NYC’s contactless subway turnstiles open today with Apple, Google, Samsung and Fitbit Pay support

After weeks of sporting “Coming Soon” screens, the New York City MTA’s OMNY pilot finally launched today. The system augments the city’s MetroCard swipes with new contactless screens that work with contactless prepaid credit and debit cards and a variety of different smart devices.

We’ve highlighted the latter already. For starters, the system will work with Apple, Google, Samsung and Fitbit Pay, which means it will be open to a large range of smartphones and wearables.

Contactless cards are those with NFC chips sporting a four-bar wave symbol that are already available from a number of big banks and credit card companies. Per the MTA’s site, the list of partners includes Chase, Visa, Mastercard and American Express, which should cover a majority of card holders, one way or another.

That’s a big no for Diners Club, Japan Credit Bureau and China UnionPay. Also, PIN-protected cards don’t currently work, nor do gift cards and non-reloadable cards. Another important restriction in all of this is the fact that the system is currently limited to single-ride. That means the large number of New Yorkers who currently use daily, weekly and monthly passes to save on the ever-increasing ride prices are SOL for now.

Ride plans will be coming before 2021. The MTA says it also plans to have the system implemented in all subway stations and buses before then. For now it’s currently limited to the 4, 5, 6 line between Grand Central Station in Manhattan and Brooklyn’s Atlantic Avenue-Barclays Center, as well as Staten Island buses.

Having demoed the system recently, I attest that it works well on both the iPhone and Apple Watch. It remains to be seen, however, how much of a logjam this technology will create in its first weeks and months. Ultimately, however, it should go a ways toward speeding things up as riders no longer have to fumble for their MetroCard and deal with aging swipe readers.

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Two years after Essential’s launch, still no Home hub or second phone

This morning’s Moto Z4 news was good cause to go back and reassess the state of the modular phone. Three years after the line launched, the concept hasn’t exactly ignited the market — in fact, there are really just a handful of scattered competitors to show for it. Essential is among the most prominent, with the PH-1’s clever two-pin connector.

By sheer coincidence, it turns out today is the two-year anniversary of the company’s debut. Founder Andy Rubin took to the stage at Code 2017 with big ideas and two products. One, the PH-1, has come and gone, launching a couple of months late in August 2017 before being discontinued late last year. The other, the Essential Home hub, never appeared at all.

The day the products were announced, then COO Niccolo de Masi (who appears to have since moved on to Honeywell spin-off Resideo), spoke of the company’s 10-year plan. It was an acknowledgement that it had a tough road ahead, as it planned to take on big names like Apple and Samsung. But the company certainly had the money. A $300 million raise helped the startup achieve unicorn status not long after taking the stage at the conference.

But the intervening two years have been plagued with bad news. In spite of positive reviews, the company reportedly only shipped 88,000 phones in 2017. The PH-1 got a massive price drop and its first modular accessory, a 360 camera, was discounted to $19, down from $250.

Last May, rumors surfaced that the company had gone up for sale and its follow-up phone had been canceled. And in October, it laid off nearly a third of its staff. Founder Andy Rubin has been laying low in the meantime. That same month, The New York Times published an explosive story about a $90 million Google payoff in the wake of sexual misconduct claims, causing him to take leave from Essential.

All the while, however, the company has firmly denied claims that it’s going away. I spoke to a rep at the company recently who said things are in the works, without revealing any specifics. There have been a ton of patent filings that appear to point to some future handset. It announced a new mod for the PH-1 in June and even acquired a company in December. Hell, earlier this month, it issued a new security patch, holding to its promise of monthly updates — a hell of a lot more than many more successful smartphone makers have offered.

That’s part of what makes the Essential story so frustrating. The PH-1 was a novel device, among the first to go with a camera notch display. Its $699 price (later reduced to $499) also predated Samsung/Apple/Google’s move into budget flagships. But even with a unicorn valuation, hardware is hard. And Essential may have entered the market at the worst possible time, as smartphone sales were beginning to flag for the first time ever.

Two years after launch, it’s hard to shake the feeling that Essential’s time may have come and gone. For now, however, the company appears to simply be biding its time before announcing what comes next.

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Flipboard hacks prompt password resets for millions of users

Social sharing site and news aggregator Flipboard has reset millions of user passwords after hackers gained access to its systems several times over a nine-month period

The company confirmed in a notice Tuesday that the hacks took place between June 2, 2018 and March 23, 2019 and a second time on April 21-22, 2019, but the intrusions were only detected a day later on April 23.

