Daily Tech Snippet: Tuesday, September 20, 2016

• Facebook just bought a small hardware startup called Nascent Objects: Facebook has acquired Nascent Objects, a small Bay Area startup that offers what the company calls a “modular electronics platform” — essentially a software program to help expedite the process for building physical gadgets, including 3-D-printed hardware. Nascent Objects will join Facebook’s Building 8, the company’s new top-secret hardware lab run byformer Xoogler Regina Dugan, who used to run Google’s advanced technology and products team that did things like 3-D mapping and modular smartphones.he “modular” element is interesting. The idea of a modular smartphone where you can easily add or remove different components like a camera or battery or storage has been kicked around for a while now but has never taken off. It’s unclear what Facebook wants to build, but Nascent Objects specializes in modular gadgets. The other key seems to be expediting the time it takes to prototype hardware projects, which is also why Facebook recently built a new hardware lab on its Menlo Park, Calif., campus.

• Ride-hailing app Grab raises $750 million in funding led by SoftBank: Southeast Asian ride-hailing firm Grab said it raised $750 million in a funding round led by investor SoftBank Group, adding that it would continue expanding in the region and also significantly invest in mobile payments capabilities. Southeast Asia is fast becoming a key battleground for ride-hailing firms thanks to a burgeoning middle class as well as a youthful, Internet-savvy demographic. Grab's announcement comes a few weeks after Uber sold its China operations to bigger domestic rival Didi and analysts have said Uber may focus its efforts and money elsewhere, such as in Southeast Asia.

• Twitter to lay off less than 20 employees at India center: source: Twitter Inc said on Monday it would lay off some employees and halt engineering work at one of its development centers in India's technology hub Bengaluru. The layoffs will impact less than 20 employees at the development center, according to a source familiar with the matter. The employees were part of ZipDial, an Indian mobile communications startup bought by Twitter last year, the source said."Over the past 18 months, we have incorporated the technology and talent of our ZipDial acquisition across our company," said a company spokesperson. Twitter said it remained committed to India as a strategic market and would continue to maintain a presence in the city. The company had 3,860 employees globally as of June 2016. However, it did not disclose the number of employees it had in India.

Daily Tech Snippet: Monday, August 29

• China’s Murky World Where E-Commerce Meets Student Lending: Across college campuses in China, a small army of marketers is recruiting students to borrow money at interest rates many times that charged by the nation’s banks. Those without a credit history or parental approval can borrow money to buy a smartphone, pay for holidays, or get the latest sneakers through a raft of apps such as Fenqile. The market leader, whose name literally means Happy Installment Payments, has 50,000 part-time marketers across more than 3,000 universities and proudly touts the slogan “Wait no more; love what I love.” Welcome to the regulatory gray area where peer-to-peer lending meets e-commerce in China. In the last three years, tens of millions of students have taken out micro-loans with the tap of a button to buy things. Once just the realm of startups, the sector has attracted heavy hitters in China’s online industry, including Alibaba Group Holding Ltd.’s finance affiliate and JD.com Inc., which are pouring hundreds of millions of dollars into the lending model. In a nation with 37 million college students, the market is expected to reach $15 billion, according to the Beijing-based market research firm Analysys. The apps sell everything from cameras to concert tickets sourced from third-parties, charging students annualized interest rates typically above 10 percent. The loans are then packaged and sold to wealthy individuals, who find the expected return of as much as 10 percent much more attractive than the central bank’s benchmark savings rate of 1.75 percent.

• How long before Amazon forces its Indian rivals into a merger or sale? Three years into Amazon’s aggressive push in India, the country’s two home-grown e-commerce competitors are feeling the pressure. Both Flipkart and Snapdeal have raised more than a billion dollars, but have historically recorded big losses as they’ve engaged in discounting battles with each other and with Amazon. Amazon has made it clear it is willing to spend big to become the No. 1 e-commerce player in the country after failing to make a dent in another huge international market, China. Now, it seems like every week there’s a new rumor of the two homegrown players considering a merger or sale. Alibaba, which owns a stake in Snapdeal and another Indian player, Paytm, is often in the conversation. In any potential talks, however, Flipkart and Snapdeal’s frothy valuations could be a problem. Flipkart was valued last year at $15 billion while Snapdeal most recently secured a $6.5 billion valuation.

Daily Tech Snippet: Tuesday, August 23

• Former Flipkart CEO’s Employee Clash Shows Indian Startup Trauma..: India’s largest online shopping service is heating up, and not in a good way. Flipkart’s regular Friday townhall grew tense after employees incensed by hundreds of job cuts openly accused management of betrayal. Taken aback, chairman Sachin Bansal countered that the departures stemmed from poor performance and he lost his job as chief executive for the same reason. The co-founder admitted the company had missed financial targets in recent months, prompting an overhaul of its top rungs, according to employees who attended the meeting. He didn’t elaborate but recent moves -- including a brief decision to go mobile app-only after ditching its fashion site -- may have granted an opening to a hard-charging Amazon.com Inc. Bansal’s unusual candor, which drew applause, underscores the plight of the country’s technology sector as competition intensifies and funding begins to dry up.

• ..Even as analysts opine that Amazon overtook Flipkart in India July e-commerce sales: Barely three years after launching in India, Amazon (Amazon Seller Services Pvt. Ltd) likely exceeded Flipkart in terms of gross sales in July. Flipkart reported gross sales or gross merchandise value (GMV) of less than Rs.2,000 crore in July, while Amazon’s gross sales crept up above Rs.2,000 crore, according to five people familiar with the companies’ numbers. Another local online marketplace Snapdeal (Jasper Infotech Pvt. Ltd) reported gross sales numbers of roughly Rs.600 crore, a fall of more than 50% from the sales it had been generating until the end of last year, said two other people, familiar with the company’s numbers. Gross sales refer to the value of goods sold on a site, and not net revenue. (Flipkart, Snapdeal and Amazon are structured as marketplaces because of regulations; their net revenue comprises the commissions they charge their third-party sellers on every transaction and fees for services) To be sure, the numbers are only for the month of July and the market share battle between Flipkart and Amazon is far from over. Flipkart’s numbers also exclude revenue at Myntra and Jabong, the two large fashion retailers it owns. Snapdeal’s numbers exclude sales at FreeCharge, its payments arm. Including Myntra and Jabong revenues, Flipkart is still comfortably ahead of Amazon. Yet, the numbers confirm reports in Mint and other publications since the start of the year that Flipkart and Amazon are running neck-and-neck in the e-commerce market share battle and the latter is close to overtaking it. This is the first time the exact picture has emerged.

• Chinese investors buy ad tech startup Media.net for $900 million: Advertising technology startup Media.net, founded by tech entrepreneur Divyank Turakhia, said on Monday it had been acquired for about $900 million by a group of Chinese investors. The deal would represent the third-largest in the ad tech industry, after Google's acquisition of DoubleClick and Microsoft Corp's for aQuantive. More here: Ad-tech firm Media.net Sells to China Group for $900 Million: The startup, which powers contextual ads offered by Yahoo! and Microsoft’s Bing, plans a move akin to a reverse merger that would make it a public company in China.Media.net, which is based in Dubai and New York, is touting this as the third-largest ad-tech acquisition in history. However, the complex deal more closely resembles a reverse merger, where a private company takes over a public one and bypasses the formalities of an initial public offering. Technology entrepreneur Divyank Turakhia started Media.net in 2010 and bootstrapped the business. The company provides the technology powering contextual ads offered by Yahoo! Inc. and Microsoft Corp.’s Bing search engine. The system is similar to one offered by Google, choosing which ads to show based on the content of the web page they appear on. The deal comes as merger activity involving ad-tech companies is declining. There were 43 deals during the first half of the year, according to research firm PitchBook Data. That’s a 45 percent decline from the same period last year. Media.net generated $232 million in revenue last year, more than half of which came from mobile visitors, Turakhia said. The U.S. accounts for 90 percent of Media.net’s revenue, but the company is hoping to make a big push into China after the deal, he said. 

• Amazon wants to sell a cheaper music subscription service that will only work on its Echo player: Spotify, Apple Music and everyone else cost $10 a month. Amazon wants to charge half of that. Amazon wants to launch a music subscription service that would work the same way services from Apple, Spotify and many others work: $10 a month, for all the music you can stream, anywhere you want to stream it.  But Amazon is also working on a second service that would differ in two significant ways from industry rivals: It would cost half the price, and it would only work on Amazon’s Echo hardware. Industry sources say Amazon would like to launch both services in September, but has yet to finalize deals with major music labels and publishers. One sticking point, sources say, is whether Amazon will sell the cheaper service for $4 or $5 a month.

