General Electric's Upcoming Big Day

One of the most interesting companies these days has got to be General Electric (NYSE:GE). After falling from grace in the eyes of investors and eventually being removed from the Dow Jones Industrial Average’s list of 30 stocks, a spot it has held continuously since 1907, the conglomerate announced plans to undergo a significant restructuring. However, on July 20th of this year, another event is coming to pass: management is slated to report earnings for the second quarter of the company’s 2018 fiscal year. Heading into earnings time, there are some items I have identified, especially now that major changes have been announced to how the business will operate in the future, that investors in the business and watchers of the stock should keep a close eye on.

Power: continued trouble on its way

Regular readers of mine know how I feel about General Electric’s Power segment: if it were up to me, management would divest of the business or at least some portion of it. I have expressed this in other articles in the past, and I lamented management’s inaction on this when the firm came out and announced its plans for the future. Simply put, the segment is at the early stages of what will look like a multi-year downturn as competition and weak demand for gas turbines negatively affects performance. By monetizing this asset, the firm could allocate capital elsewhere, like its robust and profitable Aviation segment or on its Digital operations.

Sadly, this quarter, I expect no positive change for Power. If anything, the picture will be worse than it was in the first quarter of this year. In the first quarter, Power generated sales of $7.222 billion, a decrease of 9% compared to the $7.940 billion reported the same quarter a year earlier. This was driven in large part by the sale of just 12 gas turbines compared to the 20 seen a year before that. Meanwhile, segment profit declined 37.7% from $438 million to $273 million.

In the second quarter of last year, results were stronger than the same quarter of 2016, with revenue up 5%, but segment profit contracted 10% year over year, falling from $1.14 billion to $1.03 billion. I do believe there’s a strong chance that profits from the first quarter of 2017 to the second quarter will grow, but the year-over-year sales decline should be significant. After all, management is currently forecasting that industry sales this year will amount to perhaps fewer than 30 GW (gigawatts), down from their prior forecast of 30 to 34 GW. Given increased fuel efficiency as well, this trend should continue for a few years.

Of course, this doesn’t mean that everything will be positive. Though the decrease in sales had a major negative impact on the segment’s margin, which declined from 5.5% in last year’s first quarter to 3.8% this year’s, management touted some success in what they are referring to as “structural” costs. In 2017, management claims to have reduced this figure by $800 million, while in the first quarter of this year, they lowered costs by $350 million with the expectation this year of $1 billion in savings. I actually believe management will up this figure in their second quarter, but investors should be aware of the pitfalls of relying on such an abstract measure. With no clear definition and no data provided by investors to consolidate an estimate of this nature in accordance with GAAP, management can technically say anything they want, and it will have little impact until we see sales grow back in the future and notice whether or not the savings have resulted in margin expansion that otherwise would not be explained.

Additional guidance should come

When management announced last month that they were going to restructure the company, I was generally supportive of their goal, but there’s still a lot of information that hasn’t been discussed. For starters, the company said that they intend to divest of their Healthcare segment by selling off around 20% of that business’s equity and spinning off the rest. Details today are still scarce. I had suggested that Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) might be a good acquirer, especially with his company’s partnership with Amazon (NASDAQ:AMZN) and J.P. Morgan Chase (NYSE:JPM), but that may very well not come to pass.

Beyond the divestiture of General Electric’s Healthcare segment, management needs to provide more insight into the $25 billion worth of sales planned for GE Capital, but perhaps the biggest guidance-related issue on investors’ minds is what will become of General Electric’s distribution. Last year, the conglomerate cut its dividend for the second time since the last financial crisis, decreasing it by half to $0.48 per share each year. Given the business’s current share count, this translates into about $4.17 billion per year. Some companies, like J.P. Morgan, have said recently that the business must cut its distribution.

Whether this will happen or not remains to be seen, but I would be supportive of cutting the dividend to zero. This is because I would prefer to see the company allocate the cash toward either debt reduction or, preferably, toward growth initiatives. $4.17 billion per year is a lot of cash that could be used far more efficiently than paying shareholders. The only thing we know is that the distribution is safe for the moment. Management said that they will keep the current dividend until they divest of their Healthcare segment, after which they will “adjust” it to be in line with “industrial peers”. Some sort of discussion on this and clarification on the 12-18-month timeline for Healthcare’s separation should be watched closely.

Expect Aviation to shine

Beyond any doubt, my favorite part of General Electric has got to be its Aviation business. Over the past three years, sales at the segment have grown at a respectable rate of 5.4% per annum, growing revenue from $24.66 billion in 2015 to $27.375 billion in 2017. The real treat for shareholders, though, is the segment’s profitability. Over the same three-year time frame, segment profit expanded an impressive 20.6%, or 9.8% per annum, growing from $5.51 billion in 2015 to $6.64 billion last year. During this time frame, the segment’s profit margin expanded as well, growing from 22.3% to 24.3%.

So far, 2018 has been really kind to Aviation. According to management, the first quarter of this year saw sales of $7.112 billion, up 6.6%, from the $6.673 billion reported in the first quarter of 2017. Segment profits grew even faster, expanding 25.9% from $1.273 billion to $1.603 billion. All of this is great, but the really exciting figure is the segment’s backlog. In the first quarter of last year, this figure stood at $179.2 billion. This year’s first quarter saw the figure hit $201.6 billion, an increase of $22.4 billion, or 12.5%, year over year. As I wrote in a prior article, the Aviation industry is supposed to expand nicely alongside the global economy in the long-run. So long as there aren’t any worldwide economic downturns, and so long as management can maintain industry-leading products, this backlog increase, which has taken backlog up to 7.4 years’ worth of work using 2017 as a benchmark, suggests even greater sales and profits to come.

