Source: Red Hat is buying Ansible for more than $100M

Red Hat Jared Smith Flickr

Publicly traded enterprise software company Red Hat has acquired devops software startup Ansible for more than 0 million, VentureBeat has learned.

Red Hat will announce the news as soon as tomorrow, a source familiar with the matter told VentureBeat.

Update (5:52 a.m. PST, October 16): Red Hat today formally announced the acquisition in a statement released several hours after this article was published. Red Hat did not disclose the terms of the deal but did note in the statement that “management expects GAAP operating expense to increase for fiscal 2016 by approximately million, or (.02) per share, in the third quarter and approximately million, or (.02) per share, in the fourth quarter as a result of the transaction.”

Ansible cofounder and chief executive Saïd Ziouani spent a decade at Red Hat as a vice president of sales and business development. Todd Barr, Ansible’s senior vice president of sales and marketing, is also a Red Hat veteran.

Representatives of Red Hat and Ansible did not immediately respond to requests for comment.

Red Hat, which sells distributions of Linux, among other things, has a reputation as a successful open-source company. Buying Ansible — one of four major providers of at least partly open-source devops tools — makes sense, because it can add to Red Hat’s line of offerings. Plus, Ansible already integrates with Red Hat’s OpenShift, OpenStack, and Red Hat Enterprise Linux software.

Written mostly in Python, Ansible’s open-source software has gained popularity, but the startup also offers premium Tower software and consulting services. The software allows developers to more easily set up and manage IT infrastructure for applications at scale. For instance, Ansible can speed up the rollout of OpenStack Ceph storage software across companies’ data center infrastructure, according to a recent blog post from Red Hat.

“We see in Ansible a perfect alignment with the core principles that shape Red Hat’s management, both at the product level and at the portfolio level,” Red Hat said on a frequently asked questions (FAQ) page about the acquisition. “At the product level, Ansible matches Red Hat’s desire to deliver a frictionless design and a modular architecture through open development. At the portfolio level, Ansible matches Red Hat’s desire to support a multi-tier architecture, provide multi-layer consistency, and deliver multi-vendor support.”

Ansible is younger and less popular than well-funded Puppet and Chef. Another devops contender is SaltStack.

Ansible started in 2013 and is based in Durham, North Carolina — right near Red Hat’s Raleigh headquarters.

Ansible had 50 employees and more than 500 customers, Red Hat said in the FAQ document. Customers include Atlassian, Cisco, Cloud Physics, Evernote, Hootsuite, Juniper, Twitter, and Red Hat. Ansible announced a million funding round with backing from Menlo Ventures in August 2013. Other investors include

Recent Red Hat acquisitions include eNovance, FeedHenry, and Inktank.

Red Hat fully intends to provide Ansible customers with support and service.

“With Red Hat’s long history of successfully guiding open source communities for the benefit of all members, the Ansible community can feel confident in a continuation of the vital vibrant ecosystem Ansible, Inc. has built well into the future,” Red Hat said in the FAQ document.

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Everything Microsoft announced at its Windows 10 hardware event

Windows 10

Today Microsoft made major news with the announcement of the Surface Book, the Band 2, the Surface Pro 4, the Surface Pen, the Lumia 950 and 950XL, and the Lumia 550.

Below is a list of everything Microsoft announced.

Microsoft unveils wearable holograms in HoloLens, taking applications for devkit today

Microsoft HoloLens

Microsoft kicked off its big hardware event in New York today with wearable holograms for its HoloLens gaming platform.

The on-stage demonstration showed a game player wearing a HoloLens headset with a weapon formed around his hand. He used this to do battle with some scary-looking robo-monsters.


Microsoft is taking applications for the developer kit starting today, and it will cost ,000. They expect these kits to ship the first quarter of 2016.

Microsoft unveils Surface Book: 13.5-inch laptop starting at ,499

Microsoft Surface Book

Today’s big announcement was Microsoft’s new Surface Book. It’s a little bigger than Microsoft’s tablet-laptop Surface hybrid with a slightly larger screen: 13.5 inches, with a resolution of 267 pixels per inch.

The Surface Book starts at ,499, and you can preorder it starting on October 7. The device will begin shipping on October 26.

Microsoft Surface Book

The keyboard can detach from the display and be used as a tablet, albeit a heavy one. It also features a touch-sensitive display that works with Microsoft’s new Surface Pen.