Daily Tech Snippet: Thursday, July 07

• India's $4 Smartphone Seems Too Good to Be True: A little-known Indian company called Ringing Bells Pvt is set to start shipping the Freedom 251. The prototype touts a quad-core processor, a 4-inch screen and front and back cameras - at the astonishingly low price of 251 rupees (less than $4). While global brands Samsung Electronics Co. and Lenovo Group Ltd. sell devices for less than $100, the $4 smartphone is the one stirring up the internet-hungry, app-crazy hordes in a country where Apple Inc. has been unable to make a dent. With iPhones costing upwards of $700, Apple commands a mere 2 percent market share in a country where the World Bank puts the per capita income at $5,630. Brands can't make money even on $50 smartphones, so profiting from a $4 device is a ludicrous idea, say experts like Tarun Pathak, a senior analyst at Counterpoint Technology Market Research. While Micromax sells millions of cheap devices every month in smaller cities - it profits by taking advantage of economies of scale. Ringing Bells’ managing director Mohit Goel isn't counting on a profit from device sales, conceding that the company will lose hundreds of rupees on each unit, and is instead planning to recoup money through advertising and marketing deals. Goel has said the company is importing kits from Taiwan and assembling the phones in a factory in Haridwar near Delhi.Even at $4, the smartphone could still be out of reach for most because of scarcity. When Goel first announced Freedom 251 in February, the company said over 70 million jostled to register, crashing its website. Last week he said Ringing Bells will soon start shipping 200,000 smartphones to buyers picked by lottery. Other details were not available and e-mails, phone calls and text messages to Goel and his representatives in the past days went unanswered. Selling such a cheap device has attracted scrutiny along with the publicity. The prototype Freedom 251 presented to the media turned out to be produced by another manufacturer with its logos covered. Thwarted buyers protested outside the company’s headquarters, setting off inquiries by the police and tax officials. Pankaj Mahindroo, president of the Indian Cellular Association, with members including Apple and Samsung, said “We are concerned and keeping a close watch.”

• Another Tesla crash is under investigation to see if Autopilot is at fault: U.S. transportation regulators are opening a new probe of a Tesla car crash, one week afterannouncing an investigation into a fatal crash of a Tesla operating in the company’s semi-autonomous driving mode. The new investigation involves a non-fatal crash on July 1 in Pennsylvania. The National Highway Traffic Safety Administration will try to determine if the Tesla’s Autopilot functions were active at the time. The additional investigation will likely intensify scrutiny around the safety and design of Tesla’s Autopilot product, which provides some self-driving features as a software update. 

• Zomato's Results: For the year ending March 2016, Zomato posted revenues of Rs 87.5 crore for the India region, up from Rs 46 crore revenues in 2015. India accounted for 47.3% of Zomato's overall revenues that stood at 184.97 crore for FY16. The net loss for the India region however shot up to Rs 247 crore for the fiscal, up more than three times from Rs 62.3 crore loss in 2015. This is nearly half of Zomato's overall net loss of Rs 574.5 crore in FY16.In the US market that accounts for nearly 50% of its listings, the Gurugram-based company posted a net loss of Rs 327.5 crore on revenues of Rs 6.73 crore for the fiscal. This is a massive increase from Rs 33 crore on revenues of Rs 5.1 crore in 2015. Zomato had forayed into United States last year with the $52 million UrbanSpoon acquisition that was eventually folded into the company.In terms of segments, Online advertising still dominates Zomato's revenues, accounting for 91.4% of the company's overall revenues. The segment's revenues grew by 76.1% to Rs 169.1 crore for FY16, from Rs 96 crore in FY15. Revenues from online ordering was at Rs 7.5 crore for the fiscal, accounting for nearly 4% of the company's revenues. Goyal had recently said that 20% of its India revenues came from the ordering business in April this year. Subscription revenues grew to Rs 8.4 crore from Rs 0.64 crore in 2015. This includes revenues from its business app from restaurants and its Whitelabel platform among others.

• Apple Drops to Fifth in China’s Mobile Market as Locals Rise: Apple Inc. dropped to fifth place in Chinese smartphone shipments, losing ground in its biggest overseas market in a fresh blow for the technology giant. IPhones made up 10.8 percent of devices sold in May, down from 12 percent a year earlier, according to Counterpoint Research. By comparison, Chinese vendor Huawei Technologies Co. increased its lead with 17.3 percent. Chief Executive Officer Tim Cook has publicly touted the importance of China, where the company is combating a slowing domestic economy and local vendors with increasingly popular devices. The launch of the cheaper iPhone SE was meant to boost Apple’s popularity in developing markets and Cook met with China’s vice premier Liu Yandong in May. Instead, it has suffered commercial, legal and regulatory setbacks in recent months leading to lawsuits and key products getting shut down. Local brands Huawei, Vivo, Oppo and Xiaomi are now the top four smartphone makers in China with a combined market share of 53 percent, according to Counterpoint research director Neil Shah. Oppo almost doubled its market share to 11 percent. Apple’s sales in Greater China, which also includes Taiwan and Hong Kong, fell 26 percent during the March quarter compared to a year earlier, amid a slowing market.

Daily Tech Snippet: Tuesday, June 21

• VR is the future of porn, and it’s a creepy future indeed: This got real weird, real fast. And not just because I was demoing the technology in the middle of the E3 floor, surrounded by fellow show-goers. It’s just — well, even after all the explainers in the world, it’s hard to sufficiently brace your mind for all that virtual reality porn entails. It occupied a small space, tucked in the rear of the LA Convention Center, but Naughty America may just have had the one booth capable of rivaling Nintendo’s for sheer show buzz. We must have walked by the thing a dozen times during our three days on the floor, and there was always a small army of show-goers lined up to take it for a spin. Much like, say, your standard first-person shooter, the technology is built around a POV (point-of-view) shot, putting the viewer in the place of the camera. The effect is already a bit jolting (and, at times nausea-inducing) in standard VR, but all of that really goes next level when you look down and you’ve swapped your bits and bobs with someone else’s. The company’s demo cycles through a few short clips, in which the scenery, scenarios and co-stars change, but, well, the view pretty much stays the same. It’s hard to say how much of the initial shock is due to the newness of the technology and how much is firmly entrenched in the uncanny valley, though the company told me that many attendees enjoyed the demo, strange setting and all.Once you get past the somewhat off-putting nature of swapping nether regions with a professional, VR porn does offer an interesting way forward for an industry that, like many others, has been hard hit by the prevalence of free online content.

• Apple May Soon Open Retail Stores in India: After months of delays, Apple is likely to open its first retail stores in India, a fast-growing market for smartphones where the American technology giant has little presence. New rules issued by the Indian government on Monday exempt foreign-owned companies that want to open stores selling a single brand of products from requirements that 30 percent of the content of those products come from India. The exemption, which lasts three years, can be extended to eight years in the case of companies selling “cutting edge” items, such as Apple’s iPhones and Macs. Apple, which makes virtually all of its devices in China, lobbied for months for the loosening, and Timothy D. Cook, the company’s chief executive, discussed it with government officials during his first visit to India last month.An Apple spokesman declined to comment on the issue on Monday. The company has not yet received any formal response from the Indian government on its application to open stores. By themselves, new stores will have little impact on Apple’s small market share in India, beyond serving as a marketing tool. Although Indians will buy an estimated 139 million smartphones this year, Android models that cost less than $120 dominate the market, according to the Gartner research firm.Apple says its sales in India grew 56 percent during its last fiscal quarter, but its cheapest phones typically run $400 or more. Its total annual sales in India were around two million units last year, according to Gartner.

• Chinese Curb Cyberattacks on U.S. Interests, Report Finds: Nine months after President Obama and President Xi Jinping of China agreed to a broad crackdown on cyberespionage aimed at curbing the theft of intellectual property, the first detailed study of Chinese hacking has found a sharp drop-off in almost daily raids on Silicon Valley firms, military contractors and other commercial targets. But the study, conducted by the iSight intelligence unit of FireEye, a company that manages large network breaches, also concluded that the drop-off began a year before Mr. Obama and Mr. Xi announced their accord in the White House Rose Garden. In a conclusion that is largely echoed by American intelligence officials, the study said the change is part of Mr. Xi’s broad effort to bring the Chinese military, which is considered one of the main sponsors of the attacks, further under his control. As a result, the same political forces that may be alleviating the theft of data from American companies are also responsible for Mr. Xi’s stunningly swift crackdown on the Chinese media, bloggers and others who could challenge the Communist Party.

