A step-by-step guide to agile growth experiments

growth steps


After driving growth for the world’s largest companies, building automated trading systems like SearchForce and managing over billion media spend while studying high growth companies like AirBnB, Uber and Zenefits, I’ve consolidated my experience into a single, strategic framework for building and running successful experiments for marketing.

Every organization is unique; each with different customers, markets, products, and business models. What is universal, however, is the opportunity for any business to adopt a highly scientific approach to marketing. Therefore, running lean and adopting a data-driven mindset to achieve breakthrough growth is not just a do or die for lean and mean startups — it’s for any organization that wants to build its own growth machine.

Marketing experiments involve five fundamental steps:

1. GrowthStorm

You start by brainstorming all sorts of ways to drive growth. You also generate ideas on how you can test these hypotheses. Put them in a process document called “GrowthStorm.” This will serve as a central creative repository for your growth efforts.

Download the template for experiments pipeline and growth storming here.

2. Prioritize execution

Once you have your collection of ideas, it’s time to organize them. Create a “Prioritize Execution” document that keeps tabs on past, current, and future experiments. This document should also include goals and projections for tests you’re running.

The doc provides a quick and easy way for team members to understand what tests have been run, when they were run, and their respective outcomes. Note: This document must be available at every level of the company, from the CEO on down to the implementation team. Running experiments in a silo makes it unlikely that insights will drive real action, particularly where skills across departments are required.


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3. Apply the scientific method

Each test gets its own “Method” document stating, in detail:

  • Problem: What is the test attempting to solve for
  • Hypothesis: The specific results you expect to see
  • Resource Estimation: The resources of time and energy you’ll need from your team
  • Experiment: The nitty-gritty – implementation, elements, etc.
  • Gather Data: Compiling test data once completed
  • Action Items: Taking action on findings – optimizations and future test planning

Download the template for OKR Growth goal and a sample Method document.

4. Standardize learnings and scale

Once a test has been created, run, and analyzed, capitalize on your new insights by standardizing key findings back into your product and marketing.

The idea is that as you run more tests and gain more data and insights, you then use those data and insights to run smarter tests with more informed predictions. The growth process is cyclical, so the standardization phase isn’t the end of the process. Rather, it’s an ongoing process of up-leveling by which teams are constantly gaining greater insight into their customers and markets, and translating those insights into better user experience, better products, and more effective marketing.

Download the template for sample agile meetings and monthly tracking against goals.

Remember to learn from your tests.

The last step to this process is one of coming together as a team and taking the time to discuss questions, findings, ideas, and proposed actions related to the tests you’ve performed. This is a crucial part of the process because it’s easy to get so caught up in the implementation and management of current tests that the actual results of completed tests are overlooked.

5. Ask your growth team these key questions

  1. What are we learning from the tests we’re running? (Just collecting the data isn’t enough.)

  1. How can we double down on what’s working by refining successful tests? (When something works, focus on figuring out why.)

  1. How do we implement our findings at scale? (Once you understand the why, how will you bring that learning to other areas of the business?)

  1. What are we learning about what NOT to do? Not all tests will be successful and it’s crucial to take action on failed experiments.

  1. What is the plan of action going forward? (Keep the heat on your team to maintain their testing schedule and continue to generate insights!)


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This is a process of focusing on specific tactical actions aimed at improving performance, and then stepping back for a more macro look at what’s working and what isn’t, and how to take action on key findings.

For example, from a 10,000-foot level you are learning to improve your product, UX, functionality, marketing, pricing, etc. This data will teach you how to optimize every one of your channels individually, and also which is most useful to choose from among those channels.  You can monitor competitors’ data and use that for bench marking your progress.

Then you dive back in and actually plan and run new tests, and improve on current tests. You never stop toggling between these two vantage points; constantly communicating, collaborating, learning, and improving. This is your process to achieve hockey stick Growth via Agile.

Running Growth Expirements

References: Tammy Camp @ 500 Startups & The Scientific Method: How to Design & Track Viral Growth Experiments by Brian Balfour, Hubspot.

Samir Patel is president and CEO of Growth Machines and a growth mentor at 500Startups. You can follow him on Twitter: @meetsamir.

Apple finally introduces the iPad Pro

iPadPro_Pencil_Lifestyle2-PRINT


Apple finally trotted out its “work tablet,” the 12.9-inch iPad Pro.

