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Tech Roundup: Whitman Leaves HP, AMZN-CERN Deal, GOOGL Tracking, BABA Alliance

Zacks

Last week, Meg Whitman resigned as HPE CEO, Amazon AMZN was rumored to have a deal with Cerner, Alphabet’s GOOGL Google was caught secretly collecting user location data and Alibaba BABA formed a strategic alliance in China. Here are the details-

Meg Whitman Resigns as CEO of HPE

After a 6-year stint at the company she promised to turn around in 5, Meg Whitman is resigning from her position as CEO of HP Enterprise. She steps down on Feb. 1 and will be succeeded by Antonio Neri, who is an engineer with 22 years of experience working in various departments of the company.

Back in 2014, Whitman split the company in two in the hopes that the two halves would operate more efficiently as separate units. True enough, the consumer hardware side, HP Inc, has shown signs of improvement although comparisons get tougher here on out. However, the HPE side that she heads directly hasn’t done as well as predicted, with the main problem being an inadequate level of innovation that hasn’t allowed the company to compete effectively.


She has, however, picked up Aruba Networks and Nimble Storage along the way, both of which are contributing to its growth numbers today. She’s also stripped down the workforce, almost laying the ground for the engineering push Neri is likely to bring. “Antonio is a deep technologist,” Whitman told analysts. “I think I have added a lot of value here in terms of shareholder value creation, financial structuring, ignition of the innovation engine. But the next CEO of this company needs to be a deeper technologist.”

The announcement took analysts by surprise since Whitman has previously denied her intention to leave, especially when Uber was reportedly pursuing her for the top job some time back. She has also said that much work remains to be done. The announcement was taken very badly by investors since it came alongside weaker-than-expected guidance on the back of results that topped expectations.

Amazon Has Deal with Cerner

CNBC reports that Amazon has an agreement with Cerner, according to which the leading EHR company will deliver EHR services along with Amazon analytics at high speeds and accuracy to large healthcare organizations that operate on a very big scale. This will help Cerner expand geographically.

Cerner’s HealtheIntent platform facilitates the gathering and retrieval of and access to patient electronic records (EHRs) including prescriptions to facilitate their analysis by hospitals and healthcare professionals, thereby reducing the cost and improving upon the outcome of treatment while also taking care of insurance claims. This is the service that will use AWS.

Google Secretly Recording User Location

Quartz has revealed that from some time in the beginning of the year, Android devices have been sending Google location data even when location services were disabled. Google’s privacy policy contains a section on location data that reads as follows: “When you use Google services, we may collect and process information about your actual location. We use various technologies to determine location, including IP address, GPS, and other sensors that may, for example, provide Google with information on nearby devices, Wi-Fi access points and cell towers.”

This tracking was done through the Android OS by making changes to the Firebase Cloud Messaging service that runs on Android devices by default. So the data was collected irrespective of whether the phone was connected or not and whether it had a SIM installed or not.

When confronted, Google said that the information was collected to manage messages and push notifications, and it had never used the information nor stored it. It also said that this location-data-harvesting system was separate from the one that was shared with advertisers, so customer privacy hadn’t been sacrificed.

Alibaba Cements Offline Strategy with Strategic Alliance

Alibaba has bought 36.16% of China’s leading grocer (with around 8.2% market share, according to Kantar Worldpanel) and hypermarket store operator Sun Art for around $2.9 billion. For the purpose, Alibaba has partnered with French retailer Auchan, which is increasing its own stake in Sun Art to 36.18% and Taiwanese conglomerate Ruentex, which is selling most of its holding to Alibaba to retain 4.67%.

For Alibaba, the goals of the partnership are to bring technology to Sun Art stores, grow its food retail footprint (the total food retail opportunity in China is $500 billion), facilitate a seamless omnichannel experience to Chinese customers and collect more data on them for its machine learnings purposes.

As of June 30, 2017, Sun Art operated a gross floor area of approximately 12 million square meters in China. It currently operates 446 hypermarkets of 17,000 square meters each across 29 provinces, autonomous regions and municipalities in China. Its stores are branded “RT-Mart” and “Auchan” and “Auchan Minute” (for superstores and innovative unmanned stores).

Alibaba has been investing in offline channels for some time now. The company has invested more than $9 billion dollars on physical stores over the past two years, including InTime, Suning and Lianhua.

Ticker

Price Change Last Week

Price Change Last 6 Months

AAPL

+0.17%

+13.91%

FB

+1.78%

+23.30%

GOOGL

+0.77%

+9.58%

MSFT

+0.07%

+21.64%

INTC

-1.97%

+25.10%

CSCO

+1.70%

+15.50%

AMZN

+4.28%

+22.17%

Other Stories

Corporate

Apple Removes Apps in China: Apple AAPL, like several others, has removed several voice over internet protocol (VoIP) apps, including Microsoft’s Skype from the app store. The Chinese government has for some time been cracking down on apps that do not comply with government censorship rules and illegally reach users through their VoIP connections.

An Apple spokeswoman said in this context, "We have been notified by the Ministry of Public Security that a number of voice over internet protocol apps do not comply with local law, therefore these apps have been removed from the App Store in China” adding that “these apps remain available in all other markets where they do business."

