Welcome to the TechMemeRiteHome from Monday, August 28th, 2023. I'm Brian McCullodt today. Apple looks to refresh the iPad line to invigorate sales. Huge network crashes, grounding planes in the UK. Some tentative signs that the tech IPO window might be creaking open. Can I introduce you in a 100 year domain renewal and the Silicon Valley bigwigs who are investing big money to build a new Bay Area City from scratch? Here's what you missed today in the world of tech.
I don't remember how much I highlighted this in the last Apple earnings report report. But in a period where basically all of their hardware sales have been down, the real outlier for Apple was the iPad. So Mark German says that for 2024 Apple is planning the iPad pros first major upgrade since 2018 featuring a new M3 chip, an OLED screen, and a magic keyboard with a larger trackpad. Quoting German in Bloomberg.
The product was once seen as a potential successor to the Mac, but now the iPad generates the least amount of revenue among Apple's major segments. This past quarter sales slipped to the lowest level since the cusp of the pandemic in early 2020. And it's not just a revenue problem. Apple's unit shipments declined 17% in the second quarter, according to data from IDC. On its most recent earnings call, the company blamed a tough comparison with last year, when it rolled out a new iPad Air.
But there's clearly a broader problem. Like desktops and laptops, tablet sales have slumped since a pandemic fueled surge. Nearly every major manufacturer is suffering declines, including Samsung and Lenovo. There's just not much urgency among customers to buy a tablet or upgrade their perfectly functional old one. Many consumers also sought larger screen phones in recent years, making a tablet even less necessary.
The good news is Apple has its best chance in years to reinvigorate the market, an overhauled iPad Pro. The next iPad Pro models, codenamed J717, 718, 720, and J721, will shift to the next generation M3 chip. They will also be Apple's first tablets with OLED displays, the same types of screens used on the iPhone since the 10 model in 2017. They are crisper and brighter and reproduce colors more accurately. The new models will come in 11 inch and 13 inch sizes.
That's similar to the existing lineup, but the larger model is currently 12.9 inches. Something else coming with the new iPad Pro I'm told is a revamped magic keyboard. The new accessory makes the iPad Pro look even more like a laptop than the current setup and adds a larger trackpad. That addresses a complaint about the current magic keyboard which debuted in 2020. The new models will likely give iPad sales a boost, but not for some time.
They won't be part of the company's big launch event next month, when it will focus on the iPhone and Apple Watch, and probably won't debut until spring or early summer. I'm not anticipating anything other than minor updates to the company's other tablets before then. Is this interesting or just interesting? Chinese EV Giant BYD's electronics unit has struck a deal with US-based Jeb Bill to buy the key Apple suppliers manufacturing business in China for around $2.2 billion.
BYD is that electric car manufacturer in China that in some measures is bigger than Tesla or in Buffett is a long time BYD shareholder. Quoting the information. The consumer electronics unit of China's BYD has entered into a preliminary agreement to buy several Chinese factories operated by Jeb Bill, a US manufacturer that counts Apple as one of its biggest customers.
The factories to be sold have historically assembled components for Apple products ranging from aluminum housings to touch, track pad and keyboard modules according to people familiar with the matter. Jeb Bill's factory divestiture comes at a time when US companies are reducing their exposure to China given increasing trade tensions, which could potentially disrupt the flow of materials and products between the two countries.
While Apple is also trying to diversify its production beyond China, it is simultaneously turning more to Chinese companies like BYD to expand its production in places like Vietnam. BYD has long supplied components including small metal parts and batteries to Apple, but began to assemble the iPad in 2020.
The people said BYD is part of a growing trend of Chinese manufacturers moving up the supply chain from simply providing low-end components to becoming an assembler of more sophisticated modules and entire products. At the time of this writing, the UK's National Air Traffic Services is experiencing network-wide computer failures and subsequently hundreds of flights in and out of the country have been delayed. Quoting the Guardian.
Some passengers have been told they could face delays of up to 12 hours while engineers seek to tackle the fault. According to flight tracking sites, few planes have been able to take off from London Heathrow, the UK's busiest airport since 11.30am while inbound short-haul flights have been held from departure. A spokesperson for NATS, the National Airspace Controllers, said, We are currently experiencing a technical issue and have applied traffic flow restrictions to maintain safety.
Engineers are working to find and then fix the fault. We apologize for any inconvenience this may cause. A Heathrow spokesperson said, quote, as a result of National Airspace issues, there is a disruption to flights across the UK. Passengers are advised to check with their airline for the latest information. We are working closely with NATS and other airport partners to minimize the impact this has on passengers. British Airways told passengers that its flights were subject to delays.
A spokesperson added, we are working closely with NATS to understand the impact of a technical issue that is affecting UK airspace and will keep our customers up to date with the latest information. Here's at NATS, we'll be racing against the clock with an extended outage likely to spell widespread cancellations. A computer glitch at the control center in Swanwick in 2014 affected flights until the following day, despite airspace being curtailed for only about an hour.
