Despite all the money we’ve spent—Gartner estimates $81.6 billion on cybersecurity in 2016—things are, on the whole, getting worse, says Chris Bronk, associate director of the Center for Information Security Research and Education at the University of Houston. “Some individual companies are doing better,” adds Dr. Bronk. “But as an entire society, we’re not doing better yet.”
The article provides several suggestions on how to deal with security issues, especially for smaller companies:
Retrain IT staff on security—or replace them. In today’s world of ever-multiplying threats and dependence on connected assets, all IT staff must now be cybersecurity staff first. “The good news is that you don’t need that dedicated person to run your email server anymore—they can run security,” says Dr. Bronk.
All of this raises the question of whether Microsoft, which declined to comment for this story, should have done more to fix the faulty software in the first place. The company’s after-the-fact approach to safety differs from other industries, such as car companies, where manufacturers have faced massive liability for failing to warn people about faulty ignition switches and other defective products.
There’s also the fact Windows is a closed software platform. This means any defects in its source code are hard to detect because the internal workings that make it run—the source code—are all but invisible to those outside the company. This is why some people like Eban Moglen, a noted computer law professor at Columbia University, considers platforms like Windows to be intrinsically dangerous.
IBM’s product is called “Emptoris”, from a company of the same name, and was reported to have come with a US$600m price tag when Big Blue acquired it in 2011. Big Blue bought Emptoris to advance the “Smarter Commerce” play it ran a few years ago, in pursuit of what it described as “a $20 billion market opportunity in software alone.”
Never knew the investment IBM made on Emptoris…
As technology, Hadoop is broadly used across the computing infrastructure of web service providers. Big Data is proliferating as well in commercial uses. As it is increasingly adopted in Enterprise computing, its attractiveness as a business will become increasingly clear. Hadoop is far less costly than present comparable Enterprise technologies such as Data Warehousing. Surely it offers strong growth. Yet for some specific reasons, Hadoop is relatively less profitable than other types of software, mainly because so much of the technology is Open Source and freely available. There is no fee in its licensing, as we noted above. No fee revenue, less profit
James Gosling plans to join Amazon Web Services (AWS) as a “distinguished engineer,” according to a Facebook post penned by Gosling on Monday. Gosling did not say what he’ll do at AWS. But in addition to programming, Gosling is also familiar with the process of deploying IoT systems, according to Venture Beat.
Companies like AWS and Google are increasingly dependent on programmers to help them make technologies more useful to the general public by creating applications. Both companies have been known to give away cloud credits and other gifts to developers willing to help them. Bringing Gosling on board helps show programmers that AWS is programmer-friendly and could help the company attract more of them.
For the first time in four years, Lenovo—a company that gained acclaim a decade ago for turning around storied U.S. personal-computer maker IBM — slipped from the top spot this year to No. 2 in the personal-computer market, behind rival Hewlett-Packard. Lenovo has also fallen to No. 8 in the number of smartphones shipped globally, from No. 3 when it acquired another U.S. brand, Motorola, in late 2014.
Lenovo’s Hong Kong-listed stock has fallen nearly 60% since the Motorola acquisition.
“Imagine you’re a government employee and you take a trip. In the U.S., as soon as it’s approved and before you’ve even taken it, the government needs to set aside the money and record the liability for that approved spend, and then they need that approval to flow into all the impacted cost centers,” he said. “How you encumber, how you take that spend and how you put it as a liability, it starts to look like a core ERP use case.”
Koch sees a billion-dollar opportunity for SAP and its integration partners in the 90,000 U.S. government entities that are potential users of ByDesign.
This analysis is like saying that because someone built a bridge, they also created the entire city on far side of it. It’s absurd, and in fact the argument was already tried and found wanting in a federal court just three weeks ago. Anyone with a modicum of technical knowledge will find this explanation of how the internet and web work truly wrongheaded and entirely incorrect. It’s hard to think of this as anything other than a willful misrepresentation of the facts.
Although some level of wrangling is common in such deals, the back-and-forth from the Saudi negotiators, mostly PIF lawyers, made SoftBank executives begin to wonder if the Saudis were stalling. On at least one occasion, SoftBank executives sought assurance from PIF that the fund wouldn’t be scuttled. PIF negotiators assured their Japanese counterparts that MbS was 100% committed to its success.
SoftBank, which has 80 people in Silicon Valley and London looking for and processing deals, already has lined up a dozen deals of a billion dollars or more for the fund to invest in, with plans to work on “blockbuster” transactions of tens of billions of dollars in the future, said a person who helped set up the fund.
Photo: Flash Bros
GE is getting in on the artificial intelligence game with the acquisition of two AI firms. As the company tries to bolster their Predix cloud platform, Amazon and Google are about to officially unleash their own machine learning platforms.
As GE, Amazon, and Google grow their services, is IBM faced with the possibility of having to write off their cloud solution? It seems the company vastly overpaid for SoftLayer ($2B to buy, another $1B in enhancements) and it is bringing in a fraction of that cost.
AWS continues to quietly chalk up wins. They scored a hosting and platform provider deal with Tableau this week.
Software giant Oracle Corp. has purchased a Santa Monica office building for $368 million, according to a source familiar with the deal. At roughly $1,165 a square foot, the transaction is one of the priciest ever per square foot for a large office complex in Los Angeles.
