Daily Tech Snippet: Tuesday, August 16

• Xiaomi Phone Shipments Fall 38% in China as Huawei Takes Lead; Apple Falls Behind: Xiaomi Corp., the once-hot Chinese smartphone maker, saw shipments tumble 38 percent in China in the second quarter as Huawei Technologies Co. took over the top spot in the world’s largest market. Xiaomi shipped 10.5 million smartphones in the quarter, down from 17.1 million in the same period a year earlier, according to research from International Data Corp. That made the company the fourth-largest competitor in the market behind Huawei, OPPO and Vivo. Xiaomi was once valued at $46 billion, according to CB Insights. The Chinese market has grown increasingly competitive as domestic manufacturers have improved their quality, design and marketing, putting pressure on global leaders Apple Inc. and Samsung Electronics Co. Apple saw shipments in China drop 32 percent in the second quarter and the iPhone maker fell to fifth in the market, according to IDC. The research firm said that Huawei and OPPO gained ground by concentrating on one or two key attributes in their marketing messages. Huawei emphasized the Leica lens now available on its phones, while OPPO pitched fast-charging technology. Apple’s global shipments are set to decline in 2016 as it continues to lose ground in its largest overseas market, Canalys said in a separate report. “The iPhones lack features such as waterproofing and wireless charging. Apple needs to catch up with the competition if it wants to compete,” Canalys research analyst Jessie Ding wrote.

• Microsoft’s HoloLens Technology Adopted by Israeli Military: If Pokemon Go achieved one thing, it was showing the world that augmented realitytechnologies are ready for the mainstream. Israel’s military thinks AR is ready for another use: battlefield training. The Israeli army’s C2 Systems Department recently purchased two HoloLens glasses from Microsoft Corp. The commander of the head programming department, Major Rotem Bashi, intends to develop the technology to improve battlefield strategy and train field personnel. And quickly: He intends for HoloLens to be used on active duty within months. At the army base outside Tel Aviv, a handful of developers in Bashi’s team created a software program in less than a month that allows commanders to manipulate military terrain models and intelligence data to monitor troop positioning from enemy vantage points. Battlefield maps are superimposed on top of the real terrain, streamed in via satellite, to create a blend that can be interacted with via sight, voice and hand gestures. The unit is now finding ways to allow HoloLens-wearing medics to operate on wounded with simultaneous instruction from trained surgeons, and combat soldiers to fix equipment malfunctions. It’s far removed from hurling Pokeballs at Pidgeys and Rattatas in Pokemon Go, but based on similar principles. Besides adapting the HoloLens to military life, Bashi’s unit is working on a product that will give headquarters an online report about a combatant’s physiological state in the field.

• LinkedIn sues anonymous data scrapers: LinkedIn is trying to lock down its exclusive relationship with its users. The professional networking company filed suit against 100 unnamed individuals last week for using bots to harvest user profiles from its website. The lawsuit is a preliminary step to revealing the identities of the scrapers — LinkedIn intends to ask the court to reveal the true identities behind the scrapers’ IP addresses — and a way to maintain its exclusive hold on users’ resumes. But LinkedIn’s lawsuit also raises questions about how to police bot use. The company, which was recently snapped up by Microsoft for $26.2 billion, has invoked the controversial Computer Fraud and Abuse Act (CFAA) in its suit against the unidentified scrapers, claiming that collecting user profiles from the site amounts to hacking. LinkedIn’s case accuses the anonymous scrapers of building a massive botnet and circumventing the restrictions LinkedIn uses to prevent profile collection by undesirable third parties. The lawsuit details several of LinkedIn’s automated tools that prevent data harvesting. Dubbed FUSE, Quicksand and Sentinel, these tools monitor the web traffic of LinkedIn users and limit how many other profiles a user can view, and how quickly a user can view those profiles. This tracking is intended to prevent scrapers from signing up for fake LinkedIn profiles and then vacuuming up vast amounts of data. The company also uses a tool called Org Block to block IP addresses it suspects of scraping and uses Member and Guest Request Scoring to track page requests. But paradoxically, LinkedIn doesn’t want to prohibit scraping altogether. Search engines like Google use bots to index websites and turn up relevant results — and LinkedIn wants to allow this type of scraping to occur. “LinkedIn ‘whitelists’ a number of popular and reputable service providers, search engines, and other platforms so as to permit them to query and index the LinkedIn website, without being subject to all of LinkedIn’s security measures,” the company explains in its suit. The scrapers targeted in the lawsuit circumvented LinkedIn’s bot-blocking tools by sending their requests through one of these ‘whitelisted’ entities, a third-party cloud service provider.

• Peter Thiel says journalism will be just fine, since he’ll decide what’s good journalism: Peter Thiel is a billionaire who decided he didn’t like Gawker Media after it outed him as gay. So he funded Hulk Hogan’s lawsuit against the company, and they won. Now Gawker is selling itself in a bankruptcy auction. Today, the same day that bids for Gawker are due, Thiel published an op-ed in the New York Timesas a sort of victory lap, but also to muster votes for a bill currently wending its way through Congress, the Intimate Privacy Protection Act. It's more commonly known as the revenge-porn bill, which would make it illegal to transmit private images and messages, but Thiel has co-opted it for his own purposes, referring to it by a lesser-known nickname, the Gawker Bill. But the most interesting part of Thiel’s editorial is what he says about the need for a free press: It’s telling that despite the fact he felt Gawker had invaded his privacy, Thiel himself never filed a lawsuit — he’s fighting via proxies. In trying to determine what should and shouldn’t qualify as journalism, Thiel is exercising the classic Silicon Valley pretension to attempt to own the definition, to write its own narrative, devoid of context or skepticism. But smart publishers will react to Thiel’s call to arms in a similar vein to the closing words of his editorial: He can’t do it, if we don’t let him.

Daily Tech Snippet: Wednesday, June 1

• Why you should delete the online accounts you don’t use anymore — right now: Despite falling out of vogue years ago, MySpace — that old precursor to Facebook — still has details on more user accounts than the United States has people. And now a hefty chunk of those account credentials has been leaked to the entire Internet, in a humbling reminder that the Matchbox Twenty-inspired username you probably made in high school is still worth a heck of a lot to companies and criminals. As many as 360 million MySpace accounts turned up for sale Friday in a 33-gigabyte dump online, according to reports that were confirmed Monday by MySpace's parent, Time Inc. The massive leak includes passwords, email addresses and usernames that were swiped from MySpace in a hack dating back to June 2013, before MySpace made a site redesign that closed some security gaps. It's unclear how many of the accounts in the MySpace hack were still "active," in the sense that they belong to people who continue to log into the service today. But chances are at least some of these accounts hadn't been touched for years. The reason this makes you vulnerable is the same reason experts say you shouldn't use the same username and password for every online service — it makes it easy to take one set of stolen credentials and plug them into others, giving hackers potential access to large swaths of your digital life. Personal data from the MySpace breach was going for sale to the tune of thousands of dollars, highlighting how even outdated information can still carry significant value. But whether your old data gets used for marketing, fraud or some other nefarious purpose is still at least partly within your control.

• Inside Uber’s Auto-Lease Machine, Where Almost Anyone Can Get a Car: In its relentless pursuit for growth, Uber needs new drivers, and many of those drivers need cars. To help them get started, Uber has been offering short-term leases since July through a wholly owned Delaware-based subsidiary called Xchange Leasing, LLC. It partners with auto dealerships, advertises to drivers, manages risk, and even pays repo men to chase down cars whose drivers aren't making their payments. Xchange may be key to Uber's continued expansion as it tangles with Lyft in the U.S. and a bevy of competitors abroad. Uber announced a partnership with Toyota last week to finance even more cars. This year, Uber said its financing and discount programs, which include Xchange, will put more than 100,000 drivers on the road. That requires dipping into the vast pool of people with bad or no credit. In a deal led by Goldman Sachs, Xchange received a $1 billion credit facility to fund new car leases, according to a person familiar with the matter. The deal will help Uber grow its U.S. subprime auto leasing business and it will give many of the world's biggest financial institutions exposure to the company's auto leases.  The credit facility is basically a line of credit that Xchange can use to lease out cars to Uber drivers.

