Amazon, Flipkart eye tie-up with IRCTC

MUMBAI/NEW DELHI: Before Flipkart, there was IRCTC, which for most Indians was their introduction to e-commerce more than a decade ago. And even now, revenue from online ticketing on Indian Railway Catering and Tourism Corp rules the roost, having exceeded the combined sales of Flipkart and Amazon India in the year ended March.

While both Flipkart and Amazon each said earlier this year that they had hit a billion dollars in annual gross merchandise value or total value of goods sold, IRCTC generated Rs 15,410 crore or nearly $2.5 billion through online ticket sales in the last financial year, up 24% from a year ago when it sold tickets worth Rs 12,419 crore. The figures are sourced from RoC filings.

Amazon, Flipkart eye tie-up with IRCTC

Amazon and Flipkart are in talks with IRCTC as they look to tap the railway portal’s existing database of more than 21 million consumers

Since IRCTC doesn’t compete with any of the online marketplaces in India, both Amazon and Flipkart are in talks with the government-owned portal as they look to tap the railway portal’s existing database of more than 21 million consumers.

“Tie-ups with portals like Flipkart, Amazon etc are in the process under which these portals would like to sell their merchandise through IRCTC’s portal, it being one of the largest e-commerce sites in the entire Asia-Pacific region,” said Sandip Dutta, public public relations manager at IRCTC, which set a record in March when it booked 5.80 lakh e-tickets on a single day. That compares with 27 tickets a day when it began in 2002.

The government-owned portal posted a 33% increase in income at Rs 954.7 crore, which mainly includes service charges on tickets, sales of Railneer water, onboard catering services and licence fees from outsourced catering vendors. This is similar to online marketplaces where sales don’t include actual goods sold but instead count commission from sellers and revenue from advertisements on their e-commerce sites. Amazon Seller Services posted revenue (commissions) of Rs 169 crore while Flipkart Internet, which manages the portal, had total income of Rs 179 crore.

But unlike these privately owned marketplaces, IRCTC posted profit after tax of Rs 72 crore, up from Rs 59 crore in the previous year. Amazon, which entered India a year ago, posted a net loss of Rs 321 crore while its biggest rival Flipkart more than doubled losses to Rs 400 crore.

Despite having a monopolistic position, higher web traffic and sales, IRCTC can’t command a valuation similar to Flipkart or Snapdeal, feel experts.

“Being a government company, its slow decision making, red tapism, less innovation leads to non interest by investors, which in turn leads to a lower valuation. Margins of travel are much lower than margins commanded by selling goods online too,” said Rakesh Nangia, founder and managing partner of Nangia & Co, a tax and transaction advisory firm.

Also, e-commerce companies sell a wide variety of goods unlike IRCTC, which is mainly a ticketing website with no product mix, making it a less scalable business. According to a report by consulting firm Technopak, the $2.3 billion e-tailing market is expected to swell to $32 billion by 2020 and account for 3% of the total Indian retail sector by then.

IRCTC, on its part, tried widening its business by partnering Yebhi.com in a revenue-sharing model last year. Electronics, clothes and home furnishings were sold on the IRCTC site, which also promoted online shopping with a link to Yebhi’s portal. However, the year-long contracted wasn’t extended.

 

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Ballmer: ‘Maybe I’m an emblem of an old era’

Microsoft’s CEO suggests in interview that perhaps time has passed him by and the company needs a fresh face to accelerate change.

 

pic::Microsoft CEO Steve Ballmer: “I have to move on.”

 

As he prepares to head for the exits one last time as CEO, Steve Ballmer is letting down the protective wall that he’s guarded in public for so long. In a remarkably personal interview with The Wall Street Journal, Ballmer allowed that perhaps time has passed him by.

 

“Maybe I’m an emblem of an old era, and I have to move on,” an emotional Ballmer acknowledged in what was described as a series of interviews published Friday. “As much as I love everything about what I’m doing,” he said, “the best way for Microsoft to enter a new era is a new leader who will accelerate change.”

