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A year of healthy progress along Microsoft strategic ambitions

July 24, 2016 11:45 am / Leave a comment

Microsoft Stock Price for the last 5 years — July 22, 2016:Microsoft Stock Price for the last 5 years -- 22 July, 2016 My earlier posts related specifically to this 3 years overall transition history:
– Microsoft partners empowered with ‘cloud first’, high-value and next-gen experiences for big data, enterprise social, and mobility on wide variety of Windows devices and Windows Server + Windows Azure + Visual Studio as the platform as of July 10, 2013
– Microsoft reorg for delivering/supporting high-value experiences/activities as of July 11, 2013
– An ARM-focussed Microsoft spin-off could be the only solution to save Microsoft in the crucial next 3-years period as of August 24, 2013
– Opinion Leaders and Lead Opinions: Reflections on Steven Sinofsky’s “Era of Continuous Productivity” vision as of September 1, 2013
– The question mark over Wintel’s future will hang in the air for two more years as of September 15, 2013
– Microsoft could be acquired in years to come by Amazon? The joke of the day, or a certain possibility (among other ones)? as of September 16, 2013
– Sinofsky’s ‘continuous productivity’ idea to be realised first in Box Notes as of September 21, 2013
MS FY15 NEW STRATEGIC SETUP– Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
– Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft as of July 23, 2014
– Steve Ballmer on leaving Microsoft, relationship with Bill Gates: “We’ve dusted-up many times”, on His Biggest Regret: “doing hardware earlier [for being] more effective in phone business” AND on Amazon: “They Make No Money.” as October 25, 2014
– The Empire Reboots — Can C.E.O. Satya Nadella Save Microsoft? | Vanity Fair, Oct 27, 2014

WPC Day 1: The Digital Transformation Opportunity from Microsoft Partner Network UK Blog as of July 11, 2016:

“Empower every person and every
organisation on the planet to achieve more”
The Microsoft Mission

At the core of today’s opening Worldwide Partner Conference keynote was ‘Digital Transformation’ aka the desire of CEO’s to use technology to change business outcomes – whether it be how they:

  • Engage their customers,
  • Empower employees to make better decisions,
  • Optimise their operations,
  • Build up the predictive power within their organisations so that every operation is intelligent,
  • Transform their products and services.

Digital Transformation = An Unprecedented Partner Opportunity

Every customer of every size business (startup to Enterprise) is not only looking to use digital technology, but to build digital technology for their own.

Digital-transformatoin-all-partner-types1-1024x530[1]

Businesses are looking to drive greater efficiency – automating processes and enhancing productivity, particularly in those areas where there are operating expenses. This poses an unprecedented opportunity for you no matter what partner type you are.

Digital Transformation Opportunity by Microsoft and Partners -- July 11, 2016Microsoft Ambitions to Drive Digital Transformation

Microsoft has three core ambitions which play a fundamental part in digitally transforming businesses:

  • Re-inventing Productivity and Business process
  • Building the Intelligent Cloud
  • Create more Personal Computing

These will be covered in more detail over the next two days keynotes, however, Satya provided some great examples of what these 3 ambitions entail.

1) Re-inventing Productivity and Business Process

This is all about removing the barriers between productivity tools and business applications. Satya focused on two key areas:

  • ‘Conversations as a Platform’: Using human language understanding personal assistants and Bots (conversational interfaces) which augment our connection with technologies. (Watch the demo 48 minutes into Day 1 Keynote)

2) Building out the intelligent Cloud

To showcase how intelligent cloud is helping transformation, Satya invited General Electric CEO, Jeff Immelt, on stage to discuss how he has digitally transformed the GE business.

Considering GE is over 140 years old, it’s a company that has embraced transformation and digital transformation. You can read more about their story and find out about Microsoft’s new partnership with GE to bring Predix to Azure, accelerating digital transformation for industrial customers.

Satya then went on to talk about ‘The next phase of building the Intelligent cloud’ with ‘Cognitive services’.  We’re seeing the beginnings of a new platform for cognitive services. Microsoft has taken decades of research from Microsoft Research encapsulating speech, computer vision, natural language text understanding, and made these available as API’s. These API’s are being used to infuse perception into apps – the ability for Apps/Bots to understand speech and see i.e. computer vision. These cognitive capabilities are capable of transforming business by bringing productivity gains. A great example of this is how Macdonalds are creating efficiency in their Drive Thru’s with speech/order recognition (Watch the demo 1 hour 10 minutes into the Day 1 keynote).

3) Create More Personal Computing

Create more personal computing was the third and final ambition covered. Satya discussed Windows 10 – an OS system spanning multiple devices from Raspberry PI to Hololens and bringing centralised infrastructure benefits and cost savings to business.

It was on the topic of Hololens, he discussed how personal computing is shaped by category creation moments. Moments where input and output change. ‘Mixed Reality’ is that moment. With Hololens its created an interface changing moment – Mixing real with virtual, enabling us to be anywhere and everywhere – fully untethered and mobile.

What followed was a great demo showcasing how Japan Airlines are using Microsoft HoloLens to change how they train flight crews and mechanics (Watch the demo 1 hour 17 minutes into the Day 1 keynote)

Mixed reality offers huge opportunities for partners with so many applications across so many sectors.

Expect more details on Digital Transformation and Microsoft’s three ambitions in WPC Day 2 and 3 keynotes.

News From WPC2016 Day 1

The three ambitions announced a year ago and the proof-points of healthy progress along them in FY16:

  1. Office 365, Dynamics 365, AppSource, and LinkedIn as all being part of one overarching strategy in Productivity and Business Process:
    – core part of an overarching strategy
    – digital transformation both for us and our partnerships with customers
  2. Significant differentiation vs. Amazon AWS in Intelligent Cloud:
    – enterprise cloud leadership
    – every customer is also an ISV
    – hyperscale-plus-hybrid approach with annuity focus enabling cloud lead conversation with customers
    – meeting cloud needs of customers where they are
  3. Windows strategy to achieve progress in More Personal Computing:
    – deliver more value and innovation, particularly for enterprise customers
    – grow new monetization through services across our unified Windows platform
    – innovate in new device categories in partnership with our OEMs

The Q1FY16 progress was presented in my Microsoft is ready to become a dominant force in cloud computing with superior cloud offerings, a Windows ecosystem under complete renewal, first signs of Surface-Lumia-Xbox successes on the market, and strong interest in technology partnerships by other industry leaders as of October 24, 2015.

“Reinvent Productivity and Business Processes“, “Build the Intelligent Cloud” and “Create More Personal Computing” were the original 3 “interlocking ambitions” the Microsoft CEO talked about at Microsoft Iginite held on May 4-8, 2015 in Chicago. The proof-points of FY16 progress are shown along that list, and explained in detail by remarks from Microsoft (MSFT) Satya Nadella on Q4 2016 Results – Earnings Call Transcript as of July 18, 2016.

For more information see also:  Q4 2015 Earning Call Transcript, the 2015 Annual Report or—even better—my earlier posts indicated here under each ambition. For a deeper strategic intent underlying these ambilitions see my earlier post Julia Liuson: “Microsoft must transform from a company that throws a box with software into the market … into a company that offers pure services” published on October 25, 2015. These ambitions also became reporting segments in FY16. See Earnings Release FY16 Q1 as of October 22, 2015. The major corporate groups were also organised along these line: ASG = Application & Services Group for “Reinvent productivity and business processes” ambition, C&E = Cloud & Enterprise for “Build the intelligent cloud platform” ambition, and OSG= Operating Systems Group for “Create more personal computing” ambition.

Note that the overall strategic approach was developed 2 years ago and it was described in my post Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft of July 23, 2014:

image.png

Here are the remarks from Microsoft (MSFT) Satya Nadella on Q4 2016 Results – Earnings Call Transcript as of July 18, 2016. for details

1. Office 365, Dynamics 365, AppSource, and LinkedIn as all being part of one overarching strategy in Productivity and Business Process:

For initial and additional details available earlier see my earlier posts:
– The first “post-Ballmer” offering launched: with Power BI for Office 365 everyone can analyze, visualize and share data in the cloud as of February 10, 2014
– OneNote is available now on every platform (+free!!) and supported by cloud services API for application and device builders as of March 18, 2014
– An upcoming new era: personalised, pro-active search and discovery experiences for Office 365 (Oslo) as of April 2, 2014
– Microsoft Azure: Marketable machine learning components capability for “a new data science economy”, and real-time analytics for Azure HDInsight service as of October 22, 2014

In fact, this last quarter, some of the most strategic announcements were all around our application platform. At our partner conference, there was a significant amount of excitement with the tools that we announced like PowerApps and Power BI, Azure functions and Flow. These are tools that our developers and system integrators and solution partners will use in order to be able to customize applications around Azure. And so to me that’s another huge advantage and a competitive differentiation for us.

1.1 Core part of an overarching strategy

The move to the cloud for our customers and for us is not just about a new way of delivering the same value just as a SaaS service. It’s really the transformation from having applications that are silos to becoming more services in the cloud where you can reason about the activity and the data underneath these services to benefit the customers who are using these services. So that’s what this notion of a graph [by Microsoft Graph] represents.

So when somebody moves to Office 365, their graph [by Microsoft Graph], their people, their relationships with other people inside the organization, their work artifacts all move to the cloud. You can connect them with all the business process data that’s in Dynamics 365, but not just in Dynamics 365 but all the applications in AppSource because business process will always be a much more fragmented market as opposed to just one market share leader by industry, by vertical, by country. And so that’s our strategy there.

And now the professional cloud or the professional network helps usage across all of that professional usage. Whether it’s in Office 365 or whether you’re a salesperson using any application related to sales, you want your professional network there. Of course, it’s relevant in recruiting, it’s relevant in training, it’s relevant in marketing. So that’s really our strategy with LinkedIn as the professional network meeting the professional cloud. And these are all part of one overarching strategy, and ultimately it’s about adding value to customers.

1.2 Digital transformation both for us and our partnerships with customers

This past year was a pivotal one in both our transformation and in our partnerships with customers who are also driving their own digital transformation. Our progress is best captured in the results of our three ambitions, starting with Productivity and Business Process. In a world of infinite information but finite attention and time, we aim to change the nature of work with digital technology. In pursuit of this ambition, we continue to add value to our products, grow usage, and increase our addressable market. Along these lines, let me start with Office 365 and then move to Dynamics 365.

In the last quarter, we advanced our collaboration tools. We launched Microsoft Planner, which helps teams manage operations, as well as Skype Meetings, which is aimed at helping small businesses collaborate. In June, we further strengthened our security value proposition with the release of Advanced Security Management.

Lastly, we continue to add intelligence in machine learning to Office to help people automate their tasks and glean insights from data. These advancements helped to drive increased usage across enterprises, small and medium businesses, and consumers. In the enterprise, Office 365 Commercial seats grew 45% year over year, and revenue grew 59% in constant currency. Also 70% of our Office Enterprise agreement renewals are in the cloud. Innovative companies like Facebook, Hershey’s, Discovery Communications, Cushman Wakefield all adopted Office 365 and now see how transformative this service can be for their own business.

We are enthusiastic about the early feedback and growth opportunity from companies using our newly released Office 365 E5, which includes powerful security controls, advanced analytics, and cloud voice. These customers tell us that they love the simplification that comes with standardizing across all of our productivity workloads.

We will continue to grow our install base and drive premium mix through offers like Office 365 E5, but they’re very, very early days of E5. And E5 value proposition across all three of the areas, whether it’s cloud voice or analytics or security are all three massive areas for us. And I would say if anything, the initial data from our customers around security is gaining a lot of traction. But at the same time, one of the things that customers are looking for is making an enterprise-wide architectural decision across all of the workloads.

We see momentum in small and medium businesses, with a growing number of partners selling Office 365, now up to nearly 90,000, a 25% increase year over year. We continue to grab share and adding over 50,000 customers each month for 28 consecutive months.

We also see momentum amongst consumers, with now more than 23 million Office 365 subscribers. Across segments, customers increasingly experience the power of Office on their iOS and Android mobile devices. In fact, we now have more than 50 million iOS and Android monthly active devices, up more than four times over last year.

Now let’s talk about progress with the other pillar of this ambition, Dynamics 365. We are removing any impedance that exists between productivity, collaboration, and business process. This month we took a major step forward with the introduction of Microsoft Dynamics 365 and Microsoft AppSource. Dynamics 365 provides business users with purpose-built SaaS applications. These applications have intelligence built in. They integrate deeply with communications and collaboration capabilities of Office 365.

Dynamics 365 along with AppSource and our rich application platform introduces a disruptive and customer-centric business model so customers can build what they want and use just the capabilities they need. The launch of Dynamics 365 builds on the momentum we’re already seeing in this business. Customers around the globe are harnessing the power of Dynamics in their own transformation, including 24 Hour Fitness and AccuWeather. Overall, Dynamics now has nearly 10 million monthly paid seats, up more than 20% year over year, and Q4 billings grew more than 20% year over year.

Overall, Business Processes represent an enormous addressable market, projected to be more than $100 billion by 2020. It’s a market we are increasingly focused on, and I believe we are poised with both Dynamics 365 and Microsoft AppSource to grow and drive opportunity for our partners.

Across Office 365 and Dynamics 365, developers increasingly see the opportunity to build innovative apps and experiences with the Microsoft Graph, and we now have over 27,000 apps connected to it. Microsoft AppSource will be a new way for developers to offer their services and reach customers worldwide.

Lastly, with Office 365 and Dynamics 365, we have the opportunity to connect the world’s professional cloud and the world’s professional network with our pending LinkedIn deal. Overall, the Microsoft Cloud is winning significant customer support. With more than $12 billion in Commercial Cloud annualized revenue run rate, we are on track to achieve our goal of $20 billion in fiscal year 2018. Also, nearly 60% of the Fortune 500 companies have at least three of our cloud offerings. And we continue to grow our annuity mix of our business. In fact, commercial annuity mix increased year over year to 83%.

2. Significant differentiation vs. Amazon AWS in Intelligent Cloud 

For initial and additional details available earlier see my earlier posts:
– Windows Azure becoming an unbeatable offering on the cloud computing market as of June 28, 2013
– Microsoft partners empowered with ‘cloud first’, high-value and next-gen experiences for big data, enterprise social, and mobility on wide variety of Windows devices and Windows Server + Windows Azure + Visual Studio as the platform as of July 10, 2013

– 4. Microsoft products for the Cloud OS [‘Experiencing the Cloud’, as of Dec 18, 2013, but published only on Feb 14, 2014] (was separated from the next “half bakedness” post because of its length)
– 4.5. Microsoft talking about Cloud OS and private clouds: starting with Ray Ozzie in November, 2009[‘Experiencing the Cloud’, as of Dec 18, 2013, but published only on Feb 14, 2014] (was separated from the next “half bakedness” post because of its length)
– Microsoft’s half-baked cloud computing strategy (H1’FY14) as of February 17, 2014 Note that this “half bakedness” ended by the facts published in Microsoft is ready to become a dominant force in cloud computing with superior cloud offerings, a Windows ecosystem under complete renewal, first signs of Surface-Lumia-Xbox successes on the market, and strong interest in technology partnerships by other industry leaders as of October 24, 2014
– Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
– Microsoft BUILD 2014 Day 2: “rebranding” to Microsoft Azure and moving toward a comprehensive set of fully-integrated backend services as of April 27, 2014
– Scott Guthrie about changes under Nadella, the competition with Amazon, and what differentiates Microsoft’s cloud products as of October 2, 2014
– Sam Guckenheimer on Microsoft Developer Division’s Journey to Cloud Cadence as of October 19, 2014
– Microsoft Azure: Marketable machine learning components capability for “a new data science economy”, and real-time analytics for Azure HDInsight service as of October 22, 2014
– Microsoft Cloud state-of-the-art: Hyper-scale Azure with host SDN — IaaS 2.0 — Hybrid flexibility and freedom as of July 11, 2015
– Microsoft’s first quarter proving its ability to become a dominant force in cloud computing with superior cloud offerings as of Januar 27, 2015
– DataStax: a fully distributed and highly secure transactional database platform that is “always on” as of February 3, 2016
– Microsoft chairman: The transition to a subscription-based cloud business isn’t fast enough. Revamp the sales force for cloud-based selling as of June 6, 2016

Cloud Growth Helps Microsoft Beat Street in Q4 from TheStreet as of July 19, 2016 

… [0:34] and Microsoft’s Enterprise Mobility [Suite]
customers nearly doubled YoY to 33,000. [0:40] …

Note that the Q1FY16 report was that “Enterprise Mobility [Suite] customers more than doubled year-over-year to over 20,000, and the installed base grew nearly 6x year-over-year“. Enterprise Mobility Suite (EMS) is a service available in the CSP (Cloud Solution Partner program) along with Windows Intune, Office 365, Azure and CRM Online. The reason for that very impressive growth was given by Satya Nadella in the much earlier Q2FY15 report as:

Microsoft Enterprise Mobility Suite is one key of product innovation that I would like to highlight given the growth and uniqueness of our offering. Microsoft offers a comprehensive solution that brings together mobile device management, mobile application management, hybrid identity management and data protection into a unified offering via EMS.

Office 365 now includes new app experiences on all phones and tablets for mobile productivity.  Further, we have released completely new scenarios. This includes Office Sway for visualizing and sharing ideas; Delve, to help search and discover content; Office 365 Groups to make it easier to collaborate; andOffice 365 Video for secure media streaming for businesses.

Finally, we continue to invest in enterprise value by integrating MDM and the Enterprise Mobility Suite into Office 365; new encryption technologies and compliance certifications; and new eDiscovery capabilities in Exchange.

…

Overall at the highest level, our strategy here is to make sure that the Microsoft Services i.e. cloud services be it Azure, Office 365, CRM Online or Enterprise Mobility Suite are covering all the devices out there in the marketplace. So that, that way we maximize the opportunity we have for each of these subscription and capacity based services.

2.1 Enterprise cloud leadership

Now let’s get into the specifics of the Intelligent Cloud, an area of massive opportunity, as we are clearly one of the two enterprise cloud leaders. Companies looking to digitally transform need a trusted cloud partner and turn to Microsoft. As a result, Azure revenue and usage again grew by more than 100% this quarter. We see customers choose Microsoft for three reasons. They want a cloud provider that offers solutions that reflect the realities of today’s world and their enterprise-grade needs. They want higher level services to drive digital transformation, and they want a cloud open to developers of all types. Let me expand on each.

To start, a wide variety of customers turn to Azure because of their specific real-world needs. Multinationals choose us because we are the only hybrid and hyperscale cloud spanning multiple jurisdictions. We cover more countries and regions than any other cloud provider, from North America to Asia to Europe to Latin America. Our cloud respects data sovereignty and makes it possible for an enterprise application to work across these regions and jurisdictions. More than 80% of the world’s largest banks are Azure customers because of our leadership support for regulatory requirements, advanced security, and commitment to privacy. Large ISVs like SAP and Citrix as well as startups like Sprinklr also choose Azure because of our global reach and a broad set of platform services. Last week GE announced it will adopt our cloud for its IoT approach.

Next, Azure customers also value our unique higher-level services. Now at 33,000, we nearly doubled in one year the number of companies worldwide that have selected our Enterprise Mobility Solutions. The Dow Chemical Company leverages EMS along with Azure, Office 365, and Dynamics to give its thousands of employees secure real-time access to data and apps from anywhere.

Just yesterday, we announced Boeing will use Azure, our IoT suite, and Cortana Intelligence to drive digital transformation in commercial aviation, with connected airline systems optimization, predictive maintenance, and much more. This builds on great momentum in IoT, including our work with Rolls-Royce, Schneider Electric, and others.

This is great progress, but our ambitions are set even higher. Our Intelligent Cloud also enables cognitive services. Cortana Intelligence Suite offers machine learning capabilities and advanced predictive analytics. Customers like Jabil Circuit, Fruit of the Loom, Land O’Lakes, LIBER already realize the benefits of these new capabilities.

Lastly, central to our Intelligent Cloud ambition is providing developers with the tools and capabilities they need to build apps and services for the platforms and devices of their choice. We have the best support for what I would say is the most open platform for all developers. Not only is .NET first class but Linux is first class, Java is first class. The new Azure Container service cuts across both containers running on Windows, running across Linux. So again, it speaks to the enterprise reality. .NET Core 1.0 for open source and our ongoing work with companies such as Red Hat, Docker, and Mesosphere also reflects significant progress on this front. We continue to see traction from open source, with nearly a third of customer virtual machines on Azure running Linux.

So those would be the places where we are fairly differentiated, and that’s what you see us gaining both for enterprise customers and ISVs.

On the server side, premium server revenue grew double digits in constant currency year over year. New SQL Server 2016 helps us expand into new markets with built-in advanced analytics and unparalleled performance. More than 15,000 customers, including over 50% of the Fortune 500, have registered for the private preview of SQL Server for Linux. And we’re not slowing down. We will launch Windows Server 2016 and System Server 2016 later this year.

2.2 Every customer is also an ISV

One of the phenomena now is that pretty much anyone who is a customer of Azure is also in some form an ISV, and that’s no longer just limited to people who are “in the classic tech industry” or the software business. So every customer who starts off consuming Azure is also turning what is their IP in most cases into an ISV solution, which ultimately will even participate in AppSource. So at least the vision that we have is that every customer is a digital company that will have a digital IP component to it, and that we want to be able to partner with them in pretty unique ways.

That’s the same case with GE. It’s the same case with Boeing. It’s the same case with Schneider Electric or ABB or any one of the customers we are working with because they all are taking some of their assets and converting them into SaaS applications on Azure. And that’s something that we will in fact have distribution agreements with.

And AppSource is a pretty major announcement for us because we essentially created for SaaS applications and infrastructure applications a way to distribute their applications through us and our channel. And I think it makes in fact our cloud more attractive to many of them because of that. So we look – I think going forward, you’ll look to see – or you’ll see us do much more of this with many other customers of ours.

2.3 Hyperscale-plus-hybrid approach with annuity focus enabling cloud lead conversation with customers

The focus for us is in what I describe as this hyperscale-plus-hybrid approach when you think about the current approach, which is pretty unique to us. Overall, I believe this hyperscale plus hybrid architecturally helps us a lot with enterprise customers because we meet them where their realities are today and also the digital transformation needs going forward, so that’s one massive advantage we have.

And the way we track progress is to see how is our annuity growth of our server business, and how is our cloud growth. And if you look at this last quarter, our annuity grew double digits and our cloud grew triple digits. And that’s a pretty healthy growth rate, and that’s something that by design both in terms of the technical architecture as well as the traction we have in the marketplace and our sales efforts and so on are playing out well, and we are very bullish about that going forward.

The Transactional business is much more volatile because of the macro environment, IT budgets, and also the secular shift to the cloud. The question again that gets asked is about the cannibalization. But if you look at Boeing or you look at any of the other examples that I talk about when it comes to the cloud, our servers never did what these customers are now doing in our cloud. So at a fundamental long-term secular basis, we have new growth, new workloads, and that’s what we are focused on, and that’s a much bigger addressable market than anything our Transactional Server business had in the past.

[Amy E. Hood – Chief Financial Officer & Executive Vice President:]
The first thing really that I think Satya and I both focus on every quarter, every month, is how much of our business are we continuing to shift to annuity and specifically to the cloud. We structure all of our motions at this company, from how we engineer to how we do our go-to-markets to how we think about sales engagement to how we do our investments, fundamentally toward that long-term structural transition in the market.

In terms of server products and services, I tend to think of it as the all-up growth. It’s really about growing the cloud, growing the hybrid, and then whatever happens in the Transactional business happens.

And so to your question on Transactional performance, there were some deals that didn’t get done in Q3 that got done in Q4, and there were some deals done in Q4 on the Office side with large companies that I’m thrilled by. But at the same time, we still will focus on those deals moving to the cloud over time. And so this volatility that we are going to see because of macro and because of budget constraints, especially on Transactional, we will focus on because we expect excellent execution and have accountability to do that in the field. But our first priority, every time, is to make sure we are focused on annuity growth and digital transformation at our company, which is best done through that motion.

In terms of the sales motion they are absolutely incented more towards cloud versus Transactional going into this year.

I do believe that every conversation that we’re having with customers is cloud-led. That cloud-led conversation and making a plan for customers to best change and transform their own business certainly is a far more in-depth one than on occasion is required by long-time Transactional purchasers, especially in Office, as an example, because what we’re talking about now is really pivoting your business for the long term.

And so I’m sure there are examples where that has elongated the sales cycle, for good reason. But I would generally point back and say most of these are driven at the structural level, which is – structurally over time, on-premises Transactional business will move to the cloud or to a hybrid structure through an annuity revenue stream.
[END BY Amy E. Hood]

2.4 Meeting cloud needs of customers where they are

The position that we have taken is that we want to serve customers where they are and not assume very simplistically that the digital sovereignty needs of customers can be met out of a fewer data center approach. Because right now, given the secular trend to move to the cloud across all of the regulated industries across the globe, we think it’s wiser for us and our investors long term to be able to meet them where they are. And that’s what you see us. We are the only cloud that operates in China under Chinese law, the only cloud that operates in Germany under German law. And these are very critical competitive advantages to us.

And so we will track that, and we will be very demand driven. So in this case we’re not taking these positions of which regions to open and where to open them well in advance of our demand. If anything, I think our cycle times have significantly come down. So it will be demand-driven, but I don’t want to essentially put a cap because if the opportunity arises, and for us it’s a high ROI decision to open a new region, we will do so.

3. Windows strategy to achieve progress in More Personal Computing

For initial and additional details available earlier see my earlier posts:
– Windows Embedded is an enterprise business now, like the whole Windows business, with Handheld and Compact versions to lead in the overall Internet of Things market as well as of June 8, 2013
– How the device play will unfold in the new Microsoft organization? as of July 14, 2013
– With Android and forked Android smartphones as the industry standard Nokia relegated to a niche market status while Apple should radically alter its previous premium strategy for long term as of August 17, 2013
– Windows [inc. Phone] 8.x chances of becoming the alternative platform to iOS and Android: VERY SLIM as it is even more difficult for Microsoft now than any time before as of August 20, 2013
– Leading PC vendors of the past: Go enterprise or die! as of November 7, 2013
– Xamarin: C# developers of native “business” and “mobile workforce” applications now can easily work cross-platform, for Android and iOS clients as well as of November 15, 2013
– Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
– Microsoft Surface Pro 3 is the ultimate tablet product from Microsoft. What the market response will be? as of May 21, 2014
– Windows 10 Technical Preview: Terry Myerson and Joe Belfiore on the future of Windows as of October 1, 2014
– The Era Of Sub-$90 Windows 8.1 Phones in U.S. as of October 3, 2014
– Windows 10 is here to help regain Microsoft’s leading position in ICT as of July 31, 2015
– Microsoft and partners to capitalize on Continuum for Phones instead of the exited Microsoft phone business as of June 5, 2016

We have increased Windows 10 monthly active devices and are now at more than 350 million. This is the fastest adoption rate of any prior Windows release. While we are proud of these results, given changes to our phone plan, we changed how we will assess progress. Going forward, we will track progress by regularly reporting the growth of Windows 10 monthly active devices in addition to progress on three aspects of our Windows strategy:

3.1 Deliver more value and innovation, particularly for enterprise customers

We continue to pursue our goal of moving people from needing Windows to choosing Windows to loving Windows. In two weeks, we will launch Windows 10 Anniversary Update, which takes a significant step forward in security. We are also extending Windows Hello to support apps and websites and delivering a range of new features like Windows Ink and updates to Microsoft Edge. We expect these advances will drive increased adoption of Windows 10, particularly in the enterprise, in the coming year. We already have strong traction, with over 96% of our enterprise customers piloting Windows 10.

3.2 Grow new monetization through services across our unified Windows platform

As we grow our install base and engagement, we generate more opportunity for Microsoft and our ecosystem. Bing profitability continues to grow, with greater than 40% of the search revenue in June from Windows 10 devices. Bing PC query share in the United States approached 22% this quarter, not including volume from AOL and Yahoo!. The Cortana search box has over 100 million monthly active users, with 8 billion questions asked to date.

We continue to drive growth in gaming by connecting fans on Xbox Live across Windows 10, iOS, and Android. Just this quarter we launched our Minecraft Realm subscription on Android and iOS. Overall engagement on Xbox Live is at record levels, with more than 49 million monthly active users, up 33% year over year. At E3 we announced our biggest lineup of exclusive games ever for Xbox One and Windows 10 PCs. And we announced Xbox Play Anywhere titles, where gamers can buy a game once and play it on both their Windows 10 PC and Xbox One. We also announced two new members of the Xbox One console family, the Xbox One S and Project Scorpio.

The Windows Store continues to grow, with new universal Windows apps like Bank of America, Roku, SiriusXM, Instagram, Facebook, Wine, Hulu, and popular PC games like Quantum Break.

3.3 Innovate in new device categories in partnership with our OEMs

Our hardware partners are embracing the new personal computing vision, with over 1,500 new devices designed to take advantage of Windows 10 innovations like Touch, Pen, Hello, and better performance and power efficiency.

Microsoft’s family of Surface devices continues to drive category growth, and we are reaching more commercial customers of all sizes with the support of our channel partners. We recently announced new Surface enterprise initiatives with IBM and Booz Allen Hamilton to enable more customer segments. Also in the past year, we grew our commercial Surface partner channel from over 150 to over 10,000.

Lastly this quarter, more and more developers and enterprise customers got to experience two entirely new device categories from Microsoft Surface Hub and Microsoft HoloLens. While we are still in the early days of both of these devices, we are seeing great traction with both enterprise customers and developers, making us optimistic about future growth.

Scott Guthrie about changes under Nadella, the competition with Amazon, and what differentiates Microsoft’s cloud products

October 2, 2014 12:03 pm / Leave a comment

Scott Guthrie Microsoft

Scott Guthrie Executive Vice President Microsoft Cloud and Enterprise group As executive vice president of the Microsoft Cloud and Enterprise group, Scott Guthrie is responsible for the company’s cloud infrastructure, server, database, management and development tools businesses. His engineering team builds Microsoft Azure, Windows Server, SQL Server, Active Directory, System Center, Visual Studio and .NET. Prior to leading the Cloud and Enterprise group, Guthrie helped lead Microsoft Azure, Microsoft’s public cloud platform. Since joining the company in 1997, he has made critical contributions to many of Microsoft’s key cloud, server and development technologies and was one of the original founders of the .NET project. Guthrie graduated with a bachelor’s degree in computer science from Duke University. He lives in Seattle with his wife and two children. Source: Microsoft

From The cloud, not Windows 10, is key to Microsoft’s growth [Fortune, Oct 1, 2014]

  • about changes under Nadella:

Well, I don’t know if I’d say there’s been a big change from that perspective. I mean, I think obviously we’ve been saying for a while this mobile-first, cloud-first…”devices and services” is maybe another way to put it. That’s been our focus as a company even before Satya became CEO. From a strategic perspective, I think we very much have been focused on cloud now for a couple of years. I wouldn’t say this now means, “Oh, now we’re serious about cloud.” I think we’ve been serious about cloud for quite a while.

More information: Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft [‘Experiencing the Cloud’, July 23, 2014]

  • about the competition with Amazon:

… I think there’s certainly a first mover advantage that they’ve been able to benefit from. … In terms of where we’re at today, we’ve got about 57% of the Fortune 500 that are now deployed on Microsoft Azure. … Ultimately the way we think we do that [gain on the current leader] is by having a unique set of offerings and a unique point of view that is differentiated.

  • about uniqueness of Microsoft offering:

One is, we’re focused on and delivering a hyper-scale cloud platform with our Azure service that’s deployed around the world. …

… that geographic footprint, as well as the economies of scale that you get when you install and have that much capacity, puts you in a unique position from an economic and from a customer capability perspective …

Where I think we differentiate then, versus the other two, is around two characteristics. One is enterprise grade and the focus on delivering something that’s not only hyper-scale from an economic and from a geographic reach perspective but really enterprise-grade from a capability, support, and overall services perspective. …

The other thing that we have that’s fairly unique is a very large on-premises footprint with our existing server software and with our private cloud capabilities. …

2014 H1 changes on the Worldwide Tablet market

July 31, 2014 4:30 pm / Leave a comment

Versus as it was presented in The lost U.S. grip on the mobile computing market, including not only the device business, but software development and patterns of use in general [this same blog, April 14, 2014]:

imageSource: The Tablet Market Ticks Up In The Second Quarter
With White Box Shipments Leading The Way [Business Insider, July 25, 2014]

      • The global tablet market ticked up in the second quarter of 2014, although growth is still near the market’s historical low.
  • Shipments hit about 44.3 million during the period, yielding year-over-year growth of 11%.

While an improvement from the previous quarter, consider that the tablet market had year-over-year growth of nearly 80% in the same quarter just a year ago.

