A day that SEGA fans thought would never come has arrived: SEGA has entered into a deal with Nintendo where Nintendo consoles will get the next three Sonic the Hedgehog titles as platform exclusives. The once bitter rivals are calling this a “worldwide partnership,” which despite being a bit short on details apparently leads us to believe that SEGA will be developing additional new software for the Wii U and 3DS consoles going forward.
The next three Sonic titles will include Sonic: Lost World, Mario & Sonic at the Sochi 2014 Winter Olympic Games, and a third unannounced title that the company is expected to officially announce at E3. The reason for the Sonic exclusive deal has to do with the past performance of Sonic titles on Nintendo consoles, and since they have proven to be good sellers, the deal does seem to make a lot of sense for both companies.
What is more interesting, however, is the other aspects of the partnership that will see additional titles developed for the Wii U. Nintendo needs all of the software support it can get for the Wii U, and just getting SEGA to continue to release new titles for the Wii U is a good thing. Sources tell us that SEGA has some new Wii U titles planned for announcement at E3, but it isn’t known exactly what SEGA might be cooking up.
While a big deal with Activision or Take-Two is really what Wii U owners might want, at least getting SEGA to continue producing Wii U titles is a positive news thing. It does remain to be seen, however, if SEGA can deliver the kinds of titles that will be successful sellers on the Wii U when so many owners are looking for the big titles from some of the other publishers.
Oracle is building a third data-center in the UK, to service the British administration’s G-Cloud plans right next to the sweet smelling Mars Chocolate factory.
According to the company, the new data-center, opening in July, is located in Slough. It will offer cloud services and infrastructure as a service, to government bodies as well as to independent software vendors working on state contracts. Oracle president Mark Hurd said in a press release that the new Equinix Slough data center, will supplements the existing facilities at Linlithgow near Edinburgh and in Slough.
“As this whole cloud evolves and develops, you’ve got a lot of issues that come up. You’ve got security concerns, you’ve got data-sovereignty issues, you’ve got regulatory issues, you’ve got various issues that come up about the location of data — some of those are the physical location of data,” Hurd said.
The new data-center is specifically for government projects. It will meet the specific requirements of G-Cloud, including the IL3 security protocols as well. Hurd claims that it will be ring-fenced data-center, specifically to serve UK government, which is one of Oracle’s biggest clients in the UK.
Hurd said the company now has more than $1bn in cloud subscription revenue and claimed the company was now the second biggest player in the cloud.
“We’re globalising our capability. We have a very broad distribution capability so we sell close to the customer and we move our capabilities close to the customer as well,” Hurd said.
SoftBank Corp President Masayoshi Son may get a less than enthusiastic reception when he comes to the United States this week to meet Sprint Nextel Corp’s major shareholders, as he tries to drum up support for the Japanese company’s proposed takeover of the No. 3 U.S. wireless service provider.
SoftBank’s billionaire founder, who proposed a $20 billion deal for a 70 percent stake in the U.S. wireless carrier, said on Tuesday that he would discuss the deal with shareholders in a bid to fight off rival Dish Network, a U.S. satellite TV provider, which offered Sprint a $25.5 billion bid.
The executive for the Japanese mobile operator may have a tough time selling the deal, as several shareholders have told Reuters that SoftBank would need to raise its bid in order to win their vote at Sprint’s June 12 shareholder meeting.
Two big Sprint shareholders, Paulson & Co and Omega Advisors, have publicly said the Dish offer looks better than SoftBank’s. Other shareholders said on Tuesday that they would go to meet Son during his trip but they were skeptical about his arguments against Dish.
While Dish’s offer would provide more cash upfront to shareholders, Son has argued that Dish would not be good for the company as it would require Sprint to take on a heavy debt load. He also promises a July 1 close for the deal and warned that Dish regulatory approval may not come until 2014.
Robert Lynch, the director of research for Westchester Capital Management, which owned over 14 million shares in Sprint at the end of December, said that the prospect of a quicker deal close would not be enough to win over his company’s vote.
“We think right now that Dish has a better offer on the table. We think SoftBank’s going to have to improve their offer,” Lynch said, noting that SoftBank’s comments about the prospective debt leverage from a Dish deal were overdone.
