Start Up No.944: smartphones post-boom, Apple slows down, Facebook saturates, Google staff walk out, VR’s too pricey, and more

Two million children – of 14 million – in the UK have access to something like this. Photo by methodshop .com on Flickr.

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A selection of 11 links for you. Satisfied yet? I’m @charlesarthur on Twitter. Observations and links welcome.

Two million children now using smart speakers in the UK • Strategy Analytics


at least two million children are now using smart speakers in the UK, particularly for listening to music, searching for information and hearing jokes and funny stories. The analysis is based on an online survey of 1002 smart speaker users carried out in July/August 2018.

Listening to music is by far the most popular activity for children who use a smart speaker. 78% are using it to listen to music at least weekly and more than half at least once a day. Children’s usage of smart speakers is quite different from that of adults: children are more likely to use them to listen to jokes and play games, while adults are more likely to listen to the news and get weather information.

The research also found that more than half of children who use a smart speaker use it to help with homework, learn vocabulary or practice spelling. But in a third of homes where smart speakers are used and children are living, the children are not using a smart speaker at all.

David Watkins, Director, Smart Speakers at Strategy Analytics commented: “Some parents are clearly quite happy that their children are making use of smart speakers. They are mostly for entertainment, but they also have uses which are more serious, and, some would say, valuable.”


There are roughly 14 million children (under 16) in the UK. This is incredibly rapid adoption, if the survey is robust.
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Skype is getting a call recording feature nearly 15 years after it launched • The Verge

Tom Warren:


Microsoft is finally adding call recording to Skype. Later this month, Skype will be updated to include built-in call recording. The new feature will be cloud-based, allowing you to access Skype call recordings across devices including Windows, Mac, iOS, Android, and even Linux. “Call recording is completely cloud-based, and as soon as you start recording, everyone in the call is notified that the call is being recorded,” explains Microsoft’s Skype team. “Call recordings combine everyone’s video as well as any screens shared during the call.”


This might sound like a boon to podcasters – except they want to capture the sound going into the microphone, not the sound once it’s been encoded by Skype. So podcasting on the iPad still hasn’t arrived. (Thanks Stormyparis for the link.)
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Free isn’t cheap enough • The Blog of Palmer Luckey

You know, he’s an Oculus (the VR people bought by Facebook) founder:


In the end, hardware sales are a meaningless metric for the success of VR.  They matter only as a means to an end, a foundation to enable the one thing that truly matters: Engagement.  Engagement is all that matters.  Engagement is Everything!

This is just as true in the present day.  Hardware sales get a lot of attention and speculation from analysts and consumers alike, but the real name of the game revolves around the number of people logging in and spending money each week, the life force that makes everything actually go.  Recent market experiments with cheap VR hardware have shown that there are millions of people willing to buy said hardware, but very few among them continue to use the hardware or invest in the software ecosystem for very long.  This is true even when people get the hardware for free – the millions of cardboard boxes fulfilling their ultimate destiny on the back shelf of a closet don’t do much for the VR industry.  Why the lack of use?  Quality of experience.  If the free hardware was as good as the visor described in the first paragraph and paired with good content, a mass-market VR revolution would occur practically overnight.

And what if that visor cost $999 instead of $99?  Price is certainly a relevant factor in the rate of VR adoption, but not a dominant one – as someone who has had to eat my hat multiple times in pursuit of keeping costs low, I feel like I intimately understand what it must have felt like to deal with the response to the E3 2006 Playstation 3 price announcement.  Five hundred and ninety nine US dollars?!  The hypothetical visor provides quite a bit more for your money, though – it may not sell billions of units, but it would certainly sell by the hundreds of millions.  Lower pricing for existing VR technology can help expand the size of the active and engaged userbase, but not to nearly the degree many people would expect.  I want to take this a step further and make a bold claim: No existing or imminent VR hardware is good enough to go truly mainstream, even at a price of $0.00. 


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Global smartphone shipments down 6.0% in Q3 2018 as the leading vendor and the largest market face challenges • IDC


While the overall smartphone market has declined for four straight quarters, two things stand out as major factors in the third quarter. Samsung, the largest smartphone vendor in terms of market share, accounting for 20.3% of shipments in 3Q18, declined 13.4% year over year in the quarter. And secondly, China, which is the largest country market for smartphone consumption, accounting for roughly one third of global shipments, was down as well for the sixth consecutive quarter.

