Daily News Digest- 29th Oct'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Next Jack Ma may be from India, Says SoftBank Boss: Masayoshi Son is searching for the next Jack Ma, a quest which he thinks might meet with success amidst the ranks of Indian entrepreneurs selling to consumers and businesses through the Internet. Son, 57, the founder of Japanese Internet and telecom group SoftBank, says he is constantly on the lookout for entrepreneurial “heroes“ who create jobs in the manner of Alibaba's Jack Ma, who has created employment for 25 million. Son's investment in Alibaba, the Chinese online marketplace, is the stuff of legend with a $20 million investment made 14 years ago now worth $80 billion after the Chi nese firm listed earlier this year. SoftBank owns 37% of Alibaba, which had a market cap of $250 billion on Tuesday. Such “local heroes“ could emerge in India as well provided Asia's thirdlargest economy manages to create the digital super-highway envisaged by Prime Minister Narendra Modi. “I think India will be one of the top two economies in this century -it has over a billion people, good education and engineering skills. This is India's century. It could be among the top two economies in the world,“ he said in an interview on Tuesday. “With that belief, if you can invest (at a) low price and harvest high price, it's a good investment,“ Son added, sitting alongside Nikesh Arora, the Google executive he poached recently .Arora, who joined as vice-chairman and CEO of SoftBank Internet and Media in July this year, is spearheading the group's US business, as well as its foray into the media and entertainment industries.

• P&G Pips Nestle to Take No. 3 Spot: Procter & Gamble, one of the top two FMCG firms in the world, has topped Nestle and ITC to become India's third-largest consumer products maker after nearly doubling its sales in the country in the last three years. P&G's three entities in the country, selling a wide variety of products ranging from detergents and shampoo to razors to sanitary napkins, posted combined revenues of ₹9,274 crore for the year ended March 2014, slightly ahead of Nestle India's ₹9,197 crore and the FMCG business ` of ITC that had sales of ₹8,099 crore. “In fiscal 2014, we generated robust sales growth across all entities through a strong innovation programmes across product categories and pricing for added consumer benefits,“ a P&G spokesperson said. Market leader Hindustan Unilever (HUL) is, however, three times P&G's size in India and competes with it in most household and personal care categories. Number two, Amul, is twice as big with over ₹18,000 crore in sales but doesn't ` compete with the US consumer giant in any segment. The company spokesperson said India, one of the fastest growing markets globally for P&G, remains a priority for the Ohio-headquartered giant. Earlier this year, Procter & Gamble merged India, the Middle East and Africa into one IMEA region as part of a significant reorganisation to remove management layers and improve the execution of strategy.

• O&M's Creative Director Abhijit Avasthi Resigns: In a surprising development sure to send shockwaves through Indian advertising industry , Abhijit Avasthi, national creative director of O&M India, has put in his papers. Widely reckoned to be India's most creative agency , O&M has over the last decade and a half become a global powerhouse of ideas, driven by Avasthi; national creative director Rajiv Rao and Avasthi's uncle; Piyush Pandey , executive chairman and creative director, India and South Asia. Pandey told ET that Rajiv Rao will take over and that more people in the system are likely to be given bigger responsibilities. Commenting on the departure of Avasthi, Pandey said, “In keeping with the spirit of the young people, he has chosen to do things on his own, and these are going to be projects that are not necessarily the agency kind of projects. So I'm happier that he is not joining a competitor. Rajiv, Abhijit and I have been partners in everything that we do and their contribution to the agency since the 2000s has been immense, not just in creative output but even in building teams.“ Avasthi is closely associated with brands like Cadbury , Fevicol, Tata Sky and Asian Paints.He headed the team that worked on the widely shared and viewed `Google Reunion' film. He was ranked among the Top 5 Most Influential People in Indian Advertising according to the Brand Equity Agency Reckoner 2014.

• Hedge Funds Close In on India Internet Startups: Global hedge funds and top technology funds are making a beeline for India, drawn by the country’s booming consumer Internet sector, boosting valuations and expectations across startups. These funds include New Yorkbased Falcon Edge Capital, Technology Crossover Ventures, DST Global and Tybourne Capital Management. According to sources, hedge funds such as Steadview Capital Management, Hillhouse Capital Group, Think Investments and Tybourne Capital are actively chasing startups. Venture capital investors focused on the Internet space such as Insight Venture Partners and VY Capital are also looking at these companies, which are growing at over 15-20% month on month. Emails sent to TCV, Tybourne, Steadview, Hillhouse, VY Capital, Insight Venture by ET did not elicit a response. Following the success of Chinese ecommerce company Alibaba’s $25billion initial public offering, appetite for India’s Internet story is high as rising smartphone sales are set to increase the number of people with broadband access from 200 million to 500 million by 2018.

