- Xiaomi takes baby steps in the US - where Apple rules, and carrier-sales + phone subsidies blunt cost advantages; also nears manufacturing deal in Brazil: Xiaomi will begin selling headphones, smart wristbands and other accessories online in the United States in coming months, taking its first tentative step onto Apple Inc's home turf without its signature Mi mobile devices. The company also said it is close to securing a manufacturing partner in Brazil, which will help it skirt punishing tariffs on imported electronics when it begins sales in Latin America's largest economy in the first half of this year. Xiaomi, a five-year-old upstart whose name means "Little Rice," came out of nowhere to become China's fastest-selling mobile brand. It has been rapidly expanding its global footprint through direct, online sales. The company was valued at $45 billion in a December funding round that drew investors ranging from Singapore's sovereign wealth fund to a private capital firm backed by Alibaba Group Holding Ltd co-founder Jack Ma. Its Mi devices, which scored with Chinese users because of their low cost and the company's heavy reliance on user interaction and feedback, are now sold online across Asia, including most recently India. Brazil marks the company's first foray with smartphones outside of its home continent. Global operations vice president Hugo Barra said Xiaomi intends to begin selling its phones there in the first half of this year. The company is in "extremely advanced discussions" with at least half a dozen manufacturing partners there, Barra, a former Google Inc executive, said without revealing names, which will help it side-step a roughly 60 percent tax on foreign electronics. The company is eschewing bigger-ticket items like phones and tablets for now partly because of the United States' carrier-sales and phone subsidy structure, which eliminates Xiaomi's cost advantage. More generally, Bin and Barra talked about the time and effort needed to tailor its MIUI Android-based operating systems for individual markets and obtain certification, among other things. Xiaomi's main intention for now is to engage American consumers and try and build a community there the same way it has in China and India - through fan events, interaction with users on social media such as a dedicated Facebook page, and gradually coming to know both local preferences and building its brand. For example, Barra told Reuters how Xiaomi might put its self-branded headphones in front of U.S. audiophiles and tweak the product depending on their detailed feedback.
- Pinterest launches App Pins, aimed at boosting app discovery on Apple's app store (1.4M apps and counting): There are more than 1.4 million mobile applications in Apple’s App Store, so unless you have a good idea of what you’re looking for, it can be tough to stumble upon novel, surprising items among Apple’s sprawling garden of apps. Pinterest, the popular social bookmarking start-up, thinks it has a fix for this. The company is unveiling a new product on Thursday that could make it easier for people to discover new smartphone apps without even having to go into Apple’s App Store. The product, called App Pins, aims to do the same thing for smartphone apps that Pinterest’s service has done for photos, recipes and many other types of websites. In short, the service is a type of digital corkboard that lets visitors save, or “pin,” items they like or places they want to go. Pinterest’s philosophy is that it can help nudge people into doing things — be it buying a coffee maker or trying a new recipe — by letting the site’s 70 million estimated regular visitors search for and save for later the things that interest them. Pinterest believes it is better positioned to help promote apps because of the nature of the service. People come to Pinterest, the company says, to find new things to do, see and buy. That is unlike Facebook, which has been used to connect with friends, or even Twitter, which is often about public discourse and news. In addition, more than 75 percent of Pinterest’s use comes from mobile users, a crowd more able and willing to download new apps. It is also a significant move for Apple, which has long surfaced popular smartphone apps via the “featured” section of its App Store. If an app is placed in Apple’s featured section, which is carefully curated by Apple employees, it is much more visible than the hundreds of thousands of other apps in the company’s gigantic repository. In the past, Apple has had some difficulty with providing adequate app search to its customers, and has made several moves to better surface apps. In 2012, Apple bought Chomp, an app search company, and it has also introduced a host of new features to the app store ace apps, including a menu that shows which apps are trending in popularity at the moment, and also gave users the ability to search by categories and sub-categories of apps. Along with Pinterest’s App Pins initiative, Apple will introduce its own curated App Store account on Pinterest, featuring multiple boards on the service on Thursday; it will use its in-house team to promote apps that will vary by season, theme and even the choices of so-called “guest pinners.” Pinterest said it did not yet have any plans to make money directly from App Pins. However, if Pinterest aims to follow in the footsteps of other social networks, App Pins could be significant for Pinterest’s business.
