Microsoft – Empty harbour.

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I think the video game streaming ship has sailed.  

  • Microsoft is showing no signs of giving up on gaming but it will have to do something really special with Mixer if it wants to make any dent at all in Twitch.
  • Microsoft has renamed the video streaming service that it acquired in 2016, Mixer, and relaunched it with a host of new features in order to compete with Twitch.
  • Twitch is the gorilla in the video game streaming business that Amazon acquired in 2014 for around $1bn (see here).
  • At the time of acquisition Twitch had 55m users but the engagement that it generated was quite staggering with 7m logging in every day with an average watch time of 2 hours.
  • In the last 2 and a half years these numbers have continued to grow with now than more than 100m MaUs of which around 10m login every day.
  • Even more surprising is that engagement has further increased with nearly half of all its users spending 20 hours per week using the service.
  • When compared to the other players (YouTube Gaming, Mixer and Hitbox), I think that Twitch is more than 10x the size of its nearest rival.
  • Twitch is a network based business where sellers (game streamers) and buyers (viewers) are put together with Twitch sharing the revenue with its content creators.
  • Twitch is the standout go to place for streaming video games and given its size advantage, I think there is almost nothing that Microsoft or anyone else can do about it.
  • Mixer is launching with some pretty cool new interactive features that takes sharing videos to a new level, but I am far from convinced that it can ever gain the critical mass needed to put even a ding in Twitch.
  • For example, in April 2016 Mixer had just 100,000 users and even its big launch event today has only around 600 users watching it.
  • Furthermore, if every Xbox Live user was to start using Mixer, it would still be less than half the size of Twitch.
  • This issue is exacerbated by the fact that Mixer is not available on PlayStation which is a much bigger community than Xbox.
  • Consequently, I think that Mixer will end up as a niche offering that has a very small, but loyal following.
  • Whether that is enough to cover the cost of the service remains to be seen.
  • Microsoft recently made a robust defence of its presence in gaming at its financial analyst briefing at the BUILD conference (see here) with which I do not necessarily disagree.
  • However, both Microsoft and Sony have made a horrible mess of trying to leverage their gaming communities into mobile and I do not buy the argument that these communities are not applicable on mobile.
  • These users almost all have smartphones upon which they will play games albeit different from those that they play on consoles and PCs.
  • Twitch is big but there are billions of users playing games on mobile devices and gaming is by far the biggest revenue generating segment for developers.
  • This is why I think that if these communities were properly leveraged into the mobile, they would be orders of magnitude more valuable than they are today.
  • Furthermore, in developed markets, this space is vacant with the only really big player (Tencent) being only present in China.
  • This is why I think that someone with the ability to do with Xbox what Microsoft cannot would be willing to pay more for the asset than it is worth to Microsoft.
  • It is under these circumstances that I have advocated for its sale as it would generate more value for shareholders than remaining inside Microsoft.
  • As it stands today, I think Xbox can generate some value for Microsoft but far more for someone else.

LeEco – Le-trenchment

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LeEco looks to return to its roots at home.

  • LeEco’s foray into the United States looks like it is coming to an end which combined with a major restructuring at home, probably brings to an end any realistic hope of becoming a digital ecosystem.
  • I understand that LeEco is about to lay off all of its employees in the US that are involved in developing, building and selling the devices and ecosystem that LeEco is offering.
  • Those that remain are thought to be staying to look after existing customers but I suspect that most that remain will be the ones that are working on the automotive ambitions of Faraday Future.
  • On top of this, Jia Yueting, the mercurial founder of LeEco, is also stepping back from his position as CEO of Leshi Internet Information & Technology Corp. (LeEco’s parent) although he will remain chairman.
  • He will be replaced by Liang Jun who has been running the content business since joining from Lenovo in 2012.
  • LeEco’s CFO has also been replaced with the CFO of the China business.
  • Furthermore, it looks like all of the content related businesses will be merged into Leshi while the automotive business is spun out as a separate unit.
  • All of this points towards a big retrenchment where LeEco will once again become a Chinese digital content company with a shareholding in an electric car company.
  • I think that this means that all LeEco’s activities in the US will be focused on Faraday Future which is trying to build an electric vehicle at a yet-to-be-completed factory in Nevada.
  • At the end of the day, I think LeEco tried to do things much too quickly and did not pay enough attention to the fundamentals of creating an ecosystem.
  • If I take LeEco’s ecosystem as it is today it has weak coverage of the RFM Digital Life Pie as it really only covers Media Consumption.
  • It also gets a poor score against RFM’s 8 Laws of Robotics mostly due to the fact that it has not paid enough attention to detail when it comes to the user experience.
  • I get the impression that the software was simply ported over from the Chinese version and not enough time has been taken to adapt the user experience for the US consumer.
  • The devices themselves offer great value compared to competitors with an 85 inch 4K TV for $5,499 being the best deal available by quite some margin.
  • However, it all falls to pieces when it comes to software and this is where LeEco was hoping to make its money.
  • I have long held the opinion that LeEco did not have the resources to create both a digital ecosystem and an electric vehicle and that it should close its automotive operation and focus on its core business (see here).
  • However, it appears to have gone one step further in closing its ecosystem ambitions and spinning out automotive where I suspect it will be seeking participation from other investors.
  • I suspect that Leshi will now return to competing in the Chinese market which is heating up with increasing levels of investment in content coming from the BATmen.
  • Consequently, the outlook is pretty bleak as Leshi’s ability to out invest the BATmen is highly questionable especially given the troubles that it has had with expanding into the US.
  • I would pick Tencent as my favourite Chinese ecosystem for investment.