Hackers stole usernames, email addresses, passwords and account tokens for third-party services. According to the notice, “not all” Flipboard users’ account data were involved in the breaches but the company declined to say how many users were affected.

Flipboard has about 150 million monthly users.

“We’re still identifying the accounts involved and as a precaution, we reset all users’ passwords and replaced or deleted all digital tokens,” the notice read.

Although the passwords were unreadable, Flipboard said passwords prior to March 14, 2012 were scrambled using the older, weak hashing SHA-1 algorithm.. Any passwords changed after are scrambled using a much stronger algorithm that makes it far more difficult to reveal in a usable format.

The hacks also exposed account tokens, which gives Flipboard access to data from accounts on other services, like Facebook, Google, and Samsung.

“We have not found any evidence the unauthorized person accessed third-party account(s) connected to users’ Flipboard accounts,” said the statement. “As a precaution, we have replaced or deleted all digital tokens.”

Flipboard becomes the latest tech giant to be hit by hackers in recent months. Developer platform Stack Overflow earlier this month confirmed a breach involved some user data. Canva, one of the biggest sites on the internet, was also hacked. Last week, the Australia-based company admitted close to 140 million users had data stolen following the breach.

Read more:

• After breach, Stack Overflow says some user data exposed
• An unsecured SMS spam operation doxxed its owners
• Samsung spilled SmartThings app source code and secret keys
• Security lapse exposed a Chinese smart city surveillance system
• A leaky database of SMS text messages exposed password resets and two-factor codes
• Chipotle customers are saying their accounts have been hacked

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Best Buy cancels Samsung Galaxy Fold preorders

Samsung is taking its time bringing the Galaxy Fold back to market. And frankly, that’s probably for the best. The Note debacle from a few years back was an important lesson about what happens when you rush a product back to market. That one resulted in a second recall — PR nightmae upon PR nightmare.

With a release date still very much in limbo, Best Buy has sent notes to those who pre-ordered the Fold. Spotted by The Verge, the letter has since been posted to Best Buy’s support forum. It cites “a plethora of unforeseen hiccups,” (fair enought) adding, “Because we put our customers first and want to ensure they are taken care of in the best possible manner, Best Buy has decided to cancel all current pre-orders for the Samsung Galaxy Fold.

The letter goes on to assure customers that the big box retailer is “working closely with Samsung” to help deliver the product to customers. At the moment, however, their guess on the timeframe is as good as ours.

Recent reports have suggested that an announcement was imminent, with the company having solved design flaws that had reviewers peeling off screens and getting debris jammed in the holes of the folding mechanism. More recent reports gave the product a June 13 release date, but that too appears to have been scrubbed for the time being.

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Automakers have a choice: Become data companies or become irrelevant

Mona Lisa frown: Machine learning brings old paintings and photos to life

Machine learning researchers have produced a system that can recreate lifelike motion from just a single frame of a person’s face, opening up the possibility of animating not just photos but also paintings. It’s not perfect, but when it works, it is — like much AI work these days — eerie and fascinating.

The model is documented in a paper published by Samsung AI Center, which you can read here on Arxiv. It’s a new method of applying facial landmarks on a source face — any talking head will do — to the facial data of a target face, making the target face do what the source face does.

This in itself isn’t new — it’s part of the whole synthetic imagery issue confronting the AI world right now (we had an interesting discussion about this recently at our Robotics + AI event in Berkeley). We can already make a face in one video reflect the face in another in terms of what the person is saying or where they’re looking. But most of these models require a considerable amount of data, for instance a minute or two of video to analyze.

The new paper by Samsung’s Moscow-based researchers, however, shows that using only a single image of a person’s face, a video can be generated of that face turning, speaking and making ordinary expressions — with convincing, though far from flawless, fidelity.

It does this by frontloading the facial landmark identification process with a huge amount of data, making the model highly efficient at finding the parts of the target face that correspond to the source. The more data it has, the better, but it can do it with one image — called single-shot learning — and get away with it. That’s what makes it possible to take a picture of Einstein or Marilyn Monroe, or even the Mona Lisa, and make it move and speak like a real person.

In this example, the Mona Lisa is animated using three different source videos, which as you can see produce very different results, both in facial structure and behavior.

It’s also using what’s called a Generative Adversarial Network, which essentially pits two models against one another, one trying to fool the other into thinking what it creates is “real.” By these means the results meet a certain level of realism set by the creators — the “discriminator” model has to be, say, 90% sure this is a human face for the process to continue.