Takeaway

General Electric has been on a wild ride over the past several months, but the trip’s not over yet. I suspect that we will see some additional pain coming up soon related to the company’s Power segment, but I believe that Aviation and perhaps other parts of the conglomerate will shine. In addition, there will be a lot of developments coming up over the next several months as management transitions the company’s operations in accordance with their restructuring plans, but I suspect some of these items will be discussed in greater detail this month when management discusses second quarter results. By keeping a close eye on these developments, investors can get a glimpse of what the future might hold, which, in the case of General Electric and given how volatile the enterprise has been, could help shareholders’ quest for profits a great deal.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Funimation Picks Up The Classic Anime Series 'Zillion' For Western Release

‘Zillion’ is finally getting a Western release.Credit: Funimation, Tatsunoko Production

</div> </div> <p>A few years back, Japan received an <a href="http://www.vap.co.jp/category/1436262311094/" target="_blank" data-ga-track="ExternalLink:http://www.vap.co.jp/category/1436262311094/" rel="nofollow">amazingly nice remastered Blu-ray version</a> of this anime and I had hoped that at some point it would come Westward.</p>

<p>After checking in with Funimation, it seems that this Blu-ray release is the one they have picked up and that the Western version will also have English subtitles.</p> <p>What’s more, this&nbsp;release will also include the OVA as well as the whole TV series. The SRP&nbsp;will also be $64.98 for the set.</p> <p>While we don’t have details on when <em>Zillion</em> will be released, the fact this classic anime is finally getting a proper release outside of Japan is great news.</p> <p><em>Follow me on <a href="https://twitter.com/Cacophanus/" target="_blank" data-ga-track="ExternalLink:https://twitter.com/Cacophanus/" rel="nofollow">Twitter</a>, <a href="https://www.facebook.com/cacophanus" target="_blank" data-ga-track="ExternalLink:https://www.facebook.com/cacophanus" rel="nofollow">Facebook</a> and <a href="https://www.youtube.com/user/Cacophanus" target="_blank" data-ga-track="ExternalLink:https://www.youtube.com/user/Cacophanus" rel="nofollow">YouTube</a>. I also manage <a href="http://www.mechadamashii.com" target="_blank" data-ga-track="ExternalLink:http://www.mechadamashii.com" rel="nofollow">Mecha Damashii</a> and do toy reviews over at <a href="http://www.hobbylink.tv/members/ollie/" target="_blank" data-ga-track="ExternalLink:http://www.hobbylink.tv/members/ollie/" rel="nofollow">hobbylink.tv</a>.</em></p> <p><em>Read my Forbes blog <a href="http://www.forbes.com/sites/olliebarder/" target="_self">here</a>.</em></p>” readability=”42.2632794457″>

One of the most interesting anime series of the late 80s, Red Photon Zillion, has now been picked up for a Western release and its gaming lineage is also pretty interesting.

Zillion is a curious anime on various counts. From it being the start of Production I.G as a spin-off studio from Tatsunoko Production to the amazing mecha design by Ammonite but the really fascinating part about the series is how it tied into the Sega Master System.

Two games were spawned from the anime, Zillion and Zillion II. There was also a laser-tag type toy sold in Japan and Brazil. However, the anime also introduced Opa-Opa from the arcade game Fantasy Zone as a recurring mascot.

Set on Mars, the anime deals with the alien invasion of the Nohzas, that want to wipe out humanity. The name “Zillion” refers to the special gun the main characters carry that is very powerful and almost impossible to mass produce.

‘Zillion’ is finally getting a Western release.Credit: Funimation, Tatsunoko Production

A few years back, Japan received an amazingly nice remastered Blu-ray version of this anime and I had hoped that at some point it would come Westward.

After checking in with Funimation, it seems that this Blu-ray release is the one they have picked up and that the Western version will also have English subtitles.

What’s more, this release will also include the OVA as well as the whole TV series. The SRP will also be $64.98 for the set.

While we don’t have details on when Zillion will be released, the fact this classic anime is finally getting a proper release outside of Japan is great news.

Follow me on Twitter, Facebook and YouTube. I also manage Mecha Damashii and do toy reviews over at hobbylink.tv.

Read my Forbes blog here.

Why Small Businesses Are Feeling the Threat of Trump's Latest Tariffs

Time and effort have gone down the drain for Steve Gould, who is scrambling to find new customers for his gin, whiskey and other spirits since the United States has taken a tough stance on trade issues.

Before the European Union retaliated against new U.S. tariffs with taxes of its own, Gould expected revenue from the EU at his Golden Moon Distillery in Colorado to reach $250,000 or $350,000 this year. Now he’s concerned that European exports will total just $25,000. Golden Moon already saw an effect when then-candidate Donald Trump made trade an issue during the 2016 campaign. Gould lost one of his Mexican importers and an investor, as overseas demand for small-distiller spirits was growing.

“We’ve lost years of work and hundreds of thousands of dollars in building relationships with offshore markets,” says Gould, who’s hoping to find new customers in countries like Japan.

President Donald Trump’s aggressive trade policies are taking a toll on small U.S. manufacturers. The president has imposed tariffs of 25 percent on steel and 10 percent on aluminum imports from most of the world, including Europe, Mexico and Canada, driving up costs for companies that rely on those metals. And he has slapped 25 percent taxes on $34 billion in Chinese imports in a separate trade dispute, targeting mostly machinery and industrial components so far. Trump’s tariffs have drawn retaliation from around the world. China is taxing American soybeans, among other things; the European Union has hit Harley-Davidson motorcycles and Kentucky bourbon; Canada has imposed tariffs on a range of products — from U.S. steel to dishwasher detergent.

