Daily News Digest- 1st Oct'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Bezos, Nadella, Now Zuck: America Comes to India: Facebook founder Mark Zuckerberg will be visiting India this month, and is likely to meet Prime Minister Narendra Modi, in what would be a hat-trick of highprofile visits by American CEOs in a fortnight after Jeff Bezos of Amazon and Satya Nadella of Microsoft, as the online social networking company seeks to expand its footprint in its fastest-growing market. Communications and Law Minister Ravi Shankar Prasad confirmed to ETthat Zuckerberg, the 30-year-old chair Ravi Shankar Prasad confirmed to ET that Zuckerberg, one of the world's youngest billionaires with a personal wealth estimated at $33 billion, has sought meetings with the prime minister and other senior ministers between October 9 and 10. The minister declined to share more details of the meetings, but Facebook is widely tipped to be partnering the government in Swachh Bharat, one of Modi's pet initiatives aimed at improving cleanliness levels across the country.

• Starbucks Sees Potential in Over 50 Small Indian Cities: Encouraged by the response to Starbucks stores in major Indian cities, the world's largest coffee chain is now setting its sights on tier-2 and tier-3 cities, a top company executive said. The move comes after Tata Starbucks, the equal joint venture between Tata Global Beverages and Seattle-based Starbucks Coffee Company reportedly decided to open outlets that are half the average size of existing ones for faster expansion in India. Stating that Tata Starbucks was “growing aggressively“ in India, chief executive officer Avani Davda said it has identified more than 50 tier-2 and tier-3 Indian cities “that have right kind of infrastructure.“ Davda said the company is open to trying out different formats that Starbucks has ntroduced globally, ncluding smaller Express stores and drive-through out ets, which account for more than 40% of the US company operated stores with higher average sales. “We will try and see which is right for each market,“ she told ET after opening the first Starbucks store in Hyderabad, in the Jubilee Hills area, on Tuesday. The coffee chain has opened 58 stores across Mumbai, Delhi NCR, Pune, Bangalore, Chennai and Hyderabad in 23 months and “will continue to grow,“ she said. Since starting its first India outlet in October 2012, Starbucks has opened stores at an average of one every two weeks, making India its fastest-expanding market. However, Davda said, “We are not in a hurry to expand or in a hurry to say we are going to have X number of stores in this country.“ Refusing to divulge details about the joint venture's financial performance, she said, “We are on track and the board is “extremely happy and satisfied with our (financial) performance so far.“ According to her, Indian cities in the south, west and north offer great growth potential for Tata Starbucks. “We would like to penetrate them in the right way and we are not going to shy away from opening up the satellite markets as well,“ she said.

• Manwani to Retire as Unilever COO in Dec: Harish Manwani, who became Unilever’s first chief operating officer more than three years ago, is set to retire from the Anglo-Dutch consumer goods giant in December. Manwani, who joined Hindustan Unilever as a management trainee in 1976, will however continue as the non-executive chairman of the company’s Indian unit — Hindustan Unilever. “Harish has been instrumental in the transformation of the company. Under his leadership we have seen a step-change in our goto-market organisation and there has been a relentless focus on flawless execution globally. He has role-modelled the 4G sustainable growth model – competitive, consistent, profitable and responsible – which has become such a strong focal point for the markets,” said Unilever CEO Paul Polman. As COO, Manwani tried to align market clusters across the world, creating a more integrated company and helping resource allocation to be done more efficiently across markets that allowed the business to be managed more dynamically especially amid slowing consumer demand. “Today, Unilever is in a strong position with a clear strategy and capabilities to drive long-term re sponsible growth. This makes it a good time for me to make this personal transition. I look forward to working with working with Paul and the leadership team over the coming months to ensure a smooth transition and to further build our growth agenda,“ said Manwani, 62, the brains behind the company's successful challenge to Colgate's lenge to Colgate's dominance in personal care segment in India in the 1990s.