In the other examples provided by the researchers, the quality and obviousness of the fake talking head varies widely. Some, which attempt to replicate a person whose image was taken from cable news, also recreate the news ticker shown at the bottom of the image, filling it with gibberish. And the usual smears and weird artifacts are omnipresent if you know what to look for.

That said, it’s remarkable that it works as well as it does. Note, however, that this only works on the face and upper torso — you couldn’t make the Mona Lisa snap her fingers or dance. Not yet, anyway.

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Immigrant founders, smartphone growth, SEO tactics, SoftBank’s financials, and AR tech

How an immigration crackdown is hurting UK startups

Our European correspondent Natasha Lomas spent the past few weeks investigating what’s been happening to immigrant founders and tech talent in the UK, who have been receiving more scrutiny from the Home Office in recent months. Natasha zooms in on Metail, a virtual fitting room startup, and its tribulations with the immigration authorities and the damage those action are having on the broader ecosystem:

The January 31 decision letter, which TechCrunch has reviewed, shows how the Home Office is fast-tracking anti-immigrant outcomes. In a short paragraph, the Home Office says it considered and dismissed an alternative outcome — of downgrading, not revoking, the license and issuing an “action plan” to rectify issues identified during the audit. Instead, it said an immediate end to the license was appropriate due to the “seriousness” of the non-compliance with “sponsor duties”.

The decision focused on one of the two employees Metail had working on a Tier 2 visa, who we’ll call Alex (not their real name). In essence, Alex was a legal immigrant had worked their way into a mid-level promotion by learning on the job, as should happen regularly at any good early-stage startup. The Home Office, however, perceived the promotion to have been given to someone without proper qualifications, over potential native-born candidates.

In addition to reporting the story, Natasha also wrote a guide specifically for Extra Crunch members on how founders can manage their immigration matters, both for themselves and for their employees.

The state of the smartphone

TechCrunch hardware editor Brian Heater analyzed the slowdown in smartphone sales, finding few reasons to be optimistic about how smaller handset manufacturers can compete with giants like Apple and Samsung. There are slivers of good news from the developing world and also from 5G and foldable tech, but don’t expect profits to reach their zenith again any time soon.

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The state of the smartphone

Earlier this month, Canalys used the word “freefall” to describe its latest reporting. Global shipments fell 6.8% year over year. At 313.9 million, they were at their lowest level in nearly half a decade.

Of the major players, Apple was easily the hardest hit, falling 23.2% year over year. The firm says that’s the “largest single-quarter decline in the history of the iPhone.” And it’s not an anomaly, either. It’s part of a continued slide for the company, seen most recently in its Q1 earnings, which found the handset once again missing Wall Street expectations. That came on the tale of a quarter in which Apple announced it would no longer be reporting sales figures.

Tim Cook has placed much of the iPhone’s slide at the feet of a disappointing Chinese market. It’s been a tough nut for the company to crack, in part due to a slowing national economy. But there’s more to it than that. Trade tensions and increasing tariffs have certainly played a role — and things look like they’ll be getting worse before they get better on that front, with a recent bump from a 10 to 25% tariff bump on $60 billion in U.S. goods.

It’s important to keep in mind here that many handsets, regardless of country of origin, contain both Chinese and American components. On the U.S. side of the equation, that includes nearly ubiquitous elements like Qualcomm processors and a Google-designed operating system. But the causes of a stagnating (and now declining) smartphone market date back well before the current administration began sowing the seeds of a trade war with China.

Image via Miguel Candela/SOPA Images/LightRocket via Getty ImagesThe underlying factors are many. For one thing, smartphones simply may be too good. It’s an odd notion, but an intense battle between premium phone manufacturers may have resulted in handsets that are simply too good to warrant the long-standing two-year upgrade cycle. NPD Executive Director Brad Akyuz tells TechCrunch that the average smartphone flagship user tends to hold onto their phones for around 30 months — or exactly two-and-a-half years.

That’s a pretty dramatic change from the days when smartphone purchases were driven almost exclusively by contracts. Smartphone upgrades here in the States were driven by the standard 24-month contract cycle. When one lapsed, it seemed all but a given that the customer would purchase the latest version of the heavily subsidized contract.

But as smartphone build quality has increased, so too have prices, as manufacturers have raised margins in order to offset declining sales volume. “All of a sudden, these devices became more expensive, and you can see that average selling price trend going through the roof,” says Akyuz. “It’s been crazy, especially on the high end.”

