Wedbush Securities analyst Michael Pachter spoke at the Game Monetization USA Summit in San Francisco, and once again made some bold predictions about the future of the game industry. He pulled no punches as he evaluated the current state of affairs in the business, and he had some hard advice for a number of companies.
Pachter noted that more people are playing games on more devices than ever before, but he doesn’t think the console market will be growing. “I don’t think you’re ever going to see 500 million consoles out there,” Pachter said. For lifetime sales, Pachter expects the Wii U will ultimately sell 30 million “or fewer” units, the PS4 will sell 100 to 120 million units, and the Xbox One will sell 90 to 110 million units.
“The reason Sony beats Microsoft is solely the price,” Pachter noted. “Microsoft loses the next generation unless they cut price. If Microsoft drops its price to $399, I expect the sales to be equal to the PS4.”
The lifetime sales Pachter predicts compare to current sales of the PS3 and the Xbox 360 at about 80 million units apiece, but it’s far below some estimates of hundreds of millions of next-gen consoles. “I don’t know where they get those numbers,” Pachter said. He feels that at several hundred dollars, with games costing $60 or more, consoles are just too pricey to ever sell hundreds of millions of units.
The Wii U’s performance so far Pachter characterized as “underwhelming,” but noted it’s possible “but unlikely” that exciting new titles will reinvigorate growth. He believes that Nintendo is missing a huge opportunity to bring new gamers into their brands: Nintendo should put old GameBoy Advance content on phones and tablets for free, and charge $3 to $5 for more recent titles from the DS. Pachter feels this would generate enormous revenue for Nintendo and bring millions of new fans into their brands, and give them a strong way to sell newer titles on the 3DS and Wii U that use those brands.
“I don’t know why Iwata is still employed,” Pachter said, given that he refuses to take advantage of this opportunity while the handheld market continues to shrink and the Wii U has failed so far to catch on in a big way.
Pachter is more positive on the PlayStation 4 – “Sony thrives, Nintendo doesn’t” – saying it’s impressive as a game playing device. “The graphics are phenomenal, and the huge RAM makes future innovation likely,” Pachter pointed out. He noted that the multimedia features remain unclear, but the CPU power of the PS4 allows the potential for huge improvement in the future. As for the Xbox One, Pachter noted it’s impressive as a multimedia device, and the added features of Kinect and Skype give it additional value. “We’re sticking with our prediction of a built-in TV tuner” for the Xbox One, Pachter said, which would simplify the ability of the Xbox One to control your television viewing.
“The next generation of consoles is probably the last,” Pachter said. “We expect frequent model updates instead of new consoles.” Moreover, there’s going to be renewed interest in the PC, he predicted. “I think the PC is going to make a comeback, the PC will be the hub of all this stuff,” he stated. He feels Smart TVs are a dumb idea, noting that you don’t have a smart monitor connected to your computer. He envisions there will be a number of screens around the home, perhaps controlled by a tablet, being driven by a supercomputer in your pocket that we call a smartphone.
Esoteric business software maker, which no one is really certain what it does, SAP is debating whether to accelerate moving more of its business to the cloud.
The move would be a change in strategy which might initially have only a small impact on its sales. Co-chief executive Jim Hagemann-Snabe said the change would generate more sales by 2017 particularly in markets like the US where there is a big push onto the cloud.
Talking to a Morgan Stanley investor conference this morning, Hagemann-Snabe said that this would have impact on the 2015 level, I don’t expect enormous impact but it would have some impact because you are delaying some revenues. In the long term however it makes a lot of sense, which is not the sort of thing people expect from SAP.
LG is investigating claims that its TVs send details about their owners’ viewing habits back to the manufacturer.
Blogger Jason Huntley detailed how his Smart TV was sending data about which channels were being watched. It appears that TVs uploaded information about the contents of devices attached to the TV, which is probably illegal. The UK Information Commissioner’s Office is investigating too.