“We think the leverage is manageable. We think there are synergies here. While raising the leverage is something we looked at we think its not as big of a obstacle as SoftBank is saying,” Lynch said.
A big Sprint investor who asked not to be named said they were happy to meet with Son while he is in the United States but that they were hoping to convince him to raise his bid.
“If Mr. Son wants to own Sprint he will have to raise his bid,” said the person from a top 25 Sprint shareholder who did not want to be quoted by name ahead of the meeting.
The founder of MySQL Michael Widenius “Monty” claims that Oracle is killing off his MySQL database and he is recommending that people move to his new project MariaDB. In an interview with Muktware Widenius said his MariaDB, which is also open source, its on track to replacing MySQL at WikiMedia and other major organizations and companies.
He said MySQL was widely popular long before MySQL was bought by Sun because it was free and had good support. There was a rule that anyone should get MySQL up and running in 15 minutes. Widenius was concerned about MySQL’s sale to Oracle and has been watching as the popularity of MySQL has been declining. He said that Oracle was making a number of mistakes. Firstly new ‘enterprise’ extensions in MySQL were closed source, the bugs database is not public, and the MySQL public repositories are not anymore actively updated.
Widenius said that security problems were not communicated nor addressed quickly and instead of fixing bugs, Oracle is removing features. It is not all bad. Some of the new code is surprisingly good by Oracle, but unfortunately the quality varies and a notable part needs to be rewritten before we can include it in things like MariaDB. Widenius said that it’s impossible for the community to work with the MySQL developers at Oracle as it doesn’t accept patches, does not have a public roadmap and there was no way to discuss with MySQL developers how to implement things or how the current code works.
Basically Oracle has made the project less open and the beast has tanked, while at the same time more open versions of the code, such as MariaDB are rising in popularity.
Nobody expected Zynga’s results for this quarter to be great, so nobody was exactly surprised when the company announced a decline in almost every number that matters. It turned a small profit, but that’s a bright spot in an otherwise deeply unimpressive set of results. The really important figures – the number of people playing and, crucially, the number of people paying – are all down. Zynga’s business may not be hemorrhaging money, but it’s losing audience, and in a business so heavily focused on scale, that’s a really bad thing.
The company likes to present itself as being on the cusp of a turnaround, or perhaps already embarked upon a slow but steady turn. If so, it’s the oddest turnaround imaginable. The firm’s MAUs – Monthly Active Users – dropped from 292 million to 253 million year on year, so nearly 40 million people have simply stopped logging in to a Zynga game even once a month. Worse still, though, is the disproportionate fall in the number of Monthly Unique Payers – those who make at least one transaction during a month-long period. This number fell from 3.5 million to 2.5 million, a precipitous year-on-year drop of almost 30%.
It bears emphasising just how bad that actually is. For a social gaming business, MUPs are the real customers. There is huge value to having a large audience (MAUs), of course, and companies need to be very careful about not trying to force players into becoming paying customers before they’re good and ready – but ultimately, non-paying users are like footfall in a store. They’re not customers, in a strict business sense. Zynga’s not-quite-so-bad loss of 13% of its players (MAUs) is a side-show compared to the fact that it’s lost 30% of its paying customers (MUPs). Imagine, by comparison, a shop loudly announcing that the number of people walking past its window had fallen 13%, distracting from the fact that the number who came in and bought something had fallen 30%.
Of course, the two figures are related, and the disproportionately large drop in MUPs figures into that relationship to some degree. The process of encouraging players of a social game to spend money is focused around a number of principles, but the key temptation lies in buying items or currency that will give you the ability to match or overtake your friends’ progress, or to create a fantastic character, farm, castle or whatever which will “impress” the many friends who are also playing the same game.
For that psychology to work, of course, you actually need to have lots of friends playing the game. Most social games, as the name suggests, don’t work terribly well if you don’t have friends active in the game. “Active” is a key aspect here too – if you see that your friends are losing interest, logging in less often or spending less time tending to their farm, castle, town or whatever, then you also tend to lose interest rapidly. Hence, a game that gives the impression of being “in decline” – with players losing interest in some visible manner – will likely experience a precipitous decline in revenue, because even though lots of people are still playing, the sense of decline removes the key psychological drive to spend money on the game. (It doesn’t help, of course, that social game operators have established a pattern of shutting down unsuccessful games rapidly, which creates a feedback loop in which players are unwilling to spend money on a game they think might be in commercial trouble.)
