Rebecca Day

Privacy concerns are slowing smart speaker uptake, even as global headphone sales benefited from lockdowns and remote working, Futuresource reported Friday: Primary speaker concerns are how data is used and worries of “being listened to” by tech companies. Desire for high quality audio filtered through to streaming, said analyst Alexandre Jornod. More than 40% of service users say they want better audio quality; more than half are willing to pay up to $3 more monthly. Jornod cited Amazon HD as a catalyst. The rise in podcast consumption doesn’t appear to be cannibalizing music listening, said Jornod, as 80% of podcast listeners say they consume the same or more music due to listening to podcasts. Meanwhile, Q2 headphone sales are recovering. “Although March and April were hit hard, many brands came back fighting, with product promotions and multiple offers,” said analyst Adriana Blanco. Headphone unit sales were down 8% in Q2, but dollar sales rose on strength of true wireless models, which accounted for 40% of headphones shipped. Apple’s AirPods led the charge.

Security vulnerabilities abound in five models of video doorbells tested, reported Consumer Reports Thursday: Eufy, GoControl, LaView and Netvue devices had susceptibilities that could expose user data, email addresses and passwords, it said. Eufy told the organization it released an app update to fix the problems on its T8200. CR said GoControl didn't respond to its request for a fix on the GC-DBC-1, and parent Nortek didn’t respond to our questions Friday. CR said LaView disagreed with the severity of issues found with the LaView One Halo LV-PDB1630-U. LaView didn’t respond to our questions. Netvue described the issues as “low-risk hidden dangers," saying it will try to provide a better user experience. It encouraged owners to use the latest version of the mobile app. Tests showed most video doorbells lack two-factor authentication. The only video doorbell brands offering two-factor authentication are Arlo, August, Google Nest, Ring and SimpliSafe, CR said. Blue by ADT told the group its doorbell will get the feature by year-end. CR said many manufacturers fail to minimize the amount of data they collect and don’t offer consumers an easy way to request a copy of their data or to delete it.

COVID-19 is a “significant headwind” at ON Semiconductor, which reported a 10% revenue drop in Q2 to $1.2 billion, said Chief Financial Officer Bernard Gutmann in the quarterly statement Monday. ON had “moderate improvement in business conditions” on a pickup in global macroeconomic activity, Gutmann said. The company is having “strong momentum” in its power, analog and sensor products. Networking and wireless accounted for $255 million, 21% of Q2 revenue, up 3% on strength in 5G, but Q3 volume will be down due to “delayed launches of certain platforms and geopolitical issues related to a specific customer,” said CEO Keith Jackson on a call. Responding to a question on whether the semiconductor company is concerned about risks that the U.S. will expand targets in China beyond Huawei, Jackson said, “We are very concerned about some of the increasing tensions on global trade.” Much of global trade is “essential for technology and the growth of semiconductors,” he said, “so clearly, would not like to see further there.” The consumer end-market contributed $126 million in the quarter, 10% of revenue, dropping 22%, due to consumer tech market weakness. The company forecasts Q3 revenue of $1.2 billion-$1.3 billion compared with $1.38 billion in Q3 2019. The stock closed 5.2% higher at $21.92.

Lockdowns helped Roku add 3.2 million incremental active accounts, a record for a non-holiday quarter, said Chief Financial Officer Steve Louden on a Wednesday evening call (see materials here under Q2). The company ended Q2 up 41% year on year in active accounts, at 43 million, fueled by shelter-at-home mandates. Revenue jumped 42% to $356 million, reflecting growth in platform and player segments. Player sales rose 28%, while average selling price decreased “only 2% ... given less promotional activity due to strong demand” and some inventory constraints, said Louden. The stock closed 6.9% lower Thursday at $153.87. The outlook for that industry remains “highly uncertain” for this year and it will be “well into 2021 before TV ad investment recovers to pre-pandemic levels,” said CEO Anthony Wood. The ad streaming market is in “very early days,” said Wood, envisioning that “all television is going to stream. Streaming hours per active account peaked in early Q2 and “has since moderated, but remains above pre-COVID levels,” said Louden. Responding to a question on HBO Max and Peacock, which launched over the past few months outside the Roku platform, Wood said, “We're not always first when it comes to adding new services to our platform because it's important to us that we establish a win-win-win relationship.” The company wants to “add all the content that we can.” Roku’s economic model with content distribution partners and advertisers “is what funds our business” and allows the company to sell low-cost players." MoffettNathanson tempered its view in a Thursday investor note, saying “looming competition from Android and TV OEMs,” and lack of key performance data makes it difficult to extrapolate COVID-19 lockdown gains into the future. The slowdown in ad impression growth in Q2 to 50% from nearly doubling in Q1 “is a bit worrying” given linear ad market trends, said Michael Nathanson. Ad-based VOD “appears a bit weaker than anticipated” given the rise in active accounts, he said. Though Roku appears well-positioned for the trend, the analyst said “it remains unclear if they will get a cut of Mulan purchases on Disney+ or share the economics of similar transactions on other major [Subscription] VOD platforms” (see 2008050037).

Wireless charging company Energous had another product delay, said CEO Steve Rizzone on an investor call Wednesday. The company “months ago” previewed the NewSound Primo W hearing aid, which was expected to be in the market now, but factory shutdowns and supply chain issues delayed production. Energous expects to have chip procurements from NewSound by year-end, said Rizzone. The company is looking to its recently announced WattUp PowerHub developer kit to create new revenue opportunities. Q2 revenue was $114,375 vs $47,500 in the year-ago quarter. Energous received $9.2 million in the quarter through a stock offering, it said. The company is now targeting military applications.

