Technology - Google News

Google gives up on Google Allo, hopes carriers will sort out RCS messaging
Sloppy report depicts Apple as struggling with LG as an alternative to Samsung OLEDs on new iPhones
Apple isn't going to trash the iPhone X, and it wasn't a failure

Google gives up on Google Allo, hopes carriers will sort out RCS messaging

Posted: 20 Apr 2018 06:50 AM PDT

It's time for another chapter in the saga of Google's messaging mess. This latest news comes from The Verge, which reports that Google will be abandoning its most recent messaging app failure, Google Allo, in favor of a renewed push for the carrier-controlled RCS (Rich Communication Services) protocol.

Google Allo was Google's attempt at a WhatsApp clone, and it launched just a year-and-a-half ago with a laundry list of deficiencies. It used a phone-centric login system and didn't support using a Google account. It only worked on one device at a time and didn't have an interface for desktop or laptop computers. Distribution wasn't great either, as Allo wasn't one of the mandatory Google apps included in every Android phone. None of this really mattered since Allo didn't support sending SMS messages, so there was no one to talk to anyway. Google's other chat service, Google Hangouts, was better in nearly every way.

With such a half-baked launch, the real unknown for Google Allo was what kind of resources Google would throw at it. Like Android, which also entered a market late in the game, Allo needed a massive amount of resources to catch up to the competition. Instead, we were treated to an absolutely glacial development pace that mostly focused on new sticker packs. It took a full year before Allo addressed one of its biggest flaws—not working on a desktop—and even then, login was handled by a janky QR code pairing system that only worked on one extra device at a time. Google users expect a Google account-based login that works on all devices all the time, just like Hangouts.

At least we won't have to worry about Allo anymore. The Verge report says Google is "pausing" Allo development and "transferring almost the entire team off the project and putting all its resources into another app." Allo will continue to work for the foreseeable future, but new features won't be arriving any time soon.

Rich (and fragmented) Communication Services

What everyone wants from Google is an iMessage clone: an over-the-top messaging service that would run on all devices and platforms, with login handed by a Google account. Essentially, people want an updated version of Google Hangouts, a piece of software Google abandoned and removed features from in order to promote Google Allo. The Verge report says that Google "won't build the iMessage clone that Android fans have clamored for" and will instead try to get the carriers to cooperate on RCS.

RCS, or Rich Communication Services, has been around as a GSMA (the worldwide mobile network trade body) project for about ten years now. RCS replaces SMS and MMS with a service that works more like an instant messaging app. RCS adds IM features to carrier messaging that most users take for granted, like user presence, typing status, read receipts, and location sharing. It sends messages over your data connection and increases the size caps on photos and video sharing.

The current problem with RCS versus an over-the-top IM service is that users on different carriers are usually not able to talk to each other with RCS features enabled. The cell carriers fear being turned into "dumb pipes" and generally prefer proprietary services that give them customer lock-in. Naturally, they have resisted building an interoperable RCS system. Currently, the RCS landscape is fragmented, with RCS flavors like AT&T Advanced Messaging, Verizon Message+, T-Mobile Advanced Messaging, and Sprint Enhanced Messaging.

Google got involved with RCS in 2015 when it acquired Jibe Mobile, a company that provides back-end RCS services to carriers. At the end of 2016, the GSMA published the "Universal Profile" spec, which was an agreed upon standard that would let the various carrier RCS implementations talk to each other. Google then started pushing carriers to adopt "Google Jibe" as an end-to-end RCS service, where Google could provide the RCS network, the cloud infrastructure, and the end-user clients. Android's default SMS app, Android Messages, was made to support this new standard.

RCS-powered "Chat": Carrier-dependent messaging

The Verge scored a few screenshots of what the future Android Messaging client will look like. Here's the basic messaging interface.
The Verge
Here's the desktop website, which requires scanning a QR code with your phone.
The Verge
Smart Replies, a favorite feature of Google Allo and Android P, are here, too.
The Verge
Group chat.
The Verge

As part of this renewed RCS push, The Verge reports that Google is putting more resources (including the Allo team) into Android Messages, and RCS will be rebranded into a new service called "Chat." Not "Google Chat," because this is RCS, which is a carrier-controlled standard. RCS will just be rebranded to "Chat."

