National Post Tech Desk

The European Union escalated its four-year-old probe into Google Inc. on Wednesday, accusing the Internet giant of abusing its dominance of the search-engine market and starting a new investigation into its Android mobile-phone software.

The European Commission sent a “statement of objections” to Google that alleges the company unfairly favors its own comparison shopping service above rivals. Regulators will also look at Google’s contracts with phone and tablet makers to check if they are forced to use the company’s services or blocked from adopting modified versions of Android.

“If the investigation confirmed our concerns, Google would have to face the legal consequences and change the way it does business in Europe,” EU Competition Commissioner Margrethe Vestager said in a statement Wednesday. “I want to make sure the markets in this area can flourish without anti-competitive constraints imposed by any company.”

The EU’s patience with Google has run out after three settlement bids failed to satisfy critics, who said the Mountain View, California-based company was wielding its power over search results to unfairly promote its own services and paid ads. The Android inquiry opens a new front that may hamper Google’s bid to gain a stranglehold on the mobile ad market.

Amit Singhal, senior vice president of Google Search, said that the company looks forward to make its case in response to the EU complaints.

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“While Google may be the most used search engine, people can now find and access information in numerous different ways – – and allegations of harm, for consumers and competitors, have proved to be wide of the mark,” Singhal said in a statement.

Google has 10 weeks to respond to the EU’s objections and can seek a closed hearing with regulators to make its case.

Sending antitrust objections, which lay out where the EU thinks Google is breaking the law, pushes the investigation into new territory. Apart from the risk of fines, it may result in demands for Google to change its behavior. Any order for it to change how search results are generated or how advertising is displayed may affect revenue.

“We do not wish to interfere with screen design, with or how the algorithm works, Vestager told reporters. ‘‘This is not what we are thinking about. What we would like to see is that shoppers are able to see the best shopping results.’’

The EU is continuing to investigate other concerns about Google’s search advertising, such as exclusivity requirements and ‘‘undue restrictions’’ on advertisers, it said. The EU is also looking at the legality of Google’s copying of rivals’ web content.

The European market contributes about 35% of Google’s revenue, according to Carlos Kirjner, a New York-based analyst at Sanford C. Bernstein & Co. Its market share in search exceeds 90% in most European markets, compared with about 65% in the U.S.

The EU’s move is a U-turn from earlier efforts to seek a settlement, which would have seen them drop the investigation if Google made minor changes to its search pages. Negative feedback from companies, as well as criticism from French and German politicians, forced the EU ditch an accord last year.

The EU has been probing allegations since 2010 that Google’s search page isn’t fair when people seek services online. Microsoft Corp., Expedia Inc., publishers and others have asked the EU to examine complaints that Google favors its own services over competitors and hinders specialized search engines that compete with it.

Regulators have been looking at Google’s Android software for mobile phones since 2013 after receiving a complaint from an industry group backed by Microsoft and Nokia Oyj.

Google said in a separate statement that its partner agreements with mobile-phone makers are voluntary.

‘‘We understand that with success comes scrutiny,” said Google’s Hiroshi Lockheimer, VP of engineering for Android, on Google’s European blog Wednesday. “But it’s not just Google that has benefited from Android’s success. The Android model has let manufacturers compete on their unique innovations.”

The EU also got a complaint last year from independent record labels that targeted Google’s YouTube online video site, alleging that Google threatened to block artists’ videos during contract talks for a streaming service.

–With assistance from Brian Womack in San Francisco and Andrew Clapham, Stephanie Bodoni and Gaspard Sebag in Brussels.

Bloomberg.com

An unmanned Falcon 9 from billionaire Elon Musk’s SpaceX blasted off on a resupply mission to the International Space Station but the company missed again in its attempt to recover the rocket’s first stage.

The rocket, carrying its Dragon cargo spacecraft and 4,300 pounds (1,950 kilograms) of supplies and payloads, rumbled aloft at 4:10 p.m. New York time Tuesday from Cape Canaveral, Florida.

Weather 60% "go" for #Falcon9 launch today @ 4:10pm ET. Lightning/clouds still a concern. http://t.co/tdni5406Hi pic.twitter.com/THhVBEE3Oi

— SpaceX (@SpaceX) April 14, 2015

“Rocket landed on droneship, but too hard for survival,” Musk said in a Twitter post about 20 minutes after the launch.

Odds of rocket landing successfully today are still less than 50%. The 80% figure by end of year is only bcs many launches ahead.

— Elon Musk (@elonmusk) April 13, 2015

Space Exploration Technology Corp. wants to cut the cost of spaceflight by creating reusable rockets. The Hawthorne, California-based company attempted to guide the booster to a vertical touchdown on Just Read the Instructions, a vessel floating hundreds of miles out in the Atlantic Ocean.

SpaceX in January first tested the ability of the Falcon 9 to touch down its landing legs on a barge. In that attempt, the 14-story-tall rocket ran out of hydraulic fluid shortly before it hit the ship and broke into pieces.

“Rocket made it to drone spaceport ship, but landed hard,” said Musk on Twitter Jan. 10. “Close, but no cigar this time. Bodes well for the future tho.”

#Falcon9 first stage approaches Just Read the Instructions. pic.twitter.com/XzmnYslNlc

— SpaceX (@SpaceX) April 14, 2015

In February, another test was called off because of rough seas.

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On Wednesday, Activision announced Guitar Hero Live, the newest instalment of the once popular Guitar Hero franchise, slated for an autumn 2015 release date.

The game is being developed by FreeStyleGames, the same studio that worked on DJ Hero and DJ Hero 2. Instead of playing against computer-generated characters, the game now features live-action video of real people in front of a crowd.

[youtube=http://www.youtube.com/watch?v=6SnIZgESm4c&w=640&h=390]

While, the series’ classic input system remains, it has been drastically overhauled, dividing its controller’s top three frets down the middle, creating one button on the inside and one button on the onside of each fret. Additionally, rather than the colour coded green, red, yellow, blue and orange buttons from other Guitar Hero games, Guitar Hero Live‘s buttons are labeled in monochrome black and white.

Past Guitar Hero songs and accessories will not be compatible with this new entry in the franchise, so those plastic instruments you’ve been hanging onto will continue to be almost useless.

The series’ popular multiplayer mode is also returning and is set to allow players to challenge both friends and random players, similar to modes featured in past Guitar Hero games. Guitar Hero Live is set to cost $99.99 and will be released on the PlayStation 4, Xbox One, PlayStation 3, Xbox 360 and Wii U, as well as “select mobile devices.”

The mobile version of the game will be compatible with the guitar controller and can be streamed to your television through a process Activision has not yet outlined (possibly a Google chromecast like device), so it’s possible to play the game without a home console.

ActivisionGutar Hero Live's controller is reportedly very different from its predecessors.

The confirmed tracklist for the game currently includes: The Black Keys, Fall Out Boy, My Chemical Romance, Gary Clark, Jr., Green Day, Ed Sheeran, The War on Drugs, The Killers, Skrillex, The Rolling Stones, The Lumineers, Pierce the Veil and Blitz Kids.

Harmonix, the creators of competing music franchise, Rock Band, recently announced that they have plans to revive their music series with Rock Band 4, also slated for a fall release date. Rock Band 4 will feature a more traditional guitar controller, and will be backwards compatible with old songs and (possibly) instruments from old versions of the game.