    • Although it lead all vendors with about 27% market share, Apple’s iPad shipments declined 9% year-over-year during the period. That marks the second consecutive quarter in which iPad shipments have declined.
    • Samsung’s tablet shipments grew a paltry 1% for the period to hit 8.5 million units in the second quarter. That is an enormous slowdown compared to the growth rates it was achieving just a year ago. In the second quarter of 2013, Samsung tablet shipments grew 300% year-over-year.
    • Both Apple and Samsung lost market share during the quarter. Apple’s leading market share fell from 33% to 27% while Samsung’s dipped two percentage points to 17%.
    • “White-box” vendors = 41% of market

    image

    image

    Worldwide Tablet Market Grows 11% in Second Quarter on Shipments from a Wide Range of Vendors, According to IDC [IDC press release, July 24, 2014]

    The worldwide tablet grew 11.0% year over year in the second quarter of 2014 (2Q14) with shipments reaching 49.3 million units according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. Although shipments declined sequentially from 1Q14 by -1.5%, IDC believes the market will experience positive but slower growth in 2014 compared to the previous year.
    “As we indicated last quarter, the market is still being impacted by the rise of large-screen smartphones and longer than anticipated ownership cycles,” said Jean Philippe Bouchard, IDC Research Director for Tablets. “We can also attribute the market deceleration to slow commercial adoption of tablets. Despite this trend, we believe that stronger commercial demand for tablets in the second half of 2014 will help the market grow and that we will see more enterprise-specific offerings, as illustrated by the Apple and IBM partnership, come to market.”
    Despite declining shipments of its iPad product line, Apple managed to maintain its lead in the worldwide tablet market, shipping 13.3 million units in the second quarter. Following a strong first quarter, Samsung struggled to maintain its momentum and saw its market share slip to 17.2% in the second quarter.  Lenovo continued to climb the rankings ladder, surpassing ASUS and moving into the third spot in the tablet market, shipping 2.4 million units and grabbing 4.9% markets share. The top 5 was rounded out by ASUS and Acer, with 4.6% and 2.0% share, respectively. Share outside the top 5 grew to an all time high as more and more vendors have made inroads in the tablet space. By now most traditional PC and phone vendors have at least one tablet model in the market, and strategies to move bundled devices and promotional offerings have slowly gained momentum.
    “Until recently, Apple, and to a lesser extent Samsung, have been sitting at the top of the market, minimally impacted by the progress from competitors,” said Jitesh Ubrani, Research Analyst, Worldwide Quarterly Tablet Tracker. “Now we are seeing growth amongst the smaller vendors and a levelling of shares across more vendors as the market enters a new phase.”

    Worldwide Tablet Shipments Miss Targets as First Quarter Experiences Single-Digit Growth, According to IDC [IDC press release, May 1, 2014]

    Worldwide tablet plus 2-in-1 shipments slipped to 50.4 million units in the first calendar quarter of 2014 (1Q14) according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. The total represents a sequential decline of -35.7% from the high-volume holiday quarter and just 3.9% growth over the same period a year ago. The slowdown was felt across operating systems and screen sizes and likely points to an even more challenging year ahead for the category.
    “The rise of large-screen phones and consumers who are holding on to their existing tablets for ever longer periods of time were both contributing factors to a weaker-than-anticipated quarter for tablets and 2-in-1s,” said Tom Mainelli, IDC Program Vice President, Devices and Displays. “In addition, commercial growth has not been robust enough to offset the slowing of consumer shipments.”
    Apple maintained its lead in the worldwide tablet plus 2-in-1 market, shipping 16.4 million units. That’s down from 26.0 million units in the previous quarter and well below its total of 19.5 million units in the first quarter of 2013. Despite the contraction, the company saw its share of the market slip only modestly to 32.5%, down from the previous quarter’s share of 33.2%. Samsung once again grew its worldwide share, increasing from 17.2% last quarter to 22.3% this quarter. Samsung continues to work aggressively with carriers to drive tablet shipments through attractively priced smartphone bundles. Rounding out the top five were ASUS (5%), Lenovo (4.1%), and Amazon (1.9%).
    “With roughly two-thirds share, Android continues to dominate the market,” said Jitesh Ubrani, Research Analyst, Worldwide Quarterly Tablet Tracker. “Although its share of the market remains small, Windows devices continue to gain traction thanks to sleeper hits like the Asus T100, whose low cost and 2-in-1 form factor appeal to those looking for something that’s ‘good enough’.”

    Digitimes Research: Global tablet shipments reach 55.06 million units in 2Q14 [press release, July 23, 2014]

    There were 55.06 million tablets shipped globally in the second quarter of 2014, decreasing 4.5% on quarter but increasing 17.9% on year, according to Digitimes Research.
    The shipments consisted of 14.1 million iPads, down 10% on quarter, and 18.96 million units launched by vendors other than Apple, down 12.7% on quarter. Additionaly, 22.3 million white-box units were shipped in the second quarter.
    Shipments of small-size Wi-Fi-enabled units in particular slowed down in the second quarter and the time period was also a slow season for shipments. Supply chains also faced yield issues and Samsung saw less-than-expected shipments for its 8-inch tablets. Tablets sized 10-inch and above have seen shipment increases since fourth-quarter 2014.
    Taiwan tablet makers meanwhile surpassed 20 million in shipments for brand tablets during the second quarter, which made up 60% of overall brand tablet shipments during the time period, added Digitimes Research.

    Digitimes Research: Global tablet shipments drop 30% sequentially in 1Q14 [press release, April 23, 2014]

    Global tablet shipments reached only 58.56 million units in the first quarter of 2014, down almost 30% sequentially, but up 4.6% on year despite Samsung Electronics trying to boost both its high-end and entry-level tablet shipments and Lenovo pushing shipments to meet its fiscal 2013 targets. Seasonality, Apple seeing weaker sales, and the tablet market growing mature were also factors that affected shipment performance, according to Digitimes Research.
    Shipments of iPads suffered both on-year and sequential drops to reach 15.85 million units in the first quarter. Non-iPad tablet shipments were 22.31 million units, down 20% sequentially, but up over 30% on year thanks to strong demand for Samsung, Lenovo and Asustek’s Windows-based models. White-box tablet shipments reached only 20.4 million units due to seasonality and labor shortages during the Lunar New Year holidays.
    Apple and Samsung remained the top-two vendors in the first quarter, but the two players’ market share gap was less than 6pp. Lenovo was the third-largest vendor, followed closely by Asustek Computer in fourth. Amazon and Google dropped to number seven and ten.
    Taiwan ODMs shipped 22.15 million tablets together in the first quarter, accounting for less than 60% of global shipments. The largest maker, Foxconn Electronics (Hon Hai Precision Industry), and second-largest Pegatron Technology both suffered significant shipment drops due to lower-than-expected demand for iPad. Quanta saw increased shipments in the quarter because of Asustek’s T100 tablet, and returned to being the third-largest maker in Taiwan. Compal Electronics’ shipments suffered a sharp decline because Amazon’s Kindle Fire range is approaching the end of its lifecycle, while Acer is turning to cooperate with China-based makers, Digitimes Research‘s figures showed.

    Digitimes Research: Global white-box tablet shipments down in 1Q14 [press release, May 12, 2014]

    There were 20.4 million white-box tablets shipped globally in the first quarter of 2014, decreasing by 27.4% on quarter and by 2.4% on year, according to Digitimes Research.
    The decrease in shipments was mainly because most white-box vendors are based in China and there were fewer working days in the first quarter due to the Lunar New Year holidays, Digitimes Research pointed out.
    Of the shipments, 7-inch models accounted for 70.5%, 7.85/7.9-inch ones 21.3%, 8- to 9-inch ones 4.2%, above 9- to 10-inch 2.9%, above 10-inch 1.1%.
    Due to strong demand in emerging markets including India, Indonesia, Thailand, Russia and Eastern Europe, global white-box tablet shipments in the second quarter of 2014 will increase 14.2% on quarter and 45.6% on year to 23.3 million units.

    Amazon joined the OTT TV, gaming console and entertainment race with its Fire TV

    April 3, 2014 12:10 pm / Leave a comment

    Gary Busey Meets Amazon Fire TV [amazon YouTube channel, April 2, 2014]

    Introducing Amazon Fire TV, http://amzn.to/1pRjlgP, the streaming media player that listens to Gary Busey. Gary likes to talk to things, but gets frustrated when high tech things don’t listen. Luckily, Amazon Fire TV listens to Gary and finds all the movies and TV shows he wants to watch. Amazon Fire TV has voice search that actually works. #AmazonFireTV

    Amazon unveils the FireTV [CNETTV YouTube channel, April 2, 2014]

    The $99 FireTV plays Amazon on-demand streaming content, adds voice search, and plays games.

    with no big stock market enthusiasm (I would say “business as usual” reaction):
    image

    Analyst commentary: Amazon Unveils Video-Streaming Device ‘Fire TV’ [WSJDigitalNetwork YouTube channel, April 2, 2014]

    Amazon.com Inc. on Wednesday unveiled a new set-top box to stream video and other media to television sets, an ambitious move by the retail giant to break into the living room. TECHnalysis Research founder Bob O’Donnell joins Lunch Break. Photo: Getty Images.

    Introducing Amazon Fire TV: The Easiest Way to Watch Netflix, Prime Instant Video, Hulu Plus, WatchESPN, and More on Your Big-Screen TV [Amazon press release, April 2, 2014]

    Powerful performance with 3x the processing power, 4x the memory, dedicated GPU, and dual-band, dual-antenna Wi-Fi

    Say it, watch it—use voice search to instantly find movies, TV shows, and more

    New ASAP feature predicts which movies and TV episodes you’ll want to watch and prepares them for playback before you even hit play

    Huge, open ecosystem of entertainment—choose from over 200,000 movies and TV episodes

    Plus, Fire TV comes with access to games from EA, Disney, Gameloft, Mojang, 2K, Amazon Game Studios, and more

    My insert here: Amazon announces Fire TV, its own set top box: 90 Seconds on The Verge [The Verge YouTube channel, April 2, 2014]

    Amazon announces Fire TV, its own set own set top box that plays movies, TV, music, games, and more. http://www.theverge.com/2014/4/2/5573818/amazon-announces-fire-tv

    SEATTLE–(BUSINESS WIRE)–Apr. 2, 2014– (NASDAQ:AMZN)—Kindle revolutionized reading by making it possible to think of a book and be reading it in less than 60 seconds. Kindle Fire put the world’s largest selection of movies, TV shows, songs, apps, games, books, audiobooks, and magazines in the palm of your hand. In each case, Amazonintegrates the hardware, software, and the content into an easy-to-use, seamless, end-to-end service for customers. Today, Amazon is excited to unveil its newest innovation—Fire TV, a tiny box that plugs into your HDTV for easy and instant access to Netflix, Prime Instant Video, Hulu Plus, WatchESPN, SHOWTIME, low-cost video rentals, and much more. Fire TV also brings photos, music, and games to the living room. Meet Amazon Fire TV at www.amazon.com/FireTV.

    image

    “Tiny box, huge specs, tons of content, incredible price—people are going to love Fire TV,” said Jeff Bezos, Amazon.com Founder and CEO. “Voice search that actually works means no more typing on an alphabet grid. Our exclusive new ASAP feature predicts the shows you’ll want to watch and gets them ready to stream instantly. And our open approach gives you not just Amazon Instant Video and Prime Instant Video, but also Netflix, Hulu Plus, and more. On Fire TV you can watch Alpha House and House of Cards.”

    Related information:
    Prime (+Netflix comparison): Amazon may hike Prime cost as earnings disappoint and further challenges lay ahead of the company for which it needs to adjust its business model and expand its operations [‘Experiencing the Cloud’, Jan 31, 2014]
    1. Cable and satellite video market (U.S. only)
    2. Pay-TV market (cable and satellite, IPTV, terrestrial)
    3. The overall TV market (home video, on demand video, linear TV)
    4. IPTV—AT&T U-verse TV and Verizon FiOS video in particular
    5. OTT (Over-the-top content)
    within the Microsoft’s integrated solution for streaming video and Live TV providers on all devices, plus the upcoming live-action and “shared experience” TV of its own on Xbox [‘Experiencing the Cloud’, Feb 3, 2014] which also contains:
    6.   Microsoft’s live TV solution on Xbox
    7.   Preliminary information on the upcoming products from Xbox Entertainment Studios
    8.   Xbox Music and Xbox Video services for other devices
    Amazon’s move into overall leadership: Kindle Fire HDX with Snapdragon 800, “revolutionary on-device tech support” (Mayday), enterprise and productivity capable Fire OS 3.0 forked from Android 4.2.2 etc. PLUS a significantly enhanced, new Kindle Fire HD for a much lower, $139 price [‘Experiencing the Cloud’, Sept 27, 2013]

    My insert here: Hands On with Amazon Fire TV [TechCrunch YouTube channel, April 2, 2014]

    Jordan takes us through an unboxing of the new set top box by Amazon called the Fire TV. Take a look at the hardware itself and also the user interface and media library features.

    Amazon Fire TV features:

    • Voice search that actually works—simply speak the name of a movie, TV show, actor, director, or genre into the remote, and you’re done. No more hunting and pecking in an alphabet grid.
    • All the content—instant access to Netflix, Prime Instant Video, Hulu Plus, WatchESPN, YouTube, and more, plus the largest selection of videos for rent and purchase—over 200,000 movies and TV episodes from Amazon Instant Video. Plus, listen to music with Amazon MP3, Pandora, iHeartRadio, TuneIn, and more.
    • Powerful performance in a tiny form factor—quad-core processor with over 3x the processing power of Apple TV, Chromecast, or Roku 3, a dedicated GPU, plus 4x the memory of Apple TV, Chromecast, or Roku 3 for exceptional speed and fluidity. Delivers stunning 1080p HD video and immersive Dolby Digital Plus surround sound. All of this comes in an incredibly small package—Fire TV is 0.7” thin and comes with a simple and sleek remote control with a built-in microphone.
    • Simple and easy to use—arrives pre-registered so you can start watching immediately out of the box.
    • An exclusive new feature called ASAP (Advanced Streaming and Prediction) predicts which movies and TV episodes you’ll want to watch and buffers them for playback before you even hit play—instant start.
    • High-quality, low-cost gaming—games like Minecraft, Monsters University, The Game of Life, The Walking Dead, NBA2K14, Asphalt 8, Riptide GP2, Despicable Me: Minion Rush, and more. The average price of paid games on Fire TV is $1.85. Play using your Fire TV remote, the Fire TV app for smartphones and tablets, or the optional Fire game controller.
    • Amazon FreeTime revolutionizes parental controls—parents can choose what their kids see and set time limits for types of content and times of day—no more negotiating for one more show before bedtime. Customers who subscribe to FreeTime Unlimited—Amazon’s all-you-can-eat content subscription designed for kids ages 3 to 8—will get unlimited access to thousands of movies and TV shows.
    • X-Ray for movies, TV shows, and music—see information about cast and crew, trivia, goofs, and synchronized lyrics.
    • See all of your photos and personal videos come alive on your big-screen TV—seamless integration with Amazon’s Cloud Drive.

    Simple and Easy to Use, with Powerful Performance

    Powerful Quad-Core Processor and Graphics Engine

    Fire TV features a world-class quad-core processor with 3x the processing power of Apple TV, Chromecast, or Roku 3, and a dedicated Adreno 320 graphics engine that processes 57 billion floating point instructions per second, for lightning-fast graphics and excellent fluidity. Fire TV comes with 2GB of memory, 4x the memory of Apple TV, Chromecast, or Roku 3, so content loads faster and games run smoother.

    New Amazon Fire TV powered by Snapdragon 600 processor [Qualcomm Snapdragon Blog, April 2, 2014]
    Amongst popcorn aromas and home-theatre decor, today, Amazon announced Fire TV: a streaming set top box that aims to deliver just about every video streaming service in a compact, powerful package.
    Addressing the media at today’s announcement in New York, Amazon.com’s Peter Larsen, Vice President of Kindle, identified three problems with today’s internet-enabled set-top boxes—search, performance, and a closed ecosystem—and detailed how Fire TV solves them.
    Granted, search and content ecosystems are well within the purview of Amazon. But performance? That’s where Qualcomm® Snapdragon™ processors come in.
    Sporting a Snapdragon 600 processor with quad-core CPU, the Fire TV has all the base capabilities you expect from a device that lives in your living room: Full HD 1080p streaming video, 7.1 Dolby Digital Plus surround sound, and a lighting-fast, ultra-stable dual-antenna Wi-Fi connection.
    With three times the processing power of other set-top boxes, the Fire TV features silky-smooth menu navigation and content browsing. And utilizing the additional performance on tap, Amazon have introduced ASAP (Advanced Streaming and Prediction), which automatically predicts, buffers, and stores the shows you want to watch—all you need to do is hit play, and they instantly start.
    But this is Amazon, the everything store. And the Fire TV is the everything box.
    Foremost of which is the new voice search. Just press a button on your remote, and the Fire TV can find John Malkovich’s entire body of work at the utterance of his name, or get Team Umizoomi up and streaming almost as fast as you children can yell “Umizoomi.”
    In addition to the massive library of movies and TV shows available through just about every video streaming service on the planet; the dedicated Qualcomm Adreno GPU opens up the Fire TV to the gaming world. Available today are staples such Minecraft, The Walking Dead, NBA2K14 and more than 100 other games. In addition, the GPU will power Amazon’s first foray into video games: Sev Zero.
    Additionally there’s Second Screen—allowing users to mirror music, movies, and photos from their Kindle Fire HDX (also powered by Snapdragon processors) to their TV. And unlike the set-top boxes that came before, Fire TV will feature X-Ray: A second screen experience, powered by IMDb, that provides viewers with relevant information—such as cast and crew bios, soundtrack credits, trivia, character backstories, and more—as their movie or show plays. Currently, X-Ray is available for Kindle Fire HDX users, with support for iPhone and iPad later this year.
    Amazon’s Fire TV is available now for $99.

    Streams in High Definition 1080p with Dolby Digital Plus Surround Sound

    With dual-band, dual-antenna Wi-Fi, Fire TV streams in up to full-HD 1080p and supports HDMI and optical audio-out, enabling up to 7.1 Dolby Digital Plus surround sound.

    Simple and Easy to Use

    Fire TV comes automatically pre-registered so you can immediately get started. No complicated set-up, no hassle—just plug it in and start watching. All of your previously purchased movies and TV shows from Amazon, as well as personalized recommendations and your Watchlist, will be there waiting for you when you turn on Fire TV.

    Designed to Disappear

    Fire TV is designed to disappear. It is 0.7” thin, so it is easy to hide, and is silent even when running the most demanding applications.

    Fire TV Remote

    Fire TV’s remote is small, simple, and intuitive, with familiar controls. Search, browse, play, pause, and add titles to your Watchlist with ease. The Fire TV remote uses Bluetooth so there is no “line of sight” required, which means no reaching or struggling to aim your signal at a tiny target—store your Fire TV in a cabinet or behind the TV.

    Voice Search that Actually Works

    Gone are the days of searching for a movie or TV show by left-left-down-right-ing through an on-screen alphabet grid using your remote. Simply speak the name of a movie, TV show, actor, director, genre, app, or game into the remote, and the results will appear instantly. Voice search leverages the search data and expertise of Amazon.com and IMDb, and is optimized to understand Amazon’s video, app, and game catalog.

    The Best Video Experience

    Movies and TV Shows from Netflix, Prime Instant Video, Hulu Plus, and More

    Fire TV comes with instant access to all of the most popular subscription video services, including Netflix, Prime Instant Video, Hulu Plus, WatchESPN, VEVO, SHOWTIME, Crackle, YouTube, and more, with additional services like WWE Network, MLB.TV, WATCH Disney Channel, WATCH ABC, and Twitch coming soon.

    Prime Instant Video, with Exclusives and Original Shows

    Fire TV is seamlessly integrated with Prime Instant Video, Amazon’s subscription streaming service. With tens of thousands of movies and TV episodes, Prime Instant Video is the exclusive premium subscription streaming home for thousands of hours of video, including shows like Downton Abbey, The Americans, Workaholics, Justified, 24, Hannibal, Dora the Explorer, SpongeBob, and more. Prime Instant Video also includes shows from Amazon Studios, the original TV production arm of Amazon, such as Alpha House from Pulitzer-Prize winner Garry Trudeau and starring John Goodman, which debuted last year and quickly became the most watched show on Amazon since its release. Alpha House is now in production for its second season, and Amazon recently greenlighted six new shows, including The After, Bosch, Mozart in the Jungle, and Transparent, which will be available starting later this year.

    The Largest Selection of Videos for Rent or Purchase

    Rent or purchase over 200,000 movies and TV episodes from Amazon Instant Video, which has the world’s largest selection of videos to rent or buy, including new releases and blockbusters. Amazon is the only nationwide video service that offers rental and purchase, as well as a subscription streaming service, so you can find everything you want in one place—catch up on past seasons of popular TV shows with Prime Instant Video before purchasing the most recent episode of the show as it’s released.

    Find the Lowest Price—Even if it’s Not from Amazon

    Just like on Amazon.com, Fire TV integrates viewing options on a single page so you can always choose the lowest price. This is available starting with Hulu Plus, Amazon Instant Video, and Prime Instant Video, and will expand to other content providers so you’ll see all of your options in one place.

    ASAP

    You shouldn’t have to wait 10 seconds for a video to buffer after you press “Play”—it should start immediately. Based on your Watchlist and recommendations, the new ASAP (Advanced Streaming and Prediction) feature predicts which movies and TV episodes you’ll want to watch and prepares them for playback before you even hit play. This feature is smart—it is personalized based on your viewing habits and adapts as those habits change. The caching predictions get better over time, so ASAP will continuously improve as you use Fire TV.

    Fling TV Shows and Movies with Second Screen

    Fling Amazon TV shows and movies from your phone or tablet to your Fire TV using Second Screen. This turns your TV into the primary screen and frees up your phone or tablet to provide playback controls, a customized display for X-Ray, or simply a place to email, browse the web, and more, while you watch a movie. Second Screen is available on Kindle Fire HDX and will be available later this year from your iPhone or iPad. You can also wirelessly mirror your tablet display to your Fire TV with Kindle Fire, as well as other Miracast-enabled phones or tablets starting later this year. Fire TV supports standards like DIAL, so app developers can enable multi-screen experiences based on open technologies.

    X-Ray for Movies and TV Shows, Powered by IMDb

    Using Second Screen on your Fire HDX and later this year on your iPhone or iPad, you can see X-Ray information as your movie or TV show plays on Fire TV. With X-Ray you can see information about cast and crew, the names of songs as they play, as well as a list of all music in the movie or TV show, trivia items in context with the action on the screen, and character backstories so you can easily remind yourself of the character’s history. X-Ray is exclusive to Amazon and is powered by IMDb.

    Amazon FreeTime—Revolutionary Parental Controls

    Now you don’t have to worry about what your kids are watching on the TV—with FreeTime, a parent creates profiles for each child and selects the content they can see. Parents can create time limits based on type of content or time of day. When in FreeTime, the background color and fonts change to a kid-friendly design. Kids only see titles that have been selected by their parents for them, and those who can’t yet read can navigate visually to content based on favorite characters or topics—for example “Dora the Explorer,” “Princesses,” or “Thomas and Friends.” Parents who have already set up profiles and approved content on Kindle Fire tablets will find the settings are automatically synchronized on Fire TV, making it simple and seamless to get started.

    Customers who subscribe to FreeTime Unlimited—Amazon’s all-you-can-eat content subscription designed just for kids ages 3 to 8—will get unlimited access to thousands of movies and TV shows. FreeTime Unlimited is available for Prime members to enjoy for a monthly price of $2.99 per child or $6.99 per family. Customers who are not yet Prime members can subscribe to FreeTime Unlimited for a monthly price of $4.99 per child or$9.99 per family. Amazon FreeTime and FreeTime Unlimited will be available on Fire TV starting next month.

    Your Photos on the Big Screen

    Fire TV makes it easy to view your photos and personal videos on your TV. You can set up and play slide shows, find specific photos, and choose your favorite album for the screen-saver on Fire TV. Photos or videos you take on your phone or tablet can be automatically uploaded to Amazon Cloud Drive, so they appear on your Fire TV within seconds.

    Music in Your Living Room

    Music from Pandora, Amazon MP3, iHeartRadio, and More

    With Fire TV, you can listen to music from popular streaming services like Pandora, iHeartRadio, and TuneIn, and watch music videos from VEVO. Starting next month, you can also listen to your full collection of music through Amazon Cloud Player. Simply upload your music or purchase from Amazon and it will be stored automatically in your Cloud Player and available on Fire TV as well as on your phone or tablet.

    X-Ray for Music

    Lyrics display and scroll line-by-line automatically as the song plays, so you can follow along with songs. X-Ray for Music will be available starting next month.

    Bonus—Great Games at Low Prices

    Games from Top Developers

    Amazon worked with game developers like EA, Disney, Gameloft, Ubisoft, Telltale, Mojang, 2K, and Sega to bring their games to Fire TV. Games available starting today include customer favorites like Minecraft, Monsters University, The Game of Life, The Walking Dead, NBA2K14, Asphalt 8, Riptide GP2, Despicable Me: Minion Rush, and more. Over 100 games are available starting today and optimized for Fire TV, with thousands of additional games coming next month with the Fire TV app, which brings controls for touch-enabled games. These are great games for such a small box and at such surprisingly low prices—the average price of paid games is $1.85.

    Fire TV also comes with access to Sev Zero, a new game built exclusively for Fire TV by Amazon Game Studios. Sev Zero is $6.99 and is available for free when you purchase the Fire game controller. Learn more: www.amazon.com/pr/SevZero.

    Fire TV runs the latest version of Fire OS “Mojito,” which is based on Android, so it’s simple for developers to port their services and games over to Fire TV.

    Choose How to Play—Remote, Game Controller, or App

    In addition to using the Fire TV remote and the Fire TV app available starting next month, you can also choose the Amazon Fire game controller, which enables more high-intensity and complex gaming with dual analog sticks and a complete assortment of controls. Simple and comfortable to use for hours, the Fire game controller pairs with Fire TV via Bluetooth. The Fire game controller also intelligently manages power by automatically going to sleep when not in use, and waking at a touch of a button, so you get up to 55 hours of gaming on a pair of AA batteries. You can pair multiple game controllers with a Fire TV so the whole family can play together in the same room. The integrated GameCircle button gives you instant access to leaderboards, achievements and friends with a simple touch of a button from any GameCircle enabled game. The Fire game controller can also be used as a remote, with fast forward, rewind, play and pause, so you can control all your movies and music on Fire TV. The Fire game controller is available today for $39.99, and comes with a free copy of Sev Zero and 1,000 Amazon Coins (a $10 value) for purchasing games.

    The Features You Expect from Amazon

    Fire TV is not a gadget—it’s a seamlessly integrated service that brings together the features customers expect from Amazon, including:

    • Whispersync—Amazon’s Whispersync technology saves and synchronizes your video and music library across all of your devices. Start watching a movie on your Kindle Fire or iPhone, and when you get home, pick up where you left off on your Fire TV. For games that support Whispersync, your place in the game will also sync across devices so you can always pick up where you left off.
    • Watch on over 300 devices—When you buy a movie or TV show on Amazon, you can watch it on over 300 devices.
    • Worry-Free Archive—Automatically backs up your Amazon digital content in the cloud so you never need to worry about losing your collection.
    • Top-Rated, World-Class Customer Service—When a customer shops on Amazon, buys a Fire TV, or buys digital content from Amazon, they know that they are also getting Amazon’s world class customer service. Customers with a Kindle Fire HDX can also use the Mayday button to receive free, live, on-device tech support.
    • Free Month of Amazon Prime—Amazon continues to invest hundreds of millions of dollars to bring Prime members new movies, TV shows, and books to enjoy at no additional cost. Prime members enjoy unlimited, commercial-free, instant streaming of tens of thousands of movies and TV episodes with Prime Instant Video. Eligible customers get a free 30-day trial of Amazon Prime when they purchase Fire TV.

    Pricing & Availability

    Fire TV is available starting today for just $99—order at www.amazon.com/FireTV.

    Eligible customers get a free 30-day trial of Netflix and Amazon Prime when they purchase Fire TV.

    Images of Fire TV are available at www.amazon.com/pr/devicesandcontent.

    Snapdragon 600 processor specs [Qualcomm product page, March 25, 2014]

    image

    CPU

    28nm LP quad core Krait 300 CPU at up to 1.9GHz per core

    LP-DDR3 memory for high performance and low latency

    GPU

    Speed enhanced Adreno 320 GPU delivers over 300% increase in graphics processing performance1

    Support for advanced graphic and compute APIs, including OpenGL ES 3.0, DirectX, OpenCL, Renderscript Compute and FlexRender™2

    Power Management

    Energy efficient LP process and dynamic GPU clock and voltage scaling

    Asynchronous Multi-Processing (aSMP) dynamic CPU power control for power-optimized performance

    Qualcomm Quick Charge 1.0 integrated for up to 40% faster battery charging

    DSP

    Hexagon, QDSP6

    Hexagon DSP enables ultra-low power operation for a variety of applications like music playback, enhanced audio effects, computer vision processing and still and video image enhancements

    USB

    USB 2.0

    Bluetooth

    BT4.0 + Integrated digital core

    Display

    Enjoy your photos, videos and games on large, high-resolution display devices (up to 2048×1536) and even on 1080p external displays

    WiFi

    802.11ac3 Wi-Fi for peak Wi-Fi performance + Integrated digital core3

    Publicly demonstrated to 280 Mbps UDP

    GPS

    IZAT™ location technology features GNSS for accurate auto and pedestrian navigation and Indoor Location capabilities for advanced location-based services

    Video/Audio

    Capture and playback video at 1080p HD

    HD multichannel sound with DTS-HD and Dolby Digital Plus

    Camera

    Up to 21 Megapixel, stereoscopic 3D

    Take high-resolution, 3D photos with 21 Megapixel stereoscopic camera support

    Process Technology

    28nm LP

    1 Compared to its predecessor, Adreno 305

    2 FlexRender is designed to help the Adreno GPU boost speed and save power by dynamically switching between drawing pixels in direct or deferred rendering mode

    3 Available only in select processors

    Snapdragon 600 processors include the following part numbers: 8064T, 8064M

    Alibaba gets Tango for its push into the U.S. and the whole Western world

    March 20, 2014 12:17 pm / Leave a comment

    It is a further proof point that in 2014: Jack Ma (Alibaba) going against Jeff Bezos (Amazon) et al. [‘Experiencing the Cloud’, Jan 8, 2014]. It is also a critical investment as Alibaba needs to have a market leading messaging and social networking app of its own to compete with the Facebook+WhatsApp combo. The aim of Tango after the huge $215M investment from Alibaba (which is giving them 21.5% majority stake) is no less than: 

    … to build the WeChat of the Western world. We have all the WeChat features but each one of them is Westernized.

    as was declared by Uri Raz, co-founder and CEO of Tango, in an interview to the Wall Sreet Journal. Quite an undertaking considering WhatsApp’s MAU (Monthly Active Users) of 450M and WeChat’s MAU of 355M versus that of the 70M+ MAU for Tango. Considering the details behind this announcement it is—nevertheless—quite feasible:

    Tango Announcement [TangoME YouTube channel, March 19, 2014]

    Tango announces a $280M round of funding led by Alibaba. Tango is a free mobile messaging service with 200M+ members. Through communication, social features and a compelling content platform, Tango members discover engaging ways to connect, get social and have fun. Download for FREE at http://www.tango.me on iOS, Android, Blackberry, Kindle Fire, and PC.

    From TANGO AT-A-GLANCE [company fact sheet, March 19, 2014] 

    Funding

     Total funding to date: $367M

    • Series A – $5M (June 2010). Investors:
       MXB Holdings
       WR Hambrecht
       Long Sea Limited
    • Series B – $42M (June 2011). Investors: 4 
       DFJ
       SPA Special Investment Fund
    • Series C – $40M (March 2012). Investors:
       AI SMS
       Qualcomm
       DFJ
       Long Sea Limited
    • Series D – $280M (March 2014). Investors:
       Alibaba [$215M from Alibaba according to Wall Street Journal, which is giving a 21.5% majority stake as the company was valued at the time of Series D founding at $1B]
       DFJ
       Qualcomm Ventures
       Access Industries
       Translink Capital
       Toms Capital
       Jerry Yang
       Bill Tai
       Alex Zubillaga

    Tango’s Latest News: A Vision of The Future and a $280M Funding Round [by Uri and Eric  in Tango Me Blog, March 19, 2014], note that my inserts below are from TANGO AT-A-GLANCE [company fact sheet, March 19, 2014] and the TangoME YouTube channel

    We launched Tango in September 2009 out of the personal need to stay connected to our own families. It helped tremendously that both of us came from deep video technology backgrounds and had strong entrepreneurial spirits. But it was the emotional connection with family living in other parts of the world that inspired our mission here at Tango. Back then we felt that free online communication through texts, voice and video calls would remove barriers and change the world. The world agreed: we signed up our first million members in the first 10 days after launch.

    Since then, we have been on quite a journey. The sheer power of free communication has changed the way we connect with others. Today, the amount of texting from over-the-top messaging apps surpasses carrier SMS. We’re proud that Tango has become a part of this industry disruption and even more excited that Tango has become a preferred place for our members to communicate and share with friends and family.

    According to China’s Alibaba Invests $215 Million in Startup Tango [The Wall Street Journal, March 20, 2014]

    Last summer, Alibaba began blocking merchants on Taobao and Tmall from using WeChat to send promotional messages to shoppers. Tencent, meanwhile, added mobile payments last year and has been offering more services and shopping options on WeChat.

