The Challenges Marketers Face Becoming Digital

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Study after study suggests that firms and marketers are having difficulty “becoming digital”. To better understand the nature of the challenge and what leading marketing organizations are doing to rapidly increase their digital sophistication, I turned to Peggy Chen, CMO at SDL. The language and content management company  works with 78 of the top 100 global brands, like Unilever, Phillips, Lexus and others, to create relevant digital experiences for consumers. Below is Chen’s insight on the digital revolution.

Kimberly Whitler: Before we start, I want to ask a basic question. How do you define “digital”? The term is thrown around regularly and with a great degree of looseness, so getting your perspective on what this means would be terrific.

Peggy Chen: It is a key buzzword that is used differently depending on who you talk to. Digital has become the medium through which people communicate—it’s table stakes. It’s how we understand, relate to, and communicate with everyone. Consumers today spend upwards of eight hours a day on any one of their three connected devices. That’s an incredible shift when you think about it.

In our business, we see a lot of people going from print to digital. And even when you are printing, you are still using digital technology. And so, the whole world now is digital. The challenge is that when it comes to communication, in the digital sphere, you tend to lose that personal connection. Consumers are inundated with meaningless messages, and making your brand stand out – in any language, or device, is a major challenge. We are at a turning point. The question is no longer, “how do we get everything on the digital channel”. Instead it’s “how you bring the human elements into digital—bring back the human interaction?” Digital is a means to an end. Now we have to make it more meaningful.

Whitler: What are the top challenges you see firms/marketers face as they attempt to become more digital (i.e., technology, organization, talent, etc.)?

Chen: Because digital is the primary channel of communication, the primary challenge is how to connect with your customers in a meaningful and relevant way (e.g., consumer experience). So now, it’s converting digital into a more effective vehicle. The first stage was to get everything on digital. Now, most companies have accomplished this. Next is to figure out how to integrate the digital experience and engage with consumers before, during and after a sale. This means how to structure the organization, how to change and train the talent, and how to use technology to engage in exciting new ways.

One of the biggest challenges marketers have is in creating the amount of content needed to deliver this level of engagement. How do you create more customized, relevant content across languages, devices, and channels for each and every person? One of our airline customers does just that – giving 100 million passengers (in nine languages) their own individual digital experience. If you want to reach millions of customers, then you’re going to need more content that humans are capable of creating. That’s where technology steps in. Advances in AI and Machine Learning are changing the game, and automating the way content is created, organized, and delivered to global audiences.

Whitler: Do these challenges vary by industry (for example, are there challenges that are unique to CPG or banking or retailing)? Why and in what ways?

Chen: Companies fall into different buckets. B2C companies (like retail and banking), where there is more competition, have been more at the forefront of figuring out how to leverage digital to deliver that integrated experience. If you look at the big high-tech, software companies, where you have lower volume, higher price, and longer relationship development cycles, they have been slower to adopt personalization and become more digitally sophisticated. This is because they have personal relationships with the buyers and so the digital sophistication hasn’t been as critical as retailers, for example, who have millions of customers (rather than hundreds). Another factor that is affecting industry development is regulation—life sciences, pharma, banking, etc. Regulation will push these companies to become more digitally sophisticated faster.

Whitler: What advice would you give to a CMO who wants to become more digitally sophisticated (themselves)?

Chen: There are a couple of pieces of advice I’d provide. First, I’d suggest that CMOs continuously monitor the entire marketing-technology landscape. The way they can do this is by following Gartner, Forrester, and Scott Brinker’s MarTech Landscape (see here). Another piece of advice is to spend time speaking with other CMOs. There are plenty of CMO events and these conferences represent a great opportunity to learn what peers are doing. The key is to find out what others are doing, and to gain insight about what is working, and what isn’t.

Whitler: What advice would you give to a CMO who wants to create a more digitally-capable organization/firm/culture?

Chen: First, understand your firm’s level of development. The key is to understand how the landscape is changing, understand the options, and then do an evaluation on where your company is in the transformation process. Before figuring out what to change, it’s critical to understand where the company stands. Of course, the pace of growth at every company is different, and technology can support whatever pace you choose – but a big part of becoming more sophisticated requires understanding the human transformation piece. You have to understand how the people, training, culture need to change to ensure that the digital transformation is effective. This is another part of transformation that is often ignored, and yet so crucial.

Join the Discussion: @KimWhitler @pbc88 @SDL

Tencent chairman pledges to advance China chip industry after ZTE 'wake-up' call: reports

HONG KONG (Reuters) – Tencent Holdings chairman pledged to advance China’s semiconductor industry, saying the blow to ZTE Corp from Washington’s ban on U.S. firms supplying telecommunications company was a “wake-up” call, local media reported.

FILE PHOTO: Tencent Holdings Ltd Chairman and CEO Pony Ma attends a news conference announcing the company’s annual results in Hong Kong, China March 21, 2018. REUTERS/Bobby Yip

China’s No.2 telecom equipment maker ZTE was banned in April from buying U.S. technology components for seven years for breaking an agreement reached after it violated U.S. sanctions against Iran and North Korea. American firms are estimated to provide 25-30 percent of the components used in ZTE’s equipment.

While the U.S. administration said on Friday it had reached a deal to put ZTE back in business after the company pays a $1.3 billion fine and makes management changes, the plan has run into resistance in Congress, indicating ZTE was still far from out of the woods. Also, ZTE is yet to confirm the deal.

FILE PHOTO: A sign of Tencent is seen during the third annual World Internet Conference in Wuzhen town of Jiaxing, Zhejiang province, China November 16, 2016. REUTERS/Aly Song/File Photo

“The recent ZTE incident made everyone more clearly realize that however advanced one may be in mobile payment, without the mobile, the chips and the operating system, you still cannot compete,” Chinese media reports cited Tecent’s Pony Ma as saying at a forum in Shenzhen on Saturday.

FILE PHOTO: A sign of ZTE Corp is pictured at its service centre in Hangzhou, Zhejiang province, China May 14, 2018. REUTERS/Stringer

Tencent, which alternates with Alibaba Group to be Asia’s most-valuable listed company, is the largest social media and gaming company in China and operates the popular WeChat app.

Ma said “even though the ZTE situation was in the process of being resolved, we must not lose vigilance at this time and should pay more attention to fundamental scientific research”.

Tencent is looking into ways it could help advance China’s domestic chip industry, which could include leveraging its huge data demand to urge domestic chip suppliers to come up with better solutions, or using its WeChat platform to support application developments based on Chinese chips, Ma said.

“It would probably be better if we could get in to support semiconductor R&D, but that is perhaps admittedly not our strong suit and may need the help of others in the supply chain.”

China has been looking to accelerate plans to develop its semiconductor market to reduce its heavy reliance on imports and has invited overseas investors to invest in the country’s top state-backed chip fund.

Reporting by Sijia Jiang; Editing by Himani Sarkar

Customers angry after National Australia Bank hit by technology outage

MELBOURNE (Reuters) – National Australia Bank on Saturday suffered what it described as a “nationwide outage” to some of its technology systems, leaving customers unable to access banking services or withdraw money.

FILE PHOTO: A National Australia Bank (NAB) logo is pictured on an automated teller machine (ATM) in central Sydney September 12, 2014. REUTERS/David Gray/File Photo

Customers took to social media to vent their frustrations, with some saying they were left unable to pay for groceries or refuel their cars.

“Loyal member for 15 years and you leave me standing at the supermarket altar with a trolley full of shopping,” said one Twitter user.

The bank tweeted just after midday (0200 GMT) on Saturday that some services were coming back online.

“We’re sorry and it’s not good enough … but we’ll get it fixed as soon as possible,” Chief Customer Officer Business and Private Banking Anthony Healy said in a video posted on Twitter.

NAB is one of Australia’s four largest retail banks with a customer base of 9 million, according to its website.

The outage follows growing customer discontent with the so-called “Big Four” banks, which have suffered numerous embarrassing disclosures at an inquiry into financial sector misconduct.

A spokesman from the bank told Reuters by telephone that it was a national outage, without elaborating on its cause.

The Bank of New Zealand [BNZL.UL], a NAB subsidiary, also experienced outages on Saturday across New Zealand, but the spokesman was unable to confirm a connection between the two incidents.

Reporting by Will Ziebell in MELBOURNE; Editing by Joseph Radford

Why Every Entrepreneur Should Care About Instagram's Recent Updates

At the moment, it’s hard to think of a social media platform on the market hotter than Instagram. With the app being within reach of growing to 1 billion monthly users by the end of 2018, it’s becoming more apparent by the day why Mark Zuckerberg pulled the trigger and acquired the photo sharing app back in 2012.

Recently, Instagram has continued its upward trajectory through a number of new updates and features. Just a handful of these updates include: 

  1. Updating the Discover tab to be hyper-personalized to each individual user.
  2. Creating a “guided search” which closely mirrors that of Pinterest.
  3. Rolling out native payments on the platform to allow for seamless discovery and purchase. This feature will, more than likely, exist to keep users in-app and strengthen Instagram’s click-to-buy feature called “Shoppable Tags”.
  4. Reservations to some restaurants are now being accepted on the platform through a partnership with the fast-growing app, Resy.

Why You Should Care

When it comes to social media, it can be tough to differentiate between trends and the countless amount of semi-useless updates and features these platforms seem to release every single day. That being said, take this one from a guy whose job it is to keep up with social media: this is certainly a social media trend every entrepreneur should be paying attention to.

The main reason for this is all these updates mentioned above point to one conclusion: Instagram is tripling down on eCommerce. With each change, Instagram is getting closer than ever before to reaching the “eCommerce promiseland”, which consists of entertaining, relevant discovery coupled with a seamless checkout process all in one app.

Instagram is also in a better position than any other social media platform to become the king of e-commerce thanks to their parent company being Facebook. The robust data Facebook has on their user’s consumer behavior is unprecedented, and Instagram will be able to capitalize on this information for years through targeted advertising. 

Caveats and Cons

As with all major trends, there do exist some caveats to consider prior to jumping on the bandwagon:

  1. Facebook’s screw-ups will inevitably effect Instagram. Because Facebook owns Instagram, any scandal that occurs (like Cambridge Analytica) will effect how the company conducts business on Instagram. 
  2. Pay-to-play. Due to the growing popularity of Instagram, the volume of content on the platform will only continue to increase, making the feed more cluttered than ever before. Because of this, if the history of Facebook holds true, it’s only a matter of time before Instagram becomes just as much a pay-to-play social media platform as Facebook has become.
  3. Best for physical products. At the moment, many of the Instagram updates mentioned in this article apply primarily to physical products, like merchandise, as opposed to all brands. If you’re a B2B brand, such as a consultant or IT specialist, all the features may not benefit you as much as a B2C brand at this point in time.

What You Can Do to Capitalize on the Opportunity

Sometimes, the simplest solutions are the most effective. The best way to capitalize on this opportunity is to become more active and effective on Instagram as soon as you can. This will position you be able to sell to your engaged followers on the platform. Here are the best ways to get started..

  1. Bolster your sales on Instagram by integrating your profile with Shopify. You can get started on that process here.
  2. Experiment with influencer marketing on Instagram. For example, consider having an Instagram influencer wear your merch or use your product in their posts. This will enable you to see whether or not influencers are your best option versus selling directly from your own profile.
  3. Take advantage of Instagram Insights to see your audience’s behavior. Like anything else in business, data is king when it comes to knowing what your Instagram followers prefer. With Instagram Insights, you’ll be able to see recommended publishing times, your highest engaged posts, characteristics of your followers, and much more.
  4. Take advantage of links in Instagram Stories. Leverage links in your Stories by showcasing your product, then include a link where your most engaged viewers can purchase that product if they’d like to.

With the barrage of recent updates coming from Instagram, it’s apparent the social media powerhouse is doubling down on eCommerce. If you’re an entrepreneur, be sure and take advantage of this opportunity with these new features before everybody is doing it. Best of luck.

Report: Document Shows Apple Knew iPhone 6 Was More Likely to Bend

Apple knew ahead of time that its iPhone 6 was “more likely to bend” than other iPhones, according to tech news site Motherboard.

A lawsuit filed in 2016 claims Apple knew about defects with the iPhone 6 and 6 Plus, including so-called “touch disease” — or problems with the iPhone 6 and 6 Plus touchscreen responsiveness, which can happen if the phone is bent.

While documents submitted by Apple in this case are under seal, U.S. District Court judge Lucy Koh made some information public in a procedural ruling on the case on May 7. In it, she said that “Apple’s internal testing ‘determined that the iPhone 6 was 3.3 times more likely to bend than the iPhone 5s (the model immediately prior to the subject iPhones) and that the iPhone 6 Plus was 7.2 times more likely to bend than the iPhone 5s.”

She continued: “Underscoring the point, one of the major concerns Apple identified prior to launching the iPhones was that they were ‘likely to bend more easily when compared to previous generations’ something that Apple described as ‘expected behavior.’”

Koh also wrote that Apple began adding reinforcement to the iPhone 6 and 6 Plus in May 2016 that caused malfunctions. (Koh also presides over a long-running patent infringement case between Apple v. Samsung).