• Wal-Mart to Buy 5% Stake in JD.com as Part of Chinese Deal: Wal-Mart Stores will acquire a 5 percent stake in Asian e-commerce giant JD.com Inc. in a deal that will reshape the U.S. retail chain’s operations in China. As part of the agreement, JD.com will take ownership of Wal-Mart’s Yihaodian online marketplace, the companies said in a statement Monday. The Chinese branch of Sam’s Club also will open a store on JD.com, and the two companies will link up their supply chains. The partnership gives Wal-Mart a fresh start in China after it struggled to adapt to a slowing local economy and a rise in online shopping. Wal-Mart Chief Executive Officer Doug McMillon has said that the company needs to succeed in China, where it estimates that 25 percent of global retail growth will come from in the next five years.A 5 percent stake in JD.com would be worth about $1.5 billion at its current stock price. Wal-Mart will receive about 145 million newly issued Class A shares of JD.com in the transaction. That deal will increase the retailer’s earnings per share by 16 to 19 cents in the second quarter, according to the statement.

• Apple to lose weighting in Russell index, shares could fall: After dropping more than $200 billion in market capitalization in one year, Apple shares could fall further as they are set to lose their weighting and be reclassified in the annual reconstitution of the widely followed Russell indexes. When all is said and done, about $1.3 billion more will be sold in Apple Inc shares at the market close on Friday, when the reconstitution of the Russell indexes takes effect, according to an analysis by Credit Suisse. Because Apple has been aggressively buying back and retiring its stock, outstanding shares have dropped to less than 5.5 billion from 5.8 billion in late June 2015, when the Russell indexes were last recalibrated, according to Reuters data. Apple's weighting in the Russell 1000 will roughly fall to 2.52 percent from 2.77 percent, Credit Suisse said. The decline is due to the combination of fewer shares outstanding and Apple's smaller part of the index's capitalization. The performance of a market-weighted index is more influenced by larger companies, like Apple. Adding to the selling pressure, Apple will be classified as both a value and a growth company at Russell. After the close on Friday, 92 percent of Apple will be considered "growth" and 8 percent "value" according to index provider FTSE Russell, splitting it between two Russell subindexes. The move matters because value managers that peg their investments to the Russell indexes will be buying Apple while growth managers will be selling. Because there are more assets benchmarked to growth than to value, there will be net selling of Apple, said Meera Krishnan, U.S. index strategist at Credit Suisse in New York. She estimated there will be over $850 million of selling in Apple out of the growth component of the Russell 1000 and about $400 million of buying from the value side.

Daily Tech Snippet: Wednesday, June 15

• Uber Sets Sights on Leveraged Loans for Even More Money: Uber has raised more than $14 billion using all sorts of creative funding sources. Now it may add something new to the list: the leveraged loan market. The ride-hailing start-up is looking to issue as much as $2 billion in securities to investors, said a person briefed on the discussions, who spoke on the condition of anonymity. Morgan Stanley, Barclays, Goldman Sachs and Citigroup are managing the process, said the person, adding that the deal has not begun yet and may still fall apart.By tapping leveraged loans, Uber is adding to its trove of billions made up of many types of securities, which the company has been spending as it expands worldwide. Uber has raised equity from traditional venture capital sources, strategic corporate investors and private equity. This month, the company said that it had raised $3.5 billion from Saudi Arabia’s Public Investment Fund. Uber has also raised billions in convertible debt, which can be exchanged for equity at a future date. Uber has redefined private fund-raising, drawing hundreds of millions in new cash or debt at a rapid pace of once every few months. The company needs financing as it now operates in at least 69 countries and is fighting an expensive battle in China against a rival, Didi Chuxing, which is also raising money to expand. Leveraged loans are rarely used among start-ups. A leveraged loan is a security issued to a company that has a lot of debt on its books already, and thus is perceived by investors as being a higher risk. The loans are typically used for leveraged buyouts and are seldom seen in Silicon Valley. Uber has been able to tap less traditional funding sources because investors think its size and scale make it a safer bet than other Silicon Valley companies. Uber’s valuation of $62.5 billion — making it the highest valued venture-backed start-up in the world — would not change with this new investment. Leveraged loans also allow Uber to raise money without diluting the holdings of its many equity investors — some of which have been through more than a dozen rounds of financing.

• Twitter has invested in music streaming service SoundCloud: Two years ago Twitter thought about buying SoundCloud, but ended up walking away from the music service. Now Twitter has bought a piece of SoundCloud instead. Twitter has invested around $70 million in the music service, as part of a round that should end up in the $100 million-range, according to sources familiar with the deal. The round is expected to value SoundCloud at about $700 million — the same value that investors placed on the company in 2014, when it raised $60 million; since then it has also raised a debt round. It’s unclear whether the Twitter investment is part of a strategic partnership, but that would make sense: Twitter might view via an integration with SoundCloud as a way to increase growth and engagement, and SoundCloud may look at Twitter as a way to promote its newly launched subscription service, which is crucial to the company’s plans. And both companies could use some help. Twitter has been punished by Wall Street for its inability to add users at a rapid clip; SoundCloud’s flat valuation indicates that investors are also worried about its own growth prospects.

• Alibaba Tries to Shore Up Investors’ Confidence: The Alibaba Group of China has disappointed investors since its record-breaking American stock listing nearly two years ago, as volatile financial results and regulatory run-ins have driven the price of its shares down almost to where they began. Now the e-commerce giant is trying to reassure. For the first time, Alibaba on Tuesday offered investors financial guidance for the coming year, saying that it expected revenue growth to accelerate from last year’s pace. At a meeting at its Hangzhou headquarters, Alibaba cited strength in its core business, despite China’s slowing economic growth, as well as benefits from new ventures that have raised eyebrows among some investors The forecast comes as Alibaba seeks to demonstrate that its strategy, which has long focused on growth, is good for business. In China, Alibaba operates online sales platforms that connect consumers with mom-and-pop stores, as well as with global brands like Burberry and Zara. It has been showing sales growth on its platforms using a measure called gross merchandise volume, a yardstick for transactions across its platforms. Alibaba said on Tuesday that it would de-emphasize that figure, saying it would no longer report it quarterly. It will continue to report an annual figure, and offered a target for 2020.

• India's Space Program Takes On Elon Musk: India’s space agency will launch a record 22 satellites on a single rocket as it tries to ease a global backlog and demonstrate the ability to compete with commercial spaceflight companies run by billionaires Elon Musk and Jeff Bezos.Satellites from the U.S., India, Canada and Germany will enter orbit after a scheduled June 20 liftoff from the Sriharikota barrier island along the southeast coast, the agency’s chairman, A.S. Kiran Kumar, said in an interview in Bengaluru.The 22 machines being launched next week include an Earth observation satellite to capture light invisible to the naked eye. It is the biggest single launch by India, trailing Russia’s 33 in 2014 and NASA’s 29 the year before. India last month successfully launched a scale model of a reusable spacecraft, a project that in time could pit the nation against Bezos and Musk in the race to make access to space cheaper and easier. The country also injected a probe into Mars’ atmosphere in 2014 for just $74 million, about 11 percent of the cost of the U.S.’s Maven probe.

Daily Tech Snippet: Monday, May 23

• To halt smartphone slide, Samsung rewrites playbook: From the way it chooses smartphone components to the models it brings to market, Samsung Electronics (005930.KS) has undergone a painful process of breaking from its past to reverse a slide in its handset business. For example, the world's largest smartphone maker agonized over camera specs for its flagship Galaxy S7 until the last moment - ultimately defying industry convention by opting for fewer pixels in exchange for improved autofocus features and low-light performance, a move that contributed to early success. It also pared back its product line-up, overcoming internal resistance, enabling it to streamline production, an executive said. The handset business has now stabilized, and had its best profit in nearly two years in January-March, though historically low smartphone industry growth still leaves Samsung looking for the "next big thing". After peaking in 2013, a sharp drop in mobile profits exposed Samsung as slow to adjust to the changing market: its budget devices were overpriced and unappealing versus Chinese offerings, and the 2014 version of its Galaxy S flopped. That prompted a cull among executives and stoked investor worries Samsung might not be able to recover as rivals including Apple, Huawei  and Xiaomi gained market share at its expense. There was no sweeping, across-the-board fix. Rather, Samsung embarked two years ago on an overhaul that included a shift from a phone-for-all-needs approach towards a line-up that emphasized economies of scale. It revamped design, using metal frames and curved screens, and gave high-end features such as organic light-emitting diode (OLED) screens to its low- and mid-tier products. The product cull paid off; the revamped models helped Samsung recover in big markets such as India. "There was a feeling the sheer number of phones in the market was confusing for customers," said a Samsung India executive, declining to be identified as he was not authorized to speak with the media.Samsung's Kim says his focus now is on premium-end smartphones - those costing $600 and above - where not all industry players have the muscle to compete.

