Rise And Fall Of America's Favorite Tech Gadgets
Unknown: what the world wants from you as a business staying true to your customers really important as you grow, it wasn't a pro customer move. It was a way for them to make more money. They are well on their way to profitability, which I think is surprising a ton of people, people think of glass as a single material. And
that's not a very good way to think about it. It was about time that these robots that we have been promised became a reality. Dain Evans: It was in 2016 that Apple announced it would be ditching the headphone jack, it really comes down to one word, courage. And for the smartphone industry, it was the shot heard round the world. Unknown: There are several reasons why Apple removed the headphone jack from the iPhone seven. And surprisingly, courage is not one of
them. Dain Evans: Samsung also just removed the decades old technology from its phones, even though it took every opportunity to ridicule Apple for the headphone jacks removal in the past John Noel's that comes with an audio jack. I'm just saying. With the launch of the Galaxy Note 10 in August of 2019, Samsung ditched the jak two Unknown: Samsung was definitely one of those companies that criticized the rest of the industry for not having headphone jacks, and conveniently forgot to mention that they got rid of it in their newest note 10. Dain Evans: The headphone jack has been around for more than 100 years. So why are companies
increasingly removing them from our phones, Unknown: it wasn't a pro customer move. It was it was a way for them to make more money. Dain Evans: Let's start with a brief history of the components needed to make mobile music what it is today, starting with the beloved audio jack, the grandparent to the standard 3.5 millimeter jack. The quarter inch jack was used all the way
back in the late 1800s. By switchboard operators. The larger Jack continued its reign until the 1970s when Sony released the Walkman the first widely available mobile music device. The Walkman was also the first successful commercial example of the same 3.5 millimeter jack we use today. An obvious
next step was the rise of the mp3 and the mp3 player popularized by Apple's iPod. It was 2001 when Steve Jobs took the stage to announce the iPod this amazing little device holds 1000 songs because right in my pocket, the Siemens s l 45, was released in 2001 and was the first phone that was also a mobile music device. And that set off a trend in the mobile world. Music was now a must. But the SL 45 was not the first phone with the headphone jack, Unknown: my first phone was a Nokia 3310 And that had a headphone jack. Back then there wasn't really any wireless communication standard that was acceptable enough to do good headset phone calls. So it was kind of born out of a
necessity to deliver high quality, you know, headset calls. Dain Evans: By the mid 2000s. There were many phones that could also play music, but we're still limited by storage and battery life. Bluetooth grew in popularity around the same time. And that spelled the beginning of the end for the headphone jack. Now that wireless listening was possible. While wired headphones
may seem antiquated, most audio files prefer the sound quality from this analog port. Unknown: The reason why you want to go wired over wireless is that compression that you get over Bluetooth. All the Bluetooth standards for the most part have some kind of compression, which then affects the actual quality of the audio. But that Dain Evans: wire can be really frustrating, especially when you're working out or need mobility. Most of Unknown: the time when I use headphones, I'm at the gym and I have wireless headphones. I
mean it's not that important to me. But the few times that I do need wired headphones like when I'm traveling or something like that it is super inconvenient not to have a headphone jack. Dain Evans: And while Bluetooth technology has come a long way it still has its pitfalls Bluetooth sucks Unknown: right now. But the the optimist in me hopes that removing the headphone jack will act as a springboard for companies to work harder at integrating Bluetooth and wireless audio technology. Most cars have Bluetooth audio, but a lot of people like only cars within like the last five years cars before that just have the export that you've plugged into, you know. Dain Evans: So why did Apple decide to remove the jack from the iPhone seven Unknown: maintaining an ancient single purpose analog big connector doesn't make sense because that space is at a premium.
It's the mental shift that you know flagships has had for the last like couple years. It's like it's not a flagship unless the headphone jack is gone. And that's kind of, you know, apples fault. Premium bones are now associated with no headphone jacks. Dain Evans: See, there's not a whole lot of space inside of a smartphone tech companies have crammed more and more into that incredibly limited space. And when something becomes
antiquated, it's got to go, making the phones thinner and allowing for other components. Unknown: The thickest part of the phone is that headphone jack, I think it was a decision of, okay, we have to use a space for other components. Because we've used so much of the phones, overall size at screen, that we just don't have room for other components and other places, we have to get rid of the headphone jack, Dain Evans: the removal of the headphone jack also helped the iPhone seven receive its IP 67 water resistant rating. So there were some good
reasons behind its removal. Unknown: As much as I do appreciate being able to plug in a pair of headphones and just have them work out of the box. I also appreciate engineering in the technological space.
Most companies have been moving away from the headphone jack, partially because a lot of the wireless capabilities of earbuds today have gotten much better. The quality is not perfect yet. There's still lots of room for improvement. But I think for most people, it's pretty good. And it satisfies their needs.
Dain Evans: But some folks don't agree that the headphone jack had to go at all, Unknown: when you're designing the circuit boards and stuff like that you can make as much room as you want. I mean, I've taken apart phones that have like projectors inside of them. And so there's room for a projector if there's room for an s 10. You know, there's room for
headphone jack, you could look at any tear down that doesn't have a headphone jack and say, Oh yeah, there's no way that there could be room in there. But then you look at it tear down other phone with a headphone jack. And it's there. Dain Evans: This choice to leave off the audio jack came simultaneously with the announcement of Apple's $159 air pods, which called into question Apple's real motives behind the exclusion.