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Ottawa-based Shopify Inc. announced on Wednesday it has filed documents for a proposed public offering in Canada and the United States, after months of industry speculation.

The company has filed to list its shares on the Toronto Stock Exchange and the New York Stock Exchange under the ticker symbols “SH” and “SHOP”, respectively.

Shopify provides companies with an online storefront, giving retailers a system that collects payments and processes mobile credit card transactions. The company’s website states its clients include 150 retailers in 150 countries that include notable companies such as Google Inc, Tesla Motors Inc and The Gatorade Company Co.

More to come…

Intel Corp., the world’s largest chipmaker, gave a forecast for second-quarter sales that was in line with analysts’ estimates, helped by demand for chips that power servers in data centres.

Revenue will be US$13.2 billion, plus or minus US$500 million, the Santa Clara, California-based company said Tuesday in a statement. Gross margin, or the percentage of sales left after deducting production costs, will be about 62%. That compares with average analysts’ projections of US$13.45 billion in sales and margin of about 61%, according to data compiled by Bloomberg.

While demand for PC chips is declining as more consumers rely on tablets and smartphones to get online, the data centres needed to churn out information and services for those mobile devices are driving orders for higher-end Intel server processors. Laptop production also rebounded last month, potentially helping Intel’s sales recover after a slump early in the year led it to slash its first-quarter revenue forecast.

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“I wouldn’t say it’s all clear, but some of the most recent data points look better,” said Craig Ellis, an analyst at B. Riley & Co. in San Francisco, who recommends buying Intel shares. “There should be sequential growth in the second quarter for PCs.”

Intel shares rose 3% in extended trading following the report. They had fallen less than 1% to US$31.49 at the close in New York, leaving the stock down 13% for 2015.

The company said revenue in the first three months of the year was little changed at US$12.8 billion. First-quarter net income rose to US$1.99 billion, or 41 US cents a share, from US$1.93 billion, or 38 UScents. That compares with average analyst estimates for earnings of 41 US cents on sales of US$12.8 billion.

Bloomberg News

OTTAWA — Smaller players — even some relatively obscure ones — in Canada’s wireless market will likely gain a little ground on the bigger telecom companies through the federal government’s latest auctioning of spectrum, says one industry expert.

But the rules for the auction, which began Tuesday, are so “ridiculous” that Ottawa likely won’t achieve its goal of creating a viable fourth major wireless carrier, said Dvai Ghose, global head of equity research and telecommunications with Canaccord Genuity.

Industry Minister James Moore announced the start of the auction — the second such bidding process so far this year — saying Canadians want the government to make decisions that will give them more choice, lower prices and better service in the wireless sector.

“Our government is working to protect the interests of consumers in the wireless sector,” he said in a statement.

“Promoting a healthy wireless industry through competition is the best way to drive results for consumers.”

The auctioning of airwaves covers the higher-frequency 2,500 megahertz spectrum used to provide not only high-bandwidth functions like streaming video to smartphones, but also for home Internet service in rural areas where wired service is unavailable.

Ottawa has placed caps on how much spectrum companies can own, a move that will almost shut out Rogers and Bell from the bidding because they already own large chunks of it in some regions.

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Telus, considered Canada’s number three telecom service provider, owns almost no spectrum in the 2,500 Mhz frequency range and is expected to buy big.

Telus was the biggest buyer in the AWS-3 auction in March, paying over $1.5 billion for 15 licences, while Bell Mobility paid nearly $500 million for 13 licences.

But companies operating in provinces where there are already four industry players are being left out because the auction “rules are so ridiculous,” said Ghose.

When the last bidding process was carried out in March, 30 of the 50 megahertz set aside for new entrants went on the block. But all four firms operating in Manitoba and Saskatchewan were eliminated from bidding because they didn’t qualify, he noted.

“How can that be in the public interest?” Ghose asked.

This latest auction is not expected to generate anywhere near the $2.11 billion raised last month.

However, it will open the door to a number of smaller, rural wireless providers, who use high-frequency spectrum to provide home Internet service.
Companies such as Xplornet Communications Inc., CCI Wireless and SSi Internet Inc. are all registered as bidders.

Wind Mobile, Quebecor Inc. and other mobile firms have also said they would participate in the auction.

Moore has said the spectrum auctions are aimed at increasing competition by giving smaller carriers preferential access to air waves.

But while those smaller firms so far have purchased about one quarter of the available spectrum, they collectively still only account for about six per cent of market share, said Ghose.

The big three companies — Bell, Rogers and Telus — continue to represent 90 per cent of the market.

The 2,500 megahertz auction is divided into three geographic regions, where each provider has a cap of 40 megahertz per region.

Results of the auction are expected to be announced within five days after the close of bidding.

The Canadian Press

CALGARY — Shaw Communications Inc. says ongoing efforts to improve its customer care operations cut into its profit in the second quarter but provided positive momentum for the longer term.

The Calgary-based telecom and media company says it recorded $38 million of expenses related to severance and employee-related costs for about 1,600 affected employees.

Shaw’s profit for the three months ended Feb. 28 was $168 million, down 24 per cent from the same period last year when it had a gain from the sale of specialty TV channels.

This year’s second quarter net income amounted to 34 cents per share, which was five cents below the Thomson Reuters analyst estimate of 39 cents per share.

Shaw said its second quarter operating income before restructuring costs and amortization was $557 million, up 5.5 per cent from $528 million a year earlier.

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It said the operating income benefitted from a more focused approach to its consumer-oriented telecom services, as announced last year, as well as growth in its two business-oriented segments.

Its media segment — which includes specialty TV channels and the Global Television network — had $58 million of operating income before items, 4.9 per cent from $61 million last year.

The consumer telecom segment had $409 million of operating income before restructuring and amortization, up from $408 million.

The business network segment increased operating income by $6 million to $65 million while the new business infrastructure segment contributed to $25 million in the most recent quarter, compared with nil last year.

Shaw’s overall revenue rose to $1.34 billion, up about five per cent from last year. Revenue from the media segment was flat, dipping to $238 million from $239 million in the second quarter of 2014.

“The positive operating momentum continues across our businesses,” chief executive Brad Shaw said in a statement.

“We are seeing the financial and operational benefits of the restructuring we started last year as part of our multi-year Focus to Deliver initiative . . . enhancing our efficiency and growth potential while better serving the needs of customers and viewers.”

Toronto-based app-maker TouchBistro has raised $6 million in Series A funding, dipping back into the purse of its top existing investors and inking a new strategic partnership with another.

In addition to fresh investments from Kensington Capital Partners, Relay Ventures and Difference Capital, the upstart also attracted financing from Just Eat, a U.K.-based online marketplace for restaurant delivery with 45,700 outlets and more than eight million users in 13 countries, the company announced Tuesday.

TouchBistro software enables restaurant waiters to take and process an order, split a bill, and email a receipt, among other features, at the table side on a handy iPad tablet. With clients ranging from food trucks to bars to coffee shops, the app can also be used at stadiums, for example, so fans can order a snack without ever leaving their seat or missing the big play.

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With his sights set on catering to the European market – and eventually to Asia – TouchBistro founder and chief executive Alex Barrotti said the new ties with Just Eat will help transplant the Canadian-made app across the pond and beyond. Now, TouchBistro can begin to realize its plan to translate the app into other languages such as French, Spanish, Portuguese and Italian.

