Procurement & Career Guidance
The Wall Street Journal recently reported that IBM is looking to potentially sell the Watson Health Platform (consisting of AI and companies like Merge, Truven, Explorys, and Phytel).
Why did something so promising end up becoming a failure for the company?
This video explores the ups and downs of Watson Health:
Photo by Markus Winkler on Unsplash
I am sure a handful of readers have been wondering where I have been. I wanted to give an update on the lack of posts and where I plan to take the blog (and vlogs and podcasts).
Photo by Scott Webb on Unsplash
After IBM took a stance on restricting facial recognition software, their competitors Microsoft and Amazon did the same.
While the move is being applauded by many, Amazon’s decision seems like a panic reaction. People have been asking Amazon to back off of providing this technology for a few years due to bias flaws.
And unlike IBM and Microsoft who offered more nuanced responses, Amazon announced they would restrict the technology for only a year (instead of committing to getting it right or not using it at all). It is another disappointing response from a company that has been struggling to get things right for the last 3 months.
Acquisitions/Investments
The cloud was a key driver in IBM’s buy of Red Hat. And if Cloudera – which like Red Hat has an open source focus – is indeed for sale then IBM might make a play as it continues to fight for marketshare with Amazon Web Services, Microsoft and Google.
IBM “is the most likely strategic buyer, especially given the partnership between Cloudera and IBM,” wrote analyst Rishi Jaluria at D.A. Davidson. He noted that a deal would complement the Red Hat buy.
But CloudEra won’t come cheaply. It has a $2.9 billion dollar market cap, and shares climbed to $12 on Tuesday after Bloomberg reported that the company is open to a takeover.
https://www.wraltechwire.com/2020/06/10/ibm-could-make-another-big-cloud-acquisition-analyst/
Cloud
For the past couple of quarters, Ellison—a master storyteller—has used Oracle’s earnings call to claim that his Cloud ERP app has so much momentum that a number of SAP’s biggest and longest-term customers are on the verge of tossing out SAP and installing Oracle Cloud ERP. But with each telling, the claims get a bit more vague. My hope is that Ellison will avoid the subject unless he’s able to share some specific names and details.
However, the Oracle-SAP wars have been raging for decades, and the latest battles seem to now be centered around which company can be more convincing in persuading existing on-premises customers to move to the cloud. As I noted above, SAP has flat-out denied that any of its big ERP customers are on the verge of jumping ship to Oracle. In fact, CEO Christian Klein recently told me that not only are none of his customers jumping to Oracle, but also SAP’s cloud ERP business has far more customers than Oracle’s.
https://cloudwars.co/oracle/oracle-q4-earnings-larry-ellison-will-focus-on-5-things-including-sap/
Security/Privacy
IBM firmly opposes and will not condone uses of any technology, including facial recognition technology offered by other vendors, for mass surveillance, racial profiling, violations of basic human rights and freedoms, or any purpose which is not consistent with our values and Principles of Trust and Transparency. We believe now is the time to begin a national dialogue on whether and how facial recognition technology should be employed by domestic law enforcement agencies.
While the House Committee on Oversight and Reform has held a number of hearings on the use of facial recognition technology, it has yet to introduce a bill regulating the technology. Rep. Jimmy Gomez, D-Ca., who serves on the committee told CNBC in a phone interview he is hopeful Congress will pass a bill this year.
“It’s a good first step, but it’s still not enough,” said Rep. Gomez of Amazon’s announcement.
“They’re saying, ‘we’ve been asking Congress to put guardrails on the use of this technology,’ – but every time we tried to get more and more data they stalled – and we had to have hearings to make movement on the issue.”
Microsoft’s president and chief counsel, Brad Smith, announced the decision and called on Congress to regulate the technology during a Washington Post video event on Thursday.
“We’ve decided we will not sell facial recognition technology to police departments in the United States until we have a national law in place, grounded in human rights, that will govern this technology,” Smith said.
Also…
Microsoft, Amazon and IBM are calling on Congress to set national rules over how police use facial recognition — something that’s now being considered as part of a police reform package sparked by the protests following Floyd’s death.
