Important Note
Tech Narratives was a subscription website, which offered expert commentary on the day's top tech news from Jan Dawson, along with various other features, for $10/month. As of Monday October 16, 2017, it will no longer be updated. An archive of past content will remain available for the time being. I've written more about this change in the post immediately below, and also here.
WSJ Reports Early iPhone 8 Production Delays, Apple Said to Deal With LG for OLED (Sep 7, 2017)
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Spotify Adds Hulu to $5 Per Month US College Student Subscription (Sep 7, 2017)
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★ Amazon Announces Search for Second HQ Location, Invites Cities to Make Pitches (Sep 7, 2017)
Amazon today announced that it’s initiating a formal search for a second North American headquarters city in addition to its current HQ in Seattle, and invited cities to make pitches to win its business with a formal RFP process. The approach here is reminiscent of Google Fiber’s strategy of inviting cities to pitch to host its early networks, a process that resulted in tax breaks and other concessions intended to lure Google to municipalities, and Amazon is clearly aiming for very much the same approach here, hoping to get big tax breaks and other incentives. The driver here is twofold. Firstly, this is a PR move intended to get lots of positive attention from cities around the US both during the process and once it’s completed and it starts creating jobs and other economic activity in an area.
Secondly, it’s a practical issue: Amazon has grown to over 40,000 employees in Seattle, a big coastal city with a high cost of living and doing business, and with another massive tech company – Microsoft – nearby and competing for potential employees. It’s also been criticized recently for being too dominant a force in Seattle. In addition to hiring tens of thousands of warehouse workers around the world each year, Amazon is beefing up its AWS and advertising sales forces, and there’s no particular reason why they need to sit in expensive Seattle office space. As such, hunting around for a lower-cost base with substantial financial incentives from the local government makes a ton of sense for practical as well as PR reasons. We’re going to see cities falling over themselves to win this business, which Amazon says will eventually provide 50,000 direct jobs and $5 billion in construction investment.
The challenge of running two headquarters will be a fairly unique one for a big tech company – others certainly have satellite offices, and big mergers sometimes result in dual headquarters arrangements, but this would be the first time that I’m aware of that a big tech company would deliberately choose to divide its HQ function between two locations in different stats. That’s going to create some unique challenges for managing the business, though Amazon’s highly balkanized management structure likely makes it a little easier. As with the recent acquisition of Whole Foods, this big process is going to be completed remarkably quickly: responses to the RFP are due by October 19th, and the announcement will be made next year, though the RFP talks about three distinct phases, with 500k square feet of office space required by 2019 and up to 8 million required “beyond 2027”, and mentions the “initial 15-17 years of the project”.
Update: two other things worth mentioning which have popped up since I published this: Amazon is also opening an R&D hub focused on machine learning in Barcelona, Spain; and Recode reports that there’s already political opposition to Amazon’s approach of seeking tax breaks for its new HQ.