More businesses could be feeling the pain as the trade disputes escalate — the administration on Tuesday threatened to impose 10 percent tariffs on thousands of Chinese products including fish, apples and burglar alarms. And China responded with a tariff threat of its own, although it didn’t say what U.S. exports would be targeted.

Small businesses are particularly vulnerable to tariffs because they lack the financial resources larger companies have to absorb higher costs. Large companies can move production overseas — as Harley-Davidson recently announced it would do to escape 25 percent retaliatory tariffs in Europe. But “if you’re a small firm, it’s much harder to do that; you don’t have an international network of production locations,” says Lee Branstetter, professor of economics and public policy at Carnegie Mellon University’s Heinz College.

Shifting manufacturing away from items that use components that are being taxed is also harder since small businesses tend to make fewer products, he says. And if tariffs make it too expensive to export to their current markets, small companies may not be able to afford the effort of finding new ones.

Small business owners have been growing more confident over the past year as the economy has been strong, and they’ve been hiring at a steady if not robust pace. But those hurt by tariffs are can lose their optimism and appetite for growth within a few months.

“They have narrow profit margins and it’s a tax,” says Kent Jones, an economics professor at Babson College. “That lowers their profit margins and increases the possibility of layoffs and even bankruptcies.”

Bertram Yachts is one company finding it trickier to maneuver. The U.S. has put a 25 percent tariff on hundreds of boat parts imported from China, where most marine components are made. And European countries have imposed a 25 percent tariff on U.S.-made boats. Last year, Bertram exported about a third of its boats, with half going to Europe.

“We have been squeezed on both sides,” says Peter Truslow, CEO of the Tampa, Florida-based boat maker.

Truslow doesn’t know how the tariffs will affect the company’s sales and profits, but dealers he’s spoken to in Europe have already gotten cancellations on boats that run into the millions of dollars. Bertram plans to try to build up its strong U.S. business and seek more customers in countries that aren’t involved in trade disputes with the U.S. including Japan and Australia.

Still, the company’s growth and job creation stand to slow. “It’s probably going to be more about a reduction in hiring than it is about layoffs,” Truslow says.

The ripples are being felt across the industry, says Tom Dammrich, president of the National Marine Manufacturers Association trade group. He estimates there are about 1,000 manufacturers, almost all small or mid-size businesses, and says some parts can only be bought from China.

Matt Barton’s metal fabrication company, which makes custom replacement parts for farm equipment, outdoor signs and people who race hot rods, is paying its suppliers up to 20 percent more for metals than it did a year ago.

Prices had actually soared as much as 40 percent months ago amid expectations of U.S. tariffs on aluminum and steel. They have since steadied, but are expected to remain high for three to six months. Barton’s Pittsboro, Indiana-based company, The Hero Lab, is absorbing part of the increases. Some racing customers are still delaying orders.

“What they budgeted to cost $1,000 now is now $1,200 or $1,500,” Barton says. “They’re pushing their orders back four to six weeks, waiting for a few more paychecks to come in.”

Jeff Schwager’s cheese company, Sartori, is selling products to Mexico at break-even prices because of that nation’s retaliatory 25 percent tariff. Twelve percent of the Plymouth, Wisconsin-based company’s revenue comes from exports, which is the fastest-growing segment of the business.

Sartori and its Mexican importer are each absorbing half the costs of the tariff. Schwager, the CEO, doesn’t see leaving the Mexican market as an option.

“If you lose space on the grocery store shelf, or you’re taken out of recipes in restaurants, that takes years to get back,” he says. He hopes the trade dispute can be resolved and tariffs rolled back.

But some small manufacturers believe they can benefit from a trade dispute. Greg Owens, president of flatware maker Sherrill Manufacturing, says if his competitors in China are hit by U.S. tariffs, he could see revenue increase.

“They would have to raise the retail price, which would allow us to raise our prices,” says Owens, whose company is located in Sherrill, New York. In turn, Owens says, that would allow “long overdue” raises for workers and upgrades to capital equipment.

Catalyzing Innovation via Centers, Labs, and Foundries

Industry, government and academia working togetherDepositphotos enhanced by CogWorld

The cornerstone of collaboration is based on knowledge transfer; sharing of research tools, methodologies and findings; and sometimes combining mutual funding resources to meet shortfalls necessary to build prototypes and commercialize technologies.

Collaborations often involve combinations of government, industry and academia who work together to meet difficult challenges and cultivate new ideas. A growing trend for many leading companies is creating technology specific innovation centers, labs, and foundries to accelerate collaboration and invention.

As the development of new technologies continues to grow exponentially and globally, collaboration has more value as a resource for adapting to the rapidly emerging technologies landscape by establishing pivotal connections between companies, technologies and stakeholders.

In the US Federal government, the National Labs (including: Lawrence Livermore, Oak Ridge, Argonne, Sandia, Idaho National Laboratory, Battelle, and Brookhaven, and Federally Funded Research and Development Centers (FFRDC’s), and federally funded Centers For Excellence have been outlets for innovation and public/private cooperation. The benefits of the Labs’ role include experienced capability in rapid proto-typing of new technologies ready for transitioning, showcasing and commercialization. The Labs are a reservoir of specialized skills and capabilities with the best state-of-the art facilities for testing and evaluation of technologies.

Industry has increasingly adapted the innovation centers, labs, and foundries model used by government. They are often focused on areas of specific types of technologies where companies have expertise. Their models often include participation by clients, other companies, academia and government.