• Premium Mobiles Galore, but iPhone may Win Hands Down: Apple’s new devices — iPhone 6 and iPhone 6 Plus — are expected to corner a chunk of the premium market when they are introduced in India on the back of pent up aspirational demand. The Cupertino-based company’s new gadgets could beat back competition from upcoming launches by leading brands such as Samsung, Sony and BlackBerry in this low-volume, high-value category of smartphones, say analysts. The brand’s iconic status — besides features such as a larger, crisper screen, faster processor, better camera and onboard storage of as much as 128 GB — will continue to draw consumers, analysts add. “Success of upcoming flagship devices such as iPhone 6 series, BlackBerry and Xperia Z3 will be quite polarised towards iPhones as the rich urban consumer will look to get her hands on the most aspirational brand in the market right now, which is Apple,” said Tarun Pathak, a senior research analyst at Hong Kong-based Counterpoint Research. Of the two, the iPhone 6 Plus with a 5.5-inch display could fare better, given the demand for handsets with larger screen sizes, analysts said. While there is uncertainty over whether Apple will start selling the new iPhones in India before or after Diwali, Samsung is set to launch its Note 4 phablet before the festival of lights. Although the India prices for the iPhone 6 and iPhone 6 Plus have not been officially disclosed, they are available in Delhi's grey market for between ₹ 1,00,000 and ₹ 2,00,000, three to four times the expected price, and an indication of the huge interest in the products. The unlocked, 128 GB iPhone 6 Plus costs $949 (about ₹ 58,600) in the US, according to Apple's website. However, launch delays and supply issues given the huge global demand and “exorbitant pricing“ could affect demand for the new iPhones for at least the next two or three months, Pathak cautioned, indicating that if Apple missed the upcoming festival season, competitors such as Samsung and Sony could steal a march over it in the near term. Apple sold over 10 million iPhone 6 and iPhone 6 Plus models in the three days after the launch on September 19.

• Delivery Cos in Ecomm Space Face Tax Heat: Logistics service providers who have been slapped with demands for additional tax by authorities in several Indian states are among a growing number of players in India’s booming online retail sector to be tripped up by arcane tax laws framed originally for retail sales in physical stores. Even as Amazon, which offers an online platform linking sellers and consumers in India, grapples with demands from tax authorities in Karnataka, several firms which provide logistics services to online retailers have fallen afoul of tax structures in states such as Maharashtra, West Bengal and Kerala. “They (tax authorities) saw our bank account and saw crores (of transactions) and put a penalty on us. But this was not our money; we were collecting and transferring this money to our ecommerce clients,” said ES Sudharsan, 50, cofounder of IndiaOnTime, a logistics services company. The firm has been slapped with a penalty of over ₹ 2.5 crore by the Palakkad office of the Department of Commercial Taxes in Kerala. Its operations came to a halt as national bank accounts were frozen in February due to the tax imbroglio. The three-year-old startup was handling about 6,000 shipments a day in the southern state for most of the top ecommerce companies and was collecting over ₹ 40 lakh a day as cash-on-delivery.

• Maruti recalls 70k units of Swift, Dzire & Ritz: Maruti Suzuki India, the country’s biggest carmaker, said on Tuesday that it would voluntarily recall 69,555 diesel cars, including models of the Dzire, the Swift and the Ritz manufactured between March 8, 2010 and August 11, 2013, to repair a faulty wiring harness fitment. This is the company’s third recall in less than a year. The inspection and repairs will be limited to 55,938 units of the DZire, 12,486 units of the Swift and 1,131 units of the Ritz and will not pertain to any other vehicle of the company or its exports, Maruti Suzuki said in a statement. It also said that its dealers will contact owners of all the affected vehicles and the dealer workshop technicians will inspect the wiring harness fitment’s condition and carry out the necessary repairs, free of cost. Customers can also visit the company’s website to check whether their cars are among the ones that will be recalled. The Society of Indian Automobile Manufacturers (SIAM), an industry body, had put in place a voluntary code on vehicle recall in 2012 that instructs vehicle manufacturers to inform customers about any manufacturing defects that might affect their safety.

