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🤝 X Joins Hands with Google for Ad Space: Turnaround Strategy?
Today: Netflix Trails in India | Microsoft vs. Nvidia Chip | ChatGPT Sparks AI Race
Kristoffer Lindström
October 09, 2023
Greetings, Digital Navigators!
Today is Monday, October 9 and the technology landscape continue to bring forward several notable developments:
X & Google's Collaboration: A strategic partnership in the ad space.
Netflix's Challenge in India: Facing stiff competition from Prime and Disney.
Elon Musk's Streaming Venture: Garnering 2.8 million viewers and capturing attention.
Microsoft vs. Nvidia: The emerging battle in the AI chip sector.
and more…
These are but a few of the many updates we have curated for you. Dive in for comprehensive coverage and insights.
Spotlight*
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Tech Companies
X has partnered with Google Ad Manager to sell some ad space following a significant drop in its ad revenue. The deal allows advertisers to tap into X's inventory via Google Ads, offering potential access to X's extensively engaged user base.
💡 Why does this matter?
This partnership between X and Google Ad Manager could offer a wealth of advertising opportunities, particularly for the tech industry. The ability to reach X's immense audience through Google's familiar campaign setup could foreseeably open new marketing opportunities and even alter user interaction patterns on digital platforms. It is, however, essential to be aware of potential risks involving ad placement due to X's less stringent advertising guidelines.
Despite reduced subscription costs in India, Netflix lags behind Prime Video and Disney+ Hotstar due to a lack of local content, says AllianceBernstein. The report also highlights cricket streaming as a dominant strategy.
💡 Why does this matter?
Netflix's failure to capture a significant market share in India, despite reduced subscription costs, underlines the importance of local content and competitive pricing for streaming platforms. This situation presents opportunities for platforms like Prime Video, YouTube, and Disney+, that offer more localized content and successfully leverage local interests, like cricket streaming, to thrive and grow in the market.
Amazon's Project Kuiper launched its first two prototype satellites aiming to compete with SpaceX's Starlink in the satellite internet domain. Amazon's next phase includes deploying over 3,200 satellites, with potential customer sign-ups starting next year.
💡 Why does this matter?
Amazon's launch of prototype satellites marks a significant step towards creating a satellite-internet space, an enterprise likely to rival SpaceX's Starlink. This development holds potential for heightened competition in space-based internet, bringing new opportunities and challenges for tech investments and innovations.
Elon Musk tested video game streaming on X (formerly Twitter), bolstering its evolution into an 'everything app'. Revealing future plans for Xbox and PS5 integration, the stream attracted 2.8 million viewers.
X is serving users a new indistinguishable ad format, proving the platform's struggle to attract advertisers. As direct ad sales dwindle, X opts for third-party ad networks, resulting in lower revenue.
Amazon's Prime Video is projected to generate a $7 billion incremental ad revenue, with ads set to reach over 115 million monthly US users from 2024. Users can opt-out for $2.99 per month.
AI Corner
Microsoft is planning to launch its own AI chip in November to decrease its dependence on Nvidia. It intends to utilize the chip for data center servers to train and operate large language models, crucial for generative AI. Concurrently, OpenAI, Meta Platforms, and Amazon are also exploring in-house chip manufacturing. The demand for AI-specialized chips is rising due to the growth of generative AI, with revenues forecasted to reach $53.4 billion this year, and nearly double to almost $120 billion by 2027.
💡 Why does this matter?
Microsoft's intent to create its own AI chip impacts the tech, especially those utilizing AI in their products or services. This self-reliance approach reduces reliance on Nvidia. It signifies Microsoft's serious AI ambitions and presents opportunities for cost efficiency and addressing shortages in the sector. This could inspire other tech companies to follow suit, thus shaking up the current AI supply market.
OpenAI wasn't prepared for the immense popularity of its AI chatbot, ChatGPT, which attracted 100 million users within two months of its launch, according to CTO Mira Murati. The unexpected success sparked a global AI race as other tech firms aimed to replicate the model. Murati warned of a potential "race to the bottom on safety" amid the rush to introduce new AI products.