The focused innovation concept is not a new one, but it’s a proven one. PARC (Palo Alto Research Center), founded in 1970 as a division of Xerox Corporation transformed in 2002 into an independent, wholly owned subsidiary company, has been dedicated to developing and maturing advances in science and business concepts with the support of commercial partners and clients.

There are a variety of promising and exciting new initiatives in the PARC mold. For example, in the growing area of artificial intelligence and deep learning, Nvidia opened up a lab in Toronto dedicated to the technology. Giants such as IBM, Microsoft, Google, Cisco and many others in the AI ecosphere have all established innovation centers to create, collaborate, and develop in a wide range of technology disciplines, including AI.

Similarly, in defense and aerospace, leading companies such as Lockheed Martin, General Dynamics, Northrup Grumman, and Raytheon all have invested in labs, centers and collaborative projects to develop better solutions for the warfighter.

Dell EMC recently announced the creation of the world-class High Performance Computing Dell EMC HPC Innovation Lab in Austin, Texas. Booz Allen’s IHub will serve as the headquarters for Booz Allen’s Dark Labs team, an elite group of security researchers, penetration testers, reverse engineers, network analysts and data scientists dedicated to stopping cyber-attacks. And, Intel Corp. is opening an Information Technology Innovation Center in Folsom, California to stimulate and attract innovation in IT research and development.

An interesting approach is the global positioning of Foundries. AT&T has established Foundry innovation centers in 6 cities around the world, and since its inception, has started more than 500 projects and has deployed dozens of new products and services. Each Foundry has a specialized research, prototype, and networking area, including IoT, Edge computing, and cybersecurity.

Image credit: AT&T; enhanced by CogWorld

The exponential arrival of new technologies in diverse areas such as genetic engineering, augmented reality, robotics, renewable energies, big data, digital security, quantum computing and artificial intelligence necessitates rapid, comprehensive approaches that innovation centers, labs and foundries can help fulfill. The result of such collaborations will both keep us apprised of new paradigms and contribute to a seismic shift in breakthrough product discoveries. Such cooperation could speed up the realization of the next industrial revolution and bring benefits beyond our expectations.

SoftBank's Son says to carry on with deals despite trade jitters

SUN VALLEY, IDAHO (Reuters) – SoftBank Group Corp (9984.T) CEO Masayoshi Son said on Tuesday he was optimistic that U.S. President Donald Trump’s escalation of trade disputes and heightened scrutiny of foreign investments would not affect the Japanese firm’s prolific dealmaking.

FILE PHOTO – Masayoshi Son, CEO of Softbank, arrives before U.S. President Donald Trump participates in the Foxconn Technology Group groundbreaking ceremony for its LCD manufacturing campus, in Mount Pleasant, Wisconsin, U.S., June 28, 2018. REUTERS/Darren Hauck

Trump’s administration has been slapping trade tariffs on Chinese goods and blocking Chinese investments in the United States it deems a threat to U.S. national security.

SoftBank, which has links to China through investments such as internet giant Alibaba Group Holding Ltd (BABA.N), has seen its U.S. deals facing protracted regulatory reviews as a result.

“Our investments are innocent,” Son told reporters in Sun Valley, Idaho, where investment bank Allen & Co is hosting an annual get-together for technology, telecommunications and media executives.

SoftBank and its Vision Fund, the world’s largest private equity fund which in May last year raised over $93 billion, have made many investments in U.S. technology firms, including ride-hailing firm Uber and share-office space firm WeWork. The fund has raised tens of billions of dollars from sovereign wealth funds in Saudi Arabia and the United Arab Emirates.

Last year, SoftBank bought Fortress here Investment Group but agreed to run the private equity firm at an arm’s length to win permission from the Committee on Foreign Investment, a U.S. national security panel, to proceed with the acquisition.

Son also told reporters on Tuesday he was not interested in doing any “traditional media” acquisitions, even as U.S. cable operator Comcast Corp (CMCSA.O) is looking for partners to strengthen its bid for media assets that Twenty-First Century Fox Inc (FOXA.O) has agreed to sell to Walt Disney Co (DIS.N).

Son said he is instead going to continue to focus on the areas where SoftBank has made some of its biggest investments, including artificial intelligence, the Internet of Things, robotics and ride sharing.

Reporting by Carl O’Donnell in Sun Valley, Idaho; Editing by Himani Sarkar

Surface Go Is Microsoft’s Big Bet on a Tiny-Computer Future

Panos Panay is the betting type. You can see the evidence in Microsoft’s Building 37, where two $1 bills stick out from beneath a Surface tablet sitting on a shelf.

When I ask Panay about the dollars during a recent visit to Microsoft, he says it was a wager he made a few years back on a specific product. I ask if it was a bet on Surface RT, the very first Surface product Microsoft made, and he seems genuinely surprised. “I would have lost that bet, and I’m going to win this one,” he says. “It’s about a product that’s in market right now.” And that’s all he’ll volunteer.

Panay, Microsoft’s chief product officer, isn’t there to talk about the ghosts of Surface’s past, or even the present. Panay wants to talk about his next big bet in the Surface product lineup: the brand-new Surface Go. But to call it “big” would be a misnomer, because the Surface Go was designed to disappear.

Ian C. Bates for Wired

If you’ve followed the trajectory of the Surface product line, you might say that the Surface Go previously existed in some form, if not as a prototype then in sketches and leaks and rumors and in our own imaginations. But Panay insists that this new 2-in-1 device is not the offspring of anything else—not the Surface RT, not the Surface 3, and not the Surface Mini (which served as a kind of fever-dream notepad for Panay, but never shipped).