- Contrasting routes to staying relevant: Texas Instruments ('small and spread out') and Cisco ('big and comprehensive'): Texas Instruments, a 63-year-old company that produced the first silicon transistor, ran into trouble several years ago selling digital chips for wireless products. The company refocused on cheaper and less sophisticated nondigital chips. Done well, these chips have exceptional profit margins, and Texas Instruments’ stock has gained 143 percent in the past five years. The Dow Jones industrial average is up 78 percent over the same period. The chips also turn out to be profitable at a time when seemingly everything is acquiring some kind of machine intelligence. Performance improvements that used to happen with better mechanical engineering now come from closer monitoring and computer analysis. Mr. Templeton foresaw Texas Instruments as targeting a lot of small manufacturers, the kinds of places with 50 employees turning out just a few products, that never came near his business before. The reason is that almost every part of the manufactured world, including things like outboard motors or novelty doorbells, is going to have to include machine intelligence to monitor its performance. He plans to sell it to small manufacturers through an online catalog of parts, with salespeople touching the larger accounts. “It’ll be difficult for you and your world to analyze,” he warned a room full of Wall Street bankers. “It’s literally hundreds of thousands of customers, very disaggregated.” On Wednesday, Cisco Systems reported second-quarter earnings well above what Wall Street expected. Revenue was $11.9 billion, versus a consensus estimate of $11.8 billion published in a survey by Thomson Reuters. Adjusted net income was $2.7 billion, or 53 cents a share, compared with an expected 51 cents a share. For John T. Chambers, Cisco’s chief, it seemed a vindication for several years of struggle. “I’m not sure people outside Cisco appreciate the magnitude of the changes we have made in the past years,” he said in an interview. Cisco, he said, had changed 30 percent of its leadership, moved 40 percent of its employees from traditional businesses like computer networking hardware, and into software, industry-specific applications, collaboration and cloud computing. Cisco laid off 6,000 people from its ranks of 74,000, but also hired 6,000 people for other jobs. All those changes were similar to what Texas Instruments had gone through: The old company was retooling for a world in which machine intelligence is everywhere. So far, however, Cisco’s “big and comprehensive” approach does not have the payoff of T.I.’s “small and spread out” style. These things have a way of swinging, of course, and the first rule for any incumbent facing change is the same: Find a way to survive that works for what you’ve got.
- Indian startup action: Housing.com in talks to acquire PropEquity, a real estate data analytics firm: Housing.com, is in talks to acquire Delhi-based P.E. Analytics Pvt Ltd, which owns a real estate data product PropEquity, sources close to the development told Techcircle.in. According to industry sources, Housing.com is believed to have offered around Rs 80 crore for the company. PropEquity recorded revenues of Rs 13.7 crore in 2014 and losses of Rs 70 lakh. The company has been in losses for the last three years as it had made investments in building a B2C product, according to sources. The deal will give Housing.com a ready revenue stream from B2B clients as the heavily funded company will come under increasing pressure to show revenues. PropEquity’s data and analytics enable clients – mainly real estate private equity investors, developers, and BFSI industry – to spot market trends, and generate macro/micro analytics. It claims of covering over 45,000 projects of 8,200 developers across over 40 cities in India and adding about 500 projects every month. Presently, the company has over 250 employees. On the other hand, Housing.com is a B2C product primarily with tools to sieve through mountains of data to develop indices and metrics that help consumer search for homes. PropEquity is majority owned by entities belonging to American hedge fund Och-Ziff Capital Management Group.