Samsung had a challenging quarter with shipments down 13.4% to 72.2m units shipped. The market share leader continues to feel pressure from all directions, especially with Huawei inching closer to the top after its second consecutive quarter as the number two vendor. In addition, growing markets like India and Indonesia, where Samsung has held leading positions for many years, are being changed by the rapid growth of Chinese brands like Xiaomi, OPPO, and vivo.

Meanwhile, China’s domestic market, which represents roughly one third of all smartphones consumed, has been in decline since the second quarter of 2017, and 3Q18 was the sixth consecutive quarter where the market sees contraction. China was down 11% in the first half of 2018 (1H18), and the challenges continued into 3Q18. Overall IDC expects this decline to decelerate with the market returning to flat growth in 2019.


Apple down to third place, with a 13.2% share (46.9m); Huawei was 14.6% (52.0m). Xiaomi, which a couple of years ago was struggling, is now 4th, with 9.7% share (34.3m). Chinese smartphone companies thriving even as China sales slow.

The smartphone boom is over. What follows now flows from that.
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Apple holiday forecast misses on iPhone demand; shares fall • Bloomberg

Mark Gurman:


Apple chief executive officer Tim Cook cited weakness in some emerging markets, currency volatility, the timing of new iPhones and uncertainty about whether Apple can meet demand for all the new models it recently released, according to an interview with Reuters.

IPhone unit sales barely grew from a year earlier, even though new flagship iPhones came out in the fiscal fourth quarter this year. That was a disappointment, considering there were no big iPhone launches in the same period last year.

The company sold 46.9m iPhones in the quarter, generating revenue of $37.2bn. The period included about a week and a half of sales of the high-end iPhone XS and iPhone XS Max models. The average iPhone selling price was $793. Analysts were looking for 48.4m iPhone units in the quarter, and an average selling price of $729.

The company released new iPhones in September, and upgraded iPads and Macs were introduced earlier this week. Apple raised prices on most of the devices, a relatively recent strategy to offset slowing unit sales growth. It’s a bet that consumers will continue to pay up for access to the company’s specialized and tightly integrated hardware and software.


Apple also announced that it will no longer give out unit sales data for iPhones, iPads or Macs. The interpretation is that emerging markets are slowing down, and that unit sales are going to drop (even if average sale prices, ASPs, rise), and it doesn’t want that on the record. It’s now about keeping ASP up to mask any unit problems – and so keeping Wall St happy.

Wall St isn’t happy, though, because it sees less information as less transparency, and so less visibility about the future.
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Facebook growth slows as Zuckerberg says developed countries are saturated • The Guardian

Gabrielle Canon:


While Facebook also reported continued growth in daily active users this quarter, use of the platform in the west may be waning – which may spell bad news for the company that’s been hit with several scandals and increases in government regulation.

Between the second and third quarters, the company reported an increase of average users from 1.47 billion to 1.49 billion, and a decline in the growth rate from 11% to 9%.

User rates in the US and Europe remained mostly static, and the small growth came in other areas of the world.

On the call, Zuckerberg framed the numbers as a sign that Facebook had remained stable and was saturated in “developed countries”.

He emphasized that the company was expanding its ability to deliver stories and video, and would increase efforts to build communities – replacing that as a priority above newsfeed – with new offers like dating connections that will be rolled out soon.

“These are services that benefit from having everyone you know connected on a single platform,” he said, adding that it had been a tough but important year for the company.


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Google walkout: global protests after sexual misconduct allegations • The Guardian

Matthew Weaver and Alex Hern in London, Victoria Bekiempis in New York, Lauren Hepler in Mountain View and Jose Fermoso in San Francisco:


The mostly young workers listened to some of their co-workers address the crowd, such as Demma Rodriguez, who heads equity engineering at Google in New York.

“Enough is enough is enough!” she shouted, to cheers. “Every single person at Google is exceptional … it is absolutely disgusting that anyone thinks you can be less than exceptional, worse than that, you can be negligent about sexual assault, sexual harassment and abuse of power.”

One man protesting, who declined to give his name, said he participated in the walkout because “I have a sister, a mother.”

He added: “I’m here for all the women in my life.”

Many were too nervous to talk to reporters, while some said they had been told by bosses not to or to refer the media to the company’s PR department.

But Amelia Brunner, 25, a software engineer, who has been with the company for three years, said that while she hasn’t experienced sexual harassment, she has endured different treatment at work because of her gender.