“There’s a lot of overlap [in the customers who use TouchBistro and Just Eat] and we want better, tighter integration,” Barrotti said in a phone interview. “We wanted to partner with someone who had a presence in Europe. [Just Eat] gives us a better way to reach those people than if we just translated the app and didn’t have any feet on the street.”

The company also boasted that its mobile point-of-sale solution transacted more than $1 billion annually at both fine dining and quick service restaurants. Barrotti declined to disclose the number places currently using the TouchBistro app, but did say the total venue count has grown 110 per cent since it closed its $4.5-million seed funding round back in November 2013. Monthly recurring revenue is up 203 per cent during the same period. Clients, who pay a monthly subscription fee per connected device, average 2.5 iPads.

Roughly three-quarters of its 42 employees call the company’s Toronto office home whereas the rest are based in New York City, helping facilitate expansion in the U.S. Barrotti says TouchBistro is in the midst of a growth spurt, with as many as six new hires set to start over the next 10 days.

During the past year, TouchBistro was crowned the top-grossing food and beverage app on Apple Inc.’s App Store in 33 countries, according to a company release published Tuesday. Replacing pen and paper with the TouchBistro app can help streamline how a meal is ordered, processed and paid for, especially for big dining groups where mistakes are easily made and the time between arriving and eating is stretched.

“For the restaurant, it means they can turn over tables quicker, provider better service and, in a lot of our clients’ case, they can take payment on the device,” Barrotti added. “It saves tremendous time and cost.”

When asked if he would consider offering the TouchBistro application on other operating systems, Barrotti pledged his allegiance to Apple’s iOS. “In the Android market there’s too much fragmentation,” he said. “If someone calls us from overseas and says they have an Apple iPad 2, we know precisely what they have, what CPU, what memory, what configuration. Support is easier.”

TORONTO – Postmedia Network Canada Corp. sealed its $316 million deal to buy 173 Sun Media publications on Monday, creating the largest digital news and newspaper organization in Canada.

The closing of the acquisition is the last hurdle in Postmedia’s bid to acquire Sun Media’s English-language properties, which include dailies in major Canadian cities such as Toronto, Calgary, Edmonton, Ottawa, Winnipeg and Vancouver.

The deal brings in 2,500 more employees into Postmedia, increasing its total headcount to more than 5,000.

“With the completion of this transaction Postmedia becomes one of Canada’s largest newsmedia companies with even more compelling, made-in-Canada offerings for marketers,” said Paul Godfrey, chief executive of Postmedia.

The deal to buy the Sun Media newspapers from Quebecor Inc. was originally announced in October. At the time, the deal involved 175 Sun Media newspapers, but one community newspaper has since closed and two publications in Fort McMurray were consolidated.

The acquisition gained regulatory approval from the Competition Bureau last month.

Ambarish Chandra, a professor at the University of Toronto’s Rotman School of Management who has written academic studies on newspaper mergers, said the closing and approval of the deal sets an important precedent in Canada.

“It is clear consolidation, especially in traditional media like newspapers, is necessary if some of these publications want to remain sustainable,” he said. “Now if other media properties want to seek such large mergers in the future, there’s already been precedent set. It’s clear the Competition Bureau doesn’t see a problem, so future consolidation shouldn’t be problematic.”

The deal creates an organization that brings in 12 million unique monthly visitors to its various news websites, while also creating a new source of revenue that could potentially help Postmedia become more profitable.

The company pointed out that based on last year’s earnings, the Sun Media properties will bring in $175 million in new annual revenue. Godfrey has said the company expects annualized cost synergies in the range of $6 million to $10 million from the deal, though he stressed the newsrooms would remain separate.

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Postmedia funded the acquisition with an equity rights offering that raised $173.5 million and issued $140 million of debt, set to mature in 2017. The company also used corporate cash and money raised from the sale of the Montreal Gazette’s production facility.

The closing of a deal highlights how the media landscape in Canada has drastically changed in the past decade. In a conference call following the deal’s approval last month, Godfrey said that it was unlikely such a deal would have been approved 10 years ago.

Chandra said that the deal highlights how rapidly the media landscape continues to evolve in Canada as newspapers deal with a drop in advertising, declining circulation and increased digital competition.

“Part of the reason why there is no challenge to this merger is I think regulators realize that for a traditional industry like newspapers, there needs to be a different way of doing things to survive,” Chandra said.

As Nokia Oyj reemerges as a contender in the telecommunications industry, it’s never been in a better position to acquire Alcatel-Lucent SA.

Nokia has transformed itself from a fumbling mobile-phone maker into a slimmer company focused on wireless networking. The stock has tripled in two years amid the comeback. Now, it’s in talks over a takeover of Alcatel-Lucent.

Nokia’s stock was almost 40 per cent more valuable than Alcatel-Lucent’s before Tuesday, when the companies said they’re in advanced negotiations about a combination. That makes a cash-and-stock bid feasible and accretive to earnings, according to data compiled by Bloomberg. And its coffers are growing: The Finnish company sold its devices unit to Microsoft Corp. last year for about $7.5 billion, and it’s said to be exploring a sale of the $2 billion maps business next.

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Still, Nokia will need to make a persuasive offer for its $13 billion French rival. They’ve held talks in the past that didn’t go anywhere.

“Nokia thinks it’s worth X, and Alcatel thinks it’s worth Y,” Mike Walkley, an analyst for Canaccord Genuity Group Inc., said in a phone interview. “Nokia has a strong balance sheet, but they’re going to stick to their guns. It’s going to come down to, do they close the gap on the valuation?”

Mobile Customers

Alcatel-Lucent’s wireless assets would give Nokia networks that serve some 1.3 billion mobile subscribers in China and contracts with the two biggest U.S. carriers — Verizon Communications Inc. and AT&T Inc. But Alcatel-Lucent’s core networking-equipment segment, which includes its IP routing business, would expand Nokia’s portfolio at a time when efficiently transferring the booming amount of data from services such as Netflix is crucial.

Together, Verizon and AT&T account for 25 per cent of Alcatel-Lucent’s revenue, whereas Nokia’s top customers are in Asia and Europe — China Mobile Ltd., SoftBank Corp. and Telefonica SA, according to data compiled by Bloomberg.

Combined Company

The combined entity would become the biggest maker of wireless-network equipment, overtaking Sweden’s Ericsson AB and Huawei Technologies Co. of China, according to researcher IDC.

Nokia shares closed on Monday in Europe with a 36 per cent valuation premium to Alcatel-Lucent, based on earnings before interest, taxes, depreciation and amortization. That gives it plenty of firepower to make a cash-and-stock bid.

If Nokia were to pay a hypothetical 30 per cent premium, with half in cash and half in stock, the deal would increase next year’s earnings, according to data compiled by Bloomberg.

On Tuesday, Alcatel jumped as much as 18 per cent in Paris, while Nokia slid as much as 8.3 per cent on the Helsinki exchange.
Bloomberg.com

Elon Musk plans to revolutionize space travel by landing a used rocket – plummeting to Earth – on a floating, unmanned barge. While this may appear to be a practice of the absurd, it’s another step to changing space travel, and even putting humans on Mars, according to space experts.

