Amazon and Hachette announced an end to their dispute: Hachette, the fourth largest publisher, won the ability to set the prices for its e-books, which was a major contention in the fight. Neither side gave details of the deal, but both pronounced themselves happy with the terms.
Uber in India has tied up with local mobile payments provider Paytm to sort out its problem with the RBI. Uber has been sweating in India ever since local taxi services complained to the RBI that Uber was violating Indian foreign exchange regulations by routing credit card payments from customers to Netherlands-based Uber BV. Most of it was converted back to Indian currency when payments were routed to cab drivers’ accounts in India, after adjusting for commissions, promotions, etc. But the RBI agreed with local competitors like Meru that such transactions violated rules meant to prevent fraud or flight of capital from the country, and that foreign players could not be allowed to bypass a two-stage credit card authentication process required for digital payments in India. Uber was initially given until October 31 to fall in line with these requirements, but the deadline was extended to the end of November. Now Uber has added Paytm’s digital wallet to its payment options. India is the first country where it has made such an arrangement. Those who have already registered with Paytm can just link their accounts with Uber. Others will need to sign up with Paytm which involves regulatory steps like verification of a phone number and email address.
The launch of WeChat's free VOIP calling app was marred by problems; Tencent apologized, attributing the crashes to excessive demand: The folks behind China’s new WeChat Phonebook were left apologizing on Thursday after its Wednesday launch was marred by severe technical problems. WeChat Phonebook has garnered a lot of interest in China as a way to make your phone smarter and cheaper. The app offers free VOIP calling (as long as you’re on wifi) and a variety of convenient services like automatic contact list backup, syncing WeChat avatar images with your contact list, easy group texting, etc. The 1.0 version of the app hit China’s Android and iOS app stores yesterday, and while it immediately shot to the top of the charts, it hasn’t actually been working for many users. Users have reported being unable to register, log in, recieve confirmation text messages, and make phone calls, among other problems. Since making phone calls is the app’s main purpose, that’s kind of a big deal. On Thursday, WeChat apologized via the app’s official Weibo account for the issues. The cause, it says, is that the app had too many users, leading to service instability.
Alibaba plans to raise $8 billion in a U.S. bond sale, just two months after its IPO: Asia’s largest Internet company is working to issue its first-ever U.S. dollar-denominated notes to refinance its credit facilities, according to a statement today. The bonds have been rated A+, or the fifth highest investment-grade rating, by Standard & Poor’s and an equivalent A1 by Moody’s Investors Service. The debt issue would be on top of the $25 billion that it collected in a September initial stock offering, which was the biggest share sale on record. The Hangzhou, China-based e-commerce company, with a market capitalization of almost $300 billion, has $11 billion in loans and credit lines, according to data compiled by Bloomberg.“They’re pretty flush with capital. It’s another example of companies being opportunistic and trying to take advantage of low rates while they can.” The company will be able to maintain a conservative capital structure with a strong net cash position in the next few years, while it keeps its ratio of debt to cash flow below 1.5 times, according to Fitch. A $4 billion term loan that the company obtained last year pays 2.75 percentage points more than the London interbank offered rate. Libor, the rate at which banks say they can borrow from each other, is at about 0.23 percentage point.
Amid flagging investor sentiment, Twitter held its first Analyst Day, and announced a slew of upcoming product changes: the stock rose 7% in response: Loads of coverage: NYT, Bloomberg, Reuters, TechCrunch, AdWeek: (1) An "instant timeline" that would allow new users to get value out of the service right away, without having to follow anybody first. Twitter would use algorithms to figure out what might be important and interesting. The feature would also be shown to returning users who don't have "healthy" timelines, Chief Executive Officer Dick Costolo said. (2) By early next year, ways for people to "record, edit and share" video using the Twitter application. (3) A "what you missed" feature to show people the most important tweets that were posted since they last logged in. (4) Starting next week, an update that allows people to share public tweets within private messages. (5) Changes to the Twitter homepage, which draws 125 million people each month who don't log in or sign up. (7) New mobile applications besides Twitter and Vine. (8) Content organized around geography and events. (9) A "quick promote" option so that users can turn their tweets into advertisements with a couple of clicks.