• Instagram Adds Business Profiles in Advertising Growth Push: Facebook’s photo-sharing application Instagram is unveiling tools to help businesses differentiate themselves from regular users in a bid to help drive advertising revenue. Instagram, which has been heralded by analysts as a key source of growth for Facebook, will now let businesses create special profiles that will allow customers to contact them directly rather than posting public comments. Instagram will also offer business users new data on which posts are getting the most engagement and give them the ability to turn posts into advertisements. Facebook is working to leverage Instagram’s 400 million monthly users to keep up its pace of revenue growth. Instagram ads are expected to bring in $1.53 billion in revenue in 2016, or 15 percent of Facebook’s total ad sales, according to eMarketer. Instagram has 8.5 million users in Canada, Levine said.

• Microsoft sells patents to Xiaomi, builds 'long-term partnership': Software maker Microsoft  is selling about 1,500 of its patents to Chinese device maker Xiaomi [XTC.UL], a rare departure for the U.S. company and part of what the two companies say is the start of a long-term partnership. The deal, announced on Wednesday, also includes a patent cross-licensing arrangement and a commitment by Xiaomi to install copies of Microsoft software, including Office and Skype, on its phones and tablets. Both companies declined to discuss financial terms of the deal.  Jonathan Tinter, corporate vice president at Microsoft, said the company was keen to tap into Xiaomi's young, affluent and educated users by having its products pre-installed on their devices. He declined to go into detail about the patent deals, but said the overall deal was something "we do only with a few strategic partners." Microsoft has cut licensing deals with many Android device makers over the years, but has had less luck with Chinese manufacturers. Florian Mueller, a patents expert who consulted for Microsoft in the past, said it was rare for Microsoft to actually sell its patents, adding "it's possible Microsoft found it easier to impose its Android patent tax on Xiaomi as part of a broader deal that also involved a transfer of patents." 

Daily Tech Snippet: Thursday, April 28

• Facebook revenue smashes expectations as mobile ad sales surge: Facebook Inc's (FB.O) quarterly revenue rose more than 50 percent, handily beating Wall Street expectations as its wildly popular mobile app and a push into live video lured new advertisers and encouraged existing ones to boost spending. The company's shares rose 9.5 percent in after-hours trading on Wednesday to $118.39, setting it on track to open at a new high on Thursday, at nearly triple its initial public offering four years ago. Facebook also announced it will create a new class of non-voting shares in a move aimed at letting Chief Executive Officer Mark Zuckerberg give away his wealth without relinquishing control of the social media juggernaut he founded. Some 1.65 billion people used Facebook monthly as of March 31, up from 1.44 billion a year earlier. Zuckerberg said users were spending more than 50 minutes per day on Facebook, Instagram and Messenger, a huge amount of time given the millions of apps available to users. "The company consistently 'warns' about higher spending, but they consistently manage their spending to deliver earnings upside. They're an impressive company, and they leave very little room for criticism," said Wedbush Securities analyst Michael Pachter, who called the operating margin a good surprise. Facebook did not offer details on sales of its Oculus Rift virtual reality headset, but emphasized that it was early days and said that sales would not significantly impact 2016 revenue.  The company's net income attributable to common shareholders nearly tripled to $1.51 billion, or 52 cents per share, in the first quarter from $509 million, or 18 cents per share, a year earlier. Excluding items, the company earned 77 cents per share, beating Wall Street's 62-cent consensus. Total revenue rose to $5.38 billion from $3.54 billion, with ad revenue increasing 56.8 percent to $5.20 billion. Mobile ad revenue accounted for about 82 percent of total ad revenue, compared with about 73 percent a year earlier.

• PayPal beats the street on Q1 sales of $2.54B and EPS of $0.37: Payments giant PayPal posted strong Q1 earnings today, counter balancing some of the weaker showings from other tech stocks yesterday and outstripping the overall growth rate of e-commerce, in its own words. Following in the footsteps of its former parent, which alsoposted strong results for Q1, PayPal posted revenues of $2.544 billion with non-GAAP earnings per share of $0.37, rising 19% and 28% respectively on a year ago and both beating analysts’ projections of $2.5 billion and $0.35 EPS. The company says it has 184 million customers now, up by 4.5 million, with 1.4 billion transactions in the quarter up 26% on a year ago. Services like Venmo and the company’s expansion into credit and other services has given the company a life on average transactions per customer, which were up 12% to 28 payments per user, and $81 billion in total payment volume. That $81 billion in TPV, it said, “was faster than the growth rate of e-commerce.” On the merchant side, there are now 14 million active accounts. When it comes to new-wave revenues, PayPal is showing some of its legacy: the company only completes 26% of transactions on mobile devices today, versus 22% a year ago.

• A Silicon Valley VC says investors from China are joining Series A deals, and they’re playing “hardball”: On valuations: The average thing coming out of Y Combinator is probably a half to three-quarters of what it was [in terms of valuation in recent years]. The average seed-stage deal is half. On hardball tactics: Docs are taking longer because there are new investors coming in, and they want more stuff in their terms. These are newer investors, often foreign investors, who are basically saying: “I want senior preference to [a company’s earlier] investors,” and that’s adding two or three weeks as they usually ask right as the docs are closing. They’re almost all from China, and they want all of their preferences to be senior to everyone else’s. What’s happening is, since they know the capital’s financials, they just wait it out. By that point, we’ve already signed a term sheet and turned off a lot of other people who wanted to invest. These things never come up in the term sheet phase but later in the docs. They’ll say, “We did our diligence, and we need XYZ to invest.” It’s not a great way to start a relationship. People in the ecosystem around here are playing for the long term; they realize that sooner or later, they’ll be on the other side of the table and don’t want this stuff applied to them. This is mostly coming from Asia, where they play much harder hardball than here. And [these investors] do it with a happy face. That’s just the environment [to which they’re accustomed]. On the slowdown in tech valuations:  I don’t expect it to pick up any time soon, which is a function of retail and institutional investors looking for high-growth stories with profit associated with them. They want profit and growth. Meanwhile, a lot of companies that have strong revenue can’t show that growth, and vice versa. There just aren’t a lot of companies that could sustain being public right now.

• Amazon is liable for billing you for your kid’s wild in-app purchases, a judge says:  A federal judge ruled on Tuesday that Amazon is liable for billing parents for unauthorized in-app purchases made by their children. With the ruling, U.S. District Court Judge John Coughenour sided with the Federal Trade Commission in its lawsuit against Amazon for failing to get consent from parents for in-app purchases made by kids. “Many of Amazon’s arguments improperly assume a familiarity with in-app purchases on the part of consumers,” the judge said in the ruling. “For example, Amazon cites to a case determining that a ‘reasonable Amazon customer is accustomed to online shopping,’ but online shopping and spending real currency while obtaining virtual items in a game are completely different user activities.” The court has not yet ruled on how much Amazon will have to pay out to customers affected by the practice. The FTC previously settled with Apple and Google in similar cases, resulting in more than $50 million being returned to consumers.

• Chinese phone makers Oppo and Vivo pass Xiaomi in global phone sales: Being the “it” smartphone sure doesn’t last long. New data from IDC finds that Xiaomi now trails several of its less well known Chinese rivals when it comes to global market share. Overall, there were 334.9 million smartphones worldwide in the first quarter of 2016, IDC said, up very slightly from the 334.3 million units a year ago. That marks the smallest year-over-year growth on record. Oppo and Vivo, two names unfamiliar to most Americans, are now the No. 4 and No. 5 phone sellers behind Samsung, Apple and Huawei, another big Chinese hardware maker. Huawei is also on the rise, still far short of its goal of supplanting Apple and Samsung, but at least closing the gap on the two leaders. Oppo and Vivo are mostly known in the Chinese market, though Oppo now gets about 20 percent of its sales from outside its home turf.

• It feels like every tech company is offering cash advances. Shopify is the latest: Following in the footsteps of PayPal and Square, e-commerce software company Shopify said on Wednesday that it would start offering cash advances to business owners who use its software. The program, called Shopify Capital, will let eligible Shopify merchants obtain a lump-sum cash advance in exchange for a fixed percentage of their daily sales. Cash advances are popular with small businesses that don’t have the time or business history to secure a loan from a bank. The Shopify announcement comes more than two years after payments companies PayPal and Square began offering similar programs. Right now, companies that serve small businesses are seeing this market as a way to create a new revenue stream that can be sold to existing customers — and, they hope, help retain them. They are joining an increasingly crowded space, as the online alternative lending space has heated up in recent years. Merchant cash advances have had a mixed reputation in the past, due to hidden fees and the risk of a business getting addicted to them. But internet companies like Shopify are trying to remove the stigma around them by promising to disclose up front how a business will pay back the advance. Square recently moved from offering cash advances to actual loans.