When Huntley contacted the South Korean company he was told that by using the TV he had accepted LG’s terms and conditions so there. Huntley said details of what channels he had been watching had been sent even after a privacy setting had been changed.
He first come across the issue in October when he had begun researching how his Smart TV had been able to show his family tailored adverts on its user interface. When he looked at the TV’s menu system, he had noticed that an option called “collection of watching info” had been switched on by default.
After switching it off, he had been surprised to find evidence that unencrypted details about each channel change had still been transmitted to LG’s computer servers, but this time a flag in the data had been changed from “1″ to “0″ to indicate the user had opted out.
The Guardian has the papers, and it shows a US National Security Agency (NSA) memo that talks about how it can collect information about unsuspected UK citizens and keep hold of their data, meaning their phone communications and their email contacts. This can then be used to build up information about links between people.
“Sigint [signals intelligence] policy … and the UK Liaison Office here at NSAW [NSA Washington] worked together to come up with a new policy that expands the use of incidentally collected unminimized UK data in Sigint analysis,” says the memo
“The new policy expands the previous memo issued in 2004 that only allowed the unminimizing of incidentally collected UK phone numbers for use in analysis. Now SID analysts can unminimize all incidentally collected UK contact identifiers, including IP and email addresses, fax and cell phone numbers, for use in analysis.”
The agreement has its roots in the 1946 UK/USA Signals Intelligence Agreement, which should prevent allied intelligence agencies from monitoring each other’s citizens without permission. However, it includes a caveat, which is that this can happen, as long as it is done in secret and in the best interest of nation states.
Governments reserved the right to stop behaving so polititely earlier, and “when it is in the best interests of each nation,” reports the Guardian, which has reproduced part of the memo.
“Therefore,under certain circumstances, it may be advisable and allowable to target second party persons and second party communications systems unilaterally, when it is in the best interests of the US and necessary for US national security…,” it adds.
“There are circumstances when targeting of second party persons and communications systems, with the full knowledge and co-operation of one or more second parties, is allowed when it is in the best interests of both nations.”
The Wii U gets a new system update from Nintendo. While details are a bit vague on what all the new system updates actually does, Nintendo says it “improves overall system stability” and also includes minor adjustments “to enhance the user experience”.
The update comes ahead of a planned Nintendo update for the 3DS that is scheduled to arrive next month. The 3DS update will bring the Miiverse to the 3DS as well as adds the ability to combine eShop balances on both the 3DS and Wii U systems. In addition it will add Network IDs to the 3DS to access the eShop. Apparently 3DS owners will not have to take advantage of using a NNID to combine their eShop purchases and will still be allowed to download software from the eShop without a NNID.
Rumors suggest that another system update for the Wii U is just around the corner, but will likely not arrive till early next year, unless Nintendo has a reason to release it sooner. On the software front, the Wii U is still struggling, but the recent sales boost has helped, but Nintendo needs strong sales for the Wii U this holiday season in order to help get published and developers re-engaged in developing for the console. Whispers suggest that Nintendo expects supplies of the Wii U to be plentiful this holiday season and does not foresee shortages like what has plagued the Wii consoles of the past. The problem is however that the lack of software will likely keep many buyers away.
HP has disclosed that it is working to extend its HP Nonstop fault-tolerant server range to include hardware based on Intel x86 processors, a move that will fuel renewed speculation regarding the future of the Itanium processor family.
However, the firm simultaneously unveiled new HP Integrity Nonstop blade servers based on the Itanium 9500 series, the latest version of the processor line, and reiterated again its commitment to customers still running Itanium based systems such as Nonstop and the mission-critical Integrity line of servers.
Neil Pringle, director of HP Business Critical Systems in EMEA, told The INQUIRER that the firm plans to introduce x86 architecture into the Nonstop line in 2015. He said that HP will offer it in parallel with the present Itanium architecture to offer customers greater choice.