The device is possibly Apple’s most serious shot at the enterprise to date. Apple would love to sell thousands of tablets at a time to whole departments, rather than selling them one by one as usual.

Looking at the hardware alone, the iPad Pro looks like a larger version of the iPad Air 2.

The new device’s screen has 5.6 million pixels. Apple says the graphics quality in the iPad Pro is 360 times greater than that in the original iPad.


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“This is the most advanced display that we have ever built,” said Apple’s Phil Schiller.

The new 64 A9X chip, Apple says, is 1.8 times faster than the older A8 chip.

The iPad Pro is available in silver, gold, and space gray colors. A 32GB Wi-Fi version is 9, a 128GB Wi-Fi version is 9, while a 128GB LTE version is ,049.

The iPad Pro weighs 1.57 lbs. The device also has a 4-speaker audio system, the first time in an Apple product.

New accessories

Apple also announced a new smart keyboard accessory for the new device. It attaches to the iPad using three magnetic circles on the side of the iPad Pro for voice and data. It will sell for 9.

IMG_8686Apple also announced a new Apple Pencil stylus that can be used to write or draw on the iPad Pro. The user can press harder to increase the thickness of the mark, and softer for thinner marks. A Lightning connector on the end of the Pencil plugs directly into the iPad to charge.

The new Apple Pencil sells for .

It runs iOS 9, which offers the ability to run two apps at a time in split-screen mode — a key feature for workplace use. A Thunderbolt port provides for power and data.

An NFC chip is included, so the iPad Pro can serve as a payment terminal and accept contactless payments.

New Microsoft partnership

Microsoft took the stage here at Apple’s event to talk about how the Microsoft suite of productivity products, like Word and Excel, will work with the new iPad Pro. Microsoft’s VP of Office products Kirk Koenigsbauer demonstrated how the iPad, with the new pen, can be used to create elements such as charts and graphs in Microsoft documents.

Work with Adobe

Adobe also took the stage here to talk about how Photoshop works on the new iPad Pro. Adobe’s Eric Snowden demonstrated design functions that are optimized for the new iPad. A facial recognition function in Adobe Comp can identify and modify specific facial features, like lips, quickly. In the water-painting feature in Photoshop, the Apple Pencil can be angled against the screen to control the mixture of water and pigment in the illustration.

Docker Trusted Registry is now available on AWS

The Docker booth on the exhibition floor at VMware's 2015 VMworld conference in San Francisco on Aug. 31.


Amazon Web Services, the largest public cloud provider, announced today that the Docker Trusted Registry software — a tool for storing and managing container images that can be used to run applications — is now available in the AWS Marketplace.

Docker Trusted Registry, formerly known as Docker Hub Enterprise, is the enterprise-focused software from hot billion-dollar startup Docker that became generally available in June. Engineers and admins have been able to buy it on the Microsoft Azure Marketplace, and IBM said it would resell the software, too.

“This new offering supports the popular laptop-to-cloud workflow by giving you a central, highly accessible location to store and manage your Docker images for deployment in your chosen on-premises or cloud environment,” AWS chief evangelist Jeff Barr wrote in a blog post today. “You can create custom access control levels and use them to regulate access to the images in your registry. You can require the use of SSL certificates or LDAP entries, and you can take advantage of all of the network access controls that are part of the Virtual Private Cloud (VPC).”

Docker has popularized the deployment of applications in containers, several of which can run on a single physical server. The open-source Docker container technology has picked up adoption among developers and is thought of as a lightweight alternative to more mature virtual machine technology from VMware, Microsoft, and other companies.

AWS itself, of course, offers the EC2 Container Service for deploying containers onto the AWS public cloud to run applications. IBM and Google have similar container deployment tools, too. A trusted place for storing critical containers, not just the public Docker Hub, is the next piece to become important across clouds.

Of course, Docker also needs many platforms on which it can sell its commercial software. Docker recently brought on a new CFO, Mike Gupta, who had been the CFO at Twitter.

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Why DNA editing needs to stop

DNA editing


In April 2015, a paper by Chinese scientists about their attempts to edit the DNA of a human embryo rocked the scientific world and set off a furious debate. Leading scientists warned that altering the human germ line without studying the consequences could have horrific consequences. Geneticists with good intentions could mistakenly engineer changes in DNA that generate dangerous mutations and cause painful deaths. Scientists — and countries — with less noble intentions could again try to build a race of super humans.