Daily Tech Snippet: Monday, January 18

• Modi Offers $1.5 Billion Fund, Tax Breaks for India Startups: India said it will set up a 100-billion-rupee ($1.5 billion) fund to encourage startup businesses and pledged to ease regulations for entrepreneurs, as Prime Minister Narendra Modi strives to create the jobs needed in a developing nation of 1.3 billion people. Startups will get tax breaks such as income-tax exemptions for the first three years, quicker patent applications, a credit guarantee program and easier routes to wind up if they fail, Modi said at a government conference for entrepreneurs in New Delhi. The fund will be established over four years. "The government should not interfere in startups," Modi said on Saturday to an audience that included billionaire Masayoshi Son, the founder of Japan’s SoftBank Group Corp., and Uber Technologies Inc. Chief Executive Officer Travis Kalanick. "India’s youth should be a job creator, not a seeker."

• Jawbone Raises $165 Million at Half Its Last Valuation: Jawbone, the once-hot wearable technology start-up, said on Friday that it had raised $165 million in funding at a valuation of $1.5 billion, or roughly half the amount that the company was valued at as recently as 2014, continuing a burgeoning trend of start-ups raising money at lower values than before. When private companies raise money at a lower value than they had previously, the event is known as a “down round.” On Thursday, Foursquare announced it had raised a $45 million round of venture capital — which people familiar with the terms have said was also a down round, with Foursquare valued at $250 million, less than half of the $650 million it was valued at during its last round in 2013. Down rounds are increasing as Silicon Valley sobers up somewhat after a frothy period. In the last quarter of 2015, there was a major investment slowdown; funding to private companies dropped 30 percent from the previous quarter, to $27.3 billion, the research firm CB Insights said. Mutual fund investors have also recently marked down the valuations of other high-profile private companies like Zenefits, Dropbox and Snapchat. Down rounds, like the ones that Jawbone and Foursquare have raised, tend to destroy value for all of the pre-existing shareholders, including employees who own the company’s private stock. It has been a tumultuous year for Jawbone, which is based in San Francisco. The company’s Up fitness band line faces stiff competition in a crowded market for wearable technology that is dominated by Fitbit and Apple, according to the research firm IDC. Last year, Jawbone laid off employees as part of a restructuring. The company raised nearly $300 million in debt from the money management firm BlackRock last April.

• As Delivery Startups Cool, Food-Delivery Startup DoorDash Eats Its Words in Fundraising Talks: The company lowered its ambitions by cutting as much as $400 million off its proposed valuation to investors. In meetings late last year, DoorDash pitched venture capitalists on an investment that would value the food-delivery company at $1 billion, people with knowledge of the matter said. The company is back on the fundraising trail for that same round, except this time it’s slashed its lofty goal to as low as $600 million, according to the people, who requested not to be named because the discussions were private. If DoorDash closes the financing at the terms proposed to some investors recently, the valuation would be around the same as the one from the last round in March 2015, which was $600 million, the people said this week. The talks are ongoing, and the terms could change again, they said. A spokesman for DoorDash declined to comment. The comedown for DoorDash shows delivery startups may be losing some of their allure. Such businesses are costly to operate and often take on huge losses in pursuit of growth. Instacart, the grocery-delivery company that was valued at $2 billion by investors, raised prices in December, a move it attributed partly to “changing market conditions.” It also cut staff, according to Re/code. Good Eggs, which works with farmers to deliver fresh produce, closed all of its operations outside San Francisco in August.

• Alphabet (formerly known as Google) Shakes Up Its Robotics Division:  Google’s robotics division has been plagued by low morale and a lack of leadership since the unit’s founder left abruptly in 2014. Now Alphabet is cleaning it up. Over the last two months, Alphabet, the new holding company that separated Google from its collection of speculative projects, has reframed the robots effort, moving it from a stand-alone division inside Google to a piece of the X research division. The company has also hired Hans Peter Brondmo, a technology industry veteran who last worked at Nokia, to help with management. A reorganization of the robots group is one of several recent moves inside the X division, which used to be called Google X but was rebranded with the Alphabet reorganization and recently unveiled a new logo. A range of companies, including tech competitors like Amazon and car manufacturers, are signaling their interest in robotics. X has several projects in varying degrees of completion, but has lately been “graduating” them as stand-alone companies or preparing them for such a move. The life sciences group, for example, is now called Verily. X also recently hired an auto industry veteran to lead its self-driving car effort — called Chauffeur internally — and noted that the project was a good candidate to be spun out. Robotics has gone in the opposite direction for reasons that are personal and practical. The division was created in 2013 by Andy Rubin, who led the development of the widely used Android operating system software, and it has been without a leader since Mr. Rubin left in 2014 to start a technology incubator that helps young start-ups turn their ideas into businesses. After starting the robotics division, Mr. Rubin quickly went on a buying spree, purchasing a number of promising companies, including Boston Dynamics, the maker of experimental military robots, and Schaft, an elite group of Japanese roboticists from the University of Tokyo. But while the companies were promising, Mr. Rubin invested in several technologies that had industry observers scratching their heads about his overall direction. Mr. Rubin originally said that the robotics division would be a 10-year moonshot, and when he was in negotiations to acquire companies he talked about the possibility of the driverless Google car rolling up to your house and the Google robot jumping off the back bumper. Google’s robotics effort stalled after his departure, going through a variety of leaders, including James Kuffner, a Carnegie Mellon roboticist who has since joined Toyota’s research and development laboratory in Palo Alto, and Jonathan Rosenberg, who is a troubleshooter for Larry Page, the Google co-founder who is Alphabet’s chief executive. Many in the industry say it is likely to be awhile before companies, Alphabet included, can get through the many technological and regulatory hurdles that stand in the way of robots becoming a huge business.

• Xiaomi Misses Smartphone Sales Target by 10% on China Slowdown: Xiaomi Corp. sold more than 70 million smartphones last year, falling well short of its target and prompting founder Lei Jun to tell employees he was refocusing research efforts into “cool stuff” like robotics and virtual reality. The Chinese startup had a stated goal of selling 80 million devices. Xiaomi originally predicted selling 100 million units, but then changed that after China set its lowest growth target in 15 years and copycat vendors started taking away market share. The miss was a blow to company morale, Lei said in an e-mail to employees. “We set a target of 80 million and, before we knew it, it became an obligation,” Lei said. “We changed under this pressure, and everyone’s faces gradually lost all traces of humor.” The smartphone maker was one of China’s most exciting startup stories of past years, with a valuation of $45 billion that trailed only that of Uber Technologies Inc. Xiaomi thrived through online sales of budget-priced devices with advanced components, overtaking domestic competitors and challenging Apple Inc. and Samsung Electronics Co. for supremacy in the world’s biggest market. Xiaomi’s market share has been pinched by competitors including Huawei and Meizu, said Jeff Pu, an analyst at Yuanta Securities Co. They are among the Chinese vendors that have flooded the Internet with ultra-thin phones offering similar features and prices to Xiaomi’s Mi 4i and Redmi Note 2. Huawei said it shipped more than 100 million smartphones last year as it expanded in the U.S. and Europe, defying an industry slowdown. Pu expects Xiaomi’s sales growth to slow to 10 percent this year. “With sales growth slowing, Xiaomi’s valuation will be hurt,” Pu said. “It could even face a down round, as investors are less willing to pay.”

Daily Tech Snippet: Thursday, November 25

• Xiaomi's $45 Billion Valuation Seen `Unfeasible' as Growth Cools: Things were going so well for Xiaomi Corp. Customers were lining up, investors were swooning and the Beijing-based startup closed funding at a $45 billion valuation. That was last year. Now the high-flying smartphone maker is stumbling. Founder Lei Jun’s latest business, one of China’s most exciting startup stories of the past few years, is likely to miss its own goal of selling 80 million smartphones this year, according to two people with knowledge of its production plans. Suppliers also cut their internal targets for Xiaomi in anticipation of the shortfall, they said. Xiaomi’s falter shows the startup’s challenge in trying to maintain momentum after a meteoric ascent past Apple Inc. and Samsung Electronics Co. in China. Investors bought into the company’s story of youthful disruption and online sales, yet the subsequent lowering of China’s growth target and the copying of its sales strategy by rivals have neutralized Xiaomi’s first-mover advantage, putting its high price tag in doubt. "All those expectations of growth aren’t being realized, which now makes that $45 billion valuation unfeasible," said Alberto Moel, an analyst at Sanford C Bernstein in Hong Kong. "The argument was that their business is kind of like Apple and they’re growing very fast, but they’re no longer growing so fast and they’re not as good as Apple." Domestic shipments of Xiaomi smartphones, including its premium Mi 4 and more economical Redmi series, dropped 8 percent in the third quarter from a year earlier, its first-ever decline, according to researcher Canalys. IHS, another research firm, estimates that Xiaomi shipments dropped 3.9 percent, barely maintaining the lead over Huawei Technologies Co. That’s a big change from the bold growth projections used to justify Xiaomi’s tag as one of the world’s most-valuable technology startups. In March of last year, Lei predicted selling 100 million smartphones in 2015. Through the first nine months of this year, Xiaomi shipped about 53 million smartphones. With its optimistic forecast, Xiaomi secured $1.1 billion in December from investors including GIC Pte., All-Stars Investment Ltd. and DST. Xiaomi drew comparisons to Alibaba, the Chinese e-commerce company that months earlier held the largest initial public offering ever.

