If the new iPad Pro you got for Christmas is bent in the center, don’t bother booking an appointment at the Apple Store. Just return the tablet, because the genius at the bar isn’t going to care. Why? …
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Sirius XM’s recent all-stock $ 3.5-billion purchase of the music-streaming service Pandora raised a lot of eyebrows. A big question was why Sirius paid so much. Is Pandora’s music library and customer base really worth that amount? The answer is that this was a strategic move by Sirius in a battle that is far bigger than radio. The real battle, which will become much more visible in the coming years, is over the driving experience.
People spend a lot of time commuting in their cars. That time is fixed and won’t likely change. However, what is changing is the way we drive. We’re already seeing many new cars with driver assist features, and automakers (and tech companies) are working hard to bring fully autonomous cars to the market as quickly as possible. New cars today already contain an average of 100 million lines of code that can be updated to increase driver assist options, and some automakers like Tessla already offer an “autonomous” mode on highways.
According to the Brookings Institute, one-quarter of all cars will be autonomous by 2040 and IHS predicts all cars will be autonomous after 2050. Those are conservative estimates, as we are likely to see major changes in the next 10 years.
These changes will impact the driving experience. As cars become more autonomous, we can do more than simply listen to music or podcasts. We may be able to watch videos, surf the web, and more. The value of car real estate is already valuable, but it’s going to skyrocket as we change the way people consume media while driving.
The Pandora acquisition was a strategic move by Sirius to gain the necessary assets so that it won’t fall behind in this space — and to get into the fast-growing music streaming business, where users consume music at home, work and at play. While Pandora’s music library is arguably second tier, it’s also good enough that it can provide pretty much every artist most people want. This is often how high-priced mergers happen – one party is concerned about falling behind and pays a premium to purchase the other company’s assets. It’s also a bet by Sirius about the driving experience of the future.
As the battle over the driving experience heats up, we will initially see companies like Google, Amazon and Apple start dipping their toes in the market. They might do that through investments in startups, rolling out their own services, or purchasing competitors. Some of those large tech companies already have projects around autonomous cars. Uber may even be interested in this market.
For now, Sirius probably doesn’t need to worry about competition from startups. They won’t be able to grow big enough fast enough to get a sizable share of the market. A more likely scenario is that startups will work on software that offers a unique functionality, making it an attractive acquisition target by a larger company.
This is going to be an interesting battle to watch in the coming years, as cars essentially become software with four wheels attached. Companies like Sirius know this is an important space and that the battle over the driving experience will be won in software. The acquisition of Pandora is only the beginning.
Apple has doubled down on its repudiation of Bloomberg’s report last week that claimed its systems had been compromised by Chinese spies.
The blockbuster story cited more than a dozen sources claiming that China installed tiny chips on motherboards built by Supermicro, which companies across the U.S. tech industry — including Amazon and Apple — have used to power servers in their datacenters. Bloomberg’s report also claimed that the chip can reportedly compromise data on the server, allowing China to spy on some of the world’s most powerful tech companies.
Now, in a letter to Congress, Apple’s vice president of information security George Stathakopoulos sent the company’s strongest denial to date.
“Apple has never found malicious chips, ‘hardware manipulations’ or vulnerabilities purposely planted in any server,” he said. “We never alerted the FBI to any security concerns like those described in the article, nor has the FBI ever contacted us about such an investigation.”
It follows a statement by both the U.K. National Cyber Security Center and U.S. Homeland Security stating that they had “no reason to doubt” statements by Apple, Amazon and Supermicro denying the claims.
Stathakopoulos added that Apple “repeatedly asked them to share specific details about the alleged malicious chips that they seemed certain existed, they were unwilling or unable to provide anything more than vague secondhand accounts.”
Apple’s statement is far stronger than its earlier remarks. A key detail missing in the Bloomberg story is that its many sources, albeit anonymous, provided the reporters with a first hand account of the alleged spy chips.
Without any evidence that the chips exist beyond eyewitness accounts and sources, Bloomberg’s story remains on shaky grounds.
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