Daily Tech Snippet: Friday February 20

• A Year Later, $19 Billion For WhatsApp Doesn’t Sound So Crazy: Without WhatsApp, Facebook’s international situation would look a lot dicier. And if a competitor like Google acquired it instead, it could have been disastrous. Instead, Facebook possess the most popular messaging app, and has neutralized the biggest threat to its global domination of social networking. No apps get opened as often as messaging apps. While you might spend longer in total scrolling through Facebook, Instagram, Twitter, or Pinterest, the frequent short sessions with chat apps make them a vector for other experiences. That means they’re more valuable than they might first appear. How do you monetize chat? It’s a tough question. Sure there’s stickers, but there’s too much competition to charge much upfront for an app and its too interruptive to show ads. But platforms, hubs, portals — whatever you want to call them — hold plenty of opportunities to cash in. The messaging apps from Asia are proving this as we speak. China’s WeChat also lets you call a taxi, pay friends, search, shop, buy movie tickets, and more. Japan’s Line hosts Line Pay, Line TV, and an identity platform for games. Why fumble with a bunch of different apps, passwords, and payment methods when you can do it all while you chat? Even Snapchat is expanding far beyond messaging. Its Stories product for broadcasting sequences of photos and videos is a hit with star content creators. Its Snapcash feature lets you quickly pay friends through Square Cash. And its new Discover portal collects Snap-formatted content from premium producers like Comedy Central, CNN, ESPN, and Vice. A lot of critics wondered how Facebook could earn money from messaging on WhatsApp, considering it’s vowed not to show ads and only charges its skimpy $1 subscription fee in a few markets. The answer is it doesn’t have to. By taking a cut of commerce, or charging for promotion of content, it could keep chat lean and clean while monetizing other parts.

• HP becomes a reseller of networking equipment; move away from hardware in quest of software-company margins takes aim at Cisco: Hewlett-Packard said on Thursday that it would sell a new line of networking switches that are manufactured by a Taiwanese company and depend on Linux-based, open-source software from another company. HP, once at the center of high-tech manufacturing, will not make the new networking equipment but will act as a reseller, providing both online ordering and worldwide support for the product. It is the most consequential announcement from HP since its chief executive, Meg Whitman, announced last October that the company would split into two separate enterprises. One will be focused on business, and the other on consumer-type products. The networking move, firmly in the area of business technology, shows the type of changes HP and other older tech giants must make to survive in a transforming marketplace. In its last fiscal year, HP took in $2.6 billion from its proprietary networking business, which started in earnest in 2009. In the long term, cheap, open-source networking equipment could threaten HP’s existing business, particularly if the open-source products make expected gains in power and capability. HP is not the only networking equipment maker threatened by the changing marketplace. Cisco Systems is still by far the biggest maker of networking gear, with $47 billion in annual revenue, and it depends heavily on proprietary products. Networking gear has been considered an important part of HP’s future, however. “We see a shift,” said Mark Carroll, the chief technology officer of HP’s networking business. “The traditional market, the one-vendor market, is transitioning to many suppliers.” By offering an open-source product consisting largely of mass-market chips, the thinking runs, HP will be in a position to dislodge Cisco. Mr. Carroll called HP’s embrace of open source “an evolution” of his company’s strategy. “You look at which markets are growing and go there,” he said. Sold complex and proprietary combinations of servers, data storage, networking and software for decades, customers are now demanding systems that can be arranged in different ways, with open-source software they can tinker with in-house. The new methods promise advantages in speed, cost and innovation. In addition, new entrants are affecting the business. Companies now rely on Amazon’s computing-rental business for many needs. Facebook last week announced an open-source switch intended to undermine prices and speed innovation in the industry. Mr. Carroll said HP “absolutely” sees Facebook’s switch “playing in the same space” as HP’s open-source networking. The actual manufacturer of the HP boxes, Accton Technology, has been making gear for HP for 20 years. The open-source software will be supplied by Cumulus Networks, which last year announced it would supply Dell with software for inexpensive networking boxes. The Cumulus relationship with HP is not exclusive, and HP could add more suppliers in the future. HP “wants the software and service margins and to get rid of being in the hardware business,” said JR Rivers, chief executive and one of the founders of Cumulus. “You’ll see other networking providers get on board with this.” The initial target customers for the product, available in March, are telecommunications and financial companies. Both use a lot of cloud computing, mobility, social media and big-data resources in their data centers.