    There are no immediate plans to connect the Tango app with the company’s various e-commerce services, though that could come over time, said a person familiar with the plans. Tango will operate separately from Laiwang.

    Tango also expands Alibaba’s portfolio of fast-growing U.S. startups as the Chinese company tries to gain a foothold here. It led investments last year in app search-engine Quixey Inc. and two-day shipping provider ShopRunner Inc.
    …
    Alibaba’s cash will help Tango, based in Mountain View, Calif., to double its workforce to more than 300 this year and open up its service to more outside developers, Chief Executive Uri Raz said.
    …
    Mr. Raz said he began adding other services, such as games and photo sharing, after seeing the success of Asian texting apps such as WeChat, Kakao and Line. “We were looking at what happened in Japan and China,” Mr. Raz said. “It was the first time since 1999 that I saw the speed of innovation happening faster over there than here.”

    From TANGO AT-A-GLANCE [company fact sheet, March 19, 2014]

    What is Tango
    Headquartered in Mountain View, Calif.
    Tango is consistently in the top 25 on Google Play and top 100 in the iTunes App Store.
     
    Tango is available in 14 languages and has subscribers in more than 224 countries with nearly one third of its members in the U.S.
     
    Basic Stats
    Year founded: 2009
    Number of users: 200M+ (if Tango were a country it would be the 5th largest in the world)
    Daily user base growth: 325K (average)
    Monthly active users [MAU]: 70M+
    [note that WhatsApp bought by Facebook has MAU of 450M and Alibaba’s major competitor Tencent’s WeChat MAU of 355M]

    Global breakdown based on DAU
     27% U.S. (North America 31%)
     20% Asia
     12% Europe
     29% Middle East
     8% Other

    Platform user base demographics:
     Gender neutral
     Over half between the ages 25-44
    Platforms: iOS, Android, Windows Phone 7, PC
    Coverage: 3G, 4G, Wi-Fi
    Number of iPhone/iPad users: 40% (whole user base)
    Number of Android users: 60% (whole user base)
    App store ranking:
     4.3 stars on Google Play
     4.5 stars on iTunes
    Number of patents: 30 (4 approved – 26 pending)
    Awards:
     Appy Awards: Best Communication App 2013
     About.com: Reader’s Choice 2013
     Webby nomination 2013
     Verizon’s Must Have Apps list 2013
    Number of employees: 160
    Total funding to date: $367M
    Partners: 40+ game partners, 10+ Direct advertising partners, and Spotify on Music Messaging

    While we’ve made progress on our mission to enable people to communicate, share and feel more connected, we are just beginning to scratch the surface of what’s possible. The opportunity for Tango goes well beyond just providing a messaging app for free communications. We see an even bigger opportunity – one where people can have access to free communication, social networking features and enjoyable content – all within a single platform.

    Over the past eight months, Tango has evolved.

    • We’ve introduced a content platform that is now home to more than 30 games.

    My inserts here:
    – Connect & Play with Tango [TangoME YouTube channel, June 18, 2013]

    Tango is partnering with Gameloft, Bubble Gum Interactive, and other world-class developers to bring great games to their messaging app.

    – Games developed for Tango: 35+ games live
    – Game developers for Tango: 50+ developers signed

    • We’ve introduced new social networking features that allow members to share updates or photos and to find new friends.

    My insert here:
    – Find Friends Nearby with Tango [TangoME YouTube channel, July 18, 2013]

    • And we’ve introduced social music sharing through integration with Spotify, which means members can now send each other songs.

    My inserts here:
    – Tango powered by Spotify video [TangoME YouTube channel, Nov 11, 2013]

    Search, listen and share songs with your friends.

    – Tango music video featuring recording artist Riz – the first of its kind to be recorded using Google Glass [RizVEVO YouTube channel, Nov 11, 2013]

    This is the FIRST ever music video shot entirely using Google Glass.

    – Total Music Played: hundreds of millions

    According to China’s Alibaba Invests $215 Million in Startup Tango [The Wall Street Journal, March 20, 2014]

    Tango joined with outside developers, such as game maker Gameloft Inc. and music-streaming service Spotify AB, to offer users a range of virtual activities inside the app. For example, Tango users can share 30-second clips of their favorite songs from Spotify or compete with their friends for the high score in the Gameloft title “Candy Block Breaker.” The company shares the revenue from purchases made inside the apps with the developers.

    By the end of this year, Tango plans to open its software code to allow any outside developer to build games and other services for its users, Mr. Raz said.

    The startup is also bolstering its revenue through mobile advertising. Last December, it began working with Twitter Inc.’s MoPub unit to sell ads within users’ news feeds and message inboxes, promoting apps made by Zynga Inc. and others.

    Quite honestly, the results have blown us away. We’re excited by the 2x increase in daily engagement since last July. And we love it that our members are huge fans of music and love to send hundreds of millions of songs to their friends through Tango. These changes are reflected in huge growth in registered users: over the last year we’ve doubled to more than 200 million.

    The way we see it, this is just the beginning for Tango. We believe that messaging apps will fundamentally change the way content and services are distributed. We are very excited to continue to build upon our foundation of free communications, while extending into new growth areas in social networking and content. We know that we can’t do it on our own, and for that reason, we couldn’t be more excited to announce our newest investor, Alibaba Group.

    According to China’s Alibaba Invests $215 Million in Startup Tango [The Wall Street Journal, March 20, 2014]

    While the company has an office in Beijing and has seen rising usage in Thailand and Hong Kong, Asia isn’t currently a main area of focus for the company, Mr. Raz said.

    Mr. Setton says the alliance with Alibaba will give Tango market insights that will help it beat rivals to new trends.

    Rather than take on WeChat in China, Mr. Raz said he’s more focused on perfecting the model for U.S. users.

    “We want to build the WeChat of the Western world,” Mr. Raz said. “We have all the WeChat features but each one of them is Westernized.”

    Together with some of our prior investors, Alibaba has lead a $280 million Series D funding round. [$215M from Alibaba according to Wall Street Journal, which is giving a 21.5% majority stake as the company was valued at the time of Series D founding at $1B.] As part of this financing, Michael Zeisser from Alibaba will join our Board of Directors. We welcome Alibaba’s investment in Tango. We know that we will be able to benefit from Alibaba’s expertise.

    More on Tango as it is:

    Tango – Connect, Get Social, Have Fun! [TangoME YouTube channel, March 12, 2014]

    Tango is a free mobile messaging service with 200 million members. Through communication, social features and a compelling content platform, Tango members discover engaging ways to connect, get social and have fun. Tango is available on iPhone, iPad, Android phones and tablets, Blackberry, Kindle Fire and PC and works across platforms and networks. Download the app at http://www.tango.me.

    Let’s Play – Tango [TangoME YouTube channel, Feb 21, 2014]

    The award-winning messaging app now powers games around the world. Connect & Play with hundreds of millions of people around the world! Play with Tango!

    Tango Free Voice, Video, and Text [TangoME YouTube channel, Sept 10, 2012]

    Now you can send pictures with all of your Tango friends, or try playing out new game during a video call!

    and its first year anniversary was proudly celebrated with the following achievements: Tango Turns One! [TangoME YouTube channel, Sept 30, 2011]

    Check out the many milestones Tango achieved it’s first year out to market!

    Tango’s market position as per Since Facebook Owns WhatsApp, Here Are 5 Alternative Messaging Services [ReadWrite, Feb 25, 2014]

    You shouldn’t feel forced to relinquish your messaging data to Facebook.

    Facebook stunned the tech world last week when it scooped up the messaging application WhatsApp for $19 billion.

    The deal was largely heralded as a win for both sides: Facebook gained a much-needed service it hasn’t yet delivered on, and the small startup cashed in big time. But the downside of the acquisition fell heavily on the shoulders of users—those 450 million people [MAU – monthly active users] whose private data is now in the hands of Facebook.

    If you’re a WhatsApp user who wants to break up with Facebook, or someone looking for a great new messaging application, we’ve put together a list of mobile messaging apps you should try.

    Telegram

    Almost five million people signed up for Telegram after Facebook bought WhatsApp. As a messaging service, it is sleek and easy to use. 

    Telegram, which is built by a Berlin-based nonprofit, is cloud-based and heavily encrypted so users can use several devices to access their messages and documents including both mobile and desktop. The company also claims Telegram is a free service that will remain so in the future, meaning no advertisements or subscription fees will ever be levied on customers.

    Telegram is available on iOS and Android. Developers can access and implement the app’s API through Telegram’s open source code.

    Wickr

    Snapchat’s sophisticated competitor Wickr brings government-strength security and encryption to your messages. Wickr lets you send self-destructing messages, documents, photos, videos and voice calls that disappear after a select amount of time.

    Wickr is entirely anonymous, as the application doesn’t ask for any of your personal information. Wickr is also exceeds top secret and HIPAA compliance, so people in medical, law enforcement, and journalism fields can feel confident using Wickr for secure messaging knowing it can’t be traced or reproduced. 

    Wickr is available on iOS and Android.

    Line

    Line is one of the most popular messaging services on the market for free voice and video calling. 

    The app is massively popular internationally, especially in Asia, and it finally entered the U.S. market earlier this year. Line is more than just a simple messaging application—it has branched out to offer in-app games and a variety of standalone apps like Line Camera and Line Tools. While the app is free, additional services like stickers and games provide revenue for the company. In the first quarter of 2013, Line made $17 million off sticker sales alone. 

    Line is available on iOS, Android, Windows Phone, and Blackberry. 

    Kik

    Kik is the world’s first messaging application with a built-in browser. The application boasts over 100 million users, a majority coming from North America and Western Europe.

    Kik has over 30 HTML5 experiences built into the application for sharing pictures, videos and gaming, according to the company, and recently launched the in-app browser. Kik has also created open source tools to help developers build and optimize their websites for mobile. 

    Kik is available on iOS, Android, Windows Phone, and BlackBerry.

    Tango

    Tango, like Line, offers an all-inclusive social app with games, music, video, and voice and text messaging. The San Francisco-based company says the app has 150 million [200 million as of March 19, 2014] users. 

    Because of the additional features that extend beyond voice calling and messaging, users of more traditional messaging services like WhatsApp may find the interface a bit confusing, but users can personalize their profiles to find and make friends or discover people you may know nearby. 

    Tango is available on iOS, Android and Windows Phone [was on WP7 back in 2011, but it is not on WP8].

    Breaking Up Is Hard

    It’s inconvenient to switch to an entirely new messaging service, especially if all your friends are dedicated to one app. But you shouldn’t feel forced to turn over your data to Facebook either. All these applications provide messaging services that rival WhatsApp, without the commitment to Facebook services, meaning you’re not turning over your mobile phone book and payment information to the social network in exchange for an efficient messaging service.

    Microsoft’s integrated solution for streaming video and Live TV providers on all devices, plus the upcoming live-action and “shared experience” TV of its own on Xbox

    February 3, 2014 5:11 pm / Leave a comment

    This is my finding as an update to the one of a year ago in “Microsoft entertainment as an affordable premium offering to be built on the basis of the Xbox console and Xbox LIVE services [Feb 13, 2013] OR create interactive content as a premium offering together with partners using Kinect technology as a starter OR moving Microsoft Xbox 360 to ‘entertainment console’ OR leaving the good quality commodities to others and going for a premium brand with Xbox as well”.

    One cannot understand the Microsoft solution without first looking at:

    1. Cable and satellite video market (U.S. only)
    2. Pay-TV market (cable and satellite, IPTV, terrestrial)
    3. The overall TV market (home video, on demand video, linear TV)
    4. IPTV—AT&T U-verse TV and Verizon FiOS video in particular
    5. OTT (Over-the-top content)

    Then the Microsoft solution could be presented as follows:

    6.   Microsoft’s live TV solution on Xbox
    7.   Preliminary information on the upcoming products from Xbox Entertainment Studios
    8.   Xbox Music and Xbox Video services for other devices

    Before all that, however, we should also understand a key trend that the Installed Base of Internet-Connected Video Devices to Exceed Global Population in 2017 [iSuppli press release, Oct 8, 2013] which is also showing the immense difficulty for the Microsoft effort:

    More than 8 billion Internet-connected video devices will be installed worldwide in 2017, exceeding the population of the planet, according to research from  the Broadband Technology Service at IHS Inc. (NYSE: IHS).

    The installed base of video-enabled devices that are connected to the Internet—a category that includes diverse product such as tablets, smart TVs, games consoles, smartphones, connected set-top boxes, Blu-ray players, and PCs—will expand to 8.2 billion units in 2017. This will represent a nearly 90 percent increase from 4.3 billion in 2013, as presented in the attached figure.

    With the world’s population amounting to 7.4 billion people in 2017, this means that there will be 1.1 Internet-connected video devices installed for each global citizen.

    image

    “On average every human being in the world will possess more than one Internet-connected video device by the year 2017—a major milestone for the electronics market,” said Merrick Kingston, senior analyst, Broadband Technology, at IHS. “In practice, ownership of Internet-connected hardware will be concentrated among users whose homes are equipped with broadband connections. We’re quickly approaching a world where the average broadband household contains 10 connected, video-enabled devices. This means that each TV set installed in a broadband-equipped home will be surrounded by three Internet-connected devices.”
    Asia-Pacific gets connected
    The number of connected devices in the mature North American and Western European regions will grow at a relatively modest compound annual growth rate (CAGR) of 10 percent from 2013 to 2017.
    In contrast, Asia-Pacific will expand at 20 percent during the same period. Driven largely by Chinese demand, Asia-Pacific will add 1.9 billion connected devices to the global installed base between 2013 and 2017.
    On the other end of the regional spectrum, sub-Saharan Africa will contribute 145 million net additions to the total installed base during the next four years.

    Challenges and opportunities

    In order to cash in on this massive growth in Internet-connected devices, media companies across the operator, broadcast, consumer electronics manufacturing and over-the-top (OTT) businesses have embraced Internet protocol (IP) video distribution. Big names making a foray into IP video include HBO, Microsoft, DirecTV and Netflix.

    However, all of these companies face a major challenge: how to wrap consumers into their ecosystems, given the proliferation of platforms, high switching costs and strong incentives for consumers to stay with their existing services.

    Back in 2005, PCs comprised 93 percent of all connected devices. By the end of 2017, the base of connected devices will diversify dramatically, with PCs comprising only 23 percent of the connected installed base. Other devices will account for the rest of the market, including smart TVs at 5 percent, consoles  at 2 percent, and smartphones and tablets collectively representing 67 percent.
    “Addressing the full breadth of the device landscape, and recuperating the development cost of doing so, will pose a major challenge for a number of media firms,” Kingston added.

    1. Cable and satellite video market (U.S. only)

    Let’s start with a list of cable and satellite video providers in the U.S.:

    image
    The chart is from Would a DirecTV-DISH Merger Still Make a New Pay-TV Media Monopoly?
    [24/7 Wall St., Oct 10, 2013]. Note that Newco is the DirectTV-DISH merged company
    just imagined by the article    . The actual Top 5 companies represented 75.4% of the U.S.
    cable and satellite video subscribers: 35.6% satellite (newco) and 39.8% cable.
    Relative to that Verizon FIOS video IPTV had 4.7M subscribers and
    AT&T U-verse [IP]TV 4.5M by the end of Q4’12 (see below).

    See also (in order to understand the challenges cable operators are facing everywhere):
    – TWC rebuffs Charter’s latest takeover bid [[IHS] Screen Digest commentary, Jan 14, 2014] with “The saga to create the nation’s second largest cable operation is moving into a new phase … With so many sharks circling TWC, IHS believes that it will be a matter of not if but when TWC accepts a bid.”
    – Time Warner Cable prepares for its business future [[IHS] Screen Digest commentary, Oct 8, 2013] with “TWC and other cable operators are in the unenviable position of seeing their primary product, pay TV video, declining. Coupled with encroachment from IPTV, and potential upstart OTT technologies, cable operators are pushing to grow other business lines. … Staying ahead of the technological curve is a problem for all pay TV operators, and cable more than IPTV, with Satellite experiencing the worst of it.”
    – Netflix added to Virgin’s TiVo platform [[IHS] Screen Digest commentary, Sept 10, 2013] with “UK cable company Virgin Media has signed what is effectively an OTT carriage deal with Netflix to bring the streaming service onto the Virgin TiVo platform. Groundbreaking move is the first deal of its type and indicates a change in the positioning of Netflix and the competitive positioning of OTT against ‘traditional’ pay TV. … that more firmly positions Netflix as a content aggregator (read: channel) rather than a platform and opens the door for similar deals internationally. Move vindicates our long-held view that this was the correct way to position Netflix and other OTT content aggregators.”

    Cable takes the fight to OTT [[IHS] Screen Digest commentary, Oct 28, 2013]

    After years of subscriber losses, Comcast announced on October 25, 2013, the first widespread test of a cable network lite bundle, the combination high-speed data (HSD) and broadcast basic video and premium channel. The trial is slated to run a minimum of one year, the operator plans to have stepped increases in the starter $49.99 per month price at 6 months ($60-$70) and again at one year ($70+).
    This is not the first such offering however. In August of 2013 Time Warner Cable (TWC) initiated a similar promotion targeted at transitioning college students back toward video products, including HBO and HSD. TWC partnered with nine colleges in this limited trial, again the term is likely to run for a year or less. TWC is charging $79.99 per month for one year, but did not list a non-promotional price.
    In the following analysis IHS makes two assumptions: 1) That cord-cutting and cord-never households will likely buy HSD from pay TV providers, and that it will skew toward higher speed tiers. 2) The price for bundled 25-30Mbit is ~$55 and unbundled ~$60.
    Our take
    The fact that the business of pay TV is  changing is no longer in doubt, but the business has insulated itself well and is preparing to weather the storm. Comcast and TWC are not the first to experiment with new offerings, Cox recently concluded its flareWatch trial, the first pay TV OTT trial. The difference between the Cox effort and Comcast and TWC is that the two latter companies have price efficiencies working  on their side.
    That’s not to say that IHS believes that the Cox trial was ended because of price, more likely Cox received valuable customer feedback and experience. The Comcast and TWC deals are predicated on completely different foundations. Both offerings provide significant perceived value, and combined monetary value to subscribers.
    Both deals compare to a HSD and Netflix and/or Hulu+ plan. The Netflix/Hulu+ plan will likely cost $68 to $76 depending upon HSD tier and number of OTT subscriptions, compared with Comcast’s year one monthly average of $60 and TWC’s $70. Another significant point of difference is the depth of offering.
    Both pay TV providers share four common features, 25-30Mbit HSD, local broadcast channels, HBO, HBO GO – Comcast also includes StreamPix (Library title Subscription VOD). IHS believes that both Comcast and TWC are at a minimum matching Netflix on a like-for-like price content offering when considering HSD and HBO versus HSD and Netflix/Hulu+. The addition of broadcast local channels as well as SVOD in the case of Comcast, signal that cable is not going to give up the fight.

    2. Pay-TV market (cable and satellite, IPTV, terrestrial)

    Then, according to Worldwide pay-TV Subscribers to Exceed 1.1 Billion in 2019 with Increasing IPTV Market Share [ABI Research, Jan 22, 2014]

    imageWorldwide pay-TV market reached 903.3 million subscribers in 2013, generating $249.8 billion in service revenue. IPTV operators enjoyed significant growth (18.5% YoY) in 2013 to 92 million subscribers with a total of $37.2 billion in service revenue.
    “Increasing FTTH [Fiber To The Home] subscriber base and bundled subscriber base of telcos are boosting the IPTV market. ABI Research forecasts that the IPTV subscriber base will grow to 161 million subscribers in 2019 accounting for 15% of overall pay-TV market,” comments Jake Saunders, VP and practice director of core forecasting.
    The global terrestrial TV market reached 9.5 million subscribers at the end of 2013. A declining pay DTT subscriber base in Italy and Spain had an impact on the overall Western European DTT market which dropped around 5% in 2013. Unlike Western Europe, the DTT market in Africa grew a remarkable 45% to 2.1 million subscribers in 2013. “As African countries start to switch over to digital, digital terrestrial TV has become an affordable alternative to satellite TV service in the region. ABI Research forecasts that Africa will have over 4.8 million DTT subscribers in 2019,” adds Khin Sandi Lynn, industry analyst.
    DirecTV maintains its largest market share in terms of pay-TV service revenue. The company had around 20.2 million subscribers in the US with an ARPU above $102 by the end of 3Q-2013. Globally, the pay-TV market is expected to grow to 1.1 billion subscribers with $320.3 billion in service revenue in 2019.

    3. The overall TV market (home video, on demand video, linear TV)

    Or a broader view representing all other segments of the TV market as well:
    Global TV market revenue to grow at a steady pace: up 23% by 2018
    [DigiWorld by IDATE blog, Jan 30, 2014] by Florence Le Borgne
    Head of the TV & Digital content Practice, IDATE.

    At a time when video has become pervasive across all of our screens, most national TV markets are losing steam: shrinking viewership and pressure on advertising markets, especially in Europe. Although pay-TV seems to be holding its own, the fast-growing popularity of OTT offerings is shaking up the traditional pay-TV model, while the demise of physical media is virtually a foregone conclusion.
    If the decline of physical media now seems inevitable, television still has a chance to reinvent itself in a way that takes into account changes in viewer behaviour and competition from new online vendors.
    Accessing TV
    According to IDATE, the number of TV households worldwide will reach 1.675 billion in 2018 (+9.6% in 5 years), with the number of digital TV households worldwide being 1.542 billion in 2018, which translates into 92% of TV households
    • Cable will the remain the chief access channel (592.3 million households in 2018) but will gradually lose ground to satellite and IPTV which will account for 32.9% and 10.9% of TV households, respectively, at the end of 2018.
    • Despite the development of hybrid TV solutions, terrestrial TV should continue its decline on the first TV set and drop down to number three spot by 2018, with roughly 21% share of the global market.
    • The development of hybrid solutions that combine live programming on broadcast networks (terrestrial and DTH) and OTT video services over the open Web is a key variable in the future development of the various TV access modes, and may well shake up current trends.
    TV: top money-maker
    Breakdown of audiovisual market revenue in 2013

    image 

    TV revenue
    According to IDATE, the global TV industry’s revenue will come to €374.8 billion in 2013 and €459.2 billion in 2018.
    • Pay-TV revenue will grow by 21.3% between 2013 and 2018, or by an average 3.9% annually, to reach €220.2 billion in 2018.
    • Ad revenue will enjoy even stronger growth of 27.3% between 2013 and 2018, to reach €201.1 billion in 2018.
    • Public financing/licensing fees will continue to increase significantly (+7.7% in 5 years) to reach nearly €38 billion in 2018.
    Video revenue
    According to IDATE, physical media sales will total €16.3 billion in 2018, when video on demand (VoD) revenue will reach €35.4 billion in 2018, which is 90% more than in 2013.
    • This means that the global market will have shrunk to more than a quarter of what it was in 2013 (-27.2%).
    • Blu-ray will be the most common format and help temper plummeting physical media sales.
    • OTT video will continue to be the biggest earner, generating 51% of total revenue.
    • VoD will still be the dominant model on managed networks. It will generate €6.9 billion in 2018 versus €2.3 billion for subscription video on demand (S-VoD).
    American OTT video providers’ footprint in Europe as of 31 December 2013
    image
    Source: IDATE, December 2013
    American OTT vendors already have a solid foothold in Europe
    Netflix is already present in seven European countries: Britain, Ireland, the Netherlands, Denmark, Norway, Finland and Sweden. The service had 1.6 million subscribers in the UK and Ireland at the end of 2013.
    • LoveFilm was reporting 1.9 million subscribers in the UK and Germany at the end of 2013.
    • At the end of 2013, iTunes’ VoD rental service was available in close to 110 countries, and permanent downloads in 14 countries, chiefly in North America and Europe.
    More information on TV and new video services market report & database

    UK Video Rental Market Plunges in 2013 as Half of Country’s Blockbuster Stores Close [IHS iSuppli press release, April 23, 2013]

    The market for Blu-ray (BD) and DVD rental in the United Kingdom is expected to plunge by 22 percent in 2013, as half the country’s Blockbuster video stores shut down in a restructuring initiated by the company’s new management.
    The U.K. market for physical-video rental will drop to £202 million in 2013, down £57 million, or 22 percent from £259 million in 2012, according to a newly updated forecast from IHS (NYSE: IHS) . While the market is generally on the decline, 2013 will bring the sharpest predicted annual decrease for the 11-year period from 2007 through 2017.

    image

    By the end of 2013, only 264 Blockbuster stores will be open in the country, down 50 percent from 530 in 2012. Blockbuster is the largest video rental chain in the country.
    “The year 2013 is set to become a watershed for the U.K. video rental market as a result of the wholesale closure of Blockbuster UK stores,” said Tony Gunnarsson, senior video analyst at IHS. “The massive downturn in the store-based video rental market represents a significant loss to the video market and will result in a major decline and radical transformation of the U.K. video market overall. From 2013 on, the U.K. physical-video rental business increasingly will be dominated by online rent-by-mail subscription services.”
    Both DVD and BD transactions are due to decrease across the store-based sector this year. DVD rentals will fall by a steep 53.2 percent to 15.4 million. BD is set to drop by an even larger 61.3 percent to 2.8 million respectively.
    Blockbuster gets busted up
    After filing for administration in January 2013, Blockbuster’s administrators Deloitte announced two separate rounds of store closures, including some 224 sites. In February 2013, supermarket chain Morrisons purchased 49 of these former Blockbuster stores in its drive to increase its store presence in southeast England.
    Out of the remaining Blockbuster stores, Gordon Brothers acquired a total of 264 locations, including a number of Blockbuster outlets earmarked for closure that will now remain open.
    Pay-TV killed the video store
    In 2012, rental stores were responsible for 41.3 percent of the video rental market based on consumer spending. In the latest forecast for 2013, however, the store-based sector is now projected to generate just 24.7 percent of the overall market. This tilts the market toward the online sector, which will see its share of market increase massively from 58.7 percent in 2012 to 75.3 percent this year.
    At the same time, the lost rental business won’t result in customers that used to rent at Blockbusters automatically signing up to become rent-by-mail customers with online providers, IHS believes. Rather, those customers are more likely to turn to a host of other video platforms, primarily pay-TV services.
    Video rental market winds down
    In the longer view, the U.K. rental market will return to a normal trend of decline after 2013, with spending on renting physical video shrinking at an annual rate of under 5 percent until 2017. By then, the retreat in spending is expected to be slightly more negative at 7 percent.

    4. IPTV—AT&T U-verse TV and Verizon FiOS video in particular

    As far as the U.S. is concerned AT&T U-verse TV and Verizon FiOS video are the leading IPTV services by far*, having 5.5 million and 5.3 million subscribers respectively, which is 11.7% of the above 92 million subscribers number by ABI Research:

    image* The next service provider, CenturyLink “Ended the quarter with 149,000 CenturyLink® PrismTM TV subscribers, an increase of approximately 17,000 subscribers in third quarter 2013” according to its Q3 203 report [Nov 6, 2013]. CenturyLink only entered five U.S. markets after acquiring Embarq (2009) and Qwest (2010). In fact no other U.S. providers are in the Top 20 globally according to SNL Kagan Reports World’S 20 Largest IPTV Operators Served 83% of Global IPTV Households at End-2012 [June 6, 2013]. More:
    – China’s leading telcos– China Telecom and China Unicom– serve an estimated 30% of the global IPTV subscriber base.
    – Asian telcos accounted for 49.2% of the top 20’s IPTV subscribers in 2012, reflecting the region’s large market size and limited telco competition.
    – France — the second-largest IPTV market by subscribers after China — is home to four operators ranked among the global top 20. [    Note that among Top 5 are Iliad and France Telecom. Iliad’s Freebox TV offering proposes a broad selection of TV channels (over 450, of which more than 200 are included in the basic package), as well as numerous audiovisual services, such as catch-up TV (with 45 channels available on Freebox Replay), and a wide video-on-demand offering. It was actually the largest IPTV deployment in the world with 2.4 million IPTV-enabled customers as of end 2007 (see here).]
    – Nine operators out of 20 are located in Western Europe and seven in Asia    .

    U-verse® Drives Wireline Consumer Growth and Broadband Gains

    • Wireline consumer revenue growth of 2.9 percent versus the year-earlier period
    • Total U-verse revenues, including business, up 27.9 percent year over year, now a $13 billion annualized revenue stream
    • 10.7 million total U-verse subscribers (TV and high speed Internet) in service:
      • 630,000 high speed Internet subscriber net adds; record annual net adds of 2.7 million
      • 194,000 U-verse TV subscribers added, lowest churn in product history
    • Continued U-verse broadband gains in the business customer segment, up 78,000, nearly doubling year-ago net adds
    • Strategic business services growth accelerates with revenues up 17.4 percent year over year, now more than 25 percent of wireline business revenues

    …

    Record-Low U-verse TV Churn. Total U-verse subscribers (TV and high speed Internet) reached 10.7 million in the fourth quarter. U-verse TV had the lowest-ever churn in its history. U-verse TV added 194,000 subscribers in the fourth quarter with an increase of 924,000 for the full year to reach 5.5 million in service. AT&T has more pay TV subscribers than any other telecommunications company.
    …

    U-verse TV penetration of customer locations continues to grow and was at 21 percent at the end of the fourth quarter.

    image

    Note that after AT&T Extends TV Watching to More Devices with Launch of U-verse TV on Xbox 360 [press release, Oct 11, 2010] and even after New U-verse Internet Customers Can Take Their Pick: A Free Xbox 360, SONOS PLAY:3, Kindle Fire or Nexus 7 Tablet [press release, March 18, 2013] that Xbox tie-up ended with AT&T U-verse TV To Drop Support For Xbox 360 on December 31 [Multichannel, Nov 26, 2013]:

    “We’ve made this decision due to low customer demand,” an AT&T spokeswoman said via email on Tuesday. AT&T declined to say how many customers currently use the Xbox 360 as a set-top. … AT&T, the spokeswoman added, currently has no plans to support U-verse TV on the Xbox One. Verizon Communications FiOS TV is the first, and so far only, U.S. pay-TV provider to offer an authenticated app for the Xbox One during its initial launch phase.

    In FiOS video we added 92,000 new subscribers in the quarter. Total FiOS videos customers reached 5.3 million, representing 35% penetration.

    …

    As far as the OnCue acquisition [from Intel, i.e. the Intel Media operation], look, the focus here is really to accelerate the availability of the next-generation IP video service which we will integrate into the FiOS video service. And really what we are trying to do is differentiate this even more so with fiber to the home versus others with the TV offerings and reducing the deployment costs. And this really accelerates us from if we were trying to build IP TV versus buying the IP TV technology.

    From an FiOS customer perspective, we expect the benefits that they will have more elegant search and discovery activity and cost stream ease of use. But also keep in mind, with the acquisition of Verizon Wireless and becoming 100% ownership of that we also plan to take that platform and integrate it more deeply with our Verizon Wireless 4G LTE network. So that really was the strategy behind this.

    As far as would we enable this platform to take us over the top, obviously we have our video digital media services that we have been working on for 2.5 years. We’ve just made two acquisitions related to that platform. So, look, we are positioning ourselves strategically to be in a position to competitively compete around the whole mobile first world and video, so I think that is where we are.

    image

    Pay-TV Operators Can Stave Off OTT Threat with Multiscreen and CDN Investments [iSuppli press release, April 17, 2013]

    Despite the dire competitive threat posed by over-the-top (OTT) services, pay-TV operators can thrive by investing in additional service offerings that should include multiscreen services to more than make up for the erosion in their customer base, according to the IHS Screen Digest TV Intelligence Service from information and analytics provider IHS (NYSE: IHS).

    Speaking here today at the IHS PEVE Entertainment 2013 Conference, Guy Bisson, research director for television at IHS, noted that although European cable operators have lost 1.4 million households, they have gained 17.8 more revenue-generating units (RGUs), during the five-year period from 2007 through 2012.

    While cable operators in Europe and other regions are expected to lose more households in the coming years, RGUs will continue to increase, driving revenue growth for the industry. The below figure presents the IHS history and forecast of cable households and RGUs for the 27 countries of the European Union.

    5. OTT (Over-the-top content)

    OTT and IPTV Integration Increasingly Popular [Pyramid Points, Nov 27, 2012]

    How do you plan to spend your evening most times when you order a pizza? You’re very likely to watch a video.
    In the UK, Domino’s Pizza Group saw the value of over-the-top (OTT) online video to boost customer loyalty, and back in October launched the Domino’s Pizza Box Office video streaming offer. Customers order a pizza and get a download code to stream a movie at home. This is just another example of how OTT is revolutionizing the way video content is delivered to consumers: Today almost anyone can become a content provider.
    Exhibit: Evolving video delivery environment and video platforms
    image
    Source: Pyramid Research

    Many operators see the proliferation of OTT as a threat to their established IPTV business models. They fear that OTT will subvert their role in the pay-TV value chain and cannibalize revenue. We’ve found, however, that the opposite is just as likely to be true. In our new report, “OTT Growth Sparks Innovation Multiscreen Video Business Models,” we argue that OTT is serving as an innovation stimulus for the pay-TV market, pushing telcos to enhance their IPTV services with more screens. We also find that an increasing number of operators, alongside their managed IPTV services, are directly entering into non-managed OTT environments. This means that more operators are using the open Internet to offer video services to potentially any consumer with a broadband connectivity, being their existing customers or not.