• Black Friday Deal or Dud? How to Shop Smart This Holiday Season: Black Friday, which has traditionally been the moment to flock to stores for steep discounts, and which has evolved to also include major online sales events for retailers like Amazon, Best Buy and Walmart, is not all that it is billed to be. We asked J. D. Levite, the deals editor of the product recommendations website The Wirecutter, for some data on just how beneficial the deals are on Black Friday — and the answer was not encouraging. Year round, Mr. Levite and his team track product prices across the web to unearth discounts on goods of all types, from gadgets to kitchenware. They also look at whether the product is high quality and durable based on their own testing and other reviews, and whether the seller or brand has a reasonable return or warranty policy. By those measures, Mr. Levite said, only about 0.6 percent, or 200 out of the approximately 34,000 deals online, which typically carry the same price tags inside retailers’ physical stores, will be good ones on Black Friday. “There are just more deals on that day than any other day of the year,” he said. “But for the most part, the deals aren’t anything better than what you’d see throughout the rest of the year.” There’s a smarter way to shop than relying on Black Friday. With the plethora of web tools now available, consumers can research online and then use trackers to follow product pricing for drops throughout the year. While it’s a time-consuming effort, the method is more precise for understanding pricing trends, both online and in stores. One useful tracking tool is Camel Camel Camel, which is geared toward users of the online retail behemoth Amazon. Using the Camel Camel Camel website, people can view a product’s price history on Amazon.com and then create alerts to receive an email as soon as the item’s price falls to a certain threshold. Over time, interesting trends emerge. One is that some product prices are raised in October, a few weeks before Black Friday. The prices are reduced again on Black Friday. Camel Camel Camel’s database also shows some items have predictable pricing patterns over the course of a year. A pair of bookshelf speakers made by Pioneer are typically $127, but that tends to drop significantly in August — to $60 in August 2014 and to $88 in August 2015, timed to the back-to-school season. This week, the same pair of speakers was again $127. In other words, there are times of year when different types of products decline in price — and Black Friday isn’t one of them.

• All In: Why Nikesh Arora Bet $483 Million on SoftBank's Future: It began late one night this year when he and Son were talking about people’s tolerance for risk and how it tends to decline over time. Arora took a chance as a kid by leaving India for the U.S. with only $200 in cash, but he had since gone on to a lucrative career. So Son prodded him. “Masa said, ‘How much risk appetite do you have?”’ Arora says. “‘Do you believe you can transform SoftBank into a company two, three, five times its size? Now is the time to take the risk.”’ A week later, Arora came back with a plan to buy 60 billion yen ($483 million at the time) in SoftBank shares, more than any insider purchase by an executive in Japan in at least 12 years, according to Bloomberg data. He would become the company’s second-largest individual shareholder and borrow heavily to do it. Arora says investors don’t yet appreciate what SoftBank is becoming. The company has been battered recently because of struggles at two major holdings, the China e-commerce powerhouse Alibaba Group Holding Ltd. and the U.S. wireless operator Sprint Corp. SoftBank is still valued at less than the public shares it owns, meaning investors deem its operating businesses practically worthless.Arora professes not to be worried. He says investors will come around once the company makes progress in reviving Sprint, lets Alibaba recover and demonstrates that it’s more than a Japanese telecommunications company with a spotty investment record.“I’m very relaxed,” Arora said. “I’m here for at least the next 10 years.”  Arora was hired last year after a decade at Google Inc. and promoted to president in June. Since then, he has been quietly building his own operation within SoftBank, an investment arm that will take stakes in technology companies around the world. Though SoftBank put money into startups for decades, including a tumultuous foray during the dot-com bust, the effort had dwindled in recent years to what Son called a “hobby” next to his wireless and broadband businesses. Arora is reviving the venture push and making it much more ambitious. He is hiring a team of 15 to 20 outsiders and plans to put about $3 billion into startups each year. Arora’s recruits, from companies such as Google and LinkedIn Corp., are hand-picked for the expertise they can offer startups in key areas like personnel, product development and acquisitions. He says SoftBank will hold a competitive advantage by operating at a financial strata few can reach. He plans to make five to 10 investments a year of $100 million to $1 billion. The idea is to back startups that have proven products and need to expand -- the rapid phase of growth Arora helped manage at Google.

• Morgan Stanley Said Struggling to Sell EBay Enterprise Deal Loan: Morgan Stanley is struggling to unload $640 million of loans backing the private-equity buyout of EBay Inc.’s enterprise business after investors shunned the debt, according to people with knowledge of the deal. The bank has been trying to sell the loans since mid-October and continues to hold the debt even after EBay said on Nov. 2 that the sale was completed. Morgan Stanley has discussed a steeper discount to lure buyers and has been probing investors in recent days about the price at which they may be willing to buy the debt, said the people, who asked not to be identified because the talks are private. One concern investors have raised is that the company’s projected earnings may be too optimistic. Buyout targets often make adjustments to forecast earnings, called add-backs, that can reduce a borrower’s leverage.

• HP Inc plunges after printer business underwhelms: Shares of HP Inc, which houses former Hewlett-Packard Co's legacy hardware business, plunged 16.3 percent on Wednesday after the company's lackluster results fueled concerns about its ability to weather a slowdown in the printer and PC markets. HP Inc's revenue from both its printer and PC businesses fell 14 percent each in the fourth quarter, their worst performance in the year ended Oct. 31, and forecast current-quarter profit below market expectations."Things got worse. Not only did they not get better - they got worse," said Shebly Seyrafi, an analyst at FBN Securities.HP Inc Chief Executive Dion Weisler called the printing business a "much greater challenge" than the PC business.The company has been cutting printer prices to tackle stiff competition, particularly from Japanese printer makers Canon and Epson.However, the price cuts, coupled with the effect of a stronger dollar, have reduced the value of income from overseas markets.Revenue from HP Inc's printer supplies such as ink cartridges and laser toner fell 10 percent this quarter. Supplies account for most of the profits for HP Inc.HP Inc's PC unit has been suffering as sales have been falling worldwide for several quarters and the launch of Windows 10 has so far failed to rekindle the industry."Ultimately I think (HP Inc), the way it's structured, it's going to be more of a sort of dividend yield play," said Jeffrey Fidacaro, an analyst.HP Inc's sibling, Hewlett Packard Enterprise, saw its shares rise as much as 8.5 percent on Wednesday, after it maintained its profit forecast for fiscal 2016.

• Zenefits Under Investigation For Allegedly Allowing Unlicensed Brokers To Sell Health Insurance: Cloud HR platform Zenefits may have allowed salespeople to illegally act as insurance agents in at least seven states. According to a BuzzFeed investigative report, the startup let unlicensed brokers sell health insurance, leading to at least one commissioner to investigate in Washington State. Those unlicensed solicitations go back to at least the summer of 2014, and the Washington State office of the insurance commissioner started looking at the potential violations earlier this year, according to the report. This is not the first time Zenefits has faced legal scrutiny for possible insurance violations. The Utah Insurance Department took the startup to task over claims it was illegally giving insurance software away for free. Regulators at the time said that the company violated local laws and that it was unfair to traditional insurance brokers. Utah legislators threw out the complaint and let Zenefits get back to business after both the Utah House and Senate overwhelmingly voted to let the startup continue operations. The broker license violation looks a bit more serious and could be considered a Class B felony, under Washington State law. Violators may be subject to a prison sentence of up to 10 years as well as face a $20,000 fine. According to the report, Zenefits execs may have known about the violations and were aware of the consequences, but were prompted to get sales agents licensed in the state only after learning of the insurance commission’s investigation. State records show 22 agents became licensed brokers just days after the report said Zenefits realized there was a state inquiry. The startup has since launched a “license management system” to help track which sales agents are properly licensed.

