Samsung – Fall before the first

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Bixby falls even before its first hurdle.

  • Samsung’s delay in the roll-out of Bixby is a strong indication of just how far behind Samsung is when it comes to artificial intelligence reinforcing my view that the investment case still lives and dies with hardware.
  • Despite much fanfare at the launch of the Galaxy s8 just a few weeks ago, it turns out that Bixby’s functionality at launch will be greatly curtailed as Samsung can’t get it to work properly.
  • Some of the features such as Vision, Home and Reminder will be available but the key piece that ties it all together which is Bixby Voice will not be available in US until later in the spring.
  • The reason for the delay is that the voice recognition system in English is not nearly good enough and substantially lags behind Bixby’s performance in Korean.
  • This is a significant blunder on Samsung’s part as:
    • First: it appears that Samsung has put more effort into making Bixby work in Korean than English.
    • I think that this was not a very sensible choice as the vast majority of Samsung Galaxy s8 devices will sell to users for whom Korean is not a language they speak.
    • Second: it is a sure indicator of just how far behind Samsung is compared to everyone else when it comes to developing intelligent services.
    • RFM research (see here) has identified three stages of voice recognition of which the first and by far the most simple is the accurate conversion of voice to text.
    • Almost everyone, even Facebook, has pretty much cleared this hurdle but it appears that Bixby has not.
  • Digital assistants face a critical chicken and egg problem.
  • This is that to improve, they need data but if they are no good, no one will use them thereby depriving them of the data they need to get better.
  • At this rate, users will try Bixby once or twice and quickly give up preferring instead to use touch based input and other digital assistants.
  • To make matters even more difficult, Bixby will be competing on its own device with the best in class Google Assistant which will be set by default and will sit on the home button.
  • The net result is that I see the Galaxy s8 competing on the basis of its superb screen, high quality camera and best in class components that together will enhance the Digital Life services provided by others.
  • I do not expect users to pay much attention to any of Samsung’s software innovations as I see them as either not useful (Samsung Dex) or not good enough (Bixby).
  • This leaves Samsung exactly where I left it as a vendor of commodity hardware that makes excellent returns by out shipping its nearest rivals by more than 2 units to 1.
  • As long as it can maintain that gap, I have no fear for its profitability or its outlook but Huawei is keen to capitalise on Samsung’s woes and remains a constant threat.
  • Samsung’s brand has also taken a hit as a result of the Note 7 disaster, leaving the Galaxy s8 as the first real test of how much damage has been done.
  • This combined with the recent very strong rally, is why I still don’t want to get involved.
  • I prefer Tencent, Baidu and Microsoft.

LeEco – Le Crunch.

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Crunch time appears to be fast approaching.

  • The LeEco proposition seems to be quickly unraveling as a flurry of bad news reinforces my view that this company only really has a chance if it dumps automotive.
  • New blows upon the already bruised company include:
    • Vizio: LeEco and Vizio have called off the $2bn acquisition by LeEco stating that regulatory hurdles got in the way.
    • Vizio was supposed to give LeEco a US brand with which to get a toehold in the US market while the Chinese market would become more open to Vizio.
    • I suspect that LeEco was having difficulty getting the money it raised from Sunac (see here) out of China giving it a good reason to back out of an acquisition that now makes less sense given LeEco’s current predicament.
    • 2016 revenues: LeEco appears to have massively missed its 2016 US revenue target but given that it launched in October this is hardly a surprise.
    • It looks like 2016 revenues were just $15m compared to a target of $100m but given the late launch, this target looks to have been way too ambitious.
    • Consequently, I don’t think that this reflects as badly as it would seem on the management of the US operation.
    • Job cuts: LeEco also appears to weighing up more job cuts with 175 of the 475 US workforce expected to be cut.
    • This does not come as a big surprise given the cash crunch that the company admitted to at the end of 2016 and the problems the company is having in getting money out of China.
    • However, growth companies tend not to need job cuts raising questions about the products being offered and the services that come with them.
  • This news comes on the back of abandoning its ambitious plan to build a US HQ with 12,000 employees (see here) and severe pressure being placed upon its automotive strategy.
  • Giving up the acquisition will massively increase cash for investment in the ecosystem but if it remains unable to get money out of China, not much development is likely to happen.
  • I find this situation strange as its competitors, Xiaomi, Baidu, Alibaba and so on all have substantial overseas operations which are most likely to be financed from China.
  • In my view, the biggest issue remains automotive as it has very little to do with the development of an ecosystem and is hugely capital intensive.
  • Apple and even Tesla have found that building cars is a difficult business that requires a lot of time and very deep pockets.
  • Faraday Future clearly needs hundreds of millions of dollars of new investment which LeEco simply cannot afford if it is to have any chance at delivering on its ecosystem ambitions.
  • Hence, I think that LeEco’s best interests will be served by not having this millstone hanging around its neck.
  • I continue to believe that for LeEco to have the best chance of succeeding, it needs to extract itself from Faraday Future and forget about self-driving cars.
  • Building a thriving ecosystem is difficult enough and throwing in cash constraints and management distractions can only make it next to impossible.