    OTT in emerging markets: Challenges and opportunities
    Operators are warming up to the idea of launching their own OTT services, especially in emerging markets. While IPTV remains a premium service, which requires subscribers to purchase more expensive bundles, OTT is more flexible and only requires a good broadband connection. This means that in the more price-sensitive markets, where there is still strong demand for online video, OTT is becoming an attractive option for users. Besides, OTT services are typically delivered over a wide range of screens and at different price points, including smartphones, tablets and gaming consoles, making them more accessible to different consumer profiles.
    In Colombia, for example, ETB has announced that it will shortly launch an OTT service to complement its upcoming IPTV deployment. In Mexico, the OTT service provided by fiber-to-the-home (FTTH) operator Totalplay, dubbed Totalmovie, has rapidly become the main competitor to Netflix. It offers video content in Mexico alongside the operators’ IPTV platform and across Latin America by using third-party operator infrastructure. As of October, it had 1.9m registered users and 5m unique monthly visitors.
    We expect to see more Latin American operators launching OTT services. The second largest regional group, Telefonica, is considering positioning OTT commercial offers in several countries. The decision between managed (IPTV) or unmanaged video delivery (OTT) ultimately depends on each country’s infrastructure, competitive environment and operator position. Telefonica has, however, confirmed that there are already ongoing OTT initiatives outside Spain.
    In Turkey, TTNET, the ISP of fixed-line incumbent Turk Telekom, has already been quite successful in combining its IPTV and OTT offerings. TTNET wants to add value to the bundles, which in turns helps increase customer loyalty and reduce churn. This is crucial in preventing the decline of Turk Telekom’s fixed-line base. While IPTV is positioned as a premium service, OTT is priced very competitively. As of August this year, TTNET had over 1.2m OTT and 150,000 IPTV subscriptions.
    OTT can provide significant benefits to operators. In the case of TTNET, positioning OTT alongside IPTV is encouraging consumers to break through their broadband allowances, thus creating the need to migrate to higher-value packages. In the case of Totalplay in Mexico, OTT is contributing to the monetization of the operator’s superfast fiber-based network. For both operators, using third-party infrastructure breaks the link between content delivery and network management.

    The outlook is positive

    In the near future, we expect to see significant revenue-generating opportunities associated with VoD, catch-up TV, and targeted advertising, especially when telcos can integrate their OTT and IPTV offerings with interactive and social media functions.

    Using the open Internet for content delivery, however, has its downsides. The main shortcoming with OTT is that the operator is not in control of quality of service (QoS). Especially in emerging markets, quality of service and network speeds vary wildly from country to country, making it challenging to ensure the same quality of experience (QoE) that can be guaranteed through a managed IPTV network. Another challenge for operators is securing in-demand content for OTT platforms. Without doubt content is king, but content is also costly. Unless they are backed by multimedia and broadcasting groups, operators tend to be the weak link in the content production and delivery value chain. But that is a challenge with IPTV too.

    All in all, if telcos are serious about developing a pay-TV offering that can resonate with the demand for multiple viewing platforms at different price levels, they need to seriously consider the opportunity of complementing IPTV platforms with OTT.

    — Daniele Tricarico, Analyst

    More information from Pyramid Research:
    – Is the Arab World Ready for OTT Video? [Sept 13, 2013]
    – CDNs Offer New OTT Revenue Hope [Feb 20, 2013]
    – Chinese Regulator Opens Up to MVNOs [mobile virtual network operators] [March 15, 2013]

    Finally here is a list of Top 10 Online Streaming Video Services [tom’sGUIDE, Jan 1, 2014] in the U.S. in order to understand the state-of-the-art of OTT video services:

    Digital video options

    Streaming video has just about displaced the DVD on the list of home entertainment options, and it may supersede cable and broadcast TV in the near future. Every modern computer has access to streaming video services, as do most game consoles and mobile devices, and even a growing proportion of televisions. Whether you’re looking to get your feet wet or expand your streaming horizons, check out 10 of the best services for watching movies, TV, music videos, Web shows and more.

    image

    Netflix

    Netflix is the most popular video streaming service out there, and with good reason. The service is available on just about every platform, including computers, game consoles, set-top boxes and mobile devices, and it hosts movies and TV shows to accommodate every taste. From hit films like “The Avengers” to every “Star Trek” TV series to original programming like “Orange Is the New Black,” Netflix’s variety of content is unparalleled. You can even share an account among five different users to keep recommendations and viewing habits separate. Netflix costs $8 per month.

    Inserts of mine:
    – Netflix added to Virgin’s TiVo platform [[IHS] Screen Digest commentary, Sept 10, 2013] with “UK cable company Virgin Media has signed what is effectively an OTT carriage deal with Netflix to bring the streaming service onto the Virgin TiVo platform. Groundbreaking move is the first deal of its type and indicates a change in the positioning of Netflix and the competitive positioning of OTT against ‘traditional’ pay TV. … that more firmly positions Netflix as a content aggregator (read: channel) rather than a platform and opens the door for similar deals internationally. Move vindicates our long-held view that this was the correct way to position Netflix and other OTT content aggregators.”
    – Netflix passes 38m paying ‘streaming’ subscribers [[IHS] Screen Digest commentary, Oct 22, 2013] with:

    Netflix’s total number of paid streaming subscribers increased by 2.4m over the quarter, to reach 29.9m subscribers in the United States and 8.1m subscribers internationally. The international streaming service saw a larger than expected increase of free trialists to 1.1m driven by Latin America and the September launch of the service in the Netherlands.
    The third quarter of 2013 is a significant milestone for Netflix, as the quarter in which the Netflix US streaming subscriber count pulled even with the US subscriber count of pay TV giant HBO. The company ended the quarter just shy of 30 million streaming subscribers with estimates for HBO at roughly the same level.
    The comparison with HBO is the most appropriate for companies such as Netflix, Amazon and Hulu‘s subscription service, rather than with the pay TV operators. Netflix, as well as Hulu Plus and Amazon, are acting as premium channels in investing in acquired and original content and following in HBO’s early-1990s footsteps. Despite the investment Netflix has made in its own original programming, the company has reported that a greater percentage of overall viewing on the platform is of previous-season TV episodes and catalogue movies. Netflix indicates that it plans to double its investment in original content in 2014, although this will still represent less than 10per cent of global content expenditure.
    …
    Netflix’s international business remained a loss-making venture as the company struggles to gain profitability without scale and without a legacy high margin physical business. Whereas in the US the company initially bundled its streaming proposition with disc rentals add value to the physical subscription Netflix has not had a preexisting business from which to launch a digital subscription internationally. At present, the international ventures are subsidized by domestic market return and with ongoing market expansions planned by Netflix; IHS does not expect this to change in the mid-term.

    End od my inserts for Netflix

    Hulu Plus

    If you want to catch TV shows almost as soon as they air, Hulu Plus may be right for you. This streaming service hosts a plethora of TV shows and movies. Whether you want to watch “Leverage,” “Family Guy” or “Spongebob Squarepants,” Hulu generally posts new episodes within days of their airing on TV. Hulu Plus costs $8 per month (with some shows available only on computers for free), and provides past seasons of shows along with Hulu’s original programs. It is available on computers, game consoles, streaming boxes and mobiles.

    Amazon Prime Instant Video

    Amazon Prime Instant Video is a streaming service that comes with an Amazon Prime subscription. In addition to offering free shipping on Amazon orders and free Kindle books to borrow, Amazon Prime allows subscribers to access approximately 40,000 movies and TV shows. In addition to unlimited streaming offerings, users can rent and buy other TV shows and movies a la carte. This makes Amazon Instant Video a good choice for watching newer movies before they touch down on unlimited streaming services like Netflix. Amazon Prime costs $79 per year.

    See also: Amazon may hike Prime cost as earnings disappoint and further challenges lay ahead of the company for which it needs to adjust its business model and expand its operations [‘Experiencing the Cloud’, Jan 31, 2014]

    M-Go

    If you’re not interested in paying a monthly fee for your streaming video content, M-Go might be up your alley. M-Go, which is the default streaming service on Roku boxes and also available on computers and mobile devices, allows you to rent and buy TV shows and movies. Prices range from $2 for individual TV episodes to $20 for HD movie purchases. M-Go excels in offering both HD and SD versions of content, making it an attractive choice if you want a one-off rental.

    Blip

    Watching big-budget movies and TV is all well and good, but for curated, original Web shows from charismatic creators, nothing fits the bill like Blip. Think of Blip as a more curated, creator-friendly version of YouTube. Individuals create and upload original series, ranging from comedy to reviews to funny pet videos, and Blip ensures that the content has professional production values and that new entries are added regularly. All content on Blip is free, and you can access it via your computer, mobile device or Xbox 360.

    image

    Vevo

    MTV hasn’t played music videos since the ’90s, but the medium is not dead just yet. Vevo hosts the latest music videos from artists ranging from Katy Perry to Old Crow Medicine Show, but audiophiles would be wise to stick around for its scads of original content. Users can access biographies, retrospectives, behind-the-scenes footage and interviews about their favorite musicians, and curated playlists for both individual artists and entire genres. Vevo is free, and available on computers, mobile devices, Rokus, Apple TVs and Xbox 360s.

    MLB.TV

    If you’re a baseball fan, you’re in luck: Major League Baseball‘s streaming service is one of the best in professional sports. MLB.TV allows viewers to watch most games during the regular MLB season. (Postseason games are available through the Postseason.TV service at additional cost.) Fans can watch both home and away games from anywhere in the world. Stat junkies can examine each pitch as it happens and compare their fantasy teams in real time. MLB.TV costs $130 per year and is available on computers, mobile devices, set-top boxes, Xbox 360s and PS3s.

    Crackle

    If you crave pop cinema, Crackle could be the best thing to happen to your TV since afternoon basic cable. The Crackle service offers a rotating selection of a few hundred movies and TV shows, including “Ghostbusters,” “The Cable Guy” and “The Shield.” Crackle also creates and hosts original content, ranging from espionage thriller serials to “Comedians in Cars Getting Coffee” starring Jerry Seinfeld. Crackle is free (though you’ll have to watch some commercials) and available on computers, mobile devices, set-top boxes and game consoles.

    Twitch

    Watching other people play video games is, surprisingly, almost as much fun as playing yourself — sometimes more so, if you have a good host. Twitch is a platform for gamers to livestream their play sessions. You can find streams of everything from “League of Legends” to “Minecraft.” Whether you want to see tutorials, speed runs or popular Web personalities’ reviews, Twitch has you covered. The service is free, both to watch and to stream your own sessions. Twitch is available on computers, mobile devices, set-top boxes and PS4s.

    YouTube

    The biggest video streaming service online is just about unbeatable when it comes to variety of content. YouTube is the go-to site to upload short videos: cats, clips from your favorite TV programs, cats, original Web shows, cats, movie trailers, cats and more. The service will be one of the first to support content for the higher-resolution 4K TVs. If you’re looking to watch short-form videos, this is the place to start. YouTube is free and available on just about every device with a screen and an Internet connection.

    Discovery to take majority control of Eurosport [[IHS] Screen Digest commentary, Jan 22, 2014]

    Discovery Communications has agreed to take a controlling interest in Eurosport International, the pan-European sports channel, from its partner TF1 Group [of France]. … Discovery, which primarily operates a portfolio of factual channels in Europe, has branched out in recent years with the acquisitions of SBS Nordic in Scandinavia and Italy’s Switchover Media. It now has the option to acquire 100% of Eurosport International and could also increase its interest in Eurosport France, though TF1 expects to retain its 80% interest until at least 1 January 2015.
    …
    The US group‘s move to take control of Eurosport is, as the company noted yesterday, taking place a year sooner than originally planned. While sports is clearly a new playing field for Discovery, the male-skewing profile of Eurosport is a good fit with its factual channel brands, offering possibilities for combining advertising and network sales. To date, co-operation has focused on markets where Eurosport is not present, notably the US and China. In the US, Discovery has been showcasing Eurosport rally and superbike programming on its Velocity channel.
    A further move into the US appears unlikely given the presence of ESPN and powerful rivals like Fox Sports, NBC Sports and CBS. Fox Sports in particular has recently made strong moves into the international market place. Outside the US, Eurosport successfully occupies a niche where it is not competing with premium pay operators like BSkyB, Canal Plus and Sky Italia for high cost events like league football, but instead focuses on lower profile events where rights are often shared with local free-to-air broadcasters.
    The main uncertainty over Eurosport’s change of ownership surrounds its content supply from the European Broadcasting Union (EBU), which provides hundreds of hours of events like cycling, grand slam tennis, winter sports and athletics. TF1 is an EBU member, but with Discovery holding the reins, this arrangement will almost certainly have to be renegotiated, with possible implications for Eurosport’s cost base. Even now, there appears to be room for improvement: Discovery’s operating margin for its international operations was 44% in 2012, compared to a slender 14% for Eurosport International.

    Sky sees future in OTT as upsell becomes focus [[IHS] Screen Digest commentary, July 26, 2013]

    Sky [more precisely BSkyB] added more Now TV customers in the quarter to end June 2013 than new satellite customers and is increasingly pushing OTT access and connected devices as the core of its future growth strategy. In calendar second quarter (Sky’s fiscal Q4), the pay TV provider added 34,000 new TV customers to reach 10.442m and said the ‘bulk’ of TV growth came from OTT service Now TV. Organic growth for broadband stood at 119,000 (25 per cent more than BT added in the same quarter) with a further 400,000 added through the acquisition of O2’s UK broadband operations to reach 4.9m. Telephony grew 140,000 organically with 153,000 coming from O2 to reach 4.5m. The number of HD subscribers grew 117,000 to reach 4.789m or 46 per cent of the TV base, with 2.7m HD boxes connected to broadband. Annualised ARPU hit £577 up £29 in the year.
    Sky said that its future strategy would focus on becoming the centre of the connected home across a range of content windows that would increasingly include DVD window for paid on-demand and movie retail as well as the traditional subscription window. The move comes on the back of impressive figures for on-demand and OTT content subscription with a three fold increase in Sky Store (on-demand) revenue and 166,000 customers paying £5 a month for the Sky Go Extra service that allows content download to mobile devices. Sky said that, on average, Sky homes have seven connected devices and that content access inside and outside the home was increasingly important to its offer. The operator said it had concluded four new studio deals with a wider range of rights to service this market and would prioritise getting its customer base connected. The new Sky HD box now comes with built in Wi-Fi and a new low-cost wireless connector is being made available. Sky also released a new Now TV box priced at £9.99 when a Now TV subscription is taken, the device also enables Smart TV functionality and is targeted at the 13m Freeview [a free-to-air digital terrestrial television service in UK, a joint venture between the BBC, ITV,Channel 4, BSkyB and transmitter operator Arqiva] homes who don’t currently subscribe to Sky services.
    Our take
    The latest move is interesting in that is represents a significant vote of confidence in both the incremental revenue that can be derived from OTT services and the potential to tap an entirely new customer base in the form of ‘dip-in’ Now TV users. While this goes hand in hand with an increased investment in original content and channels as well as sports rights to support the core service, it is clear that Sky sees the most upside in incremental revenue driven by OTT rather than strong additional growth in traditional satellite pay TV customers. With broadband and telephony being an increasingly important area of revenue growth, the connected device/OTT space becomes the next area for up-sell, meaning that the so-called ‘multi-product strategy’ becomes central. While none of the services require a tie-in to Sky’s own broadband, it is this very area that BT has chosen to attack with its bold move into sport. The free access to BT’s suite of new sports channels with a BT broadband 12 month contract means that not only could there be a subset of Sky TV customers who will migrate to BT broadband, but a further segment of existing BT customers who will not be available to Sky for triple-play up-sell. To date there has been no evidence that’s BT’s strategy is paying off (net TV additions for BT were roughly flat in the quarter to end June 2013). But BT says it believes this will change when the channels launch.
    Sky’s strategy, then, is to fall back on its traditional strengths centred on content, but to do this in a way that embraces new forms of distribution and leverages the power of its existing customer relationships. Headroom for growth remains strong: despite triple-play penetration reaching 35 per cent among the Sky customer base, two-thirds of Sky customers have yet to take a broadband offer. With Sky out-performing the market in broadband net adds, this area is likely to ensure continued strong revenue and ARPU growth. But two areas of risk remain. If the majority of TV growth comes from Now TV, Sky will have to deal with an increasingly large segment of TV customers who are not tied into a contract and who are relatively low value in terms of ARPU. As this segment scales, clearly this could lead to large and seasonal fluctuations in churn and ARPU. The second area of risk is related: cannibalisation. While this is a risk that Sky is well aware of and keeping close tabs on, the renewed connected home push risks accelerating the transition to a more transient customer base.

    UK TV viewing is about connection, says Ofcom report [[IHS] Screen Digest commentary, Aug 1, 2013]

    The home entertainment experience is becoming increasingly connected with multi-tasking central to the enjoyment of TV content, according to the latest Communications Market Report from UK regulator Ofcom. According to the findings, there has been a huge increase in the devices that people take to the living room. On average, each UK household owns three different types on Internet-enabled device. The biggest growth over the last year in take-up of services and devices has been on the number of tablets and smart-phones. Thanks to the device mix, 22 per cent of people in the living room watching screens other than the main TV most of the time.
    The main TV set remains important. Ninety-one per cent of UK population tune into the main TV set weekly up from 88 per cent in 2002, with viewers on average watching four hours a day in 2012 compared to 3.6 hours in 2006. Although the report finds that people gather around the TV in the living room, there has been a decline in the number of children with TVs in their bedroom; 52 per cent of UK children now have a TV set in their bedrooms which represents a 17 per cent decline over the last six years, mainly related to the increase number of tablets and Internet connected devices.
    Average media household spend has increased in the last year to £113.51 a month after many years of decline. The biggest increase has been on mobile services (£46.73 a month) and fixed internet (£11.91 a month) and the biggest decrease has been on fixed voice (down £22.48 versus one year ago to £21.61 in 2012). TV spend has been stable over the last five years at between £28-£29 a month.
    Our take

    Ofcom figures reflect what IHS Screen Digest has long noted: live linear TV is not dead.

    According to Ofcom, time-shifted viewing represents just 10 per cent of the total and hasn’t changed much over the last years despite the huge increase in DVR ownership. According to BARB figures DVR has grown from 18 per cent in 2007 to 55 per cent in 2010 and 67 per cent in 2012. Despite this, growth in time-shifted viewing has been only moderate up from six per cent four years ago. 
    More than half of UK adults are regular media multi taskers, they ‘stack’ or ‘mesh’while watching TV weekly, with tablet owners more likely to multi-task than average. Almost one in four UK adults made direct communication with friends and family about the programs as they watching (media meshing) and half of UK adults conduct other activities while they are watching TV on a weekly basis (media staking).
    The increase in tablet owners has also changed consumer viewing behaviour with VOD requests coming from tablets increasing from three per cent in 2011 to 12 per cent in 2012. More than 56 per cent of tablet owners used them to watch TV and 57 per cent of those watched linear TV on the tablet.

    Ofcom also found that, when it comes to the much-hyped area of social TV, it is news, reality shows and sport events that are engaging viewers through social media, but the knock-on effect is that consumers want to watch these shows live in order to engage socially, providing another boost for linear TV.

    TV Everywhere Spreads Among US Television and Cable Networks; NBCUniversal Leads [IHS iSuppli press release, Oct 18, 2013]

    NBCUniversal leads the US TV Everywhere (TVE) effort in providing access to TV content on second screens like smartphones and tablets, while EPIX and HBO share the distinction of supporting TVE on more second-screen devices than any other premium or basic cable network, according to a new report from the TV Intelligence Service at IHS Inc. (NYSE: IHS).

    From Wikipedia: TV Everywhere (also sometimes known as authenticated streaming)[1] refers to a model wherein television providers and broadcasters, particularly cable channels, allow their subscribers to access their respective content on digital platforms, including video on demand and live streaming of the channels themselves. TV Everywhere systems utilize user accounts provided by the television provider—which are used to verify whether the user is a subscriber to a particular channel, thus allowing or denying access to the content. The U.S. provider Time Warner Cable first introduced the concept in 2009; in 2010, many television providers and broadcasters began to roll out TV Everywhere services for their subscribers, including major networks such as ESPN, HBO,NBC (particularly for its Olympics coverage).
    NBCUniversal provides TVE in 15 of its 18 channels, or 83 percent of the studio’s total stable of cable and broadcast networks to pay-TV subscribers willing to authenticate on second-screen devices. Meanwhile, EPIX and HBO have been at the forefront of the TVE experience, with both very willing to embrace new technologies and offering significant amounts of content on their apps and portals.
    EPIX first kicked off the TVE phenomena in October 2009, formed by partners Paramount, MGM and Lionsgate after their failed renewal with Showtime HBO followed suit in February 2010 with the launch of its web portal and how has a vast TVE library online, even though it does not yet offer live linear streaming.

    image

    HBO, along with Cinemax and BTN2Go, are the only three networks to have TV Everywhere authentication agreements with all major US pay TV operators.
    For its part, Showtime is the only premium network offering live linear streaming through TV Everywhere. The company is also allowing for authentication outside of the home, a feature likely to expand to other basic and premium cable networks as TVE continues to evolve.
    The last premium channel group to the party is Liberty’s STARZ. STARZ and Encore launched TV Everywhere services in October of 2012, but are still missing authentication deals with both Comcast and DISH Network.
    One entity so far remains the lone hold-out among the major channel groups not providing any TV Everywhere content—Discovery Communications. But that will change as Discovery is expected to finally jump into the fray in the near to midterm time frame. It will likely become critical to offer similar services, IHS believes, as TVE access becomes more central to the future of US pay TV video.
    Solving the cord-cutting problem before it gathers steam
    All major pay-TV operators to date have implemented some form of the TVE service, although sometimes in very limited form, via either live linear streaming or video on demand (VoD). But while the streaming of live linear network feeds is largely relegated to in-home use, video on demand (VoD) is a significant out-of-home TVE product.
    VoD streaming channels, at 73 including cable, premium and broadcast, far outnumber the channels offering live streaming, at 31, as shown in the attached figure. NBCUniversal, the TVE leader, has 15 VoD channels and five live streaming channels, followed by Time Warner with nine VoD channels and three live streaming channels.
    “TV Everywhere has been developed as a collective strategy by both pay-TV operators and TV content owners to enhance the traditional linear TV proposition, so that secondary screens like tablets and smartphones can be used to view TV content in addition to the primary screen,” said Erik Brannon, analyst for U.S. cable networks at IHS. “And in spite of the differences in strategy, all TVE products have one thing in common: They allow for current pay-TV video subscribers to authenticate and consume on secondary screens a significant amount of content that they purchase as part of their normal pay-TV video subscriptions.”
    TVE is one approach that pay-TV operators and network owners are using to stem the tide of cord-cutting among cable subscribers before the number of defections become significant. In many cases, cable subscribers are finding themselves increasingly tempted to end their subscriptions—either because of high costs or because of other alternatives now available, such as over-the-top (OTT) alternatives like Netflix. In the second quarter of 2013 alone IHS estimates that the pay-TV business shed 352,000 subscribers, mostly to seasonality, but some elements of cord-cutting are likely to have been present as well. To be sure, the combined price of $28 (Netflix, Hulu Plus and Aereo) may be more appealing to consumers than the $80+ average revenue per user that IHS estimates pay-TV video customers will pony up for service in 2013.
    Through TVE, both pay-TV operators and network owners hope to add new functionality and interactivity to the television viewing experience. And by partnering with pay-TV operators, content owners like the broadcast networks hope they can continue to solidify their hold on the distribution of premium television content.
    Device compatibility extending beyond iOS and Android
    TV Everywhere is also evolving beyond Apple iOS and Android, the two platforms on which TVE apps first appeared. Now, TVE apps from networks are becoming available and are being deployed across a wide range of connected devices, including smart TVs; video game consoles like Microsoft’s Xbox; Amazon’s Kindle Fire; Blu-ray players; and digital media products such as Roku and Apple TV.
    Adoption of TVE initiatives by the major channels is a reaction to the changing landscape of TV viewers in the country, Brannon noted. And as it continues to grow in awareness and popularity, TV Everywhere will remain a central focus for pay-TV operators.

    6. Microsoft’s live TV solution on Xbox

    From Worldwide launch of Xbox One sparks global celebration for a new generation in games and entertainment [Microsoft press release, Nov 21, 2013]

    Xbox One’s innovative architecture means you no longer have to choose between your games and entertainment. Get multiplayer alerts while you watch TV, and keep watching TV while you play. Snap your NFL fantasy football stats next to the game. Jump instantly from a game to TV, movies, fitness, music, sports, the Internet and Skype video chat with the sound of your voice. With Xbox One, you never have to stop playing to talk to a friend, surf the Web or watch live TV. You also have access to a new generation of TV experiences, and starting in the U.S. and coming to many markets soon, OneGuide will allow you to access your favorite shows, channels, apps or games with the Bing natural language voice search.

    Xbox One Live TV, Xbox Fitness with Yusuf Mehdi [scarlettgarden YouTube channel, Oct 27, 2013]

    Here’s an Xbox Wire interview with Yusuf Mehdi regarding live TV on the Xbox with instant switching and Xbox experiences tailored to the gamer profile

    From Xbox One: Your Top Questions Answered [May, 2013]

    Our goal is to enable live TV through Xbox One in every way that it is delivered throughout the world, whether that’s television service providers, over the air or over the Internet, or HDMI-in via a set top box (as is the case with many providers in the US). The delivery of TV is complex and we are working through the many technologies and policies around the world to make live TV available where Xbox One is available.

    The TWC Case:

    This deal, which will bring more live channels than any other experience on Xbox 360, will offer Time Warner Cable [TWC] subscribers with an Xbox Live Gold membership the ability to watch their favorite shows from right from their Xbox 360 — including favorites like AMC, BBC World News, Bravo, Cartoon Network, CNN, Comedy Central, Food Network, HGTV and more. And unlike any other platform, you’ll be able to control your entertainment using your voice via Kinect for Xbox 360.
    I’m excited to announce, alongside our good friends at Time Warner Cable, that the TWC TV app has launched on Xbox 360 today, delivering up to 300 of the most popular TV channels to Xbox Live Gold members in the U.S. who are also TWC subscribers.
    …
    At Xbox, our vision has always been to provide all the entertainment people want in one place, putting the best in TV, movies, music and sports right next to your favorite games. Like Xbox 360, Xbox One will be the best place in your house for gaming, apps and TV and we can’t wait to show you more on that soon. Today, we’re thrilled to expand our growing entertainment app portfolio of more than 130 voice-controlled apps on Xbox 360 with the addition of TWC TV. TWC customers, thank you for your support and welcome to the Xbox family.
    When we launched the TWC TV app on Xbox 360 in August, we promised we were hard at work with our partners at Time Warner Cable to bring you Video On Demand and just in time for the holidays, we’re delivering. Starting today, Xbox Live Gold members in the U.S. who are also Time Warner Cable subscribers can now get On Demand content right on their Xbox 360 in addition to the nearly 300 channels of live TV that the TWC TV on Xbox 360 app already offers. And don’t forget that with Kinect for Xbox 360, the app lets you control your favorite shows using voice and gestures so you can kick back, remote-free.
    The update also includes an exclusive “share” feature that allows you to send messages to other Xbox Live members that are TWC TV customers while channel surfing. With the TWC TV app, you’ll have access to more than 5,000 On Demand choices and in-app messaging. Look for the update today or download the app now!

    With an unexperienced person: Hands-on video: The Xbox One as a media device [gigaom YouTube channel, Nov 19, 2013]

    The Xbox One promises to combine state-of-the-art video gaming with live TV and streaming apps. Check out or hands-on video for a closer look at the device’s entertainment offerings.

    First Wave of TV & Entertainment Apps Coming to Xbox One Unveiled [Xbox Wire from Microsoft, Nov 8, 2013]

    Offering more entertainment options has always been important to Xbox fans. For years, we’ve been working with leading entertainment brands and TV providers to offer our customers a wide variety of live and on-demand entertainment. Today we unveiled the complete Xbox One experience – showcasing how Xbox One delivers the best games and multiplayer features, along with your favorite movies, music, sports and live TV experiences – all in one place.

    “We set out to make Xbox One the all-in-one games and entertainment hub for your home. The one system that offers the best games next to the best entertainment experiences and apps,” said Marc Whitten, Xbox Chief Product Officer. “Along with offering a stellar app portfolio from around the world, Xbox One takes the next step by offering them in a way that is seamless and easy to use.”

    In addition to delivering live TV in every market where Xbox One will be sold, we are also bringing premium, voice and gesture controlled TV and entertainment apps specifically designed for your living room. These apps have been built from the ground up uniquely for Xbox One and are designed to harness the power of the all-in-one platform.  For example, Xbox One is empowering partners to bring media achievements and exclusive Snap experiences, as well as many other things to entertainment apps, offering everybody the opportunity to achieve badges or rewards for the media they consume in addition to gaming.

    image

    Something truly unique we’re doing with Xbox One is bringing together your favorite TV channels and entertainment app channels into one screen. Xbox One is also the only games and entertainment system that enables HDMI pass through. You can create your own personal Favorites in OneGuide – the Xbox One electronic program guide – so you can quickly and easily choose what you want to watch, whether it’s a TV channel like CBS, NBC or ESPN, or something inside an app like Xbox Video, Hulu Plus or the NFL on Xbox One. You can even add your personal photos and videos from the SkyDrive app to your OneGuide Favorites.

    Additionally, a Bing search for TV, movies, games, or music scans across all apps to find exactly what you’re looking for, instead of having to hunt through each app individually. For the first time, you don’t have to juggle multiple screens across cable TV, video streaming services and other entertainment apps to quickly find the entertainment you’re looking for.

    Today, we’re announcing the very first wave of some of the world’s biggest names in entertainment rolling out on Xbox One in the 13 launch markets between Nov. 22 at launch and spring 2014:

    Australia

    • Crackle
    • Machinima
    • MUZU TV
    • Network Ten’s tenplay
    • Quickflix
    • SBS On Demand
    • TED
    • Twitch

    Austria

    • Eurosport
    • Machinima
    • MUZU TV
    • TED
    • Twitch

    Brazil

    • Crackle
    • Machinima
    • Muu
    • Netflix
    • Saraiva Player
    • Sky Online
    • SporTV
    • TED
    • Telecine
    • Twitch
    • Vivo Play

    Canada

    • CinemaNow
    • Crackle
    • Machinima
    • MUZU TV
    • Netflix
    • Rogers Anyplace TV
    • Sportsnet
    • TED
    • The NFL on Xbox One
    • Twitch

    France

    • 6Play
    • Canal+/CanalSat
    • France 2,3,4,5
    • La TV d’Orange
    • Machinima
    • MUZU TV
    • MyTF1
    • MYTF1VOD
    • SFR TV
    • TED
    • Twitch

    Germany

    • Amazon\LOVEFiLM
    • Eurosport
    • Machinima
    • MUZU TV
    • TED
    • Twitch
    • Watchever
    • Zattoo

    Ireland

    • Eurosport
    • Machinima
    • MUZU TV
    • Netflix
    • TED
    • Twitch

    Italy

    • Eurosport
    • Machinima
    • MUZU TV
    • Premium Play
    • TED
    • Twitch

    Mexico

    • Clarovideo
    • Crackle
    • Machinima
    • Netflix
    • TED
    • Televisa
    • The NFL on Xbox One
    • TV Azteca
    • Twitch
    • Veo

    New Zealand

    • Machinima
    • MUZU TV
    • Quickflix
    • TED
    • Twitch

    Spain

    • Eurosport
    • Gol Televisión
    • Machinima
    • MUZU TV
    • RTVE
    • TED
    • Twitch
    • Wuaki.tv
    • Zattoo

    United Kingdom

    • 4oD
    • Amazon\LOVEFiLM
    • blinkbox
    • Crackle
    • Demand 5
    • Eurosport
    • Machinima
    • MUZU TV
    • Netflix
    • NOW TV
    • TED
    • Twitch
    • Wuaki.tv

    United States

    • Amazon Instant Video
    • Crackle
    • The CW
    • ESPN
    • FOX NOW
    • FXNOW
    • HBO GO (coming soon)
    • Hulu Plus
    • Machinima
    • MUZU TV
    • Netflix
    • Redbox Instant by Verizon
    • Target Ticket
    • TED
    • The NFL on Xbox One
    • Twitch
    • Univision Deportes
    • Verizon FiOS TV
    • VUDU

    The list above* is just the first wave of third-party apps that are coming to Xbox One over the course of the next few months.  We will continue to announce more apps coming to the platform and both the Xbox One and Xbox 360 entertainment app portfolios will continue to grow weekly.
    *Xbox LIVE Gold membership required

    In addition to the entertainment apps coming from partners, in every market Xbox One will also feature:

    • Internet Explorer
    • Skype
    • SkyDrive
    • Upload

    With games, multiplayer gaming, live TV and the best entertainment apps, Xbox One is the most complete entertainment system.