After the premiere of the iPhone 6 and iPhone 6 Plus in 2014, some customers complained about the phones bending, leading media outlets to give the problem the nickname “bendgate.” Following those reports, Apple released a statement that minimized the problem:

“Our iPhones are designed, engineered and manufactured to be both beautiful and sturdy. iPhone 6 and iPhone 6 Plus feature a precision engineered unibody enclosure constructed from machining a custom grade of 6000 series anodized aluminum, which is tempered for extra strength. They also feature stainless steel and titanium inserts to reinforce high stress locations and use the strongest glass in the smartphone industry. We chose these high-quality materials and construction very carefully for their strength and durability. We also perform rigorous tests throughout the entire development cycle including 3-point bending, pressure point cycling, sit, torsion, and user studies. iPhone 6 and iPhone 6 Plus meet or exceed all of our high quality standards to endure everyday, real life use.

“With normal use a bend in iPhone is extremely rare and through our first six days of sale, a total of nine customers have contacted Apple with a bent iPhone 6 Plus. As with any Apple product, if you have questions please contact Apple.”

Apple, according to Motherboard, has argued that bending cannot cause “touch disease” “unless the phones had already been repeatedly dropped on a hard surface.”

Fortune contacted Apple for more information about Motherboard’s report and will update as necessary.

Amazon Web Services to invest in Chile for the long-term: executive

SANTIAGO (Reuters) – Amazon Web Services is looking to invest in Chile for the long-term as part of a larger Latin American expansion plan, a senior executive said on Wednesday after meeting with Chilean President Sebastian Pinera.

FILE PICTURE – The logo of the web service Amazon is pictured in this June 8, 2017 illustration photo. REUTERS/Carlos Jasso/Illustration/File Photo

Teresa Carlson, AWS vice president, worldwide public sector, had sought the meeting with Pinera, a conservative billionaire and businessman, as Amazon.com Inc wants to expand its cloud computing footprint.

“You’re going to see us here for the long-term,” Carlson told reporters. “We think Chile is super important to Latin America and the rest of the world.”

Amazon has said it is keen to build more data centers in the region to handle data and computing for large enterprises, including governments, in the cloud.

Both Chile and Argentina – two of the largest economies in South America – have been courting investment from the cloud computing and e-commerce company.

Chile is interested in inviting companies such as Amazon and is “doing everything possible” to encourage them, said Economy Minister Jose Valente, who also attended Wednesday’s meeting.

Carlson declined to say whether both Chile and Argentina were still in the running for an Amazon data center. No announcement was imminent, she said.

Policies mattered most to Amazon, Carlson said when asked what criteria the company was considering.

“We look for telecommunication industries that are progressive,” she said. We look for a government that really is thinking forward on the digitization of their economy in terms of education and creating new jobs.”

Pinera has said he hopes to convert Chile into a digital and information services platform for South America. The sector has received $18 billion in investment in the past decade, according to Telecommunications Ministry data.

Amazon’s cloud-computing business is the largest in the world and accounts for a majority of its operating profit. Adding more data centers close to clients reduces latency and helps Amazon handle an influx of customers moving operations to the cloud.

Reporting by Dave Sherwood and Felipe Iturrieta; Editing by Grant McCool

Facebook CEO Mark Zuckerberg Sails Through E.U. Parliament Grilling

Facebook CEO Mark Zuckerberg managed to dodge tough questioning by European Union parliamentary members on Tuesday during a hearing about the company’s data collection practices.

The parliamentary members asked thorough, multi-part questions about Facebook’s policies and global operations. But because their questions were grouped together at the beginning of the roughly hour-and-a-half long session, Zuckerberg was able to mostly ignore them when it was finally his turn to speak.

Instead, he reiterated the company’s recent talking points around its efforts to clean up its service like hiring more monitors and combating fake news.

Several EU politicians brought up previous questions Zuckerberg ducked during two U.S. congressional hearings in April in Washington D.C. Similar to the EU parliamentary hearing, the U.S. congressional hearings were intended to look into Facebook’s response to the Cambridge Analytica scandal, which involved an academic obtaining and selling Facebook user data to a political consulting firm, and the company’s repeated privacy blunders that forced its executives to repeatedly apologize and pledge to do better.

Manfred Weber, the leader of the European People’s party in the European Parliament, kicked off questioning during the hearing on Tuesday by first commending Zuckerberg for apologizing for the company’s lapses and voluntarily appearing for the heading. The German politician then asked Zuckerberg a series of questions that included the following:

Can Facebook guarantee that another Cambridge Analytica scandal will not occur within the next year?

Did Zuckerberg personally make the decision against notifying its users when the company learned of the Cambridge Analytica scandal, a question Weber noted, was similar to one U.S. Senator Kamala Harris asked during the recent U.S. Congressional hearing?

Would Facebook be open to a discussion about whether it should open its secretive algorithms to the public to ensure transparency?

Zuckerberg did not respond to these questions when it came time for his answers, but he pledged that Facebook (fb) would follow up later in writing.

British politician Syed Kamall, the co-chair of the European Conservatives and Reformists Group, asked Zuckerberg about “the public outcry over shadow profiles,” a reference to Facebook’s practice of collecting data about non-Facebook users. He wanted Zuckerberg to expand on comments he had made during the previous U.S. congressional hearings during which he said that Facebook collects non-user data for security purposes. He asked Zuckerberg whether the only way for users to avoid having their data collected by Facebook would be to stay off the Internet entirely.

Another parliamentary member asked Zuckerberg whether he could guarantee that Facebook doesn’t use that non-user data for other services like targeted ads.

Zuckerberg avoided answering any questions related to shadow profiles until the very end of the hearing, when parliamentary members appeared upset and began shouting over each other in frustration.

“On the security side, we think it’s important to keep it to protect people in our community,” Zuckerberg said, a vague answer that implied that Facebook would continue to collect data about non-Facebook users. The executive then quickly shifted gears and said, “Were there any other themes that we wanted to get through?”

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After the hearing, several parliamentary members tweeted their frustration with Zuckerberg:

Zuckerberg largely reiterated what Facebook has already said publicly about its efforts to fix its service following the latest data privacy uproar.

And in the end, investors seemed pleased with his performance, as Facebook shares were relatively flat at end-of-day trading, slightly in-line with the overall market for tech stocks.

Daniel Ives, an analyst with GBH Insights, seemed positive about Facebook in a research note after the EU hearing. He said that the company’s stock continues to rebound after several months of investor concern that its latest scandals would impact the company’s bottom line.

“The Street has stepped away from the edge of the cliff over the last month on Facebook as the combination of stronger than expected March results, an impressive performance by Zuckerberg in DC, and the fears of regulation starting to fade in the background have been catalysts for a major rebound in shares,” Ives wrote. “While we expect more back and forth between the EU and Facebook over the coming weeks, we view today as another step forward for Zuckerberg post Cambridge.”

As Zuckerberg heads to Brussels, British lawmakers ask for answers

LONDON, May 22 (Reuters) – British lawmakers want their European counterparts to quiz Facebook FB.O CEO Mark Zuckerberg about a scandal over improper use of millions of Facebook users’ data, as he will not give evidence in London himself.

FILE PHOTO: Facebook CEO Mark Zuckerberg testifies before a House Energy and Commerce Committee hearing regarding the company’s use and protection of user data on Capitol Hill in Washington, U.S., April 11, 2018. REUTERS/Leah Millis/File Photo

Zuckerberg will be in Europe to defend the company after alleged misuse of its data by Cambridge Analytica, a British political consultancy that worked on U.S. President Donald Trump’s election campaign.

But while he will answer questions from lawmakers in Brussels on Tuesday, and is meeting French President Emmanuel Macron on Wednesday, he has so far declined to answer questions from British lawmakers, either in person or via video link.

Damian Collins, chair of the British parliament’s media committee, said on Tuesday that he believed Zuckerberg should still appear before British lawmakers.

“But if Mark Zuckerberg chooses not to address our questions directly, we are asking colleagues at the European Parliament to help us get answers – particularly on who knew what at the company, and when, about the data breach and the non-transparent use of political adverts which continue to undermine our democracy,” he said in a statement.

Last month, Facebook Chief Technical Officer Mike Schroepfer appeared before Collins’s Digital, Culture, Media and Sport Committee, which is investigating fake news.

But the lawmakers have said his testimony and subsequent written answers from the firm to follow-up questions have been inadequate.

Collins outlined deficiencies in Facebook’s answers so far in a letter to Rebecca Stimson, head of public policy at Facebook UK, which has been shared with the EU lawmakers who will quiz Zuckerberg. Collins requested a response from Facebook to his questions by June 4.

Reporting by Alistair Smout; Editing by Kevin Liffey

Microsoft, Google find fresh flaw in chips, but risk is low

(Reuters) – Cyber security researchers have found a new security flaw that affects a broad swath of modern computing chips and is related to the Spectre and Meltdown chip flaws that emerged in January.

Silhouettes of mobile users are seen next to a screen projection of Microsoft logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration

The newest chip problem, known as Speculative Store Bypass or “Variant 4” because it’s in the same family as the original group of flaws, was disclosed by security researchers at Microsoft Corp and Alphabet Inc’s Google on Monday. Though the flaw affects many chips from Intel Corp, Advanced Micro Devices Inc and Softbank Group’s ARM Holdings, researchers described the risks as low, partly because of web browser patches already issued earlier this year to address Spectre.

The Meltdown and Spectre flaws, which emerged in January, can allow passwords and other sensitive data on chips to be read. The flaws result from the way computers try to guess what users are likely to do next, a process called speculative execution.

When the flaws emerged in January, researchers warned that they were likely to find new variants of Spectre in the future. Earlier this month, German computer science magazine c’t reported that a “next generation” of flaws had been found in Intel’s chips and was likely to be disclosed this month. Intel declined to comment on whether Monday’s announcement was related to the German magazine’s story.

FILE PHOTO: The Google logo is pictured atop an office building in Irvine, California, U.S., August 7, 2017. REUTERS/Mike Blake/File Photo

In its research findings, Microsoft said that patches issued for common web browsers earlier this year greatly increased the difficulty of carrying out an attack with the newly discovered flaw.

Chips from Intel, AMD and ARM all have patches available, either directly from the makers or through software suppliers such as Microsoft. Intel said it expects a performance slowdown of between 2 percent and 8 percent from the patches, and ARM said it expects a slowdown of between 1 percent and 2 percent.

However, Intel said that because of the low risk of a real-world attack, it would ship its patches turned off by default, giving users the choice whether to turn them on. AMD also advised leaving the patches turned off due to the difficulty of carrying out an attack.

The security problems do not appear to have impacted chipmakers’ stock prices. Intel shares are up nearly 16 percent to since the start of the year to $54.32, and AMD shares are up 18.3 percent to $12.99 since the start of the year.

Reporting by Stephen Nellis; Editing by Cynthia Osterman

'Smart Money' Buying Oil After Missing Entire Rally

We had previously looked at the positioning of large commercial traders in the oil futures market. While the consensus view had been that this meant that oil prices were due to fall significantly, we basically took the stance that the data implied no such thing.

Since then crude oil prices have risen, with Brent oil futures threatening to break the $80 barrier and by our count, at least 4 grades of oil trading above the critical $80 mark. With prices firmly entrenched in a long-term upswing, we were surprised to see that the commercial traders had started to actually go long crude oil futures.

Source: CFTC.GOV

This was the second consecutive week where commercials expanded their net long position after shorting this market for what seemed like an eternity.

So what do we make of this change in behavior?

Where is this coming from and what it means

The one group that has been notoriously absent from trading crude oil positions in the last few years has been the airline group. Having been burnt a few times by hedging oil prices too high, they have stayed on the sidelines since 2016.

While carriers saved hundreds of millions of dollars from oil prices halving since June, they forfeited a large chunk of that gain because of the fuel hedges they bought as protection against oil rising.

The bulk of those hedges – which effectively lock in fuel costs in advance – are set at levels that force airlines to pay more for fuel than current market prices, turning them into a hindrance rather than a help.

As a result, three of the four biggest carriers – Delta, Southwest and United – said this week they were rethinking their hedging tactics. Meanwhile, American, which does not hedge fuel costs at all, is reaping the biggest savings.

Southwest Airlines Co. said on Thursday its outstanding hedges represented a loss of $1.8 billion through 2018, at Jan. 15 prices. However, it still expects a fuel bill that is more than 30 cents per gallon lower this year compared to 2015, or a roughly half-billion dollar net benefit.

It was this group’s absence that distorted the futures positioning in the crude oil market and gave the appearance that collectively “the hedgers” were bearish on oil. That logic proved very costly as anyone who went by the commitment of traders report, stayed away from long positions and missed the entire rally.

However, with prices breaching past levels that no analyst thought possible last year, the airlines may be getting religion. Fuel represents the single biggest cost factor for airlines and it is hard to pass on unless capacity utilization is extremely high. While for most part airlines have denied that they will hedge, we believe some in the group are now breaking ranks. There are two likely reasons for this. The first being the certainty of cash flow is likely to assuage investor concerns, even if it is at a much higher price than they should have hedged. The second is this.

Source: Data.tradingcharts.com

While the front end of the curve is flirting with much higher prices, airlines still have the opportunity to lock in sub-$60/barrel prices further out. So in a sense, oil prices have to fall more than $15/barrel from today’s prices for them to actually lose money on further out hedges. We think that they will embrace this opportunity as world oil fundamentals continue to tighten and supply surprises will continue to be on the downside.

As they do so, we think the incredible backwardation currently visible will begin to ease and the curve will become flatter. To some extent, this will be counterbalanced by increased producer hedging as they see an opportunity to lock in good prices, but on the whole, the curve will flatten in our view. The biggest impact of this though will be on oil producers. Oil producers continued to be priced for a $50/barrel market, and as the futures curve reflects the correct longer term supply demand situation, oil producers should embark on a spectacular rally.