I asked last week if armed filing to go public would be sort of a damn breaking moment and other tech companies might get brave and follow suit out the door as it were. Well, interesting initial signs insta cart has filed for a US IPO reporting 2022 revenue up 39% year over year to $2.55 billion and $428 million in that income up from a $73 million loss in 2021. The first half 2023 revenue was up 31% year over year, which all that is interesting.
They seem to have survived the COVID rubber band effect to their demand fairly well. But then again, insta cart is one of those companies that has flirted with going public for years now. They were likely to jump at any opportunity.
More interesting for our purposes at least is ecommerce marketing email and SaaS company clavio, which has filed for a US IPO and reported first half of 2023 revenue of around $321 million versus $208 million a year ago and 15.2 million in net income versus a $24.6 million net loss a year ago. If clavio is willing to take the plunge, that could suggest that companies that are slightly less ripe on the vine might be willing to come off the branch as it were, quoting CNBC.
Founded in 2012, clavio helps companies store user data and build profiles on them to send targeted marketing via email, text message and other channels. It got its start in the ecommerce industry by primarily serving online businesses, though clavio said it's seeing growing demand from companies and other verticals like restaurants, travel and events and entertainment. One of clavio's biggest backers and sources of business is Shopify.
The Canadian ecommerce giant owns roughly 11% of clavio shares and invested $100 million in the company last August. As of the end of 2022, about 77.5% of clavio's annualized recurring revenue or value of its existing paid subscriptions was derived from customers who also use Shopify, the company said. Clavio also has a partnership with Shopify where it is the recommended email solution for members of its Shopify Plus program.
It also has integrations with other popular ecommerce platforms like BigCommerce, Adobe's Magento and Salesforce Commerce Cloud. Clavio said it had more than 130,000 customers as of June 30 compared to 105,000 customers a year ago. Okay, WordPress.com has debuted a 100-year domain name registration product priced at $38,000, offering managed hosting and 24-7 customer service.
You're probably aware that domains are typically capped at around 10 years of registration in terms of the registration period. So I once registered one domain that I own until the 2030s, quoting search engine journal, who is the 100-year plan for WordPress says that the plan is designed for individuals, families and company founders who want to document their company's legacy.
The announcement explains, quote, families who wish to preserve their digital assets, the stories, photos, sounds, and videos that make up their rich family history for generations to come. Founders who want to protect and document their company's past, present, and future, individuals seeking a stable, flexible and customized online home that can adapt to whatever changes the future of technology will bring.
At this time, it feels apparent that the usage they have in mind are individuals who want to create a lasting way to communicate their stories. Matt Mullinweg, CEO of WordPress.com is quoted as saying, whether it's giving a newborn the special gift of a domain and lifetime home on the web or something you put in your will to make sure your website and story are accessible to future generations. I hope this plan gets people and other companies thinking about building for the long term.
Silly me, when I signed up for that 2030 domain thing back in the AOTS, it was mainly because I was afraid I just forget to renew it. Turns out I should have been thinking of passing the domain down to my kids, though I wasn't even married at that point. My e-commerce company is 23 years old this year, but it was all held together with tape and string. It was chaos, really. Until I ported everything over to Shopify.
Shopify is the commerce platform revolutionizing millions of businesses worldwide, whether you're a garage entrepreneur or IPO ready, Shopify is the only tool you need to start, run, and grow your business without the struggle. Shopify puts you in control of every sales channel. To whether you're selling satin sheets from Shopify's in-person, POS system or offering organic olive oil on Shopify's all-in-one e-commerce platform, you're covered. What was the real game changer for us?
We're the analytics. The ability to quantify conversions in a plug-and-play way that was so simple, we've been able to fine-tune all our sales funnels. Shopify powers 10% of all e-commerce in the US and Shopify's truly a global forest powering all birds, rothies, and Brooklyn and millions of other entrepreneurs of every size across over 170 countries, plus Shopify's award-winning help is there to support your success every step of the way. This is Possibility powered by Shopify.
Sign up for a $1 per month trial period at Shopify.com slash ride, all lower case. Go to Shopify.com slash ride to take your business to the next level today. Shopify.com slash ride. Finally, there's a certain strain in Silicon Valley thinking and philosophy that believes not just that the private sector can probably do things better than governments can, but also that Silicon Valley itself probably has the now-steaduce society better than maybe humanity has done thus far.
The New York Times had a piece up this weekend outlining a mysterious company that is spending more than $800 million to buy thousands of acres in the Bay area to, apparently, create a new city. Backers include Michael Moritz, Reed Hoffman, Mark Andreessen, and others. Quote, a company called Flannery Associates has been buying large plots of land in a largely agricultural region 60 miles northeast of San Francisco.
The company, which has little public information about its operations, has committed more than $800 million to secure thousands of acres of farmland court documents show. One parcel after another, Flannery made offers to every landowner for miles paying several times the market rate whether the land had been listed for sale or not.
