Daily News Digest- 27th Nov'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Jack Ma Wants to Father Many India Investments: Alibaba's Jack Ma has given the clearest indication yet that the world's largest ecommerce group is ready for a bigger play in India's online retail industry, likely making the country one of the fiercest battlegrounds for global consumer Internet companies. Ma, speaking at an event organised by business grouping Ficci, pledged to invest “more“ in India, and he told ET that he would be back again soon, signalling Alibaba's interest in di versifying its business here. “We will invest more in India and work with Indian entrepreneurs and technologists to improve the relationship of the two nations and to improve the lives of human beings,“ said Ma, Alibaba's founder, who is China's wealthiest man with an estimated net worth of $30 (₹ 1.8 lakh crore).billion. “I was a college teacher. The Internet changed me and it changed China. India is a great nation with so many young people, and the Internet will change India too,“ he said at a `business cooperation' conference involving his home province Zhejiang in eastern China. Flipkart, founded by IIT-Delhi graduates Sachin Bansal and Binny Bansal, is the market leader in India, but it is dwarfed by Alibaba, which only sells to businesses here, as well as USbased Amazon, which is scaling up retail operations rapidly. In its latest round of funding, Flipkart was valued at $7 billion, compared with a market cap of $155 billion for Amazon and $282 billion for Alibaba. “They (Alibaba) will disrupt the market. Look at what Amazon did. That is exactly what Alibaba will do. Lot of noise and immensely deep pockets,“ said Avinash Raghava, co-founder and fellow at technology think tank iSpirt.

• Lava may Raise Nokia's Chennai Unit from Dead: Fast-growing smartphone maker Lava is said to be in talks to buy Nokia's Chennai handset factory, once the world's biggest but now non-operational. If a deal is struck, that could raise the possibility of thousands of former workers getting a chance at re-employment at the plant that had been regarded as a showpiece of India's manufacturing capabilities. The two companies have signed a nondisclosure agreement, people familiar with discussions told ET. “Lava's manufacturing team has already visited the plant and has done the assessment. It will make a proposal to Nokia mid-December after taking all aspects into consideration,“ one of the people said. “The tax issue needs to be sorted out before a final deal is sealed though.“ He was referring to the tax dispute between Nokia and the government, which had prevented the Finnish com pany from transferring the factory to Microsoft as part of a global $7.2-billion deal to sell its devices business to the US company . The tax row is in court and the factory is silent after Microsoft decided to stop using it from November 1 as a contract manufacturer for its devices, putting thousands out of work. Another person said a top executive of Nokia Finland's M&A team was recently in India to discuss the sale with Lava, which has moved up to the No. 3 spot among smartphone vendors in the July-September quarter from No. 4 in the second quarter, according to IDC. The Noida-based company , headed by co-founder and Chairman & Managing Director Hari Om Rai, was set up in 2009 and sells devices under the Lava and Xolo brand names.

• Snapdeal, Ola Backers Say No to SoftBank's Buyout Offer: As SoftBank Corp was finalising deals to infuse capital in online retailer Snapdeal and taxi aggregator Ola last month, the Japanese Internet and telecom giant also made an offer to buyout shares of angels and some early venture-capital investors in both companies, according to multiple sources familiar with the matter.Most of them said no. It may not have been an easy offer to refuse as some of these early investors are sitting on returns of 100 times their investment on paper.They, however, see the value multiplying further. “I haven't sold any shares so far. If someone is offering a valuation which I expect the company to reach in the next one-two years, then I can think about it,“ said People Group founder Anupam Mittal, one of the early backers of Ola. Investments like Ola come once in a lifetime, he added. Mittal's decision underlines what has become a norm, of early capital investors holding on to their winners in risk capital business where returns come from a few portfolio companies. According to data from financial research platform VCCEdge, Indian e-commerce and online businesses have seen 694 investments totaling $5.56 billion since 2011. But there have only been 45 exits worth $295 million in that time.