• Sumitomo buys Carzonrent unit for Rs 200cr: Japan’s Sumitomo Group has acquired the car lease division of Carzonrent India, the company that also runs Easy Cabs, for around Rs 200 crore. Sumitomo Group, which runs Japan’s largest car lease business with over six lakh cars, has set up SMAS Auto Leasing India, which will gain rights to car lease division of Carzonrent with a fleet of about 2,000 cars and about 135 marquee corporate clients spread across India. Carzonrent MD Rajiv Vij says that with a market share of about 18 % in the domestic organized car rental sector, Carzonrent will now focus on investing Rs 2,000 crore in the next four years to grow its network from 39 to 100 cities in India, increase the fleet size of 7,500 cars to 30,000 cars in the car-with-driver and self-drive services and foray into markets outside India. “Sumitomo has the muscle to grow the lease business here. We have identified chauffer-drive and self-drive as core businesses that will drive growth for us in the next decade. Post our agreement with Sumitomo, our strategic focus will be on expanding our cabs business under “Easy Cabs” brand and self-drive business under the “MYLES” brand,” he said. rate clients spread across India. Carzonrent MD Rajiv Vij says that with a market share of about 18 % in the domestic organized car rental sector, Carzonrent will now focus on investing Rs 2,000 crore in the next four years to grow its network from 39 to 100 cities in India, increase the fleet size of 7,500 cars to 30,000 cars in the car-with-driver and self-drive services and foray into markets outside India.

• Indian Alibaba inevitable, says Myntra’s Mukesh Bansal: If Mukesh Bansal, chief executive officer of Myntra, recently acquired by e- commerce major Flipkart, is to be believed, an Indian Alibaba is inevitable. Bansal, who heads the fashion business at Flipkart and is part of the core management team running the Flipkart- Myntra combine, was speaking to Business Standard on the possibility of an Indian Alibaba in the near future. That question has been around since the Chinese e- tailer notched a $ 21.8- billion Initial Public Offer of equity. Its market capitalisation exceeds that of Amazon and eBay together. Mukesh Bansal, the third one by that surname in the C- team of Flipkart- Myntra after Sachin Bansal and Binny Bansal, refused to say which the Indian Alibaba would be. However, he noted the e- commerce leader in India was expected to hold 70- 80 per cent of the market in the next four to five years. In market share, Alibaba is at that point now, with an estimated 80 per cent of the Chinese e- commerce market. On whether Flipkart- Myntra will be that leader in the Indian e- commerce space in four to five years, Mukesh Bansal said, “ We are working towards that.’’ Currently, market estimates suggest the two entities jointly have about half of Indian e- commerce. In the fashion space, the fastest growing segment, the two have been able to capture alittle over 55 per cent of the total pie. In India, there will be one or more $ 100- bn internet companies in the time to come, Bansal said in an interview to this newspaper from his designer Bangalore office on Sunday. That was the same day Jeff Bezos, founder and CEO of American e- commerce company Amazon, was in the city, talking to the media about the potential of the country’s e- commerce sector. And, Flipkart is very much a contender, he indicated. While there’s no timeframe set for achieving the $ 100- bn target, 2020 seems logical, if not sooner, Bansal said.

International:

• EBay to Spin Off PayPal; New CEOs for Each Company: The board of eBay Inc has approved a tax-free spinoff of PayPal, expected to be completed in the second half of 2015. Once completed, eBay and PayPal will be two independently operated public companies, each having its own chief executive officer. Dan Shulman has been named president of PayPal, effective immediately. He will become ceo of PayPal following the completion of the spinoff. Since 2010, he has been president of American Express' Enterprise Growth Group, which has the mandate to expand alternative mobile and online payment services. He was also involved with American Express' joint venture with flash-sale site Vente Privee. Devin Wenig, now president of eBay Marketplaces, will become ceo of the new eBay after the PayPal spinoff is completed. Current eBay president and ceo John Donahoe will serve on the boards of both companies.

