Tech With Viral

Friday, 5 October 2018

We’re talking AR with Snap’s camera platform head at TC Sessions: AR/VR

For a lot of consumers, Pokemon Go wasn’t their first exposure to augmented reality, it was the dog selfie lens inside Snapchat.

In the past few years, consumer use hasn’t evolved too heavily when it comes to what people are actually using AR for even though technical capabilities have taken some giant leaps. Snap was an early leader but now the industry is much more crowded with Apple, Google, Facebook and others all staffing up extensive teams focused on smartphone-based AR capabilities.

At our one-day TC Sessions: AR/VR event in LA on October 18, we’ll be chatting with Eitan Pilipski, the VP of Snap’s Camera Platform, a role that would seem to be pretty central to the long-term vision of a company that has long referred to itself as “a camera company.”

Snap has been throwing some updates to their developer tools as of late especially for their Lens Studio product which gives developers access to tools to create AR masks and experiences. There’s a lot of room to grow, and it will be interesting to see how much depth Snap can pull from these short experiences and whether it sees “lenses” evolving to bring users more straight-forward utility in the near-term.

The company hasn’t had the easiest bout as a public company lately, but it’s clear that it sees computer vision and augmented reality as key parts of the larger vision it hopes to achieve. At our LA event we’ll look to dive deeper into how they’re approaching these technologies and what it can bring consumers beyond a little added enjoyment.

As a special offer to TechCrunch readers, save 35% on $149 General Admission tickets when you use this link or code TCFAN. Student tickets are just $45 and can be booked here.

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Most iOS devices now run iOS 12 according to Mixpanel’s data

Analytics company Mixpanel is currently tracking the install base of iOS 12. And the latest version of iOS is quite popular as it’s already installed on roughly 47.6 percent of all iOS devices. 45.6 percent of devices still run iOS 11, and 6.9 percent of iOS users run an older version.

Adoption rate is an important metric for app developers. With major iOS releases, Apple also releases new frameworks. But developers still need to support old versions of iOS for a little bit before moving entirely to newer frameworks and drop support for old iOS versions.

But it’s interesting to see that you can already drop support for iOS 10 without losing too many customers. Chances are that users who don’t update their version of iOS don’t really care about having the latest version of your app anyway.

With iOS 11, it took much longer to reach that level. Last year, Apple announced on November 6th that iOS 11 was more popular than iOS 10. Sure, Mixpanel and Apple don’t have the exact same numbers, but you can already see that the trend is different this year.

iOS 12 focuses on performance. Apple has optimized this major release for older devices, such as the iPhone 6. All devices that run iOS 11 can update to iOS 12 as well. Basically, if you want a faster phone, you should update to iOS 12.

This is a bit counterintuitive as previous iOS releases had rendered older devices much slower. But it sounds like iOS users got the message based on the adoption rate.

iOS 12 makes your phone faster than ever

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Chinese investment into computer vision technology and AR surges as U.S. funding dries up

Tim Merel Contributor

Tim Merel is managing director of Digi-Capital.

More posts by this contributor

Last year 30 leading venture investors told us about a fundamental shift from early stage North American VR investment to later stage Chinese computer vision/AR investment — but they didn’t anticipate its ferocity.

Digi-Capital’s AR/VR/XR Analytics Platform showed Chinese investments into computer vision and augmented reality technologies surging to $3.9 billion in the last 12 months, while North American augmented and virtual reality investment fell from nearly $1.5 billion in the fourth quarter of 2017 to less than $120 million in the third quarter of 2018. At the same time, VC sentiment on virtual reality softened significantly.

What a difference a year makes.

Dealflow (dollars)

What VCs said a year ago

When we spoke to venture capitalists least year, they had some pretty strong opinions.

Mobile augmented reality and Computer Vision/Machine Learning (“CV/ML”) are at opposite ends of the spectrum — one delivering new user experiences and user interfaces and the other powering a broad range of new applications (not just mobile augmented reality).

The market for mobile AR is very early stage, and could see $50 to $100 million exits in 2018/2019. Dominant companies will take time to emerge, and it will also take time for developers to learn what works and for consumers and businesses to adopt mobile AR at scale (note: Digi-Capital’s base case is mobile AR revenue won’t really take off until 2019, despite 900 million installed base by Q4 2018). Tech investors are most interested in native mobile AR with critical use cases, not ports from other platforms.