• Facebook’s Internet.org Now Available Throughout India: Internet.org, Facebook’s initiative to provide free Internet services in developing countries, is now available to all Indians through the Free Basics app on Reliance Communication’s network. The project is meant to give people in emerging economies easy access to the Internet, but has been hit by a slew of criticism. Reliance Communications is India’s fourth-largest telecom operator, with about 110 million subscribers as of June. According to its site, Free Basics will enable users to use Facebook and Facebook Messenger and access sites like Wikipedia, BBC News, Bing Search, Dictionary.com, and local news services. Detractors say that by making a handful of services available on its platform, Internet.org gives preferential treatment to its partners, therefore violating the tenets of net neutrality. In response, Facebook founder and chief executive officer Mark Zuckerberg said Internet.org will focus on offering basic services for free (hence the branding of its app) and is not meant to limit access to other providers. The company has also taken steps to make joining Free Basics easier to join for developers and other potential partners. This has done little to ameliorate critics who are concerned about the potential drawbacks of having a company as large and powerful as Facebook control what millions of new Internet users see. In addition to India, Free Basics is available in 30 countries throughout Africa, South and Southeast Asia, and Latin America.

Daily Tech Snippet: Tuesday, August 11

Big Changes at Google: Major Restructuring and a New Holding Company Named 'Alphabet'; Shares Rise 6%: Google is listening to Wall Street, while also trying to keep its innovation going. The Silicon Valley behemoth is reorganizing under a new name — Alphabet — and separating its moneymaking businesses from the moonshot ones. Under the new structure, Mr. Page is to run Alphabet along with Sergey Brin, who co-founded the web search business with him in 1998. Alphabet would be the parent entity, housing several companies, with the biggest among them Google. In addition, the portfolio would include Nest, the smart thermostat maker, and Calico, a company focused on longevity, among other things. Sundar Pichai, who had been senior vice president in charge of products, will be chief executive of Google, which will encompass Internet such products as search, maps, YouTube and applications like Gmail. Mr. Pichai will add YouTube to his list of products. The YouTube chief executive, Susan Wojcicki, will now report to him, whereas she previously reported to Mr. Page. In addition, Mr. Pichai will oversee the business operations for Google. Google’s current business chief, Omid Kordestani, will end that role and become an adviser to Alphabet and Google. Ruth Porat, chief financial officer of Google, will remain in that position and will also be chief financial officer for Alphabet. Other entities under Alphabet will include Google Fiber, a provider of ultrafast Internet service. There will also be two financial businesses, Google Ventures, the venture capital arm, and Capital, which does private-equity-like deals. Google X, which includes projects like self-driving cars, a drone delivery service and an attempt to make Internet-connected balloons, will be managed separately and run by Mr. Brin.A holding company structure also gives Mr. Page and Mr. Brin, who became multibillionaires when Google went public in 2004, room to make big new bets to add to Alphabet’s portfolio — without annoying Wall Street. Over the last few years, investors have expressed concern that Google has become distracted from its core web search, instead pursuing projects fancied by its founders, like self-driving cars or a pill to detect cancer. The holding-company structure is set to provide more financial transparency. Starting in the fourth quarter of this year, Alphabet will break out financial results for Google Inc., as well as for the overall company. While investors will not be able to see individual results for other companies, the system will make it easier to get a sense of how Google’s core business is doing.

After Surprise drop in Exports, China Unexpectedly Weakens Yuan Reference Rate by Record 1.9% Amid Slowdown: China weakened the yuan’s daily reference rate by a record 1.9 percent, allowing depreciation to combat a slump in exports. The currency dropped an unprecedented 1.2 percent to 6.2848 per dollar as of 9:43 a.m. in Shanghai, and slid a similar amount in Hong Kong’s offshore trading. The onshore spot rate was 0.9 percent weaker than the reference rate of 6.2298, within the 2 percent limit allowed by the People’s Bank of China. Monday’s reference rate increase was a one-time adjustment, the PBOC said in a statement, adding that it will strengthen the market’s role in the fixing and promote the convergence of the onshore and offshore rates. It said also that it will keep the yuan stable at a reasonable level. The yuan’s effective exchange rate is stronger than that of other currencies, which is a deviation from market expectations, the central bank said. The comments come after the PBOC said earlier Tuesday that a strong yuan puts pressure on exports. China’s overseas shipments fell 8.3 percent from a year earlier in dollar terms in July, well below the estimate for a 1.5 percent decline in a Bloomberg survey.

Facebook Launches Autofill Forms, Improved Customer Service and Enhanced Video Analytics: Autofill Forms: Overview: Facebook’s latest ads automatically populate contact information that people have previously given Facebook, like email addresses, phone numbers, address, company name, job title, etc. Details: Facebook has dubbed its new ad type as “lead ads” and hopes that their existence will make the mobile signup process easier. Lead ads take the friction out of the clunky experience associated with responding to mobile ads and filling out forms. Instead of leaving one app to start a form in another app and then entering all the information again from scratch, lead ads allow users to stay within their news feed. Retailer Opportunities: Removing clicks and manual data entry can greatly boost conversion rates for those brands advertising on Facebook. What You Should Know: Lead ads aren’t currently available to everyone. Facebook is testing them with a small group of businesses around the world to gain feedback before rolling them out to the wider public. Improved Customer Service. Overview: Facebook’s latest step toward enhancing customer service for pages is “saved replies” — a feature allowing page admins to write, save and reuse canned messages when they receive an inquiry via Facebook Messenger. Details: When responding to a message, saved replies appear in a list to the left. Simply click on your desired response from the list and it will automatically display in the message body and auto-populate with personalization features, such as the respondent’s name, admin’s name and company website. Retailer Opportunities: Customer service via social media is increasingly becoming more common. Why would consumers want to spend an extended amount of time waiting on the phone when they can quickly shoot the brand a message? This new feature will save businesses time when handling incoming customer service inquiries. Enhanced Video Analytics. Overview: Video metrics have been added to page insights. Details: On the new dedicated video tab, page admins can track total views, 30-second views, top videos and metrics for videos shared by other pages. In addition to customizing the date ranges, you can slice the data into various segments, such as organic versus paid, auto-played versus click-to-play and unique versus repeat.

Xiaomi Plans to Have India Smartphone Lineup Produced Locally (By FoxConn): Foxconn has begun assembling Xiaomi’s first made-in-India smartphone from a new plant in the country’s south, helping the Chinese company shorten delivery times and prop up margins. Xiaomi, the world’s fourth-largest phone vendor, will source “100 percent” of Redmi 2 Prime devices sold in India from Foxconn’s new factory in Sri City, Hugo Barra, vice president of global operations, said by phone on Sunday. The Redmi 2 Prime went on sale online Monday, at $110 for a 2GB model. “We are starting small; but our eventual aim is to make most of our devices if not all of our devices that are sold in India, manufacture them here,” said Manu Jain, Xiaomi’s India head. “The entire ecosystem needs to exist before we start manufacturing the phone from scratch. This will probably take some time,” he said. Foxconn had begun production of smartphones at the Sri City factory, a person familiar with the matter said in July. The Taiwanese company, a contract manufacturer for the world’s largest electronics brands including Apple Inc., is looking to expand in the South Asian country amid Prime Minister Narendra Modi’s Make in India campaign aimed at creating jobs and accelerating economic growth. Assembling locally will help Xiaomi shore up margins and take advantage of tax breaks in its largest market outside of China. As low-end smartphone sales slow in its home country, Xiaomi is depending on other emerging markets for growth.

Alibaba to invest $4.6 billion in China electronics retailer Suning; JD.com falls 6% on news: JD.com, a Chinese online retailer, sank to a four-month low after Alibaba Group Holding Ltd.’s purchase of a stake in the country’s biggest electronics chain threatened to increase competition. The American depositary receipts plunged 6.3 percent to $30.06 in New York on Monday. Trading volume of 21.2 million ADRs was more than double the daily average of the past three months. JD.com, which gets more than half of its revenue from electronics and appliances, declined as most stocks on the Bloomberg China-U.S. Equity Index rose. JD.com slid after Alibaba, China’s biggest online retailer, said it will spend $4.6 billion to become Suning Commerce Group Ltd.’s second-largest shareholder with about a 20 percent stake. The ADRs extended their drop to 21 percent from this year’s high in June as concern mounted that stiffer competition will further slow sales growth in an industry already beset by the country’s slowest economic expansion in 25 years.