• Being fully transparent in pricing can be costly, finds online ticket seller StubHub : In January 2014, StubHub attempted something radical. Addressing the frustration of its customers, the online ticket reseller began including its bevy of fees in the first price a customer sees, rather than tacking them on just before purchase. Now when you click “buy,” a pair of tickets listed at $100 will cost $100, not $125. According to StubHub, customers said they wanted—and say they love—the transparency. But the change hasn’t improved sales. Because StubHub, which generated $500 million in revenue last year, baked its fees into the list price, its tickets looked more expensive than those of rivals. Sales for the company fell more than 10 percent in the months that followed the pricing change, according to Wedbush Securities, as competitor Ticketmaster gained market share. StubHub further trimmed its profit margins by cutting its take from each sale. By November, Chris Tsakalakis, who championed the new pricing, was out as president. (He declined to comment.) Still, the ticket reseller has stuck with the policy, which spokesman Glenn Lehrman says is among the most popular moves the 15-year-old company has ever made.

• Startups continue to try and crack the attribution problem of omnichannel shoppers and cross-device conversions: The proliferation of smartphones and tablets has given rise to the “omnichannel shopper,” a retail industry term for a customer who might scope out a product from their phone, computer and local store before making a purchase. Major retailers are waging advertising wars across an increasing number of screens and storefronts in an effort to win these shoppers’ business. After all, that customer could decide to buy at any point. But serial entrepreneurs Hemang Gadhia and Christopher Brown discovered a simple albeit significant problem: Retailers have a hard time tracking when that customer using their app, visiting their Web site and entering their store is actually the same person. The pair’s latest venture, District-based Revmetrix, uses software to identify omnichannel shoppers as they move from smartphone to computer to tablet to store, then helps retailers determine what will motivate that specific customer to actually spend money. How will Revmetrix track omnichannel shoppers? Data, of course. As customers visit retailers online and in stores, they leave digital footprints along the way, such as the make and model of a smartphone, an IP address and a geographic location. That information can then be matched with information the retailer may already collect about its customers, such as their online shopping habits, purchase history and demographic data. At present, Gadhia said the Revmetrix software can identify the same customer on different devices with more than 80 percent accuracy. The more data that’s collected, the more accurate the technology becomes. “The problem that we’re solving is a problem that exists for every single large retailer on the planet,” Gadhia said.

• Flipkart is valued at more than AirBnB, as billion-dollar startups proliferate; as Snapchat proves, though, these rankings change very quickly though: Flipkart Internet Pvt. is now valued at $11 billion, making it the fifth-most valuable startup on the list. That puts Flipkart ahead of Airbnb, a company that is challenging the business models of global hotel giants with its online room rentals, and online storage firm Dropbox. These rankings are volatile though: Less than 12 months after investors valued Snapchat, the red-hot messaging app, at about $10 billion, the start-up is again in the market for money — and poised to nearly double that valuation. A range of other popular start-ups are also poised to propel their net worths to similar multibillion-dollar heights, including the virtual scrapbooking service Pinterest and the ride-hailing app Lyft. Uber, Lyft’s top competitor, has raised more than $3 billion in the last year and now has an eye-popping valuation of $40 billion. Giant sums of money and sky-high valuations are nothing new in the technology industry. But the latest burst of activity has put on clear display the frenzied pace of investors, who are eager to catch the next blockbuster company like Facebook. The action is also again spurring talk that overeager investors are poised to relive the dot-com boom and bust at the turn of the century, when overinflated start-ups led to a quick and painful downturn. For investors, the hunt is for the next proverbial so-called unicorn, a nascent business worth $1 billion or more — on paper, at least. Just last year, 38 privately held companies backed by venture capital joined the billion-dollar club, putting the membership of that group at 54, according to the data firm CB Insights. Digi-Capital, a mobile Internet advisory firm, estimates that the total value of mobile Internet start-ups worth $1 billion or more increased $28 billion in just the last quarter of 2014.