Microsoft announces the new Surface Pen stylus

Microsoft Surface pro 4 3

Seemingly in answer to Apple’s new Pencil, Microsoft has developed a new version of its stylus, the Surface Pen. The device is designed to work well with Microsoft’s new Surface Pro 4 and the productivity and creative apps that run on it.

The tip of the pen is very sensitive, allowing it to detect 1,024 levels of pressure. It has an eraser on the end. It magnetically attaches to the top of the Surface so that it can be stowed or grabbed easily.

Users can get the pen in five colors — silver, gold, red, blue, and black — and 24 different pen tips.

Microsoft unveils Surface Pro 4: Same size, bigger screen, starting at 9

Microsoft Surface pro 4 2Microsoft today unveiled the Surface Pro 4, starting at 9. The biggest highlight: The device’s bezels have been reduced to cram a slightly larger screen (12.3-inch versus 12.0-inch, 267 ppi versus 216 ppi) into a tablet that is still the same size. Like the Surface Book, the Surface Pro 4 also works with the Surface Pen.

Upgraded to the max, the Surface Pro 4 can get up to 16GB of RAM and 1TB of storage. Microsoft also offered a few comparisons: The Surface Pro 4 is 30 percent faster than the Surface Pro 3 and 50 percent faster than the MacBook Air.

Microsoft Surface Book and Surface Pro 4

We got a hands-on look at both the Surface Pro 4 and the Surface Book and found that though the devices are very similar, the Surface Book captured our attention in a way the Surface Pro did not.

Don’t get us wrong: The Surface Pro 4 has notable improvements over the Surface Pro 3, but it’s not hugely different. It’s thinner, lighter, and faster. It has a better-designed hinge, a better camera, and so on. The ports are the same. Yet none of that is what you’ll really notice from using it, unless you’re explicitly using one beside the Surface Pro 3.

Check out the full review here.

Meet Microsoft’s Windows 10 budget phone: the 9 Lumia 550

Microsoft Lumia 550

Among Microsoft’s other devices was a new budget-minded smartphone, the Lumia 550. The 9 device is set to launch this December.

Microsoft glossed over the 550 during its hardware event in New York today, focusing instead on the new 590 and 590XL flagship phones.

Microsoft unveils its next flagship smartphones, the Lumia 950 and 950XL


Meet the first smartphones designed for Windows 10 Mobile: the 5.2-inch Lumia 950 and the 5.7-inch Lumia 950XL. The Lumia 950 starts at 9 and the Lumia 950XL starts at 9. Both phones will be available in November, Microsoft said.

The new Lumia flagships aren’t terribly sexy-looking phones, and they’re not radical departures, design-wise, from earlier Lumias, but they are powerful.

The Lumia 950 runs on a Snapdragon 808 hexa-core chip running at 1.8 GHz. The 950XL has a Snapdragon 810 octa-core running at 2.0 GHz.

Both phones ship with Skype, Cortana, Microsoft Office, and Continuum. (Continuum allows the phones to wirelessly connect to mice, keyboards, and displays.)

The phones feature a large 20-megapixel camera on the back that shoots 4K video. The camera uses Zeiss optics and triple-LED flash technology. On the front of the phones is a 5-megapixel selfie camera.

The phones ship with 32GB of storage, in addition to 256GB of memory via the memory card, Microsoft said, with 3GB of RAM.

Microsoft unveils Display Dock, a Lumia accessory that turns your Windows 10 phone into a PC Microsoft-Display-Dock-Gallery-1-jpg

Microsoft also debuted the Display Dock today. This accessory extends your Windows 10 phone into a PC-like experience, though Microsoft did not share a price.

The feature that makes this possible is called Continuum. In short, if you connect an external display, mouse, and keyboard to your phone, you can use it like a basic PC.

The Display Dock features a USB Type-C connector for the phone, a DisplayPort for an external monitor, and three traditional USB ports for input devices like mice and keyboards. Windows 10 Mobile’s apps and user interface scale up to the larger display.

Microsoft unveils the Microsoft Band 2 for 9, available October 30

Microsoft Band 2

Today Microsoft unveiled its second go at a fitness wearable: the Microsoft Band 2. The smart bracelet launches October 30 and will retail for 9.