 

Alibaba FQ4 17 – Intuitive integration

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Signs that Alibaba is moving to make the most of its ecosystem.

  • Alibaba reported another excellent set of results which was marred by the normalisation of the tax rate following the ending of a tax break gained by investing in its distribution partner Suning.
  • Alibaba has also begun to demonstrate the kind of traits that lead me to think that it has really figured out what it needs to do to become a fully-fledged ecosystem across all aspects of its users’ digital lives.
  • FQ4 17 revenues / Adj-EPS were RMB38.6bn / RMB4.35 nicely ahead of consensus estimates of RMB35.9bn / RMB4.86.
  • The main driver of the results was Alibaba’s core e-commerce business which posted FQ4 17 revenue growth of 47% to RMB31.6bn.
  • This was underpinned by 11% growth in the number of active buyers as well as each user spending significantly more with Alibaba than they have in the past.
  • This is how Alibaba has managed to defy my expectations that growth would slow this year.
  • Cloud computing and digital media and entertainment each posted triple digit growth albeit from a much lower base.
  • The excellent results were marred by an increase in the tax rate which increased to 23% up from 14% in FQ4 16 where it will stay from here.
  • The most notable aspect of management’s commentary was the increasing focus on integration of its digital assets.
  • This has almost been completed for the digital media assets, giving Alibaba the ability to understand usage patterns across all of its media assets.
  • The same thing is going on in its e-commerce assets and it is already beginning to reap the benefits from this by offering this intelligence back to the merchants on its sites.
  • This kind of intelligence is what could also allow Alibaba have a big impact in offline retail which still makes up the vast majority of Chinese retail spending.
  • The final step should end up being the integration of all of this data into a single repository.
  • If Alibaba can to this effectively, it will be able to monetise its traffic far more effectively than it does today as well as have the insight into its services to make them richer and better than those of its competitors: Tencent and Baidu.
  • I still struggle with the valuation of Alibaba but it’s moves towards really making the most of the assets it has makes me willing to have another look.

Microsoft BUILD – The right choices.

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Enterprise remains the focus.