Although he’s still playing with electric cars, and giant battery factories in Nevada, Musk is never far from his first love, space. The launch of the reusable rocket marks yet another attempt at innovation by the South-African-born Canadian entrepreneur.

SpaceX plans to launch the Falcon 9 rocket from Cape Canaveral, Florida, with a Dragon capsule containing 2015 kg of supplies for those aboard the International Space Station (ISS), but it’s the falling rocket that experts will be watching.

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If all goes as scheduled, the hope is to land the 21-metre-tall Falcon flat against the 91-metre-wide barge while the ship sways in the water. It’s a task that requires a high degree of accuracy, like hitting a multimillion-dollar bulls-eye.

(The launch, originally slated for Monday, was delayed due to thunderstorms, so postponed till Tuesday later afternoon.)

If the landing is successful, it has the chance to transform the pace travel economy.

“It would, over time . . . be the holy grail of what we’ve been looking for which is a way to reduce the cost of launch,” said Marc Boucher, senior editor and CEO of space media company SpaceRef.

Reducing the costs of launches – the Falcon rocket itself reportedly costs $60 million – is one of the main goals of space companies everywhere.

Depending on the mission, Boucher said that past rockets fire for maybe 10 minutes before they are decoupled from the capsule and fall to Earth, never to be used again. Musk, who is the CEO and founder of SpaceX, has equated the single-use of the rocket with flying a 747 once to London and then throwing it away.

If successful, the reusable rocket could potentially save millions in space travel. The rocket fuel costs around $200,000 each launch, peanuts compared to the dozens of millions rockets cost.

“Elon Musk has said at one point that probably we’re talking 10 or 20 or 30 more times we can use [the rockets],” Boucher said.

Jurek Sasiadek, a professor of aerospace engineering at Carleton University, is similarly hopeful.

“The economy is catching up to the desire of the missions we want to do,” said Sasiadek, saying that with reduced costs, the ability to do more in space will follow.

“This is important step, not in the sense of technology development, but in the sense of the economics catching up. Without [the cost being lowered missions like going to Mars] won’t be possible. [The rocket is] not so spectacular . . . but [it’s] much more important.”

This isn’t the first of SpaceX’s attempts to change space travel, nor event the most daring. There are plans to build a private spaceport – the first of its kind – to launch ships, ending a reliance on using NASA and government launch ports.

Besides the rocket, aboard the payload going to the ISS are a few Canadian contributions, including data processors developed by Canadian CALM Technologies for use in osteoporosis research aboard the ISS, the JCAP adapter plate that will allow the station’s crew to transfer parts between the interior and exterior developed by MacDonald, Dettwiler and Associates of Canadarm2 fame, and 600,000 tomato seeds to be used for educational purposes in classrooms across Canada when they return to Earth.

This is not the first time SpaceX has attempted to land its rocket. They attempted it once before in January but it was unsuccessful.

They will fix it, sooner or later,” Sasiadek said, “even if they don’t do it right this time, they will do it next time.”

Financial Post
sKarmazyn@nationalpost.com

More Canadians are ditching their traditional TV subscriptions in 2014 than ever before, according to a new report.

There were 95,000 fewer television subscribers in 2014, a stark 12-month decrease in the number of people in Canada who paid to watch TV the old-fashioned way – versus the 13,000 net dip in 2013. The losses are anticipated to widen to 97,000 in 2015, the comprehensive report published Monday by the Convergence Consulting Group states.

“We weren’t projecting that we would see such a big decline this year. It caught us a bit off guard,” said Brahm Eiley, a principle at the Toronto-based firm who authored the report. “We’ve seen more people in the last few years either decide to get rid of television or people deciding to never get television at all.”

From 2007 to 2011, cable subscriptions grew annually by an average 220,000. The industry could count on new households to purchase TV subscriptions in past years, says Eiley, but it’s not the priority it once was.

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He attributes the net decline seen in 2014 to a combination of the so-called “cord-cutting and cord-nevers.”

According to data compiled by Convergence Consulting, cable and satellite providers are taking the brunt of this year’s loss, a trend Eiley expects will continue in 2015 as more Canadians opt to consume content through online-streaming platforms such as Netflix or even from illegal downloads.

Given these new usage patterns, revenue from residential broadband services in Canada unsurprisingly grew to $6.2 billion, up 8 per cent, as the Internet reached an estimated additional 408,000 homes in 2014.

Despite all the rage of Netflix and the like, people who do not have a TV subscription with a cable, satellite or telecommunications company account for just one-fifth – 21.6 per cent, or 3.09 million homes – of all Canadian households. While this figure has risen since 2012 and is expected to jump to 3.3 million homes in 2015, much of the population still watches the game or their favourite show on a TV screen.

“The vast majority of households still have a linear TV subscription,” Eiley added. “We can either talk about the dog’s body or its tail. That 21.6 per cent is still the tail. It’s growing, and it’s growing faster than it’s ever grown before, but the majority are still TV subscribers.”

Financial Post
cpellegrini@nationalpost.com

In a speech before Ottawa’s Canadian Club in March to announce a huge change to the way Canadians pay for television, the chairman of Canada’s broadcast regulator asked why our networks can’t be more like AMC, the U.S. cable and satellite channel.

Canadian Radio-television and Telecommunications head Jean-Pierre Blais named AMC, best known as the home of Mad Men and Breaking Bad, as an example of one network that has found success by investing in quality over quantity. He noted such critically acclaimed niche hits have ushered in a cable TV renaissance, with feature film directors and big name actors suddenly interested in making shows. Had it not been for Mad Men’s trail-blazing effect, the millions of people who watched the season premieres of HBO’s Game of Thrones and Silicon Valley on Sunday might have been stuck with blander fare with a broader appeal in the vein of CBS’s Two and a Half Men.

“Some may balk at the suggestion that Canadian programming can reach the same heights as shows created in other major global markets. Not me. I know it can succeed,” Blais said. “They can, provided the climate under which they produce their works changes and becomes less rigid.”

But in that same speech, Blais announced the dismantling of the system that made Mad Men and shows like it profitable — bundled cable and the affiliate fees that come with it. In a recent interview with the Hollywood Reporter looking back on Mad Men’s early days as it enters its final episodes, AMC’s former head of programming and production said the network was looking for a show that would make a splash so cable companies wouldn’t dare leave the channel out of bundles, ensuring steady affiliate fee revenue for AMC.

Blais blamed red tape and resistance to change for the dearth of Canadian hits, but people who work in the business say the real challenge is getting funding for big-budget, ambitious projects. And by requiring cable companies to let consumers pick and pay for the channels they want, dropping protection for genre-based specialty channels and reducing Canadian content requirements, the CRTC just made getting funded even harder.

“Even if it’s a brilliant idea, it will be very difficult to get that project off the ground,” said Janis Lundman, executive producer at Montreal’s Back Alley Film Productions Ltd. “I don’t think [the CRTC] quite understands how projects are financed.”

In the U.S., networks commonly finance between 80 and 100 per cent of a production, which is how shows like HBO’s US$6 million-an-episode Game of Thrones get made, Lundman said. In Canada, it’s more like 20 to 40 per cent, with producers left to pay for the remainder through tax credits or international financing.

Lundman said the CRTC’s pilot program to relax Canadian content certification requirements for big-budget shows hasn’t been enough to convince the big networks to invest. She said she’s already heard stories of dropped projects and tightening budgets.

