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Much Of Intel’s $740M Cloudera Investment Likely Went To Existing Shareholders

Originally posted on TechCrunch:

Yesterday’s blockbuster news that Intel had invested $740 million in Hadoop-focused Cloudera was a surprise. The market hadn’t expected Intel’s investment to be so large.

The deal was so large that industry watchers like TechCrunch and VC Experts ticked through Cloudera’s seventh amended and restated certificate of incorporation, and tried to square the firm’s Series F Preferred Stock with the investment size.

Things didn’t add up: Either Intel paid a much higher per-share price for Cloudera than did its recent investors like Google Ventures, or it bought from sources outside the company.

The former might be true, but the latter certainly is. Intel and Cloudera both confirmed with TechCrunch that Intel purchased shares from entities outside of Cloudera itself. This means that Intel did in fact spend $740 million to buy 18 percent of Cloudera, but that those dollars did not all go to Cloudera itself.

In fact, it…

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Apple + Xfinity, not quite Magic

Source: NCTA Comcast and Time Warner Cable (TWC) recently provided a document in its filings explaining to regulators why they should be allowed to merge. In the document, Comcast distinguishes Apple’s current Apple TV from a different set-top box still in development. Will time, technology and a two percent YOY Pay-TV subscriber growth forecast disrupt a traditional value chain forcing potential competitors to become frenemies? It is still early to speculate on the terms or potential fallout, but here are a few things to consider.

The Cable industry has been hit hard over the last few years from multiple competitors and by changing consumer values. Losing 1.8 million cable customers in ultra dense markets largely due to the tactics of Verizon Fios and AT&T u-Verses who offer multi-play bundles to 48 million homes passed. Satellite providers also have maintained its customer base many who live outside the reach of Cable and Telco networks while free local over the air digital broadcast have grown to 16+ million largely urban homes. Despite the hype around OTT cord cutting, Netflix/Amazon cord shaving and some millennial cord nevers, the primary cable MSO market concern is one of price shopping/value switching. With the common denominators being Live Linear HD Programming @ 77% followed by Original Programming @ 32%, Video On Demand @ 27 % and TV Everywhere @ 19%.

Comcast Pay TV is far ahead of most other Cable Providers with their internally developed Xfinity STB RDK and VIPER team syncing, linking, streaming TV Everywhere. Xfinity X1 provides hundreds of streaming live linear programming and On Demand options in the home with 53 channels of live TV everywhere.  X2 is an all IP platform that supports Live TV Everywhere, On-demand Video, Personal Video Recording but is currently only available on a few select college campuses.

Despite its availability in most markets, Comcast has yet to deploy their Xfinity X1 services to its potentially 33+ million cable TV masses. A full deployment will cost Comcast billions while logistically taking multiple years. The massive investment provides no market expansion with a minimal improvement in revenue retention. Xfinity X1/X2 are also not likely to vector subscriber acquisition trajectories. Any potential new revenue outside of the expected annual rate hikes are likely to come from advertising that benefit from Addressable Advertising and a Programmatic Buyers Index.

Comcast IP video delivery expertise is not what brought Apple to the Table, its the legacy Hybrid Fiber Cable network that delivers Live HD Linear TV programming past 83 Million or 64% all cable homes passed. Reach is not the only consideration, Comcast/TWC would own 33% of all Pay TV subscribers while controlling 38% of all broadband Internet homes. They also gain considerable market leverage in several key areas including transit, peering, carriage rates, retransmission fees, advertising CPM, regional sports network coverage, and wholesale pricing.

The deal would not benefit NBC/Universal in the form of content distribution revenues or ratings as they already have OTT distribution with Hulu+ and others already. Nor was it likely in Apples deal strategy as they had originally picked TWC as a potential “first” partner. What history has proven is they will not be able to negotiate with the multitudes of local, national broadcasters, regional sports networks and independents for retransmission/carriage fees. This was the death spiral for Intel’s OnCue start-up business unit that was recently sold to Verizon. Apple could negotiate a hybrid service with AT&T, Verizon, Dish or Direct but that makes little sense. They could also wait for Aereo’s supreme court case to conclude but time is not on their side nor CBS or jurisprudence.

It is unlikely the Apple deal will facilitate delivery out of Comcast MSO franchise footprint. Bandwidth economics for live digitally encoded programing delivered to living-room HD TV’s are largely dependent on network economics gained from IPTV multicasting, Switched Digital Video (SVD) multiplexing, or Digital Video Broadcasting (DVB). While its technically possible to deliver Live HD video to the living-room without IP multicasting over fixed or wireless broadband, its economically challenging when you add in carriage and retransmission fees. You can check in with Cox on the Flarewatch or Intel on its OnCue experiment if you potentially disagree.

Apple is likely targeting the 22 million broadband homes that do not pay for TV or the cord cutters and cord nevers. Initially we are unlikely to see Apple Original Content, Ad free TV or Ale-Carte channel subscriptions, the three trans-formative features Steve Jobs thought would disrupt the Pay-TV Eco-system. What we are left with is a smaller more affordable channel lineup, the Apple brand, Apple store, and some new Apple TV Apps. Leading me to believe that the new Apple Pay TV STB will simply add a Coaxial F connector to the existing Apple TV box, trick out the user interface with Siri and an improved “Apple Experience” with hopes of inking similar revenue sharing agreements with other Cable MSO providers.