“If all of the responsible companies in the country cede this market to those that are not prepared to take a stand, we won’t necessarily serve the national interest or the lives of the black and African American people of this nation well,” Smith said. “We need Congress to act, not just tech companies alone.”
Other
California and Washington state investigators have reportedly been looking into how the company treats third-party sellers, particularly whether it’s using the data it collects to compete directly against them. The Times says the Washington attorney general’s office is also investigating whether Amazon is making it difficult for sellers to list their products on other websites.
WSJ reported back in April that the e-commerce giant scooped up data from its sellers — product information such as prices, total sales and how much vendors spend on marketing and shipping — to launch competing products under its private label division. In response to that report, US Senator Josh Hawley requested for a criminal antitrust investigation into the claims and the House Judiciary Committee called on Jeff Bezos to testify before Congress.
https://www.engadget.com/amazon-california-washington-investigation-055430238.html
Photo by Timon Studler on Unsplash
The impact of COVID-19 continues to unfurl as more technology companies announce significant staff and spending reductions.
IBM, Uber, and HPE have recently announced major head count reductions joining dozens of other companies over the last two months.
As organizations try to conserve cash, there are rumors and articles predicting a spike in acquisitions in the technology and retail industries.
Acquisitions/Investments
“For the largest players, we certainly see this immediate period as a potential opportunity to make plays to aggregate capabilities by acquiring smaller businesses that may need liquidity,” said J. Neely, managing director and global M&A lead at consulting firm Accenture PLC.
Large companies across the economy are seizing similar opportunities to grow, sparking worries about market consolidation in several industries.
https://www.wsj.com/articles/large-tech-companies-prepare-for-acquisition-spree-11590053401
Intel has acquired Rivet Networks, the maker of Killer-branded NICs (network interface cards responsible for managing your connection) found in some laptops from popular brands like Dell, Alienware, HP, and other manufacturers. Killer’s own networking products were noteworthy for providing gaming-centric features like minimizing latency to keep you from missing a beat in-game, and prioritizing network traffic for games and other applications that need it the most.
Rivet Networks has been a competitor to Intel in the NIC space for over a decade. With this acquisition, Intel can capitalize on the gaming market.
While it’s crystal clear that video conferencing is a hot item during the pandemic, all sides maintained that this deal was about much more than the short-term requirements of COVID-19. In fact, Verizon saw an enterprise-grade video conferencing platform that would fit nicely into its 5G strategy around things like tele-medicine and online learning.
They believe these needs will far outlast the current situation, and BlueJeans puts them in good shape to carry out a longer-term video strategy, especially on the burgeoning 5G platform. As BlueJean’s CEO Quentin Gallivan and co-founders, Krish Ramakrishnan and Alagu Periyannan reiterated in a blog post today announcing the deal has been finalized, they saw a lot of potential for growth inside the Verizon Business family that would have been difficult to achieve as a stand-alone company.
https://techcrunch.com/2020/05/18/verizon-wraps-up-bluejeans-acquisition-lickety-split/
Amid the coronavirus crisis and its impact on the retail industry, today the retail giant quietly announced in its quarterly report that it would be discontinuing Jet.com, the online-only marketplace that it acquired when it was just over one year old for $3 billion (plus $300 million in earn-outs over time), as it struggles to bring its e-commerce operations into that black after reportedly seeing a loss of $2 billion in the division in 2019 and shifting how to deliver its e-commerce strategy: by betting on giant stores, rather than online warehouses, as the hubs of its online delivery model.
Jet.com’s fate was disclosed as part of a Walmart’s Q1 earnings report, in which the company said it saw growth of less than 10% in its core US market, and said that it would be withdrawing guidance for fiscal 2021.
Cloud
While the company would not get specific about the number, the new contract involves using Anthos, the tool the company announced last year to secure DIU’s multi-cloud environment. In spite of the JEDI contract involving a single vendor, the DoD has always used solutions from all three major cloud vendors — Amazon, Microsoft and Google — and this solution will provide a way to monitor security across all three environments, according to the company.
“Multi-cloud is the future. The majority of commercial businesses run multi-cloud environments securely and seamlessly, and this is now coming to the federal government as well,” Mike Daniels, VP of Global Public Sector at Google Cloud told TechCrunch.
