Tag Archives: googl

Google Cloud Chief Ignites Expansion To Catch Amazon, Microsoft

Alphabet ( GOOGL ) will open data centers in Oregon, Japan and elsewhere before the end of 2017 to support its cloud infrastructure and app platforms and take on Amazon.com ( AMZN ), the industry’s current leader, according to a news report Tuesday. Google has three “cloud regions” now and plans to add another 10 cloud regions over the next 12 to 18 months, either as facilities leased from other providers, or built and operated by Google, according to the Bloomberg report. “Cloud region” is the Google term for a data center equipped with computers and software that customers can rent over the Internet. Google’s new cloud chief Diane Greene – who also sits on the Alphabet board – will oversee the expansion, Bloomberg said. Greene co-founded VMware in 1998. “There was a pretty darn good vision in place and now I’m just bringing everybody together so that we all know what we’re doing,” Bloomberg quoted Greene as saying. “The cloud is a revolution, I mean it’s rivaling the industrial revolution, and it’s pretty fun being this involved.” The openings will increase the number of “cloud regions” run by Google to 15, according the Bloomberg report. Amazon currently has 12 regions and plans to open another five. Amazon unit Amazon Web Services (AWS) is now the biggest provider of infrastructure as a service (IaaS), where customers rent computer servers and data storage systems accessed via the Internet. Microsoft ( MSFT ) ranks second, while Alphabet unit Google ranks third. Cloud computing, an increasingly popular way for companies to run their IT operations. That’s a $20 billion-a-year business forecast to grow 35 percent over the next year, according to Gartner Inc. Google is also working on tools that can broaden its corporate user base to include less technically savvy customers, and it’s embarked on a hiring spree aimed at selling and explaining these new products, according to the report. The Internet company is set to hold a conference in San Francisco for cloud customers starting Wednesday. Amazon stock rose 1.2% to close at 560.48 on Tuesday. Microsoft stock rose a fraction to close at 54.07. Alphabet stock fell a fraction to close at 760.05.

Online Travel, Other Tech Giants Set Sights On Cuba

As President Obama stands beside Cuban President Raul Castro in Havana and brokers historic talks to thaw relations between the two countries, online travel giants and other Silicon Valley titans have set their sights on building businesses on the island nation. The $8.4 billion tourism industry is likely to swell once Washington allows general tourism to the island nation. For now, a license from the Treasury Department is required for legal travel to Cuba, but the online travel kings have been quick to strike deals to build sales to that nation. Still, online travel firms shouldn’t expect any big returns on their efforts for three to five years, says Douglas Quinby, an analyst with travel research firm Phocuswright. “But once all the ducks are lined up, I think you’re going to see a lot of interest for U.S. travelers,” Quinby told IBD. “It’s a huge Caribbean destination, it’s got great beaches and sun.” Online travel giant Priceline ( PCLN ), via its Booking.com platform, already is setting up shop in Havana and allowing U.S. citizens to reserve and pay for rooms at Cuban and foreign-owned hotels. “Members of our leadership spent many weeks working hand in hand with the Cuban government and tourism authorities, hotel partners, and banks to ensure that when we launch a few weeks from now our customers will experience the secure and seamless service they’ve come to expect from Booking.com,” Todd Dunlap, managing director of Booking.com Americas, told IBD via email. Expedia ( EXPE ) is working on getting travel to Cuba online as well — though it did not share a timetable or a specific date that bookings could begin. “We currently have a team working across multiple channels to help enable U.S.-to-Cuba travel, taking every step to ensure that the solutions align with the laws governing travel between the countries,” company spokeswoman Sarah Gavin said in an emailed statement. Privately held Airbnb has been operating in Cuba for a year, and is available to U.S. citizens in Cuba. The San Francisco-based firm lets travelers rent homes, rooms in homes and apartments. According to an Airbnb blog post , U.S. visits to Cuba rose 77% in 2015, to 161,000. The company says it’s working closely with the Cuban government. TripAdvisor ( TRIP ) spokeswoman Julie Cassetina told IBD via email that the company is “now displaying hotel metasearch for Cuban hotels” on its website, but she declined to make executives available for an interview. Silicon Valley Heads To Havana Outside of the online travel agency kings, the tech contingent included IBD Leaderboard stock PayPal ( PYPL ). In a blog post Sunday, PayPal CEO Dan Shulman outlined his case for targeting Cuba. The major cash cow for the firm is likely to be in assisting Cubans who receive money from sources in the U.S., an influx which at the moment, according to the blog , accounts for $2 billion, or 3%, of the Cuban economy each year. It’s a chance for PayPal to expand the reach of its Xoom subsidiary, which handles international transfers. PayPal bought Xoom for $890 million in July 2015. The blog also makes the pitch that PayPal plans to find ways to attract Cuban small businesses — which at the moment are mostly not set up to process credit and debit cards. Privately held Stripe, which competes with PayPal payments-processing subsidiary Braintree, also made the trip to Cuba. Stripe said in a blog that it would start offering Cuban businesses the ability to set up bank accounts and incorporate in the U.S. On the trip, President Obama said Alphabet ( GOOGL )-owned Google would try to help ensure that Cubans have access to broadband Internet, which remains scarce, especially outside of large cities. “We know, from the experience of many countries around the world, that new technologies and improved internet access can help people in their daily lives, provide new information and experiences, and help harness a country’s creativity and ingenuity,” Brett Perlmutter, the Cuba lead for Google Access, wrote in a blog post Monday. “We hope to have the chance to offer more services to the Cuban people in the future.” Xerox ( XRX ) CEO Ursula Burns also attended the trip in a fact-finding capacity. “Recent changes in U.S. regulations may afford new commercial opportunities in Cuba,” Burns told IBD in an emailed statement, “but the parameters of those opportunities are not always obvious. The U.S. government has worked hard to describe what the recent changes mean. I think part of my job on this trip is to evaluate what they mean in light of the economic realities here in Cuba.”