    Note that after AT&T Extends TV Watching to More Devices with Launch of U-verse TV on Xbox 360 [press release, Oct 11, 2010] and even after New U-verse Internet Customers Can Take Their Pick: A Free Xbox 360, SONOS PLAY:3, Kindle Fire or Nexus 7 Tablet [press release, March 18, 2013] that Xbox tie-up ended with AT&T U-verse TV To Drop Support For Xbox 360 on December 31 [Multichannel, Nov 26, 2013]:

    “We’ve made this decision due to low customer demand,” an AT&T spokeswoman said via email on Tuesday. AT&T declined to say how many customers currently use the Xbox 360 as a set-top. … AT&T, the spokeswoman added, currently has no plans to support U-verse TV on the Xbox One. Verizon Communications FiOS TV is the first, and so far only, U.S. pay-TV provider to offer an authenticated app for the Xbox One during its initial launch phase.

    With highly experienced users: Xbox One All-in-One Demo with Yusuf Mehdi and Marc Whitten [xbox YouTube channel, Nov 8, 2013]

    Marc Whitten and Yusuf Mehdi walk through a comprehensive demo of Xbox One, including instant switching, biometric sign-in, Live TV, Skype, game DVR, OneGuide and more.

    From Xbox One: The Complete All-in-One Games and Entertainment System [Xbox Wire from Microsoft, Nov 8, 2013]

    …
    As we head toward Nov. 22, we’re showcasing the all-in-one capabilities of Xbox One. This is the real Xbox One in action. Corporate Vice President of Marketing and Strategy, Yusuf Mehdi, and Chief Product Officer Marc Whitten show the best of Xbox One in this new video. And, you can see 10 of our favorite new features below.
    #1 – Unleashing the Power of Your Voice
    A simple voice command turns on your Xbox One, your TV, your set-top box and your AV system because Kinect for Xbox One is an Infra-Red blaster. And when you say “Xbox On,” your game is always ready to resume from wherever you left off. You can start playing your favorite game, find your favorite show, change channels, turn up the TV volume and more – with the sound of your voice, powered by Bing voice recognition technology.  Just say “Xbox, go to ESPN” and your TV will change directly to the ESPN channel. Or, “Xbox, go to Hulu Plus,” “Xbox, Volume Up,” “Xbox, Mute,” “Xbox, go to Music” – it’s simple. Kinect “talks to” your TV, set-top box and AV receiver, making it easier than ever to navigate entertainment in your living room.
    #2 – Biometric Sign In
    …
    #3 – Instant Resume and Instant Switching
    We’ve talked about instant switching before, but now you can see it for yourself in action. The video showcases how quickly you can jump from one experience to another and right back where you left off. You can literally jump from a game to live TV, music, movies, sports, Web sites and back again in seconds, just by using your voice.
    #4 – Watch Live TV via Xbox One
    Xbox One lets you watch live TV from your HDMI-compatible cable or satellite box, making it easy to switch from games to live TV – all with the sound of your voice, and without having to switch TV inputs. No more multiple remotes, missed multiplayer matches while you’re watching TV, or frustrating delays. Just connect your set top box to your Xbox One and you can watch live TV through your Xbox One.
    #5 – Get a Multiplayer Invite, while you are Watching a movie or live TV
    …
    #6 – Game DVR and Upload Studio Let You Record and Share Your Greatest Moments
    …
    #7 – Do Two Things at Once
    You can also choose to snap two experiences together – so you can play a game while you watch TV or listen to Xbox Music. Or, watch the big NFL game while you manage your fantasy football team. For gamers, snapping Machinima opens up a whole new world of opportunity. Just by saying “Xbox, Snap Machinima,” the Machinima app will be snapped next to “Dead Rising 3” or your favorite game, and walk-throughs, game reviews, help videos and more will appear.
    #8 – Skype on the Big Screen, With Groups and Free Long Distance
    Skype is amazing on Xbox One, offering the only big screen experience with Group Video Chat with up to four people. Kinect is the only camera in the world that will follow the caller and pan and zoom automatically as if you had your own camera man. You can talk with your friends while surfing the Web or checking the latest stats of a sports team. And have full 1080p video calls for one-to-one chats on your TV. 1
    1 For 1080p video call, both users must have compatible HD displays, web cams, messaging clients, and broadband internet.

    #9 – OneGuide Delivers Personalized Guide to TV, Apps and More

    Xbox One has its own TV listings guide that can be navigated with your voice. Say “Xbox, what’s on Discovery Channel?” and boom, there you have the list of shows.  Call out your favorite TV show by name and start watching it instantly.  And, Xbox One is the only system that brings together your favorite TV channels and entertainment app channels into one screen.  Create your own personal Favorites in OneGuide, so you can easily choose what you want to watch – whether it’s on Fox, CBS, NBC, ESPN, Hulu Plus or the NFL on Xbox One app. For the first time you don’t have to juggle multiple screens across cable TV, video streaming services and other entertainment apps to quickly find the entertainment you’re looking for.

    #10 – Xbox SmartGlass Enhances Gaming in New Way
    …

    Microsoft Is Changing the Game for Sports Fans [Xbox Wire from Microsoft, Sept 3, 2013]

    Whether it’s in the living room or on the playing field, Microsoft and products like Xbox, Surface, and Windows 8 are impacting the way we experience our favorite sports.
    In May, Microsoft announced a multi-year, landmark partnership with the NFL. For the Xbox community, this means exclusive interactive NFL experiences for fans at home, found only on Xbox One starting this November. Today, we’re excited to share more details about this partnership and the game changing NFL experiences for Xbox One and Surface. We are also pleased to introduce NFL.com Fantasy Football on Xbox 360, Windows 8 and Windows Phone which are available for download today.
    Also making headlines today is the confirmation and details around the all-new ESPN application for Xbox One. Leveraging the unique platform capabilities of Xbox One, sports fans will now have control of the live programming, highlights, stats and more across ESPN like never before. 
    The NFL on Xbox One and Surface 
    Tailored for you, the NFL on Xbox One will deliver the best of the NFL, in a way that will completely reimagine the way you experience football from the comfort of your home.  Only Xbox One can bring interactivity to live games, stats, scores, highlights and your NFL.com Fantasy Football team all together on the best screen in the house – your TV. Xbox One will personalize your NFL experience, for your team, with the best content the NFL has to offer including NFL.com, NFL Network, and NFL RedZone.  Whether you’re watching the game or not, Xbox One makes it easy to keep tabs on the league with Snap mode. You can watch live TV, play games, or watch movies, while simultaneously tracking your NFL.com Fantasy Football team, or checking in for the latest scores and stats. 
    While you’re watching at home, Surface technology is in the stadium, on the sidelines to help protect your favorite players.  Teams and trainers will implement use of the X2 concussion testing application this season to quickly diagnose potential player concussions immediately after leaving the playing field with the help of Surface tablets, helping quickly determine if they can get back in the game or call it a day.
    ESPN on Xbox One We are also excited to announce ESPN on Xbox One, which builds on our innovations with ESPN on Xbox 360, and provides you with the best of ESPN networks and web content personalized just for you.  Featuring deeper sports content personalization, ESPN on Xbox One gives you immediate access to the teams and sports you care about most.  With WatchESPN, ESPN.com, and ESPN3 video content, you get the best highlights, live events and on-demand sports in full screen mode.  Additionally, you will receive personalized scores and stats in Snap mode from the most popular sports.
    NFL.com Fantasy Football on Xbox 360, Windows 8, and Windows Phone 
    Beginning today, NFL.com Fantasy Football is now available on Xbox 360, offering a whole new way to track your team and leagues on the best screen in your house – your TV. This destination is tailored just for you and your NFL.com Fantasy Football team, and is easy to jump into and simple to use. The Xbox 360 app brings you an endless playlist of Fantasy Football highlights, Fantasy analysis, stats, scores and standings about your NFL.com Fantasy Football team and leagues, making sure you don’t miss a thing. Consumers can head to NFL.com today to sign up for a league and get in the game before kick off on September 5th.
    And, with the new NFL.com Fantasy Football apps for Windows 8 and Windows Phone, you can keep tabs on your team and leagues on your tablet, PC, and mobile device as well.
    Download NFL.com Fantasy Football for Xbox 360, Windows 8 and Windows Phone today, and stay tuned for game changing experiences on Xbox One this November.

    7. Preliminary information on the upcoming products from Xbox Entertainment Studios

    Best Advice: Nancy Tellem [Fortune Magazine YouTube channel, Oct 31, 2013]

    Nancy Tellem is the entertainment and digital media president of Microsoft.

    Faces to Watch in 2014: Digital media | Nancy Tellem, Mike Hopkins, Issa Rae [Los Angeles Times, Dec 27, 2013]

    A big year is coming up for game designers Ryan and Amy Green and Ruben Farrus, plus Microsoft’s Nancy Tellem, Hulu’s Mike Hopkins and Web writer-actress Issa Rae.

    The Times asked its reporters and critics to highlight figures in entertainment and the arts who will be making news in 2014. Here’s who they picked:

    Nancy Tellem | Microsoft’s president of entertainment and digital media

    The veteran CBS television executive had her work cut out when she joined Microsoft Corp. in 2012 to launch a Santa Monica studio to create original content.

    Long fascinated with changes in consumer behavior, Tellem is now playing an important role in determining what appeals to younger consumers accustomed to getting their entertainment on multiple screens. She is trying to build on the momentum that Microsoft has achieved by encouraging millions of consumers to consider the Xbox more than just a video game console. Xbox users spend more than half of their time online listening to music and streaming movies, TV shows and exploring other entertainment options. Microsoft wants to build a trove of exclusive content to differentiate its game system from the rival Sony PlayStation.

    Microsoft’s slate of new shows designed to appeal to the digitally connected generation is expected to launch in the first half of 2014. Microsoft also brought Tellem on board to make inroads with Hollywood’s creative community. One of the first projects she announced was a live-action TV series, produced by Steven Spielberg, based on the “Halo” game franchise for Xbox Live, a feature that enables gamers to play against online opponents.

    Tellem was trained as a lawyer and worked her way up the ranks in business affairs at Lorimar, Warner Bros. and then CBS. At the broadcast network, Tellem was a key executive in the development of new shows, including the hit reality show “Survivor.” She was one of the TV industry’s first female entertainment presidents.

    — Meg James

    Mike Hopkins | Hulu chief executive
    …

    Issa Rae | Actress-writer-director
    … 

    Nancy Tellem at Wrap Power Women Breakfast: Microsoft Is Aiming for a “Game of Thrones”  [The Wrap YouTube channel, Oct 30, 2013]

    TheWrap’s keynote speaker at its fourth annual Power Women Breakfast (Oct 30, 2013) says Microsoft’s new studio has the ambition and the means to create landmark programming

    Nancy Tellem at Wrap Power Women Breakfast: Microsoft Is Aiming for a ‘Game of Thrones’ (Video) [TheWrap, Oct 30, 2013]

    Nancy Tellem, Microsoft’s new president of entertainment and digital media, said on Wednesday she has the means and the ambition to make a “Game of Thrones”-like series for the new studio backed by the technology giant.

    “I have the ambition” to make a show as grand as “Game of Thrones,” said the former president of CBS entertainment at TheWrap‘s Power Women Breakfast at the Montage in Beverly Hills.

    “That, to me, was greatest testament to how wonderful television can be and how engrossed people are and committed – and it was a social experience,” she said.

    And, she said smiling, Microsoft’s budget was “enough for me to do my job, let’s just say.”

    …

    Not being bound by the constraints of a 22-episode season or even show length and with the technology to engage the viewer through the Xbox platform allows Tellem and her team to “focus on the content itself” and then way viewers can “share that experience.”

    Tellem said she expects that Microsoft will begin rolling out its new shows — which will range from sports programs to scripted series — as soon as the spring. She says they have not decided whether to release the episodes over time or put them all out at once, like Netflix.

    Asked about binge viewing, Tellem said she was not sure if Microsoft would release all its content at once, observing that interactivity was more the distinctive purview of Microsoft.

    Xbox One Reveal: Halo TV and NFL [xbox YouTube channel, May 23, 2013]

    Nancy Tellem’s Xbox Entertainment Studios announcements of Halo TV with 343 Industries and Steven Spielberg and NFL from Xbox One Reveal Press Briefing.

    From Microsoft unveils Xbox One: the ultimate all-in-one home entertainment system [press release, May 21, 2013]

    Blockbuster titles, Steven Spielberg-produced Halo TV series, and exclusive agreements with the NFL transform games, TV and entertainment for the 21st century living room.
    …

    “Halo” television series. Award-winning filmmaker, director and producer, Steven Spielberg will executive-produce an original “Halo” live-action television series with exclusive interactive Xbox One content, created in partnership with 343 Industries and Xbox Entertainment Studios.

    RTS Cambridge Convention 2013: Xbox One – From Gaming to Content [Royal Television Society, Sept 12, 2013]

    Created for gaming, the Xbox One is the latest challenger to old-fashioned telly, but, said Microsoft entertainment and digital media president Nancy Tellem, it is not the final nail in the TV industry’s coffin.

    “It’s an augmentation,” she argued. “Right now, [TV] is in a renaissance period — what Xbox offers is a different TV experience.” 

    Since joining Microsoft from CBS a year ago, Tellem has been spearheading the software giant’s move into TV, delivered via its Xbox One gaming console.

    Interactivity among its current 76 million connected console users would be the key to Xbox One’s success. “It isn’t just delivering content. It really offers an immersive experience,” she said.

    The session was chaired by Matt Frei from Channel 4 News, who said that he enjoyed being a “passive” consumer of TV. To laughter from the audience, Tellem replied: “Xbox addresses the next generation.”  

    Tellem identified sport, live events and scripted entertainment as genres particularly suited to Xbox One. Mentioning Game of Thrones as the type of complex drama suited to the console, she claimed: “You can give a much richer understanding of the characters and their history.”

    Tellem is in discussions with studios and talent about commissions, which she hopes to announce in a few weeks. Earlier this year, Microsoft revealed that a TV show based on the Halo game, with the involvement of Steven Spielberg, was in the pipeline.

    She also countered a suggestion from the audience that Xbox One’s programming would be geared at 18-year-old boys. Tellum said that her ambition was to reach out beyond traditional gamers, adding that 40% of its platform users were female, with most of the audience between 18 and 40. 

    “My mission it to transform it into an entertainment service,” she said, which would include music, film and sport as well as games. “It’s a simple offering that can access all your entertainment needs.”

    Before joining Microsoft, Tellem had worked at the US network CBS for a decade and a half, latterly as senior adviser to chief executive Leslie Moonves.

    Xbox Entertainment Studios to Debut Documentary Series Exclusively on Xbox in 2014 [Xbox Wire from Microsoft, Dec 19, 2013]

    First Documentary Explores the Fabled Atari Mystery

    Today, Xbox Entertainment Studios announced an original documentary series that will debut exclusively on Xbox in 2014. Xbox will produce the series with two-time Academy Award-winning producer Simon Chinn (Searching for Sugar Man and Man on Wire) and Emmy-winning producer Jonathan Chinn (FX’s 30 Days and PBS’s American High) through their new multi-platform media company, Lightbox. 

    “Our collaboration with Xbox offers an unparalleled opportunity to make a unique series of films around the extraordinary events and characters that have given rise to the digital age,” said Simon Chinn. “Our goal is to produce a series of compelling and entertaining docs which will deploy all the narrative techniques of Simon’s and my previous work. It’s particularly exciting to be partnering with filmmakers like Zak Penn who come to this process from other filmmaking disciplines and who will bring their own distinctive creative vision to this,” added Jonathan Chinn.

    “Jonathan and Simon Chinn are the perfect team to spearhead this series for Xbox. They are consummate story tellers and they plan to match their creative sensibility with the best talent in the industry,” commented Xbox Entertainment Studios President Nancy Tellem. “These stories will expose how the digital revolution created a global democracy of information, entertainment and commerce, and how it impacts our lives every day.”

    The first film in the groundbreaking series investigates the events surrounding the great video game burial of 1983. The Atari Corporation, faced with overwhelmingly negative response to the video game “E.T. the Extra-Terrestrial,” buried millions of unsold game cartridges in the middle of the night in the small town of Alamogordo, New Mexico.

    Fuel Entertainment, an innovator in cross-platform content development, secured the exclusive rights to excavate the Atari landfill and approached Xbox. Lightbox will document the dig, which is planned for early next year.

    Filmmaker and avid gamer Zak Penn (X-Men 2, Avengers, Incident at Loch Ness) will direct. This episode will not only document the excavation, it will also place the urban legend of the burial in the context of the precipitous rise and fall of Atari itself.

    “When Simon and Jonathan Chinn approached me about this story, I knew it would be something important and fascinating,” said Penn. “I wasn’t expecting to be handed the opportunity to uncover one of the most controversial mysteries of gaming lore.”

    Shooting begins in January. The series will air exclusively on Xbox One and Xbox 360 in 2014 and will be available globally in all markets where Xbox Live is supported.

    8. Xbox Music and Xbox Video services for other devices

    Xbox Music + Video apps for Windows Phone 8 [Windows Phone Central YouTube channel, Dec 18, 2013]

    On December 18th, Microsoft released two new apps for Windows Phone 8: Xbox Music and Xbox Video. We give a tour of both apps and show off some of their features on a Lumia 1520. More info: http://www.wpcentral.com/xbox-music-and-video-app-tour

    Xbox Video for Windows Phone 8 Walkthrough [Pocketnow YouTube channel, Dec 19, 2013]

    Microsoft finally released the Xbox Video application for Windows Phone 8. We go hands-on with the new application in this walkthrough video, and discover all its features and missing functionality. See more at Pocketnow: http://pocketnow.com/2013/12/19/xbox-video-for-windows-phone

    New Xbox Video and Xbox Music apps Available for Windows Phone 8 Customers [Xbox Wire from Microsoft, Dec 18, 2013]

    It’s a big day for Windows Phone 8 customers. New apps for Xbox Video and Xbox Music are becoming available today in the Windows Phone store.

    Xbox Video Comes to Windows Phone

    Today, Xbox Video launches on Windows Phone 8, so now you can truly take your movies and TV shows with you wherever you go. Stream from the cloud or download your favorite movie or TV episodes to your phone to watch them offline. You can rent or buy the newest hit movies or search for classics from the massive catalog with the only app that lets you download movies and TV episodes right to your Windows Phone 8. You’ll even get Rotten Tomatoes ratings and Metacritic scores right on your phone.

    Xbox Video on Windows Phone 8 also delivers countless TV shows. With a Season Pass, brand new episodes are automatically added to your collection so you don’t miss a beat from your favorite new shows. Or catch up with every episode from past seasons and relive the glory days of your favorite shows from years past.

    With Xbox Video, your collection follows you from screen to screen in the cloud. For example, you can buy and start a movie or TV show from XboxVideo.com or Xbox Video on a Windows 8.1 tablet, and continue watching on your Xbox One, Xbox 360 or Windows Phone 8. And with Xbox SmartGlass, you get a richer viewing experience that isn’t found anywhere else. Xbox SmartGlass integrated with Xbox Video for Xbox One and Xbox 360 offers second-screen experiences with bonus content and exclusive extras, serves as a remote control, and gives you new ways to interact with whatever you’re watching.

    Xbox Video is a free download in the Windows Phone Store today, and don’t forget to check out our new Web store at XboxVideo.com. 

    A Peek at the New Xbox Music for Windows Phone

    Also releasing today is a new Xbox Music preview app. This early-access app gives Xbox Music Pass users a look into the new music experience on Windows Phone 8.¹ Stream millions of songs from your phone or download the ones you want for offline listening. Create playlists that sync across your devices. Play songs from your personal music collection alongside your Xbox Music Pass content. It’s the best way to experience all the music you love on your Windows Phone.

    The Xbox Music Preview is available in all 22 markets where Xbox Music is available today and can be found in the Windows Phone Store. The full release will roll out in 2014. Xbox Music is available today on Windows Phone, Xbox One, Xbox 360, Windows 8/8.1, online at Music.Xbox.com and iOS and Android devices.

    ¹ Xbox Music Pass required to use the app. Compatible devices and internet required. Data charges apply. See Xbox.com/music.

    Xbox Music For Android Review [Mikey Capoccia YouTube channel, Sept 9, 2013]

    In todays video I will be reviewing the Xbox Music application for Android

    Microsoft launches Xbox Music across iOS and Android, adds free streaming on the Web [press release, Sept 8, 2013]

    Enjoy your favorite music from a 30 million-song global catalog powered by the one service that integrates your music experiences across your tablet, PC, phone and TV. All the music you love, every way you want it.

    Nearing its one-year anniversary, Microsoft Corp.’s all-in-one music service, Xbox Music, continues making strides to deliver all the music people want, wherever they want it played. Today, Microsoft announced its plans to bring Xbox Music to iOS and Android devices, as well as free streaming on Xbox Music via the Web.[1]

    Accessing music across all the different devices people interact with has become complicated. People today use PCs, laptops, tablets, phones and TVs to access different music services that don’t connect with one another. Xbox Music is designed to solve this common problem by combining the best of all music offerings with free streaming on the Web and on Windows 8 PCs and tablets, Internet radio, subscription (called Xbox Music Pass), and download-to-own options.[2] With today’s news, access to Xbox Music grows to include iOS and Android devices, as well as a free Web-based interface on computers.

    “Xbox Music now, more than ever, powers music experiences between Windows 8, Xbox, Windows Phone, and now iOS, Android and the Web,” said Jerry Johnson, general manager of Xbox Music. “We’re also excited to connect artists with their fans on the most anticipated consumer product of the year when Xbox One launches Nov. 22.”

    Expanding the Xbox Music family of devices

    Starting today, your Xbox Music Pass brings the catalog of music to iOS and Android devices. Get unlimited access to the songs and artists you want at any time with playback across your tablet, PC, phone and Xbox console for $9.99 per month or $99.99 per year. Add a song to your collection on your Xbox, and you’ll also have that song on your iOS, Android or Windows 8 device on the go or at the office. Xbox Music Pass also unlocks unlimited access to tens of thousands of music videos on your Xbox 360.

    With the addition of free streaming on the Web, enjoy on-demand access to 30 million songs globally for free on the Xbox Music Web player at http://music.xbox.com or through the Xbox Music app on all Windows 8 tablets and PCs. Discovering and enjoying free music is as easy as typing an artist or song name and hitting “play.” Songs are instantly available to stream at no cost and for you to create an unlimited amount of playlists.[1]

    Continued innovation

    Xbox Music will continue to grow and evolve over the coming months. Microsoft will add Radio to the free Web player, a quick and dynamic way to personalize your collection, discover new favorites, and create ultimate playlists by launching instant mixes based on your favorite artists. With unlimited skips and a view of the full recommended music stream, Radio puts you in control of your Internet radio experience.[1]

    Xbox Music will grow on Windows 8 when it adds the anticipated new Web Playlist tool this fall. The tool scans all the artists and music available on a given Web page and creates a custom playlist of all that music. Think about the Web page of your favorite radio station, or an upcoming music festival, and all the bands and songs included on that Web page. Web Playlist identifies all that music and creates an instant, custom playlist inside Xbox Music with the simple touch of a button. Web Playlist along with Windows 8.1 will be released Oct. 17.

    In the coming months, additional updates for iOS and Android platforms will become available, including an offline mode that lets you save your music to your device for playback without an Internet or data connection.

    About Xbox

    Xbox is Microsoft’s premier entertainment brand for the TV, phone, PC and tablet. In living rooms or on the go, Xbox is home to the best and broadest games, as well as one of the world’s largest libraries of movies, TV, music and sports. Your favorite games, TV and entertainment come to life in new ways through the power of Kinect, Xbox SmartGlass and Xbox Live, the world’s premier social entertainment network. More information about Xbox can be found online at http://www.xbox.com.

    [1] Free streaming available only on the Web and devices running Windows 8 or later. Limited hours of free streaming after six months; unlimited with paid subscription. Coming later this fall: artist-based Radio on Android, iOS and the Web.
    [2] Xbox Music Pass is streaming only on Xbox consoles, Android, iOS and the Web. Applicable taxes extra. On Xbox consoles, Xbox Music requires an Xbox Music Pass and an Xbox Live Gold membership (both sold separately). Download music on up to four devices. Some Xbox Music content may not be available via Xbox Music Pass, and may vary over time and by region. Coming later this fall: Xbox music download-to-own on Android and iOS, and playlists and song sync on Windows Phone 8. See http://www.xbox.com/music.
    For details, please visit http://news.xbox.com.
    For assets, please visit http://news.xbox.com/media.

    Amazon may hike Prime cost as earnings disappoint and further challenges lay ahead of the company for which it needs to adjust its business model and expand its operations

    January 31, 2014 12:28 pm / Leave a comment

    … first time after 9 years

    The main attraction of Prime is that the shipping service is bundled with a mature streaming video service for the price of Netflix’ service only:
    Amazon or Netflix [Brent Byron YouTube channel, Dec 5, 2012]

    Comparison of Amazon prime and Netflix streaming video services. Both amazon and netflix have movies and tv shows, some of the same titles, but netflix has many more movies available than amazon (20,000 vs 12,000). You can also bundle the dvd service with streaming service on netflix. Price is similar for the two services. Amazon gives free shipping on some items with prime accounts, but has no dvd rental service, just streaming. I’m an affiliate of netflix.

    but wait:

    Considering joining Amazon Prime for the free shipping and free streaming video service this holiday season? Here’s why you may want to rethink that move…
    Tom Forte, Telsey Advisory Group; David Pearl, Epoch Investment Partners; Natali Morris, independent technology reporter; and CNBC’s Jon Fortt discuss Amazon’s fourth quarter earnings report.

    Amazon.com posted quarterly results Thursday that fell short of expectations and handed in a weak revenue outlook.

    Additionally, Amazon said during its conference call it may increase the cost of its popular Amazon Prime subscription by $20 to $40 due to higher fuel and other shipping costs.

    There were no immediate details on when or how Amazon would make the decision during the call. The company did not disclose the exact number of Prime customers.

    “We have added massive selection and digital content to the service—Kindle owners lending library, Prime instant video,” according to CFO Thomas Szkutak during the call. “It’s great value for customers. We see customers love it and we will continue to make that better over time.”

    In December, Amazon said that its Prime service had a “record-setting holiday season.” According to the company, more than 1 million people signed up in the third week of December alone. Prime members get free two-day shipping on eligible items, free streaming of 150,000-plus movies and TV episodes, and free e-book borrowing from a library of more than 475,000 titles.

    The world’s largest Internet retailer posted earnings of 51 cents a share on sales of $25.59 billion, versus expectations for 66 cents a share on sales of $26.06 billion, according to a consensus estimate from Thomson Reuters.

    In addition, the company posted current-quarter sales guidance of between $18.2 billion and $19.9 billion, missing expectations for $19.67 billion.

    The company said international sales gained just 13 percent, lower than Wall Street forecasts for around 14 percent to 15 percent.

    Shares initially shed nearly 10 percent in extended-hours trading before gradually recovering from lows. The stock rallied nearly 5 percent during the regular session Thursday. (Click here to get the latest quotes.)

    The stock has had a stellar run since the lows of 2009, with shares surging close to the $400 mark by the end of 2013.

    “It’s a good time to be an Amazon customer. You can now read your Kindle gate-to-gate, get instant on-device tech support via our revolutionary Mayday button, and have packages delivered to your door even on Sundays,” said CEO Jeff Bezos in the company’s press release. “In just the last weeks, Forrester, YouGov, and ForeSee have all ranked Amazon #1—and we believe we’re just scratching the surface of what world-class customer service can be.”

    Earlier this week, the Wall Street Journal reported that Amazon plans to move into the mobile payments business, offering brick-and-mortar retailers a checkout system that uses Kindle tables as soon as this summer, citing sources.

    Recently, Amazon also expanded its grocery delivery service to two new U.S. cities, introduced Sunday package delivery with the Postal Service and reached agreements to build warehouses in several states.

    Amazon Prime TV Commercial via @RichBTIG [BTIGResearch YouTube channel, Jan 2, 2014]

    Aired on IFC network on 12/29/13 Richard Greenfield & Brandon Ross, BTIG http://www.btigresearch.com

    From Amazon.com’s Management Discusses Q4 2013 Results – Earnings Call Transcript [Seeking Alpha, Jan 30, 2014]

    Tom Szkutak – Chief Financial Officer, Senior Vice President:

    For Q1 2014, we expect net sales of between $18.2 billion and $19.9 billion or growth of between 13% and 24%. This guidance anticipates approximately 30 basis points of unfavorable impact from foreign exchange rates.

    GAAP operating income, or loss to be between a $200 million loss and $200 million in income, compared to $181 million in income in the first quarter 2013. This includes approximately $350 million for stock-based compensation and amortization of intangible assets.

    We anticipate consolidated segment operating income, which excludes stock-based compensation and other operating expense to be between a $150 million loss and $850 million, compared with $441 million in the first quarter of 2013. We launched Prime in the U.S. nine years ago with free, unlimited two-day shipping on one main items in an annual membership priced at $79. Today Prime Selection is growing to over 19 million items.

    Even as fuel and transportation cost have increased, the $79 price has remained the same. We know the customers love Prime as the usage of the shipping benefit has increased dramatically since launch. On a per customer basis, Prime members are ordering more items across more categories with free two-day shipping than ever before.

    With the increased cost of fuel, transportation as well as the increased usage among Prime members were considering increasing the price of Prime between $20 to $40 in the U.S.

    …

    In terms of details of how we would roll out the Prime price increase that we are considering, you have to wait on that, but certainly as I mentioned, it’s something that we haven’t had any increase in the nine years. Customers certainly love Prime.

    The available units for shipment have grown dramatically from one million to over 19 million over the last nine years. We haven’t had any price increase. Customer usage, on a per customer basis, has gone up pretty dramatically, given the selection and the convenience of the service. So that’s why we are considering, of course during this nine year period, shipping cost have gone up a lot, fuel cost have gone up a lot. So that’s certainly the basis for us taking a look at it but in terms of the details, we will be back when we make those decisions back to customers.

    …

    We have added a lot of new services to Prime beyond this shipping benefits you mentioned it owners and then library. Certainly video, Prime Instant Video we are investing very heavily, and so those are certainly costly. Those aren’t the reasons for the price increases that were contemplating. That decision again is just based on – we have not done our price increase nine years. Shipping costs have gone up if you look back very considerably over the nine-year period.

    Customers like the service, they are using it a lot more and we have a lot more selection. They are using it lot more and so that’s the reason why we are looking at the increase.

    In terms of the international growth, the growth was solid, with revenue [exchange] of 15%. The unit growth was considerably faster than that, primarily because third-party growth we saw very strong and certainly FBA [Fulfillment by Amazon – Build your Business with Amazon Services] is a component of that and when you think about the capacity that we built it for not only for retail, but also for our third parties and we are able to offer your our FBA items through Prime as well, so we are very happy with the capacity that we have built across the world, including our international operations and that’s reflect in the results that you are seeing.

    …

    Yes, we like it the way it is. Yes. But again, if you look back at what we have done, you can’t expect that we might do going forward, but certainly we have had, in the U.S., Prime in place for nine years. We have added a massive selection during that time period. We have also added, this is on the physical side and we have also added digital content as well to the service in the U.S. with Kindle Owners’ Lending Library as well as Prime Instant Video and so it’s a great value for customers. We see that customers love it and we are going to continue to try and make that even better for customers over time.

    …

    We are seeing customers like the digital content. We are seeing great engagement, we are not breaking out in terms of the form, but again we are seeing great engagement. We do track very closely the Prime customers to come from free trials for examples.

    They come through the pipeline for digital content from free trial standpoint, we track those conversions and we see that’s growing very nicely. We do look at customers that use our Prime Instant Video, what are their shopping patterns look like both side of digital content.

    Beyond the free content we have on there, do they buy more digital content and certainly we are seeing nice growth in digital content because of that, because they do. They also do a lot of shopping physical categories as well, so those things we are tracking very closely and it’s a great pipeline for us as customers look at the total value proposition for Prime, including digital content.

    Amazon Prime Instant Video VS Netflix Streaming [DaVirtualGeek YouTube channel, Jan 23, 2014]

    A quick look at the differences between the two popular streaming services Amazon Instant Video and Netflix. More Details Below. Pricing and Selection: Netflix Streaming: $7.99 per month or $95.88 Annually. Netflix says, “We have thousands of other movies & TV episodes available to watch instantly ” Amazon Instant Video (Included with Amazon Prime) $79.99 per year. $39.99 per year for students. Amazon says they have, “41,000 movies & TV episodes” JOIN Amazon Prime Student FREE: http://www.amazon.com/gp/student/signup/info?ie=UTF8&refcust=WS5HDYTCDR66IVLIYTE55GDU2U&ref_type=generic

    From: Amazon.com Announces Fourth Quarter Sales up 20% to $25.59 Billion [press release, Jan 30, 2013]

    …

    Highlights

    • Amazon announced a record-setting holiday season for Amazon Prime, the annual membership program with tens of millions of members worldwide. Amazon is working hard to increase capacity for the Prime program. In December, Prime was so popular that Amazon limited new Prime membership signups during peak periods.
    • Prime Instant Video selection increased from 33,000 to more than 40,000 movies and TV episodes in 2013.
    • Selection in the Kindle Owners’ Lending Library in 2013 grew from 250,000 books to more than 475,000 books-books that Kindle owners with a Prime membership can borrow for free with no due dates.

