Apple Hosts its Most Hardware-Centric WWDC in Years

Apple today kicked off its WWDC developer conference with a keynote outlining its major announcements. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan is also at the event in person and can be reached at jan@jackdawresearch.com or 408 744 6244.
Apple had its most hardware-centric WWDC keynote in many years, with upgrades to the Mac and iPad lines, and the announcement of the HomePod home speaker. That reflects both the need to placate the pro community around the Mac lineup, and the ongoing push to frame the iPad Pro as a tablet than can replace your laptop. Overall, the focus on professional users was a major theme throughout the iPad and Mac sections of the keynote. Between what’s available today and what’s coming later this year, Apple now has a much more polished and powerful lineup of Macs for creative professionals including those who work on heavy duty content like 3D renders and VR.
The product that will garner the most attention, though, is the HomePod, because it’s the first new product category from Apple in a couple of years, and an entry in a hot space. However, Apple is smart to frame the HomePod as a music-centric and audio-centric device rather than just another smart speaker or another home for Siri. Yes, it does those things too, but that’s not how Apple wants us to think about it. At $349, the HomePod is priced well above the pure smart speakers from Google and Amazon, but Apple doesn’t want to be compared against those – instead, it wants to be considered in the same category as Sonos, Bang & Olufsen, and other high-end audio. In that category, the $349 price point is actually really competitive. The fact that Apple is claiming to marry really great and smart audio with a smart assistant and cloud music service makes this device unique in the market so far. I would bet that Apple will sell a lot of these at Christmas and into next year.
Virtual and augmented reality were another big focus area for Apple this year, neither of which it’s really talked about at its events before, but its approach to those two areas is distinct in important ways. In VR, Apple is mostly enabling third party editing and creation of VR content for consumption on other platforms and to an extent on the Mac, whereas with AR Apple is focused on developers creating apps for the iPhone and iPad. So it’s embracing AR as an immediate first-party opportunity while keeping VR at arm’s length when it comes to mobile platforms, in contrast to Samsung and other smartphone vendors. Its ARkit tools for developers should quickly vault Apple into consideration as a major player in the current smartphone-centric AR market, where it’s now got arguably one of the biggest platforms in the world for developers to focus on. And because Apple isn’t seeing AR as just for filters or lenses on selfies, the opportunity on iOS is arguably much broader than on other platforms like Facebook, especially in the near term.
The chart below shows how Apple has spent its time during WWDC keynotes over the last few years:

Google I/O Announcements Reflect Reduced Role of Android

Google kicked off its I/O developer conference today with a two-hour keynote highlighting announcements across a number of different areas of its business. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan may also be reached for further comment at 408 744 6244 or jan@jackdawresearch.com. 

In what was to have been a 90-minute keynote, Google didn’t get to Android until over 75 minutes in, and that was reflective of a shift we’ve seen from Google in recent years, in which it’s de-emphasized the core Android operating system while shifting focus to individual apps that run on top of it. In what’s ostensibly a developer event, it’s notable that Google spent almost all of the first hour talking about end user features, and all of them in turn exist as apps and not OS-level features.

That’s a reflection of two realities Google is presently dealing with: firstly, its loss of control over Android as OEMs and carriers continue to drive slow upgrade rates and overlay their own features and services; and secondly, the fact that many of Google’s most attractive and valuable users don’t use Android. As such, it increasingly needs to push its services to third party platforms and devices other than smartphones, including Apple’s iOS devices and its own Home smart speaker. Products like the Google Assistant, Google Photos, Google Lens, and others will do well in the market precisely because they’re not limited to just Android smartphones.

AI and machine learning were again major themes, as they have been for Google at past I/O conferences and as they were at both Facebook and Microsoft’s equivalent events over the past several weeks. All of these companies are using these events to burnish their AI credentials and demonstrate leadership, but Google more than the others demonstrated how pervasively AI and machine learning are now built into all its products and services.

Google is moving its Home speaker along quickly, competing effectively with Amazon’s Echo despite its earlier market entry and several recent feature enhancements. Individual user recognition continues to be an important area of differentiation for Google, and it doubled down on it with several additional features that take advantage of it. The fact that Google has long focused on individual user accounts while Amazon mostly has household-level relationships will become even more important over time as speaker-based assistants become more personalized. Phone calling using real numbers, additional entertainment integrations, and the ability to leverage other Android-powered screens in the home all feel like useful additions to the Home.