• Jared Briskin Promoted to Chief Merchant at Hibbett: Jared Briskin has been promoted to senior vice president and chief merchant of Hibbett Sports Inc., the Birmingham, Ala.-based sporting goods retailer. Briskin was most recently vice president and divisional merchandise manager of footwear and equipment and has been with the company for 16 years. He succeeds Rebecca Jones, who has left the company, and reports to Jeff Rosenthal, president and chief executive officer. Rosenthal said Briskin is “highly respected within the industry and vendor community and has had responsibility for all areas of merchandising during his tenure with Hibbett. For these reasons, we expect a smooth transition...into his new role.”

• Holt Renfrew to Open Men's-Only Store: With its first men’s-only store, Holt Renfrew says it is targeting modern tailoring, the Toronto man and not necessarily reacting to the intensifying competition across Canada. “This is 100 percent about us — our statement looking into the future and about how our customers want to shop,” Mark Derbyshire, president of the Toronto-based Holt Renfrew, told WWD. “We have a unique position in men’s in Canada. Men’s has been a big part of our business. We know it very well.” Holt Renfrew Men, a 16,500-square-foot, two-level store, opens Wednesday at 100 Bloor Street West in Toronto, on the site of a former Roots store on the corner of Bellair Street, and a block from Holt’s flagship at 50 Bloor Street West. The men’s store is an important part of the company’s overall growth strategy to invest $300 million Canadian, or $270 million U.S. at current exchange, expand its footprint by 40 percent and grow to $1 billion in revenues by 2017 from the current $800 million. Holt, well-financed by its parent company, the Weston family’s the Selfridges Group Ltd., is determined to gain market share amid the rush of U.S. retailers. Last week, Nordstrom opened its first full-line store in Canada, in Calgary, and plans five more in the country. Saks Fifth Avenue sees seven full-line stores and makes its Canada debut in fall 2015 in Toronto.

• L'Oreal halts business travel to Hong Kong: L'Oreal has banned its staff from travelling to Hong Kong until 6 October in response to the growing unrest in the city's streets. An email was sent to staff on Monday by the French cosmetics giant, warning against travel to the city. "It concerns all staff that would have to travel to Hong Kong," said a spokeswoman. Pro-democracy protesters have extended a blockade on the streets, bringing parts of the city to a standstill. Some schools and banks are closed and mainland Chinese media have warned of the potential economic impact Hong Kong could face. But, the tens of thousands of protesters want Beijing to give the territory a free vote for its next leader, something Beijing has rejected.

• Minimum unit price '50 times more effective' than alcohol floor price: Introducing minimum pricing for alcohol would be up to 50 times more effective than current government policy, according to health researchers. Hundreds of deaths could be avoided every year with a minimum price for alcohol units, researchers estimated. The Department of Health said it was "taking action to tackle cheap and harmful alcohol". It added that it was working with industry to promote responsible drinking. A minimum price of 45p to 50p per unit of alcohol would save hundreds more lives than current government policy, University of Sheffield researchers said. The current ban on below-cost selling, which came into force in May, stops retailers from selling alcohol below the cost of duty and VAT. The ban will save an estimated 14 lives and 500 admissions to hospital per year, the researchers said. However, a minimum unit price of 45p could save 624 lives and 23,700 hospital admissions each year, they said in a BMJ publication. Most of the harm reduction would happen for the 5.3% of people who are harmful drinkers, the researchers said.