If Comcast history with Verizon post its spectrumCo sale or any of its numerous Pay TV joint ventures are a future indicator, then the magical possibility for combinatorial innovation from the combined offering is one I would have to caveat with a very large and potentially looming question mark. The deal with Apple improves investor confidence and brand image indicating to financial markets that Comcast can adapt its value chain in a Pay-TV market full of digital disruption, segmented value and nonexistent home/subscriber growth for the foreseeable future. They also might eventually benefit from the Apple’s in Car development program if they can get past the term sheet. Most importantly Comcast gets a stay of execution to complete its Xfinity roll out while Apple gets to deliver a “New Product Category”.

FCC 15th Report on Video Competition
Senate Hearing on Comcast TWC Aquisition

PayTV

Marketing Trends for 2014

1. The End Of The Desktop?
2. Prime Time For Real Time
3. Filling Up On Snackable Content
4. Wearable Tech Catches On—Kind Of
5. Lighting Up The Dark Assets
6. Ad Exchanges Are Not A Clearance Rack
7. People-Based Research Makes A Comeback
8. Fighting The Man
9. More Maker Fairs And Meet-Ups
10. Crowdsourcing Everything
11. Strike Down The Banners

Marketing Resolutions for 2014

1. Produce More Video Content
2. Install Audience Management
3. Take Better Advantage Of Mobile Capabilities
4. Track Social Sentiment And Buzz
5. Get A Digital Asset Manager
6. Invest In Social Advertising
7. Stop Using So Much Excel
8. Put Your Toe Into Attribution Modeling
9. Go Guerrilla With Mobile And Local Advertising
10. Get A Personality

Thematic’s for Cambrian Innovators

Innovation

Primary user research and STEM are historically leveraged more frequently for trans-formative innovation, but market themes are usually backed by broader political, economic or social change and historically have created larger waves of disruption.

A few of my top thematic picks for Cambrian change agents who are just a click away from all those hipster codifiers and their virtual machines.

3D Printing (DNA, CRISPR Cells, Organs, Clothes, Food)
Alternative Currencies, Shadow Economies, High Frequency Traders, Microfinance
Artificial Intelligence (Predictive Algorithms, Machine Learned logic, Bio-Mimicry)
Augmented Reality (Singularity, Super Intelligence, Deep Learning)
Big Data (Actionable Analytics, Miners, Brokers, Continuous Streams, Data Journalism)
Cloud (Virtualization, Automation, Orchestration, Disintermediation)
Content Curation (Collaborative Filters, Analytically Predicted, Machine learned)
Contextual Awareness (Proximity, Dwell, Facial Recognition, Panel Indexed Behaviors)
Combinatorial Innovation (reconstruction of value chains, task brokers)
Digital Rights & Policies (PII, Privacy, Transparency, Data Life Cycle, Brokering, Collection)
Everybody Codes (scratch, code.org, udacity, eLance, oDesk)
Holocracy (the disruption of matrixed organizations)
Image Streams and Surveillance apps (Planes, Drones, Satellites, Stores, Poles, Homes, Work)
Industrial Internet (Advanced manufacturing, Frictionless supply chain)
Internet of Things (M2M, Telemetry, Connected Home, Connected Cars)
Knowledge Graph 2.0 (Mobile Context, Mobile Semantics)
Mobile Payment (POS Devices, API, Apps & Fulfillment Platforms)
Nano Everything (Tubes, Fibers, Particles, Composites, Graphene, Sapphire Crystals)
Open Everything (Open Compute, OpenStack, OpenIDEO, GIT Hub, Open Data)
Object Based Storage (software defined)
Pervasive Computing (Devices, Sensors, Robotics, Drones, Wearables)
Platform Learning (Blackboard, Prezi, Udemy, Udacity, Coursera, EdX, Lynda, Kahn Academy)
Programmable Networks (SDN, NFV, vEPC, OpenStack)
Programmatic Advertising (RTB, Mobile Context, Multichannel Attribution Models)
Quantifiable Self (mHealth and mWellness services and technologies)
Retail 2.0 (mobile click & collect, mobile beacons, interactive store displays)
Second Screen (Simultaneous, Sequential usage, Complementary data, Companion apps)
Shared, Gift, Barter Economies (homes, cars, luxury brands, services)
Smart Car (Connected, Self-Driving, Data Enabled)
Smart Home (Connected, Automated, Sensor’d and Surveilled)
Social Graph 2.0 (federated apps, social capital, trust brokers, anonymity)

Top 25 Informative Slideshares of 2013

  1. KPCB Internet Trends 2013
  2. 26 Time Management Hacks I Wish I’d Known at 20
  3. Culture Code: Creating A Lovable Company
  4. Congratulations Graduate! Eleven Reasons Why I Will Never Hire You
  5. What Would Steve Do?
  6. 16 Unique & Innovative Ways to Market your Business
  7. Trading Up The Chain: How To Make National News in 3 Easy Steps
  8. Everything Fake Click Fraud Fake Pages Botnets Ad Waste Reduction
  9. The Plateau Effect: Why People Get Stuck and How to Break Through
  10. 50 Customer Service Quotes You Need to Hang In Your Office
  11. Crap. The Content Marketing Deluge
  12. Profits before People
  13. 10 Leadership Lessons I Wish I Learned In My 20′s
  14. What’s the Future of Business by Brian Solis
  15. 10 Powerful Body Language Tips for your next Presentation
  16. 20 Jobs of the Future
  17. 7 Tips to Beautiful PowerPoint
  18. How to (not) Fail
  19. Nail the First 60 Seconds of Your Presentation
  20. 50 Powerful Statistics About Tech Mega Trends
  21. Pixar’s 22 Rules to Phenomenal Storytelling
  22. The Growth Hacker Wake Up Call
  23. The Future of Work Report 2013
  24. The Sharing Economy
  25. 99 Facts on the Future of Business