“We are continuing that family of products and announcing that the Intel 9500 chip has now been deployed into the NonStop family, but in addition we are planning to extend the family to adopt in parallel the x86 architecture for a set of our customers. It means they can still choose the world’s most available server, but they will have the choice to use Itanium or x86,” he said.
The move mirrors HP’s adoption of Intel Xeon based server blades into the mission-critical Integrity lineup two years ago, as part of HP’s Project Odyssey. The Integrity systems were also given a boost with the release of new blades based on the Itanium 9500 chip almost exactly a year ago.
However, while the move allowed Windows and Linux workloads to run on Integrity systems, HP has declined to port its HP-UX Unix operating system that forms the heart of Integrity onto the x86 architecture. With Nonstop, however, the operating system and applications will run on x86 chips.
Project Odyssey has taken longer to reach HP’s NonStop systems, which are designed to provide the highest level of availability for customers in the banking, telecommunications and manufacturing sectors. Pringle claimed that one customer has been operating services on Nonstop for over 27 years without a single interruption.
Historically, the product line can be traced back to the Tandem Nonstop line, which was acquired by Compaq and subsequently acquired by HP over a decade ago.
Pringle said that customers will be able to seamlessly operate existing Nonstop OS applications on x86 Nonstop blades without recompilation, although recompiling them will deliver optimum performance.
HP said it is developing its x86 Nonstop hardware on the existing Xeon processors, but hinted that this might not be what it is actually based on when it reaches commercial availability.
“It will depend on Intel’s roadmap,” said Pringle, “but also on our customers. While they are looking for choice, they are also looking for stability, so we would look to choose from the Xeon family which is the right chip at the time.”
When asked if HP is making this move because customers want to migrate away from Itanium, Pringle denied this, reiterating that it was about delivering choice.
“If customers are looking to continue to process environments that they do today, they will probably stay with Itanium. But if we have customers looking to extend their capabilities and re-architect their environment to take them forwards for the next 10 to 15 years, which many large institutions are, we will offer them the choice to operate the world’s most available server on Itanium or x86,” he explained.
However, Itanium processor development has stalled over the past decade, with Intel repeatedly failing to hit delivery dates for successive chips on the roadmap, while the Xeon line has continued to improve in both performance and mission-critical features. It would be surprising if some customers were not pushing HP to offer a migration path off Itanium.
The new Itanium-based Nonstop systems, the HP Integrity Nonstop Bladesystem NB56000c and HP Integrity Nonstop Bladesystem NB56000c-cg are available worldwide today, HP said.
Based on an assumed initial public offering price of $18.50 — the midpoint of the range — Twitter estimates the net proceeds from the sale of shares of common stock will be roughly $1.25 billion, the company said in documentsfiled with the U.S. Securities and Exchange Commission.
Some 80.5 million shares of common stock will be registered, according to the filing.
Releasing its IPO price range positions Twitter to begin its “road show,” seeking to raise funds from investors across the country. In documents filed last week, the company said it would list its shares under the ticker symbol TWTR on the New York Stock Exchange, representing a big win for the market over rival Nasdaq.
Twitter has yet to determine a date for the listing, though one report suggested Nov. 15 could be the day.
Twitter’s IPO is likely to be one of the hottest of the year and the most prominent in social media since Facebook went public last year. Twitter’s share price range will be markedly lower than Facebook’s, which priced its IPO at $38 per share.
Twitter filed for its highly anticipated public offering earlier this month.
The maker of expensive esoteric software which no-one is really sure what it does, SAP has decided to pull the plug on its offering for small businesses. Business weekly Wirtschaftswoche said SAP would stop the development of a software dubbed Business By Design, although existing customers will be able to continue to use it.
SAP insists that development capacity for Business By Design was being reduced, but that the product was not being shut down. Business by Design was launched in 2010 and was supposed to generate $1 billion of revenue. The product, which cost roughly 3 billion euros to develop, currently has only 785 customers and is expected to generate no more than 23 million euros in sales this year.