💡 Why does this matter?
OpenAI's ChatGPT rapidly gaining 100 million users signifies the booming potential of the AI chatbot market. As other tech giants race to roll out their own versions, it not only intensifies competition but also raises safety concerns. This news could influence companies' AI roadmaps and investors' future tech investments.
Amazon's Bedrock platform is now widely available, offering generative AI models and the first fully managed GenAI service. The platform features models from top AI firms and access to Meta's Llama 2.
💡 Why does this matter?
Amazon's fully managed generative AI service, Bedrock, is now generally available. This news may interest tech entrepreneurs, investors, and workers as it offers opportunities for businesses to leverage generative AI tools for enhanced customization, efficiency, and combating future threats.
EPIK, an AI photo-editing application, tops the App Store with its 90s-inspired yearbook photos feature, marking 92.3 million total installations since its launch in August 2021. The app's popularity, however, led to delivery delays due to high demand.
Snapchat faces ICO's preliminary enforcement notice over inadequate assessment of privacy risks to its UK users, particularly children, by its AI chatbot My AI.
Markets & Money
Goldman Sachs predicts Nvidia and Amazon will see further gains amid the upcoming Q3 earnings season. Nvidia's growth is powered by strong demand for its AI tech, while Amazon benefits from diverse operations and impressive AWS performance.
💡 Why does this matter?
Goldman Sachs predicts a potential bull market boost as the 3Q earnings season begins, particularly benefitting tech leaders. Two tech companies, Nvidia and Amazon, are marked as strong buys, poised to capitalize on this catalyst. This news may impact investors and tech workers, opening doors for growth and investment opportunities in these companies.
In September, US nonfarm payrolls rose by 336,000, significantly exceeding the 170,000 consensus estimate. Despite concerns of labor unrest and government turmoil, job growth demonstrated stability in the American economy. However, the positive news led to a surge in treasury yields and a decline in stock market futures, as investors feared sustained high-interest rates could hamper economic resilience. Wage growth was softer than anticipated, prompting expectations for a potential federal rate increase later in the year.
Microsoft's $68.7 billion acquisition of Activision Blizzard may finalize on October 13, pending the UK’s Competition and Markets Authority's final approval. The deal structure includes transferring cloud gaming rights to Ubisoft.
SoftBank's PayPay dominates Japan's QR-code payments, with prospects of addition to the company's IPO pipeline. With over 60 million users, PayPay aims for continued double-digit growth.
Tesla has reduced prices on its top U.S. models following disappointing Q3 deliveries. The cuts aimed to increase demand might impact the company's profit margins.
Insights & Analysis
The growth rate of the top 100 SaaS and Cloud companies, known as the Cloud 100, dropped from 100% in 2022 to 55% in 2023. Despite the decrease, the companies are more profitable and almost all have reached $100m+ annual recurring revenue. Several members still report 100% growth, whereas a few reported a drop to 20%. Most companies are cash-flow positive or expected to be by 2024.
💡 What can we learn from this?
In 2023, the Cloud 100's growth rate dropped significantly from 100% to 55%. Though impressive for companies with a $100m+ ARR, the change indicates a challenging year for these top SaaS and Cloud companies. Despite the slowed growth, the silver lining is an uptick in profitability, with most companies becoming cash-flow positive or set for it in 2024. This could mean a shift from aggressive growth strategies to sustainable financial models in the tech industry.
Quick Links
South Korean regulators may issue fines totaling $50.5 million to Apple and Google, alleging violations of the country's Telecommunications Business Act in app store payment policies.
Intuit Mailchimp and Wix have announced a multi-year bilateral partnership aiming to enhance marketing capabilities, drive customer engagement, and boost sales growth. Their collaboration will enable users to connect CRM data between platforms, providing ease of use and an improved functionality. The integration targets self-creators, agencies, and freelancers, offering a comprehensive email marketing suite with industry-leading tools.
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