Unknown: Personally, I do think that it was monetarily motivated, at least in some way. It wasn't a coincidence that they released the air pods the same time they took away the headphone jack, it was something that wasn't making the money so they got rid of it. So people would buy the air pods, Dain Evans: not to mention the fact that the lightning port is a proprietary connector, meaning companies have to pay Apple just to make a compatible device.
Unknown: Apple charges a fee to license their lightning port, they can get more money if you have to make a lightning accessory, whereas the 3.5 millimeter jack just anybody can make I see you're gonna be people scrambling to license and if they can't afford that Apple license. Essentially, there's going to be headsets that work well with iPhones, and there's going to be headsets that don't work well. Dain Evans: And when Apple kills something, it usually creates a domino effect in the tech world. Unknown: They remove the floppy drive, they removed the CD ROM drive from their Macs. And people went crazy, right but people kept buying the devices and their competitors quite frankly, follow their direction only two or three years later.
Dain Evans: So slowly other larger companies started to follow suit. But Samsung kept its grip on the audio jack, Unknown: whether you're listening to the Eskimos, amazing new speakers, or on your own pair of headphones, by simply connecting them to the convenient headphone socket at the bottom of the device. Can I still use these headphones with the 10? Yeah, but you'll need an adapter or as most people like to call it a dongle Dain Evans: away. But with its most recent phone release, Samsung finally left out the headphone jack without mentioning anything during the keynote about why it left it out and even took down some content that challenged Apple's decision. If
Unknown: you are going to take such a solid stance against Apple for not putting a headphone jack in the phone, at least own up to it. I feel like in the moment, you know, there could have been a story where this is the best most compact device you can make. There's some compromises. If you don't like it, we have a bigger version for you. If you don't like either, you can still get an asset tag. But the fact that they didn't even address it was a little bit. Not great.
Dain Evans: Samsung did tell CNBC it removed the headphone jack to make more room for its powerful battery. There are still some brands like LG that find the space for a headphone jack, whether it be for its audio file customers, or its customers who don't want to or can't afford the switch Unknown: in you know other markets, like China and India, that headphone jack and actually micro usb are still important because people can't get rid of their old chargers or can't afford them. Dain Evans: Luckily for those who want to keep their headphones. Many of the big phone makers are coming out with lower cost models of their flagship phones, like the Google three A and three eight Excel, which include a headphone jack, Unknown: there's still a considerable amount of people that want the headphone jack because they can't afford, you know, wireless earbuds that are good. There are so many awesome phones at the $500 level that still have the headphone jack, because people who are buying cheaper phones probably don't have an extra, you know, 100 200 bucks to throw down on some wireless headphones. But those $500 phones are they do 95% Of what $1,000 phone does.
Dain Evans: Like it or not, it looks like the headphone jack is gone for good when it comes to the top end flagship phones, Unknown: I think they are going for the pointless phone and they won't stop until they get Dain Evans: there. In fact, some speculate we might not even get buttons in a few years. Unknown: There's no fingerprint sensor, no buttons, and you know charges wirelessly. So it might even be you know, no more USB Dain Evans: port. So Unknown: what can you do, you can go spend $1,000 Every year if you really want to, but you're not getting a return on that $1,000 a $500 phone is more than enough for the average person. And
whether it has a headphone jack or not. I would just say you know, use your phone as long as possible because there's no reason to upgrade, which is from a tech reviewer who makes a living cell phone no matter what you look at a Motorola you get a bigger, brighter climate PV picture automatically. Honestly, it seems like Motorola Mobility should have died long ago, but it's still here.
Dain Evans: Motorola is the company responsible for the first transmission from the moon. The name is now synonymous with communication and especially phones wowing business people in the 80s with mobile communication and defining the high social status of razor owners in the 2000s. Unknown: One of the assets that Motorola has is this tremendous brand. Dain Evans: Nowadays, Motorola is actually two companies, Motorola Solutions and Motorola Mobility solutions. The company that produces first responder radios and 911 Dispatch software has been flourishing recently, mobility the company in charge of mobile phones and other consumer based products has been struggling. Unknown: They are well on their way to profitability, which I think is surprising a ton of people.
Dain Evans: The iPhone dominated much of the smartphone competition when it gained a significant market share in the late 2000s. And not even a merger with Google could bring Motorola back to its former glory. Unknown: Once the iPhone was launched. It was the beginning of the end for Motorola as we knew it as a consumer brand in the United States.
Dain Evans: But Motorola Mobility recently made a strong impression on the tech world with the resurrection of its razor series in the form of a folding smartphone. Unknown: I think the new razor is exactly what the company needs its future forward. It's using some very exotic technologies, the razor product is is going to be good for them. Because you can tell already from the amount of headlines it's got before it's even shipping. And even though it's only going to ship in relatively small numbers at a very premium price. It does at least reawaken the brand. Dain Evans: The phone did what numerous previous smartphone models couldn't do for the company. It pulled it out of obscurity.
Unknown: When you think about smartphones in the United States usually think about Apple, Samsung LG Google Pixel, we don't really think about Motorola Mobility. The new Dain Evans: razor could put Motorola Mobility back on top, but it has a long way to go given the fall it took during the smartphone wars. Motorola was founded in 1928. Unknown: Amy had my best Amy on a Motorola. In the Dain Evans: beginning, the company's focus was radio systems for governments and businesses and home radios and TVs for consumers. In fact, the first words from the moon
were transmitted from Motorola equipment. Unknown: At one small step for man on a Motorola as an anchor company in Chicago, you know, loads the heritage, the car radios, the first radio on the moon. You know, there's so many milestones that they've gone through.