The latest version of Android, meanwhile, includes lots of minor feature improvements for better achieving parity with iOS, across security, usability, and performance. There’s almost nothing here which sets Android apart in a positive way, and much of what’s being announced is about offsetting the disadvantages Android has always labored under by being a more open system. What we’re seeing is the slow uncoupling of the most interesting features of Android from the operating system itself and into apps which are also available on iOS, making the OS less differentiated but also making the slow upgrade process for new versions less important. The one area where Android is setting itself apart is in support for users in emerging markets, which it already dominates because of the high cost of iPhones, but where it can and must still do better. Its Building for Billions effort should help Android developers think more responsibly about how their apps will be used in those markets.

Lastly, Google continues to evolve its vision for VR while struggling for relevance in AR. Daydream as a platform and the View as a device are arguably both more compelling from a user perspective than Samsung’s Gear VR, but it’s the latter that’s dominated the mobile VR space so far because of Samsung’s massive reach. Getting Samsung to support Daydream is therefore a huge step forward for Daydream, while producing standalone VR headsets potentially gets Google into other segments of the VR market, though we don’t yet know what the price/performance tradeoffs will be relative to other systems. On AR, Google’s Tango continues to do very interesting things at tiny scale, and it doesn’t look like that’s going to change anytime soon, which means it’ll likely remain a marginal play while others including Facebook, Apple, Snapchat, and others dominate the early running.

T-Mobile Takes a Different Tack on 5G

T-Mobile today announced that it will be using its recently acquired 600MHz spectrum to provide 5G service starting in 2019. The comments below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan can also be reached for further comment at jan@jackdawresearch.com or 408 744 6244. 

In marked contrast to most of the other carriers who have announced 5G plans, T-Mobile intends to use low-band spectrum to provide widespread 5G coverage across the US in the near term. Whereas Verizon and AT&T have been testing dramatically faster 5G services based on high-band spectrum, T-Mobile is prioritizing coverage over speed with its approach. That means it won’t get the dramatic generational leap in performance usually associated with a new generation of wireless technology, but it will likely have one of the first widespread 5G networks not only in the US but in the world. There’s a certain irony in T-Mobile taking an approach which could see it lead in coverage but lag in speed over time, given that it has until now been known for the opposite: a fast but far from ubiquitous network.

T-Mobile will get some of the other benefits of 5G, even if it won’t get the speed, however. One of the major benefits of 5G is the ability to have a single network perform in different ways optimized for various classes of devices. That means it can provide both higher-speed service to smartphones while also operating in a very efficient way for Internet of Things devices, which in turn will be able to last for years on a single battery. The 5G network T-Mobile is planning to build therefore opens up potential new opportunities which could help the company continue to grow even as its reliance to date on phone subscribers starts to provide diminishing returns.

For better or worse, T-Mobile’s aggressive approach may largely set expectations in consumers’ minds for what 5G is and how it performs. Its modest ambition is to improve the average experience on its network through a combination of faster LTE and then 5G, rather than provide a radically new and upgraded experience. That may dampen excitement among consumers for 5G at least until the other carriers start to roll out their more geographically limited but more impressive networks. It may also cause confusion about what 5G really is, because it will mean fundamentally different things depending on which carrier offers it.

Lastly, T-Mobile’s focus on broad geographic coverage means that nothing in its early 5G strategy will help with its big strategic weakness: its lack of a play in home broadband and TV services. Given the rise of bundles and the increasing convergence between home and mobile services, there’s going to be increasing pressure for T-Mobile to pair up with a provider that can offer those services. Other carriers are pursuing 5G in a form which could replace home broadband services where deployed, but T-Mobile won’t be going down that route at least in the beginning, which means it will likely still need a merger with a cable or landline telecoms provider somewhere down the line to be competitive in bundled services.

Facebook Debuts Phone-Centric Vision for AR

Facebook is holding its F8 developer conference today in San Jose. Its first-day keynote covered a lot of ground, but the major theme was augmented reality. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan can also be reached via email at jan@jackdawresearch.com for further comment and is also on-site at F8.

