Industry Focus offers up a grab-bag of tech topics this week, including Microsoft's (NASDAQ:MSFT) decision to release Cortana on Android and iOS, Amazon's (NASDAQ:AMZN) latest acquisition, and some bad news on Intel's (NASDAQ:INTC) revenue guidance, tempered by rumors of some potentially very good news for Intel regarding the iPhone.
Speaking of phones, while many consumers think of advertising when they think of the iBeacon and similar systems, analyst Nathan Hamilton shares what many users may find to be some very useful applications of beacon technology.
A full transcript follows the video.
Sean O'Reilly: What did Cortana say to Siri? We'll tell you on this tech edition of Industry Focus.
Greetings, Fools. I am Sean O'Reilly, joining you here with the one and only Nathan Hamilton. We are here at Fool headquarters in Alexandria, Virginia. How are you today, Nathan?
Nathan Hamilton: I'm doing pretty well. I understand not only is it Tech Friday when we're recording, but it's a special day for one of our podcast members here. Is that correct?
O'Reilly: It is. You got me, I am turning 29 today.
Hamilton: Is that the official age? That is the truth?
O'Reilly: Yes, I don't start lying until a year from now!
Hamilton: I started lying about three years ago, then.
O'Reilly: Ooh, man. Awkward! I know how old you are now! A special shout out to my mom -- I didn't do anything special today -- so thank you, Mother, for bringing me into this world!
First up, Nathan, we wanted to chat about Cortana coming to iOS and Android, which they probably should do if they're smart, because iOS and Android have 97% market share or something.
Hamilton: Yes, we'll talk about that and a few other topics, but you hit on it exactly; 97% market share, or whatever the number is currently ...
O'Reilly: I was just reading an article about the market share. I don't follow Microsoft and the Windows Phone market share numbers, but I was just reading an update. I was like, "Oh my gosh, this 3%, this is just sad."
Hamilton: No one does follow them, so ...
O'Reilly: Touché! I have one friend that has a Windows phone.
Hamilton: I think I've seen one person that I know, with a Windows phone device. That really gets at the broader picture of it all here. Microsoft, a few years ago as Satya Nadella took over, realized that, "We can try and go after some market share with Windows Phone," and they still are, with the Surface and so forth.
But the reality of it is, Android and iOS absolutely 100% -- and I know 100% is not the straight number as market share numbers -- but in any other real, meaningful way, 100% they own the operating system market, so it's impossible for Microsoft to compete by just having its own product, like Cortana.
How do you get yourself out there? Cortana drives search revenue through Bing to Microsoft also. How do you get your product out there? The easiest way I know, and Microsoft knows this as well is you've got to go to where the people are, and that's on Android and iOS.
I can't recall the timeline, but Microsoft will be releasing Cortana. For listeners that aren't familiar with it, that's essentially their Siri or OK Google for Windows Phone, and it will be available on iOS and Android.
O'Reilly: "Cortana, what lunch locations are available closest to me?"
Hamilton: Yes. But here's the thing as well. There are different views and people have different opinions, but a lot of the opinions seem to say that Cortana and Google's version are actually better than Apple's (NASDAQ:AAPL) Siri.
They have actually improved pretty significantly. They're a lot more accurate, and deliver relevant results when you ask for whatever you're inquiring about.
O'Reilly: Has anybody asked Cortana what she thinks of Siri, and vice versa?
Hamilton: If we can find somebody with a Windows phone, let's do it!
O'Reilly: Yes, we need to do that! Anyway, what's going on with airports and Wi-Fi?
Hamilton: We have news that came out recently, and this is talking a little bit about phone tracking and beacon technology. We've talked before on the show, we've talked about these.
O'Reilly: Yes, about the iBeacon.
Hamilton: But there's a company -- and I found this really interesting. It points a little bit to the future and where we could see benefits with ... I know it's a bad thing to say "phone tracking" and so forth, but there really are some benefits to it.
A company actually found that by tracking the addresses of individuals' phones within the airport, waiting in lines, say for a security screening, that by tracking it specifically and notifying the users, they could cut the wait times down by about a third.
O'Reilly: I would be highly interested in that!
Hamilton: Yes. You have to put it in the context of what it really means.
O'Reilly: Is this kind of an IoT angle? Because they talk about cutting traffic down in smart cities ...
Hamilton: Yes, it is somewhat of an IoT play, but this is more personal, on a consumer level.
You have to look at the benefits. A lot of people argue, they say iBeacon technology could deliver ads to you -- which is one of the uses for the technology or beacons in general -- but you have to look at the other side of it. Where is the utility?
We find it with this here. Ultimately if you see it, you could be in the airport, walk up to a line, and something that pops up on your phone says, "Hey, why don't you go to the other side of the airport and go through their other screening? It's 30 minutes less of a wait." To me, that's a huge benefit.
I really wanted to point out where the benefits are, beyond just advertising. Really, when you look at it, that's one thing. That's one use for it in the whole grand scheme of things.
O'Reilly: You could do that with parking spots, too; start doing things that way.
Hamilton: Yes. "Parking lot's full. Go to the other one, across the street." There really are some very specific uses for it that are a benefit.
O'Reilly: Very nice. This is one thing I really wanted to talk about; the recent trouble with Intel. Gave some rough guidance, very sad.
Hamilton: Yes. Essentially the company came out and ...
O'Reilly: Do you think they're being too conservative?