If you look at a lot of the military communications that happened in World War Two, and even in Vietnam and Korea, that was all backed by Motorola. Dain Evans: A crowning achievement for the company was the first cellular phone call in 1973. Unknown: I mean, they all want it the founders of the industry. Ultimately they're up there. With those big Titans.
Dain Evans: Motorola employee Martin Cooper is credited with inventing the cell phone, the company went on to produce the first commercially available cell phone, the DynaTAC Unknown: to this day, we still call it the Zack Morris phone, and you can use your cellular phone to order me a pizza. This really bulky handset costs around $4,000, which would be about $10,000 in today's money, and it only had about 30 minutes of battery life or 10 hours of standby so didn't last the whole day. Dain Evans: Motorola kept churning out the hits encouraging people like Ben woods to keep a collection. I don't Unknown: know whether it works my wife so but she's a bit dismayed about the fact that the garage is absolutely rammed with cell phones.
But hey, Dain Evans: by 2004 phones got smaller, more people started buying them. And Motorola was at the top of the mobile phone game second only to Nokia. Unknown: So before the iPhone, there was another phone that everybody had and that was the Motorola Razor V three came out in 2004. And it was a huge success for Motorola. They sold 130 million
units. My favorite phone was the razor and the 2005 era. And what I loved about it is it was so small, and when you opened it up, you flipped it open everybody was looked at it like oh my gosh, I can't believe that. Dain Evans: The Razor quickly became a social status symbol and pushed Motorola to the first place phone seller in North America.
Unknown: Yeah, they changed the game really. They took mobile phones from being functional to fashionable. Dain Evans: But with the coming of the smartphone era, Motorola started losing its grip, mostly because of Apple's iPhone. Unknown: Nobody ever thought Apple was going to come on and steal any of their market share will really make a dent at all. But then in 2007, Apple launched the iPhone, and it was a surprise hit Dain Evans: Motorola's delayed response to the smartphone boom crippled its competitive edge. The
Droid was released two years after the launch of the first iPhone. Unknown: If you missed one product cycle in smartphones, you have been disrupted. You can't miss a beat. They worked with Verizon in the US to deliver the droid products because at&t had got the exclusive with the iPhone. And that was kind of a lost hurray for Motorola.
Dain Evans: Even though droid saw success for Motorola and Verizon sales couldn't keep up with the iPhone. Apple had already asserted its dominance and squashed the competition. In April of 2010. Apple already had 53% of North
America's smartphone market share, followed by BlackBerry's parent company rim. And that was just three years after Apple released its first iPhone ever. Unknown: Motorola were out of step with the market, they were flat footed, they got too big and at the same time agile Asian competition, particularly coming from South Korea was Samsung and LG. Just outpaced them,
Motorola eventually had to figure out how it was going to survive. And that's when it started to turn towards Google and Android. But that's a time. Still Dain Evans: Motorola found its mobile business successful enough to spin off into a separate company in 2011, creating Motorola Solutions and Motorola Mobility. Google swept in to purchase the
newly separated Motorola Mobility for $12.5 billion in 2012. Unknown: Their business was losing money, they were losing lots of share. It wasn't
strategic anymore. And eventually that resulted in the sale to Google for whom people had high hopes. Dain Evans: This gave Google a team of smartphone experts and 1000s of smartphone patents. This was a huge asset to Google who was fighting with Apple over smartphone patents. Unknown: You had these massive companies who had mobile patent portfolios who were suing each other doing cross licensing. You had Microsoft, you had Apple, you had Google, among other and you had companies like Motorola who had built very large patent portfolios. And Google
who didn't have mobile patent portfolio had nothing to defend with had nothing to countersue with had nothing to negotiate with. Together, Dain Evans: Google and Motorola focused on more affordable smartphones. Unknown: I remember when Google acquired Motorola Mobility seemed like a really good thing for most of us because it would allow it seemed Google to put Motorola Mobility back on the map with these really clean and fresh Android phones that could allow Google and Motorola Mobility to compete directly against Apple. In the end, that's not what actually happened. Sort of
faltered even though it launched some compelling handsets Dain Evans: Motorola's North American market share for smartphones dropped from 6% to 3%. During its time under Google, while Apple jumped from 46% to 53%. It's Unknown: very hard to take a hardware point of view, insert that into an advertising company and have something good around it. Even though Google was the birthplace of Android. I believe it's set it back and actually put more distance between Motorola and companies like Apple.
Dain Evans: Google sold Motorola Mobility in 2014 to Chinese computer company, Lenovo for $2.9 billion $9.6 billion less than what it paid for the company.
