Daily Tech Snippet: Monday, April 27

• Alibaba-backed Paytm pushes deeper into e-commerce, adds mobile marketplace app for e-merchants: Paytm, an Indian online payments platform backed by China’s Alibaba, is pushing deeper into India’s booming e-commerce industry with a zero-commission mobile app marketplace targeted at small and medium-sized firms, the mainstay of the country’s economy. The company said on Friday this push, in addition to its existing general e-commerce platform, would help marketplace operations make up half of its total revenue target of $4 billion by the end of 2015. “This is our move into mobile commerce,” said Paytm Chief Executive Vijay Shekhar Sharma, adding the mobile app was designed to connect small businesses and consumers. Even though only about a quarter of the population can access the Internet, India already has the world’s third-largest population of internet users, thanks to cheap smartphones. That has driven a boom in e-commerce, in a country that had previously shopped largely in informal stalls and bazaars. Paytm, which has yet to turn a profit, will not charge merchants commission on their sales, making money instead on commissions levied when they transfer money earned out of the site. Paytm expects to have 100,000 merchants on its app by the end of the year, up from about 33,000 today on their general web platform. It expects to grow the number of stock-keeping units — essentially, units sold — from 8.5 million today to 100 million by the end of the year.

• Ratan Tata buys a stake in Xiaomi, will also act as advisor (more here) Ratan Tata, chairman emeritus of the holding company of India's Tata conglomerate, has acquired a stake in Xiaomi Technology [XTC.UL], a deal that is likely to bolster the Chinese phone maker's presence in the world's third-largest smartphone market. Financial details of the unspecified stake bought by Tata in Xiaomi, the first by an Indian, were not disclosed in the statement issued by the Chinese company on Sunday. Xiaomi, the No. 3 global smartphone maker, was valued at $45 billion after a December funding round. Tata, a respected business leader who was the chairman of salt-to-software Tata Sons for more than two decades, has previously invested in Indian start-ups, including online retailer Snapdeal. Tata'a investment in Xiaomi comes against the backdrop of an aggressive push by Xiaomi in India after entering the market, which has huge growth potential with just one in 10 people using smartphones, in July 2014. On Thursday, Xiaomi hosted its first global launch outside of China in the Indian capital New Delhi, unveiling its feature-heavy Mi 4i model that supports six Indian languages at 12,999 rupees ($205). Xiaomi and other Chinese smartphone makers are drafting in cricket teams and Bollywood stars to conquer India, their largest overseas market and a key testing ground for their international expansion. "Mr. Tata is one of the most well-respected business leaders in the world. An investment by him is an affirmation of the strategy we have undertaken in India so far," Lei Jun, founder and chief executive officer of Xiaomi said in the statement. "We are looking forward to bringing more products into India," he said.

• Alibaba, China Telecom tie up to sell cheap smartphones in China's smaller cities: Chinese e-commerce leader Alibaba Group Holding Ltd and state-owned China Telecom Corp Ltd have tied up to sell inexpensive smartphones aimed at boosting mobile commerce in smaller cities and rural areas. The phones, dubbed "Tianyi Taobao Shopping Handsets", will come installed with either an app for easy access to Alibaba's flagship Taobao online shopping platform or its home-grown YunOS mobile operating system, it said in a statement late on Friday. Buyers will be eligible for four months of free 2G data service. The partnership is a bid to deepen Alibaba's e-commerce base in less developed parts of the country and promote its mobile operating system in a shrinking, cut-throat handset market. Six models produced by Coolpad, Hisense and TCL would come with the Mobile Taobao app pre-installed. Mobile Taobao is China's most popular mobile shopping app with more than 200 million monthly active users, it said. Another eight models, made by lesser-known brands including Uniscope, Ctyon and Kingsun, will run YunOS, providing buyers with an Alibaba account for shopping and cloud-based storage, and other preloaded services, it said.

• GE is installing sensors into L.E.D streetlights so that city can collect data: Earlier this month, General Electric announced it was selling GE Capital, its financial arm. With less fanfare, G.E. also unveiled plans for computer-connected L.E.D. streetlights, so cities can collect and analyze performance data, for lower costs and better safety. GE Capital was a huge profit center after the financial deregulation of the 1980s, but that was then. Sensor-rich lights, to be found eventually in offices and homes, are for a company that will sell knowledge of behavior as much as physical objects. “The next generation of bulbs have a life cycle of 20 years; we can’t think of that as a transactional business anymore,” said Bill Ruh, the head of G.E.’s software center. “We can put cameras and more sensors on these, and measure motion, heat, air quality.” Retailers might want such lights to steer shoppers, he said, while consumers could better learn about their electricity consumption. This sensor explosion is only starting: Huawei, a Chinese maker of computing and communications equipment with $47 billion in revenue, estimates that by 2025 over 100 billion things, including smartphones, vehicles, appliances and industrial equipment, will be connected to cloud computing systems. The Internet will be almost fused with the physical world.