Human DNA is, however, merely one of many commercial targets of ethical concern. The DNA of every single organism — every plant, every animal, every bacterium — is now fair game for genetic manipulation. We are entering an age of backyard synthetic biology that should worry everybody. And it is coming about because of CRISPRs: clustered regularly interspaced short palindromic repeats.

Discovered by scientists only a few years ago, CRISPRs are elements of an ancient system that protects bacteria and other single-celled organisms from viruses, acquiring immunity to them by incorporating genetic elements from the virus invaders. CRISPRs evolved over millions of years to trim pieces of genetic information from one genome and insert it into another. And this bacterial antiviral defence serves as an astonishingly cheap, simple, elegant way to quickly edit the DNA of any organism in the lab.


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Until recently, editing DNA required sophisticated labs, years of experience, and many thousands of dollars. The use of CRISPRs has changed all that. CRISPRs work by using an enzyme — Cas9 — that homes in on a specific location in a strand of DNA. The process then edits the DNA to either remove unwanted sequences or insert payload sequences. CRISPRs use an RNA molecule as a guide to the DNA target. To set up a CRISPR editing capability, a lab only needs to order an RNA fragment (costing about ) and purchase off-the-shelf chemicals and enzymes for or less.

Because CRISPRs are cheap and easy to use, they have both revolutionized and democratized genetic research. Hundreds, if not thousands, of labs are now experimenting with CRISPR-based editing projects. A race is on between the major research institutions to file CRISPR-technique patents. Research dollars, both public and private, are pouring into CRISPR projects. Meanwhile, a panoply of leading geneticists — including one of the developers of the CRISPR technology — has urged for a moratorium on alterations to the human germ line until the implications of messing with human DNA are further studied and safeguards have been put in place.

Changing human DNA creates, for scientists and humanity, a frightening ethical grey zone. On the one hand, for the many millions of poor souls suffering from diseases arising from genetic defects, CRISPRs and the research they fuel could mean finding a cure for their problem in their lifetimes. On the other hand, changing the human germ line is incredibly risky without much better knowledge of how our DNA actually works.

Though scientists now commonly sequence human DNA, they still struggle to understand how the different pieces of the human genome work together. For example, until recently, scientists thought that much of our genetic material was useless and served no purpose. They called it “junk” DNA. In a previous era, they might have considered editing the junk out of our genes.

Now, research is emerging that shows junk DNA plays a key role in regulating genetic expression (effectively turning various genes on and off), regulation that is fundamental to the biological processes that govern our bodies and our endocrine systems. What if a well-intentioned researcher develops a cure for one of these diseases and shares it with thousands of sufferers before realizing that the cure is far worse than the disease and that the side effects are painful — or even deadly — and easily spread from person to person?

Such a scenario could arise through good intent. But in the hands of evil biohackers, these powerful and simple tools are a cause for alarm. A smart biohacker could alter the influenza genome, for example, to make it more potent, setting off an epidemic that kills hundreds of millions of people. Though a nuclear weapon can cause tremendous long-lasting damage, the ultimate biological doomsday machine is bacteria, because they can spread so quickly and quietly.

No one is prepared for an era when editing DNA is as easy as editing a Microsoft Word document. The government does not have any regulations on editing human DNA. The ethical concerns have not been fleshed out. There is no centralized risk-management inventory, listing which labs are doing what with CRISPR. It’s all rather terrifying.

Rarely do I argue that a moratorium on technological progress is the prudent course. But the stakes in the case of CRISPRs are so high that I believe a blanket moratorium is the only course. Yes, rogue scientists may nonetheless continue working at modifications on the human germ line, which could endow them with a first-mover advantage and unfair knowledge. But such a moratorium could be as effective as the global moratorium on the cloning of humans has been: At the least, scientists such as those who engineered the human embryos in China would become international pariahs rather than being celebrated for publishing papers in prestigious publications.

Vivek Wadhwa is a fellow at Rock Center for Corporate Governance at Stanford University, director of research at Center for Entrepreneurship and Research Commercialization at Duke, and distinguished fellow at Singularity University. His past appointments include Harvard Law School, University of California Berkeley, and Emory University.