Instead, the new Surface Go is an attempt to bring most of the premium features of a $1,000 Surface Pro to something that’s both ultra-portable and more affordable.

Ian C. Bates for Wired

Like a Surface Pro, the Go is a “detachable”—a tablet that attaches to Microsoft’s alcantara Type Cover keyboard. It has the same magnesium enclosure; a bright, high-res touchscreen display that has a 3:2 aspect ratio and is bonded with Gorilla Glass; a kickstand in the back that extends to 165 degrees; support for Microsoft’s stylus pen, which attaches magnetically to the tablet; a Windows Hello face recognition camera, for bio-authentication; two front-facing speakers, an 8-megapixel rear camera; and on and on. It’s a veritable checklist of Surface Go’s external features.

But the Surface Go is tiny. It measures just 9.6 by 6.9 by .33 inches, with a 10-inch diagonal display. It also weighs 1.15 pounds. The first time I saw the Go, Natalia Urbanowicz, a product marketing manager at Microsoft, pulled the thing out of a 10-inch, leather, cross-body Knomo bag to show just how easily it can be tucked away. It’s light enough to mistake for a notebook; the last time I felt that way about a computer was when Lenovo released the YogaBook back in 2016.

Ian C. Bates for Wired

The Go also happens to be the least expensive Surface ever. When it ships in early August, it will have a base price of $399. That’s for a configuration that includes 64 gigabytes of internal storage and 4 gigabytes of RAM, and ships with Windows 10 Home in S Mode (the S stands for “streamlined,” which means you can only download apps from the Windows Store). You’ll also have to shell out extra for a Type Cover keyboard and stylus pen.

From there, specs and prices creep up: A Surface Go with 256 gigabytes of storage, 8 gigabytes of RAM, and LTE will cost you more, though Microsoft hasn’t shared how much yet. All configurations have a microSD slot for additional storage too.

The Surface Go is not the first 10-inch Surface that Panay and his team have shipped. The original Surface had a 10.6-inch display. And in 2015, Microsoft released the 10.8-inch Surface 3. It started at $499, and ran a “real” version of Windows, not Windows RT. But it was also underpowered; and, Panay admits now, it had an inelegant charging mechanism.

“To this day I regret the charging port on Surface 3,” Panay says. “I’d convinced myself that this ubiquitous USB 2.0 connector was going to solve the thing people asked me for: Can I just charge it with the charger I already have? And what I learned is that people want a charger with the device, they want a very seamless charging experience…I know that seems small, but I don’t think I can overstate that every single little detail can be a major difference maker.”

Panay says there’s been clear demand for a successor to the Surface 3, which would, by definition, have been the Surface 4. But “that evolution wasn’t right,” he says. “That would be too close to the original Surface Pro, and that’s not what this product should be at all.” Instead, he’s been noodling something like the Surface Go—codenamed “Libra”—for the past three years.

The new Surface Go benefits from all those learnings. It has the same Surface Connect port as the Pro lineup, along with a USB-C 3.1 port for data transfers and backup charging. It’s supposed to get around nine hours of battery life. It also runs on an Intel Pentium Gold processor. This is not one of Intel’s top-of-the-line Core processors, but it’s still a significant jump up from the Cherry Trail Atom processor in the Surface 3.

Ian C. Bates for Wired

Pete Kyriacou, general manager of program management for Surface, says Microsoft has worked closely with Intel to tune the processor for this particular form factor. “If you compare the graphics here to the Surface Pro 3 running on an i5 [chip], it’s 33 percent better; and if you compare it to the i7, it’s 20 percent better,” Kyriacou says. “So we’re talking about Pentium processing, but, it’s better from a graphics perspective than a Core processor was just three years ago.”

A lot about the new Surface has been “tuned”—not just the guts of the Go, but its software, too. “We tuned Office, we then tuned the Intel part, we tuned Windows, we made sure that, in portrait, it came to life,” Panay says. “We brought the Cortana [team] in to better design the Cortana box—we went after the details on what we think our customers need at 10 inches.”

There’s usually a tradeoff when you’re buying a computer this small. You get portability at the expense of space for apps and browser windows. The Surface Go has a built-in scaler that optimizes apps for a 10-inch screen, and Microsoft says that it’s working with third-parties to make sure certain apps run great. There’s only so much control, though, you have over software that’s not your own. I was reminded of this when I had a few minutes to use the Surface Go, went to download the Amazon Kindle app in the Windows Store, and couldn’t find it there.

Making the Surface smaller was no small feat, according to Ralf Groene, Microsoft’s longtime head of design. Groene walks me through part of Building 87 on Microsoft’s campus, where the design studio is housed and where Groene’s team of 60 are tasked with coming up with a steady stream of ideas for potential products.

Ralf Groene, Microsoft’s head of design.

Ian C. Bates for Wired

Behind a door that says “Absolutely No Tailgating”—a warning against letting someone in behind you, not a ban on barbecues and cornhole—a small multimedia team makes concept videos. “Before products get made, we have a vision, we have an idea, and we express it in a video,” Groene tells me. If the video is received well by top executives, they know they have a winner. “Since there’s usually a timeline on how long processors are good for, we try to build as many iterations as possible of a product within that timeline.”

Once the Surface Go got the go ahead, Groene’s job became that of a geometrist: How do you fit all this stuff into a 9.6-inch enclosure? Going with magnesium again was an easy choice; it’s up to 36 percent lighter than aluminum, Groene says, and Microsoft has already invested in the machinery needed to work with magnesium. Some of the angles of the Go’s body are softer—Groene calls these “curvatures and radii”—making it more comfortable to hold close for extended time periods, like if you’re reading or drawing.