“People will doubt my work a lot more than they will doubt my male colleagues,” she said. “You will get talked down more in meetings.”

She said that while she has a “loud personality” that helps her overcome this, others may not.

“Theres a trickle-down effect “ she said. “How are you supposed to rise in the ranks?”


A reminder that it’s because of claims that some men were paid millions of dollars to leave Google in the face of sexual harassment allegations. In the UK, there has been a similar NDA-payoff row – though the people who got the payoffs were women who disliked their treatment at the hands (or mouth) of Philip Green, head of one of the biggest retailers. So it’s not just Google.
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An AI lie detector is going to start questioning travellers in the EU • Gizmodo

Melanie Ehrenkranz:


The virtual border control agent [in Hungary, Latvia and Greece] will ask travellers questions after they’ve passed through the checkpoint. Questions include, “What’s in your suitcase?” and “If you open the suitcase and show me what is inside, will it confirm that your answers were true?” according to New Scientist. The system reportedly records travelers’ faces using AI to analyze 38 micro-gestures, scoring each response. The virtual agent is reportedly customized according to the traveler’s gender, ethnicity, and language.

For travelers who pass the test, they will receive a QR code that lets them through the border. If they don’t, the virtual agent will reportedly get more serious, and the traveler will be handed off to a human agent who will asses their report. But, according to the New Scientist, this pilot program won’t, in its current state, prevent anyone’s ability to cross the border.

This is because the program is very much in the experimental phases. In fact, the automated lie-detection system was modeled after another system created by some individuals from iBorderCtrl’s team, but it was only tested on 30 people.


Hmm. 30 people? Feels like this is going to have some teething problems.
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Why we’re changing Flickr free accounts • Flickr Blog


Today, we’re announcing updates to our Free and Pro accounts that mark a new step forward for Flickr. To be candid, we’re driving toward the future of Flickr with one eye on the rearview mirror; we’re certain that Flickr’s brightest days lay ahead, but we remain acutely aware that past missteps have alienated some members of our community. We also recognize that many of the clues for how best to build the future of Flickr can be found in our own, rich history.

Many of today’s announcements are unequivocally positive things: a new, simplified login with any email you prefer; improvements to the Pro account; and additional partner perks. The changes to our Free accounts are significant, and I’d like to explain why these changes are necessary and why we’re confident they’re the right path forward for Flickr.

Beginning January 8, 2019, Free accounts will be limited to 1,000 photos and videos. If you need unlimited storage, you’ll need to upgrade to Flickr Pro.

In 2013, Yahoo lost sight of what makes Flickr truly special and responded to a changing landscape in online photo sharing by giving every Flickr user a staggering terabyte of free storage. This, and numerous related changes to the Flickr product during that time, had strongly negative consequences.

First, and most crucially, the free terabyte largely attracted members who were drawn by the free storage, not by engagement with other lovers of photography. This caused a significant tonal shift in our platform, away from the community interaction and exploration of shared interests that makes Flickr the best shared home for photographers in the world. We know those of you who value a vibrant community didn’t like this shift, and with this change we’re re-committing Flickr to focus on fostering this interaction…

…making storage free had the unfortunate effect of signaling to an entire generation of Flickr members that storage—and even Flickr itself—isn’t worth paying for.


Storing all those photos is actually “staggeringly expensive”, says new owner for which money is emphatically NOT no object. The terabyte thing was always crazy, but who would tell Marissa?
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Someone paid thousands of foreigners 20 cents each to hide HuffPost’s negative coverage of a Democratic PAC • HuffPost UK

Alexander Thorburn-Winsor and Paul Blumenthal:


A HuffPost article that critically covered a Democratic political action committee abruptly disappeared from the top results in Google search after a contractor hired thousands of workers outside of the U.S. this spring to help suppress negative coverage of the PAC’s activities.

HuffPost’s April 2016 report investigated the tactics of End Citizens United, a political action committee founded by three former staffers at the Democratic Congressional Campaign Committee, the party’s official organ dedicated to electing Democrats to the House of Representatives. ECU, which worked to elect Democratic candidates who support campaign finance reform, used aggressive and expansive email campaigns to rake in millions of dollars in online donations. The PAC’s pushy tactics angered other nonprofits working toward campaign finance reform, which came to think of the PAC as an arm of the Democratic Party stealing their donors with deceptive email marketing.