In response to the funding squeeze, Back Alley Film is one of many Canadian production companies making distribution partnerships outside the country. That means the content has to appeal to an international audience.

“I’m looking more and more outside of Canada, looking more toward the U.S., pitching U.S.-only shows, looking toward Europe and England, doing co-productions,” Lundman said. “The Canadian-only projects we were doing previously are very difficult to do now.”

Lundman said the growing prestige of big-budget TV is making it hard to compete for international dollars as well. Productions with big names attached — such as Mike Judge of Beavis and Butt-head and Office Space fame who created HBO’s Silicon Valley, or True Detective star Matthew McConaughey — are much more likely to get funded, she said.

John Barrack, strategic counsel and partner with Don Carmody Television, said the level of vertical integration in Canadian TV will affect how things play out. He predicted independent companies such as Blue Ant Media Inc., which owns specialty channels like Cottage Life and Smithsonian Channel Canada, will be more likely to invest in Mad Men-like big-budget saviour programs to keep their channels alive.

Meanwhile, the big cable companies can just shut unprofitable channels down and target spending elsewhere. Spokesmen for both Blue Ant Media and Bell Media, which owns Canada’s most-watched specialty channels, said they’re still developing their strategies about where to target program funding in a post-pick-and-pay world.

Related

• CRTC’s mandatory pick-and-pay proposal deeply misguided
• CRTC to require pick-and-pay TV channels, basic package with $25 cap from cable providers

In general, however, Barrack was optimistic about the future of Canadian TV under the new regulations. Some specialty channels won’t survive, but the Web gives producers an opportunity to deliver programs to specialized audiences in a different way, he said.

“We know if we make a great show, it’s going to find a home,” Barrack said. “We’re in a situation where there are niche communities. It’s the whole basis of specialty television, but it’s also, if you think about it, how the web works.”
But Arnie Gelbart, founder and chief executive of the film production company Galafilm Inc., said telling producers to put their content online doesn’t solve the problem of how to fund the productions in the first place. Online video providers such as Netflix Inc. generally fund their own content, he said.

“To do fewer big-budget shows and have more hits, that isn’t the nature of the industry. There isn’t enough money in Canada to do that no matter what they do,” Gelbart said. “I’ll see if I can survive in this world or not. That’s what I’ve done for 25 years and I’ll try again.”

Financial Post
cbrownell@nationalpost.com
Twitter.com/clabrow

Ottawa will hold another spectrum auction beginning on Tuesday, the final one before this fall’s federal election, but a cap on how much of the 2500 MHz frequency band of airwaves a licensee can possess will restrict two of the country’s largest telecommunications companies.

A strict spectrum aggregation limit of 40 MHz will be in place for five years from the date any of these 20-year licences are issued in 58 of the 61 areas where airwaves are available for auction, excluding Northern Canada. Since BCE Inc. and Rogers Communications Inc. have existing licences in each of the three main regions, how much each carrier can now acquire is limited.

The two heavyweights have already exceeded the holdings cap in 13 contested service areas in and around Toronto, Montreal and Vancouver, representing a string of densely populated regions where heavy data usage and urban landscapes are increasingly putting a strain on wireless networks. Other qualified bidders including incumbent Telus Corp. and regional service providers Bragg Communications Inc. and MTS Inc. have no licences in the band that would constrain their bids against the 40 MHz cap.

With two fewer deep-pocketed bidders vying for these licences, the federal government can expect to generate less revenue than what it would if they were taking part. But like recent auctions, Ottawa appears to be willing to sacrifice its own financial gain if its policies can boost competition in the wireless market.

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• Ottawa nixed SaskTel-Wind Mobile spectrum deal, sources say
• Wind Mobile bulks up on spectrum — but financing questions remain

In October 2013, BCE and Rogers were considered “severely limited in their ability to participate in the auction,” according to confidential briefing notes prepared by Industry Canada officials for Minister James Moore, which were obtained by the Financial Post through a Freedom of Information request.

But during the past 18 months, BCE and Rogers’ 2500 MHz spectrum holdings have both decreased either through transfers to another commercial carrier or by returning licences back to Ottawa, offering both companies some wiggle room in this auction to acquire rights to other blocks of spectrum in many areas outside the big cities should they choose to do so.

Last summer, Industry Canada approved a transfer of 47 licences in the 2500 MHz band from BCE to Xplornet Broadband Inc., which was later given permission to reassign those licences to a new entity called Xplornet Communications Inc., a rural service provider headquartered in Woodstock, N.B. According to Industry Canada’s 2500 MHz holdings table last updated in January, Xplornet has 46 licenses in this band.
By contrast, Rogers returned some of its licences to Industry Canada. They won’t be up for grabs in this latest auction.

Rogers spokesperson Patricia Trott said in an email that “applications to transfer/return licences are confidential.” Bell spokesperson Jacqueline Michelis declined to comment. Industry Canada rules strictly prevent qualified bidders from discussing their strategy ahead of a spectrum auction.

“Bell and Rogers are constrained, but I’m sure they’ll be bidding where they can,” said Gregory Taylor, principal investigator at the Canadian Spectrum Policy Research based out of Toronto’s Ryerson University. “These licences are for 20 years so it makes real economic sense to participate now while this is all in a state of flux. I would think most of the major carriers would be trying to stock up as much as they can even though, yes, they are limited by the spectrum cap.”

Like its decision to set aside blocks of spectrum specifically for new entrants in March’s AWS-3 auction, Ottawa hopes its licensing limits will “effectively reserve spectrum for a fourth provider in each region,” the 2013 briefing notes explain. Another confidential document to Moore date-stamped in December 2013 says the set-up will “encourage the participation of smaller, fixed Internet providers such as Xplornet, SSi [Micro Ltd.] and others,” both of which qualified to bid in this auction.

Taylor expects Telus, which spent $1.5 billion to acquire AWS-3 licenses in the auction held last month, “to be very geographical in its strategy,” adding that he predicts the Vancouver-based carrier will focus on “the areas where its short of spectrum.” He added that “a company to watch in this auction will be Xplornet,” which stayed on the sidelines last month. He expects Xplornet will “be more interested in larger blocks outside the city” to bulk up its capacity and service in rural Canada.

Financial Post
cpellegrini@nationalpost.com

Toronto-based InterAxon’s brain-sensing headband, Muse, sounds like a device pulled straight from a Sci-Fi movie – but it isn’t.

The company’s recently released futuristic $300 headband is equipped with sensors able to measure and track brain activity with the help of a mobile companion application, appropriately called Calm, making Muse seem similar to a high-tech Fitbit activity bracelet, but for your brain.

The device tracks the electroencephalography (EEG) activity going on in your skull, a process that typically requires multiple sensors attached to your head as well as thousands of dollars of equipment. There’s even a third-party-developed app for the Muse, called Muse Monitor, that’s able to give users raw EEG readouts of their brain activity, but you need a neuroscientist’s help to understand the data the app churns out. However, the fact that InterAxon has been able to pack traditional EEG technology into a small, at least comparably affordable device, is an impressive achievement.