India e-commerce – The big if.

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Flipkart for Snapdeal looks increasingly likely.

  • The probability of consolidation in Indian e-commerce is creeping ever closer as Softbank, is pushing for the sale of Snapdeal to Flipkart at a valuation considerably less than the $6.5bn at which the company last raised money.
  • I think this move makes complete sense as on their own, both Flipkart and Snapdeal are likely to be crushed by Amazon should it decide to pull out all the stops in order to dominate the Indian market.
  • This is because, on their own, neither of them is large enough to keep Amazon at bay, but together, they might just have a chance.
  • Snapdeal and Flipkart like Alibaba and to a lesser degree Amazon are market places which bring together merchants and buyers in one easy to use location and from which they can take a small cut.
  • In effect, they are network businesses just like Uber, Alibaba, AirBnB, Craigslist and so on and consequently, they are bound by the same rules.
  • 18 months ago I proposed a rule of thumb that states: A company that relies on the network must have at least 60% market share or be at least double the size of its nearest rival to begin really making profit (see here).
  • This, in a nutshell, is the problem faced by both Flipkart and Snapdeal in India.
  • Flipkart is bigger than Snapdeal and so it is in a slightly better position but it is not double the size of its nearest rival.
  • Data from 7ParkData shows that Flipkart has about 35% of e-commerce monthly active users followed by Amazon at 23% and Snapdeal at 13%.
  • As it stands today, not one of the Indian e-commerce players has established itself as the go to place to buy and sell goods, meaning that all parties are likely to be losing large amounts of money through aggressive competition.
  • If Flipkart is able to successfully execute the acquisition of Snapdeal and hold onto all of its users, then its share of MaU will reach 49% more than double that of Amazon.
  • This could give it just enough scale and momentum to become the go to marketplace in India making extremely difficult for Amazon to compete.
  • This is a big if and will require flawless integration, streamlining as well as customer service.
  • This is why I suspect Softbank is willing to take a substantial haircut on its investment as I think it has concluded that should Snapdeal remain independent, its investment could easily be worth nothing.
  • Amazon does not have a good track record in emerging markets as its performance in China vs. Alibaba was dismal and it does not seem to do much with its acquisitions other then leave them to their own devices.
  • Hence, I think the combination of Flipkart and Snapdeal has a chance but Amazon does seem to be determined not to repeat in India the mess it made in China.
  • Valuations are falling, highlighting the prospect of bargain hunting, but the high-level of uncertainty keeps me from wanting to be involved.

Spotify – Crown jewels

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Spotify keeps the crown jewels to itself.