Being carrier-controlled comes with a number of downsides. First, Chat will need your individual carrier to support Universal Profile to work. Over 55 carriers—including the big four in the US—have "committed" to eventually support RCS, but no timeframe is included in that commitment. In the US, only Sprint has Universal Profile up and running right now. T-Mobile has promised a "Q2 2018" rollout, while Verizon and AT&T have so far declined to give a time frame. (This worldwide Universal Profile tracker is a great resource.) There's also no one single client for RCS. Google's RCS client is Android Messages, while Samsung phones come with a Samsung RCS app. Also, no one knows if Apple will support RCS on the iPhone.

Another big downside of carrier control is no end-to-end encryption. The Verge notes that Google's RCS service will follow the same legal intercept standards as SMS. Nearly all of Google's competition—like iMessage, WhatsApp, Facebook Messenger, Signal, and Telegram—supports end-to-end encryption.

Google's revamped Android Messages app will include old Allo features, like integration with the Google Assistant, GIF search, and smart replies. Android Messages is already an SMS app, so if your friends aren't on an RCS carrier, you'll still be able to send them a regular SMS message. SMS support will be a big improvement over Allo.

Messages will also get a desktop client, but it unfortunately sounds a lot like Allo's awful Web client. The Verge got to try an Android Messages Web client that, like Allo, paired to your phone through a QR code instead of a Google account. These QR-code powered systems typically mean you'll only allowed be logged into one device at a time, and if your phone dies, you can't text anyone. The "desktop client" is also only a webpage, so it won't run in the background the way Hangouts and other IM apps can.

Carriers versus consumers

Various Google execs have been asked numerous times why Google doesn't just build an iMessage clone, and the answer that came back was always something along the lines of "We don't want to jeopardize our relationship with carriers." Carriers famously dislike many of the consumer-centric choices Apple makes with the iPhone, and building a quality, non-SMS messaging solution was one of those choices. For Google, keeping carriers happy so they run Android and Google services on nearly every non-Apple device is far more important than rocking the boat with a competitive messaging app. The plan this year, apparently, is to try to strike a happy medium with the carriers.

Like Google Allo, Chat will start far, far behind the competition at launch and will need to move quickly to catch up. If it catches up—if that's even possible—it needs to surpass the entrenched messaging services and be so much better that users are willing to switch. It seems like it will be especially tough to accomplish this while being hamstrung by the world's cellular carriers. Just making RCS actually work across carriers is a huge challenge, and it would only result in a very basic messaging system that can be matched by every other chat app in existence. Plus, the lack of end-to-end encryption already makes Google's Chat plans inferior to other services in many people's eyes.

With all these challenges ahead of it, can Google turn RCS into something worth using? If Google's history with past messaging apps is any indication, the answer is "no."

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Sloppy report depicts Apple as struggling with LG as an alternative to Samsung OLEDs on new iPhones

Posted: 20 Apr 2018 07:44 AM PDT

A new report claiming to understand Apple's supply chain has asserted that LG screens might be facing development issues as a second source for OLED displays on upcoming iPhones, based on Apple's higher than normal scrutiny of LG prototypes--and then strangely claims this issue is driving iPhone X prices so high that "some" are not buying it.

iPhone X shipped with an OLED display from a single source

The Wall Street Journalreport, with a byline of Yoko Kubota in Beijing and Takashi Mochizuki in Tokyo, and additional credit for Tripp Mickle in San Francisco (who recently--bizarrely--claimed iPhone X was selling poorly based on a fundamental lack of understanding of the phone industry and Apple's supply chain) described Apple's efforts to develop a second source for OLED screens (apart from its current sole supplier Samsung) as both a "struggle" and the reason why iPhone X carries a premium price.

A report mixing reality with fantasy

LG's inability to match Samsung in OLED competency is well known. Last fall, Google shipped two Pixel 2 models, one from HTC with a Samsung display and the other from LG with an LG display. Both had serious OLED screen issues, but the LG "XL" model was shockingly bad. Google shipped it anyway. Sales of both models were terrible. Nobody in the media seemed to care, and if anything, made excuses for Google--which shipped a faulty, inferior product with a high price tag.