  • At Microsoft’s developer conference, it continued to emphasise its move away from being a platform for the consumption of content to one that is primarily for the creation of content.
  • At the same time it cemented its move away from mobile with the migration of its strategy from cloud first, mobile first to intelligent cloud, intelligent edge.
  • Effectively, Microsoft is signalling two main changes:
    • First, device agnostic: Microsoft no longer cares what device the user has, but instead is aiming to ensure that its services work seamlessly across everything that is available.
    • This was embedded in every presentation during the first two days of BUILD where cross device was emphasised time and again.
    • Cortana, Office 365, team collaboration and communication will be increasingly integrated across all the devices that the user has.
    • This was made very clear with the announcement of the cloud powered clipboard where text and pictures copied to the clipboard on the PC can be pasted into non-Microsoft apps on iOS or Android devices.
    • Microsoft employees no longer have to hide their iPhones and Galaxies or take off their Apple Watches when entering hallowed ground in Redmond.
    • I have long argued that cross device is a good way to differentiate an ecosystem that is vying for engagement with the two giants Apple and Google.
    • Microsoft has led in this space for a long time and, as long as this works as billed, it will take Microsoft further into the lead.
    • Second, processing at the edge: Microsoft discussed a future where all the processing does not happen in the cloud but part of it is redistributed to the edge for faster response times and greater efficiency.
    • Microsoft demonstrated how running diagnostics locally could cut an emergency shutdown time for a piece of industrial equipment from 2000 millisecond to just 100.
    • However, this is a problem that is supposed to be solved by 5G, which was not mentioned once, further cementing Microsoft’s move away from mobile as a standalone technology.
    • This goes directly against what Intel (and others) is aiming for as its most profitable and highest market share products are the processors that power the cloud meaning that it wants as much as possible to run there.
    • I see a number of schools of thought with regard to how intelligence and processing should be distributed throughout the network with each proponent obviously going for the option that benefits their business the most.
    • I think that the reality will be that different use cases require different scenarios.
    • For example simple monitoring that requires rapid response makes sense in the edge but object recognition and tracking and relating that to policies is a very intensive task that is best carried out on big servers in the cloud.
  • Microsoft also announced the fall creators update for Windows 10 to support all the cross-device capability as well as badly needed improvements to the Windows Store that is needed to give Windows 10 S a chance (see here).
  • Hololens was also upgraded with the addition of a controller to bring it into line with the other offerings but this remains very much a tool for the enterprise.
  • This was clear in the demos and examples which were focused around productivity with the idea of a virtual shoot out in the living room, thankfully not being repeated.
  • With every presentation that passes, Microsoft distances itself further and further away from content consumption and the consumer.
  • Consequently, while there is a strong rationale to keep Bing (data generation), I cannot say the same for Xbox, Minecraft and a number of other assets.
  • Hence, I would not be surprised to see them sold off should a good opportunity present itself.
  • The net result is that Microsoft is doing exactly what it should in playing to its strengths and differentiating where it has a chance rather than wasting money trying make a difference where it has no chance.
  • This sets it up for steady growth with its dominant position in the enterprise, still giving support to the valuation even though the shares have been strong.
  • I still like Microsoft alongside Baidu and Tencent.

Snap Inc. – Price of opposition.

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Twitter is in a better position.

  • A poor set of maiden results highlights that Twitter is actually in a better position because although it is stuck in a niche, it remains unopposed in that niche.
  • Management even had the temerity to laugh off the threat from its much larger and far more powerful rival, Facebook, which is successfully replicating Snap’s innovations to great effect.
  • Q1 17A revenues and adj-EBITDA were $149.6m / LOSS$188.2m slightly below consensus at $158m / LOSS$180m.
  • User numbers also disappointed with 166m daily active users (DaU) compared to consensus at $168m.
  • This is not nearly good enough for a company valued at 31x 2017 EV/Sales which triggered a 23% decline in after-hours trading.
  • The company also burned $155m in cash from operations.
  • Commentators are already drawing the comparison to Twitter, but I do not think that this comparison goes far enough.
  • Twitter is stuck in a niche that it has fully monetised and its attempts to branch out into video are faltering (see here).
  • This means that its outlook for growth remains very bleak.
  • However, in the Digital Life Pie segment of microblogging and related messaging, there is no opposition.
  • This means that once it stops spending money in trying to grow, it should make good but static returns from monetising that niche.
  • Snap Inc on the other hand still has plenty of growth ahead of it but its core business competes head to head with Facebook’s dominant properties of Messenger, WhatsApp and Instagram.
  • This is where the problems begin as Facebook can easily afford to outspend Snap in every instance and has 7.8x more DaUs than Snap does.
  • Both of these businesses are network based where there is an exponential relationship between the value that can be created and the number of connections that the network has.
  • Furthermore, to continue its growth, Snap has to monetise outside of USA as its US ARPU already looks full at $1.81.
  • Outside of the US the relative strength between Facebook and Snap Inc. is even more in Facebook’s favour making Snap Inc.’s task all the more difficult.
  • These results were bad because the company has a very high valuation and then missed expectations rather than anything in particular going wrong.
  • However, Facebook’s announcements and the intentions that it made clear at F8 (see here) are a concern.
  • Consequently, I see no reason to change my position on Snap Inc.’s fundamental outlook or my valuation of $15.4bn or $16 per share in a blue-sky scenario (see here).
  • Given the increasing risks involved, I would not consider buying until the shares were meaningfully below this value.
  • Between the two, Twitter is the better long term investment but given the choice, I would not have either.