  • In striking a deal with Universal, Spotify has traded much better than I thought it would giving the label two concessions that I think will end up being pretty worthless.
  • Spotify has signed a licence with Universal that has three main aspects:
    • First: Universal artists will have the option to release their music to premium users only for two weeks before it is available to all users.
    • Second: It looks like Spotify will cut the share that pays to Universal from 55% to 52%.
    • Third: Spotify will provide Universal with the data that its music generates thereby enabling the label and its artists to gain better insights into how its music is being consumed.
  • On the surface, it looks like two of these points benefit the labels but when I take into consideration how the music industry is evolving, I think the winner from this deal is Spotify.
  • This is because Spotify has managed to increase its gross margins on Universal music by 300bp and has cleared one major hurdle towards its road to an IPO.
  • Sony and Warner are the two remaining hurdles which, now that a precedent has been set, may be easier to overcome.
  • That is what Spotify has gained from this deal but what has it given up in return?
  • Not much in my opinion.
    • First: I do not think that delaying releases to the free tier for two weeks will have much, if any, impact on the appeal of the free tier.
    • I have long believed that the free tier is far more valuable to Spotify than anyone thinks that it is (see here) and I think that its desire to protect the user experience of this segment has been a major sticking point in striking a new deal with the labels.
    • Time shifting media releases is how music and films have been released for years but I think that this is changing.
    • Spotify knows what it users listen to and what they like and I think that in the future, users will be increasingly made aware of new music when the streaming services recommend them rather than when the artist or label releases them.
    • Hence, many users might not even notice a two-week delay meaning that Spotify has received something for nothing.
    • Second: Spotify is giving Universal access to its fire hose of data but I have doubts whether it will be able to make much sense of it.
    • This is because it will only have access to the data which is just a raw material.
    • To make something useful out of it, trained algorithms are required to parse that data and draw meaningful conclusions from it.
    • These algorithms are Spotify’s crown jewels and I am pretty sure that they will be staying safely under lock and key.
    • After all, they are the reason why Spotify’s service is better than Apple’s and are the key to its ability to eventually replace the labels entirely (see here).
    • Furthermore, Universal will only have access to its own data which compared to the entire catalog that Spotify has, is a small subset.
    • Hence, even if it could make sense of the data, it wont be able to draw many meaningful conclusions from it as it will be looking at an incomplete picture of user activity.
  • The net result is that I think Spotify has dealt much better than I thought it would as I was concerned that the pressure to make it to IPO in 2017 would force it to give too much away to the labels (see here).
  • In fact, I think that the reverse has happened putting Spotify in a good position to IPO without having to give much, if anything, away.

 

Twitter – End of days

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The loss of the NFL is a disaster.

  • Twitter has lost its deal to stream certain NFL games which I think punches a potentially fatal hole in its strategy to break out of its niche of microblogging.
  • Amazon has reportedly paid $50m for the rights to stream 10 Thursday night NFL games for the coming season.
  • This is 5x what Twitter paid in 2016 but I do not think that this is a case of the little guy being priced out of the market.
  • Instead, I think that Twitter got a very good price from the NFL because of its promises to be able to leverage its social interest graph to generate meaningful advertising revenues as well as insights that could be shared back to the NFL.
  • Clearly, Twitter has not been able to live up those promises which is why the rights have been sold to a more conventional bidder who I think is simply paying a more regular price for the rights.
  • In my opinion this is nothing short of a complete disaster because expanding into media consumption was Twitter’s one hope to break out of its niche and resume subscriber and revenue growth.
  • The loss of the NFL is an indication that this strategy is failing and that despite its efforts, it is nothing more than a broadcaster of short text messages and a second-rate instant messaging platform.
  • Blogging and Instant Messaging make up a total of 16% of the Digital Life pie which I have long believed that Twitter has already fully monetised.
  • I remain convinced that this is the reason for its growth grinding to a halt (see here).
  • If Twitter can entice its 300m users to do more with Twitter beyond these activities, then there is scope for revenues to begin growing again as it will have more traffic to monetise.
  • This is why the video strategy was so important.
  • Media Consumption makes up another 10% of the Digital Life pie and had Twitter been able generate significant traction from it, there would have been significant upside from current revenue levels.
  • Without this growth, I still fear that Twitter’s shares will fall below $10 because even at $14.5, with no growth, the shares are still expensive.
  • This loss makes it even more likely that 2017 is going to be a stagnant year where the realities of the company’s predicament really begin to become apparent.
  • I think that this could drive the shares to $10 or below.
  • I continue to see Twitter as a potential acquisition target but would expect to see the shares touch $10 before real interest is triggered.
  • I see no reason whatsoever to go bargain hunting as there is no bargain to be had.

Xiaomi – No favours

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Xiaomi’s ecosystem remains its biggest weakness.