• Men's Wearhouse Names Brand Presidents: On Tuesday, the Fremont, Calif.-based retailer promoted longtime merchant Scott Norris to brand president for its flagship Men’s Wearhouse division as well as Moores in Canada. In addition, Paul Fitzpatrick, a former men’s merchant for Macy’s West, has joined the company to oversee its recently added Jos. A. Bank division as president. Jim Thorne, who had been executive vice president and chief merchandising officer for Jos. A. Bank, was named executive vice president of direct sourcing. All three will report to Mary Beth Blake, who was elevated to president and chief merchandising officer of the corporation earlier this month. Doug Ewert, Men’s Wearhouse’s chief executive officer, said: “We are excited to strengthen and solidify the executive talent in merchandising and sourcing as we integrate, manage and grow the company. Scott has been an integral part of the Men’s Wearhouse merchandising team since 1996 and has spent his entire career developing initiatives to drive sales and margin results. His track record at the company reflects his skills as a successful merchant.”

Tech:

• Microsoft unveils Windows 10 system with Start Menu: Microsoft has disclosed the first details of Windows 10 - its next operating system (OS). The name is a surprise, bearing in mind it represents a jump from the last version - Windows 8. The software will run on a wide range of devices, from phones and tablets to PCs and Xbox games consoles, with applications sold from a single store. It also marks the return of the Start Menu, which had been removed from Windows 8. In addition to offering a list of the user's favourite applications, the menu also brings up resizable tiles - similar to those featured in Windows 8's touch-centric interface on PCs and tablets. These provide a quick view of notifications from relevant applications, such as details of new emails, Facebook messages and weather forecast updates. The company said the facility was intended to make the software seem familiar to both users of Windows 8 and Windows 7. The behavior of the OS will depend on the type of device with which it is being used. Unlike its predecessor, users will not need to switch between Desktop Mode and the touch-focused alternative. However, they can still spread a number of "live tiles" across the screens of two-in-one laptop-tablet hybrids to make them easier to use with both a mouse and finger presses.

• Huawei aims to sell 1 mn smartphones in India this year: Chinese telecom firm Huawei today said it aims to sell 1 million smartphones in India this year as the company charts out a new retail strategy with launch of Honor series, which will be its online only brand. The company launched four devices under Honor series, which will be available exclusively on Flipkart and there will be no offline retail. "We are aiming to sell 1 million smartphones in 2014 and are on track to achieve our target," Huawei Telecommunications India CEO Cai Liqun said here. The company said as part of the strategy, it will sell Ascend series handsets through offline retail and Honor series through online medium with Flipkart.

• Snapchat hit by weightloss spam scam: Accounts on messaging service Snapchat have been hijacked to send spam - but the site has said it was not the victim of a hack. User profiles were used to send out advertisements for a weightloss site. It's not clear how many people have been affected, but Snapchat users in several countries took to Twitter to complain about the problem. Snapchat has suffered breaches in the past, including the leak of 4.6m usernames and phone numbers in January. In that instance, a website called SnapchatDB released the personal data but censored the last two digits of phone numbers. Those behind it said they wanted to raise awareness of a vulnerability that Snapchat had not fixed. In a statement, Snapchat said the latest incident was due to user credentials being found on other sites. "We have seen evidence that hackers who have access to a trove of credentials leaked from other websites, have started using them to gain access to Snapchat accounts," the service told the BBC. "In many instances, our defences have notified the user that their account has been compromised. "We recommend using a unique and complex password to access your Snapchat account."

• Google Increases Maximum Chrome Bug Bounty to $15,000: Google today announced it is expanding its bug bounty program for Google Chrome. In short, the company will pay more and offer more recognition to the security community. The reward pricing range has been increased from $500-$5,000 to $500-$15,000 per bug. Google is even going to back-pay valid submissions from July 1, 2014 at the increased reward levels. There are naturally exceptions. Google has been known to reward above these levels for particularly great reports. Last month, the company awarded $30,000 for a Chrome OS report spanning bugs in V8, IPC, sync, and extensions that could lead to remote code execution outside of the sandbox. Yet today’s changes are tied to the fact that Google wants to pay more when researchers provide exploit code to demonstrate a specific attack. Hackers can now submit the vulnerability first and follow up with an exploit later. The company argues this a win-win situation: “we get to patch bugs earlier and our contributors get to lay claim to the bugs sooner, lowering the chances of submitting a duplicate report.” Oh, and more reward money can’t hurt. Lastly, Chrome reward recipients will now be listed in the Google Hall of Fame. We’re honestly not sure why this wasn’t so before. The company today also revealed security researchers have helped it squash over 700 Chrome security bugs. It has rewarded them with more than $1.25 million through its bug reward program, so far.