Amazon – Show and tell.

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Screens help to alleviate digital assistants’ stupidity.

  • I think that the Echo Show is more about addressing the shortcomings of voice interaction with machines than it is about launching a series of new and exciting Digital Life services.
  • Amazon has launched an ugly looking device called Echo Show that is effectively Alexa with a 7 inch screen attached to the front.
  • The form factor is disappointing as even Baidu with no hardware experience managed to come up with a far more appealing looking product (see here).
  • Amazon has also upgraded the speakers to give a louder and richer sound profile but I see this being about giving Alexa another medium with which to communicate with the user given the limitations of voice.
  • The problem is simply that Alexa (and all other others) are far too stupid to be able to hold a meaningful conversation with a user.
  • Google Assistant is currently the best but remains woefully short of what one would consider to be a useful assistant.
  • Digital assistants were designed to replace the human variety but because their intelligence is so limited, they are unable to hold a coherent conversation with the user.
  • Human assistants do not need to use screens to understand requests, relay information and carry out tasks meaning that the perfect digital assistant should not either.
  • Hence, I think that the Echo Show has been created to make up for the huge shortfall in Alexa’s cognitive ability
  • This type of interaction is what RFM refers to as one-way voice where the user asks a question and the results are displayed on a screen.
  • RFM research has found (see here) that the vast majority of all man to machine interactions are one-way voice and with this device, Amazon makes these interactions easier.
  • Furthermore, for those that depend on advertising having a screen also helps to maintain the business model of lacing a Digital Life service such as Search or Social Networking with advertising.
  • Consequently, I think that Google is likely to follow up with a similar product which will take advantage of the fact that the necessary communication apps that the device will use are already installed and ready to use on all new GMS Android compliant devices.
  • In Alexa’s case, it looks like the user will have install another app on his phone in order to communicate with the Echo Show.
  • The Echo Show will come with all of 12,000 Alexa’s skills but these skills have been designed for a device with no screen and so I do not see the screen improving the already very poor user experience that these skills currently offer.
  • At $230 or two for $350, the Echo Show is priced to sell but I think that volumes will be small given that the vast majority of Echo’s shipments are made up by the cheapest member of the family, the $50 Echo Dot.
  • Hence, I do not see a sudden rush by developers to upgrade their existing skills or develop new ones to make use of the screen.
  • This is where Google Assistant has a huge advantage as it has already been designed to run with a screen (smartphones) meaning that adapting to having a screen on the Google Home product should be much easier and much better.
  • I still think that Google Home has the advantage here as it has a much better assistant than Alexa, but its lack of developer support for the smart home is starting to be a real problem.
  • Google really needs to pull its finger out and show developers love, especially as Microsoft looks set launch something similar to Echo Show but using Cortana.
  • I continue to struggle with Amazon’s share price whose valuation I think demands that investors pay for profits that never seem to materialise.

Facebook Q1 17 – Sleeping policeman

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Facebook’s growth story hits a temporary bump for 2017.

  • Facebook reported good results but once again tried to temper enthusiasm with reality by saying that overall growth this year would slow materially.
  • Q1 17A revenues / EPS were $8.03bn / $1.04 nicely beating consensus at $7.8bn / $0.86.
  • Advertising revenue was $7.9bn of which mobile was $6.7bn making up 85% of total advertising revenues.
  • The user count has now hit 1.9bn MaU (1.3bn visiting every day) with the vast majority coming from mobile.
  • Video and Instagram remain the biggest drivers of growth but Facebook has reached a limit in terms of the amount of advertisements that it can stuff into its apps.
  • Further increases could improve revenues in the short term but would probably lead to a fall in engagement which would negatively impact revenues anyway.
  • Hence, Facebook is turning to other avenues to find growth.
  • With its existing mature apps, Facebook has 36% of the Digital Life Pie and this is now fully monetised.
  • This is why, I have long been of the opinion that to become a $40bn revenue company, Facebook needs to increase its coverage of Digital Life.
  • The good news is that the signs of this continue to strengthen and at its developer conference, Gaming and Media Consumption were in sharp focus.
  • The issue is that I don’t think that Facebook’s Media Consumption offering or its Gaming strategy are mature enough to really start generating revenues which is why revenues will really start to slow down this year.
  • The street is expecting a 40% YoY improvement in revenues this year which I think is unattainable.
  • However, once those new services hit maturity, I think that Facebook will once again, be in a position to beating expectations.
  • Consequently, as the disappointment sets in for lower growth in 2017, I expect the valuation of the stock to moderate.
  • This will be driven by straight-line-loving (of which I am equally guilty) analysts bringing down their long-term forecasts in response to short-term issues.
  • It is at the point that the greatest opportunity exists to invest in Facebook for the next leg of its development.
  • In the meantime, I continue to prefer Microsoft, Baidu and Tencent.