In August, Ballmer surprised the technology world and his company by announcing plans to step down sometime within the next 12 months. The article presents of a picture of an impatient board of directors pushing Ballmer to execute a reorganization plan designed to break down competitive corporate silos. At a certain point, Ballmer told the WSJ, he began to question whether he could meet the board’s timetable.

“No matter how fast I want to change, there will be some hesitation from all constituents — employees, directors, investors, partners, vendors, customers, you name it — to believe I’m serious about it, maybe even myself,” he said.

During a trip to London in May, Ballmer said he began to envision a Microsoft without him at the helm, a change he thought might accelerate sought-after change at the company.

“At the end of the day, we need to break a pattern,” he said. “Face it: I’m a pattern.”

Thus began a series of conversations with underlings and selected directors, informing them of his thinking. By the time the board met in June in Bellevue, Wash., Ballmer told the WSJ that he broke the news officially. “While I would like to stay here a few more years, it doesn’t make sense for me to start the transformation and for someone else to come in during the middle,” he said.

 

Microsoft’s board voted officially on August 21 to accept Ballmer’s retirement.

 

Tumblr founder to get $110 million to stay at Yahoo for the next four years

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pic:;Yahoo’s recently completed acquisition of Internet blogging service Tumblr includes a $110 million payment to Tumblr founder David Karp as long as he remains on the job for the next four years.

 

The retention payment disclosed in a regulatory filing Thursday is part of the windfall that Karp and Tumblr investors realized by agreeing to sell the service for $1.1 billion in May.

Karp turned 27 last month. He started Tumblr in 2007, a few years after he dropped out of high school in New York to concentrate on computer programming.

Yahoo Inc. CEO Marissa Mayer has pledged not to make any dramatic changes at Tumblr in hopes that the acquisition won’t alienate the blogging service’s existing users, which includes a substantial number of teenagers and young adults.

As part of her promise “to not screw it up,” Mayer is allowing Karp to run Tumblr independently in New York. Yahoo is based in Sunnyvale, Calif.

Karp is believed to own a 20 to 25 percent stake in Tumblr, which means he probably has already received a windfall, which hasn’t been disclosed, from the sale to Yahoo. But he must stay at Tumblr until June 2017 under the provision disclosed Thursday to get the $110 million retention payment.

The payment will consist of $70 million in stock and options and $40 million in cash, according to Yahoo’s filing.

The documents also disclosed that Yahoo paid a total of $44 million to buy six other companies during the three months ending in June. All told, Yahoo paid about $1.15 billion to buy 10 companies, including Tumblr, during the first half of the year.

Yahoo has bought several other startups since the end of June. The prices for those deals are likely to be disclosed in another regulatory filing in October and November.

Dolphins can remember their partners and friends like humans

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pic:;Besides humans, Dolphins and Elephants can be considered cognitively sophisticated spieces.Reuters

 

Dolphins have the longest social memory ever recorded in a non-human species, scientists say. University of Chicago researchers found that dolphins can recognise their old tank mates’ whistles even after being separated for more than 20 years. The remarkable memory feat is another indication that dolphins have a level of cognitive sophistication comparable to only a few other species, including humans, chimpanzees and elephants. “This shows us an animal operating cognitively at a level that’s very consistent with human social memory,” said Jason Bruck, who conducted the study.

To establish how well dolphins could remember their former companions, Bruck collected data from 53 different bottlenose dolphins at six facilities, including Brookfield Zoo near Chicago and Dolphin Quest in Bermuda. Bruck played recordings of signature whistles to dolphins that had once lived with the animals that made the calls. First, Bruck would play recording after recording of signature whistles that the target dolphins had never heard before. His initial studies showed that these “dolphins get bored quickly listening to signature whistles from dolphins they don’t know.”

Once they were habituated to the unfamiliar calls, Bruck would play a recording of an animal with which the target dolphin had lived. The familiar calls often would perk up the dolphins and elicit an immediate response. “When they hear a dolphin they know, they often quickly approach the speaker playing the recording. At times they will hover around, whistle at it, try to get it to whistle back,” Bruck said. To check that the response was the result of recognition, Bruck also would play a test recording of an unfamiliar bottlenose that was the same age and sex as the familiar animal.