The Band 2 features a curved display and additional sensors, and is expected to be available in more countries on launch day than its predecessor. The redesigned display is now apparently more touch-sensitive, and features built-in GPS, UV monitoring, sleep tracking, and calorie tracking, as well as notifications for calls, texts, and email updates. It also now comes with a barometer.

Windows 10 is now installed on over 110 million devices

Microsoft Surface Book

Of course, what would any tech event be without the release of new company stats?

Microsoft announced Windows 10 is now installed on over 110 million devices. It took the latest and greatest operating system from Microsoft just 10 weeks to enter the 9-digit range.

Previously, Microsoft had shared that 24 hours after its July 29 launch, Windows 10 was installed on more than 14 million PCs and that four weeks after launch, Windows 10’s install base passed 75 million PCs.

How to stream Spotify to your new Chromecast

Google Chromecast 2 and Chromecast Audio

If you’ve been following the news from Google today, you probably know that you can now stream Spotify right to your Chromecast. To do this, all you need is the Spotify app and a Chromecast or Chromecast Audio device hooked up to your TV or speakers.

Although both types of devices allow streaming, there is one important difference: You’ll need to be a premium subscriber to play music through your Chromecast Audio.

Here’s how you can get Spotify to stream on your new Chromecast and Chromecast Audio:

  • Make sure that your phone, tablet, or computer is connected to the same Wi-Fi as your device
  • Within Spotify, select a track that you want to listen to
  • At the bottom of the screen, select “Devices Available”
  • Tap on the Chromecast device listed
  • Now you’re listening to the track right from your TV or speaker

Photo Sep 29, 4 58 18 PM Photo Sep 29, 4 58 24 PM

Anyone who has the Spotify app and is connected to your Wi-Fi is able to control what’s played on your television, just like when streaming to other devices, like a Sonos.

Keep in mind that only the new Chromecast devices will be able to do this; if you have one of the first-generation dongles, you’ll have to wait at least a few weeks until it receives a firmware update.

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Sony advertises Destiny: The Taken King by pushing it into your PlayStation 4 library

I don't own Destiny, but it's in my PlayStation 4 library.

Advertisements are features now.

If you own a PlayStation 4 but don’t own Destiny, you may have noticed that the sci-fi shooter popped into your library today. Of course, if you click-through to actually launch it, the PS4 will take you to the store page to buy the game for . But this is all part of a little-known option that Sony calls “featured content.” This is when Sony downloads things to your system that it thinks you will like — and maybe it’s just a coincidence that the thing it thinks you will like is a game it’s spending a ton of marketing money on.

Sony warned us that it would do this a couple of years ago.

“As the [PlayStation 4] learns your likes and dislikes, we can take [personalization] a step further,” PlayStation 4 designer Mark Cerny said at the system’s reveal event back in 2013. “You’ll discover content preloaded and ready to go on your console by your favorite creator or in your favorite genre. Our long-term vision is to reduce download times of digital titles to zero. If we know enough about you to predict the next game you’ll purchase, then that game can be loaded and ready to go before you even click the buy button.”

This sounds like a bright and shiny future — and one that I’d maybe even welcome given PlayStation Networks’ miserable download speeds. But that really doesn’t feel like what is happening here. Instead, Sony is putting a commercial for a game it has a big stake in into my game library with the hopes of pushing me over the edge and buying it.

And I checked — my PS4 did not download any Destiny content. The only thing I have is the icon for the game to take me to buy it.

Thankfully, this “featured content” is something you can turn off. Here’s how you do it:

  • Turn on PS4.
  • Go to Settings on the top menu bar.
  • Go down to System.
  • Go to Automatic Downloads.
  • Uncheck Featured content.

Here’s a video of how to do it:



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Amazon pens angry rebuttal to NY Times investigation into company’s ‘bruising’ culture (updated)

A box from is pictured on the porch of a house in Golden

Updated at 10 a.m. PST with response from New York Times executive editor Dean Baquet.

Updated at 1 p.m. PST with response from Amazon’s Jay Carney to Baquet’s response to Carney’s response to the Times’ original story.

If you thought Amazon might have moved on from the scathing story the New York Times published back in August, well, think again.