Facebook has been slow to get into augmented reality and related technologies, focusing instead on the more mature but less mainstream virtual reality. This year’s keynote shows Facebook is serious about catching up in this area and competing with Snapchat and others. What’s interesting given Facebook’s ownership of Oculus is that Facebook is very focused on the phone and not a headset for its AR vision, at least for now. It still sees glasses or even contact lenses as the eventual outcome, but for now is working on phone tools, which places it in direct competition with Snapchat.

The new tools and apps Facebook demoed on stage today around augmented reality are impressive, but most of them won’t be in users’ hands anytime soon. Mark Zuckerberg’s closing remarks on AR were notable for their tone of expectation management, and he made clear that this is going to be a long road, with the vision he outlined today playing out over years and not weeks or months. But having come into this market late, Facebook is clearly getting aggressive now, and the demos on stage actually looked better than the similar Snapchat features announced earlier today. They won’t all be available right away, but Facebook has the resources to move fast in this area and the audience to spread those features much more widely than Snapchat. All of this is setting up a really interesting competition between not just these two companies but also others which will enter the market. The big question is who will capture developer interest and importantly give those developers opportunities to make money.

Facebook also overhauled its Messenger Platform, which launched last year, and went as far as to call it Messenger Platform 2.0. That kind of separation from the version launched a year ago is smart, because the first round was ill thought out, with the vision for bots both too expansive and not nearly detailed enough. In the year since, Facebook has made a lot of progress, and the version of bots it now offers to developers is much more compelling and better suited to the kinds of things it will be used for. Facebook is also getting better at serving small and medium sized businesses, which continue to make up an enormous chunk of the total base of businesses in many markets. That’s important because these businesses represent the biggest future opportunity for Facebook advertising, which is already well penetrated among larger enterprises.

Lastly, Facebook introduced its first social VR product, which is critical to unifying its main business and its Oculus business. Facebook Spaces is a VR app which allows avatars of up to three friends to interact in a virtual space, and seems like it would be a lot of fun if you had several friends who also had really expensive VR rigs. The big challenge is that for the vast majority of people on Facebook, none of their friends will have the technology, and so the best they can hope for is calling out via Messenger Video to share their virtual worlds with real-world friends. Though these experiences will come to other, cheaper VR platforms in time too, the narrow reach of Oculus VR and VR in general highlights why Facebook is smart to start working hard on AR, which has much more mainstream potential.

Samsung Announces Galaxy S8

Samsung today announced the Galaxy S8, its latest flagship smartphone. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan is also at the event in New York City, and can be reached at jan@jackdawresearch.com or 408 744 6244 for further comment.

Samsung’s new phone taps into one of the biggest trends in smartphones this year: smaller bezels. This move follows LG and Xiaomi’s recent small-bezel phones and pre-empts what’s expected to be a similar move from Apple and new iPhones later this year. The Samsung approach is particularly clever, with its curved screen now less sharp on the edges, offering a more symmetrical and therefore more comfortable device. Its display looks fantastic too, though the longer, thinner aspect ratio may be problematic for some apps and consuming video.

The other headline features in the S8 seem interesting in principle but will have to live up to their promise to be compelling in practice. The Bixby assistant looks limited but potentially powerful if it works as advertised. The same can be said for the new iris and facial recognition features and Samsung’s connected home hub and apps. The move of the fingerprint sensor to the back of the device is a source of potential frustration for users, but those iris and facial recognition options should make unlocking the phone in other ways possible, at least in decent lighting. Samsung hasn’t fared well with its first party software or services in the past, so these new features are a big test of whether it’s made progress here.

The price of the new phones is up to $100 higher than their predecessors and almost all of the premium smartphones they’ll be competing with, which feels like a big risk. In this as with the bezels, it feels like Samsung is competing with what it expects Apple to launch later in the year rather than what’s in the market today, and that’s dangerous, because for at least the next few months Samsung will competing with cheaper iPhones, LG smartphones, and many others. That’s a big bet that its phones will justify a higher price, whereas it could have used these new phones as a way to drive higher sales after a couple of years of stagnation.