Conclusion

Oil producers have outperformed the broader indices recently, but we believe this is a long-term trend that can still be bought. Our favorite oil producers are trading at a fraction of their fair value and offer gains not available anywhere else in the market. Oil itself has had a sensational run and is due for a pullback. But the longer-term story is still intact and we continue to ignore silly stories about EVs denting demand.

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Charging Electric Scooters Is a Profitable, Fun—and Occasionally Dangerous—Youth Trend

The newest big trend in tech startups is in turn fueling an emergent youth culture, as teenagers and young adults spend their free time collecting and charging electric scooters. Some compare it to a game—one that they’re getting paid pretty well for playing, but also comes with some real-world risks.

As reported by The Atlantic, the part-time gig is sometimes called ‘Bird hunting.’ That name comes from Bird, the most prominent company in a wave of new “dockless” scooter and bike rental startups, which use smartphone apps to both rent and track light vehicles.

The systems offer a potentially innovative solution to urban transportation, particularly what’s known as the “last mile” problem: how to get users of public transit from stations to their doorsteps. Because they can be dropped off anywhere, the rental vehicles can be more convenient for riders than personal scooters or bikes (though they can also, according to some city officials, create a “public nuisance”).

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The apparent convenience of those systems, though, is created by a lot of behind-the-scenes work, much of it done by contractors, known as “chargers,” who collect and charge the scooters. Several young chargers described their work to The Atlantic as a fun side-hustle—one even compared it to playing Pokémon GO, since it involves using an app to find the GPS-tagged scooters. The “prizes” for finding scooters are also game-like, with chargers paid more for retrieving scooters that are harder to find. Young chargers report teaming up to do the work faster, starting what amount to small businesses with some socializing thrown in for good measure.

Rewards can range up to $20 for a single scooter, and chargers described making up to several hundred dollars per night. Those rewards are likely to decline, assuming that Bird and other startups are following the standard tech-industry model of sacrificing revenue for market share early on (at least $250 million in venture capital supports Bird and similar companies). But the game-like aspects of charging may make workers less price sensitive.

That said, just as Uber has become a primary source of income for many of its drivers, it’s clear that recharging scooters is not a game for everyone. Chargers interviewed by The Atlantic describe occasional conflicts over scooter bounties, manipulation of the reward systems, and outright theft of the scooters, which criminals have been known to chop up for parts. Perhaps worst of all, some report that criminals are hunting the hunters—using scooters as bait, then mugging the chargers who arrive to retrieve them.

Tesla: Tsunami Of Sales And Profits In Q3

Bullish expectations for Q3

This article explores the bullish projection that Tesla (NASDAQ:TSLA) is about to become profitable in Q3.

Among the expectations discussed below are that Tesla Model 3 sales in Q2 will be 20,000 cars fewer than production due to federal tax credit rules. This will appear to be poor sales, but in reality will be due to stockpiling cars for sale in Q3 due to the way the tax rules are written.

While this means Q2 revenue will be reduced, it also means Q3 revenue will be increased. As a result, Model 3 should become a top 20 selling vehicle in the US in Q3 with a potential of 80,000 units sold into the US.

This is an average per month sales of about 27,000 Model 3 cars, making it the 12th best selling vehicle in the US ahead of the Nissan Altima (see list below).

Tesla Q3 sales will match the total number of cars sold by Tesla in all of 2017.

Elon Musk has adopted “profits” as his current goal. This replaces his previous goal of fast expansion of the product lineup. The former goal required capital input to fund rapid expansion. The new goal will flip the losses upside down and generate profits now that the bottlenecks are being eliminated one after another.

Most authors write that Tesla is shutting the production line down to “fix problems”. I suggest that Tesla is shutting the production line down to install new machinery that will increase the production speed. Increased production speed means increased gross margin, and if the increase is large enough, net profits.

Showing profits will potentially increase stock price and eliminate the potential for bankruptcy. This in turn will eliminate the bear thesis that Tesla is about to go under and is therefore a good stock to short.

With the short thesis proven wrong, I expect the stock to increase to a new plateau above $400 per share. This was my expectation a year ago, but the bottlenecks delayed the realization until now.

However, sales will likely remain low for May and June. I don’t expect this share price increase to be realized until after a barrage of sales in July make what I’m suggesting here obvious.

Let’s now explore why I’ve come to the above conclusions.

Model 3 may enter top 20 selling US cars in Q3

This week, Tesla has reached 500 cars per day, or, 3,500 cars per week. Bloomberg just increased their production estimate to 3,523/wk.

According to Electrek, Tesla is well on its way to reaching 5,000 cars per week by the start of Q3 in July.

If Tesla reaches this target for next quarter, the Model 3 will enter the top 20 list of US vehicles sold. A rate of 5,000 cars per week means an annual rate of 250,000 cars and a monthly rate around 20,000 cars. I expect Tesla will sell 80,000 Model 3 cars in Q3 so look for 27,000 or so cars per month on the list below.

That rate is between the Jeep Grand Cherokee and the Toyota Tacoma. If realized, the Model 3 will become a top 20 selling car in the US, next quarter.

This data was published by Focus2move here:

Today, the Model 3 is the best selling EV, but it isn’t on the top 100 list. Neither is any other EV. Every one of the top 100 selling cars in the US have an internal combustion engine. And while Tesla is now projected to be building more than 3,000 cars per week, which is to say over 12,000 cars per month (which would place the Model 3 around the #40 position of vehicles sold in the US), I expect this will not happen in May or June.

The reason? The federal tax credit.

It is beneficial for any company to cross the 200,000th car sold into the US threshold, early in a new quarter. Doing so wins that company an extra quarter of sales where customers receive the full tax credit.

Tesla would likely cross that mark this quarter if it sold all the cars it builds, as soon as they are built. To avoid this, Tesla is likely already stockpiling vehicles for a blow out delivery rush starting in July.

Several authors have noticed that the production figures are higher than reported sales figures. Tesla should have built over 6,500 cars in April, but sold fewer than 4,000. That’s a 2,500 or so discrepancy.

There are articles projecting that the discrepancy results from poor build quality and cars piling up for re-work and being stored in parking lots until Tesla can get around to fixing them.

I contend that thesis is wrong, and instead, Tesla is piling up a tsunami of cars for sale in Q3. Here’s why.

How the Federal Tax Credit works

The federal tax credit phases out over a 4-quarter (1-year) period beginning the second quarter after a company sells their 200,000th car.

If Tesla actually sold the cars produced, I expect the company would cross the threshold this quarter. By delaying the 200,000th US sale until after July 1, Tesla adds nearly an entire extra quarter of sales to the program, benefiting their customers. Tesla will sell nearly 60,000 more cars under full tax credit.

For this reason, I think one should expect sales to be flat this month and next (in Q2), while a 20,000 car stockpile ready for Q3 sales is accumulated.

Musk’s Increased Confidence

Elon Musk has stated several times that Tesla will not need to raise money this year. During the recent earnings call, he explicitly stated Tesla will not raise money this year.

Much was written about Musk’s behavior on that call. Most articles in one fashion or another, assert that Musk is cracking under the pressure. If so, Tesla may be headed for a crash near term.

So many people bought into that notion that 400,000 new shares sold short overnight after the earnings call. The stock price dropped 10% in one day.

Since then, however, the stock price has fully recovered and the divide between the bullish and bearish theses has widened.

Listening to the call, it made perfect sense to me that Elon was annoyed by the callers who had read the release and yet asked questions about things specifically stated in that paper. It was as if the callers were saying they knew the paper said they would be profitable, but they don’t believe it and so are trying to figure out what Elon is lying about. Feeling like he was being called a liar, I believe, is why he lost his cool.

But that isn’t what’s interesting. What’s interesting is that he is so confident that he will not need to raise funds that he didn’t bite his tongue.

What this means is that for the first time, Musk is placing profits ahead of expansion and rapid growth. And what’s more, he fully expects to reach profitability.

Bloomberg’s Model 3 Tracker diverging from reality

Bloomberg’s Model 3 Tracker website has been excellent at following the ramp up in Model 3, until April. The analysis has a flaw that doesn’t account for the federal tax credit deviation from business as usual.

The Tracker assumes that when a car is built and ready for sale, that Tesla will sell it as quickly as possible. This has been true, until this past month. Now, and until the end of June, Tesla can benefit its customers best by holding back about 20,000 (total) cars built in Q2 and then selling them in Q3.

Here’s the VIN data from the wild, plotted as yellow dots. Notice the gap in the numbers from about 23,000 to 25,500 representing about 2,500 cars that are absent from the public. Where did they go? Were they built?

Tesla should have built around 6,500 Model 3 cars in April. This is based on Tesla statements that they built 2,000+ cars per week for 3 weeks in a row (2 in April), and then shut down the line to add improvements and further speed the line production. April production should have been ~6,500 cars.

Instead of 6,500 Model 3 cars sold in April, Tesla only sold 3,875 M3 cars according to InsideEVs here.

We know Tesla built over 4,000 Model 3 cars in the first 2 weeks of April and would have needed to shut the line down for the rest of the month if cars produced were the same as cars sold. That makes no sense.

One logical explanation is that Tesla “sold” fewer cars than it “produced” by around 2,500. If these cars are being stockpiled, then in May and June this discrepancy should get much worse.

Tesla should build around 10,000 Model 3 cars in May and around 18,000 cars in June. But Tesla will likely sell just 5,000 per month for those two months to remain below 200,000 cars sold into the US. That means Tesla may accumulate 2,500 + 5,000 + 13,000 = 20,500 cars more than it sells in Q2.

Bloomberg’s model averages the estimates of cars produced with cars sold. But that’s averaging apples and oranges, it doesn’t work.

Last week the production estimate was 1,752 and this week it is 3,523.


Bloomberg needs to separate the sales and production projections into two different values. Otherwise they are trying to average apples and oranges. This would be fine any other time except now, where unusual strategy makes sense to benefit customers who desire to receive the federal tax credit.

Potential Q3 Sales

This brings us to estimate potential Q3 sales based on these optimistic expectations.

First, if Tesla succeeds at ramping to 5k/wk by the beginning of Q3, then it should have produced about 30,000 M3 cars in May and June. If it sells 10k of those to hold #1 BEV position for those months, there would remain 20,000 cars in stock.

Second, Tesla should pass 5k/wk build rate and increase to higher than that during the middle of Q3. That means Tesla should build more than 60,000 cars in Q3. VIN filings must significantly increase to meet that pace, and those filings will be public information.

For the past month, VIN filings are about 3,800 cars per week. This is well on its way to 5,000 per week by the end of the quarter. Tesla should also build about 25,000 of Models S and X in Q3.

Tesla will be coming out with the dual motor and possibly also ludicrous mode variants of the Model 3 in Q3. Tesla is taking orders for the higher cost variants of Model 3 first, so I expect the average price to remain high and will use $50k for these estimates.

The total M3 cars sold in Q2 should be around (20k + 60k) * $50k = $4B.

The total MS and MX sold should be around 25k * $100k = $2.5B.

The total revenue from cars should be in the range of $6.5B with a gross profit of $1.3B if they make the 20% margin figure claimed. I’ll ignore the energy side for this treatise as small by comparison.

Given that Musk has firmly asserted the company will not need cash, and also that it will be profitable and cash flow positive, I suspect that Musk is thinking Tesla will manage something like the above.

Model 3 is about to enter the US Top 20 list

The Model 3 is about to climb the ranks of other vehicles, and if the above figures are met, it will pass Toyota Corolla and Honda Accord, landing in a tie with the Jeep Grand Cherokee for top selling vehicles in the US for Q3.

I admit that this comparison is, and isn’t, fair. The Model 3 is an EV whereas all of the top 100 cars sold in the US today have internal combustion engines, ICE.

The Model 3 is the best selling EV and the only mass produced EV. In this regard, the comparison is NOT fair since it is different from all of the rest of the cars on that top 100 list.

However, any other car company could have launched an EV instead of their ICE models. And, they could have built their own equivalent of the Supercharger Network instead of relying on other businesses to do so for them. So in this regard, the comparison IS fair and demonstrates that people want electric cars with good range and a fast charging system that is already deployed.

That this is so is confirmed by a recent Consumer Reports article about a AAA survey showing that 20% of Americans expect their next vehicle purchase to be an EV. US car sales dropped by 2% in 2017 according to JDPowers. That marked the end of a 7-year run of steady sales growth. Given the AAA survey of intentions combined with blooming sales of Model 3, I expect we will see US sales of internal combustion engine cars drop by a larger figure in 2018.

There are not enough good EVs to replace the drop in ICE vehicle sales.

Jaguar I-Pace, for example, claims 350kW charging capability. But the claim is a farce. Today, no 350kW chargers exist out on the open road and it will likely be several years (if ever) before a network of charging stations is built. It isn’t clear yet that the 350kW charging standard will even work.

Upon introduction this summer, anyone that purchases an I-Pace will be forced to use the only chargers actually deployed… the same ones used by the Bolt and Leaf that only charge at 50kW instead of Tesla’s 120kW. Charging an I-Pace will take more than double the time to charge a Tesla.

What this means is that counter to claims that Tesla is about to face a swarm of new contenders, the fact is that none of them can hold a candle to the charging speed of the Supercharger Network. Ironically, all of the contenders should increase Tesla sales, as once anyone reviews charging infrastructure, Tesla is the only logical brand choice.