Until this spring, HuffPost’s story was the second to come up in a generic Google search for “End Citizens United.” But in the spring of 2018, an anonymous US-based contractor paid at least 3,800 workers in countries around the world through the crowdsourcing firm Microworkers to manipulate what stories would come up when people searched for the PAC in Google, according to public job listings on Microworkers reviewed by HuffPost.


Political wrangling gets worse and worse. I like the irony of using a PAC to end PACs.
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Tech and media website Re/code to be folded into • WSJ

Benjamin Mullin:


The decision to fold Recode into Vox comes more than three years after Vox Media announced the acquisition of the media and technology site in an all-stock deal whose financial terms weren’t disclosed. Jim Bankoff, Vox Media’s chief executive, said at the time that Recode’s conference business was an attractive asset for the company.

Ms. Swisher, a former Wall Street Journal reporter, co-founded Recode with her then-colleague, the technology journalist Walt Mossberg, after the pair parted ways with Wall Street Journal parent Dow Jones in 2013. They were among a wave of high-profile journalists who left their employers to found their own media companies around that time. Jessica Lessin, also a former Wall Street Journal reporter, left to found The Information, a news and technology site, in 2013. Alex Blumberg, a former This American Life producer, co-founded Gimlet Media, a podcasting company, in 2014. Ezra Klein left the Washington Post in 2014 to start with Ms. Bell and the journalist Matt Yglesias.

Recode’s traffic has declined in recent months, as some of the site’s marquee journalists have left the company for jobs at other news organizations. The site attracted 1.36m unique visitors in September 2018, a 50% decrease from its audience of 2.77m unique visitors during the same period the year before, according to comScore. By comparison, the Verge, another Vox-owned tech website, drew 25.9m unique visitors in September.

Mr. Mossberg retired last year, and reporters such as Edmund Lee, Tony Romm and Johana Bhuiyan have all left Recode in the past year. Ms. Swisher has begun writing for the New York Times, which she joined as an opinion contributor in July.


I think Re/code has never quite had the heft that All Things Digital, its forebear spinoff from the WSJ, had – partly because it started from nothing. The Verge did too, but aims to be a sort of technology wire service: the Reuters or AP of the web.

I don’t see Re/code thriving from here, though.
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Errata, corrigenda and ai no corrida: none notified

4 thoughts on “Start Up No.944: smartphones post-boom, Apple slows down, Facebook saturates, Google staff walk out, VR’s too pricey, and more

  1. A nice example of why 3rd-arty stores are nice-to-have:

    1- that app is useful: it allows you to install several copies of the same app, say if you have different logins it saves you the disconnect+reconnect dance
    2- Google is being extremely opaque about a) the app being banned b) why
    3- It’s conceivable the app does violate Store policy (though Google is failing to state which); it’s nonetheless malware-free, benign, and useful.

    • 1) useful, sure. Though it seems to be removing friction that’s barely there.
      2) Google tends to be opaque when it is very suspicious of what an app is doing. Sometimes apps change hands, and the new owners are nefarious. (Linked here multiple times.)
      3) It sounds like Google is wary of apps that can make duplicates. As the story says, nobody seems to be able to work out why. App stores don’t scale very well.

      • Say you have several Clash of Clans accounts, which is pretty much mandatory to enjoy the game: monetization is based on making you wait, workaround is to play several games in parallel. I’ve given them $20/account, that’s fair and that’s it.
        Switching from one account to another on the same device is not possible on iOS (because iOS is dumb). You can do it on Android, but Supercell makes you sweat for it: Settings > Disconnect > Connect > Select Google Play account > spell out CONFIRM on the keyboard > OK.

        That’s a whole lot of careful actions. gBoard makes it better with a custom dictionary, typing “hh” will cause CONFIRM to pop up in the suggestions. You still have to do the rest.

        If I can replace that with Home > Clash2, I’m in !

  2. Interesting:

    I’ve been saying iPhones (all flagships really) are luxuries for 2-3 years now. Nice to see others catching up ;-p Also: smartphones are handbags (ie, social/fashion markers, not tools).

    The issue though is that smartphones aren’t just objects they’re gateways into an ecosystem. The Apple 2 and the Mac had a similar “luxury” issue that made it difficult to marshal enough users to motivate devs. That’s balanced by iPhone users’ willingness to be parted from their money, and then counterbalanced by Apple’s goal to grab most of it. It’s not so much that Open Always Wins, it’s that network effects do. Apple’s lucky Android is so bad at creating them: no aMessage, seriously, Google ?

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