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GOPRO’S DRONE INITIATIVE CRASHES WITH KARMA RECALL

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gopro-karma-droneGoPro’s ambitious plans to be a player in the fledgling drone market crashed last week when it had to announce a product recall due to Karma UAV units falling from the sky.

The company needed to resolve a performance issue related to loss of power during operation, it said. It indicated it would resume shipment of Karma at some point, but didn’t suggest when.

The Karma recall likely will have a significant financial impact on GoPro.

“With the amount of competition in the consumer drone space, it is imperative to satisfy demand, or that demand will shift to another product,” said Michael Blades, a senior industry analyst at Frost & Sullivan.

“The longer Karma is sidelined, the less chance it has of grabbing significant market share,” he told TechNewsWorld.

Revenue Hit

GoPro’s stock price had begun slipping before the recall and has continued to decline steadily, Blades added.

“The impact will be on stock price and revenue,” he said.

GoPro already had lowered its fourth-quarter revenue forecasts because it launched Karma later than planned, explained Ken Hyers, director of wireless device strategies at Strategy Analytics.

“In the two weeks it was available, GoPro sold around 2,500 Karma drones and surely had been anticipating strong sales for the Karma drone from Thanksgiving on. That revenue is now lost,” he told TechNewsWorld.

“Worse, GoPro had been counting on the Karma to drive sales of its new GoPro Hero5 and Hero5 Session cameras, and now that opportunity has also been lost,” Hyers added.

Black Eye

Since Karma was GoPro’s first UAV, the drone was supposed to establish the company’s reputation in the market. It has done that — but not in a good way.

“Given that the Karma is GoPro’s first drone, and in many ways was seen as the future of the company, it’s recall has to be viewed as devastating for its reputation as a drone maker and its ambitions in the drone space,” said Hyers.

“Drone buyers are more likely to avoid GoPro in the future, with severe consequences for the company’s future drone and camera sales,” he noted. “There are simply too many very good drone alternatives available on the market for buyers to risk giving GoPro another chance.”

The recall emphasizes the fact that GoPro is a camera company and not a drone company, Frost’s Blades added.

“GoPro should not have been expected to develop a perfect product with its first drone,” he said. “However, the market is innovating so quickly that if your product is not better or more capable than the latest products, you will likely fail.”

Flawed Strategy

Consumer interest in UAVs has been less than anticipated by the industry, and the Karma recall isn’t going to improve that, observed Brad Russell, a research analyst with Parks Associates.

Less than 5 percent of U.S. broadband households own a drone, and less than 4 percent said they were interested in owning one at the beginning of the year, he noted.

“Negative drone stories in the press and mechanical failures, such as GoPro’s recent troubles, are likely stifling consumer interest outside of film and video professionals and enthusiasts,” he told TechNewsWorld.

Even without the recall of Karma, GoPro’s prosumer drone strategy may be flawed, suggested Philip Solis, a research director at ABI Research.

Although revenues from prosumer drones amount to about half of the $1 billion consumer drone market, those drones represent only 6 percent of drones shipped in the space.

“GoPro’s strategy should be to use drones to expand the sales of their cameras, but they’re pricing themselves into the prosumer space, which is low volume, which means a very tiny amount of additional cameras sold,” Solis told TechNewsWorld.

Debacle for GoPro

What’s more, by selling Karma at $799, GoPro is going head-to-head with the established leaders in the market, DJI and 3DR. “If you’re not DJI or 3DR, it’s awfully hard to compete in the market,” Solis said.

“If they had a product at $400 to $600, they could compete better in the market and sell a lot more cameras,” he maintained.

“The Karma drone has been a debacle for GoPro, and it will be extremely challenging for them to bounce back in the drone market after such an awful start,” said Strategy Analytics’ Hyers. “Going forward, GoPro should partner with another drone maker and outsource drone development. It’s clearly not ready to do it on its own.”

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Business

ONEPLUS IS GOING TO START MAKING TVS

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OnePlus is is getting into a new line of business: making TVs. Best known for its phones, China’s OnePlus also has a small catalog of really good accessories like wireless earphonesand surprisingly awesome backpacks, though nothing as complex or expensive as a television set. In announcing the news on the OnePlus online forums, company chief Pete Lau describes it as “the first step in building a connected human experience.”

Every hardware manufacturer is now looking intently at ways to monetize the smart home space. Samsung and Huawei recently announced smart speakers, Apple and Google already have the HomePod and Google Home, respectively, and Microsoft and Sony are old incumbents with their Xbox and PlayStation consoles. OnePlus has decided to make its entry point into this market the TV itself, which has always been at the center of home entertainment, though often with the help of other connected devices. Reading Lau’s teaser announcement, the OnePlus TV — which so far only has a project name, no timeline or specs have been revealed — will serve as the connectivity hub for OnePlus’ future vision of the smart home.