Introduction of the competition should further increase Model 3 sales until such time as a new charging infrastructure is actually in place, and, assuming Tesla is unable to use that new infrastructure. If Tesla CAN use that new infrastructure, then Tesla remains the best EV choice bar none, simply for its enhanced number of charging stations.

Conclusions

Tesla is building more cars than it is selling. This may indicate that Tesla is accumulating cars to be sold in Q3 due to tax phase out rules.

If Tesla makes the production targets it has disclosed, it would generate approximately $6.5B in Q3 gross sales with around $1.3B in gross margin. Even without cutting back on spending, that much extra gross margin should yield net profits.

The Model 3 may rise from below rank #100 for sales into the US now, to above position #20 next quarter. That is, the Model 3 appears poised to jump 80 positions in the US top 100 vehicle sales list, beginning in July.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Spotlight On Gambling Reset And Banking Bill

Welcome to Seeking Alpha’s Stocks to Watch – a preview of key events scheduled for the next week. Follow this account and turn the e-mail alert on to receive this article in your inbox every Saturday morning.

While investors will surely have their eyes on trade talks, developments in the oil market and rising interest rates in the week ahead — a sideline show will continue to be the complete reset in the gambling industry following the Supreme Court decision that opens up legalized sports betting. Notable movers since the SCOTUS decision came down include Dover Downs (NYSE:DDE) +46%, Scientific Games (NASDAQ:SGMS) +13%, Churchill Downs (NASDAQ:CHDN) +11%, Penn National Gaming (NASDAQ:PENN) +8%, The Stars Group (NASDAQ:TSG) +8% and Caesars Entertainment (NASDAQ:CZR) +8%. Across the pond, bookmaker stocks William Hill (OTCPK:WIMHY), Paddy Power (OTC:PDYPF), GVC Holdings (OTCPK:GMVHF) and 888 Holdings (OTCPK:EIHDF) also jetted higher. Expect even more price swings with new names as the ramifications become clearer. Nomura Instinet analyst Harry Curtis reminds that the upside potential from the Supreme Court decision down the road includes higher traffic and customer engagement at land-based casinos, as well as digital offerings and tech/financial partnership opportunities. On that last point, there’s a sense major players such as Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Visa (NYSE:V), Mastercard (NYSE:MA) and Google (GOOG, [GOOGL]]) aren’t going to completely ignore the developments. On the economic calendar this week, data on new and existing home sales will capture some attention.


Notable earnings reports: Monro (NASDAQ:MNRO) on May 21; Ctrip.com International (NASDAQ:CTRP), Urban Outfitters (NASDAQ:URBN), The Container Store (NYSE:TCS) and TJX Companies (NYSE:TJX) on May 22; Target (NYSE:TGT), Hewlett-Packard Enterprise (NYSE:HPE), Lowe’s (NYSE:LOW) and Lion’s Gate (NYSE:LGF.A) on May 23; GameStop (NYSE:GME), Best Buy (NYSE:BBY), Gap (NYSE:GPS) and Splunk (NASDAQ:SPLK) on May 24; Foot Locker (NYSE:FL) on May 25. See Seeking Alpha’s Earnings Calendar for the complete list.

IPOs expected to price: Evo Payments (EVOP) on May 22; CLPS (CLPS), Kiniksa Pharmaceuticals (KNSA), Scholar Rock (SRRK) and GreenSky (GSKY) on May 23; Iterum Therapeutics (ITRM) on May 24.

Analyst quiet period expirations: Ceridian HCM (NYSE:CDAY) and Nlight (NASDAQ:LASR) on May 21; DocuSign (NASDAQ:DOCU), Goosehead Insurance (NASDAQ:GSHD) and Smartsheet (NYSE:SMAR) on May 22.

Upcoming stock splits: DDR (NYSE:DDR) 1-for-2 on May 21, China Lodging (NASDAQ:HTHT) ADS-to-ordinary share ratio to change on May 24 from one ADS per four ordinary shares to one ADS per one ordinary.

Banking bill: The House of Representatives is expected to vote on a banking reform bill next week. The bill would raise the threshold at which banks are considered risks to the system to $250B from $50B. The legislation also exempts banks with less than $10B in assets from some proprietary trading rules. Zions Bank (NASDAQ:ZION), BB&T (NYSE:BBT), Bank of New York (NYSE:BK), State Street (NYSE:STT) and SunTrust (NYSE:STI) are just a few of the banks to keep an eye on with the new rules. On a broader scale, John Hancock Regional Bank Fund’s Lisa Welch observed that the S&P 500 bank index trades at 11.34X earnings estimates for the next 12 months compared with the historical mean of 12.56X. “It’s a sector that benefits from rising rates, a growing economy and a more favorable regulatory environment that’s trading at attractive valuations,” she noted.

Projected dividend hike announcements: Donaldson (NYSE:DCI) to $0.185 from $0.180, DXC Technology (NYSE:DXC) to $0.21 from $0.18, Flower Foods (NYSE:FLO) to $0.18 from $0.17, National Storage to $0.30 from $0.28, Tiffany (NYSE:TIF) to $0.55 from $0.50.

Notable Analyst/investor meetings: Micron (NASDAQ:MU), Monro (MNRO) and (NASDAQ:GLAD) on May 21; Walgreen Boots Alliance (NASDAQ:WBA), Brooks Automation (NASDAQ:BRKS), National Instruments (NASDAQ:NATI), Sanmina (NASDAQ:SANM), Xilinx (NASDAQ:XLNX), Atlas Financial (NASDAQ:AFH) on May 22; Align Technology (NASDAQ:ALGN), Thermo Fisher Scientific (NYSE:TMO), Phototronics (NASDAQ:PLAB), Pure Storage (NYSE:PSTG), Qorvo (NASDAQ:QRVO) and Huntsman (NYSE:HUN) on May 23; Cabot (NYSE:CBT) on May 24.

FDA watch: Loxo Oncology (NASDAQ:LOXO) and Bayer (OTCPK:BAYRY) are expected to hear on a FDA review for larotrectinib NDA, while Lexicon Pharmaceuticals (NASDAQ:LXRX) and Sanofi (NYSE:SNY) should find out whether sotagliflozin NDA for type 1 diabetes has been accepted for FDA review.

Wolfe Research 11th Annual Global Transportation Conference: Companies due to talk at the transportation industry get-together include Genesee & Wyoming (NYSE:GWR), American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL), United Continental (NYSE:UAL), Alaska Air (NYSE:ALK), USA Truck (NASDAQ:USAK), J.B. Hunt Transport (NASDAQ:JBHT), Werner Enterprises (NASDAQ:WERN), ArcBest (NASDAQ:ARCB) and Daimler Trucks (OTCPK:DDAIF). The high cost of freight transportation has been a common topic on the Q1 earnings conference calls of retailers.

Crypto watch: The big blockchain event in New York last week didn’t light a fire under cryptocurrencies as regulatory concerns still linger. Over the last seven days, Bitcoin (BTC-USD) is down 2.3%, Ethereum (ETH-USD) is up 4.6%, Litecoin (LTC-USD) fell 2.5% and Ripple (XRP-USD) dropped 1%. ZCash (ZEC-USD) was one of the cryptos that did break significantly higher, with a 50% pop during the week,

Eyes on crude oil: Saudi Energy Ministry Khalid al-Falih will meet with Russian Minister of Energy Alexander Novak at a St. Petersburg economic summit next week. An election in Venezuela on Sunday could also impact oil prices if President Nicolas Maduro is re-elected to a six-year term. WTI crude oil trades at $71.28 per barrel, while Brent crude is at $78.51.

M&A watch: Shareholders with Bravo Brio Restaurant Group (NASDAQ:BBRG) will hold a special shareholder meeting on May 22 to approve the merger transaction with Spice Private Equity. The deadline for the start of the tender offer by Lilly (NYSE:LLY) for Armo BioSciences (NASDAQ:ARMO) hits on May 23. The go-shop period on the acquisition of VeriFone Systems (NYSE:PAY) by Francisco Partners expires on May 24.

60 Minutes: Alphabet will be featured in a story on the Sunday night news show. Critics are expected to take aim at the tech company over some of its anti-competitive practices.

Box Office: Fox’s (NASDAQ:FOXA) Deadpool 2 is expected to dominate the weekend box office. The Marvel comic book mashup is expected to take in $138M in a wide release of 4,439 theaters. Disney’s (NYSE:DIS) Avengers: Infinity War is predicted to come in second place with $29M to add to its eye-popping $1.69B global box haul through this week. Next Friday, Disney’s Solo: A Star Wars Story opens in a highly-anticipated holiday weekend debut. The U.S. box office is up 4.4% YTD.

Barron’s mentions: Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) are lined up as attractive high-dividend stocks at knockdown prices. All three trade with a forward price-to-earnings ratio of lower than 20 and below their historic norms. Chinasoft International (OTC:CFTLF) and Baozun (NASDAQ:BZUN) are mentioned as two other ways for investors to play the digital explosion in China beyond first-movers Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU) and Tencent (OTCPK:TCEHY). Lowe’s is seen as having limited downside into its earnings report.

Sources: EDGAR, Bloomberg, CNBC and Reuters.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Fed Up With Apple's Policies, App Developers Form a 'Union' Ahead of WWDC

Nearly two years ago, Apple revealed its plans for a revamped App Store. It introduced ads within search results in the iOS portion of the store, rolled out more ways for developers to offer subscriptions, and sweetened the revenue deal for app makers who did offer subscriptions. The changes marked the most significant update to the App Store since it had opened for business, and it was part of an effort by Apple to show that the company was attuned to developers’ needs, even as the company raked in billions of dollars from their apps each year.

But as the iOS App Store approaches its tenth anniversary, some app developers are still arguing for better App Store policies, ones that they say will allow them to make a better living as independent app makers. Now a small group of developers, including one who recently made a feature-length film about the App Store and app culture, are forming a union to lobby for just that.

In an open letter to Apple that published this morning, a group identifying themselves as The Developers Union wrote that “it’s been difficult for developers to earn a living by writing software” built on Apple’s existing values. The group then asked Apple to allow free trials for apps, which would give customers “the chance to experience our work for themselves, before they have to commit to making a purchase.”

The grassroots effort is being lead by Jake Schumacher, the director of App: The Human Story; software developer Roger Ogden and product designer Loren Morris, who both worked for a timesheet app that was acquired last year; and Brent Simmons, a veteran developer who has made apps like NetNewsWire, MarsEdit, and Vesper, which he co-created with respected Apple blogger John Gruber. (“Brent’s been developing for Apple products since before any of us were born,” Schumacher quipped.)

The union, so far, is loosely-formed. There’s no official strategy in place for collective bargaining and no membership requirements (like dues). The union has goals of reaching a thousand members this week and hitting a mass of 20,000 signees by early June, when Apple will host its annual Worldwide Developers Conference in San Jose, California. But at launch, the four representatives will be the only names attached to the letter. Non-developers are welcome to join as well, they said.

“It’s a non-union union in a way,” Morris, the product designer, said when reached by phone. “I’m not super interested in creating a traditional union; I’m more interested in bringing the voice of indies back into the spotlight and this is a step in that direction.”

“We might eventually incorporate voting on certain things, but right now it’s really about the unification of developers,” Ogden added.

Free app trials have been a sticking point over the past several years for some iOS app developers, who believe that mobile apps–especially premium ones that cost more than a few bucks and aren’t games–should mimic the experience that people have had for years with desktop apps. It’s a particularly thorny issue for app makers who don’t make subscription apps, but who still want to give potential customers a free trial of their apps.

Apple has given developers some ability to offer free app trials, for time periods ranging from three days up to a whole year. But a free trial can only accompany a subscription app. This means that when opting to get the free trial, the customer has to authorize Apple to automatically charge them when a trial ends, developers say. The ideal situation, they say, would allow them to offer free trials for all apps, at lengths they determine, and without barriers that might make people shy away from trying their apps.

Apple has not responded to a request for comment on this story.

Another topic The Developers Union says it will attempt to tackle is revenue sharing. Apple’s longstanding policy gives App Store developers 70 percent of the money made from most apps, while Apple takes 30 percent. Back in 2016, Apple changed this split to 85/15 percent for developers who are able to maintain long-term subscription customers. Google soon followed suit, offering the same revenue split for subscription apps sold through the Google Play Store. But Microsoft is taking it a step further: later this year it will give 85 percent of any non-gaming app revenue to Windows developers if the app was purchased through the Microsoft Store; while 95 percent of the money will go to developers if the customer discovers the app through an external web page or app.

While the open letter says that the union plans to “advocate for a more reasonable revenue cut,” the members have not yet shared specifics beyond that.

Slice of the Pie

Making a living off of making apps is something that’s felt increasingly out of reach for independent developers. Some have described a kind of divergence that’s happening: Apple’s services business is booming, while some developers’ own businesses are floundering.

Apple, in recent years, has started sharing how much it pays out to developers. In January, it said that iOS developers were paid a total of $26.5 billion in 2017, a 30 percent jump from the year before. Since the inception of the App Store, developers have earned more than $86 billion dollars.

But that revenue is credited largely to in-app purchases and currencies–essentially, games. Ben Thompson, who writes the Stratechery blog and who has extensively analyzed the business of app stores, has identified these as “games with repetitive mechanics that can monetize existing users through in-app purchases,” and wrote back in 2013 that other apps, like premium productivity apps, are “a terrible match for app store economics.” Schumacher, Ogden, and Morris call the biggest money-making apps “the guys with the angry faces”–referring to the app icons for games that feature, well, men with angry faces.