“We’ve been working with EEG technology for a long time. Ariel Garten (founder and CEO) and Chris Aimone (co-founder and chief technical officer), have been working with it since about 2003: Art installations and giant concerts with multiple people controlling things – and Ariel was excited about this and sort of saw there was something magical about the technology. That’s when she got Chris and I together to take it [the technology] out of the lab and into the world,” said Trevor Coleman, one of Muse’s co-founders.

Coleman explained InterAxon’s journey towards releasing the retail, consumer version of Muse late last year (which is available at Best Buy for $300), was a long process, and that the company worked on many other projects prior to Muse.

Patrick O'Rourke/National PostThe Muse headband sits on the user's head similar to a pair of behind-the-ear headphones.

“When we started we were making really awesome, experimental stuff. We made things like a levitating chair: The coolest and funnest stuff we could think of. Then we started looking for people who might be interested in having us do projects for them,” Coleman said.

InterAxon worked on a project with 5 Gum that had people racing to chew gum as quickly as possible in order to make on-screen fruits explode, he said. They also created a prototype in-flight entertainment centre for the Ontario AeroSpace council. But the company’s biggest project was during the Vancouver Olympics, when InterAxon developed technology that controlled the lights of the CN Tower, Niagara Falls and the Parliament building, all with brain sensing technology.

“While we were doing all these projects we were either using clinical systems (which cost about $6,000 a unit and require fibre-optic cables and weird goop) or we were using the first generation of a similar consumer product, [devices from other companies that were predecessors to the Muse], that had low signal-quality and weren’t well-made. We realized we could make something better, especially if we wanted this technology to succeed and change people’s lives in the way we saw possible,” said Coleman.

InterAxon launched in 2007 and initial funding for Muse was achieved via popular crowd-funding platform Indiegogo, where the company raised almost $300,000 from eager backers, although the startup has also received $7.2 million in funding just prior to the release of Muse in May 2014.

The company also received $500,000 in seed financing from New York-based FF Venture Capital in 2012, and settled on $6-million Series A financing in August 2013, lead by Hong Kong-based Horizon Ventures, with additional funding from OMERS Ventures, A-Grade (Ashton Kutcher’s investment company), and Felicis. Rumours also circulated early last year that Google was seeking to acquire InterAxon, although Garten later told the Financial Post she has plans to build her company into a $500 million enterprise over the course of five years, dispelling the industry speculation.

Patrick O'Rourke/National PostDespite its hefty price tag, Muse feels flimsy.

Unlike other stress-relieving activities such as yoga, meditation or even playing sports, Muse gives the user quantifiable results, indicating how long they remain relaxed, neutral and active during a session. These results are tracked by Muse every time the device is used in an effort to give the user an indication of their progress.

According to Coleman, one of the significant issues Muse has had to navigate is the rampant science fiction surrounding brainwave-reading technology, and the unrealistic expectations this has created for the EEG and InterAxon.

“People have seen a lot of science fiction around the technology. They’ve seen people moving things with their mind, machines that are able to read thoughts and pictures in other people’s heads – the expectations of EEG are separate from what the real power of the technology is. We were looking for an application that very clearly showed off the real power of how the technology can be used to help people,” said Coleman.

The Muse headband looks very similar to most over-the-ear sports headphones, except the device’s band needs to be placed on the wearer’s forehead, ensuring each of Muse’s sensors maintain a solid and continuous connection with the user’s brain. Configuring the device can be tedious at times, especially for those with long hair, but once Muse achieves a solid connection, the meditation experience unfolds smoothly.

After being paired and synced to a smartphone, a calm, soothing female voice relays instructions on how to use the app (these instructions can be turned off, but are useful for first time users). A colour-coded screen appears, and as each sensor makes a consistent connection, a cone shape is filled with a corresponding colour. Once completed Muse asks the wearer to think of specific things such as fruit, famous places and cities, in order to configure its settings properly. This process needs to be completed each time Muse is used.

Patrick O'Rourke/National PostInterAxon's Muse wants to help people learn to relax.

Next, the real Calm session begins. A beach landscape appears on the smartphone’s screen and the user is asked to close their eyes and count their breaths. Muse also provides user’s real-time feedback via audio cues as the session continues. When the wearer’s mind is active, they hear loud wind and crashing waves. When they remain calm, clearing their mind of activity and stress, the wind and waves disappear. And if you’re particularly relaxed during a session, you’ll hear birds chirping. Session times range between three and 20 minutes, depending on how long the user wants to meditate. In an effort to gameify the experience the wearer is also rewarded with points and the ability to unlock new features depending on how well they perform during each session.

Despite Muse offering an interesting and unique experience, and also being relatively easy to use, it’s unclear if Muse’s meditation techniques give the wearer long-term benefits beyond a brief moment of relaxation and clarity during a hectic week. However, Coleman claims that beyond relaxation, Muse has the potential to help solve other medical issues.

“Studies have shown 10 one-hour sessions with a neuro-feedback based EEG system can be as effective as Ritalin in terms of treating ADD, with those effects persisting for six months. With a headband like the Muse, it’s totally possible to deliver a drug-free treatment for ADD. That’s the kind of thing that we’re really excited about looking at and working in as we go forward,” said Coleman.

“Right now we’re partnered with over 50 different research institutions. We’re looking at everything from attention deficit disorder, to obesity and all kinds of different studies. We’re developing these classifiers – the systems that are able to identify something about how you’re feeling, or how your body is from your brain signals. Developing those classifiers is difficult and takes a very long time. So what we’re doing is working with as many labs as we can to try to understand how they can create that next-generation of things for us. There’s so much this technology can do,” said Coleman.

Related

• InteraXon making waves with brain-sensing headband, but can it attract more funding and consumers?
• Behold Muse, a space-age headband that reads your brain activity and sends it to your mobile device

In terms of other future potential applications for Muse, Coleman discussed how the device could be used in video games, giving the example of Muse detecting when the user is holding their breath, and how this physical interaction could make an in-game gun’s on-screen aiming reticule become more steady.

Perhaps the biggest barrier for Muse is its $300 price tag, especially considering its current limited functionality. However, InterAxon does have plans to add more features to its brain-sensing headband in the future.

Qualcomm Inc. should consider spinning off its chipset business as part of a strategic review of options to boost shareholder value, activist investor Barry Rosenstein said.

Separating the unit, which makes chips for mobile phones, could make it a takeover target, Rosenstein said Monday at 13D Monitor’s Active-Passive Investor Summit in New York. Rosenstein’s Jana Partners, which has invested more than US$2 billion in Qualcomm, has held talks with the company’s management, he said.

In a letter to Jana’s investors, the fund called on Qualcomm to weigh other options such as speeding up share buybacks and reorganizing its board, including by “introducing new directors with an owner orientation and a focus on operational performance including cost management.”

Qualcomm rose 3.6 per cent to US$71.63 a share as of 9:31 a.m. in New York on Monday. The company has a market value of about US$118 billion.
‘Constructive Dialogue’

“We’ve been engaged in very constructive dialogue for the last couple of months,” Rosenstein said. “We had very friendly and I think worthwhile discussions with the company.”

Related

• Qualcomm modem should bring next Apple iPhone to China Mobile
• Jana Partners sold stake in Agrium, J.C. Penney

The majority of the company’s revenue comes from selling chips used in smartphones such as Apple Inc.’s iPhone, yet most of Qualcomm’s profit is generated by the fees it collects from smartphone makers that license its technology.

