The net is abruptly abuzz with news that Facebook bought Oculus VR, the partially-Kickstarted virtual reality company backed by game engine wunderkind John Carmack. And, it’s abuzz with a lot of fairly predictable hair-pulling and shirt-rending.
It’s certainly interesting news, and on the surface bemusing—although no more so than half of what Google buys these days. Facebook seems to be pretty interested in keeping abreast or ahead of Google, too. Hmm. Does Google have any VR product that sort of like Oculus Rift? Something that rhymes with “crass?” I’m sure there’s something along those lines I’ve been hearing about.
Frankly, despite all the hair-pulling I don’t think this is going to make a lot of difference to Oculus Rift users. When it comes to handling acquisitions Facebook seems to be more like Microsoft than Google or Apple. And that’s actually a good thing. Microsoft has certainly done in good products through acquisitions, but look at Bungie and, before them, Softimage, one of the leading high end 3D animation programs of the 1990s. In both cases, the companies were given a great deal of autonomy—what Microsoft wanted them for actually required that. Bungie’s Halo essentially defined the Xbox gaming platform, and Softimage got NT into animation and movie studios. (I suspect this was a much bigger nail in SGI’s coffin than it’s usually given credit for.)
Facebook needs the Rift to be a successful product, and for it to be a successful product they have to not screw with it. They don’t want to take it away from gamers—what they want is, well, pretty much what Zuckerberg wrote:
Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face — just by putting on goggles in your home.
What Facebook wants, ultimately, is to build the kind of communication device that up until now only existed in science fiction. I’m not sure any company can actually pull that off, but I can’t think of another company that genuinely has a better shot. And as much as many things about Facebook continue to exasperate me, I’ve been coming to a somewhat reluctant admiration not only of their ambition but their engineering.
I can’t say this purchase makes me more likely to use either Oculus products or Facebook, but it’s a very interesting milepost. I’ve thought for years that Facebook the product has a limited lifespan, but Facebook the company may have a much longer—and far more interesting—one than I would ever have guessed.
Dan Goodin, Ars Technica:
Hundreds of open source packages, including the Red Hat, Ubuntu, and Debian distributions of Linux, are susceptible to attacks that circumvent the most widely used technology to prevent eavesdropping on the Internet, thanks to an extremely critical vulnerability in a widely used cryptographic code library.
Goodin argues that the bug is worse than Apple’s highly publicized “goto fail” bug, as it appears that it may have gone undetected since 2005.
I’d like to pretend I’m above feeling a bit of schadenfreude given that some of the loudest critics of Apple tend to be the open source zealots, but I’m not. One of the more religious aspects of Open Sourcitude is the insistence that all software ills stem from proprietary, closed source code. If the code is open, then in theory there should be fewer bugs, more opportunity for new features, and a lower chance of the software dying due to abandonment by its original developers for whatever reason.
But in actual, real world practice, software with few users tends to stagnate; software that becomes popular tends to keep being developed. This holds true regardless of the license and access to the source code. There are a lot of fossilized open source projects out there, and a lot of commercial products with vibrant communities. Being open source helps create such communities for certain kinds of applications (mostly developer tools), but it’s neither necessary nor, in and of itself, sufficient. And no one—not even the most passionate open source developer—ever says something like, “You know what I’d like to do tonight? Give GnuTLS a code security audit.”
Apple pulled Blockchain, a Bitcoin “wallet” app, from their store, and Blockchain’s CEO is sure this is because Apple sees them as a potential competitor. “I think that Apple is positioning itself to take on mobile payments in a way they haven’t described to the public and they’re being anti-competitive,” he told Wired.
As usual, though, this comes up because it fits into the default narrative about What Apple Is Like, not because there’s either direct or even circumstantial evidence to support it. While Apple may not welcome competition with open arms, there are dozens of applications on both the iOS and Mac app stores that directly compete with Apple’s products and services. Pandora, Netflix, Hulu, just about every app Amazon makes—by this logic, shouldn’t these all be gone?
For that matter, there are already mobile payment applications in the store that are far more direct competition for this still-hypothetical Apple payment system than Blockchain is. I can walk into (some) stores and pay directly with the Square or Paypal apps, but I can’t walk into a store and pay directly with Blockchain; it has no infrastructure specifically designed for point-of-sale, and even if the store took Bitcoin, I’d rather just swipe a credit card than diddle around with paying by SMS.
So why did Apple pull Blockchain? As usual, we don’t know, because Apple is about as communicative as a sack of flour. But given that they pulled Coinbase a couple months ago, the signs point to this having little to do with competition and a lot to do with Bitcoin. Apple has a rapidly expanding presence in China—whose antipathy toward Bitcoin is crystal clear—and they’re a strikingly conservative company when it comes to financial and legal matters; Bitcoin’s reputation as a haven for illegal activity may not sit well with them.
After (my) lunch today, Techmeme lit up with articles about Twitter’s earning report that contain headlines or subheads like:
- Slowing user growth betrays revenue strength (CNET)
- Twitter crushes with Q4 revenue of $242.7M, but shows slow user growth to 241M actives (TechCrunch)
- Twitter posts small earnings in first quarter as a public company, but user growth is slowing (Engadget)
Okay, so their user growth is slowing, but they’re bringing in a lot of money! They’re even making small earnings! Yet here comes the New York Times with:
Wait, what? What page is the NYT on?
Twitter reported a net loss of $511 million, compared with an $8.7 million loss a year ago.