Twitter Shares Climb 8% on NFL Deal, Executive Stock Purchases: Twitter’s stock rose 8.2 percent on Monday after it unveiled a content deal with the National Football League and executives said they’re buying shares in the company. On Friday, the stock had closed at its lowest level since its November 2013 initial public offering, a slump that began in July when Jack Dorsey, co-founder and interim chief executive officer, warned that it will take a while before Twitter is able to reverse a slowdown in user growth. Today, Dorsey promoted his purchase of about $875,000 in shares with a tweet saying, “Investing in @twitter’s future.” Chief Financial Officer Anthony Noto and board member Peter Fenton also bought Twitter shares last week, according to regulatory filings. It’s not the first time Twitter’s executives have coordinated their actions when confidence was low. Before reporting disappointing first-quarter sales, Twitter’s insiders halted all their sales for a few weeks.

Rackspace Pops 5% After Reporting Lackluster Q2 Results Buttressed By The Promise Of Share Buybacks: Following the bell today, Rackspace reported its second-quarter financial performance. The company mostly missed street expectations, with lower-than-expected revenue, and earnings-per-share that just met expectations. Shares in the hosting company are up just under 6 percent in after-hours trading. Rackspace reported profit of $0.20 per share on revenue of $489 million in the three-month period. Investors had expected the company to report a $0.20 per-share profit on revenue of $490.54 million. The company grew its revenue 11 percent compared to the year-ago quarter; the company was quick to note that using a constant-currency basis for measurement, it grew 13.7 percent. If Rackspace missed on its top-line projections, and barely met its profit requirements as set by the street, why are its shares up? Because the firm is signalling a stock repurchase, of $500M in the next 6-9 months; Rackspace intends to borrow money to buy its own shares to reward shareholders with presents it can only slightly afford.

Daily Tech Snippet: Friday, July 3

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• Twitter Pushes Ads With A New Button Atop Mobile Users’ Profiles: Twitter’s latest push to monetize its service has led to the rollout of a new “Twitter Ads” button, which is now prominently appearing on user profile pages on both the iOS and Android client applications. The newly added button, which some users may have initially mistaken as a shortcut to Twitter analytics, is found right next to the “Edit profile” button, the account switcher and the Settings icon. By clicking on the Ads button, users are offered the ability to manage their Twitter ad campaigns while on the go. That’s a different tactic–and perhaps a more overzealous one–than the one Facebook took when it introduced a way to manage Facebook ads via smartphones earlier this year. The company launched a dedicated Facebook Ads Manager App which not only allowed current advertisers to track the way their ad campaigns were performing, but actually brought the creation process itself to mobile phones. Here, users could write ad text, upload photos, and even target their desired audience right from the app itself. Not everyone is happy with the change, which some Twitter users are calling “desperate,” or “ugly.” And it’s hard to find fault with those sentiments. If you’re not currently running a Twitter ad campaign, the feature does nothing more than let you know that this button serves as a place where you can manage an ad campaign in the future – it doesn’t go so far as to allow users to actually get started building their first campaign from the app itself.


• Twitter Launches "Personas", Aiming To Make It Easier for Advertisers to Target Audience Niches: Twitter wants to make targeting easier for advertisers, so today it unveiled a feature called "personas," which lets brands target groups of consumers based on whether they have college degrees, are parents, make more or less than $100,000 or run small businesses, to name a few. More specifically, marketers can not only target college grads but also pinpoint such alums based on their gender, location and interests. Advertisers could piece together similar targeting parameters on Twitter in the past, but now they can build more precise campaigns with just a mouse click or two. The San Francisco-based tech company is leveraging ongoing partnerships with data companies Acxiom and Datalogix to bring such targeting options to the table. The development is reminiscent of Facebook's people-based marketing product moves of 2014, when it rolled out "Audience Insights" and other similar products. Personas and the campaign insights are now available to advertisers, globally.


• Yelp Sale Process to Stall as Founder Decides to Wait; Stock Slumps: Yelp, which hired Goldman Sachs Group Inc. to find a buyer, has temporarily decided not to pursue a sale. The consumer-review website has had several interested suitors but isn’t pursuing a transaction in the immediate future. The firm may pursue a deal again if co-founder and Chief Executive Officer Jeremy Stoppelman changes his mind, one of the people said. Yelp dropped 12 percent in afternoon trading in New York, giving the company a market value of about $2.8 billion. Bloomberg and the Wall Street Journal reported in May that Yelp was working with a bank to explore a sale. Yelp hired Goldman Sachs after receiving takeover interest.


• Xiaomi reports sequential sales fall, putting full-year goal in doubt: China's top smartphone maker Xiaomi on Thursday reported semi-annual sales that for the first time were lower than the previous six months, jeopardising its full-year target and hinting at a slowdown in its mainstay domestic market. The firm said it sold 34.7 million handsets in January-June versus 35.0 million in July-December - the first sequential fall since the company began disclosing six-month figures in 2013. For 2015, it aims for minimum sales of 80 million smartphones. Smartphone shipments in China - where Xiaomi is No. 1 - fell in the first quarter for the first time in six years, though it was unclear whether the drop signalled the start of a downward trend, researcher IDC said in May. Beijing-based Xiaomi has been expanding overseas to relieve the pressure at home, focusing on India, Southeast Asia and, from next week, Brazil.


• Venture Investment In Healthcare Declines Through Q2 After Record 2014: After a record-breaking year of growth in 2014, venture capital investors in healthcare seem to have settled into a groove. They invested roughly $2.8 billion in healthcare technologies through the second quarter of 2015, down from $3.3 billion over the same period last year, according to a study from Startup Health. Nearly $6.8 billion went into healthcare technologies that year, up from $3 billion the year before. Driven by twin engines of government legislation and technology innovation around wearable devices and data, venture capital investments in healthcare went up like a rocket in 2014. Now, the industry seems to be catching its breath a bit. Investments in healthcare technology actually held steady in the second quarter at $1.8 billion after a $500 million decline year-on-year in the first quarter. An examination of some of the companies that have raised the most money and successfully exited: Zenefits and Oscar Health , which are tackling the regulatory changes brought on by the Affordable Care Act, raised more than respectable $500 million and $145 million rounds, respectively. While Nant Health, a company using big data analytics for genomic sequencing, and HealthCatalyst, which uses data to track health across populations, both scored big with their own big rounds of $200 million and $70 million. On the wearables side, the FitBit public offering proved that even public markets were interested in the wearable health opportunity.

Daily Tech Snippet: Wednesday, July 1

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• Facebook is testing a more conservative definition of video views, but is still far more aggressive than YouTube in charging advertisers: While Facebook charges advertisers for videos the second they appear in a news feed, views are defined differently since users can easily scroll past the ads. Facebook considers a view to last three seconds compared with YouTube's 30-second rule. This has resulted in marketers' clips uploaded to Facebook to amass a wealth of views compared with those published on YouTube in recent months. But those views don't necessarily mean people are watching ads. Now, advertisers can start paying for videos with a cost-per-view rate that kicks in after a user watches for 10 seconds, making the ad seemingly more valuable to advertisers who want to pay for qualified views. Until now, advertisers have paid for videos immediately after they show up in a news feed—something akin to a cost-per-impression model. When Twitter launched autoplay video earlier this month, it tried to address concerns by promising brands 100 percent viewability: promising only to charge on video ads that have been seen 100 percent in full view of the user..


• Xiaomi Continues International Push, Starts Selling $160 Redmi 2 Phone in Brazil: Xiaomi made its expected move into the Brazil market on Tuesday, announcing plans to sell its affordable Redmi 2 smartphone for 499 Brazilian reals ($161). To avoid hefty taxes placed on foreign imports, Xiaomi is working with Foxconn to have the devices built in Brazil, with additional products coming soon.