WhoKnows tells you who at your company knows most about what you’re researching online

WhoKnows-Omni-Layer


Take a moment to look around at the people you work with. Do you have a good grasp of everything they know and all the topics they’re knowledgeable about? Are you fully aware of all the connections and relationships they can leverage to help you do your job?

The likely answer is “No,” and as with everything else in the 21st Century, it turns out that there’s an app for that.

WhoKnows bills itself as the “first smart enterprise network” — a repository not just of who works for your company, but of all the topics, expertise, relationships, and interests that they possess.


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The company, which has raised .6 million to date (led by Intel Capital, PivotNorth, and Citrix), has launched Omni Layer today. What does it do? Simply put, it allows you to leverage your internal network using any website content as its source. For example, you might be browsing a LinkedIn profile. With one click, WhoKnows will tell you everyone within your company that can help you either explain a concept on that page, or connect you to that person.

I spoke with CEO Chris Macomber about WhoKnows and Omni Layer to learn more about how this new capability can help sales teams, marketers, engineers, and more with their day-to-day tasks.

WhoKnows contextually recommends the best colleague to introduce you to for any web app, CRM, or search engine, but how does the database of workers, and the knowledge they posses, become populated in the first place?

“WhoKnows uses a combination of machine learning and slick UI to help users quickly build their employee profiles,” Macomber said. “First, the user can choose which sources she’d like WhoKnows to analyze including web profiles, articles, social content, and even email activity. Anything we discover is presented to the user for review before it’s published to protect their privacy.”

But scraping historical content only gets you so far, so I was curious to know what other tricks WhoKnows has up its sleeve to understand what each person knows.

Adding expertise, interests, and knowledge to a profile

Above: Adding expertise, interests, and knowledge to a profile

“WhoKnows can continue to make additional recommendations of new expertise by analyzing the natural work being done through the browser,” Macomber said. “WhoKnows wants to help you get recognized for all the great work you’re already doing while ensuring you’re always in control of who can see what.”

And as we know from all the recent research I’ve conducted on how people react to personalization, that control over privacy is an important element. While WhoKnows is working in the background to identify your expertise and relationships, you still get to ultimately decide if that information is published internally to others.

Once WhoKnows understands the knowledge that is collectively possessed within the company, managers can use its analytics and reporting features to better understand gaps in the business, which is helpful for future recruiting. Individuals can use their own profiles to better understand themselves too, which could lead to higher quality self-assessments, and gives each employee data-backed evidence of areas they can improve or train in.

The new Omni Layer system allows the user to select any content within any website, and therefore any web-based application. Once a website, application, or on-page content is selected, a single click of the WhoKnows button launches a pop-up window that shows you who can help you internally with that topic, person, subject, or interest. I’ve seen WhoKnows and Omni Layer in person, and it works instantaneously to deliver the results.

Discovering colleagues that can help from a news article

Above: Discovering colleagues that can help you connect with, or understand the topics involved, direct from a news article

So why did Macomber create WhoKnows?

“After talking with hundreds of executives and knowledge workers, we realized that organizations still barely know who knows what and who knows who within the company,” Macomber said. “As the speed of business continues to accelerate, unlocking that tacit knowledge is becoming even more critical to compete. Looking at today’s social enterprise solutions, we realized that their fundamental flaw is that they still put too much of the burden on the employee. The employee has to manually document what they know and more importantly change how they work, which is unreasonable. That’s why we wanted to build a solution that alleviates the employee burden with machine learning and contextual user experience.”

For now, WhoKnows and its Omni Layer work within a browser. I asked if the company had plans to bring this to mobile devices, much in the way that Google on Tap and Bing’s Search App for Android work now.

“WhoKnows has focused on the Web to date, but we’ll be launching our WhoKnows mobile app in Q4 this year, which will provide even more ways to put your organization’s network at your fingertips when you need it,” Macomber said. “Google Now is providing the same level of intelligence to consumers that we want to provide to knowledge workers in enterprise.”

Of course, leveraging internal knowledge becomes useful as you include higher numbers of employees, which means that WhoKnows, for now, might be more useful to larger organizations than small businesses or startups. Macomber has plans to extend the system beyond the user’s office walls.

“What I’m really excited about is allowing our customers to expand their networks outside the company into their ecosystem,” Macomber said. “Financial services and consulting firms will project their expertise to their VIP customers to tighten their relationship. Professionals, universities, and even VCs will be able to build private expertise and referral networks for their members.”