Not all developers are thrilled by the union. Schumacher told me that one notable developer he reached out to said that, while he hopes the grassroots effort makes progress, he wasn’t inclined to join. “He said, ‘I make all my income from Apple. I don’t know if I should be throwing rocks,'” Schumacher told me.

And despite the issues they have with the App Store, even the union organizers themselves–with the exception of Simmons, who wasn’t available for an interview–acknowledged that developing for the App Store carries a kind of cache that other software stores don’t.

“Apple is getting a lot right, especially around security,” Schumacher said. This new group is just looking for a few more breadcrumbs, he said. And not the kind you buy in mobile games.


More Great WIRED Stories

British gaming firm enlists army of players to create Worlds Adrift

LONDON (Reuters) – British game maker Bossa Studios will release Worlds Adrift on Thursday, an ambitious adventure game designed to appeal to the Minecraft generation that has taken three years and 50,000 gamers to create.

Twenty gamers play “Worlds Adrift”, whilst suspended in a life size “Sky Ship” based on the game, above Chelsea College of Arts during the launch in London, Britain May 16, 2018. Luke MacGregor/Handout Bossa Studios UK via REUTERS

The London-based independent games designer is pushing technical, logistical and financial boundaries by counting on gamers to build floating islands for their characters to inhabit, which other players can visit via airborne, pirate-like ships.

“Worlds Adrift allows you to go into the game and set your own objectives and go about the game however you choose,” said Henrique Olifiers, one of the company’s three co-founders.

Bossa was set up in 2010 by veteran game designers who first focused on making social games played on Facebook before switching to PC-based online games. It is best known for “Surgeon Simulator” and “I Am Bread”, which have drawn in millions of users with their physics-based, realistic movements.

Its new multiplayer online game is the first to run on the computational platform of Improbable, a second London firm which enables enormous cloud-based simulations to be created, without which Worlds Adrift’s complex, user-generated landscape would be impossible. It is far more sophisticated than prior Bossa games.

Bossa aims to create the next big European games franchise, following in the footsteps of household names such as Microsoft-owned (MSFT.O) Minecraft, Clash of Clans from Tencent-controlled (0700.HK) Supercell, Candy Crush by Activision Blizzard’s (ATVI.O) King, and Angry Birds creator Rovio (ROVIO.HE).

Slideshow (3 Images)

Typically only established gaming companies with hundreds of engineers and hundreds of millions of dollars could develop games of the complexity of World’s Adrift which have massive creative potential and are not limited to scripted tasks.

Eight months ago, Bossa Studios raised $10 million in funding in a round led by European venture firm Atomico. It has 82 employees but is expanding rapidly with the recent funding, Olifiers said.

Improbable, whose system can be used to digitally simulate real-world locations not just for games but in product design and corporate planning, received a $502 million investment from the Softbank (9984.T) Vision Fund a year ago.

“Unlike any other massively multiplayer online (MMO) game, your actions actually impact the virtual world – and matter,” says Improbable co-founder Herman Narula.

Gamers will build and develop increasingly complex islands which players can visit and interact with other game participants however they wish.

It is a massive fantasy universe designed to appeal to a younger generation of players looking to build games themselves.

The title is aimed at gamers reared on open-ended Minecraft, the second best-selling game of all time, which provides players with building materials to construct buildings and villages. It has attracted a sizeable number of players under the age of 15, although the majority of them are over 28 so far, Olifiers said.

During development those gamers have created 10,000 islands, 450 of which will feature as the game launches in “early access” mode, meaning that it is still under construction and subject to changes. General release is expected within a year, said Olifiers, a Brazilian games journalist-turned-entrepreneur.

Policing the game is left to players, by design, Olifiers said. Creative contributions will be quickly mimicked by others and collaboration will be beneficial. Bad behavior could prompt users to abandon islands where incidents take place, turning them into Robinson Crusoe outposts no one else visits.

The game goes on sale later on Thursday at a fixed price of 19.49 pounds, or $24.99, with no in-game purchases that can pile up costs for committed players.

Reporting by Eric Auchard in London; Editing by Elaine Hardcastle

Silicon Valley startup peddles 3D-printed bike

(Reuters) – After a career that included helping Alphabet Inc’s Google build out data centers and speeding packages for Amazon.com Inc to customers, Jim Miller is doing what many Silicon Valley executives do after stints at big companies: finding more time to ride his bike.

A 3D-printed carbon fiber commuter bicycle by Arevo Labs is seen in Santa Clara, California, May 10, 2018. REUTERS/ Stephen Lam

But this bike is a little different. Arevo Inc, a startup with backing from the venture capital arm of the Central Intelligence Agency and where Miller recently took the helm, has produced what it says is the world’s first carbon fiber bicycle with 3D-printed frame.

Arevo is using the bike to demonstrate its design software and printing technology, which it hopes to use to produce parts for bicycles, aircraft, space vehicles and other applications where designers prize the strength and lightness of so-called “composite” carbon fiber parts but are put off by the high-cost and labor-intensive process of making them.

Chris Lee, an engineer at Arevo Labs, watches a 3D-printing robot print a bicycle frame in Santa Clara, California, May 10, 2018. REUTERS/ Stephen Lam

Arevo on Thursday raised $12.5 million in venture funding from a unit of Japan’s Asahi Glass Co Ltd and Leslie Ventures. Previously, the company raised $7 million from Khosla Ventures and an undisclosed sum from In-Q-Tel, the venture capital fund backed by the CIA.

Slideshow (11 Images)

Traditional carbon fiber bikes are expensive because workers lay individual layers of carbon fiber impregnated with resin around a mold of the frame by hand. The frame then gets baked in an oven to melt the resin and bind the carbon fiber sheets together.

Arevo’s technology uses a “deposition head” mounted on a robotic arm to print out the three-dimensional shape of the bicycle frame. The head lays down strands of carbon fiber and melts a thermoplastic material to bind the strands, all in one step.

The process involves almost no human labor, allowing Arevo to build bicycle frames for $300 in costs, even in pricey Silicon Valley.

“We’re right in line with what it costs to build a bicycle frame in Asia,” Miller said. “Because the labor costs are so much lower, we can re-shore the manufacturing of composites.”

While Miller said Arevo is in talks with several bike manufacturers, the company eventually hopes to supply aerospace parts. Arevo’s printing head could run along rails to print larger parts and would avoid the need to build huge ovens to bake them in.

“We can print as big as you want – the fuselage of an aircraft, the wing of an aircraft,” Miller said.

Reporting by Stephen Nellis; Editing by Lisa Shumaker

Netflix's next act: feeding the service with its own movies

LOS ANGELES (Reuters) – As Hollywood studios unleash their summer blockbusters into theaters, Netflix Inc is trying to give film buffs a reason to stay home.

FILE PHOTO: The Netflix logo is shown in this illustration photograph in Encinitas, California, U.S., on October 14, 2014. REUTERS/Mike Blake/File Photo

The streaming service is on track to release at least 86 Netflix original films in 2018, the company told Reuters. That exceeds the scheduled output of the top four traditional studios combined, as well as Netflix’s previous record of 61 films last year.

The aggressive strategy is aimed in part at addressing complaints that the service’s movie library is stale, an issue likely to be exacerbated by Walt Disney Co’s decision to stop supplying Netflix with new films for its U.S. customers in 2019. Buying movies from other studios also has become more expensive as streaming competition has intensified.

Having more of its own films is paying off, Netflix said. The company told Reuters that the 33 Netflix films released so far this year have been watched more than 300 million times by more than 80 million account holders worldwide. That’s an average audience of more than 9 million viewers per film.

Executives said the large number of movies is a response to the wide range of tastes they are trying to satisfy, and that data they collect on subscriber viewing habits provides insight that helps them choose movies.

Fifty-five percent of Netflix’s 125 million customers live outside the United States, and the company is counting on foreign markets to drive future growth.

“It’s art and science,” said Ian Bricke, who oversees Netflix’s independent film licensing and production. “Our global audience is more and more diverse. We are constantly learning and trying to get smarter.”

SPENDING SPREE

The company would not say how much it is spending on its film push, but it has budgeted $8 billion for programming in 2018, a figure that includes original TV series and films as well as content licensed from others.

The heavy spending will lead to negative free cash flow of up to $4 billion this year, the company has said. Investors have so far endorsed the strategy as Netflix subscriber rolls keep booming, sending shares soaring 70 percent this year to $326.13.

The Netflix film slate features everything from low-budget family fare to higher-brow independent dramas such as last year’s “Mudbound,” which earned four Oscar nominations, and an expensive mobster tale due out next year starring Robert De Niro and Al Pacino.

About one-third of Netflix viewership is for movies, company executives have said, while the rest is for television offerings, including the company’s highly acclaimed original series such as “House of Cards” and “Stranger Things.”

The critical reception for Netflix original films has been mixed, and some prominent directors balk at the idea of making movies that will be seen mainly on the small screen.

“My entire life has been spent trying to give audiences something in a large, large forum,” Steven Spielberg told Reuters. “I love the whole feeling of social interaction outside. You leave your house, you park your car, you go somewhere. Those are the kinds of audiences I like to talk to.”

Unlike traditional studios, which have increasingly focused resources on expensive action spectacles and sequels, Netflix is producing and acquiring movies across genres, from teen dramas and romantic comedies to horror flicks and sci-fi adventures.

At least 17 of this year’s Netflix films will be in languages other than English, including French, Arabic, Hungarian, Japanese and Russian. Eight or more will be in Spanish.

The company has promised more big-budget films like 2017’s Will Smith action flick “Bright,” with former Universal Pictures executive Scott Stuber leading that effort.

THE BIG-SCREEN OPTION

Some Netflix films also go to a limited number of theaters. In 2017, Netflix released 33 movies in theaters in 40 cities around the world, Chief Content Officer Ted Sarandos told Reuters, and some played for as long as seven weeks. “Bright” opened in 12 locations while action adventure film “Okja,” from South Korean director Bong Joon-ho, was shown in about 50.

Theater screenings help allay concerns of some filmmakers and actors. But the company insists its movies be available to streaming subscribers the same day they debut in theaters, prompting most large theater chains to reject Netflix films.

Some in Hollywood worry their films will get lost in the sheer volume of new Netflix movies.

“I don’t yet have clarity on how they are going to make a splash with 80-plus films,” said one agent who asked to remain anonymous because of ongoing business with Netflix. “It has led me, in setting up films at Netflix, to question whether that’s the right move.”

Netflix argues that its trove of viewership data allows it to market films directly to customers most likely to appreciate them, and to pull together a large audience from around the world.

Some big stars and directors have embraced the Netflix model. The company’s most ambitious movie gamble to date is “The Irishman,” the coming De Niro and Pacino film directed by Martin Scorsese. The movie cost at least $125 million to make, a price tag that others rejected.

De Niro said he was thrilled that Netflix opened its checkbook for the movie, which includes costly special effects to make the actors appear as younger versions of themselves in parts of the film.

“They could afford it and do it properly,” De Niro told Reuters. “The main thing is to make the movie the way it should be made.”

To view a graphic on Netflix far outpaces its rivals in new film releases, click: tmsnrt.rs/2IkWI5f

Reporting by Lisa Richwine in Los Angeles; Additional reporting by Alicia Powell in New York; Editing by Greg Mitchell and Sue Horton

Didi's Hitch scrubs social features as passenger murder dents image

BEIJING (Reuters) – China’s biggest ride-sharing company, Didi Chuxing, will disable features such as profile pictures, ratings and public tags from its carpooling service, as it looks to win back trust after the killing of a female passenger sparked questions about safety.

A man is seen in front of a Didi sign before a promotional event of its Hitch service for the Spring festival travel rush, in Beijing, China January 24, 2018. Picture taken January 24, 2018. REUTERS/Stringer ATTENTION EDITORS – THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT.

The 21-year-old flight attendant’s murder, allegedly by her driver, and revelations that Didi drivers have been reviewing female passengers based on their appearance, has marred the ride-hailing giant’s image at a time when it is preparing to take on rivals such as Uber Technologies [UBER.UL] overseas.

In a bid to make prompt amends, Didi has apologized for the “tragedy” and suspended the carpooling service for a week. The company on Wednesday said it will temporarily offer “Didi Hitch” between 6 am and 10 pm, instead of 24×7, and make daily facial recognition checks mandatory for all drivers.

Didi will extend facial recognition requirements to other services and redesign its emergency help function. The company, whose backers include Japan’s SoftBank Group Corp, has also proposed to record audio for every trip as an added security measure.

Didi has previously acknowledged its facial recognition tool was defective and as a result the male suspect who allegedly killed the female passenger was able to use a driver account belonging to his father without being detected.

SOCIAL NETWORKING SERVICE?

In the wake of the killing earlier this month, Didi has come under heavy criticism online, with many calling out the company for its efforts to market Hitch as a social networking service.

Adverts for Hitch dating back to 2015 on Didi’s official social media accounts present the carpooling service as a way to meet new people, including romantic encounters. Hitch allows users to hail a car via their smartphone and share a ride with someone else headed in the same direction.

One advert for the service, still visible on the verified Didi Hitch Weibo account on Monday morning, featured a male driver holding a sign reading “you have a short skirt, I have warm air … give her a free ride, I’m willing!”