By far the biggest challenge was the Go’s Type Cover keyboard. The factor that always stays the same is the human, Groene says, and that includes fingers. Shrink a keyboard too much in your quest to make a laptop thin and light, and you’ll inevitably get complaints from people that their fingers are cramped, or that they land on each key with an unsatisfying thud. (Or worse, that the keyboard is essentially broken.)

The Go’s keyboard is undoubtedly smaller than the one that attaches to the Surface Pro. But it still has a precision glass trackpad, and a key travel that Groene says is fractionally less than the key travel on the Pro.

Ian C. Bates for Wired

Most notably, the Go’s keyboard uses a scissor-switch mechanism that was designed to give, as Groene describes it, the right “force to fire.” Each key is also slightly dished, a decision that Microsoft made after watching hours of footage of people typing, captured with a high-speed camera. The keys are supposed to feel plush and good under your fingers and not at all like a tiny accessory keyboard. (I only used the keyboard on the Go for a brief period of time, so I can’t really say what it would be like to use the keyboard to, say, type of a story of this length.)

I mention to Groene that Apple has long held the stance that touchscreens aren’t right for PC’s, something that Apple’s software chief Craig Federighi underscored in a recent WIRED interview when he said that they’re “fatiguing.” And yet, Microsoft is pretty committed to touchscreen PCs. What does Microsoft’s research show about how people use touchscreen PCs?

Groene first points out that the Surface laptop is the only one in Microsoft’s product line that has a classic laptop form factor and a touchscreen; the others are detachables, or, there’s the giant Surface Studio PC. But, more to the point, he says, “By offering multiple ways to get things done doesn’t mean that we add things. It’s not like the Swiss army knife, where every tool you put in makes it bigger.”

Sure, if you sit there for eight hours holding your arm up, it will get tired, Groene acknowledges. But that’s not the way people are supposed to use these things. “It’s the same thing with the pen. ‘We don’t need the pen because we are born with ten styluses,’” Groene says, wiggling his fingers, making an oblique reference to a well-known Steve Jobs quote about styluses. “However, having the tool of a pen is awesome when you want to go sketch something.”

“We are trying to design products for people,” he says, “and we don’t try to dictate how people use our devices.”

Ian C. Bates for Wired

So who is this tiny Surface Go actually made for? It depends on who you ask at Microsoft, but the short answer seems to be: anybody and everybody.

Urbanowicz, the product marketing manager, says Go is about “reaching more audiences, and embracing the word ‘and’: I can be a mother, and an entrepreneurial badass; I can be a student, and a social justice warrior.” Kyriacou, when describing the Go’s cameras, says to “think about the front line worker in the field—a construction worker, architect, they can capture what they need to or even scan a document.” You can also dock the Go, Kyriacou points out, using the Surface Connect port, which makes it ideal for business travelers. Groene talks about reading, about drawing, about running software applications like Adobe Photoshop and Illustrator. Almost everyone talks about watching Hulu and Netflix on it.

Panos Panay initially has a philosophical answer to this. It’s his “dream,” he says, to just get Surface products to more people. “I mean, that’s not my ultimate dream. But there are these blurred lines of life and work that are happening, and if you collect all that, Go was an obvious step for us.”

The evening before Panay and I chatted, he went to the Bellevue Square shopping center with his son, and at one point, had to pull out his LTE-equipped Surface Go to address what he said was an urgent work issue. His son asked if it was a new product, and Panay, realizing the blunder of having the thing out in public, tucked the Go in his jacket. To him, that’s the perfect anecdote: The lines between work and family time were blurred, he had to do something quickly, and when he was done, he could make his computer disappear.

Panos Panay, Microsoft’s chief product officer.

Ian C. Bates for Wired

Panay’s team also has a lot more insight into how people are using Surface products than it did eight years ago, he says, when Surface was still just a concept being developed in a dark lab. To be sure, Microsoft has been making hardware for decades—keyboards, mice, web cameras, Xbox consoles. But when Microsoft made the decision to start making its own PCs (and ultimately, take more control over how its software ran on laptops), it was a new hardware category for the company. It was a chance to get consumers excited about Microsoft again, not just enterprise customers.

The first few years of Surface were rocky. The first one, known as Surface RT, seems to be something that Microsoft executives would rather forget about; I don’t see it anywhere in the product lineups that Microsoft’s PR team has laid out ahead of my visit. Its 2012 launch coincided with the rollout of Windows 8, which had an entirely new UI from the previous version of Windows. It ran on a 32-bit ARM architecture, which meant it ran a version of the operating system called Windows RT. Depending on who you ask, the Surface RT was either a terrible idea or ahead of its time. (Panay says it was visionary.) Microsoft ending up taking a massive write-down on it the following year.

Since then, Microsoft has rolled out a series of Surface products that, due to the company’s design ethos, a newer operating system, and plain old Moore’s Law, have only gotten better. In 2013 it introduced the Surface Pro line, which are still detachables, but are built to perform like a premium laptop and can cost anywhere from $799 to $2,600. There’s the Surface Book line; the Surface Book 2 starts at $1,199 and clocks in around 3.5 pounds, making it a serious commitment of a laptop. The Surface Studio is a gorgeous, $2,999, all-in-one desktop PC, aimed at creative types. The Surface Laptop is Microsoft’s answer to Apple’s MacBook Air. It starts at $799, and got largely positive reviews when it launched last year.