• Xiaomi sells 60,000 Redmi 1S unit in 14 seconds: Xiaomi Tuesday sold 60,000 units of the entry-level Redmi 1S smartphone in some 13.9 seconds in the latest flash sale for the product, the company said on its Facebook page. Xiaomi has competed five rounds of flash sales of its RedMi 1S device, which is priced at Rs 5,999 phone in India. The Redmi 1S competes with the likes of Moto E and Asus Zen Phone4 in the country. In addition, Android One smartphones, which are backed by Micromax, Karbonn and Spice, are also competing head-to-head with Xiaomi's entry level device.

• Google's Drive for Education Offers Free, Unlimited Storage: Google Apps for Education just got a little bit sweeter: In the coming weeks, new and existing customers will have access to Drive for Education, an academic version of its online storage solution. Drive for Education follows Drive for Work and boasts unlimited storage, support for individual files up to 5TB in size and automatic encryption. “Every file uploaded to Google Drive is encrypted, not only from your device to Google and in transit between Google data centers, but also at rest on Google servers,” Ben Schrom, PM Google Apps for Education said. The service will be bolstered with Google Apps Vault, a compliance-focused tool for administrators, before the end of the year. Google is also promising a swathe of reporting and auditing tools, as well as an Audit API for tracking files. Google Apps for Education is free for nonprofit educational institutions and comes with Classroom, a toolset that teachers can use to deliver classroom materials, track assignments and give students feedback. With the new Drive for Education, projects that users create and manage through Classroom will be organised automatically into Google Drive folders. Seamless stuff.

• Reddit gets $50 million in funding, will share bounty with community: In classic Reddit style, the popular link-sharing site announced Tuesday not only that it's raised $50 million in Series B funding, but also that it plans to give back 10 percent of the equity to the community itself. Reddit, the so-called front page of the Internet, used its blog to confirm the funding round, which was widely reported earlier this month. As expected, prominent venture capital firms Andreessen Horowitz and Sequoia Capital took part in the round. But it was spearheaded by Sam Altman, president of Y Combinator -- the incubator that originally helped launch Reddit. Other investors include Peter Thiel, Ron Conway, Paul Buchheit, Jared Leto, Jessica Livingston, Kevin and Julia Hartz, Mariam Naficy, Josh Kushner, Calvin Broadus Jr. -- also known as Snoop Dogg -- and Reddit CEO Yishan Wong.

• Microsoft to set up cloud data centres in India: Microsoft will have local data centres for its commercial cloud services in India by the end of 2015, CEO Satya Nadella announced in the capital on Tuesday. Nadella did not disclose the amount invested in the project or the number of hires that will need to be made for the data centres. “As we get started, you will be able to see the scale of the data centres. We’re pretty excited about the scale. 900 million end points will drive this,” said Nadella, referring to the number of mobile phone users in India. “A mobile first world can’t exist without a cloud first world,” he said. Talking about the potential of the cloud services market, Nadella said, “The cloud opportunity in India is a trillion-dollar opportunity. World class cloud infrastructure is going to help Indian government and entrepreneurs to revitalize productivity of the Indian economy. These are early days of traction in the Indian space with cloud and we are excited about its progress.” Cloud computing makes data and software available remotely, and can be used by individuals and corporations alike. The Microsoft website says that it “operates between 10 and 100 data centres located around the world.” “Our customers and partners in the country , including government departments will benefit from data sovereignty, lower latency and geo redundancy with the availability of local infrastructure. Demand for Microsoft’s cloud services in India has grown nearly 100% (in revenue terms) in the past year,” Bhaskar Pramanik, chairman of Microsoft India, told TOI over email.