MSFT / GOOG / AMZN – Law of large numbers.

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The big guys get bigger. 

Microsoft

  • Microsoft reported slightly disappointing results where the ageing Surface Pro line slightly marred another superb performance in the cloud with Azure and Office 365.
  • FQ3 17 revenues / Adj-EPS were $23.56bn / $0.73 compared to consensus at $23.65bn / $0.70.
  • Office 365 passed 100m corporate users and grew 45% while Azure managed to grow revenues by 93%.
  • Windows revenues grew by 5% defying the steady but stagnant PC market but hardware was the real problem this quarter as the Surface Pro is badly in need of a refresh and phones have dwindled to almost nothing.
  • Microsoft is firing on all cylinders when it comes to the enterprise, but the consumer remains a big question and a fiscal drag.
  • Fortunately, there remains upside in Microsoft even if the consumer continues to drift, leaving still able to favour the shares.

Alphabet

  • Alphabet reported excellent results as revenues from mobile continued to outpace expectations and spending on moonshot projects was reigned in.
  • Q1 17 revenues / EPS was $20.1bn / $7.73 compared to forecasts at $19.8bn / $7.41.
  • Once again advertising from mobile devices has led the way as users spend more time on their devices and do more with them.
  • YouTube also fared well as the advertiser boycott did not have the impact that some feared it would.
  • On the whole, YouTube is growing extremely well but there are the first rumblings of dissent from some of the biggest content creators on the platform who have seem some demonetisation to keep advertisers happy.
  • Google remains focused on keeping its lead in AI, developing a cloud offering to compete with Microsoft and Amazon and on rolling out hardware.
  • While the shipments of its hardware products have not lived up to my expectations, the reception of them has been good and there is very little doubt that Google Home is a vastly superior product to Amazon’s Echo series of products.
  • Hence, I think the outlook remains good but the stock price has keeping step with these developments and remains fairly fully priced in my opinion.

Amazon

  • Amazon reported very strong revenues and even managed to make a profit, while clearly signalling that it intends not to lose the indian market as it lost China.
  • Q1 17 revenues / EBIT were $35.7bn / $1.0bn ahead of forecasts at $35.3bn / $855m.
  • AWS grew much more slowly than Azure at 43% YoY but I suspect that this is largely because AWS is much larger rather than Azure taking share aware from Amazon.
  • Profitability also improved at AWS with margins of 24.3% which combined with steady, but low profitability in the US offset increasing losses overseas particularly due to the India roll-out.
  • Amazon is clearly going all out on India which is a major threat to Flipkart which cannot afford to burn hundreds of millions of dollars every quarter.
  • This is why I see the need for very rapid consolidation of the rest of the Indian e-commerce industry into Flipkart as without scale, the others stand little chance of survival.
  • As a result, Q2 17 profitability will be weaker than expected with Q2 17E revenues / EBIT forecasted at $35.35bn – $35.75bn ($35.5bn) / $720m – $1,075m ($898m) compared to consensus at $1,529m.
  • While Amazon continues to refuse in making in sustainable profit, I find the valuation much too much to stomach and continue not to like a position in the company.

Yahoo – Fair fee.

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I don’t begrudge Marissa her 5% payoff.