• Hidesign Plans Footwear Foray in Makeover as Lifestyle Brand: Hidesign, the homegrown leather brand known for high-end handmade handbags, plans to roll out footwear products starting February next year, as it aims to position itself as a lifestyle fashion brand. The company is set to launch its men's collection in February, followed by footwear for women a month later. Since September, it has been retailing leather jackets as well. Initially, it will showcase footwear products in 30 stores in markets like Delhi Mumbai, Bangalore and double the number later, said Dilip Kapur, the company's president. The company, which is growing 25% year-over-year, expects the new busi nesses to double the nesses to double the speed of revenue expansion. Currently, bags and wallets contribute 88% to sales while 12% comes from accessories.

• Makers of McVitie's to Expand Product Portfolio in India: UK biscuits maker United Biscuits may expand its portfolio in India beyond its core McVitie's digestive biscuits after its acquisition by Yildiz Holding, Turkey's largest food and beverage company . “Being owned by Yildiz opens up many opportunities for us in India, in terms of products, investment and game plan,“ Jayant Kapre, president at United Biscuits India, told ET.“McVitie's will remain our flagship brand in India,“ he said. “But India is obviously very attractive, and we will think about expansion seriously.“ Kapre declined to divulge specific details, saying the Turkish firm's buyout of UB was still at an early stage. Earlier this month Yildiz Holding outbid US cereal and snacks maker Kellogg Co and UK firm Burtons Biscuits to buy United Biscuits from its private equity owners Blackstone Group and PAI Partners in a deal that would make it the world's thirdbiggest biscuit that would make it biggest biscuit maker behind Oreo-maker Mondelez and Kellogg. The deal was estimated at £2 billion, or $3.2 billion. Besides McVitie's, UB makes Jaffa Cakes and Jacob's Cream Crackers. In India's ₹ 25,000crore biscuit market, it has so far focused solely on McVitie's digestives. The digestives category, however, is getting increasingly competitive, with the big three players -Britannia, Parle and ITC -all stepping up their presence in the nutrition cookie space. The UB buy gives Yildiz a footprint in key emerging markets including India, but analysts say competing with established players will require big investments on distribution and brand building.

• Indian Cos Finally Take to Cloud from Startups: For a long time, Indian startups that offer their software solutions for enterprises on the cloud have had to look overseas to find customers. Not anymore. The need to stay on top of the game and a greater trust on cloud-based products are making reticent Indian firms turn to startups. Earlier this year, for example, Bengaluru-based EnCloudEn, which provides private cloud infrastructure software developed with open source tools, got biotech major Biocon as its customer. “People are slowly realising that it is in their advantage to be taking solution from startups,“ said Abinash Saikia, 28, who cofounded EnCloudEn in 2012 with his IIT Madras college mate Satya Kishore. The firm targets $1 million in revenue next year. EnCloudEn's deal with Biocon -which Saikia claimed was the largest in the private cloud infrastructure space in the country so far -reflects an increasing trend among Indian companies to go for purpose-built cloudbased enterprise products from startups instead of solutions of large companies. Experts see this trend of big companies going for cloud-based solutions to speed up in the coming days. “I see it happening much rapidly. The scale is bigger, the pace of migration much faster,“ said analyst Jayant Kolla of research firm Convergence Catalyst. 

• Parle Products to cut brands from 50 to 20: In a significant development, Mumbai- based Parle Products, the maker of biscuits, snacks and confectionery, has decided to rationalise its product portfolio by reducing brands from 50 to 20. The exercise, which commenced about four months ago, is expected to be completed by the end of this financial year, according to Pravin Kulkarni, general manager (marketing) at Parle Products. “Our endeavour is to drive our power brands. Rather than pushing each and every variant in our portfolio, what we will now do is bunch them under an umbrella, which will be a power brand. This way, managing our portfolio will become easier and we will not take our eyes off our key products. Our brand spends will also be rationalised as a result of this effort,” says Kulkarni. Parle’s power brands in biscuits include Parle- G, Monaco, Hide & Seek, KrackJack, 20- 20, Milano, Top, Kreams, Happy Happy, Actifit and Marie. In snacks, it has Parle Wafers, Full Toss and Namkeens. In confectionery, the company has products such as Mango Bite, Kaccha Mango Bite, Melody, Poppins, Kisme and Londonderry. Together, these brands contribute the bulk of Parle Products’ estimated turnover of ₹ 6,000 crore. These products typically have anumber of flavours and variants under them, which Parle Products had aggressively launched in the past few years in a bid to take on competition. Kulkarni says it is time the company consolidated all these product offerings and focused its attention on a few of them that commanded a strong equity in the marketplace. “ The Parle name commands trust. So we will not do away with that mnemonic. But the attention will increasingly shift to some of the strong names in our portfolio,” he adds.