The psychology of what Zynga is experiencing is clear enough, then, but the figures on the bottom line are still pretty dreadful. Whatever the reasons or the mechanism, the company is losing paying customers, and that kind of damage is extremely hard to recover from.
A stark contrast to Zynga’s woes can be found on the other side of the Pacific, where mobile developer GungHo this week topped a $9 billion valuation on the Osaka Stock Exchange, making it into a larger mobile gaming company than even fellow Japanese giants GREE and DeNA. GungHo’s valuation is ridiculous, a bubble that will inevitably pop in relatively short order, but there’s a genuine success driving the excitement – a single game, Puzzle and Dragons, which is the most successful mobile game in Japan (and is launching in other territories as well). Puzzle and Dragons reportedly makes about $2 million a day; it certainly makes enough to justify prime-time adverts in evening slots on Japanese TV.
GungHo is an extreme example of a phenomenon which is completely unavoidable in the social and casual game sphere. Mobile utterly dominates this sphere. Facebook, it turns out, was a flash in the pan in gaming terms. Smartphones, and to some extent tablets (though they’re arguably more “midcore”), are the social gaming platforms of today. Zynga, for all its cash (the company still has plenty of liquid assets), its clout and its former dominance, still hasn’t made a successful transition to being a mobile-first company. Clinging to the wreckage of the Facebook social gaming model which it so successful exploited (in doing so, perhaps hastening the downfall), Zynga is being overtaken time and again by smaller companies who have mobile gaming in their DNA from the outset. With this week’s results came a fresh claim that the company will be focusing more heavily on mobile, but a good, nimble firm would have accomplished that focus shift 12 months ago, at least. Zynga right now feels like it’s plodding along in everyone else’s wake.
The other great white hope for the company, of course, is gambling. It has cautiously launched gambling services – what it calls “real money gaming” – in the UK, and wants to expand into other territories. Plenty of pundits like to tap their noses sagely and suggest that Zynga will become a gambling giant down the line – although in doing so, they’re just following in the well-worn footsteps of a large number of video games industry pundits, executives and even developers who have regarded the gambling industry with something like the avaricious wonder of wannabe prospectors hearing about a new gold rush.
I don’t see any gold rush for Zynga in “real money gaming”. Investors and executives consistently overstate the allure and possibilities of this kind of gaming, because by dint of being investors and executives, they tend to be exactly the sort of person who is very attracted to gambling risks (you wouldn’t have an investment, or a career, anywhere within spitting distance of tech stocks otherwise). Moreover, by moving into the online gambling arena, Zynga is entering a market that’s already incredibly crowded with companies who are deeply, deeply expert in this field – not just in the customer-facing psychology of the casino, but also in the legal and regulatory minefield of operating a gambling enterprise online. Many major markets simply aren’t open to this kind of business; most others require you to jump through all manner of hoops simply in order to set up shop. The notion of Zynga having an open goal in “real money gaming” is born either from complete naivety or utter desperation – it could make money in the gambling business, but it has its work cut out for it.
It’s worth highlighting, all the same, that Zynga did make a small profit this quarter – it may only be one bright spot, but it’s bright all the same. The company’s scale still also arguably works in its favour, allowing it to buy talent and IP that smaller firms could never afford. Yet after several grim quarters, it’s also worth highlighting that talk of a “turnaround” is optimistic at best. Something about Zynga – its culture, its leadership or a combination of both – is blocking this company from moving in the agile, intelligent way a firm in its position desperately needs. Inventing fairy stories about the magical potential of gambling games or constantly reassuring the world that a pivot to mobile is definitely happening any day now won’t cover up the cracks for much longer. If Zynga wants the world to buy the “turnaround” story, it needs to start showing evidence; if not, it needs to start making big changes, starting right at the top.
BlackBerry’s recent launch of the Z10 smartphone and the upcoming Q10 qwerty device were intended to put the company back in the thick of the smartphone wars, but BlackBerry seems to be defending itself from a new crisis every week.
In the latest mini-calamity, BlackBerry on Friday said it will seek a review by U.S. and Canadian securities officials of what it called a “false and misleading report” by investment analysts at Detwiler Fenton that said Z10 smartphones are being returned by customers in unusually high numbers.