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Samsung’s 5G phone hits Verizon, Sprint getting two 5G devices this month

With 5G, when it rains, it pours. A few hours after Verizon officially started selling the Samsung Galaxy S10 5G, Sprint announced that it will be offering two 5G devices for its network by the end of the month.

For now, it still feels like manufacturers are putting the cart before the horse here. There’s little question that 5G will become ubiquitous in the next few years, but actual opportunities to access the technology are still pretty scarce.

Among U.S. carriers, Verizon (or parent company’s parent company) has been the most aggressive. Fitting then, that the company is first to market with the Galaxy S10 5G. Of course all of these devices while default to 4G when there’s no 5G to be found, which is going to be the case more often than not for a while.

Verizon’s 5G is currently available in select markets, including Chicago and Minneapolis. That number is set to balloon to 20 before year’s end, including, Atlanta, Boston, Charlotte, Cincinnati, Cleveland, Columbus, Dallas, Des Moines, Denver, Detroit, Houston, Indianapolis, Kansas City, Little Rock, Memphis, Phoenix, Providence, San Diego, Salt Lake City and Washington, DC.

Sprint, meanwhile, has promised to flip on 5G in nine markets “in the coming weeks.” The list includes parts of Atlanta, Dallas, Houston and Kansas City, and then locations in Los Angeles, New York City, Phoenix and Washington D.C.

To celebrate, the network will be offering two 5G devices this month. The LG V50 ThinQ and HTC 5G Hub will hit Sprint stores on May 31.

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MultiVu raises $7M seed round for its next-gen 3D sensor

MultiVu, a Tel Aviv-based startup that is developing a new 3D imaging solution that only relies on a single sensor and some deep learning smarts, today announced that it has raised a $7 million seed round. The round was led by crowdfunding platform OurCrowd, Cardumen Captial and Hong Kong’s Junson Capital.

Tel Aviv University’s TAU Technology Innovation Momentum Fund supported some of the earlier development of MultiVu’s core technology, which came out of Prof. David Mendlovic’s lab at the university. Mendlovic previously co-founded smartphone camera startup Corephotonics, which was recently acquired by Samsung.

The promise of MultiVu’s sensor is that it can offer 3D imaging with a single-lens camera instead of the usual two-sensor setup. This single sensor can extract depth and color data in a single shot.

This makes for a more compact setup and, by extension, a more affordable solution since it requires fewer components. All of this is powered by the company’s patented light field technology.

Currently, the team is focusing on using the sensor for face authentication in phones and other small devices. That’s obviously a growing market, but there are also plenty of other application for small 3D sensors, ranging from other security use cases to sensors for self-driving cars.

“The technology, which passed the proof-of-concept stage will bring 3D Face Authentication and affordable 3D imaging to the mobile, automotive, industrial and medical markets,” MultiVu CEO Doron Nevo said. “We are excited to be given the opportunity to commercialize this technology.”

Right now, though, the team is mostly focusing on bringing its sensor to market, though. The company will use the new funding for that, as well as new marketing and business development activities.

“We are pleased to invest in the future of 3D sensor technologies and believe that MultiVu will penetrate markets, which until now could not take advantage of costly 3D imaging solutions,” said OurCrowd Senior Investment Partner Eli Nir. “We are proud to be investing in a third company founded by Prof. David Mendlovic (who just recently sold CorePhotonics to Samsung), managed by CEO Doron Nevo – a serial entrepreneur with proven successes and a superb team they have gathered around them.”

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Samsung reportedly readying Galaxy Fold for release after finding ‘fix’

Samsung’s been mostly quiet on the Fold front after recalling review units and indefinitely delaying the phone’s release. Understandably so. It couldn’t have been easy going back to the drawing board with one of buzziest handsets in recent memory. While we’ve been waiting word, the company has been exploring fixes and attempting to determine the magnitude of the issue.

According to reporting from Yonhap News Agency, Samsung is currently testing the handset with mobile carriers in Korea, putting the phone’s official release some time next month. There are a few grains of salt to be taken from these unnamed sources. The release timeframe depends on approval from carriers and will vary country by country.

What is notable, however, is that Samsung has apparently found fixes for the two primary problems. First there’s the issue with the protective laminate, which some reviewers apparently peeled off. I get it. I looks an awful lot like the peel-able screen covers the company’s phones ship with.

The protective cover will remain, but the edges will be tucked away, making it much more difficult to remove. As for the issue with matter falling through cracks in the hinge and getting wedged behind the display, Samsung’s apparently just making the holes in smaller.