• Online recharge and mobile wallet app MobiKwik targets $700M GTV in 2015-16, profits by 2016-17: MobiKwik.com, is gunning for a nearly four-fold jump in gross transaction value to $700 million (Rs 4,270 crore) this year. “We don’t have the audited numbers right now, but I can tell you that we have crossed the 2014-15 target of Rs 1200 crore ($190 million) sales and are looking forward to $700 million sales this year,” Upasana Taku, co-founder of the company told Techcircle. The Gurgaon-based company aims to turn profitable by financial year 2016-17. “We expect to meet our goal of 100 million users for the mobile wallet by 2016-17 and so next year we anticipate to start generating profits,” she added. Profitability is the holy grail for India’s fast growing consumer internet firms. MobiKwik’s competitor, the Alibaba-backed Paytm saw the gross value of the transactions conducted on its network rise to around Rs 4,000 crore by 2014-end from around Rs 1,000 crore the year before. Paytm is said to be targeting gross merchandise value (GMV) run rate of $3-4 billion by March 2015. MobiKwik plans to spend about Rs 100 crore on marketing this financial year. Most of the money will be deployed on television and online campaigns. MobiKwik is also betting big on joining hands with offline service provider. It started a service for offline players in March 2015 and has the likes of quick service restaurants, grocery stores and coffee stores on its platform. It has tie ups with Big Bazaar, Cafe Coffee Day and other players for the same.


• Apple Music First Look: Rich, Robust — But Confusing: Paid streaming music has arrived on Planet Apple, where it was regarded as unworthy for years. Today, the tech giant has entered the streaming music business with its much-anticipated Apple Music subscription service. Like other streaming services, it offers access to tens of millions of tracks for a monthly fee. Would I pay $10 a month — $120 a year — to use it? My answer is a tentative yes, with some caveats. Apple has built a handsome, robust app and service that goes well beyond just offering a huge catalog of music by providing many ways to discover and group music for a very wide range of tastes and moods. But it’s also uncharacteristically complicated by Apple standards, with everything from a global terrestrial radio station to numerous suggested playlists for different purposes in different places. One of the most confusing aspects of Apple Music is that it moves all your iTunes Music to the cloud, along with the streaming catalog. On the other hand, the service has three big strengths, in my view. First, it smoothly integrates the existing library of iTunes songs you own with the much larger catalog of music you are merely, in effect, renting. Second, while the service does use some algorithms, it suggests numerous playlists, albums and songs curated by 300 human editors, based on your tastes. Third, while Apple’s $10 monthly fee per user is both standard — and for some, pricey — the company is offering a family plan that cuts the price dramatically.


• LTE-U versus WiFi: The future of mobile data pits cellphone carriers against cable giants: To cellular providers, WiFi represents a huge missed opportunity. Internet consumption on cellular data networks — your 3G or 4G connection - could've grown by a whopping 84 percent last year, according to Cisco. But because consumers shunted so much traffic to WiFi, that figure was much lower, at 69 percent. Carriers could charge you for all that extra access to the mobile data network. Instead they're losing out when you hop onto WiFi at your home or office. And LTE-U is the industry's solution. The cable industry, on the other hand, wants to keep you on WiFi as much as possible. This is the math they fear: By 2019, Americans are expected to consume nearly 10 times more mobile data than they did in 2014. By then, 77 percent of all Internet traffic will be sent and received over mobile devices rather than stationary PCs. That's not good for cable, an industry that built its reputation on running fast (but fixed) Internet service into people's homes and businesses. You're probably familiar with 4G LTE, the current cutting edge of mobile data technology. Under ideal conditions, it provides download speeds that rival what you can get on a wired connection — fast enough to download a song in less than a minute. LTE-U is virtually identical to LTE, but with one key difference: It runs on the same frequencies that WiFi does. Unlike regular LTE, which piggybacks on airwaves owned exclusively by your carrier, LTE-U travels on public airwaves that are free to anyone. Garage door openers, cordless phones, WiFi routers — all also transmit over these open channels. Interference between the two technologies can slash WiFi transmission rates by 75 percent, according to a Google white paper filed last month to the federal government. The cable industry's top trade group, the National Cable and Telecommunications Association, argued the technology could be "disastrous" without further protections and "will severely degrade consumers' Wi-Fi experience, rendering unusable many services that are widespread today, to say nothing of the innovative new uses currently on the horizon."


• Google's Local Search, unlike Google's Organic Search, Favors Google+ Results, Yelp Claims: According to a highly critical new paper out from legal scholar Tim Wu, Harvard Business School professor Michael Luca and data scientists at Yelp, many of us are totally missing out on the information that’s most relevant, and critical, to our lives. In a statement to The Washington Post, Yelp vice president of public policy Luther Lowe uses this example: If a parent searches “pediatrician NYC,” he or she will, in a prominent first-page listing, see the names of seven pediatricians who happen to have Google+ or Google+ Local pages. “The Google organic ranking algorithm does a great job at identifying helpful content on the Web,” Lowe said. “But it’s sadly not being deployed in the most common user behavior on Google: local search.” According to Yelp, from one-third to one-half of all Google searches are local. They primarily involve something called the “Local OneBox” — the special, extra-prominent list of seven links that Google displays at the top of local search results. Local OneBox takes up a big chunk of first-page real estate, frequently at the very top of the page, which means people are disproportionately more likely to click into it than they are into regular links. Local OneBox also pulls exclusively from Google’s versions of specialized search sites, such as Google+ Local.


• Samsung, HTC suffer blowback from phone financing schemes of years past, as consumers turn slow to upgrade: It’s payback time for handset makers that long profited from Americans’ tendency to upgrade their mobile phones early and often. U.S. consumers got a taste for phone financing two years ago and never looked back. They bought fancy new devices for a few more dollars a month with no service contract attached. Now they’re holding on to their old smartphones longer than they did when they signed two-year contracts and got freebies, spelling further trouble for manufacturers like Samsung Electronics Co. and HTC Corp. that have struggled with declining sales. “When people spend $600 to $700, they are not in the mood to upgrade every year,” said independent wireless analyst Chetan Sharma. Thrifty consumers are starting to buy devices every 20 to 24 months instead of every 15 months when carriers subsidized all of their devices and made up the cost through higher service charges, he said. While iPhone maker Apple Inc. -- whose customers tend to be less price sensitive -- has remained largely unaffected, Samsung and HTC may see the most impact, analysts said. In a sign that the end of subsidies is on the horizon, Dallas-based AT and T asked in May that retail partners like Apple and Best Buy stop offering subsidized phones with two-year contracts and to sell them on its Next financing program instead. Verizon, which has been slower to move to phone financing, expects 50 percent of new sales to be on its Edge installment payment plan this year.


• Cisco to buy OpenDNS for $635 million to boost security business: Cisco said it would buy OpenDNS, a privately held cloud-based security firm, for $635 million, the latest move to boost its security business as cyber attacks increase in number and sophistication. Cisco has been buying a number of security companies, which has made its relatively tiny security business one of its fastest growing areas in the past two years. OpenDNS uses predictive intelligence to block malware, botnets and phishing threats that antivirus and firewalls miss. Cisco was a minority investor and was one of the backers that invested $35 million in OpenDNS in May last year. When Cisco buys stakes in startups, it often receives defensive rights that give it an edge to acquire companies it has invested in ahead of competitors. Cisco, whose security business is known for its firewalls, expanded into intrusion detection and prevention systems with the $2.7 billion acquisition of Sourcefire in 2013. Cisco, which has acquired dozens of companies over the years, is transitioning towards high-end switches and routers and investing in new products such as data analytics software and cloud-based tools for data centers. It bought malware analysis company ThreatGRID in 2014 and security advisory firm Neohapsis this year.