Samsung also released several accessories and other devices which are being positioned as part of a broader ecosystem, including a new version of its Gear VR headset, an updated 360-degree camera, and a home WiFi hub and smart home control system. The new Gear VR should be much more usable than the previous version with its terrible trackpad controller, while the new Gear 360 will be much better suited to use as an action camera compared to the predecessor, which was designed mostly for stationary use. The home hub taps into a popular trend of mesh WiFi networking, and along with Samsung’s ConnectHome app finally starts to build some more meaningful connections between Samsung’s phones and its broader ecosystem, including SmartThings.

YouTube TV is Another Reminder of How Hard it is to Disrupt TV

YouTube today announced YouTube TV, a new online pay TV service which will cost $35 per month and offer content from the four major broadcasters and their affiliates. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan can also be reached for further comment at jan@jackdawresearch.com or 408 744 6244. A version of this comment was posted earlier at Tech Narratives, where Jan weighs in on the day’s major tech news stories. 

YouTube TV is a great reminder of just how hard it is to truly disrupt the traditional US pay TV ecosystem. Like the other services we’ve seen previously, it looks like YouTube is determined to hit a $35 price point and has had to make a series of arbitrary decisions about what should be in or out in order to achieve that. In its case, the focus is on the four large broadcasters and their affiliates, but that means it excludes the Turner channels, HBO, AMC, and lots of other popular content. That includes some major sports content, especially basketball, which detracts from YouTube’s message here that this is a great package for sports fans. The other big limitation is local availability, since YouTube only has deals to offer channels from local affiliates owned by the broadcasters. This continues to be one of the big barriers to true disruption in pay TV, and is likely to remain so for the foreseeable future.

Every over the top streaming alternative to traditional pay TV is handicapped in at least one way, and often several. YouTube TV will offer cloud-based DVR as a differentiator, but the missing cable networks are a big downer. This is basically a four-way deal with the big broadcasters and their cable affiliates, but it means if you want any of the other networks you’re still going to have to buy Sling, DirecTV Now, Sony Playstation Vue, or whatever else comes down the pike later this year. There’s a certain irony to the fact that, though these services are nominally disruptive, they actually offer even less choice individually in many cases than the pay TV services they’re aiming to replace. We’re still a long way from being able to choose a bundle of channels that makes sense to us, rather than having to buy a bundle someone else configured for business reasons.

T-Mobile Shakes Up Phone Numbers Just As They Stop Mattering

T-Mobile today announced a limited customer beta of Digits, a new technology which allows customers to use their phone numbers on multiple devices and use multiple phone numbers on a single device. The comments below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan may also be reached at jan@jackdawresearch.com or 408 744 6244 for further comment.

T-Mobile is shaking up phone numbers at a time when phone numbers are less relevant than ever. Between VoIP calling services like Skype, over-the-top messaging services like WhatsApp, and built-in carrier-independent calling and messaging apps like FaceTime and iMessage, phone numbers and phone calls are less relevant today than ever before. As such, T-Mobile’s innovation here would have been much more meaningful five or ten years ago than it is today.

There is real innovation here, though – T-Mobile has used industry standard technology like IMS and the HLR function as enablers, but has added its own special sauce to create a new device-independent approach to phone numbers, and that’s impressive. T-Mobile claims that it would take years for competing carriers to replicate this approach, and they’re probably right. As such, this is a unique technology and service that T-Mobile can use as a competitive differentiator, to the extent that it’s appealing to potential customers.

It’s worth noting that by T-Mobile’s own description, this is a limited customer beta, and it shows. For now, the features only work fully on high-end Samsung devices, whereas on all other devices they will feel much the same as any other VoIP or messaging app downloaded from an app store. That may change over time on other Android phones, but it’s going to be very tough to achieve the same sort of integration on an iPhone. That’s going to make iPhone users second-class citizens for the service for the foreseeable future, but it’s also less likely that iPhone customers would be interested, given their access to FaceTime and iMessage, as well as Handoff and other features which make cross-device use easy. Meanwhile, T-Mobile recommends customers using Digits switch off iMessage and use standard carrier messaging to make use of it, which won’t go down well with many iPhone users.