Reaction to the Detwiler report, and others citing weak Z10 sales, apparently caused a 7.8% drop in BlackBerry stock on Thursday, down to $13.55 a share.
“Sales of the BlackBerry Z10 are meeting expectations and the data we have collected from our retail and carrier partners demonstrates that customers are satisfied with their devices,” said BlackBerry CEO Thorsten Heins in a statement Friday.
“Return rate statistics show that we are at or below our forecasts and right in line with the industry. To suggest otherwise is either a gross misreading of the data or a willful manipulation. Such a conclusion is absolutely without basis and BlackBerry will not leave it unchallenged,” Heins said.
The Detwiler report was shared with the investment firm’s clients but not directly with BlackBerry or the public. Detwiler could not be reached to comment.
That might sound precisely like Facebook, but hundreds of millions of tech-savvy young people have instead turned to a wave of smartphone-based messaging apps that are now sweeping across North America, Asia and Europe.
The hot apps include Kik and Whatsapp, both products of North American startups, as well as Kakao Inc’s KakaoTalk, NHN Corp’s LINE and Tencent Holdings Ltd’s WeChat, which have blossomed in Asian markets.
Combining elements of text messaging and social networking, the apps provide a quick-fire way for smartphone users to trade everything from brief texts to flirtatious pictures to YouTube clips — bypassing both the SMS plans offered by wireless carriers and established social networks originally designed as websites.
Facebook Inc, with 1 billion users, remains by far the world’s most popular website, and its stepped-up focus on mobile has made it the most-used smartphone app as well. Still, across Silicon Valley, investors and industry insiders say there is a possibility that the messaging apps could threaten Facebook’s dominance over the next few years. The larger ones are even starting to emerge as full-blown “platforms” that can support third-party applications such as games.
To be sure, many of those who are using the new messaging apps remain on Facebook, indicating there is little immediate sign of the giant social media company losing its lock on the market. And at a press event this week, the company will unveil news relating to Android, the world’s most popular smartphone operating system, which could include a new version of Android with deeper integration of Facebook messaging tools – or possibly even a Facebook-branded phone.
But the firms that can take over the messaging world should be able to make some big inroads, investors say.
Oracle has announced a series of Sparc servers, including two models that the company claims will be the most powerful on the market.
The new line of Sparc systems will sport Oracle’s T5 processor, offering double the cores and threading capability of previous models. Other upgrades will include doubling the memory capacity of previous models and increasing I/O capability four-fold.
Headlining the T5 update will be the flagship T5 8 unit. The server, the most powerful in Oracle’s rack-mount line of Sparc systems, is said by Oracle CEO Larry Ellison to have set a number of bench-marking records and fares better than comparable systems by IBM which can cost up to 10 times as much.
Ellison said that in addition to the new processors, Oracle will be designing its server systems from the ground up to be optimised for its software and middleware. As such, the company believes that its new generation of servers can dramatically outperform those of rival vendors.
“There are a lot of people who believed we would never catch up,” Ellison said. “We have done better, we have caught up and we passed the competition.”
The company also unveiled new additions to its mainframe servers.
Designed to operate as a stand-alone system inside its own enclosure, the M5 16 and 32 models are designed for large-scale virtualisation and other highly demanding tasks. The massive systems replace Sun servers that last saw an update with the M9000 series.
The Sparc T5 release will show whether Oracle can turn around its Sun hardware unit, which had disappointing results in the firm’s most recent financials.
Wrestling market share away from IBM will be no easy task, particularly in mission-critical markets where customers are often reluctant to give up what they already know works reliably.
Yahoo Inc is discontinuing seven products, including its mobile app for Blackberry smartphones, as new Chief Executive Marissa Mayer takes a page from Google Inc’s Playbook by eliminating unsuccessful products.
The product shutdowns, which Yahoo announced on its official company blog this past Friday, are part of what the company said are regular efforts to evaluate and review its product lineup.
“The most critical question we ask is whether the experience is truly a daily habit that still resonates for all of you today,” wrote Jay Rossiter, Yahoo’s executive vice president of Platforms.