  • While it appears that Marissa Mayer is being paid $200m for years of failure, I think that she has recently enriched shareholders of Yahoo by over $4bn making a 5% pay off not as unreasonable as it looks.
  • Marissa Mayer’s tenure at Yahoo has been a huge disappointment.
  • While I have long believed that she got the strategy right in terms of increasing coverage of Digital Life (see here) but completely failed to execute when it came to moving its engagement from fixed to mobile (see here).
  • This led to Yahoo fulfilling only a tiny fraction of its potential in mobile and massively underperforming its competitors Google, Facebook and even Twitter.
  • This resulted in the company going nowhere, executive turnover and poor financial performance.
  • It was against this backdrop that Verizon entered the scene and it is here where Marissa has finally shone.
  • I think that it is quite easy to argue that the core business is worth nothing as:
    • First: A total of 1.5bn login credentials have been stolen in two of the largest hacks in history.
    • This is more users than Yahoo has in total meaning that some of its users have suffered the indignity twice.
    • I think that this gives its users the perfect excuse to shut down their Yahoo accounts and move elsewhere.
    • This is already showing up in the company’s financial statements where real revenues (after the traffic acquisition costs) continued to decline 3% YoY in Q1 2017 and the business remains loss making on a GAAP basis.
    • Yahoo’s core business is a declining fixed Internet asset that becomes less relevant with every passing quarter.
    • Second: The two huge hacks set up the possibility of a huge legal liability should the users of Yahoo choose to sue for compensation from any losses that they have incurred.
    • Third: The outlook for Verizon to make something valuable out of Yahoo is extremely poor indeed.
    • I very much doubt that Verizon has the management bench strength to succeed where Yahoo has failed, and as a result, I think that this asset will experience a gentle decline into oblivion inside Verizon.
  • Against this backdrop, Marissa has managed:
    • First to get Verizon to pay $4.48bn for this asset
    • Second to prevent a huge haircut to the price being made when details of the hacks came to light
    • Third: to get Verizon to shoulder half of the potential legal liability when I would argue that Yahoo should shoulder all of it.
  • Consequently, I think that after years of failure and disappointment, Marissa has come good at last.
  • Her dealings in Verizon have arguably enriched shareholders by over $4bn and reduced potential liabilities by an incalculable amount.
  • All in, it looks like she has made around $200m from her time at Yahoo which amounts to around 5% of what she has finally delivered.
  • It is arguable that the opportunity forgone as a result of her bad execution is many orders magnitude greater than $4bn but I see this as a sunk cost given the poor performance of the share price.
  • Hence, I see the value she has delivered as a parting gift for her long-suffering shareholders and do not really begrudge her the 5% she is being paid.
  • With the share price now not far from my valuation of $50.4, there is no reason to involved any longer.

Digital Assistants – Bursting bandwagon.

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Digital assistant bandwagon bursting at the seams.  

  • Building a digital assistant is all the rage these days but just like app stores, I suspect that the weaker players will soon drop out once they begin to realise how difficult and how expensive it is to make a good one that users actually want to interface with.
  • The latest companies to jump on the already-full-to-bursting digital assistant bandwagon are Orange and Deutsche Telecom who together are creating a digital assistant called Djingo which can exist in a speaker, remote control or smartphone app.
  • Its functionality looks to be very similar to Amazon Alexa with both companies pouring their combined knowledge and experience in artificial intelligence (AI) into the product.
  • Other recent additions to the bandwagon include, LINE with Clova, Huawei and Samsung with Bixby.
  • However, I suspect that all of these players are going to quickly discover that digital assistants are really difficult to get right.
  • For example, Alexa, which is considered to be a leader, can only accurately interpret the words the user speaks but really struggles to make any real sense from them.
  • The net result is that the user has to give commands to Alexa in a specific way if the desired result is to be achieved.
  • RFM research (see here) has found that digital assistants also suffer from a chicken and egg problem where they need usage to improve because it is with usage data that they can evolve.
  • The problem is that no one will use them if they are not already very good meaning they will be unable to gather the data they need to get to level of quality where users will engage with them.
  • Alexa and Siri, with 10m and 1bn+ deployed devices relatively, have scope to generate data but I think that both of them are struggling as usage remains low.
  • For example, by far the most used feature of the Amazon Echo device (Alexa’s flagship home) is the Bluetooth speaker which completely obviates any usage of the Alexa digital assistant.
  • This leaves Google and Baidu leading the field both of whom are global leaders in both AI and data generation which are the two most important raw materials for the creation of a good digital assistant.
  • Despite my negative view on the new comers, it is worth noting that mobile operators are providers of the data packets which deliver digital life services and consequently have huge repositories of data.
  • Operators are restricted in terms of what they can do with this data, but I see no reason why this data should not be used to train algorithms.
  • These algorithms could then be used to ensure that the services that they offer are better than those of their competitors or they could be licensed to third parties.
  • What operators lack is the artificial intelligence expertise to make anything of this data and as a result, I suspect that the vast majority of this data will end up gathering dust.
  • Whether Orange and Deutsche Telekom have realised this potential remains to be seen but given their history, I suspect they are just jumping on the bandwagon in a last attempt to avoid being left behind.