That story labeled Amazon’s workplace culture as “bruising” and contained a number of excruciating anecdotes about the company’s high-pressure atmosphere. Two months later, Jay Carney, Amazon’s senior vice president for global corporate affairs, has penned a withering reply on Medium published today that contains a number of unflattering details about former employees and accuses the Times reporters of being misleading and biased.

“What we do know is, had the reporters checked their facts, the story they published would have been a lot less sensational, a lot more balanced, and, let’s be honest, a lot more boring,” Carney wrote. “It might not have merited the front page, but it would have been closer to the truth.”

Carney starts his take-down by pointing to the anecdote involving former employee Bo Olson, who was quoted by the Times as saying: “Nearly every person I worked with, I saw cry at their desk.”

Carney reveals that Olsen possibly had his own axe to grind with Amazon:

“Here’s what the story didn’t tell you about Mr. Olson: his brief tenure at Amazon ended after an investigation revealed he had attempted to defraud vendors and conceal it by falsifying business records. When confronted with the evidence, he admitted it and resigned immediately,” Carney wrote.

Carney claims that was just one of many facts that reporters Jodi Kantor and David Streitfeld never checked with the company, despite working on it for six months. He tries to debunk several other anecdotes about former employees, while also noting that the Times‘ public editor has criticized the paper’s coverage of Amazon in the past.

Then he publishes an email from Kantor to an Amazon executive in which she insists the story will be a neutral analysis of the company’s workplace culture rather than a scathing investigation.

“We decided to participate by sharing much of what Ms. Kantor asked for, yet the article she specifically said they were not writing became the article that we all read,” Carney wrote.

After the story was published, CEO Jeff Bezos wrote a response saying the story didn’t reflect the company. But from there, Carney said the company investigated many of the anecdotes and presented additional context and information recently to the Times.

“When the story came out, we knew it misrepresented Amazon,” Carney wrote. “Once we could look into the most sensational anecdotes, we realized why. We presented the Times with our findings several weeks ago, hoping they might take action to correct the record. They haven’t, which is why we decided to write about it ourselves.”

UPDATE: The NY Times has just responded with its own point-by-point rebuttal of Carney’s rebuttal. Also posted on Medium by Baquet.

“The points in today’s posting challenge the credibility of four of the more than two dozen named current or former Amazon employees quoted in the story or cast doubt on their veracity,” Baquet wrote. “The information for the most part, though, did not contradict what the former employees said in our story; instead, you mostly asserted that there were no records of what the workers were describing.”

Baquet noted the reporters spoke to more than 100 former and current employees and that the bent of the story was based on the patterns that emerged. In terms of the four specific anecdotes, he said that Olson disputed the reasons for his departure, while the other three stood by their own characterizations of the tough review process.

Finally, perhaps throwing a bit of jab back for quoting Kantor’s email, Baquet said that Carney had said in a conversation: “I should point out that you said to me that you always assumed this was going to be a tough story, so it is hard to accept that Amazon was expecting otherwise.”

We await Round 2.

UPDATE: Guess we weren’t kidding about Round 2. Cause here it is. Carney wrote another Medium post. He says: “The bottom line is the New York Times chose not to fact-check or vet its most important on-the-record sources, despite working on the story for six months. I really don’t see a defensible explanation for that failure.”

Mr. B. Ball’s in your court.

Microsoft cuts out the microtransactions from Project Spark game-creation engine

Project Spark goes free and open.

Microsoft said tonight that it will transition Project Spark from a free-to-play microtransaction game to a “free and open creation engine.”

Starting on October 5, Project Spark will be freely available to players who want to use it to create games. That means Microsoft will automatically unlock previously paid downloadable content for new and existing Project Spark users. Microsoft will pivot from producing downloadable content (DLC) to encouraging more user-generated content and opening up the Project Spark experience.

The change is a new twist in user-generated content, and it is not unexpected given that Microsoft bought Mojang, the maker of sandbox game Minecraft, for .5 billion a year ago.

“Project Spark’s goal has always been to empower creativity. We’ve been an incubation engine for ideas from epic to artistic, and we plan to continue doing so,” said Rahul Sandil, the head of Project Spark acquisition/engagement, in a statement. “Project Spark inspires and empowers over 200,000 creators, who have shared tens of millions of custom objects, behaviors, and experiences. Every day, we see anywhere between 300 and 400 new games being uploaded on our platform. Our support of these creators and our communications with them will continue in an open, free, and collaborative environment.”