• US-based Brillio Buys Indian Data Analytics Startup Marketelligent: US-based technology consultant and software developer Brillio has acquired data analytics startup Marketelligent. Raj Mamodia, chief executive at Brillio, confirmed the deal, but declined to reveal the purchase price. The deal is another indication of the mergers and acquisition scene heating up for technology companies in India with Facebook buying Little Eye Labs and Yahoo snapping up Bookpad this year.“It (Marketelligent) was like a marriage partner that we were looking for,“ said Mamodia.“We looked harder and spoke to at least 20 companies.“ The 100 employees of Bangalore-based Marketelligent will now join Brillio, which is headquartered in New Jersey. Mamodia said Brillio has earmarked $70 million (.`429 crore) to acquire niche companies in the emerging technologies space and also take equity stakes. “There are capabilities that will take time to build and we didn't want to waste three years to build that--time to market is very important,“ said Mamodia, a former head of global markets at Cognizant and ex-CEO of IT services firm Collabera. Founded by IIM-Ahmedabad alumnus Roy Cherian and IITDelhi graduate Anunay Gupta, Marketelligent has built a solution that mines hidden insights, patterns and correlations from Big Data, or vast of amounts of information. It then helps customers such as computer maker Dell, beverage company Coca Cola and credit card issuer American Express make better decisions using data visualization and predictive analytics.

• SoftBank's Plan to Invest in Paytm Hits Roadblock: Talks on Japanese telecom major SoftBank's proposal to invest in New Delhi-based mobile commerce company Paytm have hit a setback over valuation. SoftBank's offer was lower than the $1 billion valuation Paytm expected, sources told ET. Vijay Shekhar Sharma, the founder of One97, which owns Paytm said the deal is not off the table. SoftBank didn't immediately respond to queries from ET seeking comment. “The discussion is on. It hasn't been officially decided either way,“ Sharma said, declining to comment on specifics. Paytm is also in talks with Google Capital, ET had reported earlier. “We're seeing a lot of interest from other investors, in cluding pure financial investors as well,“ Sharma added. The company has set an in ternal deadline of No vember 3 for receiving proposals and may take a call on final in vestments early next month. SoftBank had offered to invest up to $300 mil lion in Paytm for a sig nificant minority share in the company. ET couldn't ascertain the valuation at which the offer was made. Besides the promoter's holding in Paytm, SAIF Partners owns 40%. Silicon Valley Bank, SAP Ventures, Intel Capital and Reliance Capital also own equity in the company. Paytm mandated Citigroup and Goldman Sachs to raise private equity capital of $150-200 million. The mobile commerce company plans to use the funds to improve technology, logistics and its headcount.

• ‘Indian customers most tolerant’: Will online shoppers warm up to Flipkart again after it botched up their chances of landing a good deal on the Big Billion Day sale? It seems like they would, reveals a global survey. Indians are the most tolerant customers in the world with 66% of them willing to give companies a second or more chances when faced with poor customer service, says the survey, which measures customer service of companies across the world. This is in stark contrast to customers in Japan (52%), Italy (45%) and Mexico (44%), who say that companies do not get a second chance to make a good impression when it comes to customer service. However, the findings also suggest that Indian consumers are also very touchy with 71% having dropped an intended purchase due to poor customer service. “The highly networked Indian customer presents a phenomenal opportunity as he wields a wide sphere of ‘word of mouth’ influence and is also willing to pay a premium to companies providing great service. So, focusing on delivering outstanding service will ultimately help companies to grow. Businesses can build advocates by delivering good customer service,” said Sanjay Rishi, president, American Express South Asia. Interestingly, the survey shows that good customer services help companies rake in more revenues. Nearly 78% of consumers have spent more with a company because of history of positive customer service experiences. The survey also indicates that this trend is picking up as 86% of Indian customers have expressed willingness to spend 23% more with a company they believe provides excellent customer service as against the global average of 66%, who are willing to spend 12% more. In addition to spending more, 66% of the survey’s respondents say they always tell others about good service interaction. According to the findings, recommendations from friends or family members are amongst the most likely ways to get 22% Indian customers to try a new company.

