Daily Tech Snippet: Wednesday, May 13

• Tango, Messaging Startup and Alibaba Investee, Makes Big eCommerce Play with Alibaba's Backing: Chinese ecommerce giant Alibaba has been investing quite literally all over the map. In March of 2014, the company sunk a huge sum – US$215 million – into American messaging app Tango. At the time it seemed a bit odd: why would Alibaba invest so much into an American chat app with no real footprint in China? The picture has become a bit clearer today with the announcement of Tango shops. Tango VP Chi-Chao Chang told Tech in Asia that the goal is to make the in-app shopping experience convenient and social: Tango users will be able to browse and search merchandise. They will be able to share personalized catalogs or collections of merchandise with other Tango users, and securely purchase from millions of products available. To start, Tango shops will feature products from two partners: Wal-Mart and AliExpress. AliExpress, of course, is Alibaba’s consumer-facing global ecommerce platform, and Tango users will have access to the entirety of AliExpress’s offerings via the in app-search feature. Chang said that Tango will also curate special deals from both providers that will be made available to users on a daily basis. It should come as no surprise that as an investor and now a partner, Alibaba has been heavily involved in the development of Tango’s new shops feature. Chang said Alibaba has even given Tango “special access” to products most other companies don’t have access to, and I got the impression that without Alibaba, the launch might look quite different. “They have been extremely involved,” Chang said of Alibaba. More here: Tango Offers Shopping on Its Messaging Service: Tango, a peer-to-peer mobile messaging service, planned to announce on Tuesday it would start offering shopping services. Its catalog includes most of what is sold by Walmart and Alibaba, a total of two million products.Tango, which last year received an investment of about $250 million from Alibaba, may be making the strongest move yet. The shopping application involves a button on the screen that opens access to a wide range of products.People can browse the catalog in a number of ways, create personal selections for friends to browse, buy items, or message the details to friends. Payments are handled through credit card information stored in Tango. The company appears more interested in gathering customers, and data on them, rather than profiting directly on commerce. It is taking no commission on the mobile sales.Out of the gate, it is quite a range of goods. In a brief test of the service, from Walmart I found a casket with Yankees logos on the lining, for $2,399. There was also a $4.58 box of honey nut breakfast cereal. Alibaba had women’s dresses and antifreeze, among many products (things like guns and alcohol are not available.)Should this method of commerce catch on, it could have profound implications for brands that make their own mobile apps, hoping to attract shoppers. “Would you keep a Levi’s app and a Best Buy app, and an app for every merchant, or would you go to one place where it’s all there?” Mr. Setton said. “I’m biased, but I think this interface rules.”Maybe, but only over a limited empire. The catalog will initially be available only in the United States. Tango has about 300 million registered users, about one-quarter to one-third of whom are in the United States. It seems to be the first such messaging commerce app for the American audience, though Japan’s LINE and WeChat of China offer commerce capabilities.Tango, which started in 2009, has previously offered video calling, games and photo sharing, among other things. Tango’s technology enables it to send a lot of data at low cost to the company, offering free services to customers.

• Aliyun, Alibaba's Cloud Unit, Makes Push in the Middle East, to set up Data Center in Dubai: Alibaba Group Holding Ltd.’s cloud-computing subsidiary is teaming up with Dubai-based Meraas Holding LLC as the company uses its technology to extend its influence beyond China. The joint venture of Alibaba’s Aliyun and Meraas will provide a broad swath of technology to businesses and governments in the Middle East and North Africa. Jack Ma, Alibaba’s executive chairman, and the rest of the Hangzhou, China-based multinational’s management team, laid the groundwork for the deal in a meeting last September with the ruler of Dubai, Aliyun President Simon Hu said in an interview. The joint venture will provide technical services for transportation, communication, urban infrastructure, electricity service, economic development, and urban planning, as well as cloud computing, Hu said. In a presentation to investors this month, Alibaba said that an expansion of cloud computing services was a priority for the coming fiscal year. “At the end of this year or next year, no matter where you are when you go to Dubai, no matter whether eating or sightseeing, you will encounter one of the infrastructures that is provided by Aliyun,” Hu said. As part of the venture, Aliyun and Meraas will build a technology hub consisting of a data center, along with hospitality, residential and commercial spaces. By expanding its cloud abroad, Aliyun ratchets up competition with companies such as Microsoft Corp., Google Inc., and Amazon.com Inc. These U.S. firms haven’t put large data centers in the Middle East. More here