International: 

• Cheaper, Large-screen TVs to Lure Black Friday Crowd: You might need two carts to walk away with what may be this year's biggest Black Friday bargain (at least by size): a 65“ Vizio television at Walmart for $648. As exciting as Beats headphones and iPads are, it is giant, cheap TVs that get people to camp outside for days or brave surging crowds for “doorbusters“ on Thanksgiving Day and the busy shopping day after known as Black Friday. Experts say this year's TVs on sale are bigger and cheaper than ever before, and they expect eager shoppers to snap them up in higher numbers than the last few years. Unit sales are already up this year so far, says Stephen Baker, vice president for industry analysis at NPD Group, which tracks TV sales. Baker expects holiday sales to be robust, after several years of unimpressive growth. The drivers of this year's TV frenzy are mostly above 40“, whereas the last few years, the best deals were on 32“ sets. “There are now 40“ to 55“ sets in the $200 price range, which is unbelievable,“ says Paul Gagnon, director of global TV research for DisplaySearch. A 40“ Element flat-screen for a mere $119 graces the front of Target's Black Friday ad booklet. Best Buy is featuring a 50“ Panasonic for $199.99.

• Candy Crush maker King Digital chairman resigns: The chairman of King Digital the maker of the popular mobile game Candy Crush, Melvyn Morris, has resigned and is taking a break from the UK firm. Melvyn Morris said he was going for "personal reasons". Mr Morris, who is King Digital's second-largest shareholder, will be replaced as chairman by board member Gerhard Florin. The firm's latest results showed profits down by 20% in the third quarter compared with last year. "We look forward to his [Mr Morris] rejoining the board in due course and we look forward to working with Gerhard in his new role," said chief executive Riccardo Zacconi in a statement on Wednesday, without specifying when Mr Morris would rejoin the board. Mr Gerhard has more than 20 years of experience in the industry with executive roles at King Digital's competitor, Electronic Arts (EA), and music label BMG, the company said.

• Calvin Klein Uses Snarkitecture to Design Holiday Windows: Calvin Klein Collection has enlisted the help of Snarkitecture to design its Madison Avenue flagship’s holiday windows. The design firm created an abstract, all-white winter scene, featuring custom model trains traveling through the store. The landscape, made from hundreds of freestanding white rods, is visible from a distance and resembles a snow drift inside the store. Upon closer inspection, one discovers several all-black model trains that weave in and out of view. The windows were installed Monday night. “We often work in a reduced and simplified palette, so creating this holiday installation for Calvin Klein Collection within their John Pawson-designed flagship store was in many ways an ideal venue for us,” said Alex Mustonen, co-founder of Snarkitecture. “I think there is something familiar yet unknown about our scheme, with these customized monochromatic model train sets that are continually circulating through the all-white abstract landscape.”

• Amy Kule Reveals Macy's Thanksgiving Day Parade Outfit: Macy’s Thanksgiving Day Parade will have its fashion moment right at the beginning of the procession. “It’s a majestic coat dress that swings really well” said Amy Kule, Macy’s executive producer of the parade, describing what she’ll be marching in. It’s a princess line swing coat in shocking pink, created by Tony-Award winning costume designer, William Ivey Long. The coat has matching inset leather and nickel closures, and is accessorized with a hand-painted scarf depicting scenes from the parade, black leather gloves, boots and a Patricia Underwood bowler.