Flannery is the brainchild of Jan Srammeck, 36, a former Goldman Sachs trader who has quietly courted some of the tech industry's biggest names as investors according to the pitch and people familiar with the matter. The company's ambitions expand on a 2017 pitch seen by the Times and sent by venture capitalists Mike Moritz.
Taken air at patch of brown hills cut by a two-lane highway between suburbs and rural land and converted it into a community with tens of thousands of residents, clean energy, public transportation, and dense urban life. The company's investors whose identities have not been previously reported are a who's who of Silicon Valley, according to three people who are not authorized to speak publicly about the plans.
They include the venture capitalist Michael Moritz, Reid Hoffman, the LinkedIn co-founder venture capitalist and democratic donor, Mark Andreessen and Chris Dixon investors at the Andreessen Horowitz venture capital firm Patrick and John Colison, the sibling co-founders of the payments company Stripe, Lorraine Powell Jobs founder of the Emerson Collective, and Nat Friedman and Daniel Gross entrepreneurs turned investors. Andreessen Horowitz, the venture capital firm, is also a backer.
He was unclear how much each had invested. In California, housing has long been an intractable problem as Silicon Valley's moguls have long been frustrated with the Bay Area's real estate shortage and the difficulty of building in California generally as their work forces have exploded.
Companies like Google have clashed with cities like Palo Alto and Mountain View over expanding their headquarters, while their executives have funded pro-development politicians and yes-in-my backyard activists who have pushed for looser development and zoning laws in hopes of making it easier to build faster and taller. The practical need for more space has at times morphed into lofty visions of building entire cities from scratch.
Several years ago, White Combinator, the startup incubator announced an initiative with dreams of turning empty land into a new economy and society. Years before that, Peter Teal, the PayPal co-founder and billionaire Facebook investor, invested in the Sea Stepping Institute and attempted to build a new society on Lilly Pad like structures in the Law and Tax Free Open Ocean.
But while these ideas have garnered lots of attention and curiosity, lauded in some corners for vision and derided in others for hubris, they have been little more than talk. The Flannery initiative seems different, as it began seeking property, it bought so much land so fast that it spooked locals who had no idea who the buyer was or the plans it had in mind.
The land that Flannery has been purchasing is not zoned for residential use and even in his 2017 pitch, Mr. Moritz acknowledged that rezoning could, clearly, be challenging a nod to California's notoriously difficult and litigious development process. To pull off the project, the company will almost certainly have to use the state's initiative system to get Salano County residents to vote on it.
The hope is that voters will be enticed by promises of thousands of local jobs, increased tax revenue and investments in infrastructure like parks, a performing arts center, shopping, dining, and a trade school. The financial gains could be huge, Mr. Moritz said in the 2017 pitch. He estimated the return could be many times the initial investment just from the rezoning and far more if and when they started building.
If the plan is materialized anywhere close to what is being contemplated, this should be a spectacular investment, Mr. Moritz wrote. The Bay Area is among the country's most expensive regions, even after rent and home prices fell during the pandemic. Economists and housing experts have for decades blamed a long-standing housing shortage and California's inability to build enough to meet demand.
Mr. Moritz nodded to this in the email to the investor, arguing that, quote, this effort should relieve some of the Silicon Valley pressures we all feel, rising home prices, homelessness, congestion, etc. And quote, he added that his group had secured some 1,400 acres for less than $5,000 per acre. The price per acre has since escalated and the company's most recent purchases have neared $20,000 per acre according to court documents and people familiar with the matter.
The purchases burst into public view this spring when lawyers for flanery filed a lawsuit in US district court, accusing landowners of colluding to inflate prices. The group focused on Jeppeson Prairie and Montezuma Hills, an agricultural patch of eastern Solano County between the cities of Fairfield and Rio Vista according to the lawsuit.
This area is mostly unpopulated and covered with ranches, windmills and power lines, as the offers continued and the prices escalated, landowners in Solano County started buzzing about who was buying so much land for so much money. They would come with an offer of 4 and 5 times over the market at the time. Ms. Moy said they were deals they couldn't pass up.
Flanery's offers were creating multi-millionaires across the county, but no one seemed to know what the mysterious company intended to do with land that now amounted to a large chunk of the entire county. Hello today from Northern Michigan, as I said, where I forgot that if you're here even two weeks into July, it's already starting to get cold again. Hies for this week will be in the low 60s, which is bad for me because I forgot to pack a jacket or even long sleeve shirts.
All I've got is one pair of slacks. I had to go to my hair last night just to get a sweatshirt. This happens to me all the time. It was so hot in Brooklyn I couldn't imagine it being cool anywhere else. Same thing happens in reverse when we go down the floor to for Christmas. Oh well, there is an indoor pool here so it's not a total loss though. The beach is definitely out. Talk to you tomorrow.