The Wirtschaftswoche report said that ever since the SAP product’s launch, customers had complained about technical issues and the slow speed of the software.
BlackBerry Ltd sought to reassure its leery customers and partners that it was financially stable and “here to stay,” even though it announced massive layoffs and sources say it is in talks to sell all or part of the company.
In an open letter published in 30 news outlets across nine countries, the Waterloo, Ontario-based company stressed that its customers can continue to count on BlackBerry and its products, despite the challenges it is facing and the changes it is undergoing.
BlackBerry’s products have struggled to compete against the likes of Apple Inc’s iPhone and the numerous devices powered by Google’s Android operating system.
A new line of smartphones that run on the BlackBerry 10 operating system has also failed to re-ignite sales, prompting the company last month to announce that it would slash its global workforce by more than a third.
“Our customers read a lot about BlackBerry these days, as we make the headlines quite often – this has created a lot of noise and confusion” Frank Boulben, the company’s chief marketing officer, said in an interview.
“We want customers to know that they can continue to count on us – we are here to stay. We have substantial cash on our balance sheet and we have no debt. We are restructuring our cost base and this is a very painful transition, but it will make us financially stronger and we want to get that message directly to our customers.”
The open letter is being distributed via social media channels and was published in Tuesday’s edition of newspapers across the globe, including the Washington Post and Wall Street Journal in the United States, and the Globe and Mail and National Post in Canada.
The company’s future was further thrown into question after it announced this summer that it is weighing its options, including an outright sale.
Sources have told Reuters that the company is in talks with Cisco Systems, Google Inc and SAP about selling all or parts of itself. Such a deal would be an alternative to a preliminary, $9-a-share offer by a group being led by BlackBerry’s biggest investor, Fairfax Financial Holdings Ltd.
Last week, BlackBerry co-founders Mike Lazaridis and Douglas Fregin also said that they are considering a bid to buy the smartphone maker.
Boulben said the uncertainty is the reason why BlackBerry is publishing the letter, which highlights the company’s strengths from its security offering to its device management capabilities and its mobile messaging platform.
“Whoever is interested in BlackBerry understands that the company has world class products and services. These are products and services that customers can continue to count on.”
Netflix Inc is having preliminary discussions with several U.S. cable television companies including Comcast Corp and Suddenlink Communications to make its streaming video service available through their set-top boxes, according to a Wall Street Journal report, citing people familiar with the matter.
According to the Journal, the negotiations are in the early stages, with no deal expected soon. The report said that one sticking point in the negotiations is that Netflix wants cable companies to adopt special technology designed to improve the quality of its streaming video.
Last month, two European cable companies — Sweden’s Com Hem and Virgin Media in Britain — struck deals to allow their customers to access Netflix through Tivo set-top boxes.
Netflix Chief Financial Officer David Wells, speaking at a Goldman Sachs investor conference last month, said that the company was willing to strike similar deals with U.S. cable companies.
“We would love to reduce the friction to the end consumer, and to be available via the existing device in the home which is the set-top box,” Wells said. “But it’s up to the (pay TV provider) to decide how much a competitor they view us as, or a complement.”
Netflix, Comcast and Suddenlink could not be immediately reached for comment.
On Wednesday the financial research company PrivCo released a report that, by using deduction, came to the conclusion that Twitter, at one point, was shooting for an IPO date of Nov. 15.
PrivCo’s analyst was based on an earlier version of Twitter’s public S-1 filing with the Securities and Exchange Commission, recently made public. In it, the social network said that the deadline for employees to sell restricted stock to cover tax obligations was Feb. 15, 2014. Because this lock-up period is typically 90 days after an IPO, that means Twitter was planning to go public on Nov. 15, PrivCo said.
By giving the Feb. 15 lock-up date in that previous document, “Twitter’s IPO advisors slipped up,” PrivCo said.
