Happy Monday! Dan Primack, Mike Allen and I will be at the Internet Association's Virtuous Circle conference in San Francisco, so say hi if you are there. I will be interviewing Cox Communications president Pat Esser this afternoon.
Monday interview: Roku CEO Anthony Wood
While Roku is best known for its sticks and boxes that turn a regular TV into a smart one, the company sees its future in software, not hardware.
"Our hardware business is meant to drive scale to our software platform," CEO Anthony Wood told Axios in an interview after the company's first earnings report as a public company. "We make most of our gross profit from our platform business."
Why it matters: Just as mobile hardware companies like LG and Samsung eventually migrated off of their own software platforms to market leaders' like Android and iOS, the smart TV industry is going through the same evolution.
- Roku is priming itself to be the next big software platform for smart TVs. The shift creates new revenue streams for Roku that can be scaled very quickly, including software licensing and digital TV advertising.
Here are some highlights of my colleague Sara Fischer's interview with Wood:
- "Our hardware business is meant to drive scale to our software platform," Wood told Axios. "We make most of our gross profit from our platform business." One in five of all smart TVs sold were powered by Roku's operating system last quarter.
- A whopping two-thirds of Roku's revenue last quarter came from video advertising served on ad-supported channels, including The Roku Channel.
- "TV advertising compared to the tech and techniques in digital is stuck in stone ages," Wood says. "We have a very advanced ad platform that gives advertisers the ability to use digital targeting techniques while leveraging the benefits of a TV advertising big screen."
- The Roku Channel has become a major revenue-driver for the company. "A lot of people think streaming is about ad avoidance, but 40% of streamed viewing has ads in it," Wood says.
- "Consumers looking for free content," Wood says. "People move to streaming to save money. We don't believe that they're going to replicate the amount they paid for cable with streaming. Rather, it will be a mix of SVOD [streaming video on demand] like Netflix, and free streaming options."
Qualcomm rejects rival Broadcom's $103 billion offer
Qualcomm announced this morning it has rejected rival Broadcom's unsolicited $70-per-share offer, saying the proposal "is not in the best interests of shareholders and dramatically undervalues Qualcomm." The decision came as no surprise to many following the bid.
Why you'll hear about this again: This sets the stage for what could be a prolonged battle. Broadcom could choose to up its bid, launch a proxy battle, or both.
The context: The deal would have been the largest merger in the history of the tech industry. But it also carried significant risk. Qualcomm is already in the process of trying to buy NXP Semiconductor and, even if Broadcom and Qualcomm reached a deal, it could have proven tough to get the needed regulatory approvals.
Pixel Buds are powerful, but lack Apple's style and simplicity
At the surface level, Pixel Buds are Google's answer to Apple's AirPods. Both are wireless headphones designed to easily connect to each company's latest smartphones.
Despite those similarities, they are different products, pointing to each company's strengths.
The AirPods: Apple's AirPods are decidedly more elegant, effortlessly connect to the iPhone, and are so light and comfortable you barely notice they are there.
The Pixel Buds: Pixel Buds, by contrast, are a less radical design, with the two buds connected to each other via a long cord. Where they shine is in added features, such as the ability to aid in real-time language translation via Google Translate.
In my limited testing with a French-speaking friend, it wasn't that different than just using the already impressive Google Translate app, though using Pixel Buds makes things a bit more discrete.
Who it's good for: People who have a Pixel or Pixel 2 (regular or XL models) and are already in the market for wireless headphones; those who travel a lot internationally.
Who it's not: People that already have wireless headphones they like or who want the smallest and most comfortable headphones.
The practicalities: Pixel Buds sell for $159 and are available to order from Google's website. While early orders are shipping this week, those ordered now could take until December to arrive.
On tap: The Internet Association's Virtuous Circle conference takes place today and Tuesday in San Francisco.
Trading places: Former BMW executive Stefan Krause is out as COO of troubled electric car startup Faraday Future, with both sides taking shots at one another, per The Verge.
ICYMI: Britain's Graphcore, which makes chips for AI, raised $50 million from Sequoia Capital...SoftBank's efforts to garner a stake in Uber took a big step forward on Sunday...Tesla is promising to unveil its automated semi truck on Thursday and Elon Musk promises it will "blow your mind."
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Ohio State got in a good shot at Apple during this week's game, poking fun at a recent glitch that turned the letter I into "A ?"