Snapchat’s new Snap Store teases in-app commerce potential

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Snap Inc. just launched a merchandise store. The goal isn’t to make money yet, but it proves the potential for an in-app commerce platform for other brands.

Today the company opened the Snap Store, which lives in the Snapchat app’s Discover section and lets you buy Snapchat merchandise, like a $20 Dancing Hot Dog Plushie or a $30 Dog Lens T-Shirt. You can scan the Snap Code below with the Snapchat camera to open the store and buy exclusive items that will only be available for a limited time. Click here on mobile to open the in-app store.

This isn’t designed to be a serious revenue stream for Snap Inc., though, despite it missing revenue targets last quarter. A Snapchat spokesperson gave no official comment, but told me this is something the company does for its community. Essentially, it’s a way to drive brand loyalty, though it also earns Snap some free marketing as people wear the gear.

But if Snap can use its own Snap Store to prove the potential for in-app e-commerce, it could potentially develop a real revenue stream around charging brands a cut of what they sell on Snapchat or getting them to buy ads promoting their stores.

Snapchat has previously sold a few items, like a Ghostface Chillah backpack and Dancing Hot Dog Halloween costume on Amazon, and it sold its Spectacles camera sunglasses through its Snap Bots, pop-up shops, retail partnerships and online. But now Snap is running its own sales of the third-party manufactured merchandise, and appears to have pulled everything but Spectacles off of Amazon.

Users can visit the Snap Store’s site for the Snapcode (also below), and subscribe when they first open the in-app store to see it pop up in the Discover section when new items become available. The next product drop happens on February 8th. We got tipped off to the store’s launch by reader Moshe Isaacian.

The current product offerings are:

  • Dancing Hot Dog Plush Doll: $19.99
  • Streak Hat: $29.99
  • Winkface Sweatshirt: $49.99
  • Dog Lens Tee: $29.99
  • Bring Back Best Friends Sweatshirt: $49.99

It would have to sell a ton of these to make any dent in the revenue expectations Wall Street places on the company to justify its $16.7 billion market cap. Still, after a great morning for its share price following Facebook announcing its first-ever decline in U.S. users yesterday and its slowest-ever user growth, investors push $Snap higher on news of the store’s launch.

I bought a Dancing Hot Dog… for science. Check-out happens entirely within the app, and Snapchat prompts you to save your payment details. That means it could be building up a database of credit cards to facilitate future purchases. The fact that this was built by Snap product designer Trevor Denton, who previously worked on Starbucks’ coffee ordering app, signals that this isn’t just some throwaway project for the company.

Commerce on mobile can be incredibly annoying. Between slow-loading websites, a paralyzing array of choices and having to punch in all your payment details, tons of users drop-off before they hit Buy. Snapchat could poise itself as a way for top brands to reach a premium teen audience in a way that makes shopping a seamless part of the social experience.

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Alphabet is tumbling after a fourth quarter whiff and names John Hennessy as new board chair

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Google parent company Alphabet’s big run over the past few months came to a screeching halt today after it came out with its fourth-quarter results, which fell beneath expectations set by Wall Street for the advertising giant — sending the stock down around 5 percent and shaving off billions in market cap.

While Google owns a massive chunk of the advertising system — and it still continues to print money — it’s found itself trying to diversify itself away from that with a series of other big bets on products like hardware and cloud computing. That’s starting to pay off as growth in its “other revenues” and “other bets” continues to rise year-over-year, but there are still a couple of signs that point to a potentially rocky future for Google.

Like other big tech companies reporting this quarter, Google logged a $9.9 billion charge related to changes in U.S. tax law. Here’s the scorecard:

  • Revenue: $32.32 billion, compared to $31.87 billion Wall Street estimates, up 24 percent year-over-year
  • Earnings: $9.70 per share, compared to estimates of $9.98 per share
  • Other revenues: $4.7 billion
  • Other bets: $409 million
  • TAC as a % of revenue: 24 percent
  • YoY paid clicks: 43 percent
  • YoY cost-per-click: -14 percent
  • QoQ cost-per-click: -6 percent

Google is also naming John Hennessy, who’s been on its board since 2004, as its chair following Eric Schmidt departing in December last year.