Other official social media posts asked users to share their experiences of carpooling with a stranger of the opposite sex and joked about the chemistry between older women and young male drivers, described as “young fresh meat”.

A Shanghai-based driver who formerly drove for Didi Hitch, Silla Wang, said he has seen drivers give passengers tags like “long legs”, “adorable girl” or “beautiful woman”.

“In my understanding the app is used as one would use Momo,” he said, referring to a Chinese Tinder-like dating app.

NO MORE PROFILE PICTURES

Didi has said profile pictures on the carpooling service will be replaced with generic images to bring an end to such rating and tagging of passengers.

Many users, however, said they had already removed their photos with some even leading calls to boycott the app.

Xu Yanan, a student at Beijing’s Tsinghua University, said that since the murder she had decided not to use a selfie on the app and had changed her photo to an image of a soldier.

“I want to protect myself. After the tragedy, I’m scared.”

Since acquiring Uber’s China business in 2016, Didi controls over 90 percent of the country’s ride-hailing market, giving users few alternative options, although new players have begun edging their way into the market.

Didi, valued at $50 billion, says its main carpooling services ExpressPool and Hitch had the equivalent of nearly 3 million rides a day last year. The overall Didi platform has near 25 million daily rides.

Reporting by Cate Cadell and Pei Li; Editing by Adam Jourdan and Himani Sarkar

Two Chinese bitcoin mining equipment makers plan $1 billion Hong Kong listings: IFR

HONG KONG (Reuters) – Two Chinese bitcoin mining equipment makers plan to raise up to $1 billion each from Hong Kong listings this year, riding on strong global interest in cryptocurrencies, IFR reported on Tuesday, citing people familiar with the plans.

FILE PHOTO: A token of the virtual currency Bitcoin is seen placed on a monitor that displays binary digits in this illustration picture, December 8, 2017. REUTERS/Dado Ruvic//File Photo

Canaan Creative filed a listing application to the Stock Exchange of Hong Kong on Monday, IFR, a Thomson Reuters publication, reported.

Zhejiang Ebang Communication has also started working with advisers on a proposed Hong Kong float of up to $1 billon, reported IFR.

Ebang listed on China’s National Equities Exchange and Quotations, also known as the New Third Board, in 2015 and was

delisted from the over-the-counter market in March after announcing in January that it would seek a Hong Kong listing.

Chinese bitcoin mining equipment makers are hungry for capital to fund their growth as the heightened interest in cryptocurrencies has led to a surge in demand for their machines.

Canaan, which sells “Avalon” mining machines with customised super-fast ASIC chips, made revenue of more than 1 billion yuan in 2017. Although cryptocurrencies can be mined using regular computer equipment, specialised processing devices dedicated to mining are more effective and can generate more income.

The company’s co-chairman Jianping Kong told Reuters in April that he expected China’s push to promote the domestic chip industry to help drive growth for the company.

Credit Suisse, CMB International, Deutsche Bank and Morgan Stanley are joint sponsors for Canaan’s float, according to IFR.

Canaan Creative declined to comment. Ebang could not be immediately reached for comment. All the banks didn’t immediately respond to a request for comment.

Canaan’s IPO valuation has yet to be set as there is no listed comparable and the prices of cryptocurrencies have

fluctuated a lot, reported IFR. It was valued at $500 million in mid-2017, IFR said, attributing it to one of the people.

Reporting by Fiona Lau at IFR; Additional reporting by Sijia Jiang; Writing by Julie Zhu; Editing by Muralikumar Anantharaman

Acura's RDX Comes With an Easy-to-Use Infotainment System

The modern car has a problem. Over the past decade, automakers have raced to offer their smartphone-addled customers a bonanza of features: navigation, texting, phone calls, satellite radio, Bluetooth, ways to check tire pressure and oil temperature, suspension settings, charging status, and more. Then they try to stick all those things into an interface whose users are usually pretty busy—driving the 2-ton metal boxes that kill nearly 40,000 people in the US every year.

And the solutions are non-obvious. Touchscreens are easy to use but take drivers’ eyes off the road. Knob-based systems can land you in a warren of menus that get frustrating and distracting. No wonder then, that in a 2017 study, Consumer Reports found just 44 percent of respondents were “very satisfied” with their car’s infotainment system. Among the systems CR deemed the most distracting was Acura’s, which it panned for a “frustrating dual-screen setup, convoluted display logic, and finicky voice-command system.”

Now, after four years of work, Acura has a solution that finds that elusive territory between usefulness and distraction. Starting later this year with the 2019 RDX SUV, Acura will offer the True Touchpad.

Engineer Ross Miller, who led the project, began by talking to people about their washing machines and television remotes. “People get really passionate about things that annoy them.” At the top of that list of annoyances is complexity. Too many buttons, too many options, too many menus.

Miller frames this as a resource management problem. When you’re driving, you can only spare so much of your cortex to figuring out how to turn on that podcast or punch in Auntie’s address. To minimize the time and effort required by the driver, Acura’s team stripped down the main interface to eight tiles, which you can configure however you like. This way, the home screen doesn’t just offer you categories, like “Audio” and “Phone Book,” but shows whatever you tend to look for most often. People being creatures of habit, that usually means a couple of radio stations and one or two contacts. In Acura’s new system, your home screen can offer you “John” and “Jane,” “90s on 9” and “Hair Nation.” All your faves, just a tap away.

The screen sits up high, and is controlled by a touchpad that uses absolute positioning. Want to tap the icon on the bottom left? Hit the bottom left of the pad.

Honda

That tap is where Acura’s real innovation comes in. Miller says touchscreens draw too much attention away from the road, and knob- and button-based systems can be clunky and hard to use. To control the 10.2-inch screen, his team made a new sort of touchpad. Say you want to hear some sweet Mötley Crüe, and Hair Nation is the tile in the upper right of the screen. Just put your finger on the upper right of the touchpad, which sits a few inches forward of the right armrest. If you landed a bit to the left, drag your finger over, see the flash of orange highlight the icon you’re going for, and press down. (Then crank the volume using one of the few knobs.)

Other cars with touchpads use them in the conventional way, to control a cursor on the screen. The problem there is that, just like on your computer, before doing anything you have to find the cursor, then move it to where you need it. In a situation where every instant with your eyes off the road can prove deadly, that kind of timesuck is not ideal.

Meanwhile, touchscreens come with their own problem: The fact that you need to reach them means they’re usually low down, where the radio in an old-timey car would be. And because competently using one requires looking at it, that’s even more time looking away from where you’re going.

Acura’s system is a hybrid of the two. The touchpad allows for a screen up high on the dash, so you can see it with just a flick of the eyes. But instead of letting you control a cursor, it acts like a voodoo doll for the screen: Whatever part of the screen you would tap, you tap that part of the pad.

After a lifetime using a mouse and a decade with touchscreen smartphones and tablets, it took me a bit of getting used to. But within half an hour it felt totally intuitive. A spot to rest the heel of your hand and the raised ridge outlining the pad help with orientation. Real buttons for Home and Back, which Miller calls “centering points,” make sure you never get too lost. (Abandoned concepts: a cursor-like “ghost finger” on the screen representing where the driver’s finger was in real life, and gesture controls. “That didn’t test so well,” Miller says. “It was too complicated; it was really hard to learn.”)

Eventually, the team built the system into a driving simulator and put 30 people behind the wheel. While each performed a series of tasks (call so and so, switch the radio, etc.), Acura’s engineers measured how well they stayed in their lane and away from other cars, to gauge their level of distraction. They compared the results to how those same people drove when performing a simple task, like turning a knob to tune the radio, and found no significant difference.

To go with its new interface, Acura added an improved, more natural voice recognition system and an optional head-up display that’s more capable than most on the market. Where most just show information like speed and navigation directions, this one lets you change where you’re going and make phone calls, using a knurled click wheel on the steering wheel.

Now, Acura drivers get to try it for real. And if they like it as much as the focus groups did, you can expect to see it in the rest of the Acura lineup before long—then maybe the rest of the auto industry.

More Great WIRED Stories

Your Business Deserves the Same Quality Ingredients, Patience, and Character as Your Favorite Wine

Recently, my wife and I returned from a trip to Europe. While we were there, I enjoyed some tremendous wines. It got me thinking how fine wine and good business share many characteristics. They both require quality inputs, time to develop, and character, and they need to find the right customers at the right time.

Here are other reasons why your business is like a fine wine:

1. You Don’t Have to Spend a Lot

There’s a lot of wine out there, but price does not always correlate with quality. The biggest name does not always produce the finest work. Similarly, businesses need to be careful how they spend their money. Businesses leaders must consider carefully where and how their raw materials are generated. And you don’t necessarily need to hire the candidate who requires the highest salary. There’s a great deal of quality to be found if you dig a little deeper, and the fit for your company might be even better.

2. Be Smooth

Drinking wine should be a great experience. The flavors should blend with the food and highlight the appropriate notes. The whole experience should come together seemingly effortlessly. A business should also function like a well-oiled machine. The team should coordinate efforts efficiently, and the experience for the customer should be smooth and effortless.

3. Quality Over Quantity

I love wine. And while a lot of wine can be fun, if I’m being serious, I’d much rather have a few sips of excellent, highest quality wine than a bottle of rotgut. Encouraging huge quantity can be fun for a while, and cause a flash in the pan for businesses. But for both businesses and consumers, the short-term gain almost always fizzles out, and carries long-term consequences that make everyone uncomfortable. As wine improves with age and businesses develop slowly, patience will be required. But the payoff will be well worth the effort.

4. Know Your Sourcing

Any good chef knows his vintners and vintages. The chef must know the grapes and the land that produce the wine he uses so he can understand how the flavors will meld and will be able to predict any problems. Likewise, business leaders need to know the people they work with and the resources they use. A big mistake in the beginning of the process filters down throughout the product and almost inevitably reaches the customer, putting your reputation and livelihood at risk.

5. Use an Advisor

Restaurants hire sommeliers because they want their guests to have the best experience possible. They want to ensure that the pairing between wine and food is the best possible match, and that the wine tastes exactly as it should. Business leaders, too, should use advisors. Mentoring is an important part of any leader’s development, ensuring that leaders use their time well, guide their team efficiently, and learn from their mistakes.

6. It’s About Relationships

Just like chefs must ensure that their wines match the foods, businesses must ensure that their products fit their market. You can have excellent quality product, but if it doesn’t work in the context of your target market, your businesses will not succeed. That doesn’t mean you can’t do something a little different; chefs and sommeliers sometimes get creative, and businesses should to. But make sure the proposition is compelling – don’t be different just for the sake of being different.

Global Consumer Sentiment Supports Bullish Growth View

There is a little-watched and relatively obscure set of indicators produced by Thomson Reuters and Ipsos, called the primary consumer sentiment indexes. These provide a standardized approach to measuring consumer sentiment across a number of countries, and provide timely insight into consumer trends globally.

With the release of the May data this week I thought it would be good to take a quick look at the key trends in global consumer confidence (I have aggregated these indexes using GDP weights to provide a global as well as EM vs. DM view). Basically, global consumer sentiment has held up surprisingly well, which is a positive sign.

The key takeaways on the global consumer sentiment picture are:

-The global aggregate index of consumer sentiment strengthened in May.

-Global consumer sentiment held up well through the global equity market correction and actually strengthened vs. weakening seen in the manufacturing PMI.

-EM consumer confidence has been outperforming DM.

-Overall it supports a bullish global growth outlook.

1. Global Consumer Confidence vs. PMI and Global Equities: The May round of the Thomson Reuters/Ipsos consumer sentiment indexes (which I have aggregated based on IMF calculated PPP adjusted GDP weights), shows that globally the consumer is still doing well and if anything is going from strength to strength.

Interestingly, the global consumer confidence index held up well and actually strengthened through the global equity market correction and bucked the trend seen in the manufacturing PMI. So to my mind it is a nod to the underlying strength in the global economy.

2. Consumer Sentiment – EM vs. DM: Looking at the split between emerging vs. developed economies, the same picture of an apparent structurally different level (EM generally stronger) continued, but in terms of the signal, EM has continued its strengthening trend and in the month of May outperformed DM.

This one is also key as there has been some doubt around emerging markets as EM equities have seen substantial volatility and a reversal of previously hot fund flows.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Kilauea and the Implacable Power of Volcanic Lava

In 1935, lava from an eruption of the volcano Mauna Loa, on the Big Island of Hawai’i, started oozing toward the Wailuku River, main source of water for the city of Hilo. This danger to the more than 15,000 residents of Hilo was exactly the opportunity that Thomas Jaggar, founder of the Hawaiian Volcano Observatory, had been waiting for: to blow up a volcano.

This isn’t as crazy as it sounds. Actually, no, it was crazy. Jaggar thought, based on the state of the science, that explosives would collapse and plug the channels and underground tubes through which lava flows.

He approached the Army Air Corps, which had an airbase on the island of Oahu. There, a young lieutenant colonel named George Patton (yes, that Patton) planned a mission to deploy three Keystone B-3A bombers and two Keystone B-6As—biplanes!—to the slopes of Mauna Loa, where they’d drop 20 600-pound bombs on the lava. Five dropped onto red-hot flows, splashing lava 200 feet into the air upon detonation (which then punched holes through one of the bombers’ wings). Most of the other bombs hit the solidified sides of the flows. A US Geological Survey geologist on board one of the planes, Harold Stearns, reported that most of the bombs merely impacted on the surface.