• Selling Uber Shares May Be Tougher Than You Think: SharesPost Inc., a broker of private technology stocks, approached investors with what seemed like an alluring offer: a potential investment in a fund that would hold Uber Technologies Inc. shares. In exchange for exposure to the high-flying ride-hailing startup, they were asked to part with at least $100,000 each and agree to hold the stake until the company goes public or gets acquired, with no vote in business decisions or visibility into its operations or finances. But SharesPost said it called off the proposed deal. The plan was to purchase as much as $10 million in preferred shares from Uber’s most recent round of financing and package them in an investment fund to be sold at a premium, according to offering documents obtained by Bloomberg. SharesPost said it wouldn’t pursue the transaction, citing a “lack of investor interest.” “It became clear that the minimum funds would not be collected for this deal, and as a result, the sales team began to inform interested clients of this fact,” Greg Berardi, a spokesman for SharesPost, wrote in an e-mail. The erstwhile offering shows the complexity of giving investors the chance to gain shares in a startup that wants to tightly control who gets a sliver, no matter how small. Like many startups, Uber limits sales of its shares. Such transactions can distort a company's valuation, leave control in the hands of unknown investors and result in tax liabilities for the company, its employees and other shareholders. Uber declined to comment on the SharesPost proposal, but a spokeswoman said when Uber learns of potential unauthorized shares on the market, the company contacts the people involved. SharesPost's role in share sales has drawn regulatory scrutiny. The broker settled with the Securities and Exchange Commission in 2012 to resolve claims that the online marketplace for private-company shares acted as an unregistered broker. SharesPost paid $80,000 and Greg Brogger, then the company’s president, paid $20,000, without admitting wrongdoing. Brogger is now SharesPost’s chief executive officer and chairman, and the company is registered with the SEC. SharesPost's spokesman called the 2012 settlement “completely irrelevant to a 2016 fund that never got off the ground.” Speaking to a Silicon Valley audience in March, SEC Chair Mary Jo White cautioned that secondary transactions could amplify “errors or misconceptions in valuation.” She highlighted the lack of transparency in such deals as cause for concern. For the proposed Uber transaction, the documents said a fund managed by a member of SharesPost’s board of directors would buy the shares at a 2 percent premium to their price in last year’s funding round, which valued the company at $62.5 billion, and then resell them for 5 percent more. It’s unclear where the SharesPost fund would acquire the Uber stake from. VC Experts, a private-market research firm, estimated that the transaction would give Uber an implied valuation of more the $70 billion.

• Modi’s Mini-Shuttle Set to Blast Into Elon Musk’s Race for Space: India is set to launch a scale model of a reusable spacecraft on Monday, a project that in time could pit the nation against billionaires Jeff Bezos and Elon Musk in the race to make access to space cheaper and easier. The winged vessel -- one-fifth of full size -- is due to blast off on a rocket from Sriharikota base on the southeastern coast, reach an altitude of 70 kilometers (43 miles) and glide back at supersonic speeds to Earth for a splashdown in the Bay of Bengal, the Indian Space Research Organisation said.India put a probe into Mars orbit in 2014 for just $74 million, demonstrating a combination of technological capability and low costs that chimes with the goal of more frequent space travel being championed by Musk’s Space Exploration Technologies Corp. and Bezos’s Blue Origin LLC. Both companies seek to curb costs by making rockets reusable and are conducting test launches more often.India plans to spend about 75 billion rupees ($1.1 billion) on its entire space program in the year through March 2017, a fraction of the yearly $19-billion-dollar budget of the National Aeronautics and Space Administration in the U.S.  The reusable space vehicle is supposed to provide a cost-effective and reliable option for operations such as launching satellites, according to the Indian space agency. Mock-upson government websites resemble the long-defunct NASA space shuttles.The nation remains about eight years away from a full-scale version of the reusable space vehicle, and still has to cross the hurdle of steering the vessel safely back to land rather than water, according to the Indian space agency. Musk’s SpaceX in December pulled off a soft, vertical touchdown after the two-stage rocket propelled its payload. Less than month earlier, Bezos sent one of his test rockets to the edge of space and landed it safely back on Earth. "India has to start somewhere, sometime," Lele said. "That time is now."

• Start-Ups Once Showered With Cash Now Have to Work for It: The balance of power is shifting across tech start-up land. Not long ago, entrepreneurs had the upper hand. With investors eager to get a piece of the next Uber or Airbnb, entrepreneurs often just lifted their little fingers to get financing. Some investors let the entrepreneurs choose their own terms, while others gave multimillion-dollar paydays to start-up founders long before their companies were a success. Now investors have the advantage. Instead of venture capitalists begging to be allowed to invest, entrepreneurs are coming to them begging for cash. Investors are exerting their newfound power by asking more questions about a start-up’s prospects and taking more time to invest. Some are pushing for management changes or for financing terms that would help cushion any losses they might face. “Venture capitalists are putting founders through everything short of a proctology exam before they invest,” said Venky Ganesan, a partner at Menlo Ventures, a Silicon Valley venture capital firm. The changing balance of power is evident in the numbers. Venture capitalists have put less money into start-ups in the United States in the last two quarters, according to the National Venture Capital Association; funding dropped 11 percent to $12.1 billion in the first quarter from a year earlier. With a smaller capital pie, entrepreneurs have to work harder for a piece. Investors have also been better able to negotiate financing terms that benefit them. According to a survey from the law firm Fenwick & West, investors of richly valued start-ups have been getting more provisions such as guaranteed payouts and minimum investment gains. Such terms are still relatively rare, but tend to become more common after the number and size of deals decline, said Barry Kramer, a Fenwick & West partner. Above all, investors are no longer paying any price to invest in a start-up. Since the beginning of this year, about 30 companies have had to settle for lower valuations than they previously received when they raised money, according to the research firm CB Insights. That is nearly as many as in all of 2015. “Investors have materially more time to do diligence than before,” said Ben Ling, a partner at venture capital firm Khosla Ventures. “Across our portfolio, even for the best companies, fund-raising is a longer process.”

Daily Tech Snippet: Wednesday, May 18

• China Quietly Targets U.S. Tech Companies in Security Reviews: Chinese authorities are quietly scrutinizing technology products sold in China by Apple and other big foreign companies, focusing on whether they pose potential security threats to the country and its consumers and opening up a new front in an already tense relationship with Washington over digital security. Apple and other companies in recent months have been subjected to reviews that target encryption and the data storage of tech products, said people briefed on the reviews who spoke on the condition of anonymity. In the reviews, Chinese officials require executives or employees of the foreign tech companies to answer questions about the products in person, according to these people. The reviews are run by a committee associated with the Cyberspace Administration of China, the country’s Internet control bureau, they said. The bureau includes experts and engineers with ties to the country’s military and security agencies. While other countries, including the United States and Britain, conduct reviews of some tech products, they usually focus on products that will be used by the military or other parts of the government that are concerned with security, and not on products sold to the general public. The Chinese reviews stand out because they are being applied more broadly, including to American consumer software and gadgets popular in China, the people briefed on the reviews said. And because Chinese officials have not disclosed the nature of the checks, both the United States government and American tech companies fear that the reviews could be used to extract tech knowledge as well as ensure that the United States was not using the products to spy. Ultimately, the reviews could be used to block products without explanation or to extract trade secrets in exchange for market access. Those secrets could be leaked to Chinese competitors or expose vulnerabilities, which, in turn, Chinese hackers could exploit. Further, tech companies are concerned that the reviews could set a precedent and that other countries will follow suit, each demanding different checks that would not only be costly but also put the companies at risk of having to hand over further secrets in exchange for market access.

• Google's launch of a carpooling service Monday marks the beginning of its seemingly inevitable entry into the ridesharing wars. The pilot program, which is being offered via Google's Waze navigation app, aims to connect commuters who need a ride with drivers who can supply one. In exchange, riders will help cover the drivers' fuel costs. Consolidating rides means fewer cars on the road — which is better for traffic congestion and the environment, according to Waze. Google's launch of a carpooling service Monday marks the beginning of its seemingly inevitable entry into the ridesharing wars. The pilot program, which is being offered via Google's Waze navigation app, aims to connect commuters who need a ride with drivers who can supply one. In exchange, riders will help cover the drivers' fuel costs. Consolidating rides means fewer cars on the road — which is better for traffic congestion and the environment, according to Waze.

• Apple CEO Makes First India Trip With Billion Phone Sales at Stake: Smartphone shipments may be sputtering in the U.S., Europe and other mature markets, but in India, there’s the prospect of a billion new device sales. It’s probably no surprise then that Apple Inc. Chief Executive Officer Tim Cook is making his first trip to the country. Cook, who begins his multiday visit on Wednesday, will unveil a development center for digital maps in Hyderabad and introduce an accelerator program for iOS developers in Bangalore, a person with knowledge of the trip said. Apple is pushing to open its first retail stores in the country, though it’s not clear whether any discussions will be part of the CEO’s agenda on this trip. The prize is more than 1 billion in smartphone sales in the next five years, according to researcher Counterpoint. As China’s market becomes more saturated and people across the globe upgrade their smartphones less frequently, Apple, Samsung Electronics Co. and other vendors are keen to sell to India’s middle class, which is projected to quadruple to 200 million by 2020. Signs of this explosive rise in consumption already emerged in the first three months of this year, when Apple reported that shipments in India grew 56 percent, even as iPhone sales declined globally for the first time ever.