• Early Deals Taking Wind Out of Black Friday: Once considered the kickoff for holiday gift shopping and a bellwether for the season, retailers now see less volume potential on the day and don’t read as deeply into the results. This year, enthusiasm has waned and retailers have themselves to blame, at least partially, for the new reality. They’ve already blitzed consumers with pre-Thanksgiving deals and doorbusters, thereby extending the holiday season, and they’re keeping their doors open on Thanksgiving Day in record numbers, sucking some wind out of the next day and the weekend. The bigger picture is that business has been erratic for fall so far, with shoppers generally holding back, becoming more selective than ever, and feeling cash-strapped despite lower gas prices as they contend with rising food and health costs.

• French Connection Expects to Meet Expectations: French Connection Group plc said its full-year results would be "in line with market expectations," defying a tough market that has forced rival British clothing retailers to cut guidance. Shares of the company, which is trying to turn around its business after years of underperformance, rose as much as 19.6 percent on the London Stock Exchange on Wednesday. A number of big British apparel retailers, including Next Plc and SuperGroup Plc, have trimmed full-year profit forecast in recent weeks as warm autumn weather kept coats and scarves on the shelf. Erratic weather is also driving European clothing retailers to buy goods more often and closer to home, rather than relying on seasonal collections sourced months in advance. "French Connection bought tightly for the season," analysts at Numis Securities wrote in a note.

Tech:

• Watch, India's Up on Apple's Priority List: India will be a priority market for Apple's first wearable device, the Apple Watch, which is expected to hit the domestic market by early February. The bullishness of the Cupertino based company comes from initial market studies that show the Apple Watch has the potential to become a bestseller in India, after iPhones and iPads. Apple also proposes to engage Indian developers to create apps for the device and is firming up the launch, according to two senior executives aware of the company's plans for India. “Apple is bullish about the success of the Apple Watch in India since it already has a base of more than 4 million iPhone and iPad users who are initially the potential target,“ said one of the executives. An Apple spokesman said the Apple Watch will be launched globally in early 2015 and there is no further update. As per estimates, the price of the Apple Watch will be about ₹ 28,000-35,000, which will be more than the cost of wearable products sold by rivals Samsung and Sony. The device will be compatible with the iPhone 5, 5c, 5s, 6 and 6 Plus, which run the latest operating system. 

• MS Wants Lumia Brand to be Loved as Much as Nokia: Microsoft India chairman Bhaskar Pramanik brushed aside the success of China's Xiaomi and Motorola in India's smartphone market using the exclusive online sale model as unsustainable in the long run, and said it takes a lot more to build a brand and business. “You have to build a brand, something that consumers can identify and like, and want to have that in every single phone they buy,“ Pramanik told ET. “It's not opportunistic, for a particular price at a particular moment. That's really been the value of the Nokia brand and that's what we want to continue with the Lumia brand.“ Chinese smartphone maker Xiaomi, the world's third-largest, and Lenovo-controlled Motorola sell smartphones only through e-commerce site Flipkart.com in India, and this approach has seen them scale the market share charts rapidly. While Xiaomi has sold more than 800,000 units with only two models out in the market, Motorola has sold over two million units from three models and has grabbed a 5% share of the Indian smartphone market in September, according to research firm IDC. Microsoft, which acquired Nokia's phone business earlier this year, doesn't find a place among the top five smartphone vendors on IDC's list. The company is now looking to revitalise the business, take it all the way down to the grassroots level and make it sustainable over long periods of time. The aim is to create a complete ecosystem which requires distribution, applications and offers a “unique value proposition“, Prama nik said.