But now that Apple is investigating LG as a potential OLED supplier, LG's inability to master OLED displays on the same level as Samsung has been recast as a big issue for iPhones--despite the fact that Apple already shipped iPhone X to great success using just one OLED supplier to ensure high-quality output.

According to the report, LG was supposedly tasked with building displays for about 20 percent of future iPhone models, with Samsung being relied upon for the other 80 percent. In reality, Apple constantly makes changes to its suppliers based on cost, capacity and competence, and in tandem with changes in demand across different regions globally.

Rumors of a supply cut with one supplier can not be accurately interpreted, as a history of false predictions by channel check analysts have demonstrated across the last decade.

Samsung's component expense blown out of proportion

The report also stated that Apple's single source for OLED screens would logically give Samsung higher pricing power, another obvious fact that has played out in other areas, including memory and other components where Samsung holds pricing power due to a lack of strong competition.

However, it also went out on a limb in stating that Samsung's control of the OLED market was "one reason for the iPhone X's steep $999 price tag, analysts said," before adding original conjecture that, "the price turned off some customers, causing demand to fall short of expectations and forcing Apple to cut orders for parts."

Pitty the troubles of iPhone X in trying to find buyers

That conclusion is based entirely on the media narrative that claims Apple expected to build 40 million more iPhone X units in the March quarter than it did, a wildly implausible idea that Japan's Nikkei and the Wall Street Journal kept passing back and forth as the reason why iPhone X was selling "so poorly," even as the new model gobbled up over a third of all profits as the best selling smartphone model.

Both sites (and everyone copying their lede) also claimed that iPhone X's high price was hurting sales, despite the fact that demand for the new model (and the also-expensive iPhone 8) dramatically pushed up Apple's iPhone Average Selling Price. If a statically important number of buyers were against paying any premium for the new models, the ASP would obviously not have changed. That's just how math works. Claiming the opposite is just a lie.

BOM component estimates are nearly worthless

A reliable, competitive second supplier for iPhone-quality OLED panels would certainly help Apple bargain for better component prices. But the report takes external parts estimates as fact, despite a history of warnings from Apple executives that those third party figures are just ballpark guesswork, and are generally far lower than the actual component costs involved.

The Wall Street Journal report claimed that iPhone X's OLED display accounted for "about $97 out of $376 in total estimated cost per device," based on a parts breakdown report. That display cost would indeed be significantly higher than estimated costs of previous LCD screens, which Apple sources from multiple suppliers.

Display estimates for iPhone 7 and 8 models have suggested an LCD component cost closer to $50. Yet the screens' cost ratio to the entire iPhone BOM was only a few percentage points different. And even a nearly $50 difference component cost for the display would only result in a retail price difference of about twice that much, or around $100 of the final price. Suggesting that Samsung's OLED is the primary reason for iPhone X to be priced at $999 is ridiculous

iPhone X is priced $300 higher than the base iPhone 8. Suggesting that Samsung's OLED is the primary reason for iPhone X to be priced at $999 is ridiculous.

Apple's premium iPhone X model is more expensive for a number of larger reasons, including that fact that Apple spent billions to develop entirely unique new technology for the device, including its TrueDepth camera and all of the software required to support and market its Face ID features (including significantly rethinking the navigation behaviors of iOS).

Third-party component price estimates suggested that all of the development expenses related to Face ID are somehow covered by a "camera module" that costs $16.70, as if TrueDepth was available off the shelf and Apple just pushed a shopping cart through a Walmart and put 50 million into its basket (and then refused to buy another 40 million, because it ended up being so expensive that "some" ended up not buying it). This sort of reporting is not journalism. It's farcical nonsense.

Apple, OLED and micro-LED

Sourcing OLED displays from a limited number of manufacturers is among the least complex operational issues Apple faces in introducing iPhone X and other new phone models. Apple only has one supplier building its A-series chips. It only has two makers building cellular modems (Qualcomm and Intel, with Intel struggling like LG to keep up the market leader) and it uses a variety of other components are unique to a specific manufacturer.