Sonos, whose exclusion from the List 4A tariffs was granted in March (see 2005110034), is diversifying its supply chain into Malaysia even amid COVID-19 delays, said Chief Financial Officer Brittany Bagley on a quarterly call Wednesday. The company planned to have “significant” U.S.-bound production from Malaysia ramped up by Dec. 31. Due to pandemic-related government restrictions on manufacturing in Malaysia, reaching scale will take until mid-2021, Bagley said. “Essentially all” Sonos products subject to 7.5% tariffs fall under the exemption, which was retroactive to Sept. 1, but expires Aug. 31. Sonos began the process of seeking refunds. Revenue fell 4% in fiscal Q3 ended June 27 to $249.3 million. Gains were offset by higher freight costs to increase inventory levels and fill back orders to meet “higher-than-expected” demand. Most of Sonos’ physical retail partners were closed for in-store sales during much of Q3, said the shareholder letter. The majority have reopened but with capacity and other restrictions. It’s confident it can continue to scale its direct-to-consumer channel, up 299% in the quarter, “over time.” On the transition to the S2 operating system, which left many legacy product owners angry, CEO Patrick Spence said there's “no churn" and “millions” of homes have converted. The wireless multiroom audio company, which last week settled with Lenbrook over a patent infringement lawsuit (see 2007300059), remains confident about its patent fight with Google at the International Trade Commission, said Chief Legal Officer Eddie Lazarus. There are “quite a few companies” in the multiroom audio space that Sonos believes are infringing its patents, “and we're in touch with many of them.” The stock closed 18.3% lower Thursday at $14.29.

5G and foldable will be “major pillars” of Samsung Mobile’s future, said Global Executive Vice President Federico Casalegno, in the company’s first virtual Galaxy Unpacked product event Wednesday. The scripted event had components of a live Unpacked event. A live audience -- which gathered last year at Barclays Center in Brooklyn -- was replaced by an artificial intelligence creation: a curved video wall of some 200 Samsung community members, presented in Hollywood Squares-style, tuning in from their home bases. A “completely re-engineered” hinge provides more durability in the next Samsung foldable phone “to improve resilience so you can use it with greater confidence,” said Victor Delgado, who works on global mobile B2B-strategic alliances. Samsung’s first foray into foldable designs last year was spoiled by a delay when a faulty hinge design in review units damage the phone. The new hinge has a firmer “snap” and can stay open at multiple angles due to friction created by two ridge-shaped pieces that slide up and down in a cam mechanism, said the company. Samsung doubled cam and elastic components to more than 60. A “sweeper” mechanism with bristles is located under the hinge to keep away debris, it said. The new 6.7-inch Galaxy Note 20 ($999) and 6.9-inch Note20 Ultra ($1,299) are the first Galaxy devices with Ultra Wide Band technology. Samsung is working with carmakers on future technology that will allow UWB-equipped devices to function as a digital key. The company expanded its relationship with Microsoft, allowing users to access mobile apps from a Windows PC.

Google’s $450 million investment in ADT, announced Monday, helps stave off competition from cable, telco and other tech interests, Parks Associates Brad Russell emailed us Tuesday. Google is looking to leverage the channel strength -- sales, installers, support and add-on services -- “to strengthen its long term aspiration to sit center stage for comprehensive smart home services,” said the analyst. “The future of value creation in the home security market will be driven by technological improvements that reduce false alerts, learn the habits of the home, provide predictive recommendations, and take preemptive actions on behalf of the household,” said Russell. Such high-level software development has traditionally been provided by interactive platforms including Alarm.com and Resideo, he said. Now, ADT will be better able to face Vivint and Comcast Xfinity that have artificial intelligence development efforts, Russell said. Last year, about 32% of U.S. broadband households owned a working security system, up 5 points from 2018, said Parks.

Dolby fiscal Q3 revenue fell 18% from the 2019 quarter and 30% sequentially, with TVs, PCs and mobile products outperforming set-top boxes, said Chief Financial Officer Lewis Chew on a Monday call. The quarter ended June 26. Lower unit shipments, products and services sales and Dolby Cinema revenue were due to COVID-19, he said. Theaters are reopening more slowly than Dolby expected. Revenue guidance for Q4 is $225 million-$255 million compared with $299 million in Q4 last year. Most of the potential decline can be blamed on the “economic ripple effect of the pandemic,” plus lower royalty recoveries, Chew said. CEO Kevin Yeaman said there’s “still a lot of uncertainty,” and “in addition to lower consumer spending, the pandemic has resulted in some shifts in the timing of new customer wins and revenues.” Licensees remain “deeply engaged” with adding Dolby Vision and Dolby Atmos functionality, Yeaman said. Dolby Vision was installed on about 10% of 4K TV shipments in fiscal 2019, he said. The company expects to “materially increase that adoption rate” for fiscal 2020 “with a significant growth opportunity still ahead,” he said. Yeaman sees Dolby adoption accelerating on PCs and mobile devices and on gaming and music content. Colliers' Steven Frankel said Dolby has “navigated through the worst of the supply chain interruptions.” The analyst sees the potential for Dolby.IO, the company's developer platform effort, to move technologies from devices to applications, he wrote investors Tuesday.

Worldwide smartphone shipments plunged 16% year over year in Q2 to 278.4 million, said IDC Thursday. The “huge” decline was due to a “massive reduction” in consumer spending due to the COVID-19-led global economic crisis, store closures and rising unemployment, said research director Nabila Popal. Phones also competed with other technologies consumers needed during lockdown periods, including PCs, monitors and tablets, she said. With the U.S. down 12.6%, China “fared slightly better” with a 10.3% drop, which “arguably shows some early signs of market recovery,” said analyst Ryan Reith. OEMs are moving more aggressively with 5G portfolios, but consumer demand for 5G is still low, he said.