Last week, CEO DJ Koh addressed the issue, noting that “news” was coming soon. This isn’t that, but Samsung does appear to still be committed to what could ultimately prove a very pricy mistake. At $1,980, consumers, too, are advised to approach this one with caution.

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AR display-maker DigiLens lands $50 million from Samsung, Niantic

The broader AR market is made up of a lot of hype and excitement, but fundamentally it’s all based around the promise that waveguide displays can continue to stay wafer-thin while getting better and cheaper.

Waveguide-maker DigiLens is aiming to stay aggressive in lowering the costs of the expensive component. It has just closed a $50 million Series C led by Universal Display Corporation’s venture arm alongside Samsung Ventures. The company had previously disclosed that Pokémon GO-maker Niantic and Mitsubishi were making a strategic investment in this round. This brings the startup’s total funding to $85 million.

The Sunnyvale, Calif. startup most recently raised a $22 million round in early 2017, with investments from Foxconn, Sony and Panasonic.

Waveguide displays allow projected images to be “loaded” in from the side of a sheet of glass, thanks to etchings that bounce the light around to form a complete image in front of your eye. This is ideal for augmented reality, where you want as little hardware as possible directly in front of your eye. While optics that simply reflect an image onto a curved display are intensely cheaper, it’s going to take developments in waveguide tech to create consumer-friendly svelte designs that still showcase a high-definition image.

Aside from AR glasses, DigiLens is eyeing the automotive market as a market for its see-through displays.

In a statement, CEO Chris Pickett declared that his startup’s manufacturing process was building “the only waveguide that can get to a consumer price point.”

The startup will have to compete with major tech companies and other startups that are building their own technology. Magic Leap and Microsoft are designing their own waveguide displays for their latest AR headsets. Last year, Apple bought Akonia Holographics, a Denver startup building similar technology.

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Smartphone shipments hit a five year low in North America

More dismal news from the smartphone number crunchers. New figures out of Canalys put the North American smartphone market at five year low for the first quarter of 2019. That’s…bad. But also, pretty inline with what we’ve been seeing globally. The market has stagnated, and while manufacturers aren’t in full on panic mode, there’s certainly cause for concern.

Shipments dropped from 44.4 million down to 36.4 million, marking an an 18 percent drop year over year for the first quarter. Canalys says it’s the steepest drop it’s recorded for the category, chalking some of the issues up to “a lackluster performance by Apple and the absence of ZTE.”

Apple is still the top of the heap, commanding 40 percent of the North American market with help from the sale of older discounted units. But Samsung managed to to tighten the gap on the back of a successful Galaxy S10 launch. The company grew by three percent for the year, up to 29.3 percent of the market.

LG, Lenovo and TCL rounded out the top five, with the latter two making pretty solid marketshare strides. The remainder of the market took a massive hit, however, with a 65 percent drop off in shipments. Analysts seem confident that 5G imminent arrival will help give the market a boost in coming quarters, but it’s going to be hard for manufacturers to maintain that momentum.

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Samsung’s CEO says Galaxy Fold launch news is arriving soon

Samsung has been understandably silent about the Galaxy Fold for the last couple of weeks. The company’s been reassessing issues with the foldable’s display after initially chalking problems with review units up to small sample sizes and user error. It’s tough to say how difficult and expensive a fix will be, but this surely isn’t the sort of press it was hoping for with its first to market device.

CEO DJ Koh is finally ready to talk about the Fold — or at least offer news that there will soon be news. The exec told The Korea Herald that Samsung, “has reviewed the defect caused from substances (that entered the device), and we will reach a conclusion in a couple of days (on the launch).”

What Koh appears to be referring to specifically are the gaps in the fold mechanism that allowed material to get behind the display, damaging it when pressure was applied to the touchscreen.

From the sound of things, Samsung is hoping to have an update on timing at some point this week or early next, at the latest. Koh added, “We will not be too late,” which the paper took to be a suggestion that the Fold will begin shipping earlier than expected.

Samsung no doubt is hoping to have it out sooner than later, but the Note debacle’s two recalls should serve as a reminder that these things ought not be rushed.

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Samsung spilled SmartThings app source code and secret keys

A development lab used by Samsung engineers was leaking highly sensitive source code, credentials and secret keys for several internal projects — including its SmartThings platform, a security researcher found.

The electronics giant left dozens of internal coding projects on a GitLab instance hosted on a Samsung-owned domain, Vandev Lab. The instance, used by staff to share and contribute code to various Samsung apps, services and projects, was spilling data because the projects were set to “public” and not properly protected with a password, allowing anyone to look inside at each project, access, and download the source code.