Sandil will be a speaker on a breakout session on “The Future of User-Generated Content” at our upcoming GamesBeat 2015 conference in San Francisco on October 12-13.

In light of these changes to a fully free model, all players who have purchased Project Spark digital content on or after July 28, 2015, purchased and activated retail discs on or after July 28, 2015, or have a remainder balance of purchased in-game tokens will be entitled to Microsoft Store credit equivalent to their money spent. Microsoft Store credits will be awarded to all users within 30-60 days after October 5.

Here are some other developments to come, starting October 5:

  • The maximum terrain limit in creations has been doubled
  • The maximum prop limit in creations has been increased by 500
  • 200+ new assets have been added in-game, including a dragon, goblin warlord, bog biome, and a set of new primitive building blocks
  • Each creator will now have a total of 100 Upload Slots for their creations
  • UGC ranking will be based on downloads and favorites instead of upvote/downvote ratings
  • The Project Spark Marketplace has been removed
  • The Project Spark Tour and Treasure Trove have been removed
  • Achievements have been revamped for players and creators

For more details and information on this announcement, users can join in the conversation on the Project Spark forums.

GamesBeat 2015 speaker Chris Heatherly on how Disney leverages its IP with games

Chris Heatherly, Disney's mobile-gaming boss, discusses the daily retention value of gaming.

EDIT (9:30 pm Pacific time): Modified a quote at subject’s request, added a link to recent, related news item.

Everybody knows Mickey Mouse.

Disney has leveraged this truth to create several nation-sized economies across almost every conceivable market space. The house of mouse has lent its intellectual property to games for decades, but the prominence of the games-as-service model — particularly in the mobile market — has led Disney to evaluate how best to utilize the space. Sometimes, as we found out this past Thursday, that can mean removing almost 100 mobile games off app stores. We recently spoke over the phone with Disney Mobile Games’ SVP and GM (and GamesBeat 2015 main stage speaker) Chris Heatherly about how the house that Walt built is “playing moneyball with the app store.”

How Disney views the gaming industry will be the main crux of Heatherly’s fireside chat with Facebook’s AJ Glasser at GamesBeat 2015, hosted at the San Francisco Grand Hyatt Union Square October 12 and 13, and it all comes down to retention. The primary mode of interaction audiences have expected from Disney for these past seven decades is a solitary, temporary one.

“We are a much broader-based entertainment company,” Heatherly said. “…a company primarily known for linear video content.”

What gaming represents is a venue for consistent engagement, often on a personal level. Disney has the largest arsenal of media properties on the planet, and with games, they have an ability to grant players a venue to interact with them as frequently as they want.

For Chris Heatherly and Disney, building interactive experiences out of narrative-heavy brands relies on finding story conceits.

Above: For Chris Heatherly and Disney, building interactive experiences out of narrative-heavy brands relies on finding story conceits.

Image Credit: Disney

“Games drive retention,” said Heatherly. “They drive daily engagement…increasingly people are going to want to interact with our characters.”

And daily retention is about the only gap left Disney hasn’t already covered in its entertainment network. Even if you wanted to see every single piece of media content produced in association with the house of mouse, you still have to operate on a schedule, often set by an intermediary. Watching or recording TV shows through a cable provider, or going to a theater every few months. Continuing to advance in interactive (particularly mobile) media has allowed Disney to close the attention gap, and open a direct and constant line of communication between its brands and its users. One in which they can have a more active role in how the story plays out.

Providing that service requires granting your audience a lot more agency than they get as moviegoers. Not much of a problem when letting players go on a non-canon adventure with Donald, Goofy, and a bunch of Final Fantasy characters. But how do you grant your “guests” (Heatherly and Disney’s favored word for their customers) control in a tightly-controlled continuity like Star Wars? The answer, in no uncertain terms, is story conceits.

“When we work with a partner like Kabam to make a game like Star Wars Uprising or Marvel Contest of Champions, [we spend] a lot of the time … on the story concept,” Heatherly said. “In Contest of Champions any Marvel character can fight any Marvel character, and we need to find a conceit for that. The Marvel folks dug back into their archive and used the story concept of the Collector.”