Unknown: I think it said hey, we're not making money off of this business. But we have the patents so we can now defend ourselves with Android. If Apple or anybody else wants to sue Dain Evans: and Lenovo saw the value in Motorola Mobility. Unknown: The Lenovo branded smartphone business was doing okay in China, but wasn't really doing anywhere else and Lenovo thought that bringing in the Motorola brand, they would do a lot better in the Americas and in Western Europe. Dain Evans: Today, Motorola's still lags behind much of its competition. in quarter
three of 2019 Lenovo, which includes Motorola Mobility had a smartphone market share of 8%. Unknown: You know, we're now in a situation where we have a duopoly really of Samsung and Apple dominating the total market. The past few years have been pretty boring for Motorola, it hasn't launched any flagships that compete with Apple's best or Samsung's best phones. But that's about to change. Dain Evans: Motorola recently revealed its new razor folding smartphone, which impressed reviewers during the first look, but is not expected to make a huge splash in the market Unknown: was very hard for them to get attachment in the premium space up there with Samsung and Apple. So I think perception wise,
this is exactly what it needs. In this kind of homogenous sea of smartphone sameness, where all the devices look the same, nothing jumps out. And that's where I believe that the razor strategy is a good one. It's really Dain Evans: hard to imagine what the world would look like without Motorola's innovation, radios, televisions, transmissions from space cell phones. All of these would be very different
today without Motorola and Motorola Solutions, the company that produces radios for first responders, software for 911, dispatchers, and other non consumer products is flourishing. Solutions stock rose 332% From January 2011. The month and year Motorola Solutions and mobility split to November 2019. Lenovo, the current owner of Motorola Mobility had an increase of just 14% in the same eight year timeframe on the Hong Kong stock exchange. In
Unknown: my time, as a journalist, I've seen lots of brands go and I haven't seen many brands come back. Motorola has been on the way out for years. And even if it does have a successful foldable phone, or a really nice flagship next year, and needs a lot more than that, to come back to the top. I do think there is hope for Motorola to be a a relevant vendor. Over the next 10 years, things
Dain Evans: are looking up for Motorola Mobility, but it might never reach its former glory. Unknown: Even if they could get to a point where they were able to secure a meaningful market share, start getting consumers to at least have some consideration for their products, which I think the raise will help do that that's the very very early stages of a path to recovery. Dain Evans: The name iRobot might not be as well known as its main product, the Roomba, which has been made popular in part by shows like American Dad Arrested Development and Gilmore Girls. Unknown: Did you put googly eyes on the Roomba? I just fired my housekeeper but I've already found a replacement. You know if we died right now and decomposed it would vacuum us up.
Dain Evans: The company just launched some big updates to its product line, including a new mopping robot called the Bravo jet M six. It also will soon release a lawn mowing robot named Terra AI robot is building a complete home cleaning robot fleet so you never have to mow mop or vacuum again. But since the beginning AI robot has dealt with competition and knockoffs, lots of them and now with higher tariffs on goods produced in China AI robot has to stay more vigilant than ever, CNBC got an inside look at its lab to see the latest products and development and to learn more about its goal to have a self cleaning home filled with robots to take care of our dirty work. Unknown: iRobot has had a material impact on the market by creating it in my opinion, Dain Evans: the Roomba began cleaning homes in 2002. But I robot was quite busy before then. Unknown: I robot was founded back in 1990. Based on the notion that it was about time that these robots that we have been promised, became a reality.
Dain Evans: When Colin angle co founded iRobot the company was focused on military robots. It then started making toy robots and lessons from both led the company to create the first robotic vacuum. Unknown: Everyone thought of Rosie the robot from the Jetsons and then this idea that the thing that robots were supposed to do for us in our everyday life was clean the house. It wasn't hard for us to recognize that this was a good idea. We just didn't
know how to do it. And the Roomba actually was the coming together of technologies from work we've done in the toy industry learning to make low cost complicated devices From the defense industry where we had designed algorithms that would allow a robot to go sweep a minefield and so the algorithms on Roomba that make sure it goes everywhere in the room, actually, for mine hunting algorithms. A couple years later, in 2002, we launched the first Roomba Renda robotic Florida back, if it's down there, we'll get it. This is the original Roomba called scamp. And it wasn't yet a vacuum. I had a little bit of a
sweeping system on the inside. Here's the original Roomba. This was the first Roomba that was launched and sold Dain Evans: worldwide sales of consumer robots reached $5.6 billion in 2018. And it's expected to reach $19 billion by the end of 2025. And that's in no small part thanks to iRobot, which has a market cap of 2.5 billion iRobot is
Unknown: one of the first companies to offer a product that does the automation of domestic tasks in the home. And so I think it is a market leader. It is a pioneer. Dain Evans: And people get really attached to these autonomous cleaning machines.
