The Download: Slack buys HipChat and Stride

This is The Download, a weekday recap of the top technology headlines.

Slack buys HipChat, Stride from Atlassian; will pay for IP over three years; apps will shut down in February 2019

Atlassian-Slack_920

Atlassian is selling corporate chat software HipChat and Stride to Slack and taking a small stake in the startup.

Slack will pay an undisclosed amount over the next three years to acquire the apps’ assets, according to chief executives from both companies. Slack CEO Stewart Butterfield described the payment and Atlassian investment as “nominal” in financial terms.

The deal gives Slack access to more customers, most of whom pay a monthly service fee, and gives Atlassian an out for a business that failed to generate as much demand as expected. Combining the two businesses bolsters Slack as it faces steep competition from Microsoft Teams, which immediately benefits from Office’s 135 million cloud customers. 

Butterfield said that taking a competitor out is good for Slack as there are “fewer choices for people.”

The deal lets each company focus on areas where they already have strong market share – Slack in communication and Atlassian in project management software. According to Atlassian co-CEO Mike Cannon-Brookes, hundreds of thousands of groups using the company’s products like Jira and Trello have Slack accounts including Capital One and NASA’s Jet Propulsion Laboratory.

According to Atlassian, the impact of lost revenue will be largely offset by Slack’s payments over the next three years. 

“We’re very proud of what the team has built. But at the same time, it is a crowded space, and there’s a pragmatic option there.”

Mike Cannon Brookes, Atlassian co-CEO

Atlassian will continue to manage the chat products and customers until the cloud services are shut down in February. Customers with HipChat installed on their own servers will be able to use it for up to two years, depending on the version.

Butterfield says that the transition will be easy for interested customers, but they won’t be forced to switch. He expects that most will transition, with “single digits” being added to Slack’s market share. 

Amazon Q2: Revenues of $52.89B, Net sales of $52.8B, net income of $2.5B

Amazon

Amazon reported its earnings for the second quarter of 2018, posting earnings per share of $5.07 thanks to its highly profitable cloud computing business and booming sales in its ad division.

That equates to $2.5 billion in quarterly profit, Amazon’s highest ever and a 1,200 percent increase from a year ago when the company posted only $197 million in profit. This is the third consecutive quarter Amazon’s posted over $1 billion in profit, and the first time it’s broken $2 billion. The company’s ad business topped $2 billion in sales for the first time in this quarter, up 132 percent year-over-year.

Amazon brought in $52.9 billion of revenue, just shy of the expected $53.41 billion. Amazon Web Services is growing at a rapid pace, posting $6 billion in sales compared to $4.1 billion in Q2 2017. Retail sales were helped by the launch of the next-generation Fire TV edition smart TVs and the Fire TV Cube.

Internationally, the company’s net loss slimmed to $494 million, compared to $724 million from a year ago. Amazon chief financial officer Brian Olsavsky said during the earnings call that the company’s “very bullish on international investment” because of advertising and marketing. Olsavsky explained that the company would spend more upfront on expansion efforts because “we believe it’s the right thing to do.”

The company also revealed that Prime Day was its biggest sale day yet, selling over 100 million products despite the website’s issues to start the sales bonaza. Prime Day wasn’t factored in this quarter’s metrics, instead rolling over to the third quarter. Amazon also noted that the event prompted more people to sign up for Prime than any other single day in the company’s history.

Amazon’s stock opened up roughly three percent at the start of trading on Friday.

Facebook stock loses $120B in market value in a day after disappointing earnings

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Facebook’s stock fell 19 percent on Thursday after the company announced its slowest-ever user growth rate and a warning that revenue growth would deteriorate rapidly. After the earnings call, shares dropped from a record high at $217.50 to around $176 – a market cap drop of roughly $120 billion.

That’s the largest single-day stock for a company in the history of the US stock market, significantly outpacing the $91 billion lost by Intel in September 2000 during the original dot-com bust and the $77 billion lost by Microsoft during that same period.

Daily active users grew by just 22 million for Facebook in the quarter, its lowest growth rate since at least 2011. Meanwhile, Facebook chief financial officer David Wehner warned that revenue growth would “decline by high single-digit percentages” for the rest of the year. 

Google updating event search results to show time, location, ticket providers, and more; adding For You tab with personalized suggestions next week

Events_in_Search

Google has announced updates to its event search results to show time, location, ticketing providers, and other relevant event information coming next week. Users can also save and share events with others. 

To see the changes, search for “events near me” or “free concert” in the US.

The company also added the ability to buy tickets from the provider of your choice and a “For You” tab to get “personalized ideas for things to do near you.”

Canalys: Apple shipped 3.5M Watches in Q2; market share dropped to 34%

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A new smartwatch shipment report from Canalys suggests that the Apple Watch was able to maintain its global leadership position in Q2 2018. 

According to the research firm, Apple led smartwatch shipments during the quarter, jumping 30 percent year over year to 3.5 million units. However, its overall market share dropped from 43 to 34 percent as rivals like Fitbit and Garmin made comebacks in the marketplace by targeting “distinct customer segments” with new products.

Canalys said that “stellar” work by Apple’s competitors led the industry to global quarterly sales of over 10 million units, up over the last quarter but below 2017’s record holiday quarter. 

While 250,000 Apple Watches were shipped to Asia (excluding China), the firm noted that around 60 percent of those were the LTE version of the Apple Watch Series 3. This helped the cellular model become the “best-shipping smartwatch in Asia” for the quarter, according to Canalys. This was unexpected because it’s Apple’s most expensive smartwatch and the only one that requires an ongoing service charge after the initial purchase.

However, the firm warned that the threat from competitors is growing as they’re reaching economies of scale because of million-unit quarterly shipments while adding new fitness-minded features to draw potential Apple Watch customers away. It also believes that Samsung and Google will bring new entrants into the market, leaving Apple with the need to win both upgraders and new customers.

In other news…

  • New York regulators unanimously voted to rescind their 2016 approval of Charter Communications’ acquisition of Time Warner Cable, a move that could force the company out of New York.
  • Chase Pay users can now link that account with their Samsung Pay account and make use of the latter system’s Magnetic Secure Transmission technology.
  • Google Stations are expanding to Nigeria, with 200 free WiFi hotspots coming to five cities by 2020.
  • Verizon has launched Safe Wi-Fi, a mobile VPN that hides your IP address when you use public networks. The service only works for Verizon customers on iOS and Android, and will set you back $3.99 a month to cover up to 10 devices after a 30 day free trial.
  • Statements made by Discovery CEO David Zaslav at an industry event suggest that the company is considering a direct-to-consumer streaming service that would pair its 17 networks – including HGTV, TLC, and Food Network – for between $5-$8/month.
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