I see the multiple device features mostly as a loyalty play, although T-Mobile will pick up some new customers attracted by the feature too. The multiple line feature sounds appealing for those using business and personal phones, but the phone number is usually only a small part of dual device use. Companies often have email and other confidential data on devices which needs to be secured, and simply offering a second phone line on a single device doesn’t meet any of those needs. As such, this feature will likely only be relevant to those companies with a voice-centric approach to corporate devices, which will limit its appeal to a small subset of the 30 million T-Mobile is touting here.

Beyond all this, there’s the question of pricing, which hasn’t been announced yet, though T-Mobile has made clear that there will be a cost once the beta ends. T-Mobile has said it will be compelling, but for now we have to take their word for that.

Apple Updates the MacBook Line and Takes Baby Steps Towards a TV Service

Apple today announced three new MacBook Pros and also introduced a new TV app for the Apple TV, iPad, and iPhone. The comments below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan is also at the Apple event and can be reached at 408 744 6244 or jan@jackdawresearch.com. 

Apple now has the most compelling and coherent lineup of laptops it’s had in several years. But Apple’s laptops no longer enjoy the kind of big hardware advantage they’ve had in the past. Instead, what we’re seeing is an increasingly stark difference in the philosophical approach taken by Apple and Microsoft in relation to touch on devices. Whereas Microsoft this week reemphasized its touch displays for Windows PCs with the Surface Studio, Apple reserves full touch displays for its iOS devices and focuses on the horizontal plane when it comes to interaction with Macs. The Touch Bar and larger trackpad reinforce this sense that Apple thinks you want to interact with your laptop while keeping your hands down rather than constantly reaching up and touching the screen. The Touch Bar clearly borrows heavily from some of the work done in recent years on iOS including predictive text and emoji translation, but does so in a way that’s optimized for the Mac, while Microsoft’s approach is more about the same interfaces everywhere. Apple has also come up with some clever adaptations for the Touch Bar based on the context, and it will be interesting to see how third party developers use this feature – there’s a lot of potential there. Touch ID will be a nice addition for security and online payments.

If you focus just on the most recently released devices, Apple’s laptop lineup now runs from the 12” MacBook through the more powerful new MacBook Pros, with sizes from 12 to 15 inches and weights from two to four pounds. This should provide options for everyone from those needing basic performance through to professionals working with processor-intensive creative apps, while every model in the lineup is now more portable as well. Apple is also borrowing from its iPhone and iPad strategy in keeping older devices around while the focus will shift to these newer models. The more powerful MacBook Pros are also now viable substitutes for desktops in all but the most demanding workflows, especially when paired with the new LG displays. Interestingly, the new models all feature the older Intel Skylake processors rather than the newer Kaby Lake processors, because the specific chips Apple is using don’t have equivalents in the Kaby Lake line yet.

Apple’s new TV app seems like yet another incremental step in the direction of a TV service. The biggest flaw in Apple’s vision of the future of TV being apps is that there are just so many apps (1600 video apps on the Apple TV alone), and dipping in and out of them isn’t a great user experience. The TV app provides a unifying interface that overcomes the fragmentation associated with an app model and brings much of the relevant content together. The big piece that’s missing at this point is live TV, which still requires individual apps, though Siri can help launch those. The new TV app should make Apple TV easier to use, and create something more analogous to the programming guides on pay TV services. However, Apple’s ability to get holdout app makers like Netflix on board will determine how useful the app ultimately is – the proposition breaks down pretty quickly if major apps are missing.

Microsoft Makes a Creativity Push

Microsoft today made a set of announcements including a new high-end all-in-one Windows PC called the Surface Studio as well as a new version of Windows 10 called Creators Update. The comments below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan may also be reached at 408 744 6244 or jan@jackdawresearch.com.

Microsoft has been refining its identity and strategy since Satya Nadella took over as CEO, and much of that focus and strategy has been centered on productivity and helping people get things done. That vision has married well with Microsoft’s renewed emphasis on business products and services, but it has also reinforced the sense that Microsoft doesn’t get consumers, or at least the consumer halves of its users’ lives. Microsoft has needed a rallying point for a set of efforts around consumer use cases, and it appears to have decided on creativity as the catchphrase for this push.