In particular, Google’s last quarters have been marked with the creeping shadow of increasing costs for its traffic acquisition as a percentage of Google’s revenue, or TAC. While for the past several quarters it hasn’t raised any massive alarm bells, it could represent a potential problem for Google in the future as more and more activity shifts to mobile devices. It’s something that’s come up a couple of times from analysts poking around at the subject on quarterly calls to discuss the earnings results, and it is still continuing to creep up.

Today is a surprising slip-up for Google, which, while it continues to print money and beat Wall Street’s expectations on the revenue front, found itself tumbling after its fourth-quarter earnings came out. In the past year, Google’s stock has risen nearly 50 percent:

Featured Image: Justin Sullivan/Getty Images

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Apple’s $1T dreams are on hold as it misses on iPhone sales in the holiday quarter

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Apple’s dream of becoming a $1 trillion company will have to wait — at least for a little while.

But while iPhone sales this year were about flat (down about 1% to be exact), revenue from the iPhone rose 13% year-over-year. That means Apple is finding ways to get more revenue out of the same number of units, so it may indeed be finding demand for higher-priced phones amid the usual consumer appetite for new iPhones. That higher average selling price means that Apple may have indeed succeeded in unlocking a new tier of consumer demand for higher-priced products, and its three-pronged approach may end up paying off in the end — though it still has to figure out how to ignite that massive upgrade cycle among the rest of its consumer base.

Despite the release of the iPhone X, which was accompanied by a wave of positive reviews and seen as Apple’s interpretation of what a next-generation smartphone looks like, Apple wasn’t able to create the so-called “supercycle” that would prompt a massive wave of new iPhone upgrades — leading to a bit of a collective shrug from Wall Street as everything else about hit on target. Despite looking to unlock a new, higher-priced tier to tap potential demand for early-adopters, Apple wasn’t able to see the kind of massive wave that a new size of phones brought. Apple’s guidance for the second quarter also fell lighter than what Wall Street expected.

Update: With the call ongoing, Apple’s stock is now up around 3% after starting off with a slight decline. The company on the call offered some additional guidance on the iPhone, and the company offered some optimistic growth for the iPhone — which, while Apple has an array of other products, is its key driver. While Apple offered weaker-than-expected guidance, it looks like investors may be shrugging this off with some positive signals on the iPhone.

Apple’s executives still had to do a little bit of explaining as to what was going on during hte earnings call. Still, Apple needed a very big quarter to make that final push to $1 trillion, and it didn’t quite get there. By Apple standards, this adds more than $10 billion to its market cap, but its market cap still stands at around $860 billion. By contrast, Apple’s last report — which was a blowout by even Apple standards — sent the stock skyrocketing and its market cap over $900 billion.

Here’s the scorecard:

  • Revenue: $88.3 billion, compared to $87.1 billion analyst estimates.
  • Active install base: 1.3 billion devices
  • Earnings: $3.89 per share, compared to Wall Street’s expectations of $3.83 per share.
  • iPhone sales: 77.3 million, compared to 80.2 million iPhones sold expected by Wall Street.
  • iPad sales: 13.2 million
  • Net cash: $163 billion (including debt calculations)
  • Mac sales: 5.1 million
  • ASP: $796 (this is a big one)
  • Services revenue: $8.5 billion, up 18% year-over-year
  • Other products: $5.5 billion, up 36% year-over-year
  • Guidance: between $60 billion and $62 billion, compared to $65.7 billion expected from Wall Street.

One thing to note here is that this quarter had 13 weeks, compared to 14 weeks reported in the same quarter a year ago. So the numbers will be a little wonky here, but at the same time, most of this was baked into expectations going in and still didn’t quite hit the crazy mark that Wall Street sought. Both that iPhone sales number and the guidance number came in lighter than expectations, keeping the company from contninuing that run that it went on at the back end of 2017.

Over the past several weeks, reports of weaker demand for the iPhone have come in from a number of different directions — and while it wasn’t clear exactly how it was going to play out until Apple delivered the numbers today, it did serve as somewhat of a signal that Apple wasn’t able to hit that crazy ramp with the iPhone X for any number of reasons. Apple’s guidance also fell a little on the weaker side, which means that the company might not be getting that huge lift from the iPhone X that Wall Street had initially sought.

