Apple, applied Chat GPT, Tesla pricing and McDonald's strategy (#6)
Chat GPT is already affecting the "Big 5", while the energy prices are closing companies across Europe at un unprecedented pace.
When I started the newsletter I wanted to cover Europe better, but with a leadership focused mainly on regulation this was not possible. Hence, I'm back to “classics”: US companies who innovate and scale at unprecedented levels. (China is following closely)
Strategy
Apple is reportedly working to make Macs with touchscreen. Here is a quote from Steve Jobs:
"Touch surfaces don't want to be vertical," Jobs said. "It gives a great demo but after a short period of time, you start to fatigue. And after an extended period of time, your arm wants to fall off. It doesn't work.”
Why this change? Apple is finally listening to the consumers. My two year old daughter frequently touches the apps on my Mac in the hope they will open. Apple delivered a larger iPhone screen despite Job’s unwillingness to do it, hence Macs with touch screens will be perfectly fine. Of course, expect price increases. LINK
Also, Apple built their way to the top by building an incredible supply chain around…China. “Zero cases” pandemic rule and authoritarian drift led Apple looking for alternatives:
Chosen destinations: India (of course) and Vietnam. Even if they went to these countries, they are working there with Chinese companies, because…supply chain dependence.
The process will be painful, because nobody offers scale and quality like the Chinese companies. Add to these an available workforce of 400m Chinese workers that can be moved around the country to deliver what is expected and you get a real manufacturing dragon. FT has written more extensively on the topic. LINK
Copy-cats become better and better. Here is a Chinese (of course!) brand - LeEco S1 Pro:
Goldman Sachs is in trend with the tech industries: doing 3-5% layoffs. The consumer banking arm brought $4 bn in losses with Apple’s card accounting up to 75%. What led to that? Well: (1) aggressive pricing to gain market share, (2) poor client assessment with huge defaults, (3) deteriorating macro conditions and (4) other bad management decisions. LINK
In my business predictions for 2023 I had a point on a potential video industry consolidation because all players were losing money. Warner Bros. Discovery, the parent company of HBO, decided to raise prices for the subscription after several months ago decided to pull-off hundreds of titles from the platform, including Westworld. Cash bleeding is real and painful. LINK
Tesla is having an up to 20% price cuts to its models, saying:
“At the end of a turbulent year with interruptions to the supply chain, we have achieved a partial normalization of cost inflation, which gives us the confidence to pass this relief onto our customers,” says a Tesla Germany spokesperson in a statement to Reuters.
Translation: Elon saw that the markets penalise you if you don’t deliver. (+40% YoY sales vs +50% expected in 2022). Combined with an aggressive competition he moved to price cuts, which will only weaken the brand. Analysis expected an +12-15% of sales in this fiscal year. Les Echos, The Verge
Chat GPT continues to impress everyone. Ben Thompson from Stratechery has a piece on this with the impact on the “Big 5”:
1/ Amazon: by renting GPU space
2/ Meta: using AI to generate content and closing the loop on product discovery & selling (hence, moving in a world post-ATT)
3/ Google: the search revenue stream seems to be reaching the peak. Bing integration with Chat GPT will ultimately mean a profit decrease. By the way, Google leads the research on AI. LINK
Below is an integration with Gmail:
4/ Microsoft - is bringing it to Bing and Microsoft Office (and, of course, to Azure), beside the large GPU fleets available for renting. Interesting times ahead for a company that is largely ignored.
5/ Apple - privacy will continue to play a centre role. The company surprised everyone when it announced last week an integration of Stable Diffusion on their devices, built in the system. This was possible due to the leverage of using open source software.
37signal, the parent company of Basecamp, has a guide for internal communication (short reminder: Basecamp was from day one a remote run company). LINK
The larger the company, the more problems arise mainly due to poor communication. How do you decide to communicate with your colleagues? Email, in person, Teams, Slack, etc? I think this list will help you. This is the first “commandment” and I really like it:
You can not not communicate.
Twitter lost around 40% of the total revenues under Musk’s leadership. On a yearly basis that means around $2 bn. There are takeaways from this: (1) People love predictability, especially advertisers. (2) The company has suspended the access of third parties apps without notice. The second move was expected, especially because it was needed to provide a unified user experience, while leveraging their ad efforts. The method to disconnect was done in Musk’s style, that is, chaotic. Revenue, 3rd parties.
Politico is wondering if “Is this the end of Made in Europe?”. Across Europe between 10 and 20% of the companies closed due to high energy prices. Maybe a discussion is more than ever necessary around nuclear energy. LINK
McDonald’s has a growth strategy around…marketing. It is not convincing at first sight. LINK
Climate startup removes carbon from open air in industry first. LINK
5G promises are by now made with disappointments. LINK
The Semiconductor Value Chain is dominated by Western companies:
Data
The demographic future of the world: mainly Africans, Indians and Chinese.
The 10 cognitive skills the future employers will seek from students: Analytical & Synthetic thinking, Convergent & Divergent thinking and more. LINK
Crypto.com again cuts the global workforce by 20% as industry woes deepen. FTX contagion is real and painful. LINK
Are you planning to develop a marketplace? Future.com published their annual list of Top 100 marketplaces. Main criteria: Gross Merchandise Value (GMV), website traffic and others. LINK
The Generative AI landscape
Is Ai coming for your job? Probably someone with AI:
Top tech trends to watch in 2023 from CB Insights. LINK
EVs made up 10% of all new cars sold last year. LINK
2023 Bitdefender Cybersecurity Predictions LINK
In the UK 8.3 million people received an antidepressant drug. LINK
Henan region in China, which has 100m people, has reported a 88% infection rate with covid, reports Bill Bishop on Sharp China. Second wave is expected in March. LINK
Outside interest
Looking for a university degree? Don’t pick one of these 12, according to experts: (1) Acting, (2) Film, (3) Anthropology. LINK
Apple's MacBook Air is 15 years old. LINK
The Top Geopolitical Risks of 2023 — with Ian Bremmer (invited at Scott Galloway’s podcast). LINK
“Second-order thinking, thinking about thinking, understanding hot to engage with people in real life. Management skills, organisational skills, hot to build groups of people, make them function well - young people need to learn that stuff” - Ian Bremmer
China built a series of police posts across the world in order to collect intelligence and solve crimes outside of their jurisdiction, Now the FBI is looking closer. LINK
Tinder is testing user interest in a new $500 monthly plan. It is estimated that Tinder made $1.6 bn in 2021. LINK
Old mice grow young again in study. Question: when will it be tested on people? LINK
The late Pope Emeritus Benedict XVI on Jordan Peterson. LINK
Raining in 1 sqm. LINK