The idea is to manage security across three environments with help from cloud security vendor Netskope, which is also part of the deal. “The multi-cloud solution will be built on Anthos, allowing DIU to run web services and applications across Google Cloud, Amazon Web Services, and Microsoft Azure — while being centrally managed from the Google Cloud Console,” the company wrote in a statement.
Software/SaaS
There were disagreements, as you’d expect, but there were some of a fundamental nature where we could not delay the decisions. I’m fully convinced that the hyperscalers will also go up the stack. In the partnerships, we are closing, we have to own the business platform, we have to own the application layer. I want to be more prescriptive on that because when you are losing more and more of the control of the customer transformation when you’re not sitting on the table anymore, when they’re making the decision how to transform the business model, then it gets difficult. I just want to make sure that now in these partnerships, we try our best to make sure that we are in the lead when it comes to business model transformation, when it comes to talks about how to move the system landscape, the application layer in the cloud. And it’s also important that we position our platform there, as we cannot afford to lose the platform game either, as this is the platform which keeps our applications together, makes the integration work. And it’s of course also very important for the extension of our solution. So, this is something where I would like to to draw a much clearer line going forward, because in the past, I feel we were not clear enough in some of these partnerships.
https://diginomica.com/christian-klein-ceo-sap-we-have-own-application-layer
There’s another reason Musk thinks the ultimate value of Autopilot is so high. He has promised that once Tesla’s cars are able to drive themselves, the company will leverage that capability into a “robotaxi fleet.” The goal is to make it so that each Tesla customer’s car can double as an autonomous vehicle that other people can hail while the owner isn’t using it.
Not only would operating a robotaxi service generate more revenue for Tesla, but Musk has said this would allow owners to make as much as $30,000 a year as well. In fact, Musk believes the value of this idea is so high that he’s talked about raising the sticker price of Tesla’s cars, not just the cost of the Full Self-Driving package.
“[C]onsumers will still be able to buy a Tesla, but the clearing price will rise significantly, as a fully autonomous car that can function as a robotaxi is several times more valuable than a non-autonomous car,” he said last year.
https://www.theverge.com/2020/5/20/21264345/elon-musk-tesla-full-self-driving-autopilot-price-increase
TL;DR – Because he can.
Other
In the less than two months since then, the warehouse in the foothills of the Pocono Mountains of northeastern Pennsylvania has become Amazon’s biggest Covid-19 hot spot. More employees at AVP1 have been infected by the coronavirus than at any of Amazon’s roughly 500 other facilities in the United States.
Local lawmakers believe that more than 100 workers have contracted the disease, but the exact number is unknown. At first, Amazon told workers about each new case. But when the total reached about 60, the announcements stopped giving specific numbers.
The disclosures also stopped at other Amazon warehouses. The best estimate is that more than 900 of the company’s 400,000 blue-collar workers have had the disease. But that number, crowdsourced by Jana Jumpp, an Amazon worker, almost certainly understates the spread of the illness among Amazon’s employees.
https://www.nytimes.com/2020/05/19/technology/amazon-coronavirus-workers.html
It wasn’t clear how many jobs were being cut, though a source told the Journal that it’s several thousand, out of a massive staff of about 350,000 people.
Bloomberg said the cuts are in several units, including its Global Technology Services division, which does information technology outsourcing, as well as its Watson artificial intelligence unit, a longtime key focus of IBM’s recovery efforts. Cuts are being made in five states: California, Missouri, New York, North Carolina and Pennsylvania.
“IBM’s work in a highly competitive marketplace requires flexibility to constantly remix to high-value skills, and our workforce decisions are made in the long-term interests of our business,” the company said in a statement. It added in an apparent reference to the coronavirus pandemic that it will offer subsidized coverage to all affected U.S. employees through June 2021.
https://siliconangle.com/2020/05/21/ibm-hands-first-layoffs-new-ceo-arvind-krishna/
Mr. Khosrowshahi announced the plans in an email to staff Monday, less than two weeks after the company said it would eliminate about 3,700 jobs and planned to save more than $1 billion in fixed costs. Monday’s decision to close 45 offices and lay off some 3,000 more people means Uber is shedding roughly a quarter of its workforce in under a month’s time. Drivers aren’t classified as employees, so they aren’t included.