  • Comparing itself to Costco helps Xiaomi’s valuation somewhat but does no favours when it comes to its business model.
  • In a recent interview, Xiaomi founder said that he sees his company more like Costco than Apple which does make some sense.
  • Xiaomi has pursued a typical Internet economy model which is to gather users as quickly as it can and then monetise when their numbers hit critical mass.
  • It has done this by selling nice looking devices at very low margins and then hoping to monetise users through its ecosystem of services.
  • What Costco does is similar in that it sells groceries at wafer thin margins and makes good margins on the subscription that it charges for membership.
  • However, where Costco and Xiaomi differ is that Costco has a service that users are clearly willing to pay for but I am not convinced that Xiaomi does.
  • Around 15% of all Chinese users have a Xiaomi phone but RFM research indicates that it is the ecosystems of the BATmen (see here) that Xiaomi’s users predominantly use.
  • This strongly implies that users are buying Xiaomi phones due to attractive prices and form factor but do not care about the ecosystem that Xiaomi offers.
  • Overseas the situation is even worse because outside of China, Xiaomi sells its devices with the Google ecosystem installed because its own ecosystem is irrelevant.
  • This is the critical difference between Xiaomi and Costco.
  • I have previously estimated that Xiaomi does make some money from selling content and games ($100m in 2016 (see here)) but this is very far from Xiaomi successfully monetising its ecosystem in China.
  • To try and restore growth, Xiaomi is going into retail and plans to open 1,000 stores in China as well as a good number in India with revenues of $10bn targeted within the next three years.
  • This is the right strategy to break out of the limitations of Internet-only sales, but will have the impact of increasing costs.
  • Consequently, I am comfortable that Xiaomi could hit its RMB100bn ($14.4bn) sales target for 2017, but I am certain that margins will not be going up.
  • If I take this outlook and compare it to Costco rather than Apple, I do get a slightly better valuation but not one that would make Xiaomi’s current shareholders very happy.
  • Using Costco’s 2017 EV/Sales and EV/EBIT multiples and applying them to my estimates for 2017 Xiaomi (see here), I end up with valuations of $8.6bn / $8.3bn respectively.
  • However, in using this methodology, the question needs to be asked should Xiaomi trade at a discount because Costco has already established the service it sells whereas Xiaomi has not?
  • This is somewhat higher than my current $5bn valuation using Apple, but still way below the last raise at $45bn and the $20bn or so where I understand that the shares are changing hands.
  • I do not see any threats to Xiaomi’s viability as a company but I still think it would make a good acquisition for one of the BATmen that I think will need to become more vertically integrated to continue growing in the home market.

Google – Meaningless milestone

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Android’s success shows up Google’s deficiencies.

  • Android has surpassed Windows as the No.1 platform for accessing the Internet globally, highlighting just how bad Google is at monetising Android as it remains only a small percentage of total revenues.
  • I think that this could be a growth opportunity if Google can fix the many problems that exist within the system that it created and in many cases controls.
  • According to StatCounter, Android devices now make up 37.93% of all Internet access devices very slightly ahead of Microsoft Windows at 37.91% with iOS a distant third at around 13%.
  • Furthermore, with most users spending more time on smartphones and tablets than PCs, it is clear that the PC is rapidly becoming a device used in the enterprise and by content creators.
  • This is a major reason why RFM does not consider PC usage as a contributor to Digital Life when assessing the addressable market for a digital consumer ecosystem.
  • Consequently, it would be natural to assume that Android is a big part of Google’s revenues but in reality, it is not.
  • RFM estimates that in 2016 just 19% of advertising revenues came from Android devices compared to PCs and Macs which generated 60% of advertising revenues.
  • A further 19% of revenues came from iOS devices despite the fact that there are 2.9 Android devices for every 1 iOS device.
  • This tells me that the PC is a much better platform for advertising monetisation but it is also a clear indication that Google is doing something very wrong when it comes to making money from Android.
  • I have long argued that while demographics plays a role, the endemic fragmentation of Android and Google’s inability to update software on its own devices severely hinders the usage of and loyalty to, the Android platform (see here).
  • I believe that this is a major reason why an Android device generates less than half the revenues that an iOS device does which is also meaningfully less than a PC or Mac.
  • While this is a real black eye for Google, I also see it as an opportunity.
  • RFM estimates that in Q4 16A each iOS user delivered $3.37 in revenues for Google compared to $1.47 on Android.
  • If Google could fix the problems with Android, then I think that there could be meaningful upside to this number.
  • For example, if Google was able to increase monetisation of its own Android devices to $2.00 per user per month, this would increase revenues by $6.4bn on an annualised basis.
  • As smartphone user growth and usage both slows, Google will need to look for growth elsewhere and I see this as an obvious place to start.
  • I am hoping to see signs of this at Google i/o (in May) but in the preview of Android O (see here), I was disappointed.
  • Without these kinds of actions I think that Alphabet remains fully valued and would prefer the shares of Microsoft, Tencent and Baidu.

Didi – Nasty economics

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Didi encounters a real growth problem.