• Dairy Queen eyes partners to bring burger chain in India: Global ice cream and fast food restaurant chain Dairy Queen wants a quick bite of India's fast growing QSR (quick service restaurant) market. After initial talks with Reliance Retail to introduce its dairy business fell through, it is learnt that the company is looking for new partners to launch its burger chain in the country. Dairy Queen, which is owned by American conglomerate Berkshire Hathaway, operates around 6,000 stores in 19 countries. Headquartered in Minneapolis in the US, it is best known for its signature soft serve ice cream. "The company would initially want to look at opening around 100 burger stores here," said a person familiar with the matter. However, several phone calls to the company's headquarters were not returned. Dairy Queen is not the only one. Over the last few months, some of the world's top burger chains including Carl's Jr, Wendy's, Burger King, Fat Burger and Johnny Rockets have announced their entry into the country. Samir Chopra, group chairman of Cybiz Corp, which is bringing American burger restaurant chain Carl's Jr to India, says that burgers are fast replacing pizzas as the fast food of choice. "Also, if you look at India's QSR market, it has, surprisingly, been growing despite the inflation," says Chopra.

• Fate of Nokia’s remaining 851 workers to be decided on 30 October: The Tamil Nadu labour department, Nokia India management and workers are expected to have a meeting to discuss the severance package for Nokia’s remaining workers on Thursday. “I cannot give the details of the discussion of the meeting but we are looking at the welfare of the workers,” said M. Saravanakumar, union leader of the Nokia India Thozhilalar Sangam. The severance package concerns 851 workers. Most Nokia India workers—5,600 employees—had opted for voluntary retirement scheme in May when Microsoft announced that it will turn the facility in Sriperumbudur into a contract manufacturing unit. The state’s labour department had mediated the talks between Nokia India management and workers so that a mutually agreeable solution was concluded. In September 2013, Microsoft acquired the Finnish handset maker but the Sriperumbudur facility did not form part of the deal because of a Rs.21,153 crore tax dispute between Indian tax authorities and Nokia. Due to the liens on the Nokia handset manufacturing facility in Chennai, the site was left out of the devices and services deal with Microsoft, which closed on 25 April. As a consequence, Nokia entered into a transitional services agreement (TSA) with Microsoft to address their immediate production needs and keep the factory operational. It has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from 1 November. In the absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from 1 November.

• Tata, Airbus team up to make transport planes for IAF: Tata Advanced Systems Ltd, part of Tata group and Airbus Defence and Space, part of Europe’s EADS Group, have submitted a joint bid to deliver 56 transport planes for the Indian Air Force (IAF), the European planemaker said in a statement on Tuesday. If the combine wins the contract, it will supply Airbus C295 planes to replace IAF’s Avro transport planes. While 16 planes will be delivered from the Airbus factory in flyaway condition, the remaining 40 will be manufactured in India by Tata Advanced Systems. This will include undertaking structural assembly, final aircraft assembly, systems integration and testing, and management of the indigenous supply chain, the Airbus statement said. “The teaming follows a detailed industrial assessment and stringent evaluation of the Indian private aerospace sector by Airbus Defence and Space, which concluded with the selection of Tata Advanced Systems as the Indian Production Agency (IPA) exclusive partner for this prestigious programme,” the statement said. “The C295 is a superbly reliable and tough aircraft with outstanding economics which is proven in the most difficult operating conditions all over the world,” said S. Ramadorai, chairman of Tata Advanced Systems. “It has already been ordered by 19 countries, many of which have placed repeat orders. And just this year, it has dominated the market with orders for no fewer than 20 aircraft from five countries,” he added. “We are extremely pleased to announce our partnership with Airbus Defence and Space for the Avro replacement programme for the Indian Air Force. It is a landmark for the development of aircraft manufacturing capability in India, now that Tata Advanced Systems is poised to take this step toward building entire aircraft in India. The selection of Tata Advanced Systems by Airbus demonstrates the confidence that has been built in our ability to undertake this complex programme,” Ramadorai said.

International:

• E-commerce can’t be back-door entry to multi-brand retail: India: India on Tuesday said that it is conscious not to allow e-commerce to become an avenue for foreign direct investment (FDI) in the much sought-after multi-brand retail sector. “There has been a lot of talk on e-commerce. We are conscious that e-commerce should not become a back door entry for multi-brand retail,” minister of state for commerce and industry Nirmala Sitharaman said in London. She, however, clarified that she is not “pronouncing any policy on e-commerce.” Referring to India’s largest e-retailer and its so-called Big Billion Day sale earlier this month which had led to complaints, she said: “Post the Flipkart issue, a lot of inputs have come from concerned citizens, retailers and consumers and these complaints are being looked into.” “That does mean any investigation is going on into any particular e-commerce company,” Sitharaman added. “There is nothing promised on e-commerce at the moment.” The Bharatiya Janata Party (BJP) leader, who is also the minister of state for finance and corporate affairs, is here on a two-day visit to hold discussions with investors and members of the Confederation of British Industry (CBI) on the government’s newly-launched ‘Make in India’ campaign.