The announcement represents Yahoo’s second group shutdown of products since Mayer, a former Google executive, became CEO of the struggling Web portal in July. So-called “spring cleaning” announcements, in which multiple products are shut down, have become a regular feature at Google in recent years.
Mayer signaled the company would prune its line-up of mobile apps at an investor conference last month, noting that Yahoo would reduce the 60 to 75 disparate mobile apps it currently has to a more manageable 12 to 15 apps.
Yahoo said its app for Blackberry smartphones would no longer be available for download, or supported by Yahoo, as of April 1.
Yahoo also said that on April 1 it will stop supporting Yahoo Avatars – the cartoon-like digital characters that consumers create to depict them on Web services such as Yahoo instant messenger and Facebook. Consumers who want to continue using their avatar on Yahoo’s online services must download the avatar and then re-upload the information to their personalized Yahoo profile.
The other Yahoo products set to be terminated include Yahoo App Search, Yahoo Sports IQ, Yahoo Clues, the Yahoo Message Boards website and the Yahoo Updates API.
Intel has scaled back plans for its next Itanium chip, prompting observers the question Intel’s commitment to the chip.Intel said the next version of Itanium, codenamed Kittson, will be a 32nm part. It will not migrate to a more advanced process. The new chips will use the same socket as the existing Itanium 9300 and 9500 chips.
Analyst Nathan Brookwood said the move is Intel’s idea of an exit strategy.
“It may very well be that Itanium’s time has come and gone,” he said.
Gartner analyst Martin Reynolds told Computerworld that Itanium might see a new process in the future, if it proves successful enough to make the investment worthwhile. However, he does not expect any more major updates to the architecture.
Itanium launched in 2001 and it quickly became a running joke in the industry. It never achieved the volumes expected by Intel and AMD seized the opportunity to take on Intel with 64-bit Opterons. However, Itanium soldiered on for years, although many vendors stopped developing software for the chip.
Red Hat, Microsoft and Oracle chose to ditch the chip, but Oracle was eventually forced to continue development after a legal battle with HP.
HP is practically the only Itanium partner left, but Itanium’s days are clearly numbered.
Netflix Inc surprised Wall Street on Wednesday with a quarterly profit after the video subscription service added nearly 4 million customers in the United States and abroad, sending its shares soaring.
The dominant U.S. video rental company had warned three months ago that it expected a loss for the October to December period as it paid startup costs for an aggressive expansion into Scandinavia and other foreign markets.
Netflix beat that guidance by reporting $8 million in net income for the fourth quarter, or 13 cents per share. Revenue rose to $945 million. The company also forecast it will add 1.7 million members in the first three months of 2013, though it forecasts net income to be “relatively flat” due to declining profit from the DVD business and higher global operating costs.
Shares of the company surged 34 percent after Netflix released its results, reaching $138.14 in after-hours trading, after closing at $103.26.
“They did surprisingly well with subscriber growth and profitability,” Lazard Capital Markets analyst Barton Crockett said. “It was a very good quarter.”
Netflix said it added 2.1 million customers during the quarter to its U.S. streaming business, its largest segment, for a total of 27.2 million at the end of 2012.
In international markets, the company gained 1.8 million subscribers. The total Netflix subscriber base for Latin America, Canada and parts of Europe reached 6.1 million.
The holiday season was “particularly strong, driven by consumers buying new electronic devices, including tablets and smart TVs” that offer Netflix’s service, CEO Reed Hastings and CFO David Wells said in a letter to investors.
Private equity outfit Silver Lake Partners is working to finalize a bidding group to take the world’s No. 3 PC maker private, and has started discussions with potential equity partners, sources familiar with the matter have said.
Dell also has formed a special committee to take a close look at any potential deal on the table, multiple sources with knowledge of the matter told Reuters. If successful, it would be one of the largest corporate buyouts since before the global financial crisis.
Microsoft, which accelerated its foray into computer hardware in 2012 with the launch of the Surface tablet, will provide the capital in the form of mezzanine financing according to CNBC, which is a hybrid of debt and equity.
Microsoft and Dell both declined to comment on the CNBC report. Shares in Dell gained climbed 2 percent to $13.08 in late morning trade.