Tencent Q3 results (Q3 rev: $3.2B, 38% Y/Y, operating profit $1.2B, 56% Y/Y) indicate sharply slowing growth on WeChat engagement as well as games monetization: Tencent released its third quarter results for 2014 yesterday and, as analysts predicted, its growth in mobile games has slowed. In fact at RMB 2.6 billion (US$424 million) this quarter’s mobile gaming revenue is actually down compared last quarter, although Tencent blames that mostly on “delayed launches of upgrades.”. Here are a few other highlights from Tencent’s Q3 earnings report: Q3 revenues of RMB 19.8 billion (US$3.2 billion), up 28 percent from same period last year. Operating profit of RMB 7.5 billion (US$1.2 billion), up 56 percent year-on-year. Value-added service revenues saw revenues of RMB 16.5 billion (US$2.6 billion), up 38 percent on Q3 2013. Gaming revenues from WeChat and QQ (the desktop and mobile IM app) reached RMB 2.6 billion (US$423 million), but there’s no breakdown specific just to WeChat’s gaming platform. QQ hit 819.8 million MAUs, up just 0.5 percent year-on-year. WeChat messaging app now has 468.1 million active users (MAUs) in Q3 2014. That’s up from 438 million MAUs in Q2. It represents quarterly growth of 6.8 percent – by far the lowest it has ever seen. WeChat’s growth is nearly half the rate that it saw from Q1 to Q2.
#Amazoncart lets you add products to your Amazon cart by replying on Twitter: The hashtag #AmazonCart was unveiled earlier this year, and according to Dowitcher Designs, it’s currently used in around 5,000 tweets per day. How it works: Someone posts an Amazon product on Twitter, you reply to that tweet with #AmazonCart and Amazon puts the product directly in your cart. Amazon is doing its part to promote #AmazonCart with Vine videos and pictures all tagged with #AmazonCart.
Chinese click on far more mobile ads than Americans, rely far less on TV and watch a lot of videos while commuting: The IAB U.S. and China Mobile Report 2014 finds that a whopping 71 percent of China's mobile-toting consumers watch full-length TV shows straight from a smartphone or tablet on a weekly basis. Only 28 percent of U.S. respondents said the same. Seventy-six percent of Chinese consumers used smartphones while on public transportation, and 49 percent pulled out their phones while in cars. Only 26 percent of Americans used their smartphones on public transport (likely because many buses and trains still lack Wi-Fi) while 64 percent used phones while in cars. And 91 percent of China's users play with mobile ads monthly versus 62 percent of U.S. users.
Single's Day Stats for Alibaba: GMV US$9.3 billion (up 60% Y/Y from last year’s full-day tally of US$5.8 billion). Mobile accounted for 42.6% of GMV (up from 21% last year). Orders: 278.5 million. Top brands: Xiaomi in top spot (Xiaomi sold 720K smartphones in 10 hours), Huawei second, and Haier third. Japan’s Uniqlo was next up in fourth place. Discounts were steep: Merchants were pressured to discount by at least 50%, or to the lowest point in the last 60 days, else face steep drops in listings rank.
Caveat: GMV may have been (heavily) inflated by a 'Pre-Sales Initiative' this year: Alibaba is employing what it calls a "pre-sale initiative", under which merchants advertise products at their discounted Singles' Day price from as early as Oct. 15. Tmall lets customers put down a deposit for the order but only allows merchants to process the full payment and ship the products on Nov. 11. The company said it had used such a scheme since 2012, since it helps merchants plan the logistics of shipping such large volumes of goods. Merchants said this year it was used much more widely, and was aimed at boosting Alibaba's figures. "This is a way they can actually count that volume all transacted in one day," said one online store manager who asked not to be named in case it damaged his business. "They've never done a company-wide policy like this." Merchants said Alibaba ensures discounts are genuine by having vendors discount their products from their lowest price within the 60 days before and after Singles' Day.
Lenovo's results were disappointing (Q2 rev: $10.5B, net income $262M), and company said hypergrowth in China smartphone sales is ending: Lenovo’s sales in the quarter were $10.5 billion, compared with the $11.3 billion average of 16 analyst estimates compiled by Bloomberg. Second-quarter net income rose 19 percent to $262.1 million, beating the $259.8 million average of 12 analyst estimates compiled by Bloomberg, as Yang took advantage of Lenovo’s expanding scale to boost profit at more than twice the pace of sales Lenovo fell to third in China, trailing Xiaomi and Samsung, according to researcher Canalys. Smartphone sales in China are projected to hit 426 million units this year, compared with about 214 million two years ago, according to a forecast from International Data Corp. Lenovo Group Ltd. (992) said the era of “hypergrowth” is over in China’s smartphone market after the company reported its slowest sales growth in six quarters. Shares fell to their lowest since June 24 on an intraday basis after Lenovo’s revenue rose 7.2 percent in the three months ended September, the smallest increase since March 2013 and missing analysts’ estimates.