• Can virtual reality translate into real profits? A growing number of U.S. companies are counting on virtual reality for real profits. With growth hard to come by amid the lethargic economy, companies ranging from snowmobile manufacturers to furniture sellers are incorporating virtual reality that so far has mostly been found in video games. Their bet: that the trendy headset-based technology can help them build sales and cut costs. Theme park operator Six Flags Entertainment Corp (SIX.N) is outfitting riders on some of its aging roller coasters with Samsung VR headsets, allowing the company to brand the rides as brand-new without having to build costly new attractions. nowmobile manufacturer Arctic Cat Inc (ACAT.O) has developed virtual reality rides that customers can use to try out new models at dealerships, while eBay Inc's (EBAY.O) StubHub is testing technology that allows fans to check out the view from different seats before buying tickets. In the most recent round of corporate earnings reports, some 38 companies - including the New York Times, GoPro, and furniture-seller Wayfair - highlighted virtual reality as a part of their business plans. That was a 375 percent jump from the 8 that did so at this time last year, according to a Reuters analysis of earnings calls transcripts. Nearly all were either consumer or technology companies, suggesting that virtual reality technology has a ways to go before becoming mainstream. Yet for all of the enthusiasm, there is little evidence that virtual reality can deliver substantial growth. here are few pure plays for investors who want to buy into virtual reality. Facebook Inc (FB.O), which paid $2 billion for its Oculus virtual reality division in 2014 and began shipping its first $599 Oculus Rift headsets in March, has the best-known virtual reality head gear, though other well-known companies including Google's parent Alphabet and Apple are rumored to be working on high-powered headsets of their own. Neither company returned requests to comment. Virtual reality is such a small part of Facebook's business that most analysts do not break out Oculus in their revenue or earnings estimates. Nor did Facebook give any numbers on how many Oculus headsets it expects to sell on its most recent earnings call. "This is very early and we don't expect VR to take off as a mainstream success right away ... but eventually we believe that VR is going to be the next big computing platform and we're making the investments necessary to lead the way there," Chief Executive Mark Zuckerberg said.

• For online lenders, it’s suddenly touch-and-go:  A year ago, privately held online lenders like Prosper, SoFiand Avant looked all but certain to go public at the same unicorn valuations their venture investors had assigned them — if not higher. They were seemingly reshaping the student, consumer and small business lending business. The market they’re chasing is enormous: The U.S. consumer lending market is a $3.5 trillion business, and 22 of  the largest online marketplace platforms originated just more than $5 billion of unsecured consumer credit in 2014 and more than $10 billion in 2015. They also talked a big game. When SoFi raised a whopping $1 billion from Softbank last year, CEO Michael Cagney told Bloomberg: “I’m looking at over $1 trillion of market cap from the banks, and I think it’s all vulnerable.” Fast forward to today, and it’s online lenders that suddenly look like sitting ducks. In an SEC filing yesterday, Lending Club, which announced the surprise departure of its founder and CEO last Monday, revealed that investors who “contributed a significant amount of funding” for loans are now examining that performance “or are otherwise reluctant to invest.” For many casual observers in Silicon Valley, the first signs of trouble in the online lending category emerged in late April, when the WSJ reported that Avant made $514 million worth of new loans in the U.S. in the first quarter, a 27 percent drop from the fourth quarter of 2015. Then, two weeks ago, Prosper confirmed that it planned to cut roughly 28 percent of its staff in response to falling loan volume. And Prosper’s news came just a day after OnDeck Capital said its own first-quarter losses had more than doubled as demand for its loans began to nosedive. Of course, the kicker came last week, when Lending Club CEO Renaud LaPlanche resigned following an internal audit that turned up $22 million in loans that were sold to Jefferies yet didn’t meet the investment bank’s criteria. Smartly, some players are already looking to reimagine themselves as broader financial outfits. For example, SoFi, which began as a way for students from top universities to refinance their debt, has since branched into personal loans, wealth management and mortgages. It also said last month that it’s hoping to drum up more investor demand for the debt it originates by starting a hedge fund that will buy its own loans. Baker expects that to survive and thrive, more online lenders may need to remodel themselves into the institutions they vowed to replace, either by becoming banks, buying or selling to banks or else striking up partnerships with banks. OnDeck and JPMorgan made one such pact. Last month, JPMorgan quietly began offering online loans to its existing small-business customers using OnDeck’s technology. Indeed, there is a silver lining, and it’s that huge market opportunity. The trick for online lenders will be finding new ways to pursue it while remaining viable businesses.

Daily Tech Snippet: Thursday, May 5, 20126

• India rejects Apple's plan to import used iPhones: India has rejected a plan by Apple Inc to import used iPhones, government officials said on Wednesday, a blow to the U.S. tech giant that has been seeking to revive waning sales of its flagship smartphones. Apple sells what it calls refurbished iPhones at a discount in some countries, including the United States. Extending this practice to India would have likely helped it increase its share in one of the world's fastest growing smartphone markets against competitors with much cheaper offerings. But India, which is pushing a 'Make in India' initiative to boost the competitiveness of its manufacturing sector, rejected the proposal citing rules against importing used electronics. Apple's proposal was opposed by domestic phone makers who claim selling refurbished iPhones - devices that have been returned by buyers or repaired to factory condition after damage - would breach India's anti-dumping rules. The Consumer Electronics and Appliances Manufacturers Association had written to India's telecom ministry to stall the move. The news comes at a time when Apple posted its first-ever drop in iPhone sales amid weakness in China, its most important market after the United States. In India, Apple only has about a 2 percent market share but its sales there surged 56 percent in the first three months, driven mainly by cheaper older-generation devices such as the iPhone 5S while demand for the new iPhone SE disappointed. "The 5S' success in India has more to do with affordability of a premium brand than a preference for smaller phones, and the move to the more expensive SE will discourage budget buyers," said Wilmer Ang, an analyst at research firm Canalys. The newly launched iPhone SE retails at 39,000 rupees ($585) in India - almost $200 higher than its U.S. price. To successfully tap into India's smartphone boom - where sales are expected to grow 25 percent this year - Apple will need a better retail presence and cheaper versions of the iPhone given the average smartphone in the country sells for less than$150, according to analysts. Apple, which currently retails in India through local partners, is already seeking government approval to set up its first store in the country.

• Tesla's Wild New Forecast Would Change the Trajectory of an Entire Industry - If Met: Tesla just took the most ambitious automotive production timeline since the Ford Model T and moved it up two years. The company now plans to produce 500,000 electric cars every year starting in 2018. That's 10 times the number of vehicles it produced in 2015, and enough to ensure that all 400,000 customers who put down a $1,000 deposit on the forthcoming Model 3 will qualify for a significant U.S. subsidy. Talk about doubling down—even the original 2020 goal was considered a long shot by Wall Street. This new target would pledge the carmaker to a faster production growth rate than Ford Motor Co. managed in the early 1900s. That's when Henry Ford pioneered the production line with the Model T, the first mass-market combustion-driven car. A century later, Tesla Chief Executive Officer Elon Musk wants the Model 3 to be its electric grandchild. He's now aiming for close to a million sales by 2020.  BNEF tracked 234,000 electric car sales worldwide last year, of which Tesla made up a fifth of the market, Morsy said. For Tesla to stay on its new track, it would need to produce more cars next year than the entire global electric-car industry made in 2015. Tesla's first mass-produced car, the $35,000 Model 3, will need to come to market on schedule, and with great momentum, in late 2017. Telsa's battery factory in Nevada must flourish, costs must come down, and car-making capacity must scale up at an astonishing rate. For context: Tesla has never managed to hit one of Musk's timelines for a new product launch. Not once. 

• Fitbit shares tank after reporting a weak outlook amid rising competition: Fitbit is not having a good day, with the stock crashing more than 11 percent after reporting its first-quarter results. Here’s the rub: its guidance for the second quarter came in light. Very light. Industry watchers were expecting the company to report earnings around 26 cents per share, while the company put its outlook at earnings between 8 cents per share and 11 cents per share. That’s a pretty big miss, and another indicator that the company will be facing some challenges in the wearable market. Here’s the quick rundown of the report: Devices: 4.8 million units sold. Earnings: 10 cents per share, against analyst estimates of 3 cents per share. Revenue: $505.4 million, against analyst estimates of $443 million. In the past six months, Fitbit shares are down more than 50 percent. Fitbit is facing a ton of increasing competition, not only from Apple with the Apple Watch, but from international manufacturers like Xiaomi and the usual competition from Jawbone. Fitbit’s usual strategy has been to go after the fitness-tracking market with a portfolio of devices, but recently it’s somewhat diverged from that with the launch of a smartwatch. Naturally, given Fitbit’s previous success, a shift in strategy may not be very welcome to investors looking for continued growth in the company — and a strong return. All this has forced Fitbit to find more unique ways to prove to consumers that it is the best option when it comes to fitness tracking. One recent example was an integration with the Amazon Echo, in which users can ask with their voice how they are performing through their Fitbit devices. It’s novel use cases like these that might propel the company above the competition, but so far we haven’t seen any kind of dramatic success on that front.