Computer vision and visual machine learning is more advanced than mobile AR, and could see dominant companies in the near-term. Here, investors love startups with real-world solutions that are challenging established industries and business practices, not research projects. Firms are investing in more than 20 different mobile augmented reality and computer vision and visual machine learning sectors, but there is the potential for overfunding during the earliest stages of the market.

What VCs did in the last 12 months

Perhaps the most crucial observation is the declining deal volumes over the last year.

Deal Volume (number of deals by category)

(Source: Digi-Capital AR/VR/XR Analytics Platform)

Deal volume (the number of deals) declined steadily by 10% per quarter over the last 12 months, and was around two-thirds the level in Q3 2018 that it was in Q4 2017. Most of the decline happened in the US and Europe, where VCs increasingly stayed on the sidelines by looking for short-term traction as a sign of long-term growth. (Note: data normalized excluding HTC ViveX accelerator Q4 2017, which skews the data)

Deal Volume (number of deals by stage)

The biggest casualties of this short-termist approach have been early stage startups raising seed (deal volume down by more than half) and some series A (deal volume down by a quarter) rounds. This trend has been strongest in North America and Europe, but even Asia has not been entirely immune from some early stage deal volume decline.

Deal Value (dollars)

(Source: Digi-Capital AR/VR/XR Analytics Platform)

While deal volume is a great indicator of early-stage investment market trends, deal value (dollars invested) gives a clearer picture of where the big money has been going over the last 12 months. (Note: investment means new VC money into startups, not internal corporate investment – which is a cost). Global investment hit its previous quarterly record over $2 billion in Q4 2017, driven by a few very large deals. It then dropped back to around $1 billion in the first quarter of this year. Since then deal value has steadily climbed quarter-on-quarter, to reach a new record high well over $2 billion in Q3 2018.

Over $4 billion of the total $7.2 billion in the last 12 months was invested in computer vision/AR tech, with well over $1 billion going into smartglasses (the bulk of that into Magic Leap). The next largest sectors were games around $400 million and advertising/marketing at a quarter of a billion dollars. The remaining 22 industry sectors raised in the low hundreds of millions of dollars down to single digit millions in the last 12 months.

A tale of two markets

Deals by Country and Category (dollars)

American and Chinese investment had an inverse relationship in the last 12 months. American investors increasingly chose to stay on the sidelines, while Chinese investor confidence grew to back up clear vision with long-term investments. The differences in the data couldn’t be more stark.

North American Deals (dollars)

North American investment was almost triple Asian investment in Q4 2017, with a record high of nearly $1.5 billion dollars for the quarter. Despite 2018 being a transitional year for the market (Digi-Capital forecast that market revenue was unlikely to accelerate until 2019), North American quarterly investment fell over 90% to less than $120 million in Q3 2018. American VCs appear to have taken a long-term solution to a short-term problem.

China Deals (dollars)

Meanwhile, Chinese VCs have been focused on the long-term potential of the intersection between computer vision and augmented reality, with later-stage Series C and Series D rounds raising hundreds of millions of dollars a time. This trend increased dramatically in the last 12 months, with SenseTime Group raising over $2 billion in multiple rounds and Megvii close behind at over $1 billion (also multiple rounds).

Smaller investments (by Chinese standards) in the hundreds of millions have gone into companies Westerners might not know, including Beijing Moviebook Technology, Kujiale and more. All this saw Chinese quarterly investment grow 3x in the last 12 months. (Note: some recent Western opinions about market investment trends were based on incomplete data)

Where to from here?

With our team’s investment banking background, experience shows that forecasting venture capital investment is a fool’s errand. Yet it is equally foolish to ignore hard data, and ongoing discussions with leading investors along Sand Hill Road and China indicate some trends to watch.

American tech investors might continue to wait for market traction before providing the fuel needed for that traction (even if that seems counterintuitive). While this could pose an existential threat to some early stage startups in North America, it’s also an opportunity for smart money with longer time horizons.