This new creativity emphasis includes both new creative tools within existing products like Windows and Office, and new hardware in the form of the Surface Studio and the existing Surface product line. Microsoft seems determined to challenge Apple’s historical edge among professional creatives, but it is also making a play for the creative element within a broad base of consumers and professionals. The Studio is a high-end PC that’s going to be out of reach for the vast majority of consumers, most of whom will be left with traditional PCs that don’t have all the capabilities Microsoft showed off today. But Microsoft’s new Paint 3D app and other enhancements in the new version of Windows 10 are more mainstream attempts to establish Microsoft as a creativity brand. Of course, with only 400 million of well over a billion worldwide users of Windows on Windows 10, many of Microsoft’s current users won’t see these enhancements anytime soon.

Though today’s products are a good start, it takes a long time to change deeply-entrenched perceptions, and Microsoft has its work cut out in trying to convince potential customers that its products are more than just the workhorses they’ve always been for many. Workflows and cultures in many creative companies are built around Apple products, and that won’t change overnight. However, Microsoft’s timing for these new products is great, coming at a time when Apple has been accused of neglecting its creative community. Apple, of course, has its own event on Thursday, and will get an opportunity to make its case for its own vision of the future of computing. It’s also easy to overestimate the role creative professionals play for Apple – though its Mac base was once heavily skewed towards these users, it’s long since broadened its appeal well beyond those users an well into the mainstream. Though losing creative professionals as a constituency might be painful for some at Apple, its mainstream appeal is what matters, and it needs to shore that up with its announcements this week and beyond.

Some quick thoughts on other topics:

  • Microsoft’s promotion of VR headsets from its OEM partners today is the first sign we’ve seen that Microsoft might be rethinking its focus on augmented rather than virtual reality. Given that HoloLens is likely to continue to struggle to achieve mainstream appeal, supporting a more consumer-friendly VR push by laptop makers is a smart move, although $299 PC-based VR solutions may struggle against smartphone-based versions at $100-200 which are more portable.
  • The Surface line at Microsoft continues to be a high-end proposition, will all the products in the line remaining at premium price points. That’s a great way to build a premium brand, and also to generate high margins, but it also competes with Microsoft’s OEMs at the most lucrative end of the market, while limiting its sales. Revenues for the entire Surface line continue to be a tiny fraction of those for other PC vendors.
  • It’s interesting to see both Microsoft and Google now effectively incubating fairly compelling hardware divisions within their companies. Google’s recent push into hardware with the Pixel, Home, and Wifi products and Microsoft’s growing Surface line are indications that both companies are more serious about hardware, and about competing with Apple on its own terms.

AT&T Time Warner Deal Risks Repeating History

AT&T tonight announced that it will seek to acquire Time Warner. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan also published a blog post earlier today which provides a more in-depth look at AT&T’s current consumer strategy and the context for the merger.

The AT&T Time Warner deal is straight out of AT&T’s recent consumer playbook, which has been focused on entertainment and building value by combining assets to create unique consumer benefit. The best previous example of this was the acquisition of DirecTV and the subsequent zero rating of DirecTV data on the AT&T wireless network. However, the rationale for the Time Warner deal is much less obvious, and risks repeating history as it borrows from the rationale for the AOL Time Warner deal sixteen years ago.

AT&T sees the TV value chain compressing, with content owners like Disney and Time Warner investing in distribution, while distributors like Amazon and Netflix invest in creating content. It is fear of this compression of the value chain and what will happen to those who don’t participate that’s motivating this merger. But the deal is also motivated by AT&T’s desire to offer unique content and content features to its TV and wireless customers. And that’s where the rationale feels thin.

The problem with distributors buying content companies is that content benefits most from receiving the broadest possible reach, while distributors are always incentivized to make reach narrower through exclusives. This creates massive strategic tensions that are almost impossible to resolve – AT&T risks either hurting Time Warner by restricting access to its content, or making its own differentiators too narrow out of fear of hurting Time Warner. Buying a large existing content asset with massive distribution is a very different value proposition from creating brand new content in-house with exclusivity designed in from the beginning. And at $84 billion, AT&T is paying a massive amount for minimal synergies and a thin layer of theoretical differentiation. We need look no further than Comcast’s acquisition of NBCU to see a recent example of the failure of a content-distribution tie-up to deliver any meaningful synergies.