Here’s what the revenue looks like:

“In those geographies that had in the early days of the smartphone had very traditional subsidies where you paid $199 out the door, $99, or whatever, I think it’s accurate to say those type of markets, the replacement cycle is likely longer,” CEO Tim Cook said on the earnings call. “Where that isn’t the case, I’m not nearly as sure on that. I would point out that happened some time ago, so it’s very difficult currently to ever get a real-time handle on replacement rate. You don’t know the replacement rate for the products you’re currently selling. You only know that in a historical sense. It’s not something we overly fixate on.”

Services continued to be a bit of a bright spot for Apple, once again rising around 18%. In addition to building a new iPhone to re-ignite its growth engine, services — which includes things like Apple Pay and Apple Music — is an increasingly important part of that puzzle. Consistent, methodical growth from its services business translates to just added-on incremental value for Apple, which can offset the peaks and troughs that come with iPhone update cycles. Apple CEO Tim Cook has said a few times that he expects Apple’s services business to be the size of a Fortune 100 company.

For Apple to get to that insane (largely symbolic) $1 trillion market cap, it had to show Wall Street it could deliver on multiple fronts: build that huge services revenue business, come out with new products like the AirPods (and theoretically HomePod) that were successful, and of course come out with a new blockbuster iPhone. Signs were pointing in the right direction on its last earnings call, which pushed the company to a $900 billion market cap, but the reality of fickle consumer demand is settling in as Apple continues to try to find a way to spark that huge upgrade cycle.

Those reports brought a massive run from Apple to a halt after it looked like it was primed to become a company with a $1 trillion market cap with a new generation of iPhones. The iPhone X had a staggeringly big price tag, but the bet that there would be a bracket of consumers that would pay extra for a newer phone was one that made sense in theory. So, that run to $1 trillion is probably on hold until Apple is able to really create that “super-cycle” that it wants.

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iPhone sales numbers dipped slightly, but revenue is up courtesy of the iPhone X

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As far as sales figures go, this last quarter wasn’t entirely rosy for Apple. During today’s earnings report, the company posted sales of 77.3 million iPhones, down just under a million from this time last year.

Of course, that 78.2 million figure from 2017 represented a new record for the company. It’s also worth noting that this fiscal quarter was only 13 weeks, versus last year’s 14, which no doubt contributed to the overall decline. 

But Wall Street still expected another increase, up to 80.2 million phones for the quarter, as the company added a 10th anniversary flagship to the line. In spite of that disappointment, Apple actually saw a 13-percent bump in revenue for Q1 2018, thanks in no small part to the fact that the iPhone X represents a significant price premium over the iPhone 8 and past models. The average price per iPhone is ~$40 higher than it was this time last year.

The price premium hasn’t stopped the iPhone X from topping Apple’s own sales charts, either. An analysis of the industry recently singled out the high-end handset as the top selling phone for the holidays, in spite of failing to hit some industry goals. Today Apple added that the X has been the best-selling iPhone model since launch.

“We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup,” Tim Cook says in a press release tied to this evening’s news. “iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November.”

Cook also notes that the company’s overall active installed device base just hit 1.3 billion.

Likely the company is still viewing all of this disappointment, but still a net positive. After all, revenue is really the bottom line here, even if the optics of a sales dip aren’t as cheery. Apple’s shifted to a new sales model, and even if the iPhone X wasn’t a wild success by every metric, the company’s demonstrated that people are willing to pay $999+ for a premium smartphone experience.

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NIH study links cell phone radiation to cancer in male rats

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New studies from the National Institutes of Health — specifically the National Toxicology Program — find that cell phone radiation is potentially linked with certain forms of cancer, but they’re far from conclusive. The results are complex and the studies have yet to be peer-reviewed, but some of the findings are clearly important enough to warrant public discussion.

An early, partial version of this study teasing these effects appeared in 2016 (in fact, I wrote about it), but these are the full (draft) reports complete with data.

Both papers note that “studies published to date have not demonstrated consistently increased incidences of tumors at any site associate with exposure to cell phone RFR [radio frequency radiation] in rats or mice.” But the researchers felt that “based on the designs of the existing studies, it is difficult to definitively conclude that these negative results clearly indicate that cell phone RFR is not carcinogenic.”

In other words, no one has taken it far enough, or simulated the radio-immersion environment in which we now live, enough to draw conclusions on the cancer front. So this study takes things up a notch, with longer and stronger exposures.