    …

    …

    About Amazon.com

    … The new Kindle Fire HDX features a stunning exclusive 7” or 8.9” HDX display, a quad-core 2.2 GHz processor, 2x more memory, and 11 hours of battery life, as well as exclusive new features of Fire OS 3.0 including X-Ray for Music, Second Screen, Prime Instant Video downloads, and the revolutionary new Mayday button. The all-new Kindle Fire HD includes an HD display, high-performance processor and dual speakers at a breakthrough price. …

    Related (only for the last 365 days):

    More than a billion units worldwide were ordered from Marketplace Sellers, including local businesses of all sizes, on Amazon during 2013

    The number of active Marketplace Sellers using the Fulfillment byAmazon service grew more than 65 percent year-over-year worldwide

    Amazon today announced a record-setting year for Marketplace Sellers with businesses of all sizes selling on Amazon. In 2013, Marketplace Sellers on Amazon sold more than a billion units worldwide, cumulatively worth tens of billions of dollars. Marketplace Sellers around the world also continued rapid adoption of Fulfillment by Amazon (FBA), a service that Marketplace Sellers can choose to have Amazon ship their products directly to customers and offer Amazon Prime benefits, FREE Shipping, simple exporting to customers around the world, easy returns for orders placed on Amazon and great customer service. The number of active Marketplace Sellers using the FBA service grew more than 65 percent year-over-year worldwide.

    The Amazon Marketplace, which consists of more than 2 million Marketplace Sellers of all sizes worldwide, experienced record growth during the busy holiday selling season. On Cyber Monday, more than 13 million units were ordered worldwide from Marketplace Sellers on Amazon, growing the total units ordered by over 50 percent year-over-year.

    “It has been an incredible year for Marketplace Sellers including popular brands and businesses of all sizes selling on Amazon. Our customers have told us they appreciate the hundreds of millions of products listed by Marketplace Sellers that range from all types of apparel to a vast selection of electronics items,” said Peter Faricy, VP for Amazon Marketplace. “Our goal every day is to make selling onAmazon as easy as possible. Fulfillment by Amazon is a wonderful service as it gives all Marketplace Sellers the option of warehousing their inventory in our fulfillment center network. It has been a game changer for sellers because their items become eligible for Prime benefits, which drives their sales and benefits consumers with additional Prime selection.”

    …

    “We experienced explosive sales growth for items listed on Amazon, 10x sales increases in some cases, when offering attractive holiday deals. For many items, all available inventory was sold out within an hour of the deal posting! We are already making selling on Amazon a core component of our marketing and sales planning for holiday 2014 and beyond,” said Mike Mitchell, COO for MMP Living, a home goods and toy retailer based in Colorado. “By leveraging Amazon’s FBA program we were able to focus on sourcing and offering products of the highest quality, knowing that Amazon’s world-class infrastructure will handle getting our products out to customers quickly. With the focus always on the customer coupled with the fastPrime Shipping options, Amazon is second to none.”

    Prime Instant Video to be the exclusive subscription streaming home for Veronica Mars TV show in deal with Warner Bros. domestic Television Distribution

    With Prime Instant Video fans can catch-up on all three seasons of the Veronica Mars series before the movie debut on March 14

    Exclusive film distribution deal brings A24 movies such as Spring Breakers and The Bling Ring to Prime Instant Video

    Deal includes Vikings, the #1 new cable series of the year in the U.S. along with popular MGM films for Prime members to stream instantly

    Amazon Prime members can now watch Under the Dome episodes on an unlimited basis just four days after their initial broadcast

    Under the Dome is also available for purchase and download exclusively on Amazon Instant Video

    Prime members now have access to even more episodes of NOVA,Masterpiece, and documentaries from Ken Burns along with PBS KIDS programs such as Caillou, Daniel Tiger’s Neighborhood andWild Kratts

    PBS KIDS programming available to customers with Kindle FreeTime Unlimited

    Prime Instant Video is adding thousands of episodes fromNickelodeon, Nick Jr., MTV and COMEDY CENTRAL—including a collection of subscription TV shows customers won’t find anywhere else—with favorite kids shows like Dora the Explorer, Go, Diego, Go!,Blue’s Clues and The Backyardigans, all available to Kindle Fire customers with FreeTime Unlimited

    Multi-year deal will bring Amazon customers the TV shows and movies they want to watch, when they want to watch them, and on any device they want to watch them on—including Kindle Fire, iPad, iPhone, Roku and more

    Also as a part of the agreement with NBCUniversal, popular children’s shows including Curious George and Land Before Time will be available to customers with Kindle FreeTime Unlimited

    Prime Instant Video is now home to previous seasons of popular shows like Rachael Ray’s Week in a Day, Anthony Bourdain: No Reservations, Cupcake Wars, House Hunters, Iron Chef America, Chopped, and Throwdown With Bobby Flay

    This is the first online-only subscription distribution deal for Scripps Networks Interactive

    Fan-favorite series The Shield will also join the Prime Instant Video catalog for Amazon Prime members to instantly stream at no additional cost

    Amazon recently announced that PBS favorite series Downton Abbeyand the anticipated summer series Under the Dome from CBS will soon be available exclusively on Prime Instant Video

    Amazon Prime members now have more of their favorite CBS series to choose from for instant streaming, at no additional cost on hundreds of devices

    New programming now available to Amazon Prime members includes America’s Next Top Model, Everybody Loves Raymond, Undercover Boss, United States of Tara and more

    New TV series based on Stephen King novel and produced by Steven Spielberg’s Amblin Television to premiere on CBS Television Network in June

    Amazon Prime members will have unlimited access to series episodes just four days after broadcast and Under the Dome will also be available for purchase and download exclusively on Amazon Instant Video

    Subscription streaming of “Downton Abbey” — the most watched TV series of all time on Prime Instant Video — to become exclusive toAmazon

    2014 will be the last year of making sufficient changes for Microsoft’s smartphone and tablet strategies, and those changes should be radical if the company wants to succeed with its devices and services strategy

    January 17, 2014 6:35 pm / Leave a comment

    For the company’s most recent “ONE Microsoft” strategy see:
    – Microsoft reorg for delivering/supporting high-value experiences/activities [‘Experiencing the Cloud’, July 11, 2013]
    – How the device play will unfold in the new Microsoft organization? [‘Experiencing the Cloud’, July 14, 2013]
    Update: There are extremely worrying signs on the horizon as per Jan 27, 2014:
    – MediaTek MT6592-based True Octa-core superphones are on the market to beat Qualcomm Snapdragon 800-based ones UPDATE: from $147+ in Q1 and $132+ in Q2
    – End of the Nokia “magic” hurting European and Asian consumers while mobile carriers are uncertain about the future under the Microsoft brand
    End of Update
    As 2014 will be the last year of “free ride” in the smartphone and tablet spaces for ARM-based competitors of Intel – at least what Intel is insisting again [‘Experiencing the Cloud’, Jan 17, 2014] it is time to summarize the ARM-based opportunities for 2014 (note that Intel’s goal in the tablet space is only 40 million units, both Android and Windows):

    imageCompare everything to 2014 global notebook demand forecast [DIGITIMES Research, Dec 5, 2013] which estimates that global notebook shipments in 2014 will reach around 160 million units, down from a peak of over 200 million in 2011, but the drop in 2014 will be lower than the on-year drop in 2013, with new market developments, new product opportunities, and changes in the major players’ strategies all playing critical roles in the IT industry’s future trends.

    Digitimes Research: Global smartphone shipments to top 1.24 billion units in 2014 [Jan 14, 2014]
    Global smartphone shipments are expected to top 1.24 billion units in 2014, with Samsung Electronics, Apple, LG Electronics, Sony Mobile Communications, Lenovo, Huawei [according to the company: 52 million units in 2013 vs 60 million target] , Microsoft, ZTE, Coolpad and TCL serving as top-10 vendors, according to Digitimes Research.
    Apple may see its shipments double in 2014 largely due to increased shipments to China and Japan as it will benefit from its cooperation with the largest telecom operators in the two countries, said Digitimes Research.
    The growth rate for Samsung will be limited in 2014 as its sales in the US, China and Japan will be depressed by growing popularity of iPhones.
    China-based Lenovo, Huawei and Coolpad are expected to step up their efforts to boost sales in overseas markets after being enlisted among the top-10 vendors due to higher shipment volumes in the home market in China.
    However, TCL and ZTE will continue to ship smartphones to overseas markets mainly, but will also strengthen sales in China, with domestic sales to account for less than 50% of their total shipments in 2014, commented Digitimes Research.
    This article is an excerpt from a Digitimes Research Special Report (2014 global smartphone market forecast).
    Digitimes Research: China smartphone-use application processor shipments edge up 2.4% in 4Q13 [Jan 15, 2014]
    Shipments of application processors for smartphone applications to China grew 2.4% sequentially and 20.8% on year in the fourth quarter of 2013, according to data compiled by Digitimes Research.
    MediaTek saw its AP shipments decline 3.9% sequentially in the fourth quarter due to inventory checks at clients and a high growth recorded in the previous quarter.
    However, it was a 20% sequential shipment decline suffered by Qualcomm the fourth quarter that weakened the growth momentum of the application processor sector, said Digitimes Research.
    Meanwhile, MediaTek has been shifting its focus to the high-margin segment, instead of seeking high shipment growth. China-based Spreadtrum Communications was hit with high inventory of TD-SCDMA chips and slow sales of its dual- and quad-core solutions, Digitimes Research indicated.
    Qualcomm also saw its performance weaken in the fourth quarter as its QRD (Qualcomm reference design) chips were less competitive than those offered by rivals in terms of product features.
    This article is an excerpt from a Chinese-language Digitimes Research report. Click here if you are interested in receiving more information about the content and price of a translated version of the full report.
    Digitimes Research estimates that in 2014 global tablet shipments will reach 289 million units [Dec 31, 2013]
    China white-box makers add extra value to tablets as cost reduction is no longer possible [DIGITIMES Research, Jan 16, 2014]
    China white-box players have not been able to lower their Wi-Fi-based tablets’ prices since the third quarter of 2013 because there is no room for further reductions in their BOM costs.
    The average BOM cost for a white-box tablet – most of which adopted a dual-core processors – stood at about US$25 as of the fourth quarter of 2013. Dual-core processor pricing could not drop any further, as their average prices came to about US$4, only less than US$1 higher than that of a single-core one.
    Memory and 7-inch TN LCD panels are the two key components that account for major shares of white-box tablet BOM costs. However, most panel suppliers have been only willing to upgrade specifications instead of dropping their quotes, and therefore, white-box players have been left with upgrading their devices with better panels without an option of reducing the panel cost.
    While cost reduction is no longer a feasible way to attract consumers, many white-box players have turned to push tablets with phone functions to increase their devices’ functionalities and value. The devices also provide higher gross margins for vendors.
    Digitimes Research estimates that currently, 80% of white-box tablets are available in countries other than China, because white-box tablets with phone functions have seen rising demand in Russia and other markets in Eastern Europe and Southeast Asia since the second half of 2013.
    China white-box players’ partnerships with regional brand vendors in emerging markets have also helped raise local consumers’ demand for tablets with phone functions.
    In the first half of 2013, most white-box tablets with phone functions adopted China-based Allwinner Technology’s solution which combined an entry-level single-core processor with a discrete baseband module. However, many white-box device makers have turned to MediaTek solutions for their tablets since the second half of 2013 after the Taiwan-based chipmaker also integrated a baseband chip into its tablet processor solution.
    MediaTek’s solution is more expensive, but its support for product development and hardware design has given it an upper hand over competitions. Meanwhile, independent design houses (IDHs), which provide white-box players with product design services, also started to design tablets using MediaTek’s smartphone processors in the second half of 2013, which prompted white-box players to adopt MediaTek’s solutions.
    Digitimes Research estimates that tablets with phone functions will account for 40% of 7-inch white-box tablet shipments in 2014, up from 20% in 2013.
    image

    In 2014, smartphones are expected to continue penetrating rapidly into emerging markets such as Russia, India, Indonesia and Latin America, while China’s smartphone shipments will see weakened on-year growth in the year, but still enormous volume. Within the top-10 smartphone vendors in 2013, four of them are from China and in 2014 more China-based vendors are expected to enter the top 10.
    Three China-based handset vendors increase component deliveries [DIGITIMES, Dec 11, 2014]
    China-based handset vendors Xiaomi Technology, Gionee and Hisense have been taking increasing deliveries of panels and touch panels from suppliers in preparation for launching new models during the peak period before the 2014 Lunar New Year at the end of January, according to Taiwan-based supply chain makers.
    Other China-based vendors including Lenovo, Huawei Device and Oppo have begun to follow suit, the sources indicated.
    Xiaomi has seen success in marketing its high-end Xiaomi 3, mid-range Xiaomi 2S and entry-level Hong-mi (Red Rice), the sources noted.
    Gionee focuses on marketing high-end smartphones priced above CNY2,000 (US$328) through general retail chains without cooperation with China’s three mobile telecom carriers, the sources indicated. Gionee has shipped more than two million smartphones a quarter so far in 2013.
    Hisense is among several licensed vendors of 4G smartphones and has launched the 5-inch X6T, its first 4G smartphone featuring TD-LTE, LTE-FDD, TD-SCDMA, WCDMA and GSM, on 12 frequency bands, the sources noted. Hisense has taken delivery of components for use in more than one million handsets to be launched before the 2014 Lunar New Year, the sources noted.
    China market: Xiaomi lowers price for Hongmi smartphone [DIGITIMES, Jan 7, 2014]
    China-based vendor Xiaomi Technology has reduced the retail price for its budget TD-SCDMA smartphone, the Hongmi, launched in August 2013, from CNY799 (US$132) to CNY699, heralding upcoming competition in the Android smartphone segment in China, according to industry watchers.
    Rival vendor Huawei is likely to counteract by slashing the prices of its Honor-branded budget smartphones, while other local brands in China are also expected to follow suit soon, said the observers.
    Optimizing its policy of offering smartphones with high hardware specifications and yet at low prices, Xiaomi has managed to ramp up its shipments to over three million units a month and is expected to ship over 40 million smartphones in 2014, the sources estimated. [According to Xiaomi: “7.2 million devices … in 2012 and 18.7 million …bought in 2013. … for 2014 – the CEO expects forty million Xiamoi smartphones to be bought”]
    Asustek expected to ship 2014 target of 5 million smartphones [DIGITIMES, Jan 7, 2014]
    Asustek Computer unveiled three ZenFone-series smartphones for the opening of CES 2013. Viewing that ZenFone models have comparatively high price-performance ratios, Asustek will be able to hit its target shipments of five million smartphones for 2014, and is likely to ship 8-10 million units, according to market analysts.
    The three ZenFone models will initially launch in the Taiwan, China and Southeast Asia markets in March at contract-free retail prices of US$99 for the 4-inch model, US$149 for the 5-inch, and US$199 for the 6-inch.
    All three models are equipped with Intel Atom processors and Asustek will launch 3-4 models also with Atom processors in the second half of 2014, the sources indicated.
    Since Intel has offered incentives to attract PC vendors to adopt its platforms for smartphones, Asustek is expected to procure Atom processors at discount prices and receive subsidies from Intel for marketing the devices, the sources said.
    Asustek likely to release smartphone orders to China ODMs in 2H14, says paper [DIGITIMES, Jan 15, 2014]
    Asustek Computer does not rule out the possibility of tying up with handset ODMs in China for the production of smartphones in the second half of 2014, the Chinese-language Economic Daily News (EDN) has quoted company CEO Jerry Shen as saying.
    After unveiling five new models at the recently concluded CES 2014, Asustek plans to launch another five smartphones in the second half of the year, and therefore it needs more ODMs to support production, Shen was quoted as indicating.
    The three ZenFone-series smartphones out of the five models unveiled by Asustek at CES 2014, with displays sized in 4-, 5-, and 6-inch, will be available for US$99, US$149 and US$199 unlocked, respectively, and are designed to take on China-based rivals in the entry-level smartphone segment.
    The possible switch of orders to China-based ODMs may affect its current production partners in Taiwan, including Wistron and Pegatron, said the paper.
    Digitimes Research: Asustek ZenFone smartphones have lower price-performance ratios than comparable models from China [Jan 17, 2014]
    Asustek Computer unveiled three ZenFone-series smartphones at CES 2014 and will initially launch the models in the Taiwan, China and Southeast Asia markets in March with prices comparable to low-cost models offered by China-based Xiaomi Technology and Huawei. But the price-performance ratios of the ZenFones will be still lower than rival models from China-based vendors due to the use of different marketing channels, according to Digitimes Research.
    China-based vendors such as Huawei and Coolpad have been duplicating the business model initiated by Xiaomi by introducing entry-level models with higher hardware specifications and marketing the gadgets mainly through the Internet.
    Leveraging subsidies offered by telecom operators, Asustek has been able to lower prices for its ZenFone models to levels comparable to those offered by Xiaomi, Huawei and Coolpad, but the price-performance ratios are lower than of the Hongmi smartphone from Xiaomi, the Honor 3C from Huawei and the Great God F1 from Coolpad, due to markup costs added by channel operators in China selling the ZenFones.
    Due to the lower price-performance ratios, Asustek’s goal of shipping over five million smartphones in 2014 through a low-pricing model remains hard to achieve, commented Digitimes Research.
    This article is an excerpt from a Chinese-language Digitimes Research report. Click here if you are interested in receiving more information about the content and price of a translated version of the full report.
    Total: ~289+ million
    Apple: 80-90 million
    Non-Apple brand vendors: ~105+ million
    – Samsung: 60-70 million
    Whitebox vendors: ~104 million image
    Apple, Samsung expected to ship 80-90 million, 60-70 million tablets in 2014, say sources [DIGITIMES, Jan 17, 2014]
    Apple and Samsung Electronics will remain as the global top-two tablet vendors in 2014 with expected shipments of 80-90 million and 60-70 million units, respectively, according to Taiwan-based supply chain makers.
    Samsung’s recent launch of its 12.2-inch model is expected to propel Apple to accelerate development of large-size iPads. Market sources indicated that Apple is likely to release a 12.9-inch model by the end of the third quarter at the earliest.
    The two vendors are also expected to continue rolling out new versions of their existing models.
    Samsung is also likely to launch more Galaxy Lite models, with prices going down as low as US$129, the sources indicated, adding that Samsung’s tablet shipments in 2014 are expected to reach 60-70 million units compared to 40 million shipped in 2013.
    Meanwhile, Apple reportedly has asked its production partners and component suppliers to develop new models of 7.9- and 9.7-inch tablets, added the sources.
    Foxconn expected to ship 55-60 million tablets in 2014, say Taiwan makers [DIGITIMES, Jan 16, 2014]
    Foxconn Electronics (Hon Hai Precision Industry) shipped 50 million tablets to become the largest Taiwan-based ODM in 2013 and is expected to ship 55-60 million units to maintain the leading status in 2014, according to supply chain makers.
    Foxconn is the main OEM for iPads and has undertaken ODM production of Amazon tablets, the sources noted.
    Pegatron, with orders for iPad, Surface and tablets launched by Asustek Computer, shipped 25 million units in 2013 and is expected to remain as the second-largest ODM with shipments of 25-28 million units in 2014, the sources indicated.
    With Lenovo and Acer being major clients, Compal Electronics shipped seven million tablets in 2013. With potential OEM orders for iPad mini with Retina display and additional ODM orders from Amazon, Compal is likely to ship 14 million tablets in 2014, the sources estimated.
    Quanta Computer shipped 15-16 million tablets in 2013, of which a large portion were Nexus models for Google, the sources noted. Although Quanta may obtain OEM orders for a 12.9-inch iPad, shipments in 2014 will be low volume, the sources indicated. Therefore, Quanta’s 2014 tablet shipments are expected to remain at 15-16 million units.
    Digitimes Research: Non-Apple brand vendors to ship 105 million tablets in 2014 [Nov 19, 2013]
    Global tablet shipments are expected to reach 289 million units in 2014, up 23.6% on year. The growth, however, will be weaker than that for smartphones due to the fact that the tablet market has already entered the maturity stage, according to Digitimes Research’s latest figures.
    In 2014, non-Apple first-tier brand vendors’ products are expected to have more room for price cuts, making their products even more competitive in China than their white-box competitors. The lower pricing means retailers will be more eager to promote their products. The gap in terms of functionality between Google’s official Android operating system and Android Open Source Project (used mostly by China white-box vendors) are also expected to be widen. As a result, the non-Apple first-tier vendors’ combined shipments are expected to grow dramatically to 105 million units in 2014, slightly surpassing China white-box vendors’ combined shipments of 104 million units, according to estimates by Digitimes Research.
    Although the fifth-generation iPad (Air) is expected to attract consumers and stimulate replacement demand, the device’s high pricing are expected to limit iPad series products’ shipment growth in 2014 with the volume to reach only 80 million units.
    As for brand vendors’ rankings, Apple and Samsung Electronics will remain in the top two in 2014. Since Samsung will adopt more aggressive marketing and pricing strategies in 2014, its shipments will reach 52.5 million units, reducing its gap with the market leader Apple. Lenovo, as the largest PC vendor worldwide and with advantages in its home market of China, is expected to ship 9.5 million units in 2014 to take third place in the tablet market.
    Having failed to obtain orders for the next-generation Google Nexus tablets, Asustek Computer is expected to step up promoting its own-brand tablets, and it will ship nine million units in 2014, becoming the fourth largest vendor.
    Acer will have a strong presence in entry-level segment, shipping 6.7 million tablets in 2014 to take sixth place, while Google will be the fifth largest vendor. Amazon‘s [5.45 million units in 2013 #5 with that in 2013] and Microsoft‘s shipments [max ~2-3 million of Surface Pro and ??? of Surface] will stay flat or grow only slightly on year.
    Digitimes Research expects 7-inch models to remain as the mainstream size for branded tablets in 2014 with shipments set to reach 89.1 million units. But the segment’s share of total tablet shipments will drop below 50%. Brand vendors are expected to place more emphasis on 8-inch models as they look to avoid fierce competition in the 7-inch segment, which is crowded with low-price and white-box products. Shipments to the 8-inch segment are expected to reach 30 million units in 2014, triple the volume in 2013 and surpassing 10-inch models’ 25.4 million units.
    As for Taiwan ODMs, their shipments will hit 117 million units in 2014, accounting only for 63% of the global total, down 5.2pp on year. The share will decline because Samsung and Lenovo, the second and the third largest vendors, are making most of their tablets internally.
    To seek lower manufacturing quotes and to diversify risks, brand vendors are expected to further divide their tablet orders among ODMs. Foxconn Electronics (Hon Hai Precision Industry) and Pegatron Technology will remain as the top two ODMs for tablets in 2014. With more orders coming from Apple and Asustek, Pegatron will see significant tablet shipment growth in 2014, narrowing its gap with Foxconn. Compal Electronics is expected to surpass Quanta Computer to become the third-largest table ODM, thanks to orders from Apple and its acquisition of Compal Communication.
    This article is an excerpt from a Digitimes Research Special Report (2014 global tablet demand forecast). Visit our latest Special reports.

    More information (going back to end of July 2013) which is directly related to the possible changes on the 2014 markets in terms of 2014 will be the last year of “free ride” in the smartphone and tablet spaces for ARM-based competitors of Intel – at least what Intel is insisting again [‘Experiencing the Cloud’, Jan 17, 2014]:

    2014: Jack Ma (Alibaba) going against Jeff Bezos (Amazon) et al.

    January 8, 2014 4:21 pm / 1 Comment on 2014: Jack Ma (Alibaba) going against Jeff Bezos (Amazon) et al.

    What will happen in 2014 on the U.S. e-commerce market as a consequence of that?

    This is something new to you? I suggest to read first my previous three analyses:
    – The Upcoming Mobile Internet Superpower [Aug 13, 2013]
    – The value of Taobao.com and TMall.com in China, as well as outside [Sept 2, 2013]
    – Alibaba to secure “centuries” of the future of an already “US$150 billion ecosystem of consumers, merchants and business partners” via an internal partnership (rejuvenated each year) of top executive owners (with just 10% of shares) also controlling the board [Oct 3, 2013]
    If still in doubt read Amazon Vs. Alibaba: Game On [Seeking Alpha, Dec 26, 2013]

    1. In 2013 the following strategic investments were already done in the U.S.:

    image

    2. Also because Jack Ma [is] Person of the Year by the Financial Times [CCTV News YouTube channel, Dec 30, 2013] for very good reasons

    According to the Financial Times Person of the year: Jack Ma [Dec 12, 2013] this was given for a number of reasons from which I will quote only the following two excerpts:

    Alibaba’s sales now exceed those of eBay and Amazon combined and make up about 2 per cent of China’s gross domestic product. Seventy per cent of all Chinese package deliveries come from Alibaba sales. Roughly 80 per cent of Chinese ecommerce transactions are conducted through Alibaba’s sites. And this is probably just the beginning, considering more than half of China is still offline. With 600m people using the internet and counting, China will soon overtake the US as the world’s biggest ecommerce market.

    That 2% of China’s GDP would be about US$177 billions (given the forecast of 7.6% growth for 2013 and US$ 8230 billion for 2012 as per http://www.tradingeconomics.com/china/gdp). According to China’s economy projected to grow steadily, dynamically: economists [Xinhua, Jan 6, 2014]: “China was likely to maintain steady growth of 7.5 percent to 8 percent in real terms in 2014”. This means that Alibaba’s sales only (i.e. without Alibaba’s financial services, see below) contribution to China’s 2014 GDP could easily surpass US$200 billions by the end of this year.

    Mr Ma is now setting his eyes on a new goal: shaking up Chinese finance. This has sent shockwaves through the staid, state-dominated financial sector and shows that his ambitions extend well beyond online retail.

    3. Indeed, these January 2014 quotes from the Chinese media are providing extraordinary evidence regarding Jack Ma’s new goal of shaking up Chinese finance:

    Tuning up for 2014 reform (2) [Jan 5]:
    Carr at North Square Blue Oak … points out that e-commerce giant Alibaba Group’s Yu’ebao fund lured 100 billion yuan($16.5 billion) away from the country’s bank deposits in just four months.
    “New innovative financial products such as this are already causing quite a lot of disruption to the financial system,” she says.
    China Exclusive: Internet finance transforms China’s financial landscape [Jan 7]:
    Last year was widely seen as “ground zero for Chinese Internet finance,” partly because of the phenomenon involving “Yu’E Bao (Leftover Treasure)”, a personal online finance product introduced in June by Internet giant Alibaba. It allows users to place their driblet savings — no less than one yuan — into a money market fund.
    As of the end of 2013, Yu’E Bao had 43.03 million users with aggregate deposits of 185.3 billion yuan (30.4 billion U.S. dollars), the biggest single public fund in China. Internet finance has for the first time become part of life for many Chinese people.
    China to set up fully private banks in 2014: CBRC [Jan 6]:
    China will set up three to five fully private banks on a trial basis this year in a bid to further open up the banking sector to domestic and foreign capital, China’s banking regulator said Monday.
    Private capital will be introduced to restructure current banking institutions or set up new ones bearing their own risks, the China Banking Regulatory Commission (CBRC) said in a work meeting.
    Strict procedures and standards will be set for the pilots, with demanding set-up criteria, limited licenses, enhanced supervision and a risk handling system, according to the CBRC.
    The CBRC will try to relax the threshold for foreign capital to enter China’s banking sector and ease Renminbi operation requirements, while more policies will be issued to support banking reform in the Shanghai free trade zone and financial reform pilot zone.
    Tech in China 2013: High Hopes of Disrupting Domestic Financial Market excerpt #1:
    The reform plan China’s central government released in November 2013 allows qualified private investors to set up banks.
    Shanda, the veteran online gaming company, is the first Internet company that settled in the newly established Shanghai Free Trade Zone, planning to build Internet-based financial business and a joint bank there.
    3rd payment firms enter the fray [Jan 7]:
    Third-party payment companies, after a decade of fast development, are providing not only payment services but also services traditionally provided by banks, such as loans.
    Among these companies, Alibaba Group Holding Ltd – China’s largest e-commerce company – has gone further than others. Alibaba plans to set up Alibaba Small and Micro Financial Services Group to consolidate its online payment and micro loan businesses, and provide financial services for consumers and small and micro enterprises – those with an annual turnover of less than 30 million yuan (4.8 million U.S. dollars).
    The company has made it clear that its two main business arms will be e-commerce and financial services based on its huge e-commerce data. The latter is thought to be a challenge to banks and may change the financial industry landscape due to the use of Internet technology and the huge amount of data that records users’ history and habits.
    “For the past 13 years, Alibaba hasn’t thought of challenging anyone, but creating something new instead,” Alibaba’s Chairman Jack Ma said at an industry forum late March when asked whether his company aims to challenge banks.
    “Banks are getting a bit nervous. But I think that getting nervous is good, and it would be strange if they aren’t,” Ma said.
    “If banks weren’t nervous, China’s small and micro businesses would be nervous,” Ma added, hinting that banks fail to provide enough services to help small and micro enterprises raise funds.
    …
    Last year [i.e. in 2013], the total transaction volume processed by third-party payment companies reached 3.8 trillion yuan [$628B], an increase of 76 percent year-on-year, according to domestic research company Analysys International.
    While the biggest player in the sector, Alipay …originally acted only as an escrow between sellers and buyers, third-party payment companies are now offering a wide range of services, such as payment and settlement services, and micro loans.
    Alibaba plans to launch a credit payment service for its mobile users, which gives them a certain credit limit based on their Alipay records.
    Tech in China 2013: High Hopes of Disrupting Domestic Financial Market  excerpt #2:
    It takes only one click to transfer the balance in an Alipay account to Yuebao on either the website or the mobile app, Alipay Wallet. The mutual fund is managed by THFund, a mutual fund company Alibaba bought a controlling stake in in 2013 —  THFund raised to the second biggest mutual fund company in terms of the total assets under management in 2013, up from lower than 50th one year ago, thanks to Yuebao. Users can use the money in Yuebao for online shopping anytime they like.
    Yuebao’s slogan is “14 times of the return from banks”. It sounds attractive, but Yuebao doesn’t perform better than the average mutual funds. The convenience must be a key factor in attracting users. Another attractiveness is Yuebao shows returns daily.
    Tech in China 2013: High Hopes of Disrupting Domestic Financial Market excerpt #3:
    Apart from running a mutual fund by using user’s balance, there’s a bigger picture for Alipay.
    Before long, several Chinese Internet companies launched online mutual funds and gave them similar names, such as Suning’s Yifubao, but none could be the same with Yuebao.
    Alipay itself was established for Alibaba’s e-commerce marketplaces. When one user uses money in Yuebao for shopping on Alibaba’s platforms, that will be translated into transaction-based commission to Alibaba. If Yuebao is widely recognized and users would always deposit money into it, users don’t have to make payments through banks anymore. When it comes to the mutual fund itself, the more users on board and more money tansferred into it, the lower, theoretically, the risk.
    Fan Zhiming, president of Alifinance for Domestic Market, said at an event last month that they’d possibly make Yuebao a default that any balance in an Alipay account would buy the mutual fund automatically.
    Alifinance, the finance arm of Alibaba Group, has already disrupted China’s finance sector with services like Alipay and small loans for online retailers.
    WeChat to face tougher competition in 2014 [Jan 2]
    Instant messaging app WeChat has helped Chinese internet giant Tencent become the first company to secure a position in the mobile internet market, but it is expected to face greater competition from rivals, the Shanghai-based First Financial Daily reports.
    One of the chief rivals is the Alibaba Group. An employee of the e-commerce business leader told the newspaper that the company was planning to target WeChat in four areas — telecom services, its own IM app Laiwang [with a free data plan], vendors on its online platforms, and through the celebrities using the Sina Weibo microblogging service.
    Sina and Alipay Launches Weibo Payment, to Fight against WeChat Payment [Jan 7]
    Sina launched a payment solution, Weibo Payment, together with Alipay today. It is already available with the 4.2 version of Sina Weibo app released yesterday. Fan Zhiming , head of Alifinance for Domestic Market, made it clear that Weibo Payment is aimed at WeChat Payment when it comes to the convenience of making payments online or offline, and social shopping. He asked the audience to “forget about WeChat Payment” at the press conference today, saying Weibo Payment will perform better.
    From now on all the items from Alibaba’s Taobao and Tmall shared or shown as ads on Sina Weibo will have a “buy” button that will lead users to make payments directly with Alipay.
    …
    Alibaba, the parent company of Alipay, made a strategic investment in Sina Weibo last year, with not only cash but also a promise of bringing in no less than $380 million worth of advertising revenue for Sina Weibo through displaying Taobao/Tmall items in the next three years.     