The OnePlus smart TV will be developed by a new division within OnePlus, led by Pete Lau himself. Still at the earliest stages of development, OnePlus is currently seeking input from its fans, as it often does, about what their priorities with a future smart TV will be.

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AMAZON IS REPORTEDLY BUILDING A FREE STREAMING VIDEO SERVICE FOR FIRE TV OWNERS

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Amazon is said to be prepping an ad-supported streaming video service; it’ll be available to folks who own any of the company’s Fire TV streaming dongles and set-top boxes, reports The Information.

It’ll be separate from Prime Video, which offers a range of licensed shows and movies, as well original content produced by Amazon, to people who are subscribed to Prime.

Amazon's latest streaming device is the Fire TV Cube
Credit: Amazon
Amazon’s latest streaming device is the Fire TV Cube

Do you like good gadgets?

Those sweet cool gadgets?

Oh, yeah

The idea behind this upcoming service, which is dubbed Free Dive, is to help Amazon bring in more revenue through advertising. Ads presently account for a small fraction – about $2 billion out of more than $200 billion – of its annual revenue, but they offer higher margins than retail, and are one of Amazon’s fastest growing earners company-wide.

To that end, the company’s been selling ad space on its site, and is slated to run ads during live sporting events on Prime Video. It also turned off ad-free viewing on Twitch – its game video streaming service – for Prime subscribers earlier this month.

Free Dive could give Amazon a chance to rival Roku, which offers a similar ad-supported streaming service for owners of its devices and is expected to reach 59 million users by the end of 2018. Roku also made its ‘Channel’ service available via the web earlier this month to folks in the US, so you don’t need the company’s hardware to access it. It’ll be interesting to see if Amazon follows suit – and how it plays its cards with customers across the globe, especially in cost-conscious markets like India, where it’s expanding its media offerings.

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AMAZON SETS ITS SIGHTS ON THE $88 BILLION ONLINE AD MARKET

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Verizon doesn’t sell its mobile phones or wireless plans over Amazon. Nor does it offer Fios, its high-speed internet service. But Verizon does advertise on Amazon.

On Black Friday last year, when millions of online shoppers took to Amazon in search of deals, a Verizon ad for a Google Pixel 2 phone — buy one and get a second one half off — could be seen blazing across Amazon’s home page. And on July 16, what Amazon calls Prime Day, an event with special deals for its Prime customers, Verizon again ran a variety of ads and special offers for Amazon shoppers, like a mix-and-match unlimited service plan.

Amazon, which has already reshaped and dominated the online retail landscape, is quickly gathering momentum in a new, highly profitable arena: online advertising, where it is rapidly emerging as a major competitor to Google and Facebook.

The push by the giant online retailer means consumers — even Prime customers, who pay $119 a year for access to free shipping as well as streaming music, video and discounts — are likely to be confronted by ads in places where they didn’t exist before.

 

In late August, some gamers were angered when Twitch, a video game streaming service acquired by Amazon in 2014, said it would soon no longer be ad-free for Prime members unless consumers paid an additional $8.99 a month for a premium service called Twitch Turbo.

Amazon derives the bulk of its annual revenue, forecast to be $235 billion this year, from its e-commerce business, selling everything from books to lawn furniture. Amazon is also a leader in the cloud computing business, with Amazon Web Services, which accounts for around 11 percent of its revenue but more than half of its operating income. But in the company’s most recent financial results, it was a category labeled “other” that caught the attention of many analysts. It mostly consists of revenue from selling banner, display and keyword search-driven ads known as “sponsored products.” That category surged by about 130 percent to $2.2 billion in the first quarter, compared with the same period in 2017.

Those numbers are a pittance for Google and Facebook, which make up more than half of the $88 billion digital ad market. But they come with big and troubling implications for those two giants.

Much of online advertising relies on imprecise algorithms that govern where marketing messages appear, and what impact they have on actual sales. Here, Amazon has a big advantage over its competitors. Thanks to its wealth of data and analytics on consumer shopping habits, it can put ads in front of people when they are more likely to be hunting for specific products and to welcome them as suggestions rather than see them as intrusions.

Amazon is gaining in advertising when the public perception of Google and Facebook has soured. In addition, some advertisers have yet to return to YouTube, a growing ad channel for Google, after brands like AT&T were found appearing adjacent to videos that promoted racism or terrorism.

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