Stay-at-home orders have ravaged Uber’s core ride-hailing business, which accounted for three-quarters of the company’s revenue before the pandemic struck. Uber’s rides business in April was down 80% from a year earlier.
“We’re seeing some signs of a recovery, but it comes off of a deep hole, with limited visibility as to its speed and shape,” Mr. Khosrowshahi said in his note to employees. The company’s food-delivery arm, Uber Eats, has been a bright spot during the crisis, but “the business today doesn’t come close to covering our expenses,” he wrote.
Neri said that beginning July 1, HPE will implement salary cuts for all employees through Oct. 31, 2020, with the executive team taking the biggest hit. Neri and EVPs will see their base salaries cut 25%. Senior VPs’ base salaries will be cut by 20%, and board members will also take a 25% cut to their annual cash retainer.
Employees that live in countries that prohibit pay reductions will instead take unpaid leave. “In addition, we have implemented cost containment measures across the company, and restricted external hiring through the end of our fiscal year, and put salary increases on hold,” Neri said.
Overall, HPE expects the cuts to save at least $1 billion by the end of fiscal 2022.
Neri pointed to a couple of bright points during the quarter. HPE exited Q2 with more than $1.5 billion in backlogged compute, storage, HPC, and Aruba networking orders, which Neri said represents two-times the average historical quarterly backlog despite the challenging economic backdrop.
Photo by Frida Bredesen on Unsplash
Another sign that a recovery is starting… companies are starting to buy other companies again. Microsoft and Zoom are on the move. Intel announced an acquisition last week. But Covid-19 is also being used to rethink and get out of existing deals (see SoftBank).
Meanwhile, Amazon can’t get over their loss to Microsoft for the Pentagon’s JEDI contract… and they are going after each other on their own personal blogs (this is high school level drama).
Acquisitions/Investments
Several multibillion-dollar deals have already been scuttled. SoftBank Group Corp. has pulled out of a $3 billion promise to buy stock from employees of WeWork, while Mirae Asset Global Investments Co. canceled the $5.8 billion purchase of 15 U.S. luxury hotels from Anbang Insurance Group Co. WeWork co-founder Adam Neumann and Dajia Insurance Group (which took over Anbang’s assets after it was seized by the Chinese government) both contend that the buyers have used legally faulty pretexts to justify their actions, and they are suing.
Using the fine print to renege on a deal isn’t pretty, but it’s understandable in an environment where virus-related lockdowns have ravaged economies across the world. Forecasts and valuation estimates predating the pandemic have been rendered all but meaningless.
The U.S. software giant Microsoft is expected to announce in the next few days that it has signed a deal to acquire the Israeli industrial cybersecurity startup CyberX for what sources say will be $165 million.
TheMarker revealed before the coronavirus crisis that the two sides were in negotiations. They are now in the midst of getting signatures on the deal from all of CyberX’s shareholders.
CyberX has developed an internet of things cybersecurity platform for factories and industrial control systems, using machine learning to analyze real-time activities and identifying anomalies. The IoT segment is different in many respects from cybersecurity for computers and servers, where Microsoft is active.
The acquisition of the 25-person start-up is the latest move in a 90-day plan that Zoom announced on April 1 to fix its security flaws. Zoom CEO Eric Yuan told CNBC the company needed a solution for users who are demanding the highest level of privacy and certainty that uninvited participants have no access to their conversations.
When Keybase is implemented, the Zoom user who schedules a meeting will be able to choose end-to-end encryption. That setting will prevent anyone from calling in by phone, which is one way people can access meetings, and will disable cloud-based recording of the chat. Yuan said it’s critical that users know that the encryption key is not on Zoom’s servers, so the company has no access to the contents of the call.
https://www.cnbc.com/2020/05/07/zoom-buys-keybase-in-first-deal-as-part-of-plan-to-fix-security.html
Cloud
Mr. Krishna said the company believes the marketplace adoption of hybrid cloud technology is only about 20% complete, and that the adoption of AI is about 4% complete.