• America's car market is being disrupted by online retailers: To say that Beepi is disruptive, in this age of disruptions, sounds clichéd. Yet after just a year of operation in California, Beepi is now buying and selling hundreds of cars a month and is on track to book revenue of $100 million over the next year, the company said. The start-up has raised nearly $80 million in financing and it plans to expand to seven additional regions nationwide by the end of the year. Beepi’s rapid growth illustrates something deeper about the role the digital world keeps playing in our lives: There’s no limit to it. A few years ago, it seemed reasonable to assume there were some sectors of the economy that would resist the pull of the Internet and which most people felt were better left offline. Shopping for groceries or eyeglasses, say; now both those tasks are moving online. Beepi and similar competitors, including Carlypso and Carvana, are pushing people to cross another threshold on the way toward a digital-only life. Although auto experts doubt that online-only car-buying experiences will become the norm, it would be wise not to discount their rise, for the simple reason that the Internet remains hungry. As people grow more accustomed to doing pretty much everything over computers and phones, the Internet tends to consume everything in its path. When Mr. Resnik began investigating the auto sales industry, he found that more than 90 percent of American car buyers consulted the Internet for purchases and a rising number of people worldwide say they would buy a car entirely online. According to a study by the research firm Capgemini, about a third of Americans and two-thirds of Chinese who were asked said they would buy a car over the web. To Mr. Resnik, the latent consumer interest was a starting point, and along with a friend, Owen Savir, he set out to create a system to bring to car shopping all the conveniences we’ve grown used to with other online purchases. “We just thought that the car market was broken,” Mr. Resnik said. At the core of Beepi’s business model is a pricing trick. There are three relevant prices for any used car. The trade-in price, which is what a dealer will give you for your car; the private sales price, which is what you can get if you sold it directly to someone else; and the retail price, which is the price the car will command at a dealership. Dealers pay the trade-in price for vehicles and then sell them at the retail price. On some cars, that spread can be worth 50 percent. Beepi thinks it can make a profit while operating within a tighter pricing band. When you list your car with the site, the company’s pricing algorithm, which consults data on historical car sales in your area, offers a price at least $1,000 more than you can get by trading in your car at the dealer. That is still less than what you would get selling privately, but Beepi’s price is guaranteed. If your car doesn’t sell within 30 days of listing on Beepi, the company will buy it from you. On the other side of the transaction, Beepi sells cars at prices lower than comparable certified used cars at dealerships. It can do so, the founder says, because its overhead is lower — it doesn’t have to maintain parking lots to house cars, because the vehicles stay with the sellers until they are sold. Also, because it buys and sells cars over a wide area — currently, any city in California and Arizona — it can take advantage of supply and demand disparities in different regions. Finally, Beepi caps its own fee at 9 percent, depending on price and demand (it will take as little as 1 percent). “When you put it together, we think you can give more to sellers, more to buyers, and make up to 9 percent of the price,” Mr. Resnik said. But if Beepi is faster, more convenient, and a better financial deal than the traditional car market, it also suffers one huge downside. Beepi does not let buyers test-drive cars before buying. Instead, it takes a page from other online retailers’ return policies. Like a pair of shoes from Zappos, Beepi’s cars come with a 10-day, try-it-out money-back guarantee. If you aren’t satisfied, the company will send a truck to take the car away free. The company positions this as better than a dealer’s test-drive. “It’s a 10-day test drive,” Mr. Savir said. But that could be a tough sell. Mr. Resnik of Beepi said only a handful of people have returned their cars, at a rate “much, much lower than 1 percent.” And he isn’t worried that there won’t be consumer demand in buying cars without a test-drive. “As people buy more and more online, they’re getting used to it,” he said. “It’s going to happen.”

• "Apple Won’t Always Rule. Just Look at IBM" In a few short years, Apple has become the biggest company on the planet by market value — so big that it dwarfs every other one on the stock market. It dominates the Standard & Poor’s 500-stock index as no other company has in 30 years. Apple’s market capitalization — the value of all of the shares of its stock — is more than $758 billion, greater than any other company’s. Yet the Wall Street consensus is that Apple is still having a growth spurt. In fact, if Apple’s watches, phones, laptops and other gadgets and services keep generating favorable publicity — and if its quarterly earnings report on Monday is as strong as the market expects it to be — there’s a reasonable chance that Apple’s value will keep swelling. Not far down the road, it might even reach the $1 trillion level that some hedge funds predict. But even if Apple still has some room to run, there are some early warning signs. After all, the company has already crossed a significant threshold. In February, it grew to twice the size of the next biggest company in the S.&P. 500, a rare feat of financial dominance, and one that hasn’t happened since Ronald Reagan was president. I checked the numbers with Howard Silverblatt, senior index analyst at S.&P. Dow Jones Indices. He found that the last market colossus to tower over its competitors by a two-to-one ratio was IBM, which did it in three successive years: 1983, 1984 and 1985. “That was when PCs were new,” he said, “and just about everyone thought IBM would rule the world.” Now it’s Apple’s world. Apple is the most widely held stock in American mutual fund portfolios. IBM, the former undisputed heavyweight champion, isn’t even in the running anymore. It ranks 62nd, according to a Morningstar analysis performed at my request. IBM is still an important company, but it is struggling. Investors judge it to be worth less than one-quarter of Apple’s market value today. What happened to IBM — how it became this small, in comparison with Apple — is worth remembering. IBM thrived for years afterward, but just as Jobs had predicted, it turned out to be vulnerable to disruptive change, as all big companies are. For decades now, IBM has engaged in a sometimes painful transition, and as it revealed in its quarterly earnings report last week, it is still hurting: Its revenues have declined and it has endured wrenching business shifts. My colleague Steve Lohr wrote last week that IBM has been getting out of slow-growing old businesses, like personal computers, disk drives, low-end server computers and chip manufacturing — but its new initiatives in fields like data analytics, cloud computing and mobile apps for corporate customers haven’t entirely succeeded yet. In a turnabout, IBM’s mobile app strategy relies on a partnership with the current giant, its old nemesis Apple. IBM is leveraging its prowess with supercomputers and artificial intelligence with a new initiative, Watson Health, that includes Apple. That alliance could help both companies grow — in Apple’s case, by ensuring that its products work more seamlessly in corporate environments where IBM is deeply entrenched. Rapid growth, after all, isn’t a sure thing, especially when you’re already the biggest company in the world. IBM has proved that. Sooner or later, Apple investors will have to take that lesson to heart.