As it turns out, when you are working with the tech-savvy continuity geeks in the Marvel and Lucasfilm offices, finding a reason to get Spider-Man fighting the X-Men is not only possible, but it could lead to a spin-off comic book series. Digging up the Collector and his run as Marvel universe antagonist turned Contest of Champions mobile fighting game into a trans-media enterprise. But the challenge is still, by Heatherly’s admission, “is a very delicate process.”

Never under-estimate the value of giving kids perpetual access to products tied in with the movie Frozen. The Frozen Free Fall has seen over 100 million installs, and is just one property Disney is making interactive.

“We’re able to leverage the cultural noise and ground-swell to help drive installs really effectively for our IP,” said Heatherly.

To hear more about how Disney views the gaming industry, register (while you still can) for GamesBeat 2015, and come see Chris Heatherly’s fireside chat next week.

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Apple’s iPhone 6s Plus reportedly delayed by screen backlight production issues

iPhone 6s pink

A trusted Apple analyst, Ming-Chi Kuo of KGI Securities, stated in an investor note Monday that Apple has run into problems manufacturing part of the display for the new iPhone 6s, delaying the availability of the phone.

The delay, Kuo said, stems from manufacturing problems at Minebea, one of two suppliers that makes the iPhone 6s display’s backlight module. Minebea was not able to produce enough parts for the first wave of expected iPhone 6s Plus sales.

When the problem became apparent, Kuo said, Apple moved the majority of the manufacturing of the part to another supplier, Radiant. Radiant is more experienced, having supplied the screen backlight module for the iPad mini.

Kuo says the iPhone 6s Plus is now delayed by three to four weeks after the official September 25 launch date, adding that the delay could grow longer as production ramps up at Radiant.

Preorders for the iPhone 6s and 6s Plus started Saturday morning at 12:01 p.m. Pacific Time. Apple said Monday that, based on early results, the new phones are on track to exceed the 10 million iPhone 6 and iPhone 6 Plus units that were sold during opening weekend.

“Customer response to iPhone 6S and iPhone 6S Plus has been extremely positive and preorders this weekend were very strong around the world,” Apple spokesperson Trudy Muller said in a statement. She added that demand for the iPhone 6s Plus was “exceptionally strong.”

Piper Jaffray analyst Gene Munster believes Apple sold 12 million to 13 million phones during opening weekend preorders.

“From a high-level, the iPhone 6s cycle seems to be off to a 10-20 percent better start than the iPhone 6, but note that given China is launching for the first time in the initial launch,” Munster said in a research note Monday.

Preorders from Chinese customers probably added about 2 million sales to the opening weekend total, Munster believes.

The most recent market share data from IDC (June 2015) suggests Apple’s iPhone now holds roughly a 14 percent market share among smartphones worldwide, up from 12 percent in June 2014.

Google demos how Chromecast can power gaming on the TV with your smartphone

Chromecast will use your smartphone to bring gaming to the living room.

You don’t need a console, microconsole, or even a cord to play games on your television. You’ll only need a Chromecast.

During its Nexus event today, Google revealed that it is working with developers to stream games from your smartphone to your TV-connected Chromecast (Google also announced the Chromecast 2 and Chromecast audio today). This feature enables gamers to control apps like Angry Birds Go, a kart-racing game, with their phones while the visuals display on your television.

This is something we’ve seen before with Apple’s Airplay to Apple TV, but a Chromecast is only — and Google revealed it has sold 20 million Chromecasts worldwide. Of course, mobile gaming on a television has had many incarnations so far and none have really caught on. We’ve seen plenty of companies attempt to put Android hardware microconsoles, and that led to the disastrous Ouya and a number of other entries that almost no one remembers. But gaming on smartphones and tablets is worth billion worldwide, and Google, Apple, and the rest likely see a potential to grow that market by moving on to televisions. So expect everyone to keep trying.

With this Chromecast solution, Google isn’t just mirroring the phone display to the TV. Chromecast’s gaming capabilities enable it to smartly understand what it is the player is doing. For example, if two people want to both play multiplayer Angry Birds Go on the TV (even if one has an iPhone), the Chromecast will put up a splitscreen display. The gamers can use their phones either as a motion or touchscreen controller.

Google showed another example with the WGT Golf game. This app had the visuals of the course and golfer up on the TV and a ball-whacking control interface on the phone or tablet. This maximizes the screen real estate on both devices to give players the most control and the best view on their powerful smartphone graphics.