PrivCo’s analysis was based on an earlier draft of Twitter’s IPO filing, so the company may very well have adjusted its timeline for going public since then. The social network could not be immediately reached to comment on PrivCo’s report.
Twitter’s documents for its highly anticipated IPO became public last week. In them, the company said it would be listing on the Nasdaq Global Select Market or the New York Stock Exchange under the symbol “TWTR,” but it did not say when it would be making its initial public offering.
PrivCo’s analysis does jive with some other reports saying that Twitter is shooting to begin trading before Thanksgiving.
Twitter’s initial filing was submitted confidentially to the SEC under the JOBS (Jumpstart Our Business Startups) Act so it could prepare its paperwork out of the public eye. The company said via tweet on Sept. 12 that it had filed plans for an IPO, but the actual paperwork was likely submitted much earlier than that.
Lower prices for critical components such as cameras and wireless technology have been lowering barriers to entering the $13 billion home security market, traditionally the territory of players like ADT Corp.
For cable companies such as Comcast Corp and Time Warner Cable Inc, home security is another revenue stream to help rebuild margins whittled away by rising programming costs and declining numbers of video subscribers. It is also a way to put to work the billions of dollars that cable companies have invested to create high-speed video and data services over the years.
And home security subscribers tend to stick around for an average of seven or eight years, according to industry estimates, unlike the fickle cable TV subscribers who can be lured away by enticing deals from satellite and telecom rivals.
Cable companies “are under pressure on their traditional lines of business so there’s some urgency added to add more revenue,” said Jim Johnson, executive vice president of iControl, the main home security vendor for Comcast, Time Warner Cable and Cox Communications.
Comcast, the largest U.S. cable operator with 22 million video subscribers, entered the security market in 2010 and has not revealed subscriber numbers.
Time Warner Cable, which serves 12 million video customers, has 30,000 subscribers for its security business, incoming Chief Executive Rob Marcus said at a recent investor conference. Consumers can now “watch what your dog or cat or nanny are doing during the day,” he told investors.
Cable operators will have to outmaneuver incumbents that include ADT, Protection 1, Ascent’s Monitronics, with years of experience, infrastructure and name identification. ADT alone has 6.5 million customers, about a quarter of the U.S. market.
The Silicon Valley startup that elevated the lowly thermostat with attention-grabbing designs is now launching a $129 “Nest Protect,” a smoke and carbon monoxide detector that speaks and responds to hand gestures.
Nest – co-founded by Apple alums Tony Fadell and Matt Rogers – has embedded its sleek gadget with a female voice that warns users when smoke and carbon monoxide levels get dangerously high.
Users can wave a hand to silence alarms, and choose to receive alerts on their smartphone or tablet, Matt Rogers said in an interview with Reuters.
“It’s really about finding the unloved and these things are incredibly important that you cannot live without,” he said, when asked why Nest decided to work on a smoke detector. “Yet they don’t work. They are frustrating. They are ugly.”
Rogers said there really has been no innovation in this market for many years and is ripe for disruption.
The market for smoke and carbon monoxide detectors is three to four times bigger than thermostats, Nest’s first device that retails for $249, Rogers said. “We are again looking at the top end of the market.”
The new device has a battery life between three and seven years, and comes in black and white. It will first go on sale in the United States, Canada and United Kingdom. And the smoke alarm can be set to warn in either English, French or Spanish.
Nest Protect includes nine sensors to help detect hand gestures and other movements. The device can also act as a low-powered night light that automatically switches on when someone walks under it.
The new gadget goes on sale in November at retailers such as Best Buy and Home Depot, or online at Amazon.com.
Nest, which counts Kleiner Perkins, Lightspeed Venture Partners, Google Ventures and Shasta Ventures among its investors, employs a large number of designers and engineers from Silicon Valley firms like Apple and Google Inc.