• Singapore tops World Bank business ranking for ninth year: Singapore has been ranked the best country to do business for a ninth consecutive year, according to an annual survey by the World Bank. New Zealand came second and Hong Kong third in the lender's "Doing Business" report which rates 189 nations by the ease in which firms can operate there. The UK moved up one position to eighth while the US stayed at number seven. Eritrea was at the bottom of the table, along with Libya, the Central African Republic and South Sudan. The World Bank ranking uses metrics such as the time taken to launch and close a business, gain construction permits and pay taxes in a country's largest business city. "The list remains very similar to last year's" the report said. "Economies in the top 20 continued to improve their business regulatory environment." 

• Michelle Gloeckler Discusses Wal-Mart's U.S. Manufacturing: When Wal-Mart talks, people listen, especially when it puts $250 billion behind what it says. Michelle Gloeckler, executive vice president, consumables and U.S. manufacturing lead, Wal-Mart U.S., told the summit that since the day in January 2013 that the retail giant made the “significant announcement” that it was going to spend $250 billion on additional made in the U.S. goods, “it was the kickoff of a journey.” “It was a journey that didn’t take us further from home, as most journeys do, but closer to the heart of America, to places like Winnsboro, S.C., Winchester, Ky., and Circleville, Ohio,” Gloeckler said. “We’ve seen jobs created, factories built, and we’ve seen communities revitalized and we’ve seen lives changed.”

• Alibaba's John Spelich Talks 'Ecosystem Platform Approach': Until its initial public offering last month, e-commerce giant Alibaba was largely unknown outside the confines of its native China. Now it looms large on the global scene. The 15-year-old company, founded by Jack Ma, commands about 85 percent of China’s e-commerce business, said John Spelich, Alibaba Group vice president, international e-commerce business development. Alibaba doesn’t hold any inventory and works with third-party providers in its “ecosystem platform approach.” “[Chinese consumers] lead the world in mobile shopping,” Spelich said, adding that Chinese e-commerce will comprise 12.4 percent of retail sales by 2017 (with business-to-consumer models such as Tmall expected to command the largest share of e-commerce by this time).

• Macy's to Open in Abu Dhabi: Macy’s, a holdout on the international scene, has finally decided to open an overseas store, which will be in Abu Dhabi, WWD has learned. Macy’s will open a 205,000-square-foot, four-level store at Al Maryah Central, described as a “super-regional shopping destination” under development on Al Maryah Island in Abu Dhabi. A 230,000-square-foot Bloomingdale’s will also open in Al Maryah Central, marking that retailer’s second overseas store. The first opened in Dubai in 2010. Bloomingdale’s and Macy’s, both divisions of the $28 billion Macy’s Inc., plan to open their Abu Dhabi locations in 2018. They will be operated under license by Al Tayer Group, which already operates the licensed Bloomingdale’s store in Dubai. Macy’s international plans confirm a WWD report earlier this year that Macy’s and Bloomingdale’s were headed to Abu Dhabi.

• L'Eclaireur Set to Open First U.S. Store in L.A.: Armand Hadida is taking a leap across the pond. The founder of L’Eclaireur, a French chain of specialty stores Hadida created with his wife Martine more than 30 years ago, is setting up his first U.S. outpost in March. The three-story building at 450 Robertson Boulevard in Los Angeles’ design district will be the retailer’s only brick-and-mortar unit outside of France, following the closing of a Japan unit in 2010 triggered by irreconcilable differences with its local partner. “I’ve been holding out on this since 1981, when it was first proposed to me, but back then I had to say I didn’t know the U.S. market or its retail culture,” Hadida said, noting that today, 30 percent of his clientele is American. Never mind the Californians’ widespread predilection for jeans and T-shirts, said Hadida, whose long-term vision led him to become the first multibrand retailer to introduce Oscar de la Renta to the French market at a time when local monobrand stores set the tone.