Mossab Hussein, a security researcher at Dubai-based cybersecurity firm SpiderSilk who discovered the exposed files, said one project contained credentials that allowed access to the entire AWS account that was being used, including over a hundred S3 storage buckets that contained logs and analytics data.

Many of the folders, he said, contained logs and analytics data for Samsung’s SmartThings and Bixby services, but also several employees’ exposed private GitLab tokens stored in plaintext, which allowed him to gain additional access from 42 public projects to 135 projects, including many private projects.

Samsung told him some of the files were for testing but Hussein challenged the claim, saying source code found in the GitLab repository contained the same code as the Android app, published in Google Play on April 10.

The app, which has since been updated, has more than 100 million installs to date.

“I had the private token of a user who had full access to all 135 projects on that GitLab,” he said, which could have allowed him to make code changes using a staffer’s own account.

Hussein shared several screenshots and a video of his findings for TechCrunch to examine and verify.

The exposed GitLab instance also contained private certificates for Samsung’s SmartThings’ iOS and Android apps.

Hussein also found several internal documents and slideshows among the exposed files.

“The real threat lies in the possibility of someone acquiring this level of access to the application source code, and injecting it with malicious code without the company knowing,” he said.

Through exposed private keys and tokens, Hussein documented a vast amount of access that if obtained by a malicious actor could have been “disastrous,” he said.

A screenshot of the exposed AWS credentials, allowing access to buckets with GitLab private tokens. (Image: supplied).

Hussein, a white-hat hacker and data breach discoverer, reported the findings to Samsung on April 10. In the days following, Samsung began revoking the AWS credentials but it’s not known if the remaining secret keys and certificates were revoked.

Samsung still hasn’t closed the case on Hussein’s vulnerability report, close to a month after he first disclosed the issue.

“Recently, an individual security researcher reported a vulnerability through our security rewards program regarding one of our testing platforms,” Samsung spokesperson Zach Dugan told TechCrunch when reached prior to publication. “We quickly revoked all keys and certificates for the reported testing platform and while we have yet to find evidence that any external access occurred, we are currently investigating this further.”

Hussein said Samsung took until April 30 to revoke the GitLab private keys. Samsung also declined to answer specific questions we had and provided no evidence that the Samsung-owned development environment was for testing.

Hussein is no stranger to reporting security vulnerabilities. He recently disclosed a vulnerable back-end database at Blind, an anonymous social networking site popular among Silicon Valley employees — and found a server leaking a rolling list of user passwords for scientific journal giant Elsevier.

Samsung’s data leak, he said, was his biggest find to date.

“I haven’t seen a company this big handle their infrastructure using weird practices like that,” he said.

Read more:

• Security lapse exposed a Chinese smart city surveillance system
• A leaky database of SMS text messages exposed password resets and two-factor codes
• Chipotle customers are saying their accounts have been hacked
• We found a massive spam operation — and sunk its server
• Dow Jones’ watchlist of 2.4 million high-risk individuals has leaked
• Stop saying, ‘We take your privacy and security seriously’
• Robocaller firm Stratics Networks exposed millions of call recordings
• Massive mortgage and loan data leak gets worse as original documents also exposed

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Week-in-Review: The iPhone fades and SpaceX confirms an explosion

After a dozen years of riding high, the iPhone is showing signs of weakness in a struggling smartphone market where Apple is still managing to be the biggest loser.

Here’s a snapshot of where things are…

Apple hasn’t been broadcasting its quarterly unit sales the past few quarters, so we’ll have to lean on external researchers, but even the rosiest portrayal from Canalys suggests that the Cupertino giant saw a 23% drop in year-over-year iPhone unit sales, selling 40.2 million iPhones in Q2 of this year compared to 52.2 million iPhones a year ago.

That egregious drop takes Apple to its lowest Q2 unit sales since 2013, though the company has been solidly bumping up the average selling price in a move that has largely been working, though iPhone revenue was down 15% year-over-year, as well.

It’s not Apple’s cross to bear alone; the broader smartphone market has been in decline, down 6.8% year-over-year, according to the same report. But the iPhone’s decline contributed to roughly half of the global market’s missing units while China’s smartphone triumvirate of Huawei, Oppo and Xiaomi managed to buoy the broader sector from diving even lower.

Huawei’s unit sales shot up more than 50%.

Apple wasn’t the only non-Chinese phone maker wallowing in misery. Google cited a rough market for smartphones after delivering disappointing earnings, while Samsung saw a 10% decline in unit sales this quarter, according to Canalys.