It gained a large following with its first thermostat – a round, brushed-metal device with a convex glass screen that displays temperature and changes hue to match the color of the wall it attaches to. It also tracks usage and employs that data to automatically set heating and cooling temperatures.
Nest now has about 280 employees, up from 90 in 2011.
“It’s been an absolute ride,” Rogers said of Nest’s journey from a startup in stealth mode to a recognized brand in home automation.
It is starting to look like Twitter’s much awaited IPO is going to be hyped up even more than the Facebook fiasco. Brokers are starting to predict that Twitter’s share price could almost double in its first year as a listed company.
SunTrust Robinson Humphrey analyst Robert Peck, the first to rate the stock, suggested Twitter could float at $28-$30 per share, and said it could reach $50 within a year. Peck said that it was important for investors to look at Twitter beyond just a 140 character text. Despite posting big losses over the last three years, Twitter hopes to woo investors with its advertisement revenue growth.
The company only started selling advertising only in 2010, received about 87 percent of its revenue from advertising in the first half of the year. Peck thinks that Twitter could capture a part of the $200 billion global TV market with Amplify, which allows broadcasters to show video clips and ads through tweets coordinated with what is being shown on TV.
Twitter could make use of the search capability with a product similar to Google’s AdWords, where advertisers pay Google according to the number of clicks on the ads, the brokerage said. Peck based his numbers on a float of 50 million shares, raising up to $1.5 billion, taking shares on issue to around 537 million.
BlackBerry Ltd, on the block as its smartphone business struggles, is engaged in discussions with Cisco Systems, Google Inc and SAP about selling them all or parts of itself, several sources close to the matter said.
Such a deal would be an alternative to the preliminary agreement reached weeks ago with a group, led by BlackBerry’s biggest shareholder, Fairfax Financial Holdings, to take the company private for about $4.7 billion, a bid which has faced some skepticism because of financing questions.
The company, based in Waterloo, Ontario, has requested preliminary expressions of interest from potential strategic buyers, which also include Intel Corp and Asian companies LG and Samsung, by early next week.
It is unclear which parties will bid, if any. But the potential technology buyers have been especially interested in BlackBerry’s secure server network and patent portfolio, although doubts about the assets’ value remain an issue, the sources said.
Google, Intel, Cisco, LG and SAP declined to comment. Samsung was not immediately available for comment.
Possible bidders are proceeding with caution given the uncertainty around BlackBerry, which last month reported a quarterly loss of nearly $1 billion after taking a writedown on unsold Z10 phones.
The value of BlackBerry’s patent portfolio and licensing agreements is likely to halve in the next 18 months, a company filing from this week shows, potentially limiting its attractiveness.
According to analysts, BlackBerry’s assets include a shrinking yet well-regarded services business that powers its security-focused messaging system, worth $3 billion to $4.5 billion; a collection of patents that could be worth $2 billion to $3 billion; and $3.1 billion in cash and investments.
Adding to the company’s woes, it’s likely to burn through almost $2 billion of its cash pile in the next year and a half, Bernstein analyst Pierre Ferragu wrote on Thursday after studying the filing.
Private equity firms that have showed interest in BlackBerry – which also include Cerberus Capital Management – have asked the company and its advisers to provide additional financial details about its various business segments, two of the sources said. That process could take another few weeks, as BlackBerry focuses on taking bids from industry peers, the sources said.
In August, the company said it was weighing its options, which could include an outright sale, after Reuters first reported BlackBerry’s board was warming up to the possibility of going private.
At that time, it formed a five-member special committee chaired by board director Timothy Dattels. Other members include Chairman Barbara Stymiest, Chief Executive Thorsten Heins, Richard Lynch and Bert Nordberg.
A spokesman for BlackBerry said in an emailed statement to Reuters: “The special committee, with the assistance of BlackBerry’s independent financial and legal advisors, is conducting a robust and thorough review of strategic alternatives.” He declined to provide further comment.