Amazon's AWS business is slowing, facing commoditization and increasing competition from Microsoft and Google:Sales growth at AWS has been declining. AWS is categorized in Amazon’s financial statements in “North America, Other.” That grouping brought in $1.34 billion in the third quarter, up from $960 million a year ago. Yet sales growth fell to 39 percent from a year earlier, down from 57 percent a year before. The cloud industry has become increasingly competitive this year, with Google Inc. and Microsoft slashing costs of their offerings and boosting cloud products. Earlier this month, Google said it was reducing the price of some cloud features -- including storage and networking options -- by 23 percent to 79 percent. Microsoft has also trimmed prices this year and last month said it was increasing cloud services with packages of hardware and software. “Commodification is kind of washing at the foundations of what they do,” said Carl Brooks, an analyst with 451 Group. Amazon remains the dominant cloud provider, with a 27 percent share of the worldwide market for cloud infrastructure services, according to a report last month from Synergy Research Group Inc. Microsoft has around 10 percent, while International Business Machines Corp. has 7 percent.
Going cheap rates for website visits in China show why traffic figures from Chinese sites might be unreliable: : A screenshot from a Chinese website that’s selling web traffic: The cheapest option, visits from 1,000 unique IPs per day, will run you just RMB 2.46 (US$0.40) a day. 8,000 visits a day costs just RMB 19.68 (US$3.22). The site in question, which we won’t link to as we don’t wish to contribute to the site’s business, is something that Tech in Asia found easily by searching Baidu, and it claims that it can even help webmasters increase their Alexa ranking.
Today is Singles Day: updates at Alibaba’s @Alizila Twitter account
As Alibaba sells $2B in the first hour of Singles’ Day, 4 questions analysts are asking: (1) Can Alibaba break US$9 billion in GMV? Last year, Singles Day spenders spent nearly US$6 billion across Alibaba’s marketplaces, Taobao and Tmall. That was nearly double what the sale took in the previous year, and this year Alibaba will be looking for similarly massive growth. (2) Can mobile sales break 50%? Mobile sales accounted for about 36 percent of Alibaba’s overall sales in Q2 of this year, so breaking 50 percent this Singles Day could be a stretch. (3) Will this year’s Singles Day go international? Through programs like Tmall Global, the company has increased the number and profile of international brand names on its ecommerce platforms, and today’s results should reflect how well that’s panned out. For example, Tesla automobiles go on sale on Tmall for the first time today. (4) Will delivery get better and faster? Alibaba has put a great deal of effort into improving the logistical side of its business through projects like its new Cainiao subsidiary and its new partnership with Gooday distribution.
The multi-app strategy is paying off and spreading: canonical example Facebook Messenger has 500M users; : Sometimes offering one mobile app just isn’t enough. The thinking goes as such: As companies add features to their main mobile apps, the design and experience can become increasingly cluttered and difficult to navigate. If these companies offer a separate, dedicated app for each feature, perhaps more users will adopt their services. The multi-app strategy is hardly new. Groupon follows in the footsteps of companies like Facebook, Twitter, Foursquare and LinkedIn, among many others. All of these companies have taken sections from their main mobile app offerings and created stand-alone apps for users to download.
An app to measure kids shoe size is a hit with moms: Stride Rite today is launching an iPad app to grab a chunk of that business, and it lets parents measure their children's feet size so they can then order shoes from the company. It is designed to alleviate a pain point for moms and dads who would rather not head to a store every few months to measure the shoe sizes for kids with constantly growing feet. Kristin Smith, director of e-commerce for the Boston-based retailer, said her brand has seen a 129 percent uptick in mobile traffic and a 200 percent jump in sales during the last 18 months. The app, called Rite Feet and developed by MJD Interactive, will be pushed with digital and social ads, as well as placements via Stride Ride's email list and 300 store locations. "We've seen a shift among millennial moms to mobile," Smith explained. "So we are building comprehesive strategy, beginning with the apps. And we are starting to look at iBeacons, though when it comes to mobile payments—we're not quite there yet."
Uber is seeking to raise an addition $1 billion from new investors, possibly at a $25B valuation, structured as a convertible debt offering: Coverage here, here and here: We’ve heard the company is shopping the deal as a convertible debt offering, as opposed to a typical late-stage equity deal, with a valuation cap of $25 billion. Uber’s existing investors include Benchmark, Menlo Ventures, Google Ventures, TPG Growth, Kleiner Perkins, Fidelity, Wellington Management, BlackRock, Goldman Sachs, Jeff Bezos, Lowercase Capital, and First Round Capital, among others. With the financing Uber is seeking to add to that list and is pitching new investors on the deal. For Uber, structuring its financing as convertible debt would reduce its risk of dilution, particularly as the company seeks to raise so soon after its last round. The company is already extremely well-capitalized, having raised approximately $1.6 billion to date. Uber was even tested as a delivery partner for Amazon, and there’s a real possibility it could provide the framework for on-demand delivery of goods from other third-party providers in the future. All that is very capital-intensive, and Uber will need money to make money.
