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Meta Shows Strong Growth as AI Spending Surges

The Meta logo is seen at the Vivatech show in Paris, France, Wednesday, June 14, 2023. (AP)
The Meta logo is seen at the Vivatech show in Paris, France, Wednesday, June 14, 2023. (AP)
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Meta Shows Strong Growth as AI Spending Surges

The Meta logo is seen at the Vivatech show in Paris, France, Wednesday, June 14, 2023. (AP)
The Meta logo is seen at the Vivatech show in Paris, France, Wednesday, June 14, 2023. (AP)

Facebook owner Meta saw net income and revenues top expectations on Wednesday as the company said it would expand investments into artificial intelligence, drawing nervousness from investors.
The social media behemoth, which is also the parent company of Instagram and WhatsApp, said net profit in the third quarter was $15.7 billion -- up 35 percent on the same period last year, AFP said.
Revenues rose 19 percent to $40.6 billion, slightly higher than analyst estimates.
But investors sent Meta shares lower in after hours trading over the outlook for AI spending in the months ahead and another big loss at its virtual and augmented reality arm, Reality Labs.
"Our AI investments continue to require serious infrastructure, and I expect to continue investing significantly there, too," Meta's founder and chief executive Mark Zuckerberg told analysts.
"We haven't decided on a final budget yet, but those are some of the directional trends," he added.
Meta's share price slipped nearly three percent after its earnings results were published.
Like its Big Tech peers, Meta is rushing into artificial intelligence as it tries to build revenue streams away from its social media core business.
In recent months Zuckerberg has put most of his attention and spending on the company's AI innovations that have been rolled out as chatbots across its platforms or used to upgrade its ad tech.
On Wednesday, Meta once again raised its capital investment outlook: for 2024 alone, it is forecasting a range of $38-40 billion, compared with $37-40 billion previously, much of it for AI.
'Rising costs'
Investors "were a little disappointed by the rising costs" said Jasmine Enberg of Emarketer.
"It's going to take longer time to pay off" than some had hoped, she added.
In the first quarter this year, the spending had already caused concern among investors, despite a doubling of earnings.
But a quarter later, Meta's results impressed investors with a further surge in profits, showing that its core ad business could support the investments.
"Meta's solid revenue growth in the quarter will help stave off investor concern about its AI investments," said Debra Aho Williamson of Sonata Insights, who added that these investments were making it easier to post ads on the platforms.
However, she warned, that the full impact of consumer facing AI "won't be felt until 2025 or beyond."
Reactions were positive last month when the company unveiled its Orion augmented reality glasses, which remain experimental but bolstered confidence that Meta will be a leader in the AI wearable space.
Meta also hopes to ride on the excitement of its Ray-Ban Meta smart glasses, which it developed with EssilorLuxottica, the European eyewear giant.
Analysts believe that the glasses could be a hot item during the end-of-year holiday season.
But the recurring losses at Reality Labs, the VR division, continued to weigh on investors minds. The division posted $270 million in revenues in the third quarter -- and $4.4 billion in operating losses.

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Technology

PlayStation at 30: How Sony's Grey Box Conquered Gaming

The little grey box sold 102 million units. Richard A. Brooks / AFP
The little grey box sold 102 million units. Richard A. Brooks / AFP
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PlayStation at 30: How Sony's Grey Box Conquered Gaming

The little grey box sold 102 million units. Richard A. Brooks / AFP
The little grey box sold 102 million units. Richard A. Brooks / AFP

Japanese electronics giant Sony is set to celebrate 30 years since it launched the PlayStation console, the little grey box that catapulted the firm into the gaming big league.
PlayStation was Sony's first foray into the world of video games and when it hit the shelves in Japan on December 3, 1994, the company needed to sell one million units to cover its costs, AFP said.
In the end, the gadget became a legend, selling more than 102 million units, helping to launch many of the industry's best-loved franchises and positioning Sony as a heavyweight in a hugely lucrative sector.
"PlayStation changed the history of video games," said Hiroyuki Maeda, a Japanese specialist in video game history.
"It truly transformed everything: hardware, software, distribution and marketing."
One of the keys to its success was broadening the appeal of a pastime that had often been dismissed as a hobby for children.
From the off, the firm was clear that it wanted to trash this image.
In part this stems from Sony's rivalry with Nintendo, which was already a dominant player in the sector by the mid-1990s, but whose games skewed young.
Sony 'humiliated'
The original PlayStation can trace its history to a falling out between the two great Japanese firms.
They had partnered in the late 1980s to develop a version of the Super Nintendo console with an in-built CD player.
But Nintendo suspected Sony were using the project as a way to muscle into the gaming sector and abruptly cancelled the partnership in 1991.
"Sony found itself in a humiliating position," said Maeda, so pushed ahead with the project by itself.
The hardware proved to be revolutionary, CD-ROMs being cheaper and storing much more data than the cartridges used by Nintendo and other consoles.
And to further distinguish itself from Nintendo, Sony courted a young adult audience with fighting games like "Tekken", out-and-out horror with "Resident Evil" and "Silent Hill", and military titles like "Metal Gear Solid".
Its advertising also followed a more grown-up path.
Hollywood auteur David Lynch was drafted in to direct ads for the PS2 launched in 2000 -- conjuring a nightmare vision of floating heads and talking ducks certainly not meant for younger audiences.
"The older audience obviously had better purchasing power than children," said Philippe Dubois, founder of M05, a French association that aims to preserve digital heritage.
The PS2 is still the most successful console in history, having sold more than 160 million units.
'New sensations'
Over the past 30 years, the competition has intensified and the technology has been honed.
While Sega and other rivals have fallen by the wayside, Microsoft has entered the fray with its Xbox, and Nintendo is still on the scene with its Switch console.
But the industry is enduring tough times.
A surge in popularity and investment during the pandemic has subsided and Sony's PlayStation division recently laid off hundreds of workers.
Plenty of analysts are also predicting that cloud gaming will soon render consoles obsolete.
Sony appears undaunted though, recently launching an upgraded version of its PS5 with a marketing push that highlighted new AI features.
Bloomberg has reported that the Japanese firm is also planning a new hand-held version of the PlayStation, which would once again pit it against old rival Nintendo, undisputed king of portable devices.
However, for the purists, few innovations were as great as the original console's ability to handle 3D graphics.
The technology was instrumental for the appeal of classic games such as "Tomb Raider" and "Final Fantasy VII".
"We discovered sensations, emotions that we hadn't experienced with earlier consoles," said French YouTuber and PlayStation enthusiast Cyril 2.0.
He said he had collected almost every title released for the PlayStation in Europe -- some 1,400 -- and insisted the formula for success was not complicated.
"For consoles, games are still the most important thing," he said.