    4. No wonder that Alipay has made significant inroads into the U.S. market during 2013:

      • Airlines, hotels and other travel enterprises can now easily connect to the more than 800 million Chinese account holders on the Alipay platform via the UATP Network.
      • “Alipay is dedicated to meeting the needs of China’s vast and growing pool of keen overseas travelers by making it easier for them to pay for air tickets, book hotels, rent cars and make other travel-related purchases online from the world’s leading airlines and accredited travel agencies.”

    image

      • Among the U.S. online retailers that’s begun accepting Alipay this year is iHerb Inc., No. 204 in the Internet Retailer. In the first six months of accepting the Chinese payment method, iHerb’s sales on the cn.iHerb.com subdomain of its web site aimed at Chinese consumers increased 244.52% compared with the prior six-month period and 684.15% compared with the same period a year earlier
      • Without disclosing the total number of U.S. sites accepting Alipay … there are about 10 web sites in the U.S. that already are generating more than 100 Alipay transactions per day. They include the e-commerce sites of retailers Gap Inc. Direct, No. 19 in the 2013 Top 500, and Forever 21, No. 353; travel site Travelzoo; web domain registrar GoDaddy and peerTransfer, which handles tuition payments for international students.
      • Meantime Alibaba Microfinance Service Group’s share structure revealed [Xinhua, Nov, 2013] which will clearly help in capitalisation of Alipay for U.S. expansion as well:
    HANGZHOU, Nov. 1 (Xinhua) — Jack Ma, founder of Chinese e-commerce giant Alibaba Group, holds less than 7.3 percent of shares in the newly founded Alibaba Microfinance Service Group, revealed a shareholding structure report on Friday.
    Forty percent of the shares are held by over 20,000 staff of the Alibaba Group and the Alibaba Microfinance Service Group, said the report.
    That 40 percent, part of an incentives scheme to make “all staff shareholders,” includes Ma’s shares.
    Ma also holds 7.3 percent of shares in the Alibaba Group.
    The other Alibaba Microfinance shares are expected to be acquired by strategic investors in the future, according to the report.
    Alibaba set up the Microfinance Service Group in March to integrate its payment and micro payment businesses.
    The Alibaba Microfinance Group is not included in the portfolio of Alibaba Group’s much-discussed initial public offering.

    5. As in addition to all that and according to How Alibaba Views International Expansion and Mobile: A Discussion With Joe Tsai [Forbes, Dec 11, 2013] 

    One man who was with Jack from the beginning was Joe Tsai.  Alibaba’s longtime CFO, Joe recently moved up to Vice Chairman of the group and is actively involved in the group’s recent strategic investments.
    I spoke to him recently about Alibaba’sinternational expansion plans and how it’s adapting its e-commerce platform for the mobile age we now live in.
    1. Up until now, most Americans think about Alibaba Group as a Chinese-focused company.  What are your thoughts on international expansion for the group?
    We think of international by what we can do in a cross-border context.  It’s one thing to think of exporting from China, which is what we have done a lot to date. But it’s another to situate ourselves in other countries. We’re just starting to do that.
    We’ve always had a cross-border B2B business.
    We also have AliExpress which is growing and scaling nicely. The concept for AliExpress is to bring Chinese manufacturers online and make a global B2C marketplace. eBay has done a cross-border marketplace well. AliExpress focuses on consumer markets in developing countries.  For example, we are the largest e-commerce site in Russia. We are also looking a lot at South America right now.
    The next cross-border opportunity: there are millions of overseas Chinese in North America, Europe and Australia. They all want to buy from Taobao. How do we bring them back?  Every overseas Chinese consumer is like 3-4 native Chinese consumers in terms of purchasing power. There’s no language problem with them coming to our website, but we have to work on payment and logistics.
    And on the flipside, we want to bring hundreds of millions Chinese to shop in the United States. This is something which American merchants get excited about.  With AliPay, we can enable Chinese consumers sitting in their home country to shop on, say, Saks Fifth Avenue, pay us in RMB, and we make sure merchants get the currency of their choice and handle logistics.
    For us, international means starting with the cross-border opportunity. By analogy, if you look at how Facebook has grown in different countries, they started with cross-border as well. Facebook early adopters in foreign countries were all friends with people in the US. That’s how they built a critical mass of Brazilian early adopters who had friends in the US.  Later on, those early adopters pulled in other Brazilians to the platform and Facebook suddenly hit critical mass around the world.
    2. Recently, Alibaba made key investments in Sina Weibo, AutoNavi, and ShopRunner in the US.  Tencent is rumored to be making an investment in Snapchat and has been seeing great success with WeChat.  Baidu has bought 91 Wireless.  The online video space is extremely hot right now in China.  How does Alibaba think about taking your core e-commerce services to mobile and dealing with such threats as the proliferation of Android and messaging platforms?
    E-commerce is one segment that’s perhaps the most complex when it comes to mobile. You not only have to deal with browsing and selection but logistics and payment, which implies issues of reliability and security. Mobile adoption in e-commerce is a lot slower than in other consumer Internet verticals.  For example 50% of GMV on Amazon and eBay is not from mobile.  It’s more like 15%-20% – even though in the social networking context, like facebook, more than 50% of the users access the service from  mobile devices. Today, we are seeing high teens mobile penetration from mobile GMV in China.
    We could sit here and be complacent about the rise of mobile because Taobao and Tmall have very good positions having captured large shares in mobile commerce, but we’re feeling the opposite. We’re seeing the future and we feel a strong sense of urgency when it comes to mobile.
    Mobile commerce could really disrupt the traditional marketplaces in the PC environment. In mobile, there’s not a lot of screen room. E-commerce marketplaces are conducive to larger screens. People want to save time on a mobile small screen. Therefore, the whole model could be disruptive.
    So, with mobile, we are shifting from a model of pulling users to pushing messages out to users.  Ebay’s web site is a destination. That’s pull.  In contract, mobile enables every merchant to push whatever message to a huge audience.
    Alibaba Bet On Wireless Business With ALL IN Strategy, Aiming At 30% Market Share For Laiwang [TechNode, Oct 21, 2013]
    Alibaba takes Laiwang, an IM tool released 4.0 version this September, as a breakthrough point for wireless business. The market share of Laiwang is expected to reach 30% in a bid to guarantee better user experience and to facilitate the expansion of other services.
    Different to similar IM tools of WeChat and EasyChat, Laiwang targeted at pure friend interaction platform by introducing new features such as, burn after reading, an automatic message eliminating service, and the right to establish groups with up to 500 members. The company has launched large-scale promotion activities for Laiwang both internally and externally.
    To complete the product lineup, the company will also zero in on Mobile Taobao, Ali OS as well as an imminent O2O [Online to Offline] service. The newly added users of Mobile Taobao exceeded 100 million in the first half of this year, while number of active users tripled that of the same period of last year. Sina Weibo account of Mobile Taobao-like Weitao recorded more than 50 million visitors.
    Because of the disruptive elements of mobile, we’re not standing still. We have to move out of our comfort zone of e-commerce. We have to be more eclectic. While the Taobao app is already one of the most popular apps in China with hundreds of millions mobile users, you will see us doing our own messaging platform. We have something competitive to WeChat.  It has a lot to do with e-commerce, if you make it large enough.  Within the Taobao app we also have a “mini-app” that enable merchants to stay connected to their customers who subscribe to get feeds.  This is a very good tool for merchants to retain their existing customers, which lowers their cost of churn and ultimately lowers their cost of having to acquire new customers to replace the churn.
    YunOS 2.3 云OS (Aliyun OS 2.3) 
    [Multicorechina.com YouTube channel, Dec 16, 2013]
    Introducing the YunOS 2.3
    Alibaba merges two cloud subsidiaries [WantChinaTimes.com, Jan 8, 2013]
    Aliyun     and net.cn [http://www.net.cn (万网 – WAN network or universal net) which is known as HiChina (en.hichina.com) in English], two cloud computing internet service companies under China’s largest internet company Alibaba Group, will be merged as a new company retaining the Aliyun name. … Net.cn’s services will remain unchanged, offering its users cloud computing and cloud emails with the continually upgrading system. The website is the largest domain name system provider and virtual server industry leader in China. …
    Telecom licenses granted by MIIT [Global Times, Dec 26, 2013]
    image
    China’s top telecommunications watchdog issued licenses to the first batch of domestic mobile virtual network operators on Thursday, an attempt to further reshape the country’s telecom industry.
    This move enables a total of 11 private firms – including e-commerce platform jd.com, cloud computing service provider net.cn, and Beijing-based communication service company DiXin Tong – to purchase mobile telecom services from the three State-owned telecom carriers and resell the services to consumers under their own brands, according to a statement released Thursday by the Ministry of Industry and Information Technology (MIIT).
    As the parent company of net.cn, e-commerce giant Alibaba said in an e-mail sent to the Global Times Thursday that the license will help the company to offer customized telecom services to online shoppers and retailers, allowing it to further extend its e-commerce ecosystem.
    We’re also doing an operating system for smartphones. The core strategy is to give users an experience that connects their hardware device to content and services in the cloud.  It’s an alternative to Android where an Android device is isolated from cloud-based services.
    In mobile, the boundaries between e-commerce, communications, social networking, etc., become blurred.
    Sina Weibo, often known as the Twitter of China, is a way for merchants who have Taobao store-fronts to stay in touch with their customers and for consumers to share what they like on Taobao, and that’s in part what drove our strategic investment in Weibo.  AutoNavi is not just a provider of navigation and map services.  They have one of the most popular “local services” apps in China that enable users to find restaurants and entertainment based on their locations.  Local services will play a big role in e-commerce in the future.
    We will continue to find all kinds of new ways to reach our users in ways that best suit this new mobile environment we operate in.

    6. Also Alibaba spinoff moves further into the cloud [People’s Daily, Dec 25, 2013]

    A division of the e-commerce giant readies to take on US competition

    E-commerce conglomerate Alibaba Group Holding Ltd will extend its cloud-computing services to overseas markets in March, as it attempts to grab a share of the public cloud arena from archrivals such as Amazon.com Inc and Microsoft Corp.

    imageAliyun, Alibaba’s spinoff cloud-computing division, is scheduled to set up data centers outside China to provide cloud-computing services to local enterprises and Chinese companies’ overseas operations, the company announced on Tuesday.

    By building platforms for companies to manage and store data in the cloud, Aliyun will become the first Chinese company to reach out to the foreign public cloud segment, days after its US counterpart Amazon announced the launch of a similar services in China.

    “After five years of development and three years of commercialization, Aliyun is able toprovide sustainable services to customers, backed by its resourceful parent, Alibaba,” said Aliyun director Zhang Jing.

    The service recently gained the world’s first gold certification for cloud security from the British Standards Institute, a business standards company, which further guarantees its reliability, Zhang noted.

    Zhang declined to disclose the first destination for Aliyun’s global outreach. But he implied two options: the United States (Amazon’s birthplace) or Southeast Asia, thanks to its proximity to domestic businesses.

    As the country’s largest cloud-computing platform, Aliyun provides cloud computing services for hundreds of thousands of Chinese websites and e-commerce vendors, banks, game developers and others.

    Three-fourths of the 188 million orders generated from the Nov 11 online sales day were processed by the Alibaba cloud-computing system.

    Alibaba has made a consistent push into domestic cloud- computing enterprises. InSeptember, Alibaba acquired personal cloud storage service Kanbox.

    In August, ChinaSoft International Ltd announced a strategic agreement with Aliyun and the Lishui municipal government for a State-funded cloud project in Zhejiang province.

    Aliyun may team up with local telecom carriers to avoid local regulatory restrictions, Zhang noted.

    7. Finally, as the result of extreme lucrativeness of organic growth in 2014 Alibaba to extend $8 billion loan to end 2014, buying more time for IPO: sources [Reuters, Dec 11, 2013]

    Alibaba Group Holding Ltd said on Wednesday it is seeking to extend the draw-down period of an $8 billion loan from January next year, a move people familiar with the e-commerce company’s plans said would buy it more time to launch an IPO.
    The original expiry date of the draw-down period on the loan was January 30 of next year, according to the deal terms. Alibaba wants to extend that to December 31, 2014, sources familiar with the discussions said.
    “We have plenty of cash on the balance sheet and there is no need to draw down at this time, so we are extending the availability of funds to maintain flexibility,” the company said, without specifying a new date.
    Alibaba said the funds will be used for corporate purposes. It has already used $5 billion from the loan facility to refinance its debt.
    The $8 billion loan is a key part of Alibaba’s IPO plan, and the extension to the end of next year signals that the public float is remains a long way off.
    China’s biggest e-commerce firm has struggled to reach an agreement with Hong Kong regulators over a partnership structure it hopes to use as part of an initial public offering (IPO), a deal that expected to be worth around $15 billion and which may take place next year.
    Public comments by its founder Jack Ma and a statement from the Hong Kong Stock Exchange in recent months, however, have raised the possibility of a Hong Kong listing.
    The company has yet to outline a date or venue for the IPO. Under an agreement with its second biggest shareholder Yahoo Inc., Alibaba has incentives to complete an IPO before December 2015. [Note that Yahoo! Inc. is required to sell its 208mn shares of Alibaba concurrent with the IPO.]
    All 22 lenders involved with the loan must agree to the extension.
    The banks have until December 20 to respond to the extension request, and those responding in favor before Friday will get an “early bird” fee of $50,000 from the company if the move succeeds.

    image

    Note that there is no information yet on whether the banks extended their loans to Alibaba. The delay of the IPO is, however, so lucrative to the company that I would be rather surprised if it won’t be done. According to a latest analysis What’s the Best Way to Play 2014’s Hottest IPO? [The Motley Fool, Jan 6, 2014] “it’s not unrealistic to foresee a $200 billion valuation” even as Alibaba stands today. With all those extraordinary opportunities in Chinese finances, telecom etc. (described above) that valuation could increase significantly during the year. This means that the Alibaba Group will have much more new capital coming under Jack Ma’s control. And that is even more threat to Jef Bezos (Amazon) et al.

    It is also important that Alipay is not part of that Alibaba Group IPO, so getting the strategic investors’ money (60%) will also significantly increase the additional capital that will come under Jack Ma’s control.

    Details about Jack Ma and his strategic moves for the U.S. market in 2013

    You can best understand the personality of the chairman of the Alibaba Group from Jack Ma Commencement Address at HKUST [Jim Erickson YouTube, Nov 8, 2013]

    Alibaba Group founder and executive chairman Jack Ma gives the commencement address to the 2013 graduating class at the Hong Kong University of Science and Technology on Nov. 8, 2013.

    So his devotion to the problems of the society is a quite inherent thing which was driving his life and still will continue to do so, as evidenced by this part of Jack Ma’s Last Speech as Alibaba CEO [Tech in Asia, May 13, 2013]:

    Moving forward, I will be doing things that I’m interested in, such as working on education and the environment. Besides work, let’s work hard together to improve China. Let the water be clear, the sky be blue, and the food be safe. Everyone, please! (Jack Ma kneels down to the audience).

    According to the Financial Times Person of the year: Jack Ma [Dec 12, 2013]:

    But there is another reason for choosing Mr Ma this year: his decision in May to step down as Alibaba’s chief executive at the age of 48 to devote himself to tackling some of China’s biggest problems – in particular its looming environmental disaster.

    The Resignation Speech of Jack Ma, the CEO of Alibaba Group [TofuSquare YouTube channel, May 15, 2013]

    Yu Ma (Jack Ma), the CEO of Alibaba Group resigned from his CEO position on May 10th. The Alibaba Group is one of the most influential companies in China, and Yu Ma is one of the iconic figure for Chinese internet, e-commerce and high-tech industry . TheAli Group owns one of the largest online shopping platforms in China, Taobao. The Ali Group held a 40,000 people party in Hangzhou, China to celebrate Taobao’s 10th anniversary. Accompanying with the melody “Ali, Alibaba, Alibaba is a happy young man…” The CEO of Alibaba “Yun Ma” stepped down from his CEO position. Tofusquare have translated his speech for those of you who are interested.

    According to Jack Ma TNC Board in China [The Nature Conservancy’s China Program, June 3, 2013]

    Amid much fanfare, on May 10 Jack Ma stepped down as CEO from Alibaba, the business he built from scratch in his hometown of Hangzhou that is now one of the biggest companies in the world. On the very next day, May 11, he assumed the role of his latest endeavor: to help restore China’s environment by becoming the Chairman of the Board for The Nature Conservancy’s China Program.

    Meanwhile with Jack Ma concentrating on a big strategic role as chairman of the Alibaba Group one must consider Alibaba’s Future IPO Plans [BizAsiaAmerica YouTube channel, July 14, 2013]

    Phillip Yin interviews Ronald Wan of the Hong Kong Securities Institute on the future plans of Chinese E-commerce giant Alibaba to go public

    The preparation for the IPO certainly includes international expansion plans as well. U.S. is already the place where one can see that:

    Alibaba Group unveils U.S.-based investment organization [press release, Oct 22, 2013]

    Strategy to back entrepreneurs with a focus on Internet commerce and emerging technologies

    SAN FRANCISCO – Oct. 22, 2013 – Alibaba Group announced that it has established a U.S.-based investment organization that will look to back entrepreneurial teams working on innovative platforms, products and ideas with a focus on Internet commerce and emerging technologies.
    Michael Zeisser, who joined Alibaba after leading Liberty Media Corp.’s strategies in digital media and Internet commerce for nearly a decade, heads the team. Zeisser created and oversaw Liberty Media’s eCommerce Group, a roll-up of specialty online retail companies where he worked closely with entrepreneurs and senior executives in growing the group’s annual revenues to $1.5 billion. Prior to Liberty Media, Zeisser was a partner in the Media and Private Equity practices of McKinsey & Co. Zeisser will assume the role of Chairman of US Investments for Alibaba Group.
    “Alibaba is run by entrepreneurs, and we believe in supporting entrepreneurs with great vision and a strong sense of mission for their companies,” said Joe Tsai, Executive Vice Chairman of Alibaba and head of Alibaba’s strategic investments. “We are extremely excited to have someone of Michael’s caliber and experience to lead our investment efforts in the U.S. The team has been active over the past several months and we have already completed a few investments in the U.S. by partnering with terrific entrepreneurial teams.”

    Three U.S. companies have recently announced that they received growth capital funding from Alibaba. They are Fanatics, the leading online retailer of officially licensed sports merchandise; ShopRunner, a platform for top retailers providing free 2-day shipping to online shoppers; and Quixey, a leading developer of search technology that enables users to search for content within mobile apps.

    Other members of Alibaba’s U.S. investment team include Peter Stern, a senior banker from the technology, media and telecoms M&A team at Credit Suisse in New York who advised Alibaba on the landmark $7.6 billion stock repurchase from Yahoo in 2012; and Danielle Wong, a Stanford undergraduate who recently received her MBA from the Yale School of Management. The team will be based in the San Francisco Bay Area.
    About Alibaba Group:
    Alibaba Group’s mission is to make it easy to do business anywhere. Since it was founded in 1999, the China-based Alibaba Group has developed leading businesses in consumer e-commerce, online payment, business-to-business marketplaces and cloud computing. Alibaba Group operates Taobao Marketplace (www.taobao.com), China’s most popular online shopping destination; Tmall.com (www.tmall.com), China’s leading online platform for merchants offering quality, brand-name goods to consumers; Juhuasuan (www.juhuasuan.com), a group shopping platform; eTao (www.etao.com), a comprehensive shopping search engine; Alibaba.com (www.alibaba.com) and 1688.com (www.1688.com), leading business-to-business marketplaces for small businesses engaged in international trade and domestic China trade, respectively; and Alibaba Cloud Computing (www.aliyun.com), a developer of platforms for cloud computing and data management. Alipay (www.alipay.com), the most widely-used online payment service by consumers and merchants in China, is an affiliate of Alibaba Group.

    imageRegarding Fanatics and ShopRunner here is: Self-Made Billionaire Michael Rubin: E-Commerce Is Rapidly Changing [Entrepreneur YouTube channel, Nov 27, 2013]

    The owner of Rue La La, Fanatics and ShopRunner was bankrupt in his teens. But today, at 41, he is worth almost $3 billion. Find out more at: http://www.entrepreneur.com/video/230138 Related: Why This Company Wants You to Change Your Underwear http://www.entrepreneur.com/video/229810 Why Bitcoin’s Future Is Bright http://www.entrepreneur.com/video/228099

    Score! Web Sports Retailer Fanatics Inc.Tops $3 Billion Valuation [The Wall Street Journal, June 6, 2013]

    One online retailer has quietly grown into one of America’s largest Web merchants by carving out a lucrative niche: sports apparel.
    The company, Fanatics Inc., this week raised $170 million in a new funding round. That more than doubles the retailer’s valuation to $3.1 billion from just a year ago, according to a person familiar with the deal’s terms.
    In an interview, Michael Rubin, chief executive of Fanatics’ parent company Kynetic LLC, said the retailer expects to pull in $1 billion in revenue this year, up from $800 million last year, through a focus on sales—primarily online—of officially licensed jerseys, mugs, jackets and other such merchandise. He said the company is profitable, without providing specifics, and he has no plans to take it public.
    …
    The new funding comes from Singapore state-owned investment company Temasek Holdings Pte. Ltd., and Alibaba Group Holding Ltd., said Mr. Rubin. Temasek gains a seat on the Jacksonville, Fla., company’s board, he said.
    A spokesman for Temasek confirmed the investment, but declined to discuss specifics. An Alibaba representative declined comment.
    Mr. Rubin said the money would, among other things, help Fanatics increase its $500 million inventory, fund an overseas expansion and bolster its distribution, including a planned new warehouse in the Western U.S. “We think there’s huge potential in sports apparel and for Fanatics to grow,” said Mr. Rubin. “We’ll be looking at Western Europe and Asia as places to move into.”

    Fanatics adds 800 seasonal jobs for upcoming holiday season [USA01 YouTube channel, Oct 21, 2013]

    Fanatics is the world’s largest online retailer of officially licensed sports merchandise and they’re adding 800 seasonal jobs.

    Sports E-Commerce Leader Fanatics Launches Mobile App for iPhone and Android [press release, Nov 13, 2013]

    November 13, 2013 – JACKSONVILLE, FL – Fanatics, Inc. announces the launch of its first-ever mobile app for iPhone and Android devices. The leading online retailer of officially licensed sports merchandise is continuing to ensure sports fans receive the best possible shopping experience, including easier access to the largest assortment of team gear on smartphones.
    The new Fanatics app provides sports fans worldwide with mobile access to more than 250,000 products from over 700 teams. Users have the ability to browse through merchandise, save their favorite teams and find the best quality gear from all major leagues, including the NFL, NCAA, MLB, NBA, NHL, NASCAR, PGA and UFC. App users also have access to the free Fanatics REWARDS program, which offers free 3-day shipping on everything plus 5% Fan Cash™ on orders over $50 and 10% Fan Cash™ on orders over $100.
    “Launching the Fanatics mobile app is an exciting time for our company as we continue to expand our reach to sports fans,” said David Katz, SVP and GM of Mobile for Fanatics. “With Fanatics growing so quickly and sports over-indexing on mobile, it was crucial that we get a great, user-friendly commerce app for fan gear out to our users. And this is just the start since location information and real-time data will allow us to build on this start and create even better experiences for passionate fans.”
    About Fanatics
    Fanatics is a leading online retailer of officially licensed sports merchandise and provides the ultimate shopping experience to sports fans. As a Top 50 Internet Retailer Company, Fanatics comprises the broadest online assortment offering hundreds of thousands of officially licensed items via its Fanatics (www.fanatics.com) and FansEdge (www.fansedge.com) brands. In addition, the company powers the e-commerce sites of all major professional sports leagues (NFL, MLB, NBA, NHL, NASCAR, PGA), major media brands (NBC Sports, CBS Sports, FOX Sports) and e-stores for over 200 collegiate and professional team properties.

    imageShopRunner Helping Retailers Boost Sales, CEO Says [ShopRunner YouTube channel, May 14, 2012]

    June 20, 2012 (Bloomberg) — Michael Golden, president and chief executive officer of ShopRunner, talks about the company’s business strategy and services for retailers. He speaks with Cory Johnson on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg) Learn more about ShopRunner athttp://www.shoprunner.com

    Alibaba Leads $206 Million Investment in ShopRunner [The Wall Street Journal, Oct 10, 2013]

    Alibaba Group Holding Ltd. has led a $206 million investment in a rival to Amazon.com Inc., AMZN +1.38% one of its biggest U.S. moves as the Chinese e-commerce giant considers an initial public offering here.
    Alibaba invested in ShopRunner Inc., which offers unlimited two-day shipping from retailers including Toys “R” Us Inc. and RadioShack Corp. RSH -2.62% for a $79 annual fee. American Express Co. AXP +1.27% has also taken a small stake in ShopRunner.
    The deal values ShopRunner at about $600 million, said a person familiar with the matter, and completes a funding round in which Alibaba previously chipped in about $70 million. It isn’t clear exactly how much Alibaba invested, but it did put in most of the funding, this person said. As part of the deal, eBay Inc. EBAY +1.58% sold its prior 30% holding in ShopRunner for a profit, the person said.
    …
    Alibaba has had designs on the U.S. for years. It operates two U.S.-facing websites, traditional online marketplace Aliexpress.com and Alibaba.com, a business-to-business sales site. In 2010, it struck a deal to sell goods through eBay’s marketplace. In June, Alibaba took a minority stake in Fanatics Inc., also controlled by ShopRunner-parent Kynetic LLC, as part of $170 million funding round.
    …
    “The U.S. market in the long run is very interesting to us,” said Joe Tsai, Alibaba’s executive vice chairman and co-founder in an interview. “Coming into this market is about learning about American consumers and how the market operates.” Mr. Tsai said he expects ShopRunner to be competitive with Amazon over time. One analyst says that won’t be easy.
    …
    ShopRunner is headed by Scott Thompson, the former PayPal president who resigned as Yahoo’s chief executive last year after a flap over a flawed biography in a company regulatory filing.
    Mr. Thompson, who joined ShopRunner in July, said the cash injection will help the company grow more quickly, including adding new retailers. “We’re staking out a place in mobile, hiring more engineers that will allow us to evolve our business,” Mr. Thompson said. He said the company is also hiring additional salespeople.
    Luxury retailer Neiman Marcus Group Ltd. plans to join as soon as this month, said John Koryl, a division president. “Our customer wants to know she’ll get her item in two days,” he said. “This is a good experiment to see how it goes.”
    The ShopRunner funding round marks another milestone for Kynetic CEO Michael Rubin, who sold e-commerce consultancy GSI Commerce to eBay in March 2011 for $2.4 billion; the unit is now called eBay Enterprise. The June round in which Alibaba participated valued Kynetic at $3 billion.
    ShopRunner takes a 2% to 5% cut of goods purchased from merchants’ websites by members of the loyalty program, Mr. Thompson said. And it is one of few alternatives for merchants hoping to branch out into e-commerce while not relying too heavily on Amazon. The company doesn’t disclose revenue or profitability.
    Earlier this year, the company announced a partnership with American Express giving many U.S. cardholders free memberships, a potential pool of tens of millions.

    Scott Thompson, Ousted Yahoo CEO, Named New CEO of ShopRunner [FinancialNewsOnline, July 23, 2012]

    From Fnno.com, this is the Financial News Network. While a lot of attention has been paid to Marissa Mayer being named the new CEO of Yahoo, it seems her predecessor has a new job as well. Scott Thompson, the previous CEO of Yahoo has been named the new CEO of ShopRunner.
    ShopRunner is a subscription service that partners with over 60 online retailers. Customers pay a monthly fee, and are then able to reap the benefits of exclusive deals with certain retailers, and receive free shipping. Thompson was previously a board member for the company, as early as when he was the president of PayPal.
    Thompson’s previous position at Yahoo lasted only four months after which he was forced to depart amid allegations he lied about his qualifications. ShopRunner’s current CEO, Mike Golden, will remain with the company as president. For more coverage and analysis of the business world follow us on Twitter @FNNOnline or check out our website at fnno.com

    imageQuixey – Introducing the New Android App [quixey YouTube channel, Oct 22, 2013]

    Quixey is the best place to find and discover apps on Android. Download it for free on Google Play here: http://bit.ly/1cVpC74 Learn more about the product at http://www.quixey.com/androidapp

    Announcing Quixey on Android, a Better Way to Find Apps! [Quixey News, Oct 23, 2013]

    Today we’re super excited to announce the launch of our first direct to consumer product, now available for free on Android — download it from Google Play right here and read about it on the product page!
    Until now, most app search has been based on titles and keywords, which requires users to know the name of an app before they can search for it. With Quixey, all you have to do is describe what you want to do in natural language. For example, “tune my guitar” or “identify wines.”
    Beyond that, we’ve included a bunch of fun and engaging new features. Whether you know what kind of app you want, or just have a minute to find something new, there’s something for everyone. Here’s what Quixey on Android offers:
    • Search – App search that works. You don’t need to know an app’s name to get great results. Search for apps by describing what you want to do and we’ll find apps to help.
    • Trending – Check out the latest and greatest apps. No matter who you are – parent, student, teacher, traveler, athlete, gamer, musician – we have the top trending apps picked for you.
    • Browse – Browse through categories and subcategories. Take our browse wheel for a spin to find the perfect app for you (not available on Gingerbread OS).
    • Sample – Curious what types of apps are out there? Check out our sample queries to see what other people are searching for.
    Quixey is in beta and we’re committed to building an amazing product that you love. Submit your feedback from within the app (in the information section) or send an email to androidapp@quixey.com. Thanks and have fun finding great new apps!

    [Tech Talk Video] The Functional Web: The Future of Apps and the Web [quixey YouTube channel, March 4, 2013]

    CTO Liron Shapira gives a talk about the future of apps and the Functional Web at Box HQ in Los Altos on Feb 27, 2013.

    The Functional Web is also explained by him in this Quixey blog post of March 7, 2013.

    Quixey Secures $50M in Series C Funding Led by Alibaba Group [Quixey News, Oct 3, 2013]

    Today we’re thrilled to announce we’ve officially closed our latest round of funding! Series C is led by Alibaba Group, with new investor GGV Capital, and participation from existing investors Atlantic Bridge, Innovation Endeavors, Translink Capital, US Venture Partners, and WI Harper.
    “Next year, 95% of the world’s population will have mobile access, and by 2016 people will use 1.5 billion smart mobile devices. Quixey is at the epicenter of this brave new world, and this investment will ensure that we continue to expand globally,” said Tomer Kagan, Quixey CEO and Co-Founder. “Apps have moved from novelty to a major factor in purchasing decisions for consumers and we’ve only just started to scratch the surface of what they can do.”
    We’re very excited to be working with a company on the level of Alibaba, whose mission is to make it easy to do business anywhere. Since its inception, it has developed leading businesses in consumer e-commerce, online payment, business-to-business marketplaces and cloud computing, reaching Internet users in more than 240 countries and regions.

    Joe Tsai, Executive Vice Chairman at Alibaba, is equally as excited to be working with us. As he says, “Innovation is at the heart of Alibaba’s culture, so backing entrepreneurs who are developing forward-thinking technology is what we love to do. Quixey has a great vision for the future and a fantastic team to see it through.”

    The additional $50 million, which brings our funding total to $74.2 million, will be used to further develop our market leading Functional Search™ technology, which currently allows users to find apps by describing what they want to do. With the flexibility to bolster our already strong roster of talented employees, we’ll now be able to focus on going deeper and deeper into apps, bringing users the information and functionality they want quicker than ever before.
    “Building user-centric products is what Quixey is about. We should be the starting point for every mobile device,” said Guru Gowrappan, EVP, Product and Marketing at Quixey. “We give users a more natural way to search for the things that makes their lives easier. That’s the core of our Functional Search™ technology and the core of the company.”
    Ever since launching in 2011, we’ve been working hard to bring the build the best possible product for our users. This is a huge benchmark for us as it allows us to make our vision for the future of apps and the web a reality much faster than originally possible. If you have any questions about the funding round, please send us a note at press@quixey.com. Look out for more big announcements in the coming months!

    imageAlipay service gains rising popularity [CCTVcomInternational, July 17, 2013]

    Alipay’s Yu E Bao, an online payment platform in China, is rapidly gaining popularity amongst online retailers and shoppers.

    China’s answer to PayPal expands into the U.S. [Internet Retailer, Sept 27, 2013]

    Three hundred million Chinese consumers shop online, and most of them have accounts with Alipay, the PayPal-like online payment service owned by Alibaba Group Ltd., operator of China’s top online marketplaces. In a move that could make it easier for Chinese shoppers to buy on U.S. e-commerce sites, Alipay is now promoting itself as a payment option for U.S. e-retailers.
    imageAmong the U.S. online retailers that’s begun accepting Alipay this year is iHerb Inc., No. 204 in the Internet Retailer. In the first six months of accepting the Chinese payment method, iHerb’s sales on the cn.iHerb.com subdomain of its web site aimed at Chinese consumers increased 244.52% compared with the prior six-month period and 684.15% compared with the same period a year earlier, says John McCarthy, director of marketing at iHerb.
    …
    Leading Alipay’s international expansion is Jingming Li, whose title is chief architect and acting president of the newly formed Alibaba International Financial Service Unit. Based at Alibaba’s U.S. headquarters in Santa Clara, CA, Li sees a big opportunity in enabling Chinese shoppers to pay with a method that they use widely in China, not only to shop online but also to pay utility and other bills offline in China.
    Li notes that China’s increasingly affluent middle- and upper-class consumers made 83 million trips abroad last year [in 2012] and spent $100 billion while traveling. In addition, he says, they spent 20 billion yuan ($3.3 billion) buying directly from e-commerce sites outside of China. They’re especially interested in buying baby products, apparel and luxury goods.
    They would buy more, Alibaba reasons, if they could pay with the Alipay accounts they use in China. “That’s where our international focus will be, helping our members continue to use their Alipay accounts outside of China,” he says.
    …
    imageWithout disclosing the total number of U.S. sites accepting Alipay, Li says there are about 10 web sites in the U.S. that already are generating more than 100 Alipay transactions per day. They include the e-commerce sites of retailers Gap Inc. Direct, No. 19 in the 2013 Top 500, and Forever 21, No. 353; travel site Travelzoo; web domain registrar GoDaddy and peerTransfer, which handles tuition payments for international students.
    International web sites can boost sales by accepting Alipay because many Chinese consumers don’t have credit cards from Western brands like Visa and MasterCard, Li says. Plus, he says, “They are in the habit of using Alipay. If a merchant is willing to use Alipay as a form of payment it gives a lot more trust and confidence to the consumer who may be purchasing an airline ticket from a foreign carrier for the first time.”
    Li would not disclose Alipay’s fees, but says they are lower than the fees charged by major credit card brands like MasterCard and Visa. Chinese consumers typically fund their Alipay accounts from their bank accounts, which eliminates much of the risk that credit card issuers take on when they extend credit to cardholders. McCarthy of iHerb says the fees he pays are comparable to what he pays for other payment methods, and that he views the fees as “attractive.”
    …

    Chinese consumers & global travel [BizAsiaAmerica YouTube channel, Nov 20, 2013]

    Li Jingming, Vice President of Alipay International appears on CCTV to discuss Alipay’s potential global expansion.