Vee, an Indian mobile dating app gets $1M pre-series A funding, even as Momo, a similar Chinese app files for $300M US IPO: Founded in April this year, Vee received $1 million in its pre-Series A. Vee is a dating app that connects people who are single with others having the same tastes. It essentially helps users find out companions around their area and get into mutual relationships. The company claims that Vee can predict one’s approximate location, and based on the algorithms that work on the backend, it recommends people they may like around their area. For instance, when you see a profile on the app, you can like him/her anonymously. The other person will not get to know about it until he/she likes you back. The app connects you with people only when both the users have liked each other. As soon as you are connected, you can start chatting with them using the app. The interesting thing is that women users can choose to make the chats disappear in 30 seconds (so that they don’t have to worry about leaving a trail), and you can connect with multiple persons at a time. A free app, Vee is currently available on Android as well as iOS platforms. With the app, the company is targeting the youth population within the age group of 18-28. “We have seen more than 50,000 downloads across iOS and Android already. Over 23,000 pairs have been created and around 4.4 million messages exchanged on the platform so far,” explained Gupta. The firm is also looking to monetise the app in the near future by introducing a paid subscription model, wherein it will make a customised match to its premium subscribers and will organise meeting events for them.
LinkedIn is being sued over Reference Search: The LinkedIn service in question is called “Reference Search.” It is available only to premium account holders, who pay a monthly fee. An employer or recruiter can use it to generate a list of people in its own network who worked at the same company at the same time as a job candidate. It also allows premium members to use the site’s messaging system to contact people who appear on those lists, without notifying a job candidate. In Sweet v. LinkedIn, a class-action suit filed last month in Northern California, the plaintiffs contended that LinkedIn, in providing the job reference material, enabled potential employers to “anonymously dig into the employment history of any LinkedIn member, and make hiring and firing decisions based upon the information they gather,” without ensuring that the information was accurate. This, they said, is a violation of the Fair Credit Reporting Act.
Amazon quietly launched Echo, a voice-controlled smartspeaker with integrated voice-ordering from Amazon: Initial reactions are mixed at best: Echo is priced at $199, Amazon said on its website today. Members of Amazon’s Prime fast-shipping program can purchase the gadget for $99 for a limited period. With Echo, Amazon can plant a voice-activated device in homes that lets users easily order things from the Web retailer by adding it to their shopping lists via voice command and later confirming the purchase through a companion app. Yet it’s unclear if consumers will see enough benefits and convenience to embrace another piece of hardware. “It seems like an odd and not-very-useful product,” said Sucharita Mulpuru, an analyst at Forrester Research in Cambridge, Massachusetts. “The consumer doesn’t need yet another device in their home that replicates what they already have on their phone.” Amazon introduced Echo with little fanfare, simply putting up a Web page about the device.
Despite splashy new investments and Alibaba, SoftBank is hurting from its Sprint investment: A 15 percent drop in SoftBank’s shares this year suggests investors have concerns about its shorter-term prospects. The company this week reduced its annual operating profit outlook by 10 percent, citing mounting losses at Sprint. Its 80 percent ownership of Sprint is worth about $15.5 billion, less than the $22 billion SoftBank paid last year. Sprint’s shares have slumped 54 percent in New York this year. After the company reported its 11th straight quarter of subscriber losses this week, the stock fell 21 percent in the last two days alone. In addition to Sprint, and the the 32% stake in Alibaba, SoftBank owns 36% of Yahoo Japan Corp. (4689) and 40% of GungHo. Those stakes are worth $8.6 billion and $1.8 billion, respectively, according to its website.
Location-based audience targeting is used by 18% of US mobile retailers (set to double in a year); Geo-location could turn help offline retailers fight back against online: In category after category, Amazon has steadily eroded the market share of traditional bricks-and-mortar retail chains, which seem to be in a state of irreversible decline. Much of the online giant’s competitive advantage is based on its access to and mastery of rich customer data. Traditional retailers know relatively little about their customers, unless they have a loyalty card and actually buy something – and even this knowledge comes late, after a purchase is made. They have no way to cross sell, recommend new products, or target advertising. Unlike Amazon, they can’t tell if a potential customer visits the store or passes by it without buying anything. But all that is about to change because traditional retail is starting to wake up to the potential of geolocation, which is giving the new wave of data analytics companies ways to help bricks-and-mortar retailers make up for the data deficit. A separate analysis finds that 18 percent of US mobile marketers plan to use iBeacon technology to target consumers this year. "We expect that to double next year," she said.