Unknown: Humans have an amazing ability to anthropomorphize almost anything, probably within three weeks 90% of Roombas have been given a name, or are called Roomba, as if it were their name and a bond appears we'll get these phone calls to customer service, my Roomba is broken, send it back, we'll send you a new one. No, no, I'm not sending you Rosie, can you send out an ambulance, which is a bit different from most consumer product interactions. Dain Evans: The newest addition to the iRobot family of cleaners is the Bravo jet M six, a mopping robot that has a larger tank and improve connectivity over its predecessor. Unknown: For the first time ever, we have what we call our iadapt 3.0 navigation technology. So not only does it map your home, it also learns your home, we've expanded the range. So now it can instead of cleaning a single room, it can actually clean your whole home up to 1000 square feet. And we have much larger pads and much
better cleaning performance. This is the wet single use pad and the robot automatically knows what kind of pad is on there. So to have the correct behavior if it's a dry sweeping pad, it knows obviously not to spray water. If it's a
wet pad it knows to spray but it also knows to notify you if you don't have water in the tank. Some concerns Dain Evans: about privacy have been raised though, as newer iRobot products map a user's house in order to clean it more accurately. And that data can make consumers uneasy Unknown: privacy concerns associated with these household robots are common across all consumer electronics. So in order for Roomba to vacuum the kitchen, it actually needs to know where the kitchen is. And you know, that's some information which the users need to feel in control. If you don't
want us to collect the data in the first place, you don't have to go give us permission to do so the robot just won't know where your kitchen is still will still vacuum very very well. But now Dain Evans: more than ever between the long list of similar cheaper products and the escalating trade battle with China, I robot has to make sure consumers know what sets its products apart from the long list of similar products. Unknown: Naturally, there have been copycats so the question for iRobot is how does it maintain a distinct competitive advantage with his existing product line and have as it continued to expand into other product lines. 25% of all money spent on vacuum cleaners are now spent on robot vacuum cleaners. The Roomba is the number one selling vacuum cleaner in the United States, which is amazing. And of course that's invited in and attracted copycats and competition into the marketplace. One of the
lessons that our competition always learned very quickly is that building a robot is really hard. Trying to build a robot at lower prices often leads to robots that don't have the durability or effectiveness. Perhaps even it might be worthwhile to explore other products that would be integrated into these products just like what Apple has done with its products to be able to make a very high barrier to switching over to other competing products.
Dain Evans: I robot has had to deal with tariffs before in 2018 when the US enacted a 10% tariff on products produced in China back then AI robot decided to absorb the higher cost of its products. But today it might have to find another way the Unknown: tariffs and the recent increase is very challenging for the consumer robot industry. You know these tariffs are not free. They're not paid by China that they're largely paid by the US consumer that makes this great new technology more expensive and slows down the growth of this new industry.
Dain Evans: iRobot continues to innovate through the challenges, along with the new brava mop iRobot has also previewed Terra its lawn mowing robot, which will start selling in Germany this year, and will enter beta testing in the US this year as well. Unknown: Tara has finally we've been working in this thing for 10 years is finally launching. With these three horsemen they the Roomba, the Bravo and the terror robots, we could see a much larger business in a few years, Dain Evans: companion robots have revolutionized many things from cleaning our houses to mowing our lawns to keeping us company you're hungry. And I Robot wants to stay
at the forefront of this revolution. Unknown: We've created a new level of intelligence because we know where we are. And we're starting to know where things are. It's like a whole new chapter in robotics was just begun. And so for me
for iRobot it's a very interesting time. Jeniece Pettitt: If you've ever watched heartstopping videos of people skydiving, doing crazy tricks on a bike or hooking off a clip, chances are you've watched footage from a GoPro. The company that defined the action camera industry has had its shares of ups and downs since the release of its first camera in 2004. Stock skyrocketed after it went public in 2014. But then started to stumble in 2015 and have never recovered. We spent the day skiing with
founder and CEO Nick Woodman and big sky in Montana. Our office today to hear his story behind GoPros rocky road of success failures and to learn what's next for the company. The story starts in 2002 when Nick Woodman was 26 years old, his first business had just burst with a.com bubble, and he decided to take a surfing trip to Australia and Indonesia to figure out his next steps. Unknown: They had my idea for GoPro and preparing for that trip. I knew this was going to be the surf trip of a lifetime. I went to work on this
idea I had for a camera that I could wear on my wrist while I was surfing. And that surf trip turned into a r&d product development trip because the prototype works so well. And five months later I returned home to start go for it was the first surf trip I was ever excited to come home from because I was so excited to start the business. So how did you take it from an idea to actually building the camera I had no idea how to build a camera. Not an engineer. I'm more of an idea person. I found a
camera online on an on early Alibaba bought the camera from China made some customization using plastic blocks that I dremeled and hot glued to the camera and then FedExed it back to the company in China and they ended up making it for me. So the first GoPro was very humble and cobbled together using existing things that were already out in the world. Another one of those entrepreneurs is Nicholas Woodman I came up with the HERO camera design, which allows you to securely wear the camera I really learned how to grow GoPro on the fly. I didn't know how to hire anybody. And I had no previous business experience. I was a creative person. So the first GoPro employees were people that I went to college with are family members.
Jeniece Pettitt: The first investors in the company were family members as well. Unknown: I started GoPro with 30,000 that I'd saved from my previous job. And I borrowed $35,000 for my mom and I launched GoPro on $65,000 worth the name come from one of the easiest things in building GoPro is coming up with a name that was camped out on the north coast of California, my 74 Volkswagen bus and I was just finishing my patent and the name came to me in about 10 minutes. The process was I asked myself, well what are my friends and I my surfer friends and I want to do more than anything because remember originally GoPro was intended to just be a camera for surfers, and surfers, we want to go pro. GoPro. Hey, that's pretty good.
Jeniece Pettitt: What started as a camera intended for surfers evolved into a revolutionary camera for action sports travelers and filmmakers Unknown: only launched the HD hero over Christmas of 2009 That's when GoPro really blew up. And the HD quality of the HD hero was way beyond what anybody thought was possible from such a small camera. And you started to see GoPro footage in everything from movies, television, commercials, ski movies, GoPro was everywhere. That's when we knew early on this Jeniece Pettitt: The HD hero was priced at 299. And consumers seemed willing to pay as growth continued for the startup.