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on Twitter @lucasmtny or email
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The smartphone market has had six straight quarters of year-over-year sales declines. This was the lowest quarter of smartphone unit sales in nearly five years. Whether Apple can better perform might be a question of how they can seek to differentiate themselves in China while still managing to squeeze consistent revenues from markets where it leads.

More doom-and-gloom from my buddy Brian Heater here:

iPhone hard hit as global smartphone shipments nosedive

On to the cheerier topic of dead robots…

AMY OSBORNE/AFP/Getty Images

Trends of the week

Here are a few big news items from big companies, with green links to all the sweet, sweet added context.

• Zuckerberg tries again
  Facebook is dead as you know it, or at least that’s what CEO Mark Zuckerberg wants you to think after his audacious relaunch of the company as a lover of privacy. The company gave its Facebook app and desktop site a major face lift and spoke at length about being better. Sitting in the audience, I couldn’t help but think that Zuckerberg was spinning for extra credit with decisions that had long been made. More from my colleague Josh Constine.
• SpaceX cops to an explosion
  Elon Musk’s space company may have to push back its timeline for a manned launch after the company confirmed that its Dragon crew capsule exploded during testing. The disappointing development suggests SpaceX has some more work ahead of it before it’s ready to safely transport humans into space.
• Another dead robot
  Cozmo won’t be scooting into any new homes; the startup behind the cute little robot is dead after the dissolution of a new funding round. Anki raised a staggering $182 million over the course of its life and sold 1.5 million of the curious, little wheeled bots, but now it seems to face the same lonely death as Jibo, which similarly perished a couple of months ago.
• Palantir not so nice after all
  Peter Thiel’s Palantir has long held onto this very nefarious reputation as an evil company that’s working with government agencies and screwing over progressive ideals in the process. It wasn’t always super clear how true this was because it kind of seemed like Alex Karp and company was just scrambling to get private sector customers so it could justify its private valuation ahead of an IPO. Well, turns out the company is shitty after all.
• Headset hullabaloo
  The VR market may be dead, but don’t tell that to the companies making VR headsets. Yes, the new headsets are still all bulky and weird but they are undoubtedly better. Oculus’ introduction of the Quest (reviewed here by me) and Rift S (review from me, again) next month might just add a little life to the dead VR dreams — and if that doesn’t work, Valve has a $1,000 option it’s now hocking.

Forward-looking statement

What’s coming up next week? Well, you can expect a bunch of Microsoft news at its Build developer conference and there will also assuredly be a lot emerging from Google I/O, where I’ll be spending a couple of days next week. Here’s what we think is coming…

What to expect from Google I/O 2019

“…It’s shaping up to be a biggie, too, if this week’s Google earnings call was any indication. Sundar Pichai teased out a number of upcoming offerings from the company that we can expect to see on full display at the show…”

HVEPhoto/Getty Images

GAFA Gaffes

How did the top tech companies screw up this week? This clearly needs its own section, in order of awfulness: (This week was admittedly a little light on the gaffes, but don’t be too disappointed, that’s good!)

1. Googlers aren’t happy about workplace retaliation:
   [Google employees are staging a sit-in to protest reported retaliation]
2. Researchers studying Facebook’s ad platform aren’t getting the access they say they need:
   [Facebook accused of blocking wider efforts to study its ad platform]
3. Apple wades into anti-competitive criticism with latest app bans:
   [Apple defends its takedown of some apps monitoring screen-time]

Horacio Villalobos//Corbis/Getty Images

Extra Crunch

Our premium subscription service roars ahead. We had a fascinating piece go up this week diving into Slack’s financial filings that discovered some discrepancies in the VC funding that was reported versus what was actually raised:

The curious case of Slack’s missing $162 million

“…Given that most of the stories covering Slack derived from the company’s own announcements, you would expect that those stories and the data in the S-1 would match. In short: they do, somewhat…”

Here are some of our other top reads this week for premium subscribers — you should catch up with our full Niantic deep-dive if you haven’t already; this list is a nice primer though…

• Nine lessons on how Niantic reached a $4B valuation
• What we want to know in the We Company (We Work) S-1
• Key secrets to building extraordinary teams

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iPhone hard hit as global smartphone shipments continue nosedive

The smartphone industry is in rough shape. Sundar Pichai used the word “headwinds” to discuss the company’s difficulties moving Pixel 3 units, but Canalys’ latest report is far more blunt, describing the situation as a “freefall.”