A clear pattern emerged in the data: Compared with unfamiliar calls, dolphins responded significantly more to whistles from animals they once knew, even if they had not heard the calls in decades. Researchers could not determine why dolphins’ social memories persist so long. Dolphins exhibit sophisticated social connections that follow a ‘fission-fusion’ model. In the open ocean, dolphins may break apart from one group and ‘fuse’ with other groups many times over. Such relationships could have required a growth in memory capacity. But it’s also possible that memory is just one facet of the advanced mind that evolved in dolphins for other reasons. The study was published in the journal Proceedings of the Royal Society of London B.

How Samsung is beating Apple in China

Apple chief executive Tim Cook believes that “over the arc of time” China is a huge opportunity for his pathbreaking company. But time looks to be on the side of rival Samsung Electronics Co Ltd, which has been around far longer and penetrated much deeper into the world’s most populous country.

Samsung Galaxy S4 (L) and Apple’s iPhone 5 are seen in this illustration taken in Seoul. Reuters/Kim Hong-Ji

 

 

 

Apple Inc this week said its revenue in Greater China, which also includes Hong Kong and Taiwan, slumped 43% to $4.65 billion from the previous quarter.

That was also 14% lower from the year-ago quarter. Sales were weighed down by a sharp drop in revenues from Hong Kong. “It’s not totally clear why that occurred,” Cook said on a conference call with analysts.

Neither is it totally clear what Apple’s strategy is to deal with Samsung – not to mention a host of smaller, nimbler Chinese challengers.

Today, in the war for what both sides acknowledge is the 21st century’s most important market, Samsung is whipping its American rival. The South Korean giant now has a 19% share of the $80 billion smartphone market in China, a market expected to surge to $117 billion by 2017, according to International Data Corp (IDC).

That’s 10% points ahead of Apple, which has fallen to 5th in terms of China market share.

Cook said Apple planned to double the number of its retail stores over the next two years – it currently has 8 flagship stores in China and 3 in Hong Kong. But, he added, Apple will invest in distribution “very cautiously because we want to do it with great quality.”

Samsung, with a longer history in China, now has three times the number of retail stores as Apple, and has been more aggressive in courting consumers and creating partnerships with phone operators.

It also appears to be in better position, over an arc of time, to fend off the growing assault of homegrown competitors such as Lenovo Group Ltd, Huawei Technologies Co Ltd and ZTE Corp, former company executives, analysts and industry sources say. Apple declined requests for comment for this article.

 

Varied models
Samsung’s history and corporate culture could hardly be more different than Apple’s, the iconic Silicon Valley start-up founded by Steve Jobs and Steve Wozniak in 1976.

Lee Byung-Chull started Samsung in 1938 as a noodle and sugar maker. It grew over the decades into an industrial powerhouse, or chaebol as Koreans call the family owned conglomerates that dominate the nation’s economy and are run with military-like discipline.

Apple, by contrast, became the epitome of Californian cool, an image the company revels in. That hip image translates in China – its stores are routinely packed – but hasn’t been enough to overcome the more entrenched Samsung.

A stuffy electronics bazaar in the southern Chinese city of Shenzhen illustrates part of the reason why.

Samsung Galaxys and Apple iPhones of different generations sit side by side, glinting under bright display lights as vendors call out to get customers’ attention. With its varied models, Samsung smartphones outnumber iPhones at least four to one.

While Apple releases only one smartphone a year, priced at the premium end of the market, Samsung brings out multiple models annually with different specifications and at different price points in China.

And those models, analysts say, are loaded with features tailored specifically for the local market: apps such POCO.cn, the most popular photo sharing site in China, or the two slots for SIM cards (Apple offers one), which allows service from multiple cell carriers, either at home or abroad.

“The Chinese just love features. They want their phone to have 50 different things that they’re never going to use,” said Michael Clendenin, managing director of technology consultancy RedTech Advisors.

“Apple just doesn’t play that game. Unfortunately, if you want to hit the mainstream market in China, and you want a lot of market share percentage points, you have to offer the Swiss army knife of cellphones.”