  • Didi is now the only credible ride hailing platform left in the Chinese market, but its problems are far from over because local Chinese governments are finally enforcing regulations designed to protect the taxi industry.
  • In December 2016, the governments of Shanghai and Beijing approved a policy called local cars, local drivers.
  • This meant that ride hailing companies could only use drivers who had locally registered vehicles and could prove residence in the city.
  • This may not sound like a big deal until one looks at the demographics of the urbanised workforce in China.
  • Around 40% of the workforce of both of these cities reside outside of the city and in the younger, paid part of the workforce, that number is much higher.
  • For example, prior to the enactment of this regulation, less than 3% of Didi’s Shanghai drivers had the necessary residential registration to qualify as drivers.
  • I suspect that that Didi’s Beijing drivers show similar characteristics and that other major Chinese cities also have a large migrant workforce.
  • This has not become a problem until very recently because although the policy has been approved, it has not been enforced until very recently.
  • The result has been that Didi has now been forced to substantially reduce the number of drivers in Shanghai and as of April 1st, is only allowing cars with a Beijing licence plate to operate in Beijing.
  • The net result is that supply of rides has been drastically reduced meaning that the price of those rides will inevitably increase.
  • Furthermore, on top of the service becoming more expensive, the quality of the service is also likely to meaningfully decline.
  • With less cars available, wait times will certainly rise and the chance of successfully hailing a ride will decrease.
  • Rising prices and lower reliability is likely to drive many users back into the arms of the taxi industry thereby achieving exactly the result for which the rules were created.
  • Beijing and Shanghai are the two cities which have the largest non-resident workforce but I suspect that this sort of legislation could easily be used in many of the other large Chinese cities.
  • This creates a very serious problem for Didi as, with its supply of drivers substantially limited in the areas where it has the highest demand, there will be a real crimp on its ability to grow.
  • Furthermore, there remains the very real risk that other major cities in China follow Beijing and Shanghai’s lead causing Didi further agony.
  • If this spreads, it is not inconceivable that Didi’s revenues start going backwards.
  • Didi was originally created as a taxi booking service and one possibility is for Didi to return to its roots.
  • The other is for Didi to move into the high end (where Uber started) and develop a black car offering but I think that demand for this will be quite limited.
  • This leaves Didi’s outlook at the mercy of regulation, which is not what one wants to hear when one has put money into the company at a valuation of $34bn.
  • DJI or Ant Financial are the only two private Chinese unicorns that I would be willing to consider.
  • In the listed sphere I still prefer Baidu and Tencent.

Huawei – Rivers of blood pt. IV

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I am pretty sure Huawei lost money in handsets last year.

  • Huawei reported strong growth in revenues in 2016 but that growth cost it dearly as I think that the handset business lost money as it slashed prices and ramped up spending to gain market share.
  • FY 2016 revenues grew 32% to RMB523bn ($75.1bn) but gross margin fell 114bp to 40.3% and operating margin fell by 205bp to 9.1%.
  • Huawei entered 2016 in a buoyant mood confidently stating that it would become the Number 1 seller of smartphones within 5 years.
  • In line with that goal it massively ramped up spending and cut the prices of its devices in order to close the gap to the global No. 1 smartphone maker: Samsung.
  • Unfortunately, while it was focused on Samsung, Oppo and Vivo really turned on the juice at home, costing Huawei 190bp of local market share in H2 2016.
  • The net result was lower than expected global market share gains for the full year.
  • This was a problem, because Huawei had planned for higher volumes in 2016, meaning that its OPEX budget for the year was too high.
  • Consequently, I am pretty sure that the consumer business entered negative territory which has resulted in a much more measured approach to 2017.
  • RFM research indicates that the focus of 2017 is the generation of profit, which given that Samsung still meaningfully outsells Huawei in terms of volume will require much greater austerity when it comes to OPEX.
  • Huawei is now a comfortable No. 2 in Android but because Android devices are commoditised, that means that I still see it making margins of just 2-4% in the best instance.
  • In order to earn better margin, it must become the No. 1 in terms of volume and outsell its closest rival by a factor of more than 2 to 1.
  • It is this volume advantage that allows Samsung to earn 10-12% margins on Android devices which I think is sustainable for as long as it can maintain that volume advantage.
  • This advantage closed somewhat in Q4 16A but I suspect it will widen once again in Q1 17 as Samsung recovers from the Note 7 disaster.
  • Because of these economics, Huawei has got to do far more than just catch Samsung; it must outsell it by more than 2 to 1.
  • This will be very difficult to achieve which is why I think that Huawei is also working on differentiating its products through software and services.
  • If it can create a good user experience and services that users are prepared to pay something to have access to, then it should be able to make better than commodity margins.
  • However, this is easier said than done and I think that Huawei has a lot of work to do before it will be in this position.
  • This is why, I continue to believe that its best chance of success remains in China where a tie up with Baidu or Tencent could help it plug the service gap it currently has.
  • However, this won’t help in developed markets and here Huawei must do everything that it can to develop the appeal and attractiveness of its Honor brand.
  • This will be difficult given the dominance of the Google ecosystem in these markets but there are cracks in Google’s position that might just give Huawei a chance.
  • In the meantime, I remain unconvinced that Huawei does not have the stomach or the resources to wade through the rivers of red ink that it will take to knock Samsung off its perch.
  • Consequently, I see 2017 as a consolidation year for Huawei, holding share steady and focusing on a return to profit before it considers its next move.
  • I would continue to be wary of any of the Android handset makers whose outlook is increasingly difficult as the market for devices continues to slow.
  • Apple is the only handset maker I would touch at the moment.