Tech:

• Google Fit Launches for Android: Google Fit was unveiled to the world back in June, promising a platform to help people track their fitness goals. It’s essentially a set of APIs that lets developers dig in to rival apps and combine data for deeper insights, similar to Apple Health. Today, Google has launched a dedicated Google Fit app for Android, serving to capture all your movements throughout the day, including walking, running and cycling. It’s a little bit like Moves, which was acquired by Facebook earlier this year, and a myriad of other fitness-tracking services. All you do is install the app on your phone, hook it up with your Google account, and Google Fit tracks everything, while serving up stats of your week-to-week and day-to-day activities.

• Voda, Airtel Users may Face Service Disruptions: Millions of mobile users mainly in Delhi and Kolkata are set to face temporary coverage disruptions in the coming months, after the telecom department rejected the request of Bharti Airtel and Vodafone India for more time beyond their November metro licence expiry deadlines to re-configure their networks to the new airwaves that were allotted recently. While seeking six months of additional time, the telcos had warned that the eight-month delay in the allocation of bandwidth, which they had won in the February auctions, had left them little time to reconfigure their networks in the cities before the expiry next month, which will mean disruption of services. For Airtel alone, this means temporary disruptions of close to 15 million subscribers in Delhi and Kolkata, circles where Vodafone India has a combined 14 million users, as per the August-end data. The telecom department rejected the request, reasoning that any extension of airwaves will automatically increase the time frame of the allotment, which is typically for 20 years, a top official told ET. “These operators are seeking an extension of six months. However, if we do so, they will then effectively get an extension of a total of one year for the spectrum that they won in February,“ the official said. “There could be some disruptions but the telcos would need to manage it.“ In Delhi, part of Airtel and Vodafone's airwaves in the efficient 900 MHz band were won by Idea Cellular, while the two telecom operators won Loop Mobile's airwaves in the Mumbai circle. In Kolkata, while Airtel got more airwaves than what it had before the sale, Vodafone won fewer units of the bandwidth. More importantly , the frequencies of the new airwaves that have been allotted to these operators are different from what they had earlier and technical changes, therefore, have to be made to their respective networks.

• Facebook warns higher costs will hurt revenues: Facebook has warned that its spending will increase sharply next year and its revenue growth will slow in the fourth quarter. Shares in the social network fell almost 10% in after hours trading after it said expenses would be up to 75% higher next year. The warning came after it reported third quarter revenues of $3.2bn (£1.98bn) well ahead of analysts' forecasts. It made $806m profit, up 90% on 2013. The increased profits were driven by another formidable three months for Facebook's advertising business. Ad revenues for July to September were sharply higher than a year ago. Perhaps most telling as an indicator of its future profitability was Facebook's performance in mobile advertising. Mobile ads now make up 66% of its total advertising revenue.

• Google is developing cancer and heart attack detector: Google is aiming to diagnose cancers, impending heart attacks or strokes and other diseases, at a much earlier stage than is currently possible. The company is working on technology that combines disease-detecting nanoparticles, which would enter a patient's bloodstream via a swallowed pill, with a wrist-worn sensor. The idea is to identify slight changes in the person's biochemistry that could act as an early warning system. The work is still at an early stage. Early diagnosis is the key to treating disease. Many cancers, such as pancreatic, are detected only after they have become untreatable and fatal. There are marked differences between cancerous and healthy tissues. Google's ambition is to constantly monitor the blood for the unique traces of cancer, allowing diagnosis long before any physical symptoms appear. The project is being conducted by the search company's research unit, Google X, which is dedicated to investigating potentially revolutionary innovations.

• iOS 8 is now on 52% of iPhones hitting the App Store: On Apple’s developer support page for the app store, the company has posted that 52 percent of iPhones visiting the App Store have iOS 8 installed. At the iPad event, CEO Tim Cook told the audience that 48 percent of iOS devices had installed iOS 8. iOS 8 adoption numbers had seemed to have stalled after the initial launch. Jon Gruber and others believe that has to do with the size of the OS (which was a whopping 5GB) being the largest roadblock to upgrading. If you have a 16GB device filled with photos, apps and music, there’s a a lot of storage housekeeping that needs to be done before updating.

• The World Wide Web Consortium Finally Recommends HTML5: The HTML5 standard is now officially being recommended by the World Wide Web Consortium (W3C). The HTML5 standard has been around for years and powers many of your favorite sites. Today’s news from W3C (the international standards organization for the World Wide Web) says that after all those years of use, HTML5 is ready for prime time. HTML5 allows for native media playing in browsers. Previously, technologies like QuickTime and Flash were needed to play videos in a site’s page. The organization says that it worked with more than 60 companies getting the standard finalized and that over 4,000 bugs were squashed during the process. W3C produced the following video to explain why you should care about standards like HTML5.