Tech / Telecom news — 18 Jul 2017

PRODUCTS & SERVICES

Video

Netflix shares were +10% in after-market trading yesterday, driven by 2Q17 results that pleased analysts, particularly with the beat in net customer adds, +5m in 2Q17, to reach a total of approx. 100m customers globally. Revenue jumped +32% to reach $2.79bn/Q, but operating margin fell -10% and cash burn accelerated (Story)

Mobile video will surpass desktop video next year, in terms of advertising revenue. In 2018, the market for mobile video ads will grow +49% yoy to reach $18bn, while fixed online video will grow just +1.5% to $15bn. The shift is driven by mobile (and tablet) video audiences growing +25% to reach a 36 min daily average (Story)

Cyber security

IBM is trying to turn the huge cyber security challenge that is emerging for its clients into an opportunity, with the release of IBM Z, a new mainframe computer which can power up to 12bn encrypted transactions per day. They claim that this enables companies to encrypt “every level” of their corporate networks (Story)

SOFTWARE ENABLERS

Artificial Intelligence

Retail workers and cashiers in stores could be the first jobs to be lost to AI, if Amazon’s efforts to radically increase automation in physical shops (e.g. Amazon Go) finally succeed. These jobs currently occupy 8m Americans (6% of total workforce), but they’re expected to grow -5pp vs. average jobs, impacted by new tech (Story)

HARDWARE ENABLERS

Networks

Telecom Italia is claiming it will build the first 5G network in Europe, with a plan to use the micro-state of San Marino (30,000 citizens) as a 5G testbed. There will be an initial upgrade of current 4G technology, including the doubling of mobile sites, using small cells, to culminate with a full 5G trial scheduled for 2018 (Story)

AT&T has started to deploy C-RAN, a technology that centralises part of the processing in mobile sites and facilitates coordination among them (e.g. to improve performance). They’re aiming initially to areas with highest traffic density, which require small cell deployments that are being addressed with the new architecture (Story)

Semiconductors

AI expected to drive the creation of 5 industries like chip production for the iPhone today, as e.g. a single fully autonomous car would need approx. the computing capacity of 10 iPhones. As 100m cars are built each year, a full shift to self-driving would require the equivalent of 1bn iPhones (vs. 200m produced today) (Story)

Quantum Computing

Google working on a business model for Quantum Computing, with an initial idea to use current research to create a premium option for cloud infrastructure offered as a service. Internal presentations reveal a project to build an “embryonic quantum data centre”, and to expose APIs for external developers to build apps using QC (Story)

FINANCE / EFFICIENCY

A significant EBITDA improvement (+18% yoy), after a (very) successful cost cutting program, drove Telenor to beat 2Q17 expectations, helping the company’s shares reach a 18-month peak yesterday (by rising +9%), also under the effect of the announcement of a new share buyback plan. Revenue growth was +1.6% yoy (Story)

M&A

If previous Berkshire deals are an indication, a potential investment by W Buffett in Sprint, like the one rumoured to be under discussion, could be not so cheap for SoftBank. E.g. 2013–14 investments in Burger King & Heinz both involved preferred shares with a 9% coupon. Not clear if benefits will compensate the price… (Story)

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