So why did you decide to take the company public Unknown: as a consumer product company and consumer brand being public is a really big marketing event for the company, and helped put GoPro on a global stage being public health us attract top caliber employees and really puts GoPro on a professional stage that is a private company. We were having trouble getting that level of attention. Jeniece Pettitt: GoPro IPO at $24 a share in 2014. And it was one of the hottest IPOs of the year, Nick Woodman became the highest paid CEO in America after receiving a bundle of stock worth $285 million. The stock soared based on success
of hero for lineup, but the company quickly stumbled when it did not release a new flagship camera in 2015. Unknown: And one time high player GoPro tumbling 40%. Since the start of the year, it learned that our customers really want to see a new GoPro from us every year, or they want to see us significantly discount the previous year's model. We've learned from that. And now we're dedicated to coming out with new cameras every year. Jeniece Pettitt: GoPro also had to keep up with increasing competition from other action sports cameras like Sony and Chinese company Yi, although it has always had a hold on the US market. Unknown: When people ask me, how is it that we've maintained market leadership all these years? How is it that GoPro still has 98% share in North America, for example. And it's because
of our brand because we have millions of customers around the world who are sharing GoPro experiences and helping us market socially. And it's also because we've had a relentless pace of innovation coming out with new cameras every year that other slower moving companies haven't been able to keep up with. Jeniece Pettitt: But just because it was making a new camera every year didn't mean people bought a new one each year, some models completely flopped. And that was just the beginning of challenges for the company. Unknown: IPO to a lot of fanfare, they were pitching this really great action camera that a lot of people were buying back in 2014. And
they had what they're trying to build was a media business. And so it got valued very much like a social media company. And that drove the stock open to the 90s. Jeniece Pettitt: GoPro hired teams of video producers, and the idea was to create content with its cameras to sell advertising. Unknown: Recognizing that GoPros brand, and everyone's excitement around the brand really stems from the incredible content that the brand is known for. And then our customers capture and share with their GoPros we thought that this could serve as a good platform for GoPro to scale the brand as a media company.
Jeniece Pettitt: But it never paid off, and turned out to be a painful mistake for the company that resulted in mass layoffs. Another failure came in 2016 when GoPro diversified into the drone market for the first time. Unknown: The broader concern though even in terms of their entry into the drone market is it seems from our perspective a little bit too late. Jeniece Pettitt: I mean, the category has been on fire for a few years, the karma faced delays. And when it did finally launch, the drone literally started falling from the sky.
Unknown: The issue was that the battery latch that was inside the drone was made of plastic. And while the drone was flying, the vibration would deform over time, the plastic latch, it would just come on down and let the battery back out the back. But unfortunately, we only discovered that issue after we had already shipped the product. We issued a recall as it was the right thing to do, as we looked at where the drone market was headed. The size of it complexities risks with regulation, and the overall profitability of the category. We just decided it made business sense to exit that business.
And they ran into you know, typical consumer electronic problems, channel problems over supply, little demand. Some new initiatives didn't work out and so you know, that's caused the stock to fall down to about at the low was $3.80. If you were to pinpoint your biggest challenge as CEO of GoPro, what would you say? Once we were a larger, more mature organization, I would say focus there's so much nuance in business and recognizing that focus and staying true to what the world wants from you as a business staying true to your customer is really important as you grow. Jeniece Pettitt: Whitman has spent the last few years getting the company back into focus and went through four rounds of layoffs tightening the global staff from a high of nearly 1800 to about 900 employees today.
Unknown: You know, our most successful years we were small and scrappy. I like thinking of the organization as an athlete and being fit. Nimble is always better. Our focus is to do fewer
things better. Jeniece Pettitt: Woodman has become an expert at cutting costs. Unknown: Management got rid of the things that were not profitable like the media business like the drone business, they ultimately cut out about 45% of operating expenses completely out of the income statement. To avoid
Jeniece Pettitt: potential tariffs. GoPro is moving most of its US bound camera production out of China to Guadalajara, Mexico, he said even without tariffs, this will save the company money. But still, GoPro faces tough competition, not from other action sports cameras, but from the cameras in all of our pockets. A smartphone cameras have continued to improve sales of GoPros have continued to slow. Unknown: Yes, we compete with traditional camera companies. Yes, we compete with smartphones.
Yes, we compete with home speakers, we compete for share of wallet. So we've got to be very aggressive in wowing the customer with a product. You've seen us do that with Euro seven black, our flagship product that we just launched this past holiday, and has really propelled the company back to growth and profitability in an exciting way. Jeniece Pettitt: GoPro became profitable in the fourth quarter of 2018, which was only the company second time hitting profitability since third quarter of 2015. The company has gotten back to its roots and has developed some big advances in its recent cameras. Unknown: GoPro start recording.