• Flipkart valuation marked down by two more investors: Two small mutual fund investors at Flipkart have marked down the company’s valuation, joining other investors who believe that India’s largest e-commerce firm is overvalued. Valic Co 1 marked down Flipkart’s value by 29.4% as of February, compared with August 2015, according to a regulatory filing with the US Securities and Exchange Commission (SEC). Valic valued Flipkart’s Series D stock at $98 a share in February, down from $139 a share in August.Fidelity Rutland Square Trust II marked down Flipkart’s value by as much as 39.6% as of February, compared with last August, according to a filing with the SEC. Fidelity valued Flipkart’s Series D stock at $82 a share in February, down from $135.8 a share in August. The Economic Times reported about the markdowns earlier on Wednesday. To be sure, Fidelity and Valic hold very small amounts of Flipkart stock. Their holdings together are worth less than $6 million. That’s a minuscule fraction of Flipkart’s overall value. The company last raised $700 million from investors in July last year at a valuation $15 billion. But taken along with other markdowns by Morgan Stanley and T Rowe Price, both of which together own hundreds of millions of dollars worth of Flipkart stock, it confirms the view that Flipkart’s own investors believe the company is overvalued by a significant amount. In late February, Morgan Stanley Institutional Fund Trust, another mutual fund investor in Flipkart, slashed the value of its holdings by as much as 27%. Then, last month, T Rowe Price disclosed in a filing that it cut the value of its stake in Flipkart by 15%.

• Free Code Camp survey reveals demographics of self-taught coders: If you’ve ever wondered who exactly is signing up for all these free learn-at-home coding classes and tutorial websites, Free Code Camp (which is one of them) has kindly surveyed 15,624 users with regard to various basic demographics and some more code-centric items. Some of the stats are expected (few women — around 1 in 5 surveyed) and a few are surprising — for instance, only 18 percent said they’d like to work for a startup. Thirty-eight percent don’t plan on specializing in UX, backend stuff or other specific disciplines, which they might want to revisit later. And they’re all over the world — mostly the U.S., with India a close second — but the long tail comprises 167 more countries.

Daily Tech Snippet: Monday, April 25

• A Marriage Gone Bad: Walgreens Struggles to Shake Off Theranos: The sprawling drugstore chain, now a part of Walgreens Boots Alliance, was Theranos’s first — and thus far only — direct-to-consumer retail partner, promising to eventually make Theranos’s “wellness centers” an integral part of its more than 8,000 stores nationwide. When it announced the deal in 2013, Walgreens hoped to drive traffic to its stores and bask in the reflected glow from one of Silicon Valley’s hottest unicorns and its youthful founder and glamorous chief executive, Elizabeth Holmes. For unproved Theranos, the Walgreens endorsement was akin to the Good Housekeeping seal of approval. Theranos’s valuation vaulted to $9 billion and put Ms. Holmes on the Forbes list of billionaires. Nearly three years later, with Theranos under siege on multiple regulatory fronts and its reputation in tatters, it’s clear that the relationship has been a disaster for Walgreens. The company has been trying to distance itself, halting expansion of Theranos testing in its stores and, in January, threatening to end the partnership if Theranos did not meet regulatory standards within 30 days. But that deadline has come and gone. With this week’s news that Theranos is under criminal investigation for, among other things, possibly defrauding Walgreens and other investors, the question is: What will it take for Walgreens to end its troubled relationship? Theranos’s lawyers have taken a hard line, insisting that Walgreens is contractually bound by their agreement. So far, the approach has worked. Walgreens appears to have taken a cautious approach toward terminating the relationship, perhaps preferring to wait until federal regulators impose penalties or the criminal investigation yields formal charges, either of which would strengthen Walgreens’s hand. But that could take years. Theranos can appeal any penalties, and a grand jury investigation could be a protracted process. And Theranos is likely to sue Walgreens in any event if it terminates their agreement. In the meantime, Walgreens risks being dragged into nearly every negative story about Theranos.

• Inside One of the World’s Most Secretive iPhone Factories: A few minutes past 9 a.m. at Pegatron Corp.’s vast factory on Shanghai’s outskirts, thousands of workers dressed in pink jackets are getting ready to make iPhones. The men and women stare into face scanners and swipe badges at security turnstiles to clock in. The strict ID checks are there to make sure they don’t work excessive overtime. The process takes less than two seconds. This is the realm in which the world’s most profitable smartphones are made, part of Apple Inc.’s closely guarded supply chain. After years of accusations that employees in China were forced to work long, grueling hours, Pegatron and Apple adopted new procedures to keep iPhone assemblers from amassing excessive overtime. They’re eager to show how the system works, and for the first time are granting a western journalist access into the inner sanctum.The factory at the corner of Xiu Yan and Shen Jiang roads is one of the most secretive facilities at the heart of iPhone production and covers an area equal to almost 90 football fields. In the center is a plaza with a firehouse, police station and post office. There are shuttle buses, mega-cafeterias, landscaped lawns and koi ponds. The grey and brown-hued concrete buildings are meant to evoke traditional Chinese architecture. The brand-new Shanghai Disneyland, which opens its doors in June, is a 20-minute drive away.Inside, the factory still hides a secret, according to China Labor Watch. Base pay remains so low that workers need overtime simply to make ends meet, the advocacy group said. It said 1,261 pay stubs from Pegatron’s Shanghai facility from September and October 2015 show evidence of excessive overtime. Pegatron, an Asustek spinoff, is the world’s biggest contract electronics manufacturer after Foxconn, according to Bloomberg Intelligence.Pegatron countered by saying the group miscounted because that period straddled state holidays, when pay was three times’ normal. Apple and Pegatron say they were never contacted by China Labor Watch, which said it approached Apple but didn’t get a response. Since March, the group said it’s collected an additional 441 pay stubs that point to continued excessive overtime. Back in the cafeteria, a group of women rush to finish lunch before their 50-minute break is over. They hail from across China, from Sichuan in the west to Shandong in the northeast. None has been there for more than a few months. “This is relaxed compared to other factories,” said Xu Na, 30, who followed her younger brother to work at the factory. “We never work more than 60 hours.”

• Flipkart is in the middle of a crisis of its own making—stalled growth compounded by management churn and the imminent possibility that it will cede the top slot to Amazon. But it’s not too late to change its strategy. Flipkart is in the middle of a storm of its own making: It is faced with a significant management churn at the top. For a company that pioneered e-commerce in the country, growth has virtually stalled since the middle of last year and the leadership team hasn’t figured out a way to kick-start sales. Its innovation engine isn’t firing. In e-commerce lingo, the gross merchandise volume (GMV) sold over a given period of time has not grown substantially. In the offline world, it is the equivalent of saying, the sales or revenue numbers aren’t growing. And this, for the e-commerce pioneer that until now grew its GMV by over 200% per annum for the past three years. The very culture that made Flipkart a runaway success in the first phase of its existence is now hindering its progress. The battle won’t be easy. Amazon will unleash Amazon Prime, Amazon Fresh and may even partner with offline retailers to consolidate its position as the default destination for online shopping. Amazon has rapidly scaled up its seller ecosystem and outstrips Flipkart today in several product categories. It has a chance to win India—and that is being handed over on a platter thanks to the internal confusion at Flipkart. Amazon is here to play a 20 year game—and any fumbles will cost competitors heavily. Now imagine the Flipkart investors’ dilemma. They’ve poured in over $3 billion and own over 80% of the company. They are neck deep in a business that is burning $50-70 million a month and has to get ready for the next phase of battle in the market. If the cost-cutting moves misfire and market share starts to shrink, the founders could very well put a request for another $500 million for the fight against Amazon. What will the investors do? A new investor is unlikely to step in. Even though the Chinese e-commerce players like Alibaba are waiting in the wings to swoop down on prized assets in India, there's a chance that they could choose to wait out this stage of the company’s evolution—why buy and restructure, when you can wait and buy a cleaned-up asset? Hence, one of the current investors will have to lead the round and it will put serious pressure on the team to show results. Flipkart has a last chance to redeem itself and take control of its destiny, else it will become another victim of early success. It is too big to fail and the market opportunity is too large to ignore. India will have more than one large e-commerce player—just the sheer potential of the market will keep it from consolidating for many years—and so, Flipkart’s existence is not in question. But the next few months will determine the destiny of the company. The A-team cannot afford to flounder so early in their journey. 