Even still, Microsoft’s Surface line has struggled to make a significant dent in the market for personal computing. HP and Lenovo dominate the broader PC market, while Apple leads in the tablet category (including both detachables and slate tablets).“From a shipment perspective, the entire Surface portfolio has been fairly soft,” says Linn Huang, an IDC research director who tracks devices and displays. “It was growing tremendously, and then the iPad Pro launched and Surface shipments have either been negative, year-over-year, for the past several quarters, or flat.”

Microsoft has new competition to worry about, too: Google’s inexpensive Chromebooks, which in a short amount of time have taken over a large share of the education market.

“Do I think about Chromebooks? Absolutely,” Panay says, when I ask him about them. “Do I think about iPads? Absolutely. I use multiple devices. It’s exhausting. But this product is meant to bring you a full app suite.” Panay is highlighting one of the drawbacks of lightweight Chromebooks: Their lack of local storage. Meanwhile, he says, Surfaces are designed to let people be productive both locally on the device, and in the cloud when they need to work in the cloud.

And, while Panay says he’s keeping an eye on Chromebooks, he insists that Microsoft didn’t build Go to compete with Chromebooks. That said, Surface Go will have a school-specific software option: IT administrators for schools can choose whether they want a batch of Go’s imaged with Windows 10 Pro Education, or Windows 10 S mode-enabled.

Panay wouldn’t comment on Microsoft’s plans for the future beyond Surface Go, although there have long been rumors of a possible Microsoft handheld device, codenamed Andromeda. If the Surface Go is something of a return to a smaller, 10-inch detachable, then a pocketable device that folds in half, one that could potentially run on an ARM processor, would be something of a return to mobile for Microsoft. Qualcomm has also been making mobile chips that are designed to compete directly with Intel’s Core processors for PCs.

For now, though, Panay is throwing all his chips behind the Surface Go, and making a big bet that this little device is the one that will make the masses fall in love with Surface. He tends to chalk up past Surface products, even the ones that didn’t do well, as simply before their time. Now, with the Go, he says, “it’s time.”


More Great WIRED Stories

Grab to launch grocery delivery service in race for growth

SINGAPORE (Reuters) – Grab plans to launch a grocery delivery service, and is betting on its network of 7.1 million drivers, agents and merchants to steer its expansion beyond its core ride-hailing business across Southeast Asia, its chief executive told Reuters.

The strategy to provide “everyday” offerings underscores Grab’s ambition to secure its dominant market share at a time when main rival Go-Jek is embarking on a $500 million expansion into markets including Thailand and Singapore.

Go-Jek, the main ride-hailing player in Indonesia that is backed by the likes of KKR and Warburg Pincus, has expanded into digital payments, food delivery and on-demand cleaning and massage services.

Grab, which is transforming itself into a consumer technology group, already offers loans, electronic money transfers, payments and food delivery services.

“We believe that as we offer more localized everyday services, there will be more users and higher engagement across the user base,” Anthony Tan, Grab’s 36-year-old co-founder and group CEO, told Reuters in an interview on Monday.

“When that happens, it attracts more partners and it’s a virtuous upwards cycle. Great for business,” said Tan, who scored a big win when Uber handed over its regional operations to Grab this year in return for a stake.

A grocery delivery service could pit Singapore-headquartered Grab against firms such as Amazon.com and RedMart, owned by Alibaba-backed Lazada, that offer online grocery shopping in the city-state.

Tan, however, said Grab was also open to partnering with existing players.

Grocery deliveries is part of Grab’s plan to offer a variety of services through a new open platform that will let partners access parts of its technology such as logistics and payments.

“Whether it’s food, whether it’s groceries, we need to make sure that all these are well funded, both technologically and financially,” Tan said at Grab’s spacious new downtown office in Singapore, where boxes of Apple Macbooks were piled up.

CREATE A SUSTAINABLE BUSINESS

Grab, which employs 5,000 people, counts firms such as Japan’s Softbank Group and Chinese ride-hailing firm Didi Chuxing among its investors.

Last month, Toyota Motor Corp agreed to pump in $1 billion in Grab, which a source familiar with the matter said valued the company at just over $10 billion.

Grab facilitates over 6 million rides per day across eight countries and more than 200 cities, up from 2.5 million rides just a year ago, making it one of the largest ride-hailing platforms in the world.

Tan said Grab was profitable in many markets but declined to give a target for the company’s overall profitability.

Grab says it had a revenue runrate, a bespoke metric closely watched by analysts, of $1 billion.

“The goal is not to be blindly shooting for a target. The way to think about is, how do we create a sustainable business.

To this end, Grab is revamping its app, that will have a new interface offering users quicker access to its services such as payments and food delivery. It will also introduce a newsfeed.

When asked about plans for an IPO, Tan said it was something the company “should think about, but not immediately for sure”.

Reporting by Aradhana Aravindan and Anshuman Daga; Editing by Himani Sarkar

Samsung's Galaxy S10 Has A Nasty Surprise

The Galaxy S10 is not what you expect. With Samsung determined to pull out all the stops for its 10th-anniversary model, new information has now revealed you will have to pay extra if you want its headline feature… 

‘Great Secret Features’ and ‘Nasty Surprises’ are my regular columns investigating the best features / biggest problems hidden behind the headlines.

Concept Creator

Galaxy S10 concept

The ever-reliable SamMobile reports Samsung will not bring its long-awaited in-display fingerprint reader to the entry-level Galaxy S10. Instead, Samsung will have it “side-mounted” on the frame in an effort to cut costs.

Of course, the obvious question to ask is: Why would Samsung take such a risk with such an important phone?