Sprint, the No. 3 U.S. mobile service provider, announced on December 17 an agreement to buy the outstanding shares of Clearwire it doesn’t already own for $2.97 per share. While Sprint holds a more than 50 percent stake in Clearwire, the deal requires approval from holders of just over 50 percent of Clearwire’s minority shares.
Securing that approval is looking increasingly difficult, however.
Investors collectively owning almost 211 million shares of Clearwire – roughly 29 percent of its minority shares – told Reuters they do not think Sprint’s bid is high enough and that they would not be happy casting their votes for the deal.
Crest Financial, which owns about 8 percent of Clearwire’s minority shares, immediately sued to block the deal, for example. Crest’s argument, echoed by other investors, is that Clearwire is worth a lot more than $2.97 per share as it has valuable wireless spectrum that would be crucial for Sprint.
While the 29 percent alone would not be enough to vote down the deal, its underscores the growing disenchantment Clearwire’s minority shareholders have with Sprint’s offer. Reuters was not able to reach all Clearwire shareholders.
For the deal to go through, Sprint needs approval from investors holding more than 362 million shares out of the roughly 725.89 million total minority shares outstanding. Share figures are based on the latest publicly available information.
Sprint said in December that it had support from three strategic investors – Comcast Corp, Intel Corp, and Bright House Networks LLC – who collectively own about 125.4 million Clearwire shares.
Morningstar analyst Brian Colello did not see any one news story driving the stock, which has been climbing steadily recently. The new phones are to be formally unveiled on January 30.
“The stock has been extremely volatile, based on BlackBerry 10 rumors and the potential for success in the market,” said Colello.
Several blog posts published on Friday showed purportedly leaked photos of what could be the new phones, and a number of tech sites confirmed that Sprint Nextel Corp would carry BlackBerry 10.
“Sprint plans to bring BlackBerry 10 to our customers later this year. We will share more details soon,” Mark Elliot, a spokesman for the U.S. carrier, said in an email.
Throughout the autumn of 2012, RIM’s stock rose as investors grew more optimistic about BlackBerry 10. Morningstar’s Colello said the market went from pricing in no chance of success, to betting on at least some chance of success for the new products.
The new line’s success is crucial to the future of RIM, which has lost ground to competitors such as Apple Inc and Samsung Electronics, and in December reported its first-ever decline in total subscribers.
BGC Partners analyst Colin Gillis said the news that all four major U.S. carriers would offer BlackBerry 10 was likely lifting the stock, along with Nokia’s stronger-than-expected quarterly results — a sign that Google Inc’s Android smartphones have not completely taken over its market.
“The smartphone market is one of the most robust, largest markets in the world … it’s also dynamic,” said Gillis. “The winners and losers are going to be shifting. That said, it’s a difficult road the company is facing.”
A large Clearwire Corp shareholder has stepped up its campaign to block the planned sale of the wireless service provider to its majority owner, Sprint Nextel Corp, saying it plans to ask the U.S. telecoms regulator to halt the deal.
Crest Financial’s general counsel also said on a call with reporters that it will ask the U.S. Federal Communications Commission to block Sprint’s plan to sell 70 percent of itself to Softbank Corp of Japan for $20 billion.
Going to the FCC is a new line of attack on the Sprint deal by Crest, which has also filed a class action lawsuit on behalf of Clearwire investors. Dave Schumacher, Crest’s general counsel, said the fund said other minority investors told Crest they did not support the Sprint deal, but he did not provide details.
The investment fund, which owns around 8 percent of Clearwire, has said Sprint’s offer of $2.97 share for the roughly 50 percent of Clearwire it does not currently own, “grossly undervalues Clearwire.” Sprint’s offer is worth about $2.2 billion, but Schumacher said Crest had not done its own valuation and was basing its criticism of the price on estimates by analysts.
In going to the FCC, Crest will argue that the Clearwire deal artificially undervalues the company’s spectrum holdings, Schumacher said. That in turn potentially devalues future revenue for the U.S. government when it auctions off spectrum licenses.
“The merger is therefore a bad deal all around for Clearwire shareholders and also for the public at large,” said Schumacher.
Sprint spokesman Scott Sloat said the deal with Clearwire was the right one for Sprint, Clearwire and American consumers. He said the class action lawsuit was baseless.
A spokesman for Clearwire, Mike DiGioia, declined to comment on Crest’s intention to go to the FCC.