• After Big-Bang Start, Can Tesla's Battery Hit $1 Billion Faster Than the iPhone? Tesla’s new line of big, stackable batteries for homes and businesses started with a bang. The reservations reported in the first week are valued at roughly $800 million, according to numbers crunched by Bloomberg. If Tesla converts even a fraction of those reservations into actual sales, the battery roll-out could measure up as one of the biggest ever for a new product category. The new line of storage batteries is designed to extend solar power into the night and save companies money on its electric bills during expensive peak hours. Any comparison of batteries to smartphones and erection pills is, of course, a stretch. Most of Tesla’s battery revenue will come from utilities, not the consumers who snapped up iPhones and Viagra. The price of the new batteries is also much higher. Tesla’s Powerwall units designed for home users cost $3,000 to $3,500 per unit, not including installation, while the commercial batteries are sold in roughly $25,000 incremental blocks. Tesla hasn’t even defined what qualifies as a "reservation" at this point. Of the $800 million in reservations from the first week, almost $625 million came from businesses and utilities that would seem likely to complete the transaction. The remaining reservations from home users are little more than expressions of interest made through a no-strings online reservation system. Manufacturing giant batteries will also be much more difficult to scale than Pfizer’s little blue pill, which was filling 46,000 prescriptions a day by the end of its first month on the market. Tesla won't begin shipping batteries until this summer, and it’s already sold out through mid-2016. Still, approaching $1 billion of interest, just days after introducing path-breaking product, marks a significant achievement. Tesla is going to need that battery revenue as soon as it can get it: The company is burning through cash to invest in the Model X electric SUV due later this year, the more affordable Model 3 slated to arrive 2017, and a $5 billion battery factory to power it all. In a call with analysts last week, Tesla Chief Executive Officer Elon Musk wouldn’t rule out the possibility that the battery business could someday exceed electric-car revenue. Electricity storage products aren't new. But Tesla’s price, power, and packaging set these batteries apart in a way that echoes the gap between the first iPhone and the smartphones that came before it. Now Musk has brought an Apple-launch level of public interest to what's essentially a infrastructure product, albeit one with potential to transform the way electrical grids are managed and the speed that solar power is adopted. The next daunting challenge will be to turn that interest into bookable revenue for Tesla.

• Verizon Bets on Video Ads in $4 Billion Deal for AOL: The nation’s biggest wireless operator sees its digital future in a company that still offers dial-up Internet service. However backward that may seem, Verizon Communications’ $4.4 billion all-cash deal for AOL, announced on Tuesday, illustrates how the communications industry has changed — even if the underlying rationale has not — from the days when the Internet pioneer told users “You’ve got mail.” AOL may be known for its dot-com rise and fall and for current web content like The Huffington Post , but Verizon is looking to gain the company’s powerful but little-known mobile video and advertising technology. That could make Verizon’s own phone and Internet offerings more appealing to consumers, and to advertisers. The motive is clear. Consumers are increasingly watching videos — from YouTube to HBO — on mobile phones, tablets and laptops. And big media companies and advertisers are only beginning to grapple with this rapidly evolving market. By layering AOL’s technology atop its 109 million wireless connections and growing cable television business, Verizon is betting that it can make billions of dollars by selling ads against streaming video. Comcast, the biggest cable operator, acquired NBCUniversal, the big television and movie studio company. AT&T, Verizon’s nearest rival, is acquiring DirecTV, the satellite television business. And Sprint, another wireless operator, is making its own forays into content. “The telecoms are clearly saying, ‘We’re not going to be dumb pipes,’ ” said Jonathan Miller, the chief executive of AOL from 2002 to 2006, who is now a venture capitalist. Yet in acquiring AOL, Verizon gets more than just new advertising technology. It also takes ownership of a company with a troubled legacy and a muddled present. AOL operates the dwindling but still profitable dial-up Internet business, runs a collection of news websites and employs big personalities including Arianna Huffington and its chief executive, Tim Armstrong. Verizon covets two main pieces of AOL’s mobile and video technology offerings. One is its big network of original video content, which is home to lucrative online video advertising. The other is its so-called programmatic advertising business, a system that matches online advertisers with consumers across different platforms, and collects valuable data along the way.

• Will It Be a Summer of Consolidation in Ad Tech? AOL could just be the beginning as rumors fly. Verizon's $4.4 billion purchase of AOL spark a summer of acquisitions in the ad-tech space? It depends on whom you ask. Yahoo has reportedly considered making Foursquare a big offer in recent weeks. The Google-purchasing-Twitter chatter has gone on for months and won't die. Yelp is reportedly entertaining suitors from Yahoo to Google and Amazon, with some analysts speculating that foreign companies Alibaba and Rakuten are in the mix. Even mighty Salesforce.com has found itself the subject of speculation about a Microsoft takeover. Rich Guest, president of North American operations, Tribal Worldwide, said the Twitter-to-Google hubbub makes the most sense. "I think that there were first rumors of an AOL-Verizon tie-up during CES 2015, which gives credence to the school of thinking that believes 'where there is smoke, there is likely fire,'" Guest explained. "Twitter is an amazing platform, which could add value to the product portfolios of many media or technology companies. Given all of the rumors of a Twitter-Google tie-up, I wouldn't be surprised if that happened sometime in 2015." MediaCom CMO Stephanie Fierman said, "I think many expect a transaction involving Yahoo at some point in the foreseeable future."

• GoDaddy Earnings: Quarterly Revenue $376M, +17% Y/Y; Net Loss Narrows to $43M; Shares Gyrate, end 3% down: Web-hosting company GoDaddy Inc (GDDY.N) posted a 17.5 percent rise in revenue in its first quarterly report as a public company, helped by customer additions and an increase in revenue per average user. GoDaddy forecast revenue of between $390 million and $395 million for the second quarter and between $1.60 billion and $1.61 billion for the full year. The company, which manages about 59 million Internet domains, nearly a fifth of the world's total, said it had 13.1 million customers at the end of the first quarter ended March 31, compared with 11.9 million a year earlier. Average revenue per user rose to $115 from $105. GoDaddy, known for its racy TV commercials, said bookings rose about 14 percent to $498.7 million in the first quarter. The company's net loss narrowed to $43.4 million, or 34 cents per share, for the first quarter ended March 31, from $51.3 million, or 40 cents per share, a year earlier. Revenue rose to $376.3 million from $320.2 million. The company's shares rose as much as 5.5 percent in after-market trading, before reversing course sharply to trade down as much as 3.7 percent. Up to Monday's close, the stock had risen more than 33 percent since GoDaddy went public on April 1.