via Amazon
Apple Music Signs New Deal with Warner for Lower Royalty Rates (Sep 7, 2017)
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Daily Podcast Episode 51 – September 6, 2017 (Sep 6, 2017)
The daily podcast episode for September 6 is up now on SoundCloud and should be syncing shortly to iTunes, Overcast, and other podcast apps. As usual, the podcast spends about one minute on each of the items covered on the site today, and also points to a few other items in the news today which I didn’t cover but which are nonetheless interesting. You can find today’s episode on SoundCloud and all episodes on iTunes, Overcast, and so on. The additional items covered are below:
- Amazon Advertising Pitch Deck
- Google Upgrades Street View Cameras
- Politics of Silicon Valley: New York Times Bloomberg
Amazon and Microsoft Join Lawsuit to Block End of DACA Immigration Rules (Sep 6, 2017)
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Uber Details its Machine Learning Platform to Burnish AI Credentials (Sep 6, 2017)
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Spotify and Apple Make Video Content Hires (Sep 6, 2017)
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More Chinese App Developers File Suit Against Apple Over Removals from App Store (Sep 6, 2017)
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Facebook Says It Has Uncovered Evidence of Russian Ad-Buying Operations (Sep 6, 2017)
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US House of Representatives Approves Autonomous Driving Bill (Sep 6, 2017)
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Roku Launches its Own Channel Showing Ad-Supported Movies (Sep 6, 2017)
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LinkedIn Launches Audience Network for Syndicating Sponsored Content (Sep 6, 2017)
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Facebook is Criticized for Claiming to Reach More People than Census Shows in US (Sep 6, 2017)
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★ T-Mobile Announces Free Netflix for Family Plan Subscribers (Sep 6, 2017)
T-Mobile today announced its latest “Un-Carrier” move today, in one of its simplest and certainly its shortest announcement so far: it’s offering free Netflix subscriptions to subscribers to its family plans. Specifically, the offer is available to subscribers who have at least two paid voice lines on the T-Mobile One plan introduced in August last year. That’s now the standard plan for new customers, but many existing customers will be on older family plans and will need to switch to those plans, which may cost more than those offered previously. Typically, two paid lines will be $120 per month with taxes and fees included, so the annual benefit of this offer is equivalent in value to a month’s wireless service. T-Mobile has just over 12 million postpaid accounts at the moment, with an average of just under 3 lines per account, so that gives some sense of the addressable market here, although many would need to switch to T-Mobile ONE to qualify. For Netflix, the upside is smallish – a few million potential new customers over the next few years – but low risk, with these subscribers likely having lower churn.
Certainly not all of those lines would qualify today, but assume that a quarter of those accounts eventually take the Netflix offer, and it ends up being about $90 million per quarter at the full $10 price, which I’m guessing Netflix isn’t paying. More realistically, at 80% of the full retail price, the cost to T-Mobile would be closer to $70 million on a revenue base of roughly $10 billion in revenue per quarter, so the cost is likely to be far from material for the company. Conversely, the Netflix offer will likely increase loyalty and therefore reduce churn and the costs associated with it, and drive more people to the T-Mobile ONE plans and thereby increase ARPU in at least some cases, so T-Mobile will not unreasonably be hoping the net effect on margins is positive.
This move is just the latest in a long string of Un-Carrier moves from T-Mobile, the vast majority of which have been fundamentally about the price or cost of service, either discounting services or throwing in freebies, while dressing the moves up as being something more. That’s clearly worked for T-Mobile, as it’s been by far the fastest growing postpaid phone operator in the US over the last several years, and this move is likely to provide a further little boost, though not a massive one. And of course it’s worth noting that AT&T has been offering free HBO to some of its unlimited subscribers for a while too, so T-Mobile certainly isn’t the first to offer a bundle, but Netflix has broader appeal in the US than HBO and the requirements to qualify are less stringent on the T-Mobile plan.
via T-Mobile
Daily Podcast Episode 50 – September 5, 2017 (Sep 5, 2017)
The daily podcast episode for September 5 is up now on SoundCloud and should be syncing shortly to iTunes, Overcast, and other podcast apps. As usual, the podcast spends about one minute on each of the items covered on the site today, and also points to a few other items in the news today which I didn’t cover but which are nonetheless interesting. You can find today’s episode on SoundCloud and all episodes on iTunes, Overcast, and so on. The additional items covered are below:
- Thoughtful Piece on Google’s Power
- Thoughtful Piece on Facebook’s Power
- Deep-Dive on Apple’s Health Testing Lab
- iFixit Teardown of Essential Phone
Samsung Galaxy Note8 Reviews Mostly Positive, Highlight Price, Similarity to S8 (Sep 5, 2017)
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Angry Birds Maker Rovio Announces Plans to Go Public (Sep 5, 2017)
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Facebook Tries Paying Music Labels to Cover Infringing Material Ahead of ID System (Sep 5, 2017)
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Verizon Kicks off New Loyalty Program, Requires Access to Usage Data (Sep 5, 2017)
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