Amazon is experimenting with (i) deliveries by taxi in the US, and (ii) tying up with newspaper vendors as pick-up locations at scale in the UK: US Taxi-Delivery Experiment: Amazon.com Inc is testing deliveries via taxis in San Francisco and Los Angeles, according to the Wall Street Journal, as the Internet retailer explores alternative modes of delivery to speed up shipments while restraining cost. Amazon is using the taxi-hailing mobile app, Flywheel, to ship parcels via licensed cabs, studying the feasibility of using taxi fleets more broadly as a delivery avenue, the Journal cited people familiar with the matter as saying. In its latest test, Amazon summoned cabs through Flywheel to distribution centers, from where they picked up as many as 10 packages bound for the same location at about $5 per package, the Journal reported. The deliveries usually took place early in the morning, when taxi traffic was low and the competition unlikely to notice, the paper cited the people as saying. UK Tie-up with news wholesaler for in-store pick-up: In October 2014, Amazon announced a partnership with Smiths News, a leading UK newspaper and magazine wholesaler, to offer customers same-day pickup service via the newsagent’s new subsidiary, Pass My Parcel, which will deliver Amazon packages to its select retail locations. Pickup locations are available in more than 6,000 locations throughout the UK, but same-day service is available for only 500 of them. During online checkout, buyers may see a "Pickup is Available — Choose from XX Locations Near You” message, which lets them select a delivery and pickup site. With the Pass My Parcel delivery service, the delivery process is expedited through Smiths News’ twice-daily distribution schedule. Orders made by 11:45 a.m. can be available for same-day pickup at 4 p.m., and orders made by 7:45 p.m. can be available for pickup by 6:30 the next morning in these select retail locations.
~5% Audience Engagement: That's what GoPro, Disney have on Instagram: The most successful brands on Instagram get up to 5% audience engagement. GoPro, for instance has 3.3M followers, 163K likes, and 2K comments: the study defines audience engagement as total user actions (likes + comments) as % of follower base. The highest benchmarks were set by advertisers in Consumer Electronics and Travel; Leaders in Retail (Foot Locker) and Fashion (NYX Cosmetics) had engagement of 2.5%; Autos (Mercedes Benz) stood at 2.9%.
Twitter completes one - not very successful - year as a public company tomorrow: Twitter Inc. (TWTR) is celebrating its one-year anniversary as a public company tomorrow with a stock that’s soared 55 percent from its debut. Its performance by many other measures is less stellar. After jumping 73 percent to open at $45.10 on its first trading day, Twitter’s share price today is lower at $40.37, and the company currently has a record-low enterprise value of 19.4 times trailing 12-month sales, according to data compiled by Bloomberg. The San Francisco-based company also continues to bleed money, with losses widening faster than sales gains. Twitter’s profitability has been pushed out to 2017 from 2015 at the time of its initial public offering, according to analysts’ estimates compiled by Bloomberg. The data underline how Twitter has fallen short as the rocket-ship growth stock it billed itself as during the run-up to last November’s IPO. The microblogging service touted its global reach and potential during its pitch to investors, asking them to focus on monthly user numbers that ended up slowing. Now Chief Executive Officer Dick Costolo is dealing with the backlash, even as the company’s digital-advertising business booms. The disconnect between what people thought would happen with Twitter’s trajectory and what actually happened make this one of the bigger “misfires” in technology stocks, said Francis Gaskins, research director at financial-media site Equities.com. “It’s been a round-trip ticket.” Jim Prosser, a spokesman at Twitter, declined to comment. Twitter went public last Nov. 6 at $26 a share.
Audience-targeting reaches HR; used to predict attrition, budget overspends: Workday, a leading maker of cloud-based software for running corporate human resources and financial operations, has announced it is putting into its products the kind of data analysis that Netflix uses to recommend movies, LinkedIn has to suggest people you might know, or Facebook needs to put a likely ad in front of you. One version of the Workday predicts which high-performing employees are likely to leave a company in the next year; it then offers possible actions (more money, new job) that might make them stay. In another instance, expense reporting software can predict which employee populations are most likely to exceed their budgets.