Daily Tech Snippet: Tuesday, May 12

• Xiaomi’s rolls out a money market fund to take on Alibaba and Tencent: Like Baidu and Alibaba, Xiaomi is eyeing China’s finance industry and seeing dollar signs. Today the company is officially launching a money-market fund called Huoqibao inside a new standalone app called “Xiaomi Finance.” Like the Alibaba-affiliated Yu’ebao, Xiaomi’s Huoqibao lets consumers save excess cash and earn interest from it. After registering for a Xiaomi Finance account with one’s national ID, users can bind a bank card to the app can store as little as RMB 1 (about US$0.15). The fund is managed by China’s E Fund Management and currently offers an annual return rate of 4.26 percent. This marks Xiaomi’s first foray into serious finance, but it has dabbled in money in the past. Huoqibao was once available in beta for select users of Xiaomi Wallet, another standalone app that was primarily used to manage virtual currency known as Mi coins. Users from inside China could purchase Mi coins through bound bank cards or Alipay accounts, and redeem them for customized launcher themes, or media like e-books. Compared to China’s other internet giants, Xiaomi is slightly late to the money market game. As of late 2014, Yu’ebao had over 185 million users] and and a fund size of RMB 578.93 billion (about US$93 billion). Yu’ebao’s deep integration with Alipay Wallet, which is also tied to Alibaba’s mobile ecommerce properties like Tmall and Taobao, make it tough for new customers to miss. Tencent and Baidu also have mobile money-market funds of their own. Of these three companies, Xiaomi is arguably in the weakest position when it comes to promoting consumer finance products. Alibaba already owns the biggest pool of money online in China thanks to Alipay, and Tencent owns the best mobile real estate thanks to WeChat, China’s most popular messaging app. Messaging apps and ecommerce marketplaces both contain powerful network effects that help ensure longevity. Unlike these companies (and arguably any other company in the world), Xiaomi is extremely well positioned to benefit from the emergence of smart home devices. Since thousands of customers log onto Xiaomi’s website to buy a smartphones every week, it can leverage that focused attention by selling smart lightbulbs and smart cameras and taking a cut in the process. Many of the hardware startups it invests in go on to list their items on the company’s ecommerce platform. Documents discovered last year by the Wall Street Journal indicated that Xiaomi makes the majority of its revenue and profits from hardware sales. But the company continues to invest in “services” – broadly defined as all of the semi-tangibles one buys on the internet. The company claimed to earn more than US$1 billlion in revenues from services in 2014, marking 6 percent of its total revenues.

• Chinese Smartphone Makers Try to Make Inroads in India: The era of fast growth is coming to an end in China, where the research group IDC said on Monday that phone sales fell 4 percent in the first quarter from a year earlier, the first contraction in six years. IDC expects no growth in China’s smartphone market in 2015. India’s smartphone sales are just a fraction of China’s. But as one of the fastest-growing smartphone markets in the world, with hundreds of millions of potential new customers, India may indicate whether a new generation of Chinese hardware companies can grow beyond their country’s borders. It is intensely competitive, with more than 150 brands. Among the best-selling brands are several indigenous companies with an inside track on local phone habits. Another top seller is a multinational, Samsung, which has deep experience selling across different cultures. Xiaomi, the most successful Chinese company in India, owned only 4 percent of the market in the fourth quarter. But India is also the only place that has a scale like China’s. Indians are expected to buy 111 million smartphones this year, and 149 million in 2016. And China’s smartphone makers say Chinese and Indian customers have a lot in common: Both tend to obsess over arcane features and specs, and both are highly sensitive to cost. Many Chinese companies are trying to make their case directly to potential Indian buyers online. It is a technique pioneered by Xiaomi, which used e-commerce to overcome difficult-to-manage and expensive storefronts and distribution deals in China and now India. So-called flash sales, which offer limited batches of phones to drive up demand and build brand cachet, have rattled the current top sellers in India, the local company Micromax and the South Korean giant Samsung, according to analysts. The tactic is cheap and effective, said Mr. Sharma of Coolpad: “We don’t need to spend tens of millions of dollars on marketing or building distribution networks.” One of the most successful Chinese brands in India so far, Xiaomi has gone to great lengths to create products catering to customers there. Its new Mi 4i phone costs more than many rivals at about $200, but supports six Indian languages, with local engineers working to increase that number. The company has also built an online store that focuses on India’s passions of cricket and Bollywood, and has plans to open 100 stores around the country before the end of the year. “We want to become an Indian company,” Xiaomi’s chief executive, Lei Jun, told a local newspaper after the introduction of the Mi 4i.

• SoftBank names Nikesh Arora President and Son's Likely Successor: Japan's SoftBank Corp unveiled a management reshuffle on Monday, appointing investments head Nikesh Arora as president and naming him as a potential successor to CEO Masayoshi Son, as the telecoms conglomerate steps up its overseas expansion. The move comes as Son and SoftBank are battling to make their 2013 acquisition of U.S. carrier Sprint Corp for more than $20 billion profitable. A sluggish Japanese economy, though, has forced the company to increasingly look overseas for growth. Announcing Arora's appointment at SoftBank's earnings conference, billionaire Son, who is relinquishing the president's post, said the former Google Inc executive was a "strong candidate" to lead the company in future. "Yes. He's 10 years younger than me, and he has more abilities than me," Son told reporters, when asked if Arora was a potential candidate to succeed him. "The last nine months I've spent with him have made me sure of that, but I'm not going to retire soon," Son said. SoftBank has been weighed down by the costs of trying to turn around Sprint, which has been in intense competition with larger U.S. rivals AT&T Inc and Verizon Communications Inc. Sprint, in which SoftBank owns 80 percent, has undergone a long-haul revamping of its network, shedding thousands of jobs and triggering a mass exodus of subscribers. SoftBank has made a string of other investments in recent years, including $250 million in privately-held Hollywood movie studio Legendary Entertainment, and $600 million in Travice Inc, the operator of Chinese taxi hailing app Kuaidi Dache. As well as being the largest investor in Chinese e-commerce giant Alibaba Group Holding Ltd, SoftBank has plans to invest $10 billion in India's potentially huge but under-developed online retail market. "We expect more investments and acquisitions, even more so than now," Son said. "Going forward, the overseas market will be the main factor for SoftBank." SoftBank posted a 9 percent fall in operating profit for the year ended March to 982.7 billion yen ($8.2 billion), hurt by the absence of one-time gains enjoyed the year before.

• Rackspace Earnings: Revenue $480M (+14% Y/Y) Net Income $28M; Shares Fall 13% on Outlook: Rackspace Hosting Inc, a web hosting company, forecast revenue for the current quarter below market estimates and said a strong dollar hurt its revenue growth in the first quarter. Shares of the company, which faces tough competition from Amazon.com Inc (AMZN.O), Google Inc (GOOGL.O) and Microsoft Corp (MSFT.O) were down 13 percent in extended trading on Monday. Revenue from a contract with a "large" financial services company will be realized only in the third quarter, hurting revenue growth in the second quarter, Rackspace Chief Executive Taylor Rhodes said in a post-earnings call. Rackspace Hosting will also take a one-time charge in the quarter as a customer moved some of its "production elements" away from a Rackspace data center in the United Kingdom. Rackspace leases online storage space to companies and provides its clients management and support services for their cloud-based operations. It gets about a third of its revenue from outside the United States. The company said foreign currency exchange rates hurt its revenue growth. Revenue increased 14.1 percent to $480.2 million in the first quarter ended March 31. On a constant currency basis, revenue grew 16.6 percent. Analysts had expected revenue of $481.6 million. Net income rose to $28.4 million, or 20 cents per share, from $25.4 million, or 18 cents per share, a year earlier. Analysts expected a profit of 20 cents per share. Rackspace shares closed at $53.13 on the New York Stock Exchange on Monday. They have risen 89 percent in the past 12 months.

• In global first, Uber tests cash payments for cabs in India: Uber is testing cash payments in India as the online taxi-hailing company seeks a stronger foothold in a country where many fewer people have credit cards than internet connections. San Francisco-based Uber has grown rapidly in value to be worth around $40 billion. But in India it has lagged local rival Ola, which has about 80 percent of the organized cab market. Many analysts say that is because Uber has not adapted its business model enough to suit India's needs. Uber said on Tuesday it was piloting cash payments for cabs in the southern Indian city of Hyderabad, in a first for the company globally. Until now, Uber's mobile application around the world has charged customers through credit cards or other electronic payment methods. India has about 20 million credit cards for a population of 1.3 billion. Though the government is trying to change this, most purchases are done with cash. Ola and other Indian cab services accept cash for rides, while e-commerce giant Amazon introduced a cash on delivery option when it launched in India. "Tradition dictates that cash plays a big role for Indian consumers," said Siddharth Shanker, Uber's general manager in Hyderabad.

• In 1.7M miles of test drives over 6 years, Google's self-driving cars have been in only 11 accidents, and caused none: Internet search company Google Inc's self-driving cars have been involved in 11 accidents, but have not been the cause of any, over the last six years since the project began, the program's director said on Monday. A team of drivers that is testing the fleet of more than 20 vehicles have driven 1.7 million miles so far. "...Not once was the self-driving car the cause of the accident," Chris Urmson said in a post on technology news website Backchannel's blog Medium. (bit.ly/1GZciuW) No one was injured in the accidents, Urmson added. "If you spend enough time on the road, accidents will happen whether you're in a car or a self-driving car." The cars had been hit from behind seven times, mainly at traffic lights, with a majority of the accidents being on city streets rather than on freeways.