Apple has single-sourced the base of its ARM and GPU intellectual property from the first iPhone. Starting in 2010 it began developing custom ARM designs. This year Apple released its own GPU design, which ended up being slightly better than the Imagination Technology GPU IP it had been relying upon. Apple is also reportedly working on internal analog and perhaps modem designs to similarly strip itself from dependence upon single outside suppliers. Those efforts are all vastly more complex than evaluating a second supplier of a nearly commodity component.

In the area of display technology, Apple's current OLED issues appear to be a short-term issue for the company. In the long term, the company is working on micro-LED, a different technology that promises to deliver important advantages to OLED. That development is a matter of concern to both Samsung and LG. The Wall Street Journal didn't mention that. </span>

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Apple isn't going to trash the iPhone X, and it wasn't a failure

Posted: 20 Apr 2018 06:58 AM PDT

A note from Mirabaud analyst Neil Campling suggests that Apple is going to kill the iPhone X this year. It might be true that the phone will be upgraded, but it's not "dead." Instead, I think what we're seeing is more of a reflection of Apple's new strategy in response to slowing growth in the phone market.

Let's back up: Campling said there's oversupply of chips from companies such as Taiwan Semiconductor Manufacturing Company (TSMC), which suggests that Apple hasn't been buying them to include in the iPhone X. As a result, Campling said "the iPhone X is dead."

Campling also told CNBC that the iPhone X, priced at $999, is "too expensive" and that "consumers are turning their backs on high-priced smartphones."

But Apple has said the opposite.

In February, for example, Tim Cook said the iPhone X beat Apple's expectations. "iPhone X was our most popular iPhone, despite not beginning to ship until November," Cook told CNBC's Josh Lipton and Jim Cramer. "We found out in the last few days that analysis tells us that it was the best selling smartphone in the world last quarter. And so we could not be more pleased with the reception of it." Combined with sales of the iPhone 8 and iPhone 8 Plus, Apple said it set a new iPhone revenue record during the company's fourth quarter.

Demand for new phones has waned across the board. TrendForce said the smartphone market is facing slower growth, with phone production estimated at 1.5 billion units for 2018. That's growth of just 2.8 percent from 2017, TrendForce said, lower than the 5 percent growth it originally expected.

That would also explain why there may be decreased demand from chip suppliers in general.

TSMC, a key Apple supplier, offered lower guidance earlier this week, with a forecast range for the second quarter falling between $7.8 billion and $7.9 billion, about a billion below Wall Street's estimates. Campling said the surplus "has never been higher" in the decade he's been tracking TSMC's supply.

Morgan Stanley analyst Charlie Chan said this is due to a mix of factors, not just because of decreased demand for the iPhone X.

While Chan agrees it's partially because of order cuts for iPhone X components, he also said that Morgan Stanley believes the lowered guidance can be attributed to two other issues.

"Beside the order cuts from the current Apple iPhone X processor, we attribute the major revenue shortfall in the smartphone segment to key customer MediaTek ... and around a month's delay of Apple's new 7nm processor to July," Chan said.

MediaTek provides chips for several major phone makers, particularly in emerging markets such as China where MediaTek processors are included in more affordable phones.

Apple's strategy has also changed.

Apple typically keeps its older phones around and sells them for lower prices, but the iPhone X is different. It launched a newer-high end model that stood above Apple's more traditional iPhone 8 and iPhone 8 Plus products. Perhaps Apple will keep those phones in its inventory while swapping out the iPhone X for a newer, more advanced model.

"The word "killed" doesn't make any sense at all," Patrick Moorhead, president and principal analyst of Moor Insights and Strategy, told CNBC. "The iPhone X was Apple's most expensive phone and the company sold, in units, more than any of its other phones, so I'd say it's a success. Apple will update the iPhone X, but won't kill it. The suppliers impacted have likely been replaced by another supplier so their numbers are going down."

KGI analyst Ming-Chi Kuo has suggested Apple has three new iPhones in the works, including one that might be an upgrade from the iPhone X with a larger screen.

If that happens, Apple will replace the iPhone X with a newer model — because it knows there's consumer interest in the product, not because the iPhone X needed to be killed or was unsuccessful.

CNBC's Arjun Kharpal and Tae Kim contributed to this report.

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