This is the 2nd real estate transaction Oracle has been involved in over the last two months..
Oracle plans to add Dyn’s DNS solution to its bigger cloud computing platform, which already sells/provides a variety of Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) products and competes against companies like Amazon’s AWS.
Oracle and Dyn didn’t disclose the price of the deal but we are trying to find out. Dan Primack reports that it’s north of $600 million. We’ve also asked for a comment from Oracle about Dyn’s recent breach, and whether the wheels were set in motion for this deal before or after the Mirai botnet attack in October, but our guess is that it was likely before.
The deal will create what the two companies described as the world’s largest consumer security business with over $2.3 billion in annual revenue based on last fiscal year revenue for both companies.
The immediate opportunity for Symantec comes from the large number of consumers worldwide that have been victims of cybercrime, generating as a result greater user concern in digital safety. The companies estimate the market at $10 billion, and growing in the high single digits. In the U.S. alone, the total addressable market is estimated to be about 80 million people.
Qwiklabs, which launched in 2012, has only focused on teaching skills for Amazon’s AWS platform so far. Given AWS’ dominance in the marketplace, that made perfect sense. Amazon even uses Qwiklabs as its go-to service for offering self-paced labs for developers on its platform.
Google says it will use Qwiklabs’s platform to focus “on offering the most comprehensive, efficient, and fun way to train and onboard people across all our products on Google Cloud, including Google Cloud Platform and G Suite.”
On Monday, Trump announced that Mark Jamison and Jeff Eisenach were joining his “agency landing team.” These FCC appointees have both written about how they weigh antitrust issues.
They could potentially make it harder for industry leaders like Alphabet to make large strategic purchases. “Potential headwinds include issues relating to increased regulatory review on deals,” said Page.
Today GE revealed the purchase of two AI companies that Ruh says will get them there. Bit Stew Systems, founded in 2005, was already doing much of what Predix Cloud promises—collecting and analyzing sensor data from power utilities, oil and gas companies, aviation, and factories. (GE Ventures has funded the company.) Customers include BC Hydro, Pacific Gas & Electric, and Scottish & Southern Energy.
The second purchase, Wise.io is a less obvious purchase. Founded by astrophysics and AI experts using machine learning to study the heavens, the company reapplied the tech to streamlining a company’s customer support systems, picking up clients like Pinterest, Twilio, and TaskRabbit. GE believes the technology will transfer yet again, to managing industrial machines. “I think by the middle of next year we will have a full machine learning stack,” says Ruh.
Colin Sebastian, an analyst for R.W. Baird, recently said he believes Google’s machine learning and AI efforts give it an edge over Microsoft Azure and Amazon Web Services in the enterprise. “Google would ultimately be able to differentiate its enterprise offering from competitors by leveraging advanced ML capabilities and monetize ML through a range of business services,” said Sebastian
US electronic commerce giant Amazon has become the largest corporate backer of solar east of the Mississippi River with the launch of five new solar PV projects in Virginia totalling 180MW.
Four of the projects, with a capacity of 20MW each, will be brought online before the end of next year and are located in New Kent, Buckingham, Sussex and Powhatan.
The largest project in the bundle is the 100MW facility in Southampton County, known as Amazon Solar Farm US East 6. The five new projects join Amazon’s existing 80MW facility in Accomack County which is already operational.
We believe a write-off of SoftLayer of similar magnitude (85%-90%) is almost certainly in the forefront of CFO Schroeter’s mind these days. To comply with Generally Accepted Accounting Principles, a sizable write-down is necessary, since SoftLayer is likely worth a tiny fraction of what IBM has invested. As we’ll explain in a bit, SoftLayer is niche cloud player with limited functionality and limited upside. Its infrastructure products are not competitive in mid- and enterprise-level markets.
If we add SGI revenues to HPE’s we get $480,343,000, which makes HPE more than twice as big as Dell EMC in this sector.
IDC’s overall world-wide server supplier revenue market share numbers also show HPE comfortably ahead of Dell EMC. In the second 2016 quarter, HPE had a 25.4 per cent market share with $3.4bn in sales. Dell was second with $2.6bn in sales and a 19.3 per cent market share. No other supplier was in the double-figure market share percentage area.
The big issue is when you want to run something in production. The example I’ll use is Linux. You’re running your SAP application on Linux and that’s great, but now there’s a bug that needs to get fixed, and the open source community fixes that on the brand new version of Linux. If you’re running on a three-year old version of Linux, nobody’s looking at that version for a bug or a security hole, but you don’t want to re-integrate and re-test your SAP system every time there’s a new version. That’s what Red Hat does.
The news, to be formally announced next week at the annual AWS Re:Invent conference in Las Vegas is that Tableau Online will run on Amazon’s massive public cloud and that customers will be able to buy it through the AWS Marketplace.
Salesforce, the business software provider and CRM leader, posted revenue of $2.14 billion for the third quarter, beating consensus Wall Street estimates of $2.12 billion. Marc Benioff, chairman and CEO, Salesforce said, “Salesforce delivered an exceptional quarter with year-over-year revenue growth of 25% in dollars and 27% in constant currency.”
Photo: Urbex Clan