- Struggling to expand beyond Japan, Taiwan and Thailand, Line attempts to become a messaging platform for businesses (as WeChat has already done): Messaging app company Line has released a new service that will allow brands, SMEs and other business users to tap into its platform communicate with customers and consumers. The Line@ app – which is available for iOS and Android — is essentially an enterprise-focused version of Line’s chat app, which has 170 million active users worldwide. Line@ plugs into the existing chat service and lets us users exchange message with regular Line users and post content to the social network-like ‘Timeline’, but it is designed for communicating with people who are not friends, for example clients, customers or fans. “The Line@ service will greatly expand the potential of Line, for example allowing stores and facilities, as well as brand, media, and online business operators to promote new information, communicate with clients and other business contacts, create service usage reservations, and more. Designs, artists, magazine models, and other freelance talent can also utilize the service to communicate with fans,” Line explained. The new service is free to use, but Line is charging users for a vanity ID ($24 for the first year, $12 thereafter) while free accounts are limited to sending 1,000 messages per month. Those wishing to go for more can pay $50 per month for 50,000 messages, messages beyond that bundle cost $0.01 each. Line is already open to brands and business via its ‘official’ (branded) account option, but it costs tens of thousands of dollars to create and use a branded account leaving many business users priced out. In countries like Japan, Thailand and Taiwan — where Line is the dominant chat app — small merchants and SMEs have long adopted the consumer version of the app for their business, but in dong so they mix personal and work contacts in the same place. That’s exactly the issue that Line@ is designed to cater to, and it allows users to have a personal and business profile on the service. WeChat, the dominant chat app in China that counts nearly 500 million active users, has already made its app friendly to business users. Enterprise accounts were opened to all businesses last September, and earlier in 2014 the service added a mobile store platform and released its payment service to all businesses — combined together, those three elements allow companies to run their business and communications via the service. Line has introduced payment too, and though it is dabbling in its own version of shopping, it is pushing an online-to-offline strategy that allows companies to interact with fans via its mobile messaging platform — giving them a dedicated point of access, beyond the expensive official accounts, is an important step. However, Line has struggled to dominate markets beyond Japan, Taiwan and Thailand. A lack of users in a country makes it harder to sell the need for Line@ to businesses and brands, so it remains to be seen how this new app will be adopted.
- Two gaming companies result: Zynga Q4 earnings miss: bookings $182M, stock down 10%; King Q4 earnings beat: bookings $586M, stock up 18%: The fickleness of the gaming industry was on full display in the earnings reports of "FarmVille" creator Zynga Inc and "Candy Crush" maker King Digital Entertainment Plc. Zynga's shares fell 10 percent while King Digital's soared 18 percent in extended trading on Thursday after the companies reported contrasting fortunes in a key industry metric. King's total gross bookings, an indicator of future revenue, increased 8 percent to $586 million in the fourth quarter, about $45 million more than the average analyst forecast. Zynga reported bookings of $182.4 million, about $19 million less than expected, according to research firm StreetAccount. The company, whose market value hit more than $14 billion in 2012, lost most of its shine after failing to come up with new games to match the popularity of "FarmVille". It was also caught off guard by mobile-focused rivals such as Dublin-based King Digital and Supercell, the maker of "Clash of Clans" and is now valued at about $2.4 billion. King, which went public last March, has a market value of about $4.6 billion. That helped it to avoid the fate of Zynga and "Angry Birds" developer Rovio Corp, which is also struggling to grow. King Digital's revenue and profit easily trumped market estimates as its newer games more than made up for the declining popularity of older titles. Zynga's main launch, the multi-player word game "Words with Friends", failed to excite gamers and launches aimed at the Chinese market failed to live up to expectations. The company said it would close its Beijing office and lay off all 71 employees. Zynga's forecast for bookings in the current quarter also fell far short of estimates, according to StreetAccount. Up to Thursday's close of $14.74, King Digital's shares had risen 10 percent in the past six months. Zynga's shares had fallen 7 percent to $2.66.
- Groupon Q4 revenue $926M, +20% Y/Y, stock flat: Groupon gave a forecast for first-quarter results that fell short of Wall Street's expectations on Thursday, as the online commerce company confirmed that several parties have expressed interest in acquiring its South Korean subsidiary Ticket Monster. Those parties had opened discussions with Groupon about possibly buying the loss-making Asian e-commerce firm, which sells tickets online and is valued at about $1 billion, The Wall Street Journal reported last month. Groupon said it was too early to comment on the likelihood of such a deal, though it continues to explore alternatives for its various Asian businesses. Groupon bought Ticket Monster from rival LivingSocial Inc about a year ago for $260 million. On Thursday, Groupon, which once dominated the fast-growing online coupons arena, forecast revenue of $790 million to $840 million in the March quarter, up 13 percent from a year earlier on a foreign exchange-neutral basis. That lagged Groupon's target for 15 percent growth on the same basis in 2015. It also fell short of an average analyst estimate of $856.14 million. Revenue was up 20 percent at $925.4 million during the three-month holiday period. Shares in the company slid 1 percent to $7.38 in after-hours trade.