WhoKnows’ new Omni Layer capability is available from today.

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Founders: Steer clear of this dangerous mindset

control


When I ask friends with pilot’s licenses what the hardest thing was about learning to fly, they always say, “learning how to get out of a midair stall.” The hard thing about it, they tell me, is how counterintuitive the remedy is.

The remedy is to point the nose of the plane straight down and let a stomach-churning plummet back to earth restore the plane’s flying speed, leaving just enough margin in altitude to pull out of the dive. It is both counterintuitive and counter-instinctual because the way not to fall back to earth is to start falling back to earth.

I was thinking about this the other day when I heard an entrepreneur talk about how she was resisting taking a priced round so as to avoid naming a board of directors, which could lead to her losing control of her startup.


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I do not want to argue the merits of a priced round or a board of directors in this post. Rather I want to speak to why placing an emphasis on maintaining control by the startup CEO is a costly mistake and one that often leads to the death of the startup.

There are all kinds of factors that eventually determine whether a CEO can take a startup to 0 million in revenue in five years or less. A shortlist might include:

  1. How many strong competitors the startup has, how good they are, and whether they have a head start
  2. How eager prospects are to embrace the product or service and pay the economic rent the CEO forecasted in her financing plan
  3. What government regulators will and will not allow
  4. Where the national economy is in its economic and investment cycles
  5. How hard it is to attract that rare top tier of talent that every company is chasing

Consider this partial list and note how little control the startup CEO can exert over any of these factors. Indeed, there is no CEO control lever for these kinds of issues; furthermore, even thinking in “control mode” is just as dangerous as trying to keep the nose up of a stalled plane in flight.

Rather, entrepreneurs should be focused on “influence” rather than “control.” There are two reasons why. First, “influence levers” far outnumber “control levers.” Second, influence is proactive, whereas control is defensive – defending a hill, holding a position, defending the status quo.

Control is what monopolists and well-entrenched companies exercise. It is not a winning mindset for a startup CEO. Rather, she should be charging that hill, undermining entrenched positions of competitors, and then moving onto the next battle.

And she will succeed if her plan is to influence the key constituencies she has to satisfy, placate, or neutralize. Consider a current news story as an example.

Bill de Blasio, the mayor of New York City, recently went on the attack against Uber, claiming Uber drivers were causing increased traffic congestion in the city. He advocated new and severe limits on the number of Uber drivers for the city while a commission appointed by de Blasio “studied” the problem.

deBlasio buttonUber did three things in response that put the mayor unexpectedly on the defensive. It first decided to influence New Yorkers directly, and their elected officials indirectly, by pointing out that two million of New York’s eight million residents had downloaded the Uber app. It influenced those of us who believe in equal access to transportation by pointing out that Uber services neighborhoods with people of color far better than taxicabs do in the city. And it influenced Uber users by adding a de Blasio button to its app that purported to show how much longer users would have to wait for a ride if de Blasio’s plan went into effect.

The company’s response was brilliant and almost immediately achieved its intended effect: The mayor caved amidst much criticism from friend and foe for political ineptitude.

De Blasio made a big time play for control, which stalled in a few weeks. Uber made multiple thoughtful attempts to influence, not control, voters, users, elected officials, and various interest groups. In so doing, Uber adroitly avoided a political decision that might have adversely affected its momentum. No doubt, the company is already thinking ahead to the next controversy (e.g., whether its drivers are employees or independent contractors).

And when it has to face that question, I am confident its move will be to influence as many people as possible, and not to try and control an uncontrollable situation.

Control is an illusion for startup CEOs, and a dangerous one. Influence offers a far healthier paradigm for entrepreneurs focused on changing the world. In fact, the issue of influence vs. control holds true for life in general, as Seth Godin discussed in his recent blog.

Jeff Thermond is a Venture Partner at XSeed Capital and has been involved in Information Technology and computer networking for over 30 years. Prior to XSeed, Jeff was Chief Executive Officer of Woven Systems, Chief Executive Officer of Epigram (which he sold to Broadcom for 8 million in 1999), and Vice President and General Manager at 3Com. He currently sits on the Board of Directors at Lex Machina.