So did it work? Well, the lava diverted and stopped flowing before it reached the river. It remains … controversial as to whether the bombs or the cessation of the eruption did it. (Jaggar thought the explosions released enough pressure to stop the lava; no one else does.)

Volcanoes have a lot of ways to kill people—caustic ash, superheated hurricane-like pyroclastic flows, incandescent mudslides called lahars…and, of course, lava. As the world watches the ongoing eruption of the volcano Kilauea, Mauna Loa’s neighbor to the east, you can see why Jaggar would resort to explosives, and why people have been trying to build lava barriers, unsuccessfully, since 1881. Lava’s appearance is rarely a surprise—but where it flows and how fast remain unpredictable. And it is, as researchers say, binary. Wherever it goes, it incinerates or buries everything in its path. There’s not much anyone can do about it except watch.

“A lot of cultures around the world have come to the conclusion that it’s a bad idea to live too close to a volcano,” says Natalia Deligne, a volcanic hazard and risk modeler at GNS Science, the New Zealand equivalent of the USGS. That’s why lots of volcanoes are magically inside national parks. “If you look at indigenous traditions, often the vent area is a taboo area,” Deligne says. “That’s just another form of land use planning.”

Unlike the ostentatious, once-in-a-blew-moon eruptors like the stratovolcanoes of the Cascades and the Andes, Hawaiian volcanoes are “shield volcanoes,” slow and steady pumps of relatively runny, low-silica lava. Volcanoes in general aren’t as murderous as other natural disasters—since 1900 volcanoes have killed about 280,000 humans, but in that same time earthquakes have killed more than 2 million. Lava comes in three types (highly viscous, deep “blocky” lava; chunky, fast-moving ‘a ‘a, and smooth pahoehoe), and it tends to move slow enough that it destroys property rather than kills people. So people continue to live on the slopes of the volcanoes. (Hawai’ian volcanoes also emit toxic, corrosive gas—sulfur dioxide turns into sulfuric acid on contact with the atmosphere, creating potentially deadly clouds called vog, short for “volcanic smog” [itself a contraction of “smoke” and “fog”].)

That’s what’s happening at Kilauea; lava is emerging from 14 fissures in the volcano’s East Rift Zone, amid a housing subdivision called Leilani Estates. More than 1,700 people had to evacuate, and about a dozen homes were consumed. This has been the situation, on and off, since the 1980s. “The lava would flow for a certain distance, then stop, and then rather than resuming travel in the same direction it would go back toward the vent and break out somewhere else,” says Michael Lindell, an emeritus environmental psychologist at Texas A&M who studies attitudes toward volcano risk. “Volcanologists don’t thoroughly understand the underground plumbing. They’ve got a pretty good idea, but they keep getting surprised.”

Even today, lava is unpredictable. Nobody really understands tube and channel formation or how a’a’ lava becomes pahoehoe and vice versa. Computers can forecast paths of flow from topography, but not speed or how wide the flow will be. (The USGS map of lava hazard zones on Hawai’i hasn’t been updated since 1992.) “How fast it’s coming out of the vents, how hot it is, how fast it’s cooling, how many crystals you have in the lava—those are all parameters that will dictate how the lava will flow,” Deligne says.

There’s not much to do about it when it does. Deligne says that hardly anyone actually zones construction or writes building codes with volcanoes in mind. And even if you did, what then? Ash, sure, just build your roofs with a pitch of greater than 35 degrees to shed the stuff. But lava? Maybe … round buildings? According to one of the few analyses of such things, a forensic look at a 2014 eruption of the Fogo volcano on Cape Verde, lava pushes them into compression, actually strengthening them; it tends to just push over flat walls.

Sometimes the volcano is quiet; sometimes it’s not. “Pele, the goddess of Hawaiian volcanoes, whose home is in Halema‘uma‘u Crater within Kilauea Caldera, is always described with two personas,” young and beautiful—and old and cruel, write James Kauahikaua and Robert Tilling, two past heads of the Hawaiian Volcano Observatory.

Now, the observatory is warning that things could get worse. A rapid lowering of the lava level in the Overlook crater at Kilauea’s summit was the first sign that lava was on the move. If that lava dips below the groundwater level, it could start making steam, converting this to an explosive eruption, scientists warned at a press conference. The Washington Post reports that a nearby geothermal power plant is moving 12,000 gallons of a flammable fuel called pentane to an industrial park that’s out of range, just to be safe.

But in the face of the threat, people’s attitudes toward volcanoes aren’t much different from how they feel about other hazards. Deligne loves volcanoes; she says she can’t imagine living anywhere there might be tornadoes. Lindell says if he had to live on the Big Island, he’d definitely try to stay on the north side—away from the volcanoes. As for the south side? “It’s incredibly cheap to live there and it’s a very pleasant life, so it’s an acceptable risk to them,” he says. “In some respects it’s no different than people living on the Hayward fault, or on the flood plain in Houston. They know the risk is getting worse, but they keep on rebuilding.”

More Eruptions

All You Need to Know About Google's New Products

Google showcased its plans for the next several months as it kicked off its annual developers’ conference Tuesday. Many of the new features center on the use of artificial intelligence to help save time.

Here are the highlights:

MAPS: Google will use augmented reality to help guide you to your destination. When you pull up direction on Google Maps, you can look through the camera and get turn-by-turn directions while viewing the actual street. The app will also orient you and verify your position using local landmarks such as buildings and shops viewed through the camera. Google calls the technology VPS, or visual positioning system. The feature is expected this summer.

GOOGLE DUPLEX: Google’s digital assistant will call actual people at businesses to make restaurant reservations and hair appointments and check holiday hours. In two demonstrations, a realistic-sounding automated voice used pauses and “ums” and “mmm-hmms” to sound more human during interactions with people. Google says the technology is rolling out as “an experiment” in coming weeks. Google says it’s still figuring out how to be upfront and let businesses know that they are talking to a computer.

GMAIL: An autocomplete feature called “smart compose” uses artificial intelligence to suggest ways to finish sentences you start typing. For example, “I haven’t seen you” might be autocompleted to “I haven’t seen you in a while and I hope you’re doing well.” The feature will start rolling out this month.

PHOTOS: When Google recognizes a photo of someone who is one of your contacts, it can suggest sending the photo to that person. It can also convert photos to PDFs and automatically add color to black-and-white photos or make part of a color photo black and white. The changes are coming in the next few months.

GOOGLE ASSISTANT: Google’s digital assistant will get six new voices, including one based on that of singer John Legend, later this year. The voices aim to sound more natural and will include pauses that convey meaning. Google is also unveiling ways to let you issue multiple commands without having to say “Hey Google” each time. And it will reward kids who say “please,” similar to a feature Amazon is bringing to its Alexa voice assistant.

LENS: Google’s visual assistant will be built into the camera. Just point the camera at a building or sign to get more information. Or copy text from images of menus, documents and other sources into another app on your phone. Samsung phones aren’t on the list of phones getting the feature starting next week. Samsung has its own version, Bixby Vision.

NEWS: Google is redesigning the News feature to present five stories you need to know, plus others that it thinks will be most relevant to you. For outlets with subscriptions, Google will allow you to subscribe directly through your Google account, without needing new passwords or credit card information. The feature should be available to everyone by next week.

ANDROID P: The version of Google’s Android phone software will infuse basic functions with AI smarts. The battery will adapt to how you use apps in order to conserve energy. “Adaptive brightness” will learn how bright you like your screen based on manual adjustments, instead of automatically adjusting based on the how bright it is. Apple’s latest system, iOS 11, has a similar feature. Owners of some Android phones -; none from Samsung -; can get an early test version now.

WELL-BEING: Android P also includes features to combat overuse. A “shush” mode automatically turns on the “Do Not Disturb” mode when you turn your phone face down on a table. And “Wind Down Mode” will fade the screen to greyscale at a designated bed time to help you disconnect before bed.

–The Associated Press

Nvidia Blinks, AMD Wins

(AMD vs. Nvidia from DeskDecode.com.)

On March 23rd, 2018, we published an article entitled, “Nvidia is Playing with Fire” in which we discussed Nvidia’s (NVDA) GeForce Partner Program (NASDAQ:GPP) and its implications on AMD’s (AMD) graphics cards business. Please read that story for background on the situation. On May 4th, 2018, Nvidia has announced that they are scrapping the GPP as a result of public pressure and controversy. In this quick follow up we’ll discuss the implications of this news on AMD and Nvidia.

Recap of the GPP

For more extensive background on the GPP introduced by Nvidia in March of this year and recently canceled please read our previous article entitled, “Nvidia is Playing with Fire.” We will recap the situation quickly here.

Both Nvidia and AMD produce graphics processing units (GPUs). Those GPU are then purchased by add-in board manufacturers (AIBs) such as Asus, Gygabite, MSI, etc. and are soldered into a PCB that provides power handling, display outputs, etc. Basically, when you buy an Nvidia GTX 1080 PCI Express graphics card the part that is made by Nvidia is just the GPU in the very center of the card. The rest of the components, such as the PCI slot shaped PCB, the heatsink, the fans, and of course, the obligatory RGB LEDs so coveted by gamers are manufactured by an AIB manufacturer.

As the gaming industry became more and more competitive AIB manufacturers have created valuable, gaming specific brands to sell their wares. For instance, Asus has their Republic of Gamers brand and Gigabyte has their Aorus brand. What Nvidia was looking to do with GPP was to obtain monopoly over those gaming brands. Per the GPP agreement AIB manufacturers would have to make their gaming brands exclusive to Nvidia if they wanted to be part of the program. To sell AMD based cards, these same manufacturers would have to create a separate graphics card brand. For instance, Asus added the Arez brand to market AMD graphics cards and removed all of the AMD offerings from their Republic of Gamers lineup.

Reaction to the GPP

Kyle Bennett from HardOCP got the ball rolling on criticizing Nvidia for this move. In his March 8th article he proclaimed this move to be anticompetitive and anti consumer choice soon thereafter have picked up the story and Nvidia has been widely criticized by journalists and gamers alike.

While smaller equipment manufacturers such as Asus and Gigabyte have signed up for the GPP relatively quickly there were several notable exceptions. Dell and HP, the two behemoths in the OEM world did not sign up for the GPP publicly they have not made any statements about the program to our knowledge. However, it is very likely that neither was very happy about this development.

Nvidia Blinks

In their blog post on May 4th, 2018, Nvidia had the following to say:

A lot has been said recently about our GeForce Partner Program. The rumors, conjecture and mistruths go far beyond its intent. Rather than battling misinformation, we have decided to cancel the program.

GPP had a simple goal – ensuring that gamers know what they are buying and can make a clear choice.

The GeForce Partnership Program had a short and eventful life but was quickly killed off due to public scrutiny and likely OEM pushback from large manufacturers. In their blog post, Nvidia tries to dismiss this issue by saying that their only intention was to make sure that gamers know the type of graphics card that they are buying. As we mentioned on our previous article, no gamer in the history of the world has ever purchased an AMD graphics card thinking it was Nvidia, or vice versa. While Nvidia can choose to deflect criticism by claiming that that was their intention the only way they could do so legitimately would be if they were to admit that they know next to nothing about their own target market.

AMD Wins

We believe this news is a big win for AMD. Now, to be clear we don’t think it is going to be a significant loss for Nvidia. After all, they are the big dog in this fight. They will move on and continue to sell a ton of their GPUs to gamers and cloud service providers alike. However, for AMD this means an even playing field, or at least a less tilted playing field. With their new partnership with Intel to provide Intel with AMD manufactured GPUs that can be integrated directly with Intel’s CPUs on a single socket we believe AMD has a bright future. For more on that story, please check out our article from April 20th titled, “AMD And Intel Had A Baby! And It’s A Beast!

(Image of Intel CPU and Vega GPU attached to a single CPU socket board from Intel.)

Now AMD’s strategy has to concentrate on software. They need better software for artificial intelligence (AI) applications and a much harder push in that field. Hopefully they are paying attention and will be as proactive in that endeavor as they were in killing the GeForce Partner Program.

Investor Takeaway

With the hurdle of the GeForce Partner Program out of the way AMD should continue their growth in the PC gaming world. Rather than maintaining separate marketing brands most AIM manufacturers will soon go back to selling both AMD and Nvidia products under the same brand, and that’s going to be good for AMD, as they will regain the visibility they enjoyed before.

With the Intel partnership as a significant catalyst we see AMD’s software and individual game support improve significantly as they continue to infiltrate the general consumer market. This particular catalyst is going to take time to ramp up, but you don’t build an enduring advantage over a matter of months. It took Nvidia years investing into the AI and Gaming market to gain the dominance that they now enjoy, and it’s going to take AMD some time to start chipping away at that advantage. We should see progress in this regard by 2019.

In the mean time AMD will continue ramping up their enterprise CPU sales, which should be a great catalyst for the stock in 2018. On a whole we are still very optimistic about AMD’s prospects in 2018 and 2019, and continue to have a $20 price target.

Disclosure: I am/we are long AMD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

?Red Hat and Microsoft bring OpenShift to Azure

Video: Microsoft gains protected-level cloud classification from ASD

At Red Hat Summit in San Francisco, Red Hat and Microsoft announced they were bringing Red Hat OpenShift, Red Hat’s Kubernetes container orchestration platform, to Microsoft’s Azure, Microsoft’s public cloud. The two software powers proclaimed that was the first jointly managed OpenShift offering on the public cloud.

