(#60) Spotify is a bad stock investment; Software companies can do products; and the global cooperation barometer 2024
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Strategy
on Vision Pro
So, the most expected product of the year is finally in the hands of consumers. Also, this is the newest product for Apple in 10 years.
Here are some takeaways after going back and forth through the reviews:
1/ It’s an entertainment product, not one made for productivity. Om Malik was right (see newsletter #59)
2/ It’s more like an iPad extension than a Mac extension
3/ Now you can project only one 4k screen
4/ Guest mode - each time somebody wants to try it has to go through the hand and eye calibration each time after removing the device from your head.
5/ It accentuates the solitary life
Here is Nilay Patel from The Verge:
“Apple CEO Tim Cook has been talking about how isolating VR headsets are and how important he thinks AR will be for years now.
Tim Cook, 2016: “Few people are going to view that it’s acceptable to be enclosed in something.”
Tim Cook, 2017: “Unlike Virtual Reality which closes the world out, AR allows individuals to be present in the world.”
Tim Cook, 2017: “I also like the fact that [AR] doesn’t isolate […] I’ve never been a fan of VR like that because I think it does the opposite.”
Tim Cook, 2020: “I think [AR is] something that doesn’t isolate people. We can use it to enhance our discussion, not substitute it for human connection, which I’ve always deeply worried about in some of the other technologies.”
You get the idea.
The problem is that the technology to build a true optical AR display that works well enough to replace an everyday computer just isn’t there yet. The Magic Leap 2 is an optical AR headset that’s cheaper and smaller than the Vision Pro, but it’s plagued by compromises in field of view and image quality that most people would never accept.
So Apple’s settled for building a headset with real-time video passthrough — it is the defining tradeoff of the Vision Pro. It is a VR headset masquerading as an AR headset. And let me tell you: the video passthrough on the Vision Pro is really good. It works! It’s convincing. You put the headset on, the display comes on, and you’re right back where you were, only with a bunch of visionOS windows floating around.“
Sources of reviews: The Verge, Ben Thompson, John Gruber, product tear-down, Vanity Fair, Om Malik, Kitze
Satya Nadella marked his 10th year as Microsoft’s CEO
His tenure as CEO of Microsoft, marking a decade of leadership, has been transformational for the company and the tech industry at large. His strategic vision and decisions have reshaped Microsoft into a more dynamic, forward-looking company. Here are the five most important aspects of his legacy:
1/ Transition from Windows-centric strategy to Cloud computing. Perhaps the most significant shift under Nadella's leadership was pivoting Microsoft from a primarily Windows-focused company to a leader in cloud computing. This move involved heavily investing in and expanding Azure, Microsoft's cloud computing service, which has become a significant revenue source and placed Microsoft as a formidable competitor to Amazon Web Services (AWS) in the cloud domain. This transition not only diversified Microsoft's product portfolio but also secured its position in the rapidly growing cloud market.
2/ Embracing open source. Nadella led Microsoft to embrace open-source technologies, a stark contrast from its previous stance. This included open-sourcing .NET, joining the Linux Foundation, and acquiring GitHub, a platform for open-source code sharing and collaboration. This approach helped Microsoft build goodwill among developers, increased adoption of its technologies, and fostered a more inclusive and collaborative tech ecosystem.
3/ Focus on AI and research. Microsoft intensified its focus on artificial intelligence (AI) and research, developing and integrating AI technologies across its products and services. This includes investments in AI for Office 365, Azure AI services, and the strategic partnership with OpenAI, etc. These moves have not only kept Microsoft at the forefront of AI innovation but also ensured its products remain competitive and cutting-edge.
4/ Diversification of product lineup. Nadella steered Microsoft towards diversifying its product lineup, including hardware with the Surface devices, gaming through the acquisition of game studios and the development of the Xbox Game Pass subscription service, and professional networking with the acquisition of LinkedIn. This diversification has opened new revenue streams and reduced the company's reliance on traditional software sales.
5/ Corporate culture and social responsibility. Lastly, he has been credited with transforming Microsoft's corporate culture, fostering a more open, growth-minded, and collaborative environment. He emphasizes empathy, learning from failures, and a customer-centric approach.
Probably his tenure is the best turnaround in history.
on pricing
Patek Philippe raised globally the prices by 7%, despite cooling demand. Rolex produces more than 1 million watches a year vs. 70,000 from Patek.
Two takeaways:
1/ for artisanship products you can raise the price only if you can meet up to that quality
2/ the weak Swiss franc and inflations played a key role too. LINK
on China
I try to cover as much as possible Chine because is at the root of some key industries (ie. batteries, EVs, solar panels, etc) and that is now the 2nd largest economy in the world.?