 

Google demands reform for 30-year-old U.S. data privacy act

open source congress


Google and other tech industry players testified in Washington this week that the 30-year-old Electronic Communications Privacy Act (ECPA) needs and overhaul. The law, written in 1986, was meant to set warrant rules around government agencies’ access to personal data in the cloud.

Debate on the issue is taking center stage in Washington after gaining attention over the past few months, and reform legislation is now making its way through Congress.

The current ECPA allows government agencies to force Internet companies and network providers to hand over the content of email communications, without a warrant in some cases. That’s mainly because the law is too old to have explicitly laid out warrant rules for 21st century cloud technology.


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“This pre-digital era law no longer makes sense: users expect, as they should, that the documents they store online have the same Fourth Amendment protections as they do when the government wants to enter the home to seize documents stored in a desk drawer,” said Richard Salgado, Google’s director for law enforcement and information security, in a blog post.

Salgado points out that the ECPA was found to be unconstitutional by the Sixth Circuit Federal Court of Appeals in United States v. Warshak back in 2010, adding that Google requires that law enforcement have a warrant to access any data on its servers.

One of the circumstances in which law enforcement can currently exploit vagaries in the ECPA is to obtain access to data owned by a foreign citizen without a warrant. The Department of Justice, for example, can claim that right when the data is stored in the servers of an American company, regardless of data privacy rights granted the citizen by his own country’s laws.

Some believe this use of the ECPA is hurting U.S. tech companies’ trade relations with other countries. The App Association’s Morgan Reed had this to say about that claim during testimony in front of a Senate committee Wednesday:

“For American tech companies to remain global leaders, we must be clear with our trading partners that their citizens can store data in their home country with a U.S. company and retain the privacy protections provided by their sovereign government,” Reed said. Google’s Salgado also testified at the hearing Wednesday.

The App Association supports a bipartisan piece of legislation called the Law Enforcement Access to Data Stored Abroad Act (LEADS) to fix the problems in the ECPA. The legislation establishes a clear set of rules governing how law enforcement can access data stored abroad.

The White House in July endorsed a petition to have the ECPA law upgraded. At its We The People petition website, the White House yesterday endorsed a petition called “Reform ECPA: Tell the Government to Get a Warrant.”

New Google Nexus phones: Leaked images and specs now provide a complete picture

ap_resize2


Google is getting ready to unveil a couple of new Nexus phones next week, and a fuller picture of the new devices has emerged during the past few weeks via a series of leaked photographs.

Both new Nexus phones are shaped like the iPhone if looked at from the front, with the familiar horizontal grill bars at top and bottom of the display. Both phones run Google’s latest mobile operating system, Android 6.0 (Marshmallow). The OS and the phones offer NFC chips and native fingerprint readers which, among other things, will be used to authenticate users for Android Pay mobile payments.

LG 5X

Some glamor shots of one of the phones, the LG 5X, appeared today on Android Police, showing the three color versions that will be available — white, black, and ice blue. The 5X appears to have a smooth plastic back, rounded at the edges.

nexus2cee_wm_5x-2-668x500

Reports say the 5X will run on a Qualcomm Snapdragon 808 processor. It will likely have a 5.2-inch 1080p display.

Here’s another image from Android Pit.

lg_nexus_5_2015_leak_androidpit

And FindYogi dug up an early listing of the 5X on Amazon India, listing a full set of (unconfirmed) specs.

Huawei 6P

The other Nexus phone that will be announced is the 5.7-inch Huawei 6P, the larger of the two new Nexus phones. Android Police and others believe the new phone will run on a Qualcomm Snapdragon 810 SoC (system-on-a-chip), feature a USB-C port, and come in 32GB, 64GB, and 128GB versions.

Design-wise, Huawei build an odd-looking rounded bar around the camera sensor and flash on the back of the phone.

6p

We’ll have full coverage of the September 29 Google event where the new phones will be officially unveiled.

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Apple investors should cheer up; China iPhone market is just getting started

An Apple iPhone 6 is seen on display at the Apple store on 5th Avenue in the Manhattan borough of New York City


Apple’s stock is down 14 percent since July 20, the day before it announced its third quarter earnings.

The company announced very strong earnings, beating Wall Street expectations for both revenue and profits, and missing slightly on iPhone sales volume.