However, using a closely watched measure of income that excludes stock-based compensation and other expenses, the company reported a profit of $9.7 million, or 2 cents a share, in the quarter, compared with a loss of $271,000 a year ago.
Oh, they’re on the page that looks at actual numbers. Must be some old media thing!
Revenue, of course, isn’t profit, so the headlines arguably aren’t contradictory. But they’re telling of what the different media outlets are focusing on. To the tech press, slowing user growth is the real concern—a per-quarter loss of over half a billion dollars, no big deal. Most of it’s just stock-based compensation, right?
The NYT goes on to report that Twitter projects full year revenue in 2014 to be $1.15B, and adjusted EBITDA (the “closely watched measure of income”) to be $150–180M. That does sound promising, but I honestly can’t tell whether it means they’ll still actually be losing money. I’m fairly sure most network providers don’t accept payment in EBITDAcoin yet.
As expected, white smoke came out of Microsoft’s chimney early this morning and the board named Satya Nadella their new CEO. Microsoft watchers, both inside and outside the company, all seem to like him and agree he’s the best choice, but I’m not sure that’s actually a good sign. Microsoft may not have needed a “turnaround artist” like some had suggested, but they do need someone willing to make risky, potentially unpopular moves—something the company historically tends to bungle through half-measures when they attempt it (Windows 8).
Nadella is deeply steeped in Microsoft’s current company culture, promoted to CEO from being EVP of “Cloud and Enterprise.” Is this a guy who’s really willing to make bold moves? If they are, I’d be surprised if they aren’t moves toward doubling down on what he knows best: business services. Earlier I wrote:
While picking [Nadella] might be a statement about re-invigorating Microsoft’s engineering culture, it might also be a statement about re-invigorating their focus on big business: all of Nadella’s background seems to be in enterprise computing.
In that same article, I wrote about my favorite also-ran, Stephen Elop. Those who felt sure that an Elop-led Microsoft would crash and burn are no doubt breathing a sigh of relief, but I still wonder about this:
The big difference Elop might bring to Microsoft is—I’d like to find a word that’s both less polarizing and less squishy than this one, but I can’t—a sense of taste. Elop understands the importance of user experience. I’m not sure there’s anyone at Microsoft who would have come up with devices as, well, cool as the Nokia Lumia line. Not even the Surface tablets have the same quality industrial design.
I don’t want to imply that Nadella is tasteless, but I would be honestly surprised if user experience is something he really gets. It’s not a prized skill in the enterprise world. We’ll see.
Google selling Motorola Mobility to Lenovo for a substantial loss seems to say something significant about Google, but nobody seems to be entirely sure what. Short attention span? Finally coming to their senses? That they no longer need Motorola’s hardware expertise now that they have Nest’s? (Bingo.)
One aspect that’s been widely reported is that Google is keeping Motorola’s patents with them, which seems to be yet another baffling move. From the standpoint of “patents as offensive weapons,” Motorola’s are certainly a failure, and it seems Google put a lot more stock in that aspect than they should have.
But that’s a new fashion, pushed by the rise of companies whose business model is essentially to flood the patent office with claims of dubious “inventions” that examiners have neither the time nor training to evaluate properly. Whether you approve of patents conceptually or not, the vast majority of the ones owned by a company like Motorola—in the mobile communications space from the very beginning—aren’t the dippy kinds we roll our eyes at when they get in the news. They really did create a lot of the technology in widespread use in the industry.
Yet this is a double-edged sword. It turns out that it’s the stupid patents that are most easily weaponized. Patents that are so valuable they define industries tend to get quickly and widely licensed. Such patents are subject to FRAND, “fair, reasonable and non-discriminatory” licensing rules, and companies that Google could plausibly sue—excuse me, defend against—likely already have license agreements.
So what is Google left with by hanging onto these patents? Nothing? Well, no. It’s still nearly 25,000 patents. It’s hard to figure out how much licensing they’re already bringing in because it doesn’t seem that Google breaks out their income that way, but when Motorola Mobility was an independent company it was in the neighborhood of $250 million a year. Is it possible they could get more money of that by carefully reviewing the portfolio? Sure. They couldn’t increase it ten-fold, but doubling it isn’t wildly unreasonable.
Google estimated the patent portfolio as being worth $5.5B. Again, that doesn’t seem ridiculous; after all, a patent’s total value is what you get from it during the duration of its licensing. (And what you get from it when you’re actually using it, of course; if Google makes products that are covered by these patents, they’re saving money by not paying royalties to Lenovo.) The press has made a big deal about Motorola being smacked down earlier this year in their quest to get Microsoft to pay $4B a year in royalties, but that was pretty clearly a pie-in-the-sky shot: if the estimation of the portfolio had been based on such claims being successful, it’d have been a lot higher. Google probably needs to double the royalty revenue from patents over what Motorola was getting to hit that $5.5B valuation, but it’s not nuts.
The most interesting question to me moving forward from this point is what Google actually does with hardware. It seems certain that the Nest design team will be put to work on more than thermostats and smoke detectors. Stratēchery’s Ben Thompson wrote (quoted by John Gruber) that it’s a “tiresome myth” that Google wants to be more like Apple, i.e., building their own hardware, and that selling Motorola puts that “to bed once and for all.” Really? I normally find Thompson pretty savvy, but I think we’re going to see Nest-designed Nexus phones and tablets within a year.