The studies exposed mice and rats to both 900 MHz and 1900 Mhz wavelength radio waves (each frequency being its own experiment) for about 9 hours per day, at various strengths ranging from 1 to 10 watts per kilogram. For comparison, the general limit the FCC imposes for exposure is 0.08 W/kg; the absolute maximum allowed, for the extremities of people with occupational exposures, is 20 W/kg for no longer than 6 minutes. So they were really blasting these mice.

“The levels and duration of exposure to RFR were much greater than what people experience with even the highest level of cell phone use, and exposed the rodents’ whole bodies. So, these findings should not be directly extrapolated to human cell phone usage,” explained NTP senior scientist John Bucher in a news release accompanying the papers. “We note, however, that the tumors we saw in these studies are similar to tumors previously reported in some studies of frequent cell phone users.”

The rodents were examined for various health effects after various durations, from 28 days to 2 years.

Before I state the conclusions, a note on terminology. “Equivocal evidence” is just above “no evidence” on the official scale, meaning “showing a marginal increase of neoplasms that may be test agent related.” In other words, something statistically significant but ultimately still somewhat mysterious. “Some evidence” is above that, meaning a more measurable response, followed by the also self-explanatory “clear evidence.”

At 900 MHz:

Some evidence linking RFR with malignant schwannoma in the hearts of male rats, no evidence for same in female rats. Equivocal evidence linking exposure to malignant brain glioma in females. Other tumors of various types in both sexes “may have been related to cell phone RFR exposure,” meaning the link is unclear or numbers aren’t conclusive. Less serious “nonneoplastic lesions” were more frequent in exposed males and females.

At 1900 MHz:

Equivocal evidence of carcinogenicity in lung, liver and other organ tissues in both male and female mice.

Although I would hesitate to draw any major conclusions from these studies, it seems demonstrated that there is some link here, though the level of radiation was orders of magnitude beyond what a person would ever experience in day to day life. As the researchers point out, however, relatively short-term studies like this one do little to illuminate the potential for harm in long-term exposure, such as babies who have never not been bathed in RF radiation.

An interesting side note is that the radiation-exposed rodents of both types lived significantly longer than their control peers: 28 percent of the original control group survived the full 2 years, while about twice that amount (48-68 percent) survived in the exposed group.

Two explanations are proffered for this strange result: either the radiation somehow suppressed the “chronic progressive nephropathy” that these mice tend to suffer from as they age, or possibly reduced feed intake related to the radiation might have done it. Either way, no one is suggesting that the radiation is somehow salutary to the rodents’ constitutions.

The reports and data run to hundreds of pages, so this is only a quick look by a non-expert. You can look over the full reports and supplemental materials here, but as this is a major study you can also expect replication, analysis and criticism from all quarters soon, including a scheduled external expert review organized by the NTP in March.

Featured Image: PeopleImages/Getty Images

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How Facebook stole the news business

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Big news outlets stupidly sold their soul to Facebook. Desperate for the referral traffic Facebook dangled, they spent the past few years jumping through its hoops only to be cut out of the equation. Instead of developing an owned audience of homepage visitors and newsletter subscribers, they let Facebook brainwash readers into thinking it was their source of information.

Now Facebook is pushing into local news, but publishers should be wary of making the same crooked deal. It might provide more exposure and traffic for smaller outlets today, but it could teach users they only need to visit Facebook for local news in the future. Here’s how Facebook retrained us over the past 12 years to drain the dollars out of news.

Users first is Facebook first later

To be clear, Facebook’s intention, that I believe to be earnest, is to foster stronger ties between its users and their communities to boost well-being. But that doesn’t mean ripple effects are positive. The critical lens through which to view all of Facebook’s strategy is that in the short term it puts users first, itself second and everyone else a distant, distant third. That includes developers, advertisers and definitely news publishers.

This strategy is actually self-serving in the long term, though, because Facebook only continues to dominate because its users don’t leave. Back in 2010, Facebook decimated the virality of game developers like Zynga, which made lots of money because their News Feed spam threatened to push people away from the social network. That short-term hit to the bottom line paved the way for the depth of engagement that fuels quarters where Facebook earns $4 billion today.

