Tidbits in the News: Vine’s Demise, T-Mobile and Sprint, Snapchat’s Momentum

With the Inter Korean Summit behind us, and Trump in the middle of a very chaotic situation concerning his legal counsel,  there’s a lot that’s bound to fly under the radar. And this week, there were some big ones.

So let’s get started.

Vine’s Demise

So here’s the story thus far — the co-founder of Vine, after selling his beloved creation to internet giant Twitter, saw what befell his company, and was thoroughly displeased. He thought that, if given a second chance, he could do it better than before, and make it work.

Thus was born V2, a spiritual successor to the beloved Vine platform, set to stand on its own this time, and fix the errs of its predecessor.

Except, the development for V2 was halted just this Friday (May 4th).

Reasons for this are numerous, including “sequilitis”, a term used to describe many things, including the difficulties of overcoming pent up hype around a sequel to something beloved like Vine, but the main drivers for this move seem to be 2 things: financial and legal.

Financial is a given. For a project like V2 to come to life, it needs cash, especially if you think about the scale the original once reached back in its heyday. The new project simply didn’t have the financial backing to make itself viable. But the legal reason is more interesting, and it plays into the financial reasons a bit as well.

Twitter, despite having closed Vine back in 2017, still own the trademarks of Vine, and the Vine logo. This logo seems to be the point of contention for Twitter, especially because the new logo for V2 looks more or less identical to the old Vine logo. Hofmann is quoted as saying, “legal fees have been overwhelming.”

Now, to be fair, these may be difficult problems to overcome, but they’re not crippling ones. Unfortunately, that’s only true if you’re truly vested in the project. This is the main issue with the project since its inception: Hofmann had other obligations. Hofmann is, according to himself, another early stage startup, and he stated his concerns for split attention with relation to V2, and his other company.

This is very noble of Hofmann, especially since public attention for V2 was like  none other. Had he focused on V2, he could have raised a lot of capital, really quickly — perhaps even a record breaking seed round. Yet, he’s already made obligations, and he seems to want to stick by them.

So, for now, it seems Vine’s fans need to wait a bit longer, still.

T-Mobile and Sprint

T-Mobile and Sprint were in the news before. They were in the news for merger talks, then, as well. So this whole story is nothing new. Except, this time, they’ve done it. They’re merging, pending regulatory approval by the US government.

So what does this mean?

Simply put, it means that there will now be 3 major cellphone carriers in the US. A bit of a longer explanation follows as such.

First, it means that the two entities have a lot more resources to address customer needs. Bandwidth is the major one here. The two companies will be able to pool their bandwidth resources together to create a more versatile network with a lot of throughput. This should, in theory, allow for faster network speeds across the board.

Except, T-Mobile operates its 3G and 3.5G networks on the HSPA standard, while Sprint uses the CDMA standard. It shouldn’t be much of a problem, especially as most devices connected today are LTE enabled devices (a network standard used by both companies). But, in a country like the US, where many areas still lack  LTE coverage, the merger of different 3G network standards is going to be  a challenge. Moreover, the logistics of swapping out devices to fit the new, unified standard, will also be a hurdle the new entity is bound to face.

Note: I am not a network engineer, nor do I have  the expertise to claim definitively anything as objective truth on this matter. I am stating, to the best of my knowledge, technological hurdles that must be overcome.

Second, it means there’s fewer choices for American consumers. T-Mobile has long been the discount option for those looking to pinch every penny. T-Mobile was, based on numerous accounts on the matter, the biggest driving force behind price drops in the US market for LTE data. Now that they’re set to disappear, it begs the question — who’ll act as the counterweight to these giants?

Third, this merger spells out a major step for Softbank’s plans for the US. Masayoshi Son, chairman of Softbank, had his eyes set on the US market ever since the company took over Sprint back in 2012. Even then, the mad had his eyes set on merging the bottom players in the US market to rival the Big 2. After all, that’s how Softbank became the juggernaut it is today. This merger means that Son is one step closer to actuating plans of an international telecommunications behemoth like none other.

There’s many benefits to be reaped, especially if this merger goes through. It gives Softbank as an enterprise more leverage in negotiations with device manufacturers for future releases. It should also become easier to generate substantial revenues from any other services it’s looking to offer in the future. But, most importantly, it offers Softbank a platform in the US to integrate its investments into.

After all, Softbank today is better known around the world as a venture capital firm, more so than a telecom giant. Moreover, a telecom infrastructure is becoming more and more a necessity for innovative ideas. Softbank is looking to become the place to seek investments from, for any and all companies around the world.

But, again, I’m no expert.

What I can say is that I do see this as a part of an overarching strategy for the firm, rather than a one off  business decision to make its Sprint unit more  profitable.

Snapchat’s Momentum

It seems Snapchat is losing its momentum. After what seemed like a great quarter to end off the year in 2017, the company is off to a rather slow start for 2018. You can check out the article for yourself, but there’s 1 particular metric I want to take note of: the company added just 1M users to its MAU base in 1Q18.

Two takeaways here. First, there’s a lot of growth to be had internationally for the platform. The platform, currently, has almost no exposure in many developing markets, including China and India, where it stands to gain quite a bit, should it choose to focus on expansion.

Only thing is, there’s already well established competition in the region, with Facebook expanding aggressively in South and South East Asian markets, and Chinese giant WeChat taking on the mantra in that market. This is an inherent risk with social media — it has no inherent value unless it reaches a critical mass of users. Snapchat, currently, has no inherent value outside the US, and Western Europe.

Second takeaway — is the North American market already plateauing for the company? 81 million users is a lot, don’t get me wrong, but that pales in comparison to Facebook’s number, which is an estimated 240M users in the US alone. Perhaps Snapchat is too specialized to target a general market. Maybe this is a sign that Snapchat’s already reaching its target demographic — expecting growth based on them may be a stretch in the future.

What can they do, then? Target younger and younger, and risk users graduating off the platform? Or keep its current user base by adapting the platform to their needs with age?

Personally, catering to a younger and younger audience is the textbook solution that’s been done by Facebook, and the like. Let’s admit it — even after the redesign, the people who will stay, will stay. Trouble is, Snapchat already underwent a redesign. It doesn’t seem to be working too well.

Now, whether that redesign was for its current user base, or for a new generation of them, I’m not too sure. Then again, I’m not on Snapchat. What I do know is this — if you eliminate the impossible, whatever is left, however improbable, must be the truth. Maybe it’s time for Snapchat to turn around, and go down the other fork in the road.


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