Daily Tech Snippet: Friday, April 8th

• Amazon May Violate India’s New Rules on Foreign E-Commerce: For Amazon, no country is more important to its global growth ambitions than India, the second-most-populous nation in the world behind China, where online shopping is in its infancy and growing explosively. But Amazon’s India plans just ran into a hitch. Late last month, the Indian government issued additional rules governing foreign ownership of e-commerce companies operating in the country. The government added regulations related to pricing and the sourcing of sales on sites that Amazon and several rivals appear to violate. What is more, the new policy was effective immediately, giving Amazon and others no time to comply.India essentially bars companies with substantial foreign ownership from operating retail outlets that sell from their own inventories of goods. Although American multinationals like Amazon, Walmart and Apple have sought to overturn or soften those restrictions, the government has made few changes. To work around the restrictions, Amazon and competitors billed themselves as e-commerce marketplaces, eBay-like websites that matched buyers with independent sellers. Amazon owns no inventory of its own in India, though it handles the warehousing and delivery of goods for many of its independent sellers, a model it also employs in the United States. Last week, Indian regulators confirmed that online marketplaces, which had operated in a gray era, are legal. But they added a rule saying that no single seller can account for more than 25 percent of sales on such an e-commerce marketplace. It also limited the influence that online marketplaces can exert over the prices set by their sellers. The new regulations appear to make Amazon’s dependence on one large seller on its site, Cloudtail, illegal, according to industry officials and analysts. While Amazon says it has more than 80,000 sellers on its India site, Cloudtail is estimated to account for 40 percent to 50 percent of the site’s sales, according to Mr. Meena of Forrester. The parent company of Cloudtail is a partnership between Catamaran Ventures, the investment firm of the Indian business magnate, N.R. Narayana Murthy, and Amazon, which owns 49 percent. India’s leading e-commerce company, Flipkart, also works closely with an affiliated large seller and faces a similar problem.

• US Startup Funding Deals Fall to Lowest Level in Four Years - Different Story in India and China: Venture capitalists made fewer bets in the U.S. last quarter, while putting a larger proportion of their money into the most mature private companies, according to research firm PitchBook Data. The findings show that venture investors are trying to play it safe by backing proven businesses, making it more difficult for newer startups to find capital. Last quarter had the fewest number of venture deals in four years. Funding rounds dropped 12 percent compared with the fourth quarter of 2015, when startup funding began to slow. Investments totaled $17.7 billion in the first quarter of 2016, about flat with the prior period. More than half of that went to late-stage companies. Private investors are expressing skepticism as startup valuations have skyrocketed. Mutual fund companies have written down the value of their stakes in numerous technology companies since last year. Startups are staying private longer, leaving fewer options for shareholders to cash out. No tech company went public last quarter, and many of those that did in 2015 have gotten off to a rocky start. In other countries, there's plenty of money to go around. Venture capital investments in China and India surged in the first quarter, jumping about 50 percent.

• Alibaba Gives Shelter in Debt Storm as China Internet Bonds Gain: China’s Internet giants are providing a haven for bond investors fleeing mounting default risks among the nation’s state-owned enterprises. Investors are snapping up bonds from Alibaba Group Holding Ltd., Baidu Inc. and Tencent Holdings Ltd., a bright spot in an economy growing at the slowest pace in a quarter-century. The rising demand also reflects a broader shift in China’s economy away from smokestack industries toward private-sector services such as e-commerce, online finance and entertainment. Creditors have grown wary of state-backed firms after Moody’s Investors Service cut its outlook on 38 of them along with the government in March. Dollar bonds from Internet firms have returned 4.2 percent this year, the nation’s best-performing sector, according to Bank of America Merrill Lynch indexes. Alibaba’s securities due 2034 have gained 9 percent since Dec. 31, while 2025 notes of Baidu and Tencent both returned more than 6 percent. Alibaba, China’s biggest e-commerce company, has cashed in by raising $4 billion from loan bankers and Tencent, operator of China’s most popular messaging services, borrowed $2.45 billion in December.

• Morgan Stanley Paints Bleak Outlook for Twitter on Few New Users: Morgan Stanley analysts came down hard on Twitter Inc., lowering their forecasts for the social media company’s stock price, on projected slower growth in new users, revenue and earnings. “Engagement and new user trends remain troubling,” the analysts, led by Brian Nowak, said in a note to clients Thursday. Morgan Stanley cut its price target on Twitter to $16 from $18 and reduced its projection for 2017 earnings before interest, tax, depreciation and amortization by 13 percent to $769 million. The firm reduced its 2017 revenue forecast by 6 percent to to $3.23 billion.

• Mashable Fires News Staff, Replaces Executives as Part of Pivot to Video Infotainment: Last week, the digital publication Mashable said that it had raised $15 million in a funding round led by Turner and that it would be using the money to “co-develop” content for TBS and TNT. Today, the other shoe dropped. The company announced that it is replacing its chief content and revenue officers — Jim Roberts and Seth Rogin — and firing a large portion of its editorial staff. Additionally, Mashable is pivoting from hard news coverage; it will focus on producing lots more video about “digital culture.” According to Politico and a Mashable editor, 30 people were laid off.

Daily Tech Snippet: Monday, April 4

• Tesla says Model 3 orders top $10 billion in first 36 hours: Tesla Motors said orders for its new Model 3 electric sedan topped 253,000 in the first 36 hours -- a fast start for the company's first mass-market vehicle, which may not begin to reach customers for another 18 months or more. Tesla Chief Executive Elon Musk tweeted on Friday that the Model 3, which is slated to go into production in late 2017, will sell at an average price of $42,000, including the price of options and additional features, which would give the initial flurry of orders an estimated retail value of $10.6 billion. That intense interest, fanned in part by a steady stream of tweets by Musk, could help boost Tesla's stock price, which closed Friday at $237.59, up 3.4 percent. The stock has soared more than 60 percent since hitting a 12-month low in February. The car's average selling price projected by Musk is well above the $35,000 base price. Analysts earlier had estimated the first Model 3s off the factory line in Fremont, California, could be loaded with extra equipment and sell for $50,000 to$60,000. Tesla has undertaken a costly expansion of the Fremont plant, aiming to boost annual capacity to 500,000 by 2020, with production of the Model 3, the company's first mass-market car, ramping up slowly through 2019. Some analysts said the company could have trouble filling all the initial Model 3 orders, which are accompanied by a refundable $1,000 deposit, until 2020. Barclays analyst Brian Johnson on Friday said the heavy influx of Model 3 orders "sets the stage for an equity offering" later this year by Tesla, much of which would go toward factory construction and product development.

• China’s Companies Poised to Take Leap in Developing a Driverless Car: some argue that conditions in China are actually more favorable for quick adoption of driverless cars, in part because of more aggressive support from the national and local governments. And, unlike in the United States, China never fully developed a romance with the open road and car ownership. Car ownership has spiked in China, of course. And in recent years, it has become a middle-class status symbol to own a car. For the ultrawealthy, there are clubs dedicated to Ferraris and Maseratis. But enormous traffic jams in China’s largest cities can make driving a less-than-romantic experience. Why not let a machine built with artificial intelligence inside do the work for you? “It’s not that people are more willing to use the cars in Beijing or Shanghai, it’s that the economic value is much higher in China than in the U.S.,” Mr. Mosquet said, adding that air pollution could be as much a catalyst as bad traffic. Even as American companies like Google and Tesla work on autonomous vehicles, a number of Chinese companies are working on driverless car technology. The Internet company Leshi Internet Information & Technology (better known as Letv) has a driverless car tech unit, and the Chinese carmaker Great Wall Motors has opened a research center in Silicon Valley. The assumed leader in the field in China is the search engine company Baidu, which has been at work on autonomous vehicles since 2013.

• Jeff Bezos just live-tweeted his space company’s latest rocket launch: Opening the doors to his space company to the media for the first time last month, Jeff Bezos said he had kept the company so quiet and secretive for a simple reason: “We’ll talk about Blue Origin when we have something to talk about.” Now Bezos is talking — and tweeting. The billionaire founder of Amazon.com (and owner of The Washington Post) not only announced ahead of time that his space company would launch a rocket on Saturday, but he live-tweeted it, giving his followers a play-by-play of the event, and a few inside glimpses. Saturday’s liftoff from Blue Origin’s launch site in West Texas was the third consecutive time the company has launched and landed its reusable New Shepard suborbital vehicle, which consists of a rocket and a capsule designed to take astronauts just past the edge of space. While the company has yet to fly any humans — Bezos said that test flights with humans are probably a year away — it has now demonstrated that its rocket can fly repeatedly. Bezos, and others, believe that is a key step toward lowering the cost of spaceflight, and therefore making it more accessible. Typically the first stages of rockets are discarded after each use. But Bezos and SpaceX’s Elon Musk are developing technologies to land the first stages vertically, using the engine thrust to slow them down. The United Launch Alliance is also working to recover the engines of its new rocket. But in his live-tweeting Saturday, Bezos not only chronicled the launch and landing, but also showed how the company paints a turtle on the capsule to commemorate each successful launch. He even tweeted a picture of a pair of new cowboy boots with the company’s motto printed on them. That motto is “Gradatim Ferociter,” loosely translated to “Step by Step, Ferociously,” which captures the ethos of the company to move methodically toward its goals. That’s also why it uses the symbol of a tortoise, which moved slowly but still crossed the finish line ahead of the hare.