Facebook’s “Today In” local news feature now testing in a few cities

This explains CEO Mark Zuckerberg’s recent announcement that Facebook would make changes to enhance well-being even if it decreased time spent on the site or its ad revenue. Those consequences may be true in the short term. But it’s a shrewd tactic when you zoom out. Left unchecked, the “Time Well Spent” movement could metastasize into a “Time to leave Facebook” movement. Better to trade away a few minutes per day per user now to keep those users for years to come.

Retraining news readers

When Facebook started, there was no feed. You browsed from profile to profile to check up on friends. News Feed’s launch in 2006 retrained users to just go to the Facebook home page where everything would come to you. Brands followed, investing to build an audience through Facebook’s churning stream of content.

As Facebook’s users shifted from PCs and Macs to Androids and iPhones, the company struck upon an enduring format for mobile. Desktop computers had big enough screens to accomodate multiple windows, and switching between browser tabs was quick, allowing users to easily hop between different sites. But on mobile with tiny screens, low quality app, poor connections, slow-loading sites, people seized upon Facebook’s single app that pulled together content from everywhere. Facebook began to train us to keep scrolling rather than struggle to bounce around.

In 2011, when Facebook first took notice of Twitter, it launched its public figure Subscribe feature and news links gained more visibility in the feed. By 2014, “Facebook the big news machine” was in full swing with Trending, hashtags and news outlets pouring resources into growing their Pages. Emphasizing the “news” in News Feed retrained users to wait for the big world-changing headlines to come to them rather than crisscrossing the home pages of various publishers. Many don’t even click-through, getting the gist of the news just from the headline and preview blurb. Advertisers followed the eyeballs, moving their spend from the publisher sites to Facebook.

In 2015, Facebook realized users hated waiting for slow mobile websites to load, so it launched Instant Articles to host publisher content within its own app. Instant Articles trained users not to even visit news sites when they clicked their links, instead only having the patience for a fast-loading native page stripped of the publisher’s identity and many of their recirculation and monetization opportunities. Advertisers followed, as publishers allowed Facebook to sell the ads on Instant Articles for them and thereby surrendered their advertiser relationships at the same time as their reader relationships.

This is how Facebook turns publishers into ghostwriters, a problem I blew the whistle on in 2015. Publishers are pitted against each other as they make interchangeable “dumb content” for Facebook’s “smart pipes.”

Publishers wisely began pushing back, demanding more layout and monetization flexibility, and many abandoned the platform in favor of Google’s less prescriptive AMP platform for fast-loading mobile pages. In fact, 38 of 72 Instant Articles launch partner publications including the New York Times and Washington Post have ditched the Facebook controlled format according to a study by Columbia Journalism Review.

Still, publishers have few major sources of traffic outside of Facebook and Google Search. With the death of Google Reader and Twitter’s move to an algorithmic feed, there’s still no at-scale, unfiltered place to share or follow news. If people do want a more direct relationship with news, they should get on Feedly or another RSS readers, or add a few favorite sites to their browser’s bookmark bar.

Meanwhile, Facebook’s only goal remains to provide value to users, and when it comes to content, it doesn’t really care which publisher provides it as long as it’s high-quality.

Siphoning resources to the center

Again and again, Facebook has centralized attention typically spread across the web. A few years back I wrote about “20 New Ways Facebook Is Eating The Internet,” and its appetite has only grown. It’s trying to do the same with Watch (YouTube), Marketplace (Craigslist and eBay) and many other features. It’s a smart plan that ends up arguably improving the experience for individual users — or at least offering new options while making Facebook more essential and much richer.

The problem is that for society as a whole, this leads to a demonetization and eventual defunding of some news publishers, content creators and utility providers while simultaneously making them heavily reliant on Facebook. This gives Facebook the power to decide what types of content, what topics, and what sources are important. Even if Facebook believes itself to be a neutral tech platform, it implicitly plays the role of media company as its values define the feed. Having a single editor’s fallible algorithms determine the news consumption of the wired world is a precarious situation.

The business side is just as troubling. As Ben Thompson of Stratechery has described, advertisers are abandoning news sites and aggregating to Facebook where they can more efficiently target their exact customers, where they go every day. Why advertise on an intermediary news site when businesses can go straight to well of attention. Without the massive scale and adtech, individual publishers can’t compete for dollars.

But if they resist working with Facebook and providing their content there, another publisher will happily bring the same stories to the social network in return for the short-term traffic boost. There’s always someone else willing to offer up dumb content to the smart pipe.