Conversely, Chinese VCs continue to back domestic companies which could dominate the future of computer vision/augmented reality. The next 6 months will determine if this is a long-term trend, but it is the current mental model.

If mobile AR revenue accelerates in 2019 as critical use cases and apps emerge (as in Digi-Capital’s base case), this could become a catalyst for renewed investment by American VCs. The big unknown is whether Apple enters the smartphone tethered smartglasses market in late 2020 (as Digi-Capital has forecast for the last few years). This could be the tipping point for the market as a whole (not just investment). However, Apple timing is hard to predict (because Apple), with any potential launch date known only to Tim Cook and his immediate circle.

Steve Jobs said, “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

Chinese investors embraced a Jobsian approach over the last 12 months, with Western VCs increasingly dot-connecting (or not). It will be interesting to see how this plays out for computer vision/AR investment over the next 12 months, so watch this space.

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Most iOS devices now run iOS 12 according to Mixpanel’s data

This is a bit counterintuitive as previous iOS releases had rendered older devices much slower. But it sounds like iOS users got the message based on the adoption rate.

iOS 12 makes your phone faster than ever

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Thursday, 4 October 2018

Samsung forecasts record $15.5B profit thanks to chips not smartphones

Samsung’s last quarter of business saw its slowest growth of profits in a year thanks to weak sales of its flagship Galaxy S9 smartphone. But the company is about much more than just phones, and that’s why it is forecasting a record operating profit of nearly $15.5 billion for its upcoming Q3 results.

The Korean firm said in a filing that it expects to revenue jump five percent year-on-year to hit 65 trillion KRW ($57.5 billion) with an operating profit of 17.5 trillion KRW ($15.5 billion), which represents a 20 percent annual jump and an 18 percent increase on the previous quarter.

Samsung’s pre-earnings filings are brief and don’t contain detailed information about the performance of its business units, thus we can’t assess demand for its high-end phones — which include the Note 9 — in the quarter that Apple unveiled its newest iPhones. But the clues suggest that it is actually the more boring (but reliable) divisions that are, once again, responsible for Samsung’s strong forecast.

Chips account for some 80 percent of Samsung’s revenue and demand for DRAM, which is important in areas such as cloud, pushed prices up during Q3 but analysts suspect that the growth won’t last.

“Its earnings appeared to have peaked,” Mirae Asset Daewoo Securities analyst William Park told Reuters. “DRAM prices are going to fall, although not dramatically, and that will negatively impact its margins.”

We’ll know more when Samsung releases its full earnings this month.

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Samsung forecasts record $15.5B profit thanks to chips not smartphones

Chips account for some 80 percent of Samsung’s revenue and demand for DRAM, which is important in areas such as cloud, pushed prices up during Q3 but analysts suspect that the growth won’t last.

We’ll know more when Samsung releases its full earnings this month.

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Bloomberg’s spy chip story reveals the murky world of national security reporting

Today’s bombshell Bloomberg story has the internet split: either the story is right, and reporters have uncovered one of the largest and jarring breaches of the U.S. tech industry by a foreign adversary… or it’s not, and a lot of people screwed up.

To recap, Chinese spies reportedly infiltrated the supply chain and installed tiny chips the size of a pencil tip on the motherboards built by Supermicro, which are used in data center servers across the U.S. tech industry — from Apple to Amazon. That chip can compromise data on the server, allowing China to spy on some of the world’s most wealthy and powerful countries.

Apple, Amazon and Supermicro — and the Chinese government — strenuously denied the allegations. Apple also released its own standalone statement later in the day, as did Supermicro. You don’t see that very often unless they think they have nothing to hide. You can — and should — read the statements for yourself.

Welcome to the murky world of national security reporting.

I’ve covered cybersecurity and national security for about five years, most recently at CBS, where I reported exclusively on several stories — including the U.S. government’s covert efforts to force tech companies to hand over their source code in an effort to find vulnerabilities and conduct surveillance. And last year I revealed that the National Security Agency had its fifth data breach in as many years, and classified documents showed that a government data collection program was far wider than first thought and was collecting data on U.S. citizens.

Even with this story, my gut is mixed.