Things are pretty ugly in the Q1 report, as smartphone shipments declined for the sixth quarter in a row. The combined global units hit 313.9 million, marking their lowest point in almost half a decade, according to the firm.

Of the big players, Apple seems to be particularly hard hit, falling 23.2% year on year. Once again, China played a big role here, but as usual, the full story is much more complex.

“This is the largest single-quarter decline in the history of the iPhone,” said analyst Ben Stanton in a release tied to the news. “Apple’s second largest market, China, again proved tough. But this was far from its only problem. Shipments fell in the US as trade-in initiatives failed to offset longer consumer refresh cycles. In markets such as Europe, Apple is increasingly using discounts to prop up demand, but this is causing additional complexity for distributors, and blurring the value proposition of these ‘premium’ devices in the eyes of consumers.”

A lot to unpack there, but what we’re looking at are some larger issues within the industry, including global economic issues and slowed upgrade cycles for users. The XS was also notably much less dramatic of an upgrade than its predecessor. Stanton did add that the iPhone, “show[ed] signs of recovery towards the back-end of the quarter,” which is promising for Q2.

It also remains to be seen what this year will hold in terms of iPhone upgrades, though most signs point to 2020 as the year the company makes the jump to 5G. Tim Cook was noncommittal on the topic during the company’s earnings call last night, instead pointing to positive numbers on the iPad side and, of course, Apple’s continued push into services.

Analysts are somewhat bullish about the potential of innovations like 5G and even foldables in shaking up the stagnant market, but big players like Apple are clearly hedging their bets, should the free-falling headwinds continue.

Huawei, meanwhile, continues to be a bright spot, with a 50.2% year over year growth and an 18.8% global market share, according to the firm. That growth could be hampered, however, by increased competition from Samsung and fellow Chinese handset companies like Xiaomi and Oppo.

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Samsung Ventures’ first investment in Southeast Asia is HR startup Swingvy

Samsung Ventures, the VC arm of the Korean electronics giant, has made its first investment in Southeast Asia after it backed HR startup Swingvy.

Singapore-based Swingy’s service provides HR services, payroll and insurance for SMEs on a freemium basis. The company announced this week that it raised $7 million that was led by the Samsung arm with participation from Aviva Ventures — from insurance firm Aviva — and Bass Investment. Existing investors Walden International and Big Basin Capital, which financed a previous $1.6 million round, also took part.

Founded in 2016, Swingvy claims to work with over 5,100 companies across Singapore, Malaysia and Taiwan. Those customers, some of which do not pay, have a cumulative user base of over 100,000 employees.

“Our target customer is SMEs not enterprise,” Jin Choeh, who is CEO and one of three Swingvy co-founders, told TechCrunch in an interview. “There are some local players, some legacy players and some startup competitors, but generally we saw that there’s no market leader for HR tech in Southeast Asia.”

The service itself covers areas such as an employee directory, processes for leave, performance management, company calendar, HR reporting, payroll and benefits. On the latter, Swingvy offers health insurance through partnerships with third-parties — Choeh said it is a licensed insurance agent. He said that new features coming soon include claims (for expenses and payments) while further down the line will be monthly insurance and corporate cards.

It is quite common for HR and other ‘base-level’ SME services to develop marketplaces that match their customers with third-party providers — we’ve seen that in Japan among very mature players, for example — but Swingvy isn’t going down that route. Choeh explained that it will consider offering its own services in areas where it believes it can give value to customers and control the quality and experience directly.

More broadly, the startup is aiming to triple its customer base to 15,000 this year thanks to this new injection of capital.

The initial focus is on hiring — Swingy plans to grow its headcount of 23 to over 60 this year — and more “aggressive” sales growth. That’ll mean bringing in a dedicated sales team, increasingly online advertising spend to reach new customers and being more visible around event marketing.

“Sales and marketing has been less than 10 percent of our spend,” said Choeh. “We’ve proved our model is quite cost efficient and we believe it is time to raise sales and marketing efforts.”

There’s no immediate plan to expand to new markets, but the Swingvy CEO said his company is eyeing potential expansions in 2020. Potential countries include Thailand, Vietnam and Japan, he said. Indonesia — Southeast Asia’s largest economy and the world’s fourth most populous country — is also under review, but Choeh said his team is aware that it is hyper-competitive while the market for paid SME products is particularly challenging.

What of the relationship with Samsung? For now, the relationship is financial rather than strategic, but Choeh admitted that there could be opportunities to work closely together in the future.

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