Steamrolled by strategy change

And the real problem only manifests when Facebook shifts directions. Its comes to the conclusion that users want to see more video, so the format gets more visibility in the News Feed. Soon, publishers scramble to pivot to video, hiring teams and buying expensive equipment so they can blast the content on Facebook rather than thinking about their loyal site visitors. But then Facebook decides too much passive video is bad for you or isn’t interesting, so its News Feed visibility is curtailed, and publishers have wasted their resources and time chasing a white rabbit… or, in this case, a blue one.

This happened to Page tab apps like musician profile provider BandPage, which was the No. 2 app on Facebook until Facebook banned default landing tabs. The startup lost 90 percent of its traffic after wasting years chasing Facebook’s changes, and eventually sold for $8 million after raising $27 million. Open Graph news reader apps met the same fate, built by publishers to meet the opportunity of Facebook’s short-lived Ticker and “Josh read [clickbait article] on Washington Post Social Reader” stories.

Publishers are currently caught amidst of another massive Facebook strategy change. It’s now striving to offset Russian election interference, fake news for profit, allegations of political bias, polarized society, the explosion of viral video, the absence of friends, and fears that too much scrolling hurts our well-being. That’s led to Facebook proclaiming it will remove 20% of news from the News Feed as it prioritizes content that’s not just meaningful, but stimulates meaningful interactions between users.

On this week’s Q4 2017 earnings call, Zuckerberg said Facebook had already tweaked its algorithm to show fewer viral videos and optimize well-being. The result was a 50 million hours per day reduction in Facebook use, which translates to 2.14 minutes per daily user, or 5 percent of total time spent on Facebook. The company was willing to go so far as to make changes that led to its slowest ever user growth rate, and its first decline in total users anywhere as the U.S. & Canada region actually lost 700,000 Facebookers.

Yet it’s the video makers and news publishers who will pay for this pivot of purpose. Facebook’s revenue still reached a record $12.97 billion, and investors still boosted its share price higher. In fact, Facebook could actually earn money or at least break even from the “Time Well Spent” changes.

By decreasing total time spent but raising the quality of content people see, Facebook ends up with fewer total ad impressions but higher engagement rates as people are retrained to skip less of what they see. Advertisers still eager to reach its massive audience will compete in Facebook’s ad auctions, paying higher prices. Facebook has the cash reserves and momentum to weather the short-term monetization drop in exchange for a healthier long-term future. Content creators are left trying to make ends meet.

[Update 2/4/2018: Zuckerberg discussed Facebook’s ability to persevere despite mistakes in his post about the company’s 14th birthday. “Over the years I’ve made almost every mistake you can imagine . . . I’ve missed important trends and I’ve been slow to others. I’ve launched product after product that failed. The reason our community exists today is not because we avoid mistakes. It’s because we believe what we’re doing matters enough to keep trying”. The issue is that other less secure and successful businesses like newsrooms don’t have the resources to undertake trial and error at the scale necessary to keep up with Facebook’s changes.]

Stay the course

And now local news site are facing the start of this dangerous cycle. Facebook says it will show more local news in the News Feed. It’s testing a “Today in” local news digest in several cities. It’s prioritizing content people discuss instead of passively consume. And Facebook is pushing its new mission to rebuild communities and Bring the World Closer Together that aligns with local news.

Sounds great, right? There’s no doubt there’s an opportunity here for local news outlets. But the key to keeping their boats afloat is not completely changing course to follow Facebook’s siren call. Whether or not you think the company is purposefully trying to destroy the industries it invades or just modernize them to benefit users, publishers must meet Facebook with skepticism.

Facebook’s next retraining appears to be that it’s the best place to get local news, not your local newspaper or blog. It might happily display all the headlines with little encouragement for readers to click through, as it does with Today On. It might make images and videos load faster than they do on local sites. And they might bundle local news with Facebook Events and reviews of nearby places using personalization local sites can’t match.

That might be good for the reader, and thereby for Facebook long term, but it’s dangerous for the publishers. Facebook doesn’t even have to purposefully poach advertisers from local sites, they’ll just flow to it naturally as it becomes the local news destination.