“Qualcomm welcomes input from our investors and has a track record of active engagement with stockholders,” the company said in a statement Monday. “The board and management team will continue to consider actions that are in the best interests of all stockholders.”

Founded by Rosenstein in 2001, Jana has grown to oversee more than US$11 billion. While most of the hedge fund’s investments aren’t activist — where it amasses an equity stake to try and cajole executives and directors to make changes to boost shareholder returns — it’s those campaigns that often attract the most attention. The firm has targeted companies including PetSmart Inc., Walgreen Co., Hertz Global Holdings Inc., Apache Corp., Oil States International Inc. and URS Corp.

Jana last month sold a 20 per cent stake in the hedge fund firm to a private-equity fund Dyal Capital Partners, which is run by Neuberger Berman Group. The money will be reinvested in New York-based Jana’s funds.

Bloomberg.com

Apple Inc is likely to quickly ramp production of the Apple Watch after strong pre-orders outstripped limited supply in the first weekend following its launch, some Wall Street analysts said.

According to shopping data firm Slice Intelligence, Apple booked nearly 1 million pre-orders for the Apple Watch in the United States on Friday.

Apple is widely expected to disclose weekend pre-order numbers sometime on Monday.

The Apple Watch, which allows users to check email, listen to music and make phone calls when paired with an iPhone, goes on sale officially on April 24.

“Based on our observations and media reports, launch day supply was largely sold out within the first 10 to 30 minutes depending on model,” Piper Jaffray analyst Gene Munster said in a client note.

Munster, who expects Apple to sell 2.3 million watches in the April-June quarter, expects Apple to ramp production between mid-May and June.

BofA Merrill Lynch expects Apple to ship 4 million smartwatches in the quarter.

The Apple Watch is Chief Executive Tim Cook’s first new major product launch and the company’s first foray into the personal luxury-goods market.

The company will sell the gadgets in Apple stores and online as well as in trendy fashion boutiques in Paris, London and Tokyo as part of a strategy to position the wearable computer as a must-have accessory.

Despite mixed reviews, which praised the watch’s styling but criticized its less-than-spectacular battery life and slow-loading apps, people flocked to Apple’s stores to get a close-up look.

“We think the Apple Watch will be highly disruptive to the traditional fashion watch market,” Pacific Crest analysts said.

The analysts said their checks showed that Apple appeared to be ordering components for the watch that would allow it to build well over 20 million watches this year.

“While this represents just over 5 per cent of the company’s iPhone user base, it would be nearly half of the total (more than) US$200 watch market,” they said.

The brokerage expects Apple to likely have about 5 million Apple Watches available for delivery by April 24.

Analysts widely expect the Apple Watch to outsell similar watches offered by Samsung Electronics Co Ltd, Sony Corp and LG Electronics, which have attracted lukewarm interest from consumers.

© Thomson Reuters 2015

Rogers customers can soon use their cell phones when they travel across the pond without incurring hefty roaming or overage charges.

Beginning April 15, the Toronto-based wireless carrier will extend the international data roaming service “Roam Like Home” to over 35 countries in Europe, offering unlimited usage to people who are signed up to its “Share Everything” plan for a flat fee of $10 per day to a maximum of $100 a month. Calls and texts to local numbers in those countries – plus those placed home to Canada – are also included in the price tag.

Rogers introduced a similar plan in the U.S. last November for $5 per day, amassing more than one million users who tend to consume more data abroad than they do regularly at home, per chief executive officer Guy Laurence. He says clients are now using the Internet five times as much when they’re in the U.S. than they did when Rogers didn’t “Roam Like Home.” “We have broken the fear of roaming once and for all,” Laurence told a group of reporters Friday.

“You want to take a picture of the Eiffel Tower and you want to send it to your friend saying, ‘Wish you were here,'” he said. “You don’t want to worry about whether you bought the right data package.”

According to its website, Rogers currently offers travel roaming packs for people heading to Europe, with options starting at $9.99 per day for 20 MB of data.

Apple Watch debuted at stores across Canada on Friday, but unlike the launch of previous Apple Inc. products, the process of getting your hands on the expensive new device is significantly different this time.

Each customer is required to sign up for an Apple salesperson-facilitated tour of Apple Watch either through an online sign-up system or in-store. According to Apple, the experience is very different from browsing the aisles of your local Best Buy, Wal-Mart, or even walking into the Apple Store and purchasing a MacBook or other Apple product.

Since the Apple Watch and smartwatches are generally untested technology, (and despite the common belief they’re destined to be the next big thing in tech), the Cupertino, California-based company has taken a controlled, hands-on approach to convincing customers the Apple Watch is essential to their lives.

Patrick O'Rourke/National PostThe Apple Store's initial testing station.

From a consumer perspective, the Apple Watch is one of the most confusing products the company has ever released. For example, prices range from $450 to $17,000 depending on the model and strap, and only two Canadian Apple Stores are set to carry the ultra-high-end version of the Apple Watch. The key to this sales pitch is convincing consumers the Apple Watch is more than just a silly gadget and instead is a life-simplifying, highly-customizable, fashion statement.

Customers can’t even walk out of the store with an Apple Watch, at least not yet (a leaked memo from Apple retail chief Angela Ahrendts indicates orders will remain online only). Today is only the start of pre-orders for the device and some versions of the smartwatch have already sold out or been pushed back to a June shipping date. The official release of the Apple Watch in Canada is on April 24.

Those without one-on-one product tour appointments, but who are still interested in checking out the Apple Watch, will be able to view a large glass display case showing off various watch models. Customers will not be able to drop-in and expect to go hands-on with the Apple Watch – a fact which confused many eager browsers at the Eaton’s Centre Apple Store today.

Patrick O'Rourke/National PostThe Apple Watch's in-store display case shows of the device's various versions and strap combinations.

The tour begins at a station with stand-mounted watches featuring the 42mm Apple Watch and not the slightly smaller 38mm version. Surprisingly the 42mm Apple Watch doesn’t look too big on most people, even for those with small wrists. Customers are able to run through picture messages, test the device’s unique “force touch” feature, its Digital Crown, and also switch between Apple Watch’s various other apps, giving the tester a feel for how the product operates.

Next, customers move to another table where the salesperson opens a drawer full of an overwhelming number of choices including: Apple Watch Sport (the least expensive $450 Apple Watch with a rubber strap) and the stainless steel Apple Watch models. This section of Apple’s in-store demo unfortunately isn’t interactive and is very similar to the stand-mounted portion of the tour, but it does allow the wearer to get a feel for what the Apple Watch will look like on their wrist, as well as test its various straps – one of the device’s key selling points.

Straps will likely become an unexpected deciding factor setting the Apple Watch apart from other similar devices such as the Pebble, Moto 360, Samsung Gear S and LG G Watch. Unlike other devices, the Apple Watch’s proprietary bands have been designed by Apple and feel significantly different from a standard watch straps, or even bands included with already released smartwatches.

Patrick O'Rourke/National PostThe fancy drawer where that shows off the various versions and strap combinations of the Apple Watch.

For instance, the $199 Milanese Loop strap, as well as the $199 Leather Loop strap are made of magnetized material designed to mould to the shape of the wearer’s wrist in an intuitive way. Even the Apple Watch’s $69.99 rubber sport band has a surprisingly slippery feel to it, preventing the strap from sticking to skin. The $329 buckle strap and and $599 adjustable Link Bracelet (which is more expensive than some Apple Watch models) are less impressive, although the Link Bracelet’s ability to remove individual sections on the fly is interesting.

