Facebook's Voice Assistant Is Probably Meant for its Own Apps and Hardware
CNBC reports that Facebook (FB) is working on a new voice assistant, via an R&D team within its augmented reality and virtual reality group. The report comes a year after Facebook pulled the plug on M, a voice assistant that partly relied on humans and would thus have been difficult to scale.
Though the assistant is deemed a rival to the likes of Apple's (AAPL) Siri, Alphabet's (GOOGL) Google Assistant and Amazon.com's (AMZN) Alexa, it would make a lot more sense for Facebook to focus on a solution that integrates with its app family (core Facebook, Messenger, Instagram and WhatsApp) and perhaps devices such as Oculus VR headsets and the Portal speaker, than to battle Apple, Google and Amazon's offerings head-on.
When it comes to acting as the primary voice assistant for a smartphone or tablet, Siri and Google Assistant have the advantage of being baked into the world's two dominant mobile operating systems. Alexa and Google Assistant, meanwhile, have tremendous mindshare within the home, with the platforms (Alexa especially) having also built up large hardware and developer ecosystems. And all three services have big head-starts in terms of amassing user data and being optimized with the help of that data.
However, Facebook could conceivably see strong adoption for an assistant that makes it easier to use and access features within its apps and services, which collectively now have over 2 billion daily users. Such an offering could also -- by making it easier for a user who has one Facebook app opened to access another app -- mesh well with Facebook's recently-announced plans to integrate Messenger, WhatsApp and Instagram's messaging services. In addition, it could bolster Facebook's attempts to drive the adoption of Messenger and WhatsApp as a customer support and engagement platform for businesses.
Apple Still Appears to Be Taking its Car Project Seriously
Reuters reports Apple has held talks with at least four firms about supplying LIDAR sensors -- a staple for most autonomous driving systems -- and is also working on its own LIDAR unit. At a time when LIDAR sensors are expensive and somewhat bulky, Apple is reportedly seeking sensors "that would be smaller, cheaper and more easily mass produced" than what's currently available.
The report is a fresh sign that Apple, which continues operating a fleet of self-driving test cars in California, remains serious about commercializing some kind of automotive hardware offering -- whether a self-driving system or (as would be more in line with its historical mindset) a fully-fledged car. Previous signs include the hiring of industry vets such as former Tesla (TSLA) engineering chief Doug Field and senior Waymo engineer Jaime Waydo, and the filing of patents related to things such as automotive heads-up displays (HUD) and sunroof systems.Several trends -- from the arrival of a mass-market for electric cars, to the creation of powerful infotainment systems featuring mobile connectivity, to HUD and augmented reality advances, to the development of self-driving systems that (by eliminating the need for a steering wheel, pedals and side visibility) could drive a rethink of how cars are designed -- act as incentives for Apple to try and become a major automotive player. We're still a long ways off from seeing an Apple car launch (assuming one does arrive), but the company does seem to be laying the groundwork for a large automotive investments in the coming years.
IBM's Top-Line Performance Continues to Raise Red FlagsIBM's ( IBM) revenue growth continues trailing that of an enterprise IT sector growing at a little over 3%. And the growth of its lucrative software operations continues significantly trailing that of an enterprise software market believed to be growing around 8%. The company's constant focus on buzzwords such as AI, cloud, IoT and analytics haven't managed to change that.
Big Blue's shares are down close to 3% in Wednesday trading after it posted mixed Q1 results. Non-GAAP EPS of $2.25 (down 8% annually) beat a $2.22 consensus with the help of lower-than-expected operating expenses (both job cuts and a strong dollar helped) and moderate gross margin expansion. However, revenue of $18.18 billion (down 4.7% annually in dollars and 0.9% in constant currency) missed a consensus of $18.47 billion.
The company is maintaining its guidance (issued in January) for 2019 EPS of "at least" $13.90, and for free cash flow (FCF) of about $12 billion (up slightly from 2018, but below 2017's level). On the earnings call, CFO Jim Kavanaugh forecast about 22% of full-year EPS would be produced in Q2, and that second-half EPS growth would be "skewed to the fourth quarter."
IBM overhauled its business segment reporting a bit. Some of the company's cloud services operations are now grouped with what used to be its Cognitive Solutions segment, which contains much of its software operations, rather than with IBM's traditional IT services operations. The new segment, known as Cloud & Cognitive Software, posted Q1 revenue of $5 billion, down 2% annually.
The Global Business Services (GBS) segment, which covers IBM's consulting and IT outsourcing businesses, saw its revenue remain roughly flat at $4.1 billion. However, the Global Technology Services (GTS) segment, which covers traditional IT services and some cloud services, saw revenue drop 7% to $6.9 billion. And the Systems segment, which covers hardware and operating systems, saw revenue drop 11% to $1.3 billion, as mainframe cyclicality and storage share losses offset moderate growth in IBM's Power server business.
IBM also reported that the annual run rate for its "as-a-service" cloud revenue, which covers things such as cloud infrastructure services, developer platforms and software subscriptions, was up just 10% annually at the end of Q1 to $11.7 billion. That contrasts with the 20%-plus growth that many large cloud/SaaS software firms are still seeing, not to mention the 40%-plus growth that Amazon Web Services (AWS) continues to post.
With IBM carrying an enterprise value (market cap plus net debt) of less than 11 times its expected 2019 FCF, its stock is still fairly cheap. And if it executes well, it's possible that IBM's pending $34 billion deal to buy open-source software giant Red Hat (RHT) will do much to improve its overall software performance.
But for now, there's still a lot to be concerned about when it comes to Big Blue's top-line performance. And for that reason, better options exist for tech investors hunting for low-multiple names.
To see Tech Check coverage from the previous trading day, click here.