Apple Assembling with Illegal Labor: No matter how much the iPhone X costs and how much profit it makes for the company, it appears that assembling the things requires illegal student overtime. Apple has always driven a hard bargain with its suppliers. In this case, Taiwan’s Foxconn, already hit by iPhone X production delays reportedly saw its profits drop 42% in the most recent quarter.

Possibly to make good, the company hired student interns who worked 11 hours a day to qualify for their graduation degrees. Student overtime is illegal in the country and Foxconn has said that it has a policy not to let students work overtime. Moreover, its internship programs are carried out in cooperation with local governments and vocational schools in China.

But in this case, the students worked voluntarily and were compensated and given benefits, mainly because the policy hadn’t been adopted in some parts of its operations. It has confirmed that such a thing wouldn’t happen again.

New Products/Technology

Apple Self-Driving Car Research: Apple has published a paper on self-driving technology. The Nov 17 publication in online journal arXiv, written by researchers Yin Zhou and Oncel Tuzel describes advancements in 3D object detection. LiDAR takes a time of light approach, i.e. it shines light on an object and maps its return path to determine its shape and distance. Since it’s difficult to detect small or far-away objects in this way, the LiDAR system is paired with a camera, which however makes it more cumbersome.

Apple’s researchers use complex computer vision and artificial intelligence to create a LiDAR-only system they call VoxelNet. They say that this system is more efficient and effective than the systems in use today.

Apple SE 2 in 2018: According to media reports that quoted China’s Economic Daily News and MacRumors, Apple is set to launch the second version of iPhone SE, its low-end smartphone for emerging markets. The reports say that the phone will be assembled exclusively by Apple’s partner Wistron and will cost $450.

So the launch of iPhone X and continuation of iPhone SE appear to be part of Apple’s strategy of expanding its product range to cater to a broader customer base. At the same time, it’s a way for Apple to benefit from higher volumes with the SE and greater profitability with the X. Apple remains a premium brand however since the SE is still more expensive than other low-end devices.

Intel Could Increase iPhone Share in 2018: Well-known Apple analyst with a very good track record for breaking Apple News, Ming Ci Kuo estimates that Intel’s INTC new modems will be in at least 70-80% of all iPhones next year. The XMM 7560 LTE modem is better than the currently-used XMM 7480 in terms of speed, power efficiency and compatibility with CDMA networks.

Qualcomm’s new X20 LTE modem will also be an improvement over the currently-used X16, but Apple’s reluctance to use Qualcomm technology is not just about technology. It’s more about the souring relationship and the looming litigation between the two.

Pixel Users Get Google Lens: Google Lens, the AI-powered visual search technology developed by Google, was initially announced in Google I/O 2017. Management said at the time that it would be integrated within Photos and Assistant in Pixel phones. But while some had seen it as part of Photos, the rollout to Assistant appears to be on now. Google says that the feature will be available in the U.S., U.K., Australia, Canada, India and Singapore.

AWS Secret Region for U.S. Intelligence Service: Amazon has launched a separate cloud service for U.S. intelligentsia called Secret Region. The storage space will be accessible only to the U.S. intelligence community and users with a Secret U.S. security classification and contract vehicles for using the service.

Amazon signed the CIA in 2013 for a $600 million deal, so what seems to be an expansion of services for intelligence services of the government is a huge validation of the security and secrecy offered by Amazon. According to Amazon, "With the launch of this new Secret Region, AWS becomes the first and only commercial cloud provider to offer regions to serve government workloads across the full range of data classifications, including Unclassified, Sensitive, Secret, and Top Secret."

Collaborations and M&A

Apple Pay Deal with French Bank: Apple Pay, which enables secure payments in stores, within apps and on the Internet using built-in fingerprint scanning on iPhones for authorization, has at last signed on a major French bank. Apple launched the service in France a year ago and has signed on some smaller banks to date, including a startup online bank.

Apple Acquires Vrvana: Vrvana, the company that blends AR and VR experiences in a single headset called Totem, has been acquired for an estimated $30 million, according to TechCrunch. The company’s extended reality headset differs from other competing technologies like Microsoft Hololens in that it uses a system of cameras to track a user’s relative position with respect to his environment, as well as a separate set to track his hand gestures instead of transparent, projection-based displays used in the Hololens.

This has minimized latency to 3 milliseconds, thus greatly improving upon the experience. For comparison, Facebook’s Oculus aims to deliver a latency of 20 milliseconds. Latency is an important factor driving user experience because high latency destroys the immersive feel and also leads to motion sickness. Apple has said for long that AR is a very big deal and some have rumored that it will ship its own AR device in 2020. As always, Apple doesn’t comment on rumors.

Some Numbers

Apple May Ship 4 Million HomePods in 2018: A Bloomberg report indicates that Apple will ship 4 million units when it launches in 2018. Amazon has sold 15 million Alexa units since the e-commerce giant launched them in 2015, according to CIRP LLC.

Apple's device, however, focuses on sound quality, so there is a lot of speculation about its doubling as a music streaming device. It will have much fewer skills than competing digital home products from Amazon and Google, so it’s unlikely to be as useful. But Apple has a loyal customer base that usually laps up anything Apple has on offer, so they probably won’t grudge the $349 Apple intends to charge for the device.

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