Samsung – Still in the box

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Bezels break the box but Bixby stays inside.

  • While Samsung is bursting out of the box in pushing the limits of screen real estate, its voyage into the increasingly crucial user experience shows that it remains boxed in by smarter and better alternatives.
  • Samsung finally launched the Samsung Galaxy s8 / s8+ whose main features include:
    • First: A big improvement in screen real estate with the home button now being under the glass as well as improvements in colour, contrast and brightness.
    • Second: A digital assistant called Bixby (see here) that aims to be much more than an easy way to find stuff out (see below).
    • Third: Samsung Dex which allows the Galaxy s8 to work with an external monitor, mouse and keyboard to give a desktop like experience.
    • Samsung demonstrated very basic PowerPoint editing features confirming to me that the Galaxy s8 will be capable of running the stripped-down Office apps rather than the full fat versions.
    • I still think that without full fat Office, Photoshop etc, there is not much point in this functionality as content consumption has largely already moved off form factors that use a mouse and keyboard and onto touch.
  • The net result is that Samsung is continuing to almost entirely differentiate in hardware as this device is still first and foremost a Google ecosystem device.
  • This is just one area where Bixby will run into problems as it will be the best-in-class Google Assistant that sits on the home button meaning that Bixby has a fearsome competitor even on its own flagship device.
  • To counteract this, Bixby is trying to do things a little differently but careful assessment of what Samsung demonstrated shows a service that has very little intelligence at all.
  • Bixby is a very far cry from what Viv demonstrated would be possible with its assistant prior to the Samsung acquisition, making me suspect that Viv has not proved to be nearly as clever as promised.
  • Bixby is activated with a side key (to get around the problem of Google sitting on the home button) and aims to get stuff done rather than just finding stuff out.
  • Consequently, Samsung has taught Bixby a range of skills such as screen capture and image recognition and plugged that functionality into a select number of apps.
  • By keeping the number of apps that use it limited, Samsung limits the number of possibilities that has to program further highlighting that Bixby is probably incapable doing very much outside of the box.
  • This appears to be contrary to how Viv marketed its capabilities (see here) before it was owned by Samsung, again making me wonder about the true capability of Viv / Bixby.
  • Bixby offers a series of cards (left swipe from home screen) that adjust based on usage and the time of day as the system learns what apps and services the user uses most and when.
  • This is merely clever statistics but if this proves to be a useful tool, then Samsung will achieved some much needed differentiation outside of hardware.
  • Although I have suspicions about the lack of intelligence in Bixby, I cannot be 100% certain of this opinion until I have tested it to destruction.
  • The net result is a very nice looking device that Samsung has made huge efforts to show is both high quality and extremely safe.
  • Most importantly this device is also the first real test that Samsung has had since the Note 7 disaster which is why the s8 needs to sell very well, confounding the big fall in trust that Samsung has suffered over the last 6 months (see here).
  • I think that Samsung has produced the device that it needs to cement its recovery but now it comes down to consumers, a number of whom have already switched to iOS (see here).
  • With Samsung’s share price very close to its all time high, a lot of recovery is already priced in which is why I remain a little nervous.
  • Hence, I prefer Microsoft, Tencent or Baidu.