However, every strap, whether you’re purchasing the Sport or Apple Watch edition of the device, comes at an additional cost. The only strap included with the Apple Watch’s two base models is the rubber Sport Band.

Over the course of the tour, similar to a high-end jewellery store, the Apple Watch customer service representative discussed the various pros and cons surrounding each version of the Apple Watch and its bands, and also helps the customer put on and take off each model of the watch.

Related

• How Canadian app developers are gearing up for Apple Watch’s release
• Montreal developer reveals one of the first Canadian-developed Apple Watch apps, Transit App
• Pebble Watch review: The only smartwatch worth buying

Whether or not Apple’s gamble on the smartwatches pays off remains to be seen, but it’s obvious from the company’s approach to retail that it intends to market the Apple Watch as more than just a gadget, and instead as a high-end, expensive fashion statement. However, the company’s attentive approach to retail could turn off potential buyers who might prefer browsing the device and discover its features on their own.

Nintendo may be struggling to sell consoles and games, but it’s having no trouble at all moving Amiibo.

The collectible plastic figurines, which retail for about $14 each and can interact with Wii U and Nintendo 3DS games via near-field communication (NFC), have become a terrific success story for the Japanese game maker, with more than 3.5 million sold as of March 12, less than three months after their introduction in mid-November.

In fact, they may be selling a little too well.

Supply of many of the 30 or so Amiibo released to date in three separate “waves” has radically failed to meet consumer demand. Some figures, many of which may never see another manufacturing run, are simply no longer available at retail outlets and can now only be found online, sold by opportunistic resellers for a premium – sometimes upwards of $100.

NintendoA special golden Mario Amiibo was released in North America on April 10th.

The craze reached such a fervor earlier this month that online pre-orders at major merchants such as Toys R Us and Gamestop for the fourth wave of Amiibo – set to land in May – sold out in minutes. Overeager buyers actually brought down Gamestop’s website for several hours on April 2nd when pre-orders came available, prompting the game seller to rethink how it pre-sells the collectible toy.

Armchair observers have offered plenty of opinions about Nintendo’s Amiibo strategy, suggesting the manufacturer brought too many different Amiibo to market too quickly, and that it ought to set up new production runs for unavailable figures to satisfy fans who’ve gone empty handed rather than simply march ahead with the launch of new figures.

(Post Arcade asked Nintendo for comment regarding ongoing Amiibo supply and demand issues, but received no reply.)

But regardless of the game giant’s handling of the situation, there’s no denying the passion felt by Amiibo collectors. Zen Rankin is one of them. The 34-year-old owner of an Ajax, Ont.-based creative services company has been a lifelong Nintendo fan and early adopter of most of the company’s products.

Zen RankinCollector Zen Rankin proudly displays his complete Amiibo set on a shelf in his home.

“I decided to have them all from the very start,” said Rankin of Nintendo’s collectible figurines. Indeed, he’s one of the few who have managed to track down every last one made available to date.

“People thought I was crazy to order all 12 original figures from day one, but my loyalty paid off.”

Rankin has continued to plan ahead for each subsequent wave. He set himself up to receive Google alerts about Amiibo news and is friendly with people who work at EB Games who let him know when new figures are coming available at their stores. He’s even waited out in the cold to ensure he’s among the first to place an order for the latest figures.

“My goal is not to pay premiums to scalpers on eBay, but I suppose I am paying a premium with my time,” he mused.

The only figure he had trouble tracking down so far is Meta Knight, the mysterious masked rival of Nintendo’s iconic Kirby, which was made available exclusively at Best Buy.

“We can blame Best Buy’s online ordering policies and poor customer service for that,” he said. “That was the only figure I paid more than the store price for online. I have been very lucky so far.”

Guelph, Ont.’s Micah Shearer-Kudel, a 24-year-old Nintendo fan who works on environmental projects for an agricultural organization, has also managed to collect all Amiibo released to date. His strategy involves Amiibo Facebook groups, frequent visits to classified ad website Kijiji, and working with like-minded friends to either pre-order new Amiibo or purchase them at launch.

Like Rankin, Shearer-Kudel is determined not to pay more than the manufacturer’s suggested retail price for his figures.

“I have not yet paid more than $13.99 for an Amiibo,” he said proudly. “I don’t plan to pay more, either. I don’t want to support scalping if I can avoid it.”

He did, however, have to make a sacrifice to get one particularly scarce figure.

“I had a lot of trouble finding a Rosalina Amiibo,” he admitted, referring to one of the few female Amiibo currently available. The blond haired, tiara-wearing Amiibo was slated as a Target exclusive, but when the retailer announced it was shutting down its Canadian stores its supply went to shops like EB Games, Toys R Us, and Best Buy.

“Normally, more places selling Amiibo would be a good thing,” explained Shearer-Kudel. “In this case, the stock was stretched incredibly thin. Preorders sold out in minutes at every location. Stores received only one or two each in some cases. I traded a rare Amiibo of my own, Shulk, to obtain Rosalina.”

Micah Shearer-KudelMicah Shearer-Kudel keeps his Amiibo -- including this group of rare specimens -- in-box.

But while avid collectors like Rankin and Shearer-Kudel are clearly willing to put in the time and money to purchase hard-to-find figures, their commitment relies on Nintendo maintaining their goodwill. If it begins to seem as though the game maker is purposefully nursing the Amiibo bubble or simply doesn’t care whether keen collectors can find the figures they want, both indicated they might stop their fervid quests to track them all down.

“Originally, I thought external factors such as the sinking loonie, west coast port strike, and other issues were to blame for lack of supply, but with the latest wave set to launch stock is still dismally low,” said Shearer-Kudel when asked why he thought there was such a wide gap between Amiibo supply and demand. “I think it’s a combination of Nintendo appealing to their shareholders by keeping demand high and folks looking to make some easy money by purchasing figures and reselling them.”

Rankin has experienced moments of frustration, too.

“Some days have been more trying than others,” he admitted. “If something is much too expensive, difficult, or time-consuming to obtain I usually give up collecting that particular thing. I personally find the store exclusive Amiibo to be annoying to collect. Exclusive Amiibo figures only seem to benefit the retailers.”

As a collector I’ve learned that if I’m interested in something specific and it’s difficult to find it will only make me want it more

That said, there’s no denying the increased desire often instilled in collectors when a product is in short supply.

“As a collector I’ve learned that if I’m interested in something specific and it’s difficult to find it will only make me want it more,” said Rankin. “Sometimes it becomes a bit of a real-life meta-game to collect them.”

“I definitely crave the rarer Amiibo more,” Shearer-Kudel agreed. “Like my other special items, they are on full display.”

However, he’s also considered selling off his collection, which is mint and in-box.

“I have fought with the decision to keep collecting or sell or trade what I have currently,” he said. “I think I want to keep collecting because when I can look at a complete set I think it will be a testament to the time and effort I have put into it.”

Rankin hasn’t considered selling his collection, but he admits there’s a limit to the amount of effort he’s willing to put into the hunt.

“If Nintendo makes it more difficult to obtain certain figures I will give up on collecting them all.

“I need to be realistic.”