Jeniece Pettitt: The latest the hero seven has hypersmooth technology built in that eliminates the need for a stabilization gimbal customers have noticed it is Unknown: an amazing product. It is by far the best GoPro GoPro has ever released. The hero seven black is the best selling Hero camera of any holiday season. And the other two models the white and silver seem to be holding their own. They went out and made a couple acquisitions on the software side to greatly improve editing. Now you can edit videos in mere minutes. And in
fact, they now have an artificial intelligence engine that will edit them for you. Jeniece Pettitt: The company also launched GoPro plus a service that automatically uploads pictures and video footage to the cloud. It has nearly 200,000 subscribers paying 499 a month. And it created a 360 degree camera called
Fusion, which Woodmen hinted is the future of its cameras. Unknown: It's not so much about creating content for VR, people's primary interest in fusion, is to use it as a incredibly versatile camera that allows you to capture everything around you at once. We're using that and learning from fusion to develop a next generation camera that we think will be really exciting to consumers looking longer term much longer term, they have a 360 camera. And so we think that they will redefine how we capture images in the future with the Fusion Jeniece Pettitt: Woodmen see seems open to doing what it takes to keep GoPro alive. He has said
that he would potentially sell the company if the right buyer were to come along. And he hasn't ruled out taking the company private. Is there a situation where you'd consider taking the company private again? Unknown: Yes, it's a good strategy that would make for a stronger company and stronger brand and give us better growth prospects for the future I would be open to any strategy. Jeniece Pettitt: Go Pro will inevitably hit more bumps in the road. But one thing I learned after
skiing with Nick Woodman for a day is that he is an eternal optimist. So Rob, do you think it will ever be possible Unknown: to get back to your stock highs? Oh absolutely. You just have to continue to grow the business and create value and wow customers. Playing it safe is playing it small and that's just not our style. So I have no regrets about some of our missteps and hopefully they make us smarter and more capable for what comes next. It's made of Pyro CERAM, a remarkable new glass ceramic material with exciting new properties.
Corning is a company that's been around for a long time, well known for its highly durable cookware with cute designs. The company that made Pyrex and Corningware now manufactures glass for cars, fiber optic cable and smartphones. The way I would describe Corning to someone who's never heard of the company before is I guess I would start by asking them to pull their iPhone out and explain to them the glass on that iPhone comes from Corning and then I'd point to the TV in the room and say well the glass from that comes from Corning.
The company that started 168 years ago as Corning Glass Works is now valued at $27 billion. Corning story is all about innovation. Since it started in 1851, a lot of things have been invented. Many of them were made of or involved
glass. People think of glass as a single material. And that's not a very good way to think about it.
It's better to think of it as a platform that can be tuned for particular applications. One of the company's earliest innovations was the bulb shaped glass encasement for Thomas Edison's incandescent lamp. As electric light became commercially available, demand grew quickly. Corning figured out how to mass produce the bulbs helping bring electric light to the world. In the early 1900s, it discovered new ways to make glass stronger and heat resistant. This led to products like Pyrex and Corningware, a line of glass cookware still being made over 100 years later. Although the
company divested these products in 1998 Corning's name still resonates with these brands. Corning over the years has transitioned for many different products. It's a company that is constantly evolved depending on where glasses needed the most through the rest of the 20th century and manufactured glass for everything from television sets to the windows and every manned American spacecraft mission from the Mercury program to the space shuttle. It even created a ceramic filter that can catch pollutants before they escape a car's exhaust pipe, which would become a worldwide standard to help cut down on car emissions. Then Corning got into the communication space. So in the 1960s, Charles Cao published a paper that said if a sufficiently clear optical pipe was invented, the laser could be used to send information down that pipe and overcome the bottlenecks that copper offered for communications.
In the 1970s. The company invented the first low loss fiber optic wire, which use glass instead of copper. The wire was capable of carrying 65,000 times more information than traditional copper wire. Corning has been a public
company since 1945. The stock has been steady for decades, but then took off when the.com Boom created huge demand for its superfast fiber optic cable. It plummeted to an all time low when the.com bubble burst. In 2007. It introduced a bendable glass fiber, allowing it to reach places like high rises in major cities. And since 2008, the stock has maintained a slow steady climb upward.
Today, Corning is no longer described simply as a glass maker, but as a technology company that makes specialty materials for industrial and scientific applications. It manufactures products at 108 plants in 15 countries and employs 51,000 people. Corning's changed as a company many many times over the years that it's been in existence, it just kind of ebbs and flows depending on the demand for the end products that Corning supplies these glass products into the company reports revenue in five business segments with fiber being the largest set 37%. You know, it started out as a technology you needed for submarine transmission super long distances, then move to long haul on land and then into metro areas. Now we're seeing fibre to the home, the rollout of fiber for 5g networks, and tremendous use of optical communications and data centers. varizen recently agreed to purchase 12 point 4 million miles of optical fiber from Corning to grow its 5g network at a minimum cost of $1.05
billion dollars. This increase in demand force Corning to expand its fiber production capacity. We're also announcing that we are expanding the world's largest and lowest cost fiber optic plant right in North Carolina, adding another quarter of a billion dollars to $2 billion we've got invested today. Another big part of Corning's business is display glass, which made up 29% of its sales in 2018. Corning LCD glasses used on TVs laptops,
computer monitors and tablets. Corn has gone through a lot of evolutions over the last several decades fiber and telecommunications were one of the primary drivers in the late 90s and early aughts. And then, you know around 2003 2004 They built this sizable display glass businesses LCD TVs became the dominant TV. That segment had become the
biggest over the last 18 months telecommunications has regrown to become the biggest sector. Many attribute Corning success to its manufacturing techniques. It created fusion forming in 1964 involves a lava hot glass flowing down seven storeys in mid air into one long sheet, which is then cut into whatever shape and size that customers need. The process has not been seen by many outside of Corning. What we're going
to do is get rid of all these buttons and just make a giant screen. Then in 2007 about At six months before the first iPhone was released, Steve Jobs made a call to the CEO of Corning and asked the company to create glass that could withstand scratches and breakage for a new Apple product. Corning quickly developed Gorilla Glass and it's been used on every iPhone since. So
Mr. Weeks, how many screens are you making for the iPhone eight. I do not speak at all about what goes on with Apple. In 2017, Apple announced it would invest 200 million into Corning r&d. A move analysts sighs a plan to add glass to the back of iPhones for wireless charging. Sure enough, it now offers
iPhones with glass on the front and the back. But Gorilla Glass isn't just on Apple products. It's also used by Samsung, Nokia, Google, Motorola and LG among others. Corning says Gorilla Glass has been installed on 6 billion devices since its debut in 2007. So Gorilla Glass is important according it's about 12% of their overall revenue. But that compares to 39% for the optical communication segment and 27% for the display glass segment. So it's not as
big as those two segments, but it is more profitable than average. So it maybe represents 15% or so of gross profits for Corning. And what's interesting about about gorilla is the innovation that went into making gorilla is actually allowed it to go into other potential markets, like automotive and so it's really been able to become a primary form factor for multiple markets, all starting with the little innovation in the 80s and really brought to market with the iPhone.