Setting the pace
Analysts believe Samsung’s increasing strength in China is a critical reason behind its rival’s possible intention to introduce globally a new and cheaper iPhone model, as well as one with bigger screens – a staple of Samsung’s offerings.

Said a Samsung executive with experience in China: “We definitely think we’re setting the pace there. They are having to respond to us.”

Most audaciously, Samsung has gone after Apple not simply by offering lower priced smartphones, but by attacking its rival directly in the pricier end of the market. “We put a lot of emphasis on the high end market in China,” co-CEO JK Shin told Reuters in an interview.

Samsung launched a China-only luxury smartphone together with China Telecom marketed by actor Jackie Chan that retails for about 12,000 yuan ($2,000).

The flip phone, named “heart to the world,” is encased in a slim black and rose gold metal body. The sleek look – called “da qi” (elegantly grand) -is coveted by Chinese when they shop for cars, sofas or phones.

“There are a lot of ‘VVIP’s’ in China, and for them we launched luxury phones promoted by Jackie Chan. This helps target niche customers and build brand equity,” said Lee Young-hee, executive vice president of Samsung’s mobile business.

While Samsung won’t sell millions of these smartphones, the creation of the phone in conjunction with a carrier reinforces Samsung’s willingness to go local – and tap into niche markets.

“The key point is that Samsung consistently adapts to the local market,” said TZ Wong, a Singapore-based technology analyst with IDC.

Apple’s latest mobile operating system offers links to popular Chinese applications like Sina’s microblogging platform Weibo, but the application itself must be downloaded onto the phone. On all of Samsung’s entries, it’s already there.

“People know intellectually that Samsung is from Korea, but when it comes to the messaging there is always a local face,” Wong said.

Retail presence
Samsung opened its first office in China in 1985 in Beijing – an era in which it was all but inconceivable that Apple and Samsung would end up in one of the world’s most intense corporate grudge matches.

Like other South Korean chaebols, Samsung was a first mover in China, using the market primarily as a base to produce electronics for the world.

In contrast, Apple’s big push in China came only recently, with the advent of the smartphone age roughly five years ago. The early entry gave Samsung an undeniable edge, and it adapted fast to a rapidly changing environment.

By the mid-1990s, with the economy booming, Samsung made the strategic decision to treat the Chinese market not just as a production base, but to start marketing to China higher-priced electronics, said Nomura researcher Choi Chang-hee, who wrote a history of Samsung’s experience in China.

That shift has meant Samsung’s retail presence in China far outstrips Apple’s. Aside from selling via the distribution outlets of the three major telecom carriers, Samsung also has a strong retail presence through its partners Gome Electrical Appliances and Suning Commerce Group, as well as its own “Experience” stores and small retailers all over the country.

Apple works through the same channels, but its relatively late entry means it has a significantly smaller presence. Samsung, for example, has more than 200 official distributors and resellers in Guangzhou province, while Apple lists 95.

Over the last two decades, Samsung has also taken pains to build relationships with Chinese government officials and -perhaps more critically – the three major telecom carriers.

The notion of the importance of connections – or “guanxi” -in China is occasionally overrated in business. Not, according to Samsung’s Shin, in this case.

“It’s our core policy to keep friendly relationships with the operators,” he said. In China, each carrier uses a different technology and that requires Samsung “to tweak our smartphones to their request.” “It’s not easy,” Shin said, “but we do this to be more operator friendly.”

Contrast that with the ongoing negotiations Apple has had with China Mobile, the largest cellphone operator. For years the two sides have been unable to come to an agreement on revenue sharing, effectively precluding Apple from hundreds of millions of potential customers.

Scrutiny from the top
Samsung’s reach extends higher than just the CEOs of the top state-owned telecom companies. Top executives have met each of the last several Chinese leaders, most recently Xi Jinping, who spent time in April with vice chairman Jay Y Lee, son of KH Lee, Samsung Electronics chairman.

“What surprised me most,” said Lee later, “was that they (Chinese leadership) know very well about Samsung. They even have a group studying us.”