This feature is coming to Chromecast in several games over the next few months.

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Silicon Valley IPO market boom winding down, data shows


San Fransisco (Heather Somerville, Reuters) – Last year, many tech IPOs enjoyed soaring valuations in their Wall Street debut, raining cash on the companies and their investors and boosting concerns about another Silicon Valley bubble.

Now, the party is winding down, according to data analyzed by Reuters: Five of the 12 U.S.-based tech companies that went public this year, or 42 percent, priced their shares at a valuation below or nearly the same as their private market value, compared to 24 percent of the 29 that went public in 2014.

“People are no longer out of their minds with valuations and expectations,” said Adam Marcus, managing partner at OpenView Venture Partners in Boston.

A recent example is Pure Storage, whose IPO earlier this month gave the data storage company a .1 billion market cap that almost matched its valuation in the private market. The shift in the investing climate comes as payments company Square filed this week for its own IPO later this year, becoming one of the most prominent of the so-called “unicorns,” or private companies valued at more than billion, to try to go public.

Even when valuations increase, they are growing by a smaller amount, according to the data, which was provided by Ipreo, a market intelligence company, and Pitchbook, a venture capital, private equity and M&A data provider, and analyzed by Reuters.

Among the companies that saw their values grow in an IPO in 2014, the median increase from their value in the private market was 61 percent. Some companies saw increases of three-, four- and even five-fold. So far this year, that gain is 32 percent. The data excludes eight companies that went public in 2014 because there was insufficient information to calculate their pre-IPO valuations.

The shrinking difference affects every corner of the pre-IPO market, compelling some companies to delay or withdraw their public-offering plans, bankers and industry analysts said. And some late-stage investors – while they will still get paid – may see smaller returns than they gambled on.

Those who invested in rounds with an eye on a 30 or 40 percent return will more likely get a return similar to the S&P 500 over the past year – about 8 percent, sources said. According to interviews with bankers, venture capitalists and late-stage investors, this shift in the venture investing climate is just getting underway and likely to accelerate.

It is also an about-face from the last few years, when hot tech companies found no shortage of investors for their private financing and experienced massive valuations, and then demanded an even higher market cap in an IPO. But now the public market is less willing to play along, venture capitalists said.

To be sure, some delays in going public can be attributed to the surge in funding from late stage investors, allowing tech startups to stay private longer. As their valuations grew in the private market, a big increase in the value of their shares in an IPO became harder to achieve. A valuation drop in an IPO doesn’t necessarily dim the long-term prospects of a company.

Hortonworks’ stock is up more than 34 percent from the IPO price, for instance, after its valuation took a 40 percent cut in its public offering last year. But lower valuations in the public market raise questions about the future of the nearly 150 companies that have filed confidential IPOs, according to estimates by some investors.

There is not enough market demand, they say, to support so many deals. In a confidential IPO, reserved for companies with less than billion in revenue, companies file a draft registration with the Securities and Exchange Commission that is for non-public review.

And some “unicorn” tech companies that were expected to go public this year have put those plans off. Among them are online lending company Prosper Marketplace and data storage company Nutanix, according to sources familiar with those companies. After meeting with bankers, Prosper decided to stay private for about the next year, the sources said.

“We take the idea of going public seriously,” said CEO Aaron Vermut, “but there are other ways to achieve your goals while staying private longer.” One of Prosper’s public counterparts, online business lender OnDeck, saw its valuation fall from .3 billion during its IPO to about 4 million, according to Thomson Reuters data, likely contributing to Prosper’s decision, bankers told Reuters.

Nutanix is also in a holding pattern, bankers told Reuters, although Nutanix investor Ravi Mhatre of Lightspeed Venture Partners said it “is fully capable of being a public company and operating as a public company.” Neither company has filed publicly for an IPO.

Regardless, many companies will go public in current market conditions, as those that have raised large rounds since 2013 are under pressure to return cash to their investors and employees in the next year. Square is among those. It filed for a public offering this week, proposing to raise at 5 million.

But it, too, is expected to take a price cut. With its CEO, Jack Dorsey, now also leading Twitter, some investors expect the company’s billion valuation will be discounted to compensate for Dorsey’s half-time role.

(Editing by Stephen R. Trousdale and John Pickering)