They should still focus on turning occasional readers into repeat homepage visitors that bookmark the site and return frequently. They should track analytics about what kinds of stories those loyalists want, rather than the ones that might drive occasional traffic spikes of fly-by readers. They should invest in developing their own ad technology or partnering with more neutral third-party providers. And they should keep pushing email newsletter, event and subscription signups.

That’s because there’s no telling when Facebook’s strategy around what users want or how to give it to them will change. Again, Facebook wants users to be informed and entertained, but it doesn’t necessarily care how or by whom. And let’s not forget that Facebook is quietly building up its Marketplace peer-to-peer selling feature in another part of its app to be the ultimate replacement for the classified ads that used to keep local news sites afloat.

Unfortunately, big, well-funded publishers staffed with true tech talent haven’t been able to gracefully navigate the constantly changing playing field set by Facebook. So what hope do smaller outlets without the technological or strategic prowess hope to have?

In Zuckerberg’s hometown of Dobbs Ferry, NY, there’s a beloved newspaper called The Rivertowns Enterprise. It’s a destination for those seeking local news, with a loyal following for both its website and its weekly print edition, which many who grew up there get delivered to their homes around the country. Visit its site and you’ll stumble across a variety of stories about city politics, high school sports and Main Street businesses that also advertise there.

But as Facebook turns its eyes toward local news as an answer to larger problems with well-being, false information and polarized communities, it also poses a threat to The Rivertowns Enterprise and outlets like it. The inevitable march of technological progress was merely accelerated by the dominant social network. But for now those publishers’ best bet is to take a page from Facebook if they’re going to survive: Put your own readers and your long-term viability first instead of gambling on short-lived favors.

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Foxconn to plug at least $340M into AI R&D over five years

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Manufacturing giant Foxconn has said it will make a major investment in artificial intelligence-based R&D as it looks for new business growth opportunities in a cooling global smartphone market, Nikkei reports.

“We will at least invest some 10 billion New Taiwan dollars ($342M) over five years to recruit top talent and deploy artificial intelligence applications in all the manufacturing sites,” said chairman Terry Gou.

“It’s likely that we could even pour in some $10BN or more if we find the deployments are very successful or can really generate results.”

Gou added that the ambition is to become “a global innovative AI platform rather than just a manufacturing company”.

Data put out this week by Strategy Analytics records a 9 per cent fall in global smartphone shipments in Q4 2017 — the biggest such drop in smartphone history — which the analyst blames on the floor falling out of the smartphone market in China.

“The shrinkage in global smartphone shipments was caused by a collapse in the huge China market, where demand fell 16 percent annually due to longer replacement rates, fewer operator subsidies and a general lack of wow models,” noted Strategy Analytics’ Linda Sui in a statement.

On a full-year basis, the analysts records global smartphone shipments growing 1 percent — topping 1.5 billion units for the first time.

But there’s little doubt the smartphone growth engine that’s fed manufacturing giants like Foxconn for so long is winding down.

This week, for example, Apple — Foxconn’s largest customer — reported a dip in iPhone sales for the holiday quarter. Though Cupertino still managed to carve out more revenue (thanks to that $1k iPhone X price-tag). But those kind of creative pricing opportunities aren’t on the table for electronics assemblers. So it’s all about utilizing technology to do more for less.

According to Nikkei, Foxconn intends to recruit up to 100 top AI experts globally. It also said it will recruit thousands of less experienced developers to work on building applications that use machine learning and deep learning technologies.

Embedding sensors into production line equipment to capture data to feed AI-fueled automation development is a key part of the AI R&D plan, with Foxconn saying earlier that it wants to offer advanced manufacturing experiences and services — eyeing competing with the likes of General Electric and Cisco.

The company has also been working with Andrew Ng’s new AI startup — which is itself focused on plugging AI into industries that haven’t yet tapping into the tech’s transformative benefits, with a first focus on manufacturing — since July.

And Gou confirmed the startup will be a key partner as Foxconn works towards its own AI-fueled transformation — using tech brought in via to help transform the manufacturing process, and identify and predict defects.

Quite what such AI-powered transformation might mean for the jobs of hundreds of thousands of humans currently employed by Foxconn on assembly line tasks is less clear. But it looks like those workers will be helping to train AI models that could end up replacing their labor via automation.

Featured Image: Matt Wakeman/Flickr UNDER A CC BY 2.0 LICENSE

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