• Apple's Push to Flood India With Used iPhones Ignites Backlash: Apple Inc.’s latest attempt to crack the Indian smartphone market -- by selling used phones -- is meeting a wall of resistance. The iPhone maker is seeking permission to become the first company allowed to import and sell used phones into the country, its second attempt in as many years. This time, the stakes are higher and a growing number of industry executives are fighting the move, warning government officials in private that it’ll open the floodgates to electronic waste, jeopardize local players, and make a farce of Prime Minister Narendra Modi’s Make in India program to encourage local manufacturing. “Make in India could turn into Dump in India,” said Sudhir Hasija, chairman of Karbonn Mobiles, who said it sells about 1.7 million phones a month. Apple’s application in 2015 was rejected by the environment ministry without much fanfare. But things have changed since: India, as the world’s second largest mobile population, now represents a vast untapped opportunity for Apple just as China and the U.S. are slowing. Apple has publicly talked up its prospects in India and is on course to get the green light to open its first retail stores. Apple now has less than 2 percent of an Indian market in which four-fifths of phones cost less than $150. Branded smartphones are available for as little as $35 in India. Western multinationals from car-makers to soda vendors use “India only” prices and cut-rate “India edition” products to woo customers. Apple can’t employ those strategies without tarnishing its marquee phone’s premium aura.

Daily Tech Snippet: Friday, March 18, 2016

• Google Puts Boston Dynamics Up for Sale in Robotics Retreat: Executives at Google parent Alphabet Inc., absorbed with making sure all the various companies under its corporate umbrella have plans to generate real revenue, concluded that Boston Dynamics isn’t likely to produce a marketable product in the next few years and have put the unit up for sale, according to two people familiar with the company’s plans. Possible acquirers include the Toyota Research Institute, a division of Toyota Motor Corp., and Amazon.com Inc., which makes robots for its fulfillment centers, according to one person. Google and Toyota declined to comment, and Amazon didn’t respond to requests for comment. Google acquired Boston Dynamics in late 2013 as part of a spree of acquisitions in the field of robotics. The deals were spearheaded by Andy Rubin, former chief of the Android division, and brought about 300 robotics engineers into Google. Rubin left the company in October 2014. Over the following year, the robot initiative, dubbed Replicant, was plagued by leadership changes, failures to collaborate between companies and an unsuccessful effort to recruit a new leader. At the heart of Replicant’s trouble, said a person familiar with the group, was a reluctance by Boston Dynamics executives to work with Google’s other robot engineers in California and Tokyo and the unit’s failure to come up with products that could be released in the near term. Tensions between Boston Dynamics and the rest of the Replicant group spilled into open view within Google, when written minutes of a Nov. 11 meeting and several subsequent e-mails were inadvertently published to an online forum that was accessible to other Google workers. These documents were made available to Bloomberg News by a Google employee who spotted them. The November meeting was run by Jonathan Rosenberg, an adviser to Alphabet Chief Executive Officer Larry Page and former Google senior vice president, who was temporarily in charge of the Replicant group. In the meeting, Rosenberg said, “we as a startup of our size cannot spend 30-plus percent of our resources on things that take ten years," and that "there’s some time frame that we need to be generating an amount of revenue that covers expenses and (that) needs to be a few years."

• Alibaba is working to bring virtual reality into its e-commerce services: Alibaba has formally thrown its hat into the virtual reality ring after the Chinese e-commerce giant announced its own VR research lab, dubbed GnomeMagic Lab. The company invested in red hot augmented reality company Magic Leap earlier this year, in a deal that put Alibaba vice chairman Joe Tsai on the board, and it has tinkered with 360 degree panoramic video for Youku Tudou — the Chinese video site it invested in and is in the process of acquiring for $3.5 billion — but this is its official entry into the space. Alibaba, which claims 400 million users across its services, said that GnomeMagic Lab will work with its shopping businesses with a view to integrating VR into the shopping experience while exploring other applications, such as video with Youku Tudou and entertainment via Alibaba Pictures. In a press announcement, former Facebook engineer Zhao Haiping, who is on the Alibaba’s GnomeMagic Lab team, said VR could enable customers to shop virtually on New York’s Fifth Avenue from the comfort of their own home. On a more practical level, Alibaba wants to help merchants use VR to sell on its sites, it said it has already created VR visuals for hundreds of products. That’s the plan for where Alibaba believes that VR is going, or could go, in the longer term. For now, the company is setting up a store dedicated to VR hardware to help companies tap into its vast audience.VR is the hot topic of the moment, and it’s more a case of which tech companies aren’t getting into it. Samsung has already shipped a headset. Facebook bought Occulus, which is about to launch its Rift VR and an initial 30 games. HTC’s is arriving imminently and Sony’s effort is also on its way. On the content side, Facebook, YouTube and — today — even British broadcaster Sky are opening themselves up to the virtual future.

• Why students are throwing tons of money at a program that won’t give them a college degree: One of the biggest booms in the job market right now: an influx of coders graduating from three- to six-month coding crunch programs in lieu of traditional four-year Computer Science degree programs. These for-profit programs, non-accredited and operating without much regulation, have been cropping up in response to a swelling market demand for STEM workers. They vary in quality, but most bootcamps promise steady, high-paying work upon graduation, prompting aspiring coders to invest anywhere from $10,000 to $20,000 of personal money to enroll. Now, colleges and universities are teaming up with these private schools, or rolling out their own bootcamp-style programs to offer accelerated coding workshops to their students. Northeastern, UPenn, and Rutgers have announced in-house bootcamps in the couple of months, while Lynn University and Concordia University have paired with programs like General Assembly and The Software Craftsmanship Guild. It’s a response to thetremendous growth in bootcamp enrollment, which increased by 138 percent from 2014 to 2015, compared to more modest growth in traditional Computer Science degrees (14 percent from 2013 to 2014). The demand is clear. But should universities be borrowing bootcamp tactics? O’Neill, who is Principal Architect at Monetate, agrees. He’s skeptical of bootcamper applicants and is more inclined to hire four-year CS degree graduates, especially for the most in-demand positions: “full stack” developers who possess a range of coding skills. He compares the skillsets of bootcampers to performing auto repair on a car, versus the kind of large-scale, architectural skills of your standard CS degree holder, who can do everything from small repairs to making deep structural changes. “You emerge from a bootcamp fit to do an oil change, but not design a car,” he said. A typical four-year CS degree will require students to study theoretical principles of programming on top of straight coding skills. Bootcamps, on the other hand, focus on programming alone, with an emphasis on in-demand languages in popular sectors like app development, functioning more like vocational school. But Anupam Joshi sees the immediate benefits of these programs. He’s Chair of Computer Science and Electrical Engineering at the University of Maryland, Baltimore County, which doesn’t currently have plans to incorporate bootcamp style programs into its CS department (though the university does have a “training center” that offers vocational services, including coding). But he appreciates the bootcamps' quick adaptability to industry fads and the wider scope of needs they fill amidst the student body. “Bootcamps are good for someone who wants to get an entry level job,” he said of the promotion of coding over theory. “It’s like every other trade.”

• Blackstone nears $940 million deal to buy HP Enterprise stake in India's MphasiS: sources Blackstone Group LP (BX.N) is nearing a deal to acquire Hewlett Packard Enterprise's (HPE) (HPE.N) controlling stake worth about $940 million in Indian IT outsourcing services provider MphasiS Ltd (MBFL.NS), according to three sources directly involved in the deal. HPE owns roughly 60.5 percent stake in MphasiS, and the U.S.-based parent had been looking to exit from the Indian venture to shore up its capital. Bids for buying the MphasiS stake were submitted earlier this month and the U.S. private equity firm has emerged as the front-runner for taking majority ownership of the mid-sized Indian IT services exporter, the sources said. Financial details of the possible deal were not immediately known. Based on MphasiS' stock price on Thursday, the HPE stake in the Bengaluru-headquartered company is valued at about $940 million. The company's total market value is about $1.6 billion.