Apple’s Cheap iPhone SE Raises Profit Margin Concerns

Apple ‘s ( AAPL ) decision to price its new 4-inch smartphone, the iPhone SE, starting at $399 could attract value-conscious consumers, especially in emerging markets, but it also could hurt the company’s profit margins. The iPhone SE was announced Monday at Apple’s spring product launch event at company headquarters in Cupertino, Calif. Apple also announced a 9.7-inch iPad Pro tablet; software updates for its mobile devices and the Apple TV; a price cut to the Apple Watch; and new Apple Watch bands. The iPhone SE is an update to the 2.5-year-old iPhone 5S. It features upgraded internal components such as an A9 processor, 12-megapixel camera, and NFC technology to enable Apple Pay. The “iPhone SE’s price was notably lower than we expected ($399 vs. $499), and we worry about (average selling price) and margin implications,” Bernstein analyst Toni Sacconaghi said in a research report. The lower-than-expected price may be a response to increasing sales of used iPhones and a conscious attempt to grow the installed base of iPhone users in hopes of pushing them to a services model over time, he says. The gross profit margin of the iPhone SE is probably about 30% to 35%, compared with about 45% for the iPhone 6 and 6S, Sacconaghi says. “Apple executives noted in yesterday’s remarks that the ‘vast majority’ of its iPhones are resold,” Sacconaghi said. “The bad news for Apple is that it captures no revenues from used iPhone sales. Accordingly, the low price of the SE may be an attempt for Apple to begin to provide an alternative to used iPhones for price conscious consumers and to capture those revenues directly.” Apple’s Use Of Same Components Helps Profits Nomura analyst Jeffrey Kvaal also expresses concern about the pricing of the iPhone SE and its impact on ASPs and margins. On the plus side, Apple’s use of the same components as higher-end iPhones could allow Apple to keep costs down and margins up, he says in a report. The iPhone SE is priced $50 below iPhone 5S models, which should help Apple attract new iPhone users in emerging markets while keeping gross margins stable, Morgan Stanley analyst Katy Huberty says in a report. The iPhone SE pricing likely won’t hurt gross margins because the handset shares manufacturing tools with the iPhone 5 and 5S, which have a similar design, and shares components with the iPhone 6S, she says. BMO Capital Markets analyst Tim Long says the attractively priced iPhone SE should help Apple capture more of the market that was going to smartphones using Alphabet ’s ( GOOGL ) Google Android operating system. “We continue to believe Apple’s growth over the next several years will be driven by the conversion of a small percentage of the 2 billion-plus mass market Android users,” Long said in a report. The iPhone SE “does a good job addressing a slice of that segment.” Sacconaghi rates Apple stock outperform, with a price target of 135. Kvaal has a buy rating on Apple with a price target of 135. Huberty rates Apple as overweight with a price target of 135. Long has an outperform rating on Apple with a price target of 130. Apple stock was up nearly 1% in afternoon trading on the stock market today , near 107. Apple Watch Price Cut Could Signal Version 2 Ahead On Monday, Apple cut the starting price for the Apple Watch by $50 to $299. Wall Street analysts say that move could signal that a second-generation smartphone is on the way from Apple. Bernstein’s Sacconaghi says the price cut could mean that the next version of the Apple Watch could arrive around midyear. “We note that Watch originally launched on April 24, 2015, and is approaching the one-year mark (on which Apple typically refreshes its products) — meaning Watch is due for an upgrade in the coming months,” Sacconaghi said. BMO’s Long says the Apple Watch 2 is likely to be announced this fall along with the iPhone 7. “We expect a refreshed model to be announced at the September event, which may well be a sweet spot, putting the release more than a year following the product’s initial introduction to avoid alienating early adopters,” he said. Nomura’s Kvaal says the Apple Watch price cut is more about trying to stimulate demand for the smartwatch in general. “Apple’s decision to lower the price from $349 to $299 without a new product launch suggests Apple is still searching for the right price/value ratio,” Kvaal said.