Rhodium Group,? a leading independent research provider, said in their latest report the following:
“Despite clear evidence that it was slowed down by unexpected economic headwinds this year, China will almost certainly claim to have hit its “around 5%” GDP growth target for 2023. The realities of a still-shrinking property sector, limited consumer spending, falling trade surplus, and battered local government finances mean that actual growth in 2023 was more like 1.5%. Looking ahead, China may see a cyclical recovery to perhaps 3.0-3.5% growth in 2024 as property bottoms out, although structural slowdown will naturally remain the dominant story for years to come.” LINK
This is worrying because country leaders can easily & faster bad decisions to drive away attention regarding their inability to run the economy. (ie. start a war, etc). Here is Bloomberg with another chart. LINK
Meta has announced his first-ever dividend
After losing (some say ‘investing’) more than $50bn in the metaverse dream, Meta made 3 great choices:
1/ Invested a lot on servers to better help them with a new ad model (in a post-ATT world)
2/ restructured the company (due to overhiring) - my impression is that they can easily cut 20% more
3/ gave a dividend. Keep in mind that when a company gives dividends is because they don’t know what to do anymore with the money.
The result? The stock is 4x vs 5 quarters ago:
Snap recalling and refunding all Pixy drones due to fire risk
If you read #onStrategy newsletter for long enough you know that software companies can’t do hardware and vice-versa. Snap recalls now all Pixy drones sold. Quite expected, I’d say. LINK
Artificial Intelligence
Deepfakes are coming
CNN: “Finance worker pays out $25 million after video call with deepfake ‘chief financial officer’”
领英推荐
Except from the article:
“The elaborate scam saw the worker duped into attending a video call with what he thought were several other members of staff, but all of whom were in fact deepfake recreations, Hong Kong police said at a briefing on Friday.”
So, maybe the afterall usage the blockchain technology will be to prove that we are real.?
Generative AI is coming to chip design
Companies like Nvidia, Synopsys, and Cadence Design Systems, alongside academic researchers, are leveraging AI to drastically reduce design time from over six months to potentially less than a month for complex microchips. These AI tools assist in automating hardware code writing, verification, and facilitating collaboration among design teams by summarizing updates and notes. Despite the potential of AI to revolutionize chip design, limitations remain, such as the need for human validation of AI-generated outputs and the current inability to fully automate the end-to-end design process. However, with ongoing developments, the prospect of AI autonomously creating functional chips is anticipated within the next five years, despite challenges such as AI's occasional inaccuracies. LINK
Amazon has unveiled Rufus, an AI-powered shopping assistant
Rufus is designed to revolutionize the shopping experience for its customers.
Key lesson: incumbents will always try to do the new thing a feature.
Mistral CEO confirms ‘leak’ of new open source AI model nearing GPT-4 performance. LINK
Things happen
Why BYD (Chinese EV producer) is breaking into shipping. LINK
Turning up to the office is better for your career. LINK
Mark Zuckerberg lives dangerously. LINK
This will be a great Harvard case study pretty soon: 23andMe’s fall from $6 billion to nearly $0. LINK
Decades of research destroyed after freezer fails at Swedish university. LINK
Using AI de decrypt the past. LINK
The 2025 Porsche Taycan charges from 8% to 80% in just 16 minutes. LINK
TSMC has created a ‘Semiconductor Cloud Academy’ online for high school students to better understand and gain interest in the semiconductor industry. LINK
Data
Spotify has 236 million Premium subscribers
Here are the key takeaways:
1/ Record growth in users and subscribers: Despite a year marked by operational challenges, Spotify achieved record growth, with a significant increase in both Premium subscribers and monthly active users. The company now has 236 million Premium subscribers, marking a 4 percent increase over the last quarter, and its total monthly active users have risen by 5 percent to 602 million.
2/ The business model. Despite the user and subscriber growth, Spotify reported a quarterly loss of €70 million, an improvement over the €270 million loss from the same quarter in the previous year. The net loss for the entire year stood at €532 million. The labels own the industry so from a strategy point of view Spotify needs a new source of growth.
3/ Podcasting: Spotify renews its deal with Joe Rogan to allow the distribution of his podcast on other platforms and incorporate audiobook content for Premium subscribers. These moves suggest Spotify is diversifying its content to enhance user engagement and value. LINK
The employment rate is down in the EU (Q3 2023). LINK
Nat Bulland has each year a great presentation on decarbonization. LINK
Here is the link that stands out:
The global cooperation barometer 2024 (WEF and McKinsey)
5 key takeaways:
– Trade and capital: trade and capital cooperation grew through the pandemic disruption, but slowed in 2023; geopolitical tensions and new restrictions make the future path unclear.
– Innovation and technology: flows of data, IP, and international students powered an increase in cooperation until 2020, but new questions have arisen about how to work together to harness opportunities.
– Climate and natural capital: the level of cooperation for climate and natural capital has been rising steadily, due in large measure to an increase in commitments, but emissions also continue to rise.
– Health and wellness: cooperation in health and wellness rose swiftly in response to the pandemic, but appears to be settling back to historical patterns.
– Peace and security: cooperation in peace and security has declined since 2016 and plummeted recently. LINK
Outside interest
Some thoughts on Denmark. LINK
How cheap drones are changing the war in Ukraine. LINK
Chinese migrants are the fastest-growing group crossing from Mexico into the U.S. at the southern border. LINK
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