The Chinese government has also made clear it’s well aware of Apple – though not always in a good way. In April, state media bashed Apple for its “arrogance,” protesting among other things that its current 1-year service warranty was insufficient. Apple initially dismissed those criticisms, but Cook later apologized to Chinese consumers.

Samsung’s success in China has it roots, one former executive said, in a previous obsession for the company: its desire not to replicate the mistakes made by Japanese rivals.

“Samsung spent a lot of time benchmarking Sony, Toshiba and Panasonic,” said Mark Newman, who spent six years in Samsung’s global strategy group and is now an industry analyst at Sanford C. Bernstein in Hong Kong.

“One of the things that came out of that is the realization that the insular approach has its drawbacks, and so Samsung has made an effort over the last 10 years to be much more global.”

This strategy of decentralization is plainly evident in China, he said, home now to more Samsung employees than any country outside South Korea.

Fighting high and low
Samsung now leads in both low-end and high-end segments in China, according to IDC, and its logic of going after both ends of the market is straightforward. In China, where the average wage is roughly $640 per month, many users looking to upgrade from feature phones to smartphones cannot afford Apple.

By bracketing the market with multiple models, Samsung can breed deep relationships with customers, many of whom, market research shows, trade up to more expensive models as they get older.

Playing high and low also positions Samsung to fend off the intensifying competition from Chinese firms such as Lenovo and Huawei and literally hundreds of smaller local players.

“That’s where the next battle for Samsung will be fought,” said Newman. “We’ll have to see if Apple does introduce a new, cheaper model for China – and the world.”

 

Why Russian mobile operators have stopped selling Apple’s iPhone

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Vimpelcom, one of Russia’s top mobile operators, will no longer sell Apple Inc’s iPhone, the Financial Times reported on Wednesday, after similar moves by other mobile companies in Russia.

Vimpelcom ended negotiations with Apple over iPhone sales this month as the U.S. company would not soften its contract terms, the paper said, citing a person close to the operator.

The Financial Times also reported that Russian operators MTS and Megafon have halted iPhone sales.

A representative for MTS told Reuters that the company’s contract to sell iPhones ended in September 2012, so it did not purchase the latest model, the iPhone 5. But it did continue to sell older models of iPhones in stock.

MTS is actively pushing sales of Apple’s tablet computer the iPad, as it sees a huge potential for such products in Russia, the representative said.

A spokesman for Megafon said on Wednesday that it has not sold iPhones since 2009.

Vimpelcom and Apple did not immediately respond to requests for comment.

The operators were hurt by the fact that Russia does not allow subsidies for handsets, making the phones too expensive for the average customer, the paper reported.

Apple, which has a 4.5 percent share of the Russian smartphone market, can still sell in Russia through its own resale stores and other mobile phone retailers, the Financial Times reported.

© Thomson Reuters 2013

 

The man with a $92 quadrillion PayPal balance

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Imagine waking up one morning, checking your email and learning that you’ve just inherited the tag of the richest man in the world. Not by a small margin either, but being told that you are a million times richer than the next man in the list. That’s exactly what happened with a PR executive in Pennsylvania, CNN reports.

Chris Reynolds received his monthly PayPal statement and got the shock of his life when it indicated a balance of $92,233,720,368,547,800.00. That figure is a little north of $92 quadrillion. To put that in perspective, the richest man in the world, Mexican billionaire Carlos Slim has a net worth of $72,000,000,000 as per Forbes’ 2013 estimates. In other words, his new found ‘fortune’ made Reynolds over a million times richer than Carlos Slim.

Of course, the riches didn’t last long. Reynolds logged onto this PayPal account and discovered that the balance was exactly what he last remembered – a grand total of zero. Reynolds got in touch with PayPal who admitted that the statement was a mistake, and offered to contribute an unspecified amount to a cause of Reynolds’ choice as compensation.

“This is obviously an error and we appreciate that Mr. Reynolds understood this was the case,” PayPal told CNN.

When asked what he would have done if the piles of cash had been real, Reynolds said, he “probably would have paid down the national debt.”