• Karnataka App to Give Access to 4,000-Plus Services: Narendra Modi may have a vision for Digital India, but Congressruled Karnataka is rolling out the case study for it. On December 8, President Pranab Mukherjee will inaugurate a one-of-its-kind mobile application, MOne, which will act as a single window to 637 services offered by the government, both central and state, but more importantly, link the consumer to 3,644 private services at one touch. The platform has a voice portal that can be accessed through any phone -landline or mobile -and also via computers, laptops, tablets. Consumers can call in and work through the interactive voice response system, send SMSes, or access services via Android and iOS apps. All local languages and English will work. The project was devised by Karnataka's e-governance department in January 2013 under the BJP government and has been taken forward by the current one. “Our intent urrent one. “Our intent is to ensure every citizen in the state has access to all kinds of services, both government and private,“ Siddaramaiah told ET. “Whatever is accessible on the computer to the urbanite will now be available to everyone, including those in remote areas and those who are travelling at their fingertips.“ The government has set up public application programming interfaces for the platform, which allows any soft ware to connect with the M-One system. “We have been working with the Karnataka government on this project for the last six months,“ said Nilesh Sangoi, chief technology officer at Meru Cabs. He feels the app will make a difference to his company by reaching a bigger consumer base.

• Samsung losing share in Indian smartphone market: In line with the decline in Samsung Electronics’ global revenue from mobile phones, the South Korean smartphone maker is also losing market share in India, which accounts for about 70 per cent of its overall mobile handset revenue. For the quarter ended September this year, the company’s share in India’s smartphone market fell to 24 per cent from 29 per cent in the previous quarter, though the company managed to retain its No. 1 position, showed a report by International Data Corporation ( IDC). In terms of market share, home- grown Micromax has narrowed the gap with Samsung fast — in the September quarter, it had a market share of 20 per cent, against 18 per cent in the June quarter, according to the IDC study. Another domestic handset maker, Lava, has also eaten into Samsung’s share. From six per cent in the June quarter, Lava’s market share increased to eight per cent in the September quarter. Karbonn and Motorola, which entered the market early this year, maintained their market shares at eight per cent and five per cent, respectively. Samsung has also lost marginal share to disruptors such as Xiaomi, as well as Sony and HTC, among others.

• Twitter starting to track list of users’ apps on mobile devices: Twitter Inc. said it will start collecting lists of applications installed on users’ mobile devices to help tailor the content it displays for members, including marketing messages. The feature, called “app graph,” will help provide more relevant advertising and improve suggestions on which accounts to follow, the San Francisco-based company said on its website on Thursday. While app graph will help to pull in more messages and other content to timelines, it won’t collect information from within the apps, Twitter said. “To help build a more personal Twitter experience for you, we are collecting and occasionally updating the list of apps installed on your mobile device so we can deliver tailored content that you might be interested in,” the company said. Twitter, under pressure from investors over concerns that user growth is slowing, is adding features to help it attract and keep new users. Twitter’s monthly active user count rose 23% to 284 million in the third quarter, down from 24% growth the prior period. Chief executive officer (CEO) Dick Costolo has replaced several top lieutenants this year, including ousting his CEO and appointing a new chief financial officer (CFO) and head of product.

• Spotify reports $1 billion revenue, net loss of $80 million in 2013: Spotify, the company that has come to symbolize the growth of streaming music around the world, had more than $1 billion in revenue in 2013. But it has yet to turn a profit. In its latest financial statements, Spotify reported that it had €747 million in revenue in 2013, or about $1.03 billion, according to the exchange rate at the end of the year. That was up about 74% from 2012, the company, which is privately held, said in filings made public on Tuesday. Spotify had $80 million in net losses during 2013, down from its $115 million loss in 2012. The company has said that it pays about 70% of its revenue to record companies and music publishers. By the end of 2013 it had 958 employees, but that number is already obsolete. Last week, Martin Lorentzon, one of Spotify’s two founders, said at a trade conference that its head count had grown to 1,500 and would soon be “up to 2,000 people”. The finances show how quickly streaming music has spread. Started in Sweden in 2008, Spotify arrived in the US three years later and is now available in 58 markets around the world. (Some 32 of those opened in 2013, the company reported.) It makes millions of songs available by subscription—usually at around $10 a month—or free with advertising.