After the announcement, investors got moody. Apple stock fell seven percent in after-hours trading July 21. Most speculate the mood swing was caused by concerns that Apple is relying too much on the iPhone for its fiscal health, and that the main growth market for the iPhone — China — may begin to slow down.


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Making matters worse, a new research report from Canalys earlier this week said that the iPhone had indeed slipped into third place in the Chinese market, behind Huawei and market leader Xiaomi. Apple had in January taken over the top spot in China for the first time ever, but sales of the iPhone have slowed down since then.

Both Apple and rival Samsung have been working hard to establish distribution channels and storefronts in China in an effort to take business away from Huawei and Xiaomi, which are both Chinese companies.

These efforts will very likely pay off as the Chinese smartphone market matures, but it’s still way early in the game. Samsung and Apple make high-end phones. High-end phones run on high-end networks. And the high-end 4G LTE networks are just now taking root in China.

As of the end of 2014, the number of mobile Internet users in China reached 557 million (an increase of 56.72 million for the year), making it the largest smartphone market in the world, according to the China Internet Network Information Center (CNNIC).

One analyst firm (RBC) says only 12 percent of Chinese mobile users now have a 4G connection. This is a little hard to calculate, because Chinese carriers report mobile internet subscribers as “high-speed,” which can mean 3G or 4G. The CCNNIC says no more than 40 percent of Chinese mobile users have “high-speed” service. A surprising 38 percent are still on 2G networks.

The dominant carrier, China Telecom, is the only game in town for 4G service at this time. The company operates a SCDMA 3G network, which happens to be compatible with TD-LTE 4G technology, so the government granted the carrier a 4G license in late 2013.

But in June the government granted “trial” FDD-LTE licenses to China Telecom and China Unicom so that they can build and operate 4G mobile networks. The two plan on building out new 4G networks in select Chinese cities this year.

The numbers show that when faster 3G and 4G service becomes available in a given Chinese market, people adopt the service rapidly, and buy the phones that are compatible with it. China Telecom expects to add 100 million 4G mobile customers in 2015.

So Apple doesn’t have to “win China” to get the kind of continuing sales on generation after generation of iPhones that it needs to maintain the kind of growth we’ve seen over the past five quarters.

As wireless service gets faster in China, the smartphone becomes a more important screen for consuming, creating, and sharing digital content. As this happens, many Chinese consumers will decide that Apple’s iOS mobile operating system is a good tool for managing that content in an efficient and enjoyable way. And Apple’s content ecosystem may become a larger competitive factor as a source of the content.

Only time, and future quarterly reports, will tell. But the hand-wringing of Apple shareholders today will probably be but a distant, unpleasant memory by the time Apple announces its holiday quarter earnings next January.

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Microsoft Azure launches Live Encoding out of preview

Scott Guthrie, executive vice president for Microsoft's Cloud and Enterprise group, speaks at Microsoft's 2014 Build conference in San Francisco.


Microsoft today announced a few updates from its Azure public cloud’s Media Services division. Most importantly, the Live Encoding service for encoding live streaming video feeds will become generally available to customers in the next few weeks, following a preview over the past few months.

“Live Encoding allows you to send a single bitrate live feed to Azure Media Services, have it encoded into an adaptive bitrate stream and deliver it to a wide variety of clients for delivery in MPEG-DASH, Microsoft Smooth Streaming, Apple HLS, or Adobe HDS formats,” Microsoft Azure Media Services director Sudheer Sirivara wrote in a blog post.

Microsoft will also allow customers of the Media Encoder Standard service to create live archives of feeds in .MP4 format. And Azure Media Services is getting support for Google Widevine digital rights management, after Microsoft PlayReady DRM support was introduced last year. That means people with Macs and Android devices can watch content in Microsoft’s Azure Media Player, which now features playback for audio in multiple languages.

Video encoding is becoming more and more important for cloud providers as just another workload they can handle in house for customers.

Earlier this month Amazon Web Services, the largest public cloud provider, announced that it had acquired Elemental Technologies, which provides video encoding services for many media companies. AWS reportedly made the deal for half a billion dollars. That sort of deal could inspire other cloud providers to either buy remaining encoding companies or start building their own comparable services.

Of course, Microsoft also cuts prices for compute and storage to remain competitive in the cloud business.

For its encoding services, Microsoft Azure charges by the gigabyte for output. Prices are available here.

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