China reportedly infiltrated Apple and other US companies using ‘spy’ chips on servers

Where reporters across any topic and beat try to seek the truth, tapping information from the intelligence community is near impossible. For spies and diplomats, it’s illegal to share classified information with anyone and can be — and is — punishable by time in prison.

As a security reporter, you’re either incredibly well sourced or downright lucky. More often than not it’s the latter.

Naturally, people are skeptical of this “spy chip” story. On one side you have Bloomberg’s decades-long stellar reputation and reporting acumen, a thoroughly researched story citing more than a dozen sources — some inside the government and out — and presenting enough evidence to present a convincing case.

On the other, the sources are anonymous — likely because the information they shared wasn’t theirs to share or it was classified, putting sources in risk of legal jeopardy. But that makes accountability difficult. No reporter wants to say “a source familiar with the matter” because it weakens the story. It’s the reason reporters will tag names to spokespeople or officials so that it holds the powers accountable for their words. And, the denials from the companies themselves — though transparently published in full by Bloomberg — are not bulletproof in outright rejection of the story’s claims. These statements go through legal counsel and are subject to government regulation. These statements become a counterbalance — turning the story from an evidence-based report into a “he said, she said” situation.

That puts the onus on the reader to judge Bloomberg’s reporting. Reporters can publish the truth all they want, but ultimately it’s down to the reader to believe it or not.

In fairness to Bloomberg, chief among Apple’s complaints is a claim that Bloomberg’s reporters were vague in their questioning. Given the magnitude of the story, you don’t want to reveal all of your cards — but still want to seek answers and clarifications without having the subject tip off another news agency — a trick sometimes employed by the government in the hope of lighter coverage.

Yet, to Apple — and Amazon and other companies implicated by the report — they too might also be in the dark. Assuming there was an active espionage investigation into the alleged actions of a foreign government, you can bet that only a handful of people at these companies will be even cursorily aware of the situation. U.S. surveillance and counter-espionage laws restrict who can be told about classified information or investigations. Only those who need to be in the know are kept in a very tight loop — typically a company’s chief counsel. Often their bosses, the chief executive or president, are not told to avoid making false or misleading statements to shareholders.

It’s worth casting your mind back to 2013, days after the first Edward Snowden documents were published.

In the aftermath of the disclosure of PRISM, the NSA’s data pulling program that implicated several tech companies — including Apple, but not Amazon — the companies came out fighting, vehemently denying any involvement or connection. Was it a failure of reporting? Partially, yes. But the companies also had plausible deniability by cherry picking what they rebuffed. Despite a claim by the government that PRISM had “direct access” to tech companies’ servers, the companies responded that this wasn’t true. They didn’t, however, refute indirect access — which the companies wouldn’t be allowed to say in any case.

Critics of Bloomberg’s story have rightfully argued for more information — such as more technical data on the chip, its design and its functionality. Rightfully so — it’s entirely reasonable to want to know more. Jake Williams, a former NSA hacker turned founder of Rendition Infosec, told me that the story is “credible,” but “even if it turns out to be untrue, the capability exists and you need to architect your networks to detect this.”

Chinese chip spying report shows the supply chain remains the ultimate weakness

I was hesitant to cover this at first given the complexity of the allegations and how explosive the claims are without also seeking confirmation. That’s not easy to do in an hour when Bloomberg’s reporters have been working for the best part of a year. Assuming Bloomberg did everything right — a cover story on its magazine, no less, which would have gone through endless editing and fact-checking before going to print — the reporters likely hit a wall and had nothing more to report, and went to print.

But Bloomberg’s delivery could have been better. Just as The New York Times does — even as recently as its coverage of President Trump’s tax affairs, Bloomberg missed an opportunity to be more open and transparent in how it came to the conclusions that it did. Journalism isn’t proprietary. It should be open to as many people as possible. If you’re not transparent in how you report things, you lose readers’ trust.

That’s where the story rests on shaky ground. Admittedly, as detailed and as well-sourced as the story is, you — and I — have to put a lot of trust and faith in Bloomberg and its reporters.

And in this day and age where “fake news” is splashed around wrongly and unfairly, for the sake of journalism, my only hope is they’re not wrong.

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