As smartphones and fiber optics continue to evolve, so must Corning it spent 15% more on r&d in 2018 than it did the previous year. The company already makes flexible glass for TVs and cars but it recently announced it's working on a new flexible glass product, which hints that Apple may be working on a foldable phone. Samsung and Huawei recently unveiled their foldable phones but with plastic base displays. Samsung announced it would delay the release of the galaxy fold after Demo units malfunctioned.
I think the real question is how we come out with a glass that's optimized for the flexibility and performance needed in a foldable foldable phone. We think that we'll be able to deliver within a couple years. Corning also makes glassware for labs in the pharmaceutical industry. These represent Corning smaller revenue segments. In 2017, it announced that it was collaborating with Merck and Pfizer on a new damage resistant glass for medical products made in the US. It's called valor. These three companies are announcing that pharmaceutical glass packaging will now be made in America. That's a big step. That's a big
statement. Corning's headquarters are still located in Corning, New York about four hours from Manhattan. A majority of the town's residents work at Corning, the company town is one of the last of its kind. In fact, it still operates a work whistle eight times a day. To let its workers know when to wake, get to work, take lunch, and go home. It says people are drawn to work for Corning, because it continues to innovate even after 168 years as the need for glass demand weekends in some areas and grows and others units whether it's TVs, PCs, monitors, phones, tablets, none of those in markets are growing on a unit basis. So for Corning, they need to do
two things. One is hope that people buy bigger devices. And so far, that's what they've been doing phones have expanded in size TVs are expanding two to three inches a year is that's driving the overall opportunity for Korean because they don't look at units they look an area. And so as long as area grows, Korean will grow.
The company made $11 billion in revenue in 2018. Despite slow growth in TVs, tablets and smartphones. Right now it has a lot of exposure to display glass. So what we've seen historically, if we roll
the clock back a few years is when TV demand is weak. Maybe around 2007 2008 in the in the financial crisis, then we saw Corning weak as a result of that. So that's an example of where the stock hasn't done so well. On the other hand, right now we see a lot of growth in optical communications the last several years, and that positive growth and optical communications have been a good driver for the company. Corning has a specific strategy for long term growth called the 345 approach.
We divide our focus up into three categories, the three core technologies, ceramics, optical physics, and glass science. There are the four proprietary manufacturing platforms. And then we combine that three and our four to go after five primary markets 80% of the opportunities that we pursue, need to use capabilities in at least two of the three categories that I just outlined. And then we repurpose and we reapply our capabilities within each of those to go after the next opportunity. We scale those up and we improve the strength of our manufacturing advantages. And that's it repeats and repeats and repeats.
But what about competition? It's hard to compete with Corning's entire spectrum of products. But it does have competitors within different business segments. Corning, I would argue, doesn't have any pure competitors. So you have to go segment by segment. And so if you think about the glass segment, there's multiple large Asian glass suppliers. However, Corning has a tremendous advantage on manufacturing, and so forth. And so most of the competitors in the Asian market tend to play fair in nicely with Corning. And so according to Bill
to maintain share, pricing, and so forth, over the decades in the glass business, the same thinking applies to the company's outlook. Even if one segment doesn't do well, it still has four others that could help grow revenue. They're highly exposed to display glass and TVs. Well, we see that young people watch shows more on iPads and phones than they do on big TVs. So that might reduce the demand for global glass over time, even though we haven't really seen that happening yet. But then again, you know, the positive side, the company has exposure to all kinds of new product opportunities, like self driving cars are going to have a lot of display glass we think inside of them.
Chances are you own at least one device that has Corning Glass in it, a TV, a smartphone, a tablet, your car, even if you don't see it, Corning fiber optic cable runs much of our telecommunications, and is poised to grow even more. So for connected cars, you think about the connection between the occupants or between the car and the rest of the world. I think 5g plays a big role here. And I think because those communications are going to be important wherever you take your car, you're likely to see over time 5g deployments move outside large cities and along highways and into rural areas. So that always on network is available to passengers.
So there are a variety of technical challenges right now we have so many opportunities that we go after that we have to think hard about which are most attractive for us and our shareholders over time and it makes it a really exciting time.