Hamilton: I don't know. I don't know what the actual speculation is behind it, but specifically what Intel did is they lowered their revenue guidance from about $12.5-13.1 billion, from $13.2-14.2 billion previously.
The rationale that Intel management gave is, this is on the back of weaker than expected PC demand. If we look at the last year or two, what's really been driving Intel shares is, "PC demand is back." A lot of people were concerned about that, and it seems to be coming out that, at least for the first quarter, which we're in right now, the demand is a little bit weaker than expected.
Whether that's a long-term indication could be argued, but at least in the short term I guess share prices aren't doing too well.
O'Reilly: Yes, they sold off a little bit. They were at $32.00-$32.50 or something, and it's down to about $30.00. You're talking about a quarter, though. Does that actually even matter? Long term, I would have to think that their story is still intact.
They've got a $2 billion IoT business, they've got obviously a virtual monopoly on processors in PCs, beating up on AMD (NASDAQ:AMD) ...
Hamilton: Funny you mention that.
O'Reilly: Oh, no!
Hamilton: Yes. Along with the negative news that came out with guidance, there is also positive news or rumors that Intel is making it into the iPhone.
O'Reilly: Correct me if I'm wrong. Hasn't this been a rumor for four or five years?
Hamilton: Well, this has been reported by, I think it was VentureBeat? It may be VentureBeat. If I have the name wrong, I apologize.
O'Reilly: It's out in cyberspace, so we don't know.
Hamilton: Yes, it's out in cyberspace somewhere. Essentially, there are rumors that an Intel modem is making it into the iPhone and replacing Qualcomm (NASDAQ:QCOM), which has been a supplier for the modems in iPhones for a good period of time.
O'Reilly: That's a big deal. I can't imagine that, given Apple's reputation for the margins they give their suppliers, Intel will make a mint off of this. But we shall see.
Hamilton: Yes, but it's one driver of Intel's business. You have to look at the long term side of it. Is the PC market completely dead? If it is, then that's where you might see a bleaker future for Intel because a lot of it is PC demand, and their server business.
But if you see the future as mobile, and you see that Intel can actually complete, which up to this point they haven't really been able to do, with the likes of Qualcomm and some of the other competitors out there ...
One thing I find interesting is we have one negative story and one very positive story, all within a very short period.
O'Reilly: There's a glimmer of hope there, that is for sure.
Hamilton: Yes, there is.
O'Reilly: Last story here. Jeff Bezos just can't stop doing things.
Hamilton: I know!
O'Reilly: He's not happy with just AWS and the cloud-based services for the Internet of Things. He just made an acquisition out in Colorado, as I understand it.
Hamilton: Yes, my home state. At least a couple new millionaires were minted!
O'Reilly: Oh, jeez!
Hamilton: Amazon acquired a company called 2lemetry. That's spelled with the number 2, "lemetry," so interesting play on the name there.
What the company offers is enterprise IoT data and analytics. What that means, for people that aren't familiar with the tech space, is it takes huge streams of data, analyzes it, you can take actions off of it -- so it naturally fits well into Amazon's cloud business, which is AWS.
That may be where they offer the service in the future. You mentioned Bezos isn't happy with just how things are, and that's a good thing. You have to be growing, you have to be acquiring.
O'Reilly: You have to be relentless.
Hamilton: You have to be on the cutting edge of tech.
O'Reilly: We obviously don't have a price tag on this.
Hamilton: We don't, no. I couldn't find anything.
O'Reilly: I'm still surprised -- any time any company of any size buys a smaller business like this -- I'm surprised that they didn't decide that they could just replicate it themselves. I don't know if he's going for the talent, or what the deal is there.
What was it, Yahoo! (NASDAQ:YHOO) and Marissa Mayer, they were always talking about the number of acquisitions, how it was partially for the talent.
Hamilton: Sure. There are times where it makes sense to build it internally, but there are plenty of times where it also makes sense to acquire externally, either for talent or the technology and integrating it into the company as a whole.
If you look at it, this is a very common practice, and it's behind many of the successful segments or divisions of all the big companies we know of. Google (NASDAQ:GOOG) (NASDAQ:GOOGL) acquired DoubleClick ...
O'Reilly: Do we have any idea of the size of 2lemetry?
Hamilton: I don't.
O'Reilly: Number of employees, anything?
Hamilton: No, I didn't see anything in terms of revenue or employees and so forth, how big the business is.
Amazon hasn't really been involved in IoT that much, and seem to be getting in. At least it's another offering for their AWS segment.
O'Reilly: Awesome. Very good. Thank you for your thoughts, Nathan.
Hamilton: Happy birthday, Sean!
O'Reilly: Thank you very much! I'm going to go have some good lunch, and some cake later.
Hamilton: Yes. Good Friday!
O'Reilly: Yes, that too! And it's Friday the 13th. This is actually my third time I've had a birthday on Friday the 13th.
Hamilton: I did not realize that.
O'Reilly: Yes, dun-dun-dun!
That is it for us, Fools. Before we go, I wanted to make all of our listeners aware of a special offer available to all Industry Focus listeners, for a subscription to Motley Fool's top-performing Stock Advisor newsletter. Just email us at email@example.com to learn more about the special offer.
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That's it for us, Fools. Thanks for listening, and Fool on!
Nathan Hamilton owns shares of Amazon.com, Apple, Google (A shares), and Qualcomm. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, Google (A shares), Google (C shares), Intel, and Yahoo. The Motley Fool owns shares of Amazon.com, Apple, Google (A shares), Google (C shares), Qualcomm, and Yahoo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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