The answer lies in a change of strategy. Samsung is expected to release three Galaxy S10 models, rather than the usual two with the third an ‘entry-level’ device. The problem at this stage is ‘entry-level’ is undefined: it may be a significantly cheaper option like Apple’s upcoming budget iPhone X or the standard model with the in-display reader saved for two new high-end options much as Apple did last year when releasing the iPhone X above the iPhone 8 and iPhone 8 Plus.

In my opinion, hope (and common sense) is Samsung will do the former though whether the Galaxy range can take dilution of its flagship range as well as Apple’s iPhone, remains to be seen.

OnLeaks, 91Mobiles

Galaxy Note 9 final design shows it will have a rear fingerprint sensor

What is an objective fact, however, is Motorola, Sony and Vivo have all previously tried side-mounted fingerprint readers on their phones and all without success.

Having seen both its phones and their sales stagnate in 2018, I commend Samsung for trying to do something different. Then again, with the Galaxy Note 8 also treading a risk path and Samsung determined to charge a fortune for its most exciting new phone, I do worry that fragmenting the Galaxy S10 on the range’s 10th anniversary is not the way to go…

___

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More On Forbes

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Samsung’s Radical Galaxy Smartphone Costs $2,000

Samsung’s Galaxy X And Galaxy S10 Plans Revealed

Smartphone maker Xiaomi's shares open 2.9 percent down on debut in HK

HONG KONG (Reuters) – Chinese smartphone maker Xiaomi Corp’s (1810.HK) shares dropped 2.9 percent on debut in Hong Kong on Monday, in a blow to investor sentiment for the tech sector as a raft of peers line up their own listings in the city.

Xiaomi founder, Chairman and CEO Lei Jun (L) and CFO Shou Zi Chew attend the listing of the company at the Hong Kong Exchanges in Hong Kong, China July 9, 2018. REUTERS/Bobby Yip

Xiaomi priced its Hong Kong initial public offering (IPO) at HK$17 per share, the bottom of an indicative range, raising $4.72 billion in the world’s biggest technology float in four years.

Slideshow (2 Images)

The shares touched a low of HK$16.50 in opening deals on Monday.

Xiaomi’s listing comes at a delicate time for Hong Kong’s stock market, with the benchmark Hang Seng index falling 2.7 percent last week and 5.8 percent this year as investors fret over escalating trade tensions between the United States and China.

The Sino-U.S. trade dispute has roiled financial markets including stocks and currencies, and the global trading of commodities from soybeans to coal over the past several weeks.

The weak pricing values the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, almost half its original $100 billion ambition earlier this year.

Xiaomi’s float failed to attract strong interest among investors with the retail tranche gathering demand that was only 9.5 times the number of shares on offer, according to its filing on Friday.

By contrast, China Literature Ltd (0772.HK), the e-book arm of Chinese gaming and social media firm Tencent Holdings (0700.HK), late last year raised $1.1 billion for its Hong Kong IPO amid heavy demand, with the retail portion being 625 times oversubscribed.

Reporting by Julie Zhu; Writing by Sumeet Chatterjee; Editing by Muralikumar Anantharaman

3 YouTube Daredevils Dead in Waterfall Accident

Three popular YouTubers died on Tues., July 3, after accidentally falling over a waterfall more than 1,000 feet in height. Two of the deceased were founders of the High on Life YouTube channel, which featured exotic travel and dangerous outdoor stunts.

The three victims were reportedly part of a group of seven swimming near Shannon Falls outside Squamish, British Columbia. According to eyewitness reports, Megan Scraper slipped and fell 30 meters into fast-moving water just above the falls. Alexey Lyakh and Ryker Gamble are believed to have jumped into the water to try and save her, but all three were swept over the falls. Their bodies were recovered the next day.

According to the CBC, Gamble and Lyakh started High on Life with two other childhood friends. Previous videos posted by the deceased and the High on Life channel show lots of exotic travel as well as some high-risk outdoor activities, including cliff jumping and crossing decrepit rail bridges. Some of the group’s YouTube videos emphasize the danger of certain activities. One video, featuring Gamble descending a harrowing natural water chute, is accompanied by a disclaimer stating that “Our team has been trained and involved in gymnastics, diving, stunts, and the extreme sports community for over a decade,” and warning others against trying to replicate what they see.

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The accident has nonetheless added new fuel to long-running debates about the potential danger of social media featuring risky activities. That’s in large part because the High on Life group has previously been accused of violating safety and natural preservation rules. In 2016, Gamble and Lyakh posted video showing themselves leaving designated trails in Yellowstone National Park and walking near the Grand Prismatic Spring, an ecologically delicate and potentially dangerous hot spring. They were ultimately sentenced to seven days in jail and apologized for their behavior.

Members of the group, including Gamble and Lyakh, were also accused of violating rules elsewhere. Those incidents included using bicycles in prohibited areas in Death Valley National Park; swinging from the Corona Arch rock formation in Utah; and wakeboarding on the sensitive Bonneville Salt Flats in the same state. At least some of those incidents were filmed, according to citations.

High on Life currently has more than 500,000 subscribers, no doubt partly thanks to such high-risk stunts. Some have argued that the quest for thrilling footage led the team to take more extreme risks, without the safeguards or oversight that might have been imposed by a more conventional media organization. That dynamic mirrors the documented tendency of algorithm-driven media platforms to encourage ideological extremism among users.

In a video message posted after the tragic deaths, other members of the High on Life team praised the trio’s legacy. “They lived every single day to its fullest,” the memorial stated in part. “They stood for positivity, courage, and living the best life that you can, and they shared and taught their values to millions of people worldwide.”