The pandemic will “dramatically accelerate” the adoption of hybrid-cloud and AI, Mr. Krishna said, as companies turn to cloud services to help their employees work and serve customers remotely, as well as to AI to automate certain types of work.
https://www.wsj.com/articles/ibm-ceo-lays-out-new-initiatives-in-cloud-ai-11588651261
We received notice on Tuesday that Amazon has filed yet another protest – this time, out of view of the public and directly with the DoD – about their losing bid for the JEDI cloud contract. Amazon’s complaint is confidential, so we don’t know what it says. However, if their latest complaint mirrors the arguments Amazon made in court , it’s likely yet another attempt to force a re-do because they bid high and lost the first time.
The only thing that’s certain about Amazon’s new complaint is that it will force American warfighters to wait even longer for the 21st-century technology they need – perpetuating Amazon’s record of putting its own interests ahead of theirs.
This latest roadblock is disappointing but not surprising. As my colleague Jon Palmer made clear in a recent blog, Amazon wants a do-over on JEDI . As Jon wrote, “Amazon would have you believe that it lost the award because of bias at the highest levels of government. But Amazon, alone, is responsible for the pricing it offered. As the government explained in its brief: ‘AWS and Microsoft each had a fair chance to build pricing for the entire procurement, based on their overall business pricing.’ Amazon did build its pricing for the entire procurement, and it wasn’t good enough to win.”
https://blogs.microsoft.com/on-the-issues/2020/05/07/amazon-jedi-re-do-dod/
Amazon and Microsoft are trash talking each other over a DoD contract
Drew Herdener, Amazon’s Vice President of Worldwide Communications responded in a blog post of his own today. It starts out level-headed: “Since we filed our protest, we’ve been clear in our intent: we don’t think the JEDI award was adjudicated fairly, we think political interference blatantly impacted the award decision, and we’re committed to ensuring the evaluation receives a fair, objective, and impartial review.”
But then, things take a hard left turn. Herdener called Microsoft’s blog posts “self-righteous and pontificating,” and went on to state, “Nobody knowledgeable and objective believes they have the better offering. And, this has been further underscored by their spotty operational performance during the COVID-19 crisis (and in 2020 YTD).” Herdener even attacked the DoD: “This could have been easily avoided if [the DoD] had chosen to be responsive in any of the multiple requests we’ve made in the last two weeks.”
https://www.engadget.com/amazon-microsoft-jedi-fight-154208730.html
Other
The lawsuit, filed in Delaware Court of Chancery, included a motion to consolidate his case with a lawsuit filed last month by a Special Committee of WeWork’s board. Both lawsuits focus on SoftBank Group and its Vision Fund’s decision to back out of a deal to buy shares of the co-working company.
SoftBank Group pulled its $3 billion tender offer for WeWork shares April 1, citing COVID-19’s impact on the business but also closing conditions not being met. Specifically, it pointed to outstanding regulatory investigations, a growing body of litigation against the company and the failure to restructure a joint venture in China as reasons to torpedo the agreement.
“SoftBank will vigorously defend itself against these meritless claims,” Rob Townsend, senior vice president and chief officer at SoftBank, said in a statement. “Under the terms of our agreement, which Adam Neumann signed, SoftBank had no obligation to complete the tender offer in which Mr. Neumann – the biggest beneficiary – sought to sell nearly $1 billion in stock.”
Uber will lay off 3,700 full-time employees, or around 14 percent of its global workforce, the company said in filings with the US Securities and Exchange Commission. In addition, Uber CEO Dara Khosrowshahi will forgo his salary for the rest of the year as the company continues to struggle in response to the COVID-19 pandemic.
The layoffs are expected to hit the company’s customer support and recruiting divisions. Uber says it will incur approximately $20 million in severance and other termination-related expenses. Last week, The Information reported that Uber’s top executives were considering laying off as many as 20 percent of the company’s workforce.
https://www.theverge.com/2020/5/6/21249131/uber-layoffs-coronavirus-pandemic-cost-cutting-ceo-salary