This is a fully managed service. You need not learn how to crack the whip over containers with Kubernetes. Red Hat and Microsoft will take care of that for you.

Read also: From Linux to cloud, why Red Hat matters for every enterprise

Companies are turning to containerized applications and Kubernetes to help address customer, competitive, and market demands at a rapid rate. Indeed, Gartner predicts that container use in the enterprise will jump from 20 percent now to over 50 percent of global organizations by 2020.

That’s great, but there’s nothing like enough Docker and Kubernetes experts to manage all these new containers. Users need solutions to easily orchestrate and manage these applications, across the public cloud and on-premises. Red Hat OpenShift on Azure reduces the complexity of container management. As the companies’ preferred offering for hybrid container workflows for our joint customers, Red Hat and Microsoft will jointly manage the solution for customers, with support from both companies.

In addition to being a fully managed service, Red Hat OpenShift on Azure will bring enterprise developers the following:

  • Flexibility: Freely move applications between on-premises environments and Azure using OpenShift, which offers a consistent container platform across the hybrid cloud.
  • Speed: Connect faster, and with enhanced security, between Azure and on-premises OpenShift clusters with hybrid networking.
  • Productivity: Access Azure services like Azure Cosmos DB, Azure Machine Learning, and Azure SQL DB, making developers more productive.

By enabling the hybrid cloud with OpenShift on-premises and on Azure Stack, the pair offers a consistent on- and off-premises foundation for the development, deployment, and management of cloud-native applications on Azure. This enables customers to pair the Azure public cloud with the flexibility and control of OpenShift on-premises on an Azure Stack private cloud.

With this new offering, you will be able to more easily move your applications between on-premises environments and Microsoft Azure. This is because they are leveraging a consistent container platform in OpenShift across the hybrid cloud. At Red Hat Summit, Burr Sutter, Red Hat’s director of developer experience, showed off a hybrid cloud using an on-site rack, Azure in Texas, and an Amazon Web Services (AWS) in Ohio. Using Kubernetes, Red Hat demonstrated you can load-balance across all three clouds automatically and in real time.

It can do this by using Kubernetes to run a multi-architecture container management that spans both Windows Server and Red Hat Enterprise Linux (RHEL) containers. Red Hat OpenShift on Microsoft Azure will support both Windows containers alongside RHEL containers.

With this new offering comes expanded integration of Microsoft SQL Server across the Red Hat OpenShift landscape. This will soon include SQL Server as a Red Hat certified container for deployment on Red Hat OpenShift on Azure and Red Hat OpenShift Container Platform across the hybrid cloud, including Azure Stack.

More ways for developers to use Microsoft tools with Red Hat, too, as Visual Studio Enterprise and Visual Studio Professional subscribers will get Red Hat Enterprise (RHEL) Linux credits. For the first time, developers can work with .NET, Java, or other popular open-source frameworks

Microsoft had also announced at Microsoft Edge that its own inhouse Kubernetes offering, Azure Kubernetes Service (AKS), is now generally available. AKS is also meant to simplify the process for building out container-based applications.

What customers will get from Red Hat OpenShift on Azure is a managed service backed by operations and support services from both companies. Support extends across their containerized applications, operating systems, infrastructure, and the orchestrator. Further, Red Hat’s and Microsoft’s sales organizations will work together to bring the companies’ extensive technology platforms to customers, equipping them to build more cloud-native applications and modernize existing applications.

Red Hat OpenShift on Azure will be available in preview in the coming months. Red Hat OpenShift Container Platform and Red Hat Enterprise Linux on Azure and Azure Stack are currently available.

Read also: RHEL 7.5, the latest version of Red Hat Enterprise Linux, arrives

Paul Cormier, Red Hat’s president of products and technologies, said: “Hybrid cloud is the only practical way forward. Very few organizations are able to fully silo their IT operations into a solely on-premises or public cloud footprint; instead, it’s a hybrid mixture of these environments that presents a path forward. By extending our partnership with Microsoft, we’re able to offer the industry’s most comprehensive Kubernetes platform on a leading public cloud, providing the ability for customers to more easily harness innovation across the hybrid cloud without sacrificing production stability.”

Scott Guthrie, Microsoft’s executive vice president, Cloud and Enterprise Group, added in a statement: “Microsoft and Red Hat are aligned in our vision to deliver simplicity, choice and flexibility to enterprise developers building cloud-native applications. Today, we’re combining both companies’ leadership in Kubernetes, hybrid cloud and enterprise operating systems to simplify the complex process of container management, with an industry-first solution on Azure.”

Related stories

Uber sets safety review; media report says software cited in fatal crash

(Reuters) – Uber Technologies Inc [UBER.UL] on Monday said it has retained a former top U.S. transportation official to advise it on safety after a fatal self-driving crash in March, but it declined to comment on a technology website’s report that a software flaw was responsible for the accident.

The Uber logo is displayed on a screen during the Women In The World Summit in New York City, U.S., April 12, 2018. REUTERS/Brendan McDermid

The Information reported on Monday that Uber has determined the likely cause of the collision in March that killed a pedestrian was a problem with the software that decides how a self-driving car should react to objects it detects. The outlet said the car’s sensors detected a pedestrian but the software decided the car did not need to react right away.

“We can’t comment on the specifics of the incident,” Uber said regarding the report, citing an ongoing investigation by the National Transportation Safety Board (NTSB).

In the March 18 accident an Uber self-driving vehicle struck and killed a 49-year-old woman who was walking across a street in the Phoenix suburb of Tempe.

Uber, which suspended testing of autonomous vehicles after the accident, on Monday said it was looking at its self-driving program and said it retained Christopher Hart, a former chairman of the NTSB, to advise it on safety.

“We have initiated a top-to-bottom safety review of our self-driving vehicles program, and we have brought on former NTSB Chair Christopher Hart to advise us on our overall safety culture,” Uber said. “Our review is looking at everything from the safety of our system to our training processes for vehicle operators, and we hope to have more to say soon.”

Hart, who was named chairman of the Washington-area Metrorail safety commission in March, did not immediately respond to a request for comment.

In a video of the crash released by police, the Uber vehicle appeared not to brake before it struck the woman. There was a human driver sitting behind the wheel, who in the video appeared to be looking down and not at the road. Just before the video stopped, the driver looked upward toward the road and suddenly looked shocked.

The NTSB is expected to issue a preliminary report on the Arizona Uber crash in the coming weeks, a spokesman said.

The National Highway Traffic Safety Administration (NHTSA) is also investigating the incident and declined to comment.

Bryant Walker Smith, a self-driving car expert and law professor at the University of South Carolina, said in an email that the report by The Information raised the question of whether Uber’s “software might have detected something but misclassified as something other than a human (which could include determining that the probability of that something being a human was low).”

False positives and negatives have long been a challenge for self-driving and semi-autonomous driving systems, he said, but said that detecting a pedestrian crossing a street “doesn’t seem like a edge case” that would have been difficult for a self-driving car to handle.

Uber’s chief executive officer, Dara Khosrowshahi, said in April that Uber still believed in prospects for autonomous transport, saying that “autonomous (vehicles) at maturity will be safer.”

Hart, who was chairman of the NTSB when it opened a probe into a fatal Tesla crash involving a driver using the vehicle’s Autopilot system, in 2016 said that self-driving cars will not be perfect.

“There will be fatal crashes, that’s for sure,” Hart said, but he said that would not derail the move toward driverless cars.

Reporting by David Shepardson; editing by David Gregorio and Leslie Adler

Snap hires Amazon veteran Tim Stone as CFO

(Reuters) – Snapchat-owner Snap Inc (SNAP.N) said Tim Stone, an Amazon.com Inc (AMZN.O) veteran who had led the integration of the online retailer’s $13.7-billion Whole Foods acquisition, would replace Andrew Vollero as chief financial officer.

FILE PHOTO: The Snapchat messaging application is seen on a phone screen August 3, 2017. REUTERS/Thomas White/File Photo

Stone, 51, joined Amazon in March 1998 and is currently vice-president of finance. He served as vice-president of the company’s physical stores from August 2017 until February 2018.

Vollero, who guided Snap’s transition to a public company, is leaving to pursue other opportunities and will receive an amount equal to one year of his base salary.

The resignation is not related to any disagreement on any matter related to the company’s management or finances, Snap said in a regulatory filing. (bit.ly/2JX36jy)

The appointment comes a week after Snap reported quarterly results that disappointed Wall Street following a recent redesign of its Snapchat messaging app that turned off some long-time fans and advertisers.

Snap’s shares, which have lost 24 percent of their value since reporting last Tuesday, were up 1.6 percent at $10.91 in extended trading on Monday.

“I think somebody had to take the blame for SNAP’s missing numbers and there was likely frustration with both the CFO and management team,” said Summit Insights Group analyst Jonathan Kees.

Snap will likely experience a rocky transition due to the market conditions, app redesign, layoffs, and now senior management disruption, Kees said, who holds a “sell” rating on the stock.

Stone will take charge on May 16, while Vollero will remain as an adviser until August 15.

Stone will have an annual salary of $500,000, according to the filing.

Reporting by Laharee Chatterjee and Munsif Vengattil in Bengaluru, David Ingram in San Francisco; Editing by Shounak Dasgupta and Sriraj Kalluvila

A 66-Year-Old Woman’s Brain Implant Was Shut Off By a Lightning Strike

A doctor in Slovenia has reported on a case with a lesson you might want to remember. If you wind up with a brain implant at some point down the road—including the kind that might someday allow you to control computers with your mind—be sure you don’t try and charge it during a thunderstorm.

According to the report, published earlier this month and spotted by Ars Technica, a 66-year-old patient with a brain implant was in her apartment when it was struck by lightning. The strike was strong enough to “burn and destroy” electrical appliances in the apartment, including a television and air conditioner.

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It was also strong enough to trigger a failsafe that shut off the woman’s brain implant, even though it wasn’t connected to the home’s wiring. The patient was being treated for involuntary neck spasms using a procedure called Deep Brain Stimulation, or DBS. It’s a well-established therapy that has been used for Parkinson’s disease for more than two decades, and was approved to treat severe obsessive-compulsive disorder in 2009. DBS treatment relies on an implant called a neurostimulator, in this case a unit from Medtronic, that sends electrical impulses to electrodes implanted in the brain.

The patient didn’t notice anything was wrong until an hour after the storm, when her spasms returned. She was able to get her implant reactivated and her tremors back under control quickly, and no damage to the implant was found.

But that outcome, according to the reporting doctor, could have been much worse if the implant had been plugged in to recharge during the lightning strike. Though the report doesn’t speculate on just how badly the patient could have been harmed, it does refer to “serious brain injury” in cases where patients with implants were exposed to strong electromagnetic fields. Electrical implants can be shut off or damaged when they get too close to generators, arc welders, or even medical equipment like MRI machines.

A medical neurostimulator isn’t precisely analogous to the kind of brain implants that entrepreneurs including Elon Musk want to develop. In fact, simple brain-computer interfaces have already been shown to work without any implant at all. But more sensitive versions of the technology probably will involve implants, so if you ever decide to literally hack your brain, be careful when you plug it in.

Cyber Saturday—What Readers Had to Say About My Rejection of DNA Testing

Good morning and happy cyber Cinco de Mayo, dear readers.

I received an abundance of thoughtful responses to my essay on rejecting consumer DNA tests last weekend. In lieu of a column, I’ve reproduced a selection of the several dozen well-considered comments that landed in my inbox. I hope you enjoy the variety of perspectives and insights as much as I did. (I have stripped out the identities of the authors—for privacy reasons, of course.)

KA: “While I understand your reticence, I believe as a human race we need to share genomic and other data to move forward. I’ve been in the precision medicine space for 18 years, and the only way to see it reach maximum potential is if we break down silos for information sharing globally.”

EM: “I think it is likely too late for you to refuse. It is most likely that a relative of yours—whether close or distant—has already chosen to test his or her DNA, and has shared the extended family tree that includes you.”

MP: “I don’t blame you. I do however believe that sooner or later we all will have to do it if only to have access to future healthcare (personalized medicine is coming faster than anyone thought would) and that somewhere a national genetic repository will soon exist.”

KS: “I was a fencesitter veering towards disagreeing until I read your mention of TOS [Terms of Service]. Decoding TOS can often be harder than decoding the DNA. DNA Testing is simply not worth the effort. So, now I agree!”

ML: “I did ancestry.com about a year ago and have had several moments of regret since—especially on the heels of this story. Maybe I’m a little paranoid too but I often think about what things could look like if someone like Hitler had access to our DNA records. Yikes.”

JP: “I can think of no more elegant way for the NSA (or similar group) to collect DNA information on millions of people than to own one of the ‘23 and me’ type companies.”

JR: “Just take the implications of this data in the hands of a totalitarian government, a greedy and maligned corporation, a foreign power. Bad, bad, bad.”

EF: “Everyone keeps asking me why I don’t want to know my ancestry and now I will forward them this newsletter.”

In case you didn’t catch last weekend’s essay (or EF’s forward), you may read the piece here. Thank you to everyone who wrote in and offered an astute viewpoint, personal experience, or opinion. What a pleasure it is to have so many attentive, engaged subscribers to this newsletter. I wonder if there’s a gene behind that.

Have a great weekend.

Robert Hackett

@rhhackett

[email protected]

Welcome to the Cyber Saturday edition of Data Sheet, Fortune’sdaily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.