    Alibaba restructures Alipay’s parent, Jack Ma’s share reduced [Reuters, Nov 1, 2013]

    The online payment affiliate of China’s biggest e-commerce company Alibaba Group Ltd will be restructured to attract new strategic investors, in a move that will reduce the shareholding of Alibaba’s founder Jack Ma in the affiliate.
    Zhejiang Alibaba E-Commerce Co Ltd will be restructured as a new company in which 60 percent of its shares will be offered to new strategic investors, Lucy Peng, head of the restructured entity, said in a letter published on its official Weibo microblog account on Friday.
    Ma will see his shareholding reduced from 80 percent to about 7 percent in the new company, or no greater than his shareholding in Alibaba Group, according to the letter.
    The restructured company, to be known as Alibaba Small and Micro Financial Services Group, will hold Zhejiang Alibaba’s 100 percent stake in unit Alipay, as well as its shareholding in Alibaba’s micro-finance unit, Zhongan Insurance, and Tianhong Asset Management Co.
    Alipay is China’s biggest third-party payment platform, providing payment solutions to 460,000 merchants, and with 800 million registered accounts.
    The remaining 40 percent in the new company will be offered to nearly 24,000 employees at Alibaba Group and Zhejiang Alibaba, said Peng, former chief executive of Alipay. That includes the share held by Ma.
    The announcement on Friday will have no impact on existing agreements with Alibaba and the group’s shareholders SoftBank Corp and Yahoo! Inc, Alibaba spokesman John Spelich said.
    In 2011, Ma sparked a public dispute with Alibaba Group’s biggest outside investors when he separated Alipay from Alibaba. Ma said at the time that new Chinese government regulations on third-party payment services required the changes.
    The companies later settled, in a deal that guaranteed Alibaba 49.9 percent of Alipay’s earnings prior to an initial public offering, and as much as $6 billion if Alipay sells shares to the public.
    “Today’s announcement underscores that employees of both Alibaba Group Holdings and Alibaba Small and Micro Financial Services Group are being incentivized to work hard to achieve success for the company,” Spelich said.
    Alibaba Group, through Alipay, is introducing a variety of financial services to complement its e-commerce businesses. Besides Alipay, which provides users with an online payment system, the Hangzhou-based company has also started fund and insurance sales, as well as small loan finance.
    In June, Alipay launched Yu E Bao, a fund management platform, allowing Alibaba customers to directly invest cash from their Alipay account into a money market fund managed by Tianhong Asset Management Co.
    The Zenglibao fund is the most successful fundraising by any mutual fund in China this year, with managed assets reaching 55.7 billion yuan ($9.14 billion) at the end of September.
    Alibaba also received approval this week from China’s securities regulators to act as a third party for the online sale of fund products on its Amazon-like Taobao.

    China’s Alipay teams with U.S. network [BizAsiaAmerica YouTube channel, Nov 20, 2013]

    Mark Niu reports on how Alipay is making it easier for Chinese to book flights and hotels online by partnering with the U.S. company UATP. Subscribe to BizAsiaAmerica: http://goo.gl/FMKaBj Follow CCTV America: Twitter: http://bit.ly/15oqHSy Facebook: http://on.fb.me/172VKne

    UATP and Alipay Unite to Help the U.S. Travel Industry Tap into the World’s Top-Spending Travel Market [press release, Nov 5, 2013]

    imageAirline and Travel Payment Summit,  Chicago, – November 5, 2013  – UATP announced today that it has entered into a strategic partnership with Alipay, China’s leading third-party online payment solution, to enable the U.S. travel industry to offer Chinese consumers a convenient and trusted way to book and pay for overseas travel.
    With minimal change to their existing backend systems, airlines, hotels and other travel enterprises can now easily connect to the more than 800 million Chinese account holders on the Alipay platform via the UATP Network. These consumers are extremely comfortable with online purchasing and enthusiastic about high-quality international products and overseas travel.
    China’s increasingly affluent middle- and upper-class consumers made 83 million outbound trips in 2012. China has been the world’s fastest-growing tourism source market for the past decade and it is now also the world’s top tourism spender. Chinese travelers spent a record US$102 billion in 2012 to surpass the U.S. and Germany, both with spending close to $84 billion.
    “After years as the most widely used online payment platform in China, Alipay is thrilled to join forces with UATP in this milestone collaboration. We are excited to help U.S. businesses satisfy eager Chinese consumers,” said Jingming Li, vice president and chief architect of Alipay International. “Alipay is dedicated to meeting the needs of China’s vast and growing pool of keen overseas travelers by making it easier for them to pay for air tickets, book hotels, rent cars and make other travel-related purchases online from the world’s leading airlines and accredited travel agencies.”
    “We look forward to partnering with Alipay and working with them in this mutually beneficial opportunity,” said Ralph Kaiser, president and CEO, UATP. “We see further growth in outbound travel as inevitable for China. Matching the strength of the UATP Network with Alipay’s proven success, we are confident that we can bring the best that both companies have to offer to this booming market.”
    Launched in 2004, Alipay is a cross-border payment solution that provides an easy and secure platform to make and receive payment over the Internet. Alipay partners with more than 180 financial institutions and supports transactions in 15 foreign currencies. It had more than 800 million registered accounts as of December 2012.
    UATP is a comprehensive payment solution that airlines offer to reduce the high cost of credit card use and provide vital data for accurate travel management. UATP’s corporate program and data tools, DataStream and DataMine, supply Level III Data for all air and rail travel, and folio-level data for hotel stays.
    For more information, visit http://uatp.com and http://global.alipay.com

    No wonder that the British Prime Minister, David Cameron and the Mayor of London, Boris Johnson are now courting Jack Ma as evidenced by the recent Alibaba Gets a British Touch [BizAsiaAmerica YouTube channel, Dec 26, 2013] video report:

    Richard Bestic reports from London where UK brands are set to be promoted on China’s T-Mall.

    Amazon Web Services not only achieved the clear and far dominant leader status in the Cloud Infrastructure as a Service (Cloud IaaS) market, but “the balance of new projects are going to AWS, not the other providers” – according to Gartner

    October 28, 2013 5:09 pm / 3 Comments on Amazon Web Services not only achieved the clear and far dominant leader status in the Cloud Infrastructure as a Service (Cloud IaaS) market, but “the balance of new projects are going to AWS, not the other providers” – according to Gartner

    According to the latest analysis by Gartner, Amazon Web Services (AWS) is:

    1. “overwhelmingly the dominant vendor” of the Cloud Infrastructure as a Service (Cloud IaaS) market
    2. a clear leader, with more than five times the compute capacity in use than the aggregate total of the other fourteen providers included in the so called Magic Quadrant (MQ)
    3. appreciated for “innovative, exceptionally agile and very responsive to the market and the richest IaaS product portfolio” which puts AWS into a quite far ahead position even against CSC, the only other in the Leaders quadrant currently

    In addition Amazon Web Services has come up in July with a price cut that reaches 80% on its EC2 cloud computing platform.

    Note that Gartner’s ranking is a complex evaluation, based on various point of views deemed to be most important from vendor-supplier point of view (see in the 3d party explanation of Gartner’s Magic Quadrant included in the Details part). It is not based on any kind of banchmarking, not even those run buy customers according to their specific application requirements. Therefore it is a well know fact that from pure cloud engineering point of view, especially in terms of focussed benchmarks Amazon EC2 is far from being a leader. The latest example of that:
    image

    About the Test
    UnixBench runs a set of individual benchmark tests, aggregates the scores, and creates a final, indexed score to gauge the performance of UNIX-like systems,which include Linux and its distributions (Ubuntu, CentOS, and Red Hat). From the Unixbench homepage:
    The purpose of UnixBench is to provide a basic indicator of the performance of a Unix-like system; hence, multiple tests are used to test various aspects of the system’s performance. These test results are then compared to the scores from a baseline system to produce an index value, which is generally easier to handle than the raw scores. The entire set of index values is then combined to make an overall index for the system.
    The UnixBench suite used for these tests ran tests that include: Dhrystone 2, Double-precision Whetstone, numerous File Copy tests, Pipe Throughput, ProcessCreation, Shell Scripts, System Call Overhead, and Pipe-based Context Switching.

    image

    Price-Performance Value: The CloudSpecs Score
    The CloudSpecs score calculates the relationship between the cost of a virtual server per hour and the performance average seen from each provider. The scores are relational to each other; e.g., if Provider A scores 50 and Provider B scores 100, then Provider B delivers 2x the performance value in terms of cost. The highest value provider will always receive a score of 100, and every additional provider is pegged in relation to that score. The calculation is:
    • (Provider Average Performance Score) / (Provider Cost per Hour) = VALUE
    • The largest VALUE is then taken as the denominator to peg other VALUES.
    • [(Provider’s VALUE) / (Largest VALUE)] * 100 = CloudSpecs Score (CS Score)
    Source: IaaS Price Performance Analysis: Top 14 Cloud Providers – A study of performance among the Top 14 public cloud infrastructure providers [Cloud Spectator and the Cloud Advisory Council, Oct 15, 2013] where—in addition of Unixbench—even more focussed benchmark results are reported as well from the Phoronix Test Suite (i.e. one of benchmark suites in PTS):
    – For ‘”CPU Performance” the 7-Zip File Compression benchmark which runs p7zip’s integrated benchmark feature to calculate the number of instructions a CPUcan handle per second (measured in millions of instructions per second, or MIPS) when compressing a file
    – For “Disk Performance” the Dbench benchmark which can be used to stress a filesystem or a server to see which workload it becomes saturated and can also be used for prediction analysis to determine “How many concurrent clients/applications performing this workload can my server handle before response starts to lag?” It is an open source benchmark that contains only file-system calls for testing the disk performance. For the purpose of comparing disk performance, write results are recorded.
    – For “RAM Performance” the RAMspeed/SMP which is a memory performance benchmark for multi-processor machines running UNIX-like operating systems, which include Linux and its distributions(Ubuntu, CentOS, and Red Hat). Within the RAMspeed/SMP suite, the Phoronix Test Suite conducts benchmarks using a set of Copy, Scale, Add, and Triad testsfrom the *mem benchmarks (INTmem, FLOATmem, MMXmem, and SSEmem) in BatchRun mode to enable high-precision memory performance measurementthrough multiple passes with averages calculated per pass and per run.
    – For “Internal Network” the Iperf benchmark which is a tool used to measure bandwidth performance. For the purpose of this benchmark, Cloud Spectator set up 2 virtual machines within thesame availability zone/data center to measure internal network throughput.
    Amazon EC2 performed “equally bad” in these particular bechnmarks. Check the published report.

    THE DETAILS BEHIND 

    The 2013 Cloud IaaS Magic Quadrant [by Lydia Leong on Gartner blog, Aug 21, 2013]

    Gartner’s Magic Quadrant for Cloud Infrastructure as a Service, 2013, has just been released (see the client-only interactive version, or the free reprint). Gartner clients can also consult the related charts, which summarize the offerings, features, and data center locations.

    the best image obtained from the web:

    image

    We’re now updating this Magic Quadrant on a nine-month basis, and quite a bit has changed since the 2012 update (see the client-only 2012, or the free 2012 reprint).

    In particular, market momentum has strongly favored Amazon Web Services. Many organizations have now had projects on AWS for several years, even if they hadn’t considered themselves to have “done anything serious” on AWS. Thus, as those organizations get serious about cloud computing, AWS is their incumbent provider — there are relatively few truly greenfield opportunities in cloud IaaS now. Many Gartner clients now actually have multiple incumbent providers (the most common combination is AWS and Terremark), but nearly all such customers tell us that the balance of new projects are going to AWS, not the other providers.

    Little by little, AWS has systematically addressed the barriers to “mainstream”, enterprise adoption. While it’s still far from everything that it could be, and it has some specific and significant weaknesses, that steady improvement over the last couple of years has brought it to the “good enough” point. While we saw much stronger momentum for AWS than other providers in 2012, 2013 has really been a tipping point. We still hear plenty of interest in competitors, but AWS is overwhelmingly the dominant vendor.

    At the same time, many vendors have developed relatively solid core offerings. That means that the number of differentiators in the market has decreased, as many features become common “table stakes” features that everyone has. It means that most offerings from major vendors are now fairly decent, but only a few are really stand out for their capabilities.

    That leads to an unusual Magic Quadrant, in which the relative strength of AWS in both Vision and Execution essentially forces the whole quadrant graphic to rescale. (To build an MQ, analysts score providers relative to each other, on all of the formal evaluation criteria, and the MQ tool automatically plots the graphic; there is no manual adjustment of placements.) That leaves you with centralized compression of all of the other vendors, with AWS hanging out in the upper right-hand corner.

    Note that a Magic Quadrant is an evaluation of a vendor in the market; the actually offering itself is only a portion of the overall score. I’ll be publishing a Critical Capabilities research note in the near future that evaluates one specific public cloud IaaS offering from each of these vendors, against its suitability for a set of specific use cases. My colleagues Kyle Hilgendorf and Chris Gaun have also been publishing extremely detailed technical evaluations of individual offerings — AWS, Rackspace, and Azure, so far.

    A Magic Quadrant is a tremendous amount of work — for the vendors as well as for the analyst team (and our extended community of peers within Gartner, who review and comment on our findings). Thanks to everyone involved. I know this year’s placements came as disappointments to many vendors, despite the tremendous hard work that they put into their offerings and business in this past year, but I think the new MQ iteration reflects the cold reality of a market that is highly competitive and is becoming even more so.

    A 3d party explanation of the GARTNER IaaS MAGIC QUADRANT 2013 [cloud☁mania, Aug 29, 2013]

    Gartner just released the 2013 update of his traditionally Magic Quadrant for Cloud Infrastructure-as-a-Service. Here are some consideration about the evaluation methodology and MQ players.

    In the context of this Magic Quadrant, IaaS is defined by Gartner as “a standardized, highly automated offering, where compute resources, complemented by storage and networking capabilities, are owned by a service provider and offered to the customer on demand. The resources are scalable and elastic in near-real-time, and metered by use. Self-service interfaces are exposed directly to the customer, including a Web-based UI and API optionally. The resources may be single-tenant or multitenant, and hosted by the service provider or on-premises in the customer’s datacentre.”

    To be included in Magic Quadrant IaaS providers should target enterprise and midmarket customers, offering high-quality services, with excellent availability, good performance, high security and good customer support. For each IaaS provider included in MQ Gartner is offering deep description related to services offer like: datacentre locations, computing issues, storage & network features, special notes, and recommended users. Also deep comments about Strengths & Caution in Cloud adoption are offered for each IaaS provider, despite the MQ positioning.

    Gartner Magic Quadrant for IaaS is a more than eloquent picture of actual status of IaaS major players. IaaS market momentum is strongly dominated by Amazon Web Services both Vision and Execution essentially directions. According Garner analysts, AWS is a clear leader, with more than five times the compute capacity in use than the aggregate total of the other fourteen providers included in MQ. AWS is appreciated for “innovative, exceptionally agile and very responsive to the market and the richest IaaS product portfolio”.

    The Leaders Quadrant is positioning CSC as second player, a traditional IT outsourcer with a broad range of datacentre outsourcing capabilities. CSC is appreciated for his commitment to embrace the highly standardized cloud model, and his solid platform attractive to traditional IT operations organizations that still want to retain control, but need to offer greater agility to the business

    The Challengers Quadrant is including Verizon Terremark – the market share leader in VMware-virtualized public cloud IaaS, Dimension Data – a large SI and VAR entering in the cloud IaaS market through the 2011 acquisition of OpSource, and Savvis – a CenturyLink company with a long track record of leadership in the hosting market.

    Big surprise for Visionaries Quadrant is the comfortable positioning of Microsoft with his Windows Azure platform.  Previously strictly PaaS, Azure is becoming IaaS also in April 2013 when Microsoft launched Windows Azure Infrastructure Services which include Virtual Machines and Virtual Networks.  Microsoft place in Visionary Quadrant is motivated by Gartner by the global vision of infrastructure and platform services “that are not only leading stand-alone offerings, but also seamlessly extend and interoperate with on-premises Microsoft infrastructure (rooted in Hyper-V, Windows Server, Active Directory and System Center) and applications, as well as Microsoft’s SaaS offerings.” 

    Between the IaaS providers from the Niche Players Quadrant, we have to note the presence of heawy playes triade:IBM, HP, and Fujitsu. Gartner appreciate IBM for his wide range of cloud-related products and services, IaaS MQ analyse including only cloud offering from SmartCloud Enterprise (SCE) and cloud-enabled infrastructure service IBM SmartCloud Enterprise+. In the same way, from HP’s range of cloud-related products and services Gartner is considered only HP Public Cloud and some cloud-enabled infrastructure services, such HP Enterprise Services Virtual Private Cloud. Fujitsu is one of the few non-American cloud providers, being appreciated by Gartner for the large cloud IaaS offerings, including the Fujitsu Cloud IaaS Trusted Public S5 (formerly the Fujitsu Global Cloud Platform), multiple regional offerings based on a global reference architecture (Fujitsu Cloud IaaS Private Hosted, formerly known as Fujitsu Local Cloud Platform), and multiple private cloud offerings, especially in Asia-Pacific area and Europe.

    Speaking about non-America regions we should observe that significant European-based providers like CloudSigma, Colt, Gigas, Orange Business Services, OVH and Skyscape Cloud Services was not included in this Magic Quadrant. The same for Asia/Pacific region with major players like Datapipe, NTT and Tata Communications.

    Gartner considered also two offerings that are currently in beta stage, and therefore could not be included in this evaluation, but could be considered as prospective players of next MQ edition: Google Compute Engine (GCE) – a model similar to Amazon EC2′s, and VMware vCloud Hybrid Service (vCHS) – a full-featured offering with more functionality than vCloud Datacenter Service.

    Additional Gartner blog posts related to that:

    Cloud IaaS market share and the developer-centric world [by Lydia Leong on Gartner blog, Sept 4, 2013]

    Bernard Golden recently wrote a CIO.com blog post in response to my announcement of Gartner’s 2013 Magic Quadrant for Cloud IaaS. He raised a number of good questions that I thought it would be useful to address. This is part 1 of my response. (See part 2 for more.)
    (Broadly, as a matter of Gartner policy, analysts do not debate Magic Quadrant results in public, and so I will note here that I’m talking about the market, and not the MQ itself.)
    Bernard: “Why is there such a distance between AWS’s offering and everyone else’s?”
    In the Magic Quadrant, we rate not only the offering itself in its current state, but also a whole host of other criteria — the roadmap, the vendor’s track record, marketing, sales, etc. (You can go check out the MQ document itself for those details.) You should read the AWS dot positioning as not just indicating a good offering, but also that AWS has generally built itself into a market juggernaut. (Of course, AWS is still far from perfect, and depending on your needs, other providers might be a better fit.)
    But Bernard’s question can be rephrased as, “Why does AWS have so much greater market share than everyone else?”
    Two years ago, I wrote two blog posts that are particularly relevant here:
    These posts were followed up wih two research notes (links are Gartner clients only):
    I have been beating the “please don’t have contempt for developers” drum for a while now. (I phrase it as “contempt” because it was often very clear that developers were seen as lesser, not real buyers doing real things — merely ignoring developers would have been one thing, but contempt is another.) But it’s taken until this past year before most of the “enterprise class” vendors acknowledged the legitimacy of the power that developers now hold.
    Many service providers held tight to the view espoused by their traditional IT operations clientele: AWS was too dangerous, it didn’t have sufficient infrastructure availability, it didn’t perform sufficiently well or with sufficient consistency, it didn’t have enough security, it didn’t have enough manageability, it didn’t have enough governance, it wasn’t based on VMware — and it didn’t look very much like an enterprise’s data center architecture. The viewpoint was that IT operations would continue to control purchases, implementations would be relatively small-scale and would be built on traditional enterprise technologies, and that AWS would never get to the point that they’d satisfy traditional IT operations folks.
    What they didn’t count on was the fact that developers, and the business management that they ultimately serve, were going to forge on ahead without them. Or that AWS would steadily improve its service and the way it did business, in order to meet the needs of the traditional enterprise. (My colleagues in GTP — the Gartner division that was Burton Group — do a yearly evaluation of AWS’s suitability for the enterprise, and each year, AWS gets steadily, materially better. Clients: see the latest.)
    Today, AWS’s sheer market share speaks for itself. And it is definitely not just single developers with a VM or two, start-ups, or non-mission-critical stuff. Through the incredible amount of inquiry we take at Gartner, we know how cloud IaaS buyers think, source, succeed, and sometimes suffer. And every day at Gartner, we talk to multiple AWS customers (or prospects considering their options, though many have already bought something on the click-through agreement). Most are traditional enterprises of the G2000 variety (including some of the largest companies in the world), but over the last year, AWS has finally cracked the mid-market by working with systems integrator partners. The projected spend levels are clearly increasing dramatically, the use cases are extremely broad, the workloads increasingly have sensitive data and regulatory compliance concerns, and customers are increasingly thinking of AWS as a strategic vendor.
    (Now, as my colleagues who cover the traditional data center like to point out, the spend levels are still trivial compared to what these customers are spending on the rest of their data center IT, but I think what’s critical here is the shift in thinking about where they’ll put their money in the future, and their desire to pick a strategic vendor despite how relatively early-stage the market is.)
    But put another way — it is not just that AWS advanced its offering, but it convinced the market that this is what they wanted to buy (or at least that it was a better option than the other offerings), despite the sometimes strange offering constructs. They essentially created demand in a new type of buyer — and they effectively defined the category. And because they’re almost always first to market with a feature — or the first to make the market broadly aware of that capability — they force nearly all of their competitors into playing catch-up and me-too.
    That doesn’t mean that the IT operations buyer isn’t important, or that there aren’t an array of needs that AWS does not address well. But the vast majority of the dollars spent on cloud IaaS are much more heavily influenced by developer desires than by IT operations concerns — and that means that market share currently favors the providers who appeal to development organizations. That’s an ongoing secular trend — business leaders are currently heavily growth-focused, and therefore demanding lots of applications delivered as quickly as possible, and are willing to spend money and take greater risks in order to obtain greater agility.
    This also doesn’t mean that the non-developer-centric service providers aren’t important. Most of them have woken up to the new sourcing pattern, and are trying to respond. But many of them are also older, established organizations, and they can only move so quickly. They also have the comfort of their existing revenue streams, which allow them the luxury of not needing to move so quickly. Many have been able to treat cloud IaaS as an extension of their managed services business. But they’re now facing the threat of systems integrators like Cognizant and Capgemini entering this space, combining application development and application management with managed services on a strategic cloud IaaS provider’s platform — at the moment, normally AWS. Nothing is safe from the broader market shift towards cloud computing.
    As always, every individual customer’s situation is different from another’s, and the right thing to do (or the safe, mainstream thing to do) evolves through the years. Gartner is appropriately cautionary when it discusses such things with clients. This is a good time to mention that Magic Quadrant placement is NEVER a good reason to include or exclude a vendor from a short list. You need to choose the vendor that’s right for your use case, and that might be a Niche Player, or even a vendor that’s not on the MQ at all — and even though AWS has the highest overallplacement, they might be completely unsuited to your use case.

    Where are the challengers to AWS? [by Lydia Leong on Gartner blog, Sept 4, 2013]

    This is part of 2 of my response to Bernard Golden’s recent CIO.com blog post in response to my announcement of Gartner’s 2013 Magic Quadrant for Cloud IaaS. (Part 1 was posted yesterday.)

    Bernard: “What skill or insight has allowed AWS to create an offering so superior to others in the market?”

    AWS takes a comprehensive view of “what does the customer need”, looks at what customers (whether current customers or future target customers) are struggling with, and tries to address those things. AWS not only takes customer feedback seriously, but it also iterates at shocking speed. And it has been willing to invest massively in engineering. AWS’s engineering organization and the structure of the services themselves allows multiple, parallel teams to work on different aspects of AWS with minimal dependencies on the other teams. AWS had a head start, and with every passing year their engineering lead has grown larger. (Even though they have a significant burden of technical debt from having been first, they’ve also solved problems that competitors haven’t had to yet, due to their sheer scale.)

    Many competitors haven’t had the willingness to invest the resources to compete, especially if they think of this business as one that’s primarily about getting a VM fast and that’s all. They’ve failed to understand that this is a software business, where feature velocity matters. You can sometimes manage to put together brilliant, hyper-productive small teams, but this is usually going to get you something that’s wonderful in the scope of what they’ve been able to build, but simply missing the additional capabilities that better-resourced competitors can manage (especially if a competitor can muster both resources and hyper-productivity). There are some awesome smaller companies in this space, though.

    Bernard: “Plainly stated, why hasn’t a credible competitor emerged to challenge AWS?”

    I think there’s a critical shift happening in the market right now. Three very dangerous competitors are just now entering the market — Microsoft, Google, and VMware. I think the real war for market share is just beginning.

    For instance, consider the following, off the cuff, thoughts on those vendors. These are by no means anything more than quick thoughts and not a complete or balanced analysis. I have a forthcoming research note called “Rise of the Cloud IaaS Mega-Vendors” that focuses on this shift in the competitive landscape, and which will profile these four vendors in particular, so stay tuned for more. So, that said:

    Microsoft has brand, deep customer relationships, deep technology entrenchment, and a useful story about how all of those pieces are going to fit together, along with a huge army of engineers, and a ton of money and the willingness to spend wherever it gains them a competitive advantage; its weakness is Microsoft’s broader issues as well as the Microsoft-centricity of its story (which is also its strength, of course). Microsoft is likely to expand the market, attracting new customers and use cases to IaaS — including blended PaaS models.

    Google has brand, an outstanding engineering team, and unrivaled expertise at operating at scale; its weakness is Google’s usual challenges with traditional businesses (whatever you can say about AWS’s historical struggle with the enterprise, you can say about Google many times over, and it will probably take them at least as long as AWS did to work through that). Google’s share gain will mostly come at the expense of AWS’s base of HPC customers and young start-ups, but it will worm its way into the enterprise via interactive agencies that use its cloud platform; it should have a strong blended PaaS model.

    VMware has brand, a strong relationship with IT operations folks, technology it can build on, and a hybrid cloud story to tell; whether or not its enterprise-class technology can scale to global-class clouds remains to be seen, though, along with whether or not it can get its traditional customer base to drive sufficient volume of cloud IaaS. It might expand the market, but it’s likely that much of its share gain will come at the expense of VMware-based “enterprise-class” service providers.

    Obviously, it will take these providers some time to build share, and there are other market players who will be involved, including the other providers that are in the market today (and for all of you wondering “what about OpenStack”, I would classify that under the fates of the individual providers who use it). However, if I were to place my bets, it would be on those four at the top of market share, five years from now. They know that this is a software business. They know that innovative capabilities are vitally necessary. And they know that this has turned into a market fixated on developer productivity and business benefits. At least for now, that view is dominating the actual spending in this market.

    You can certainly argue that another market outcome should have happened, that users shouldhave chosen differently, or even that users are making poor decisions now that they’ll regret later. That’s an interesting intellectual debate, but at this point, Sisyphus’s rock is rolling rapidly downhill, so anyone who wants to push it back up is going to have an awfully difficult time not getting crushed.

    Verizon Cloud is technically innovative, but is it enough? [by Lydia Leong on Gartner blog, Oct 4, 2013]

    Verizon Terremark has announced the launch of its new Verizon Cloud service built using its own technology stack.

    Verizon already owns a cloud IaaS offering — in fact, it owns several. Terremark was an early AWS competitor with the Terremark Enterprise Cloud, a VMware-based offering that got strong enterprise traction during the early years of this market (and remains the second-most-common cloud provider amongst Gartner’s clients, with many companies using both AWS and Terremark), as well as a vCloud Express offering. Verizon entered the game later with Verizon Compute as a Service (now called Enterprise Cloud Managed Edition), also VMware-based. Since Verizon’s acquisition of Terremark, the company has continued to operate all the existing platforms, and intends to continue to do so for some time to come.

    However, Verizon has had the ambition to be a bigger player in cloud; like many other carriers, it believes that network services are a commodity and a carrier needs to have stickier, value-added, higher-up-the-stack services in order to succeed in the future. However, Verizon also understood that it would have to build technology, not depend on other people’s technology, if it wanted to be a truly competitive global-class cloud player versus Amazon (and Microsoft, Google, etc.).

    With that in mind, in 2011, Verizon went and made a manquisition — acquiring CloudSwitch not so much for its product (essentially hypervisor-within-a-hypervisor that allows workloads to be ported across cloud infrastructures using different technologies), as for its team. It gave them a directive to go build a cloud infrastructure platform with a global-class architecture that could run enterprise-class workloads, at global-class scale and at fully competitive price points.

    Back in 2011, I conceived what I called the on-demand infrastructure fabric (see my blog post No World of Two Clouds, or, for Gartner clients, the research note, Market Trends: Public and Private Cloud Infrastructure Converge into On-Demand Infrastructure Fabrics) — essentially, a global-class infrastructure fabric with self-service selectable levels of availability, performance, and isolation. Verizon is the first company to have really built what I envisioned (though their project predates my note, and my vision was developed independently of any knowledge of what they were doing).

    The Verizon Cloud architecture is actually very interesting, and, as far as I know, unique amongst cloud IaaS providers. It is almost purely a software-defined data center. Components are designed at a very low level — a custom hypervisor, SDN augmented with the use of NPUs, virtualized distributed storage. Verizon has generally tried to avoid using components for which they do not have source code. There are very few hardware components — there’s x86 servers, Arista switches, and commodity Flash storage (the platform is all-SSD). The network is flat, and high bandwidth is an expectation (Verizon is a carrier, after all). Oh, and there’s object-based storage, too (which I won’t discuss here).

    The Verizon Cloud has a geographically distributed control plane designed for continuous availability, and it, along with the components, are supposed to be updatable without downtime (i.e., maintenance should not impact anything). It’s intended to provide fine-grained performance controls for the compute, network, and storage resource elements. It is also built to allow the user to select fault domains, allowing strong control of resource placement (such as “these two VMs cannot sit on the same compute hardware”); within a fault domain, workloads can be rebalanced in case of hardware failure, thus offering the kind of high availability that’s often touted in VMware-based clouds (including Terremark’s previous offerings). It is also intended to allow dynamic isolation of compute, storage, and networking components, allowing the creation of private clouds within a shared pool of hardware capacity.

    The Verizon Cloud is intended to be as neutral as possible — the theory is that all VM hypervisors can run natively on Verizon’s hypervisor, many APIs can be supported (including its own API, the existing Terremark API, and the AWS, CloudStack, and OpenStack APIs), and there’ll be support for the various VM image formats. Initially, the supported hypervisor is a modified Xen. In other words, Verizon wants to take your workloads, wherever you’re running them now, and in whatever form you can export them.

    It’s an enormously ambitious undertaking. It is, assuming it all works as promised, a technical triumph — it’s the kind of engineering you expect out of an organization like AWS or Google, or a software company like Microsoft or VMware, not a staid, slow-moving carrier (the mere fact that Verizon managed to launch this is a minor miracle unto itself). It is actually, in a way, what OpenStack might have aspired to be; the delta between this and the OpenStack architecture is, to me, full of sad might-have-beens of what OpenStack had the potential to be, but is not and is unlikely to become. (Then again, service providers have the advantage of engineering to a precisely-controlled environment. OpenStack, and for that matter, VMware, need to run on whatever junk the customer decides to use, instantly making the problem more complex.)

    Unfortunately, the question at this stage is: Will anybody care?

    Yes, I think this is an important development in the market, and the fact that Verizon is already a credible cloud player in the enterprise, with an entrenched base in the Terremark Enterprise Cloud, will help it. But in a world where developers control most IaaS purchasing, the bare-bones nature of the new Verizon offering means that it falls short of fulfilling the developer desire for greater productivity. In order to find a broader audience, Verizon will need to commit to developing all the richness of value-added capabilities that the market leaders will need — which likely means going after the PaaS market with the same degree of ambition, innovation, and investment, but certainly means committing to rapidly introducing complementing capabilities and bringing a rich ecosystem in the form of a software marketplace and other partnerships. Verizon needs to take advantage of its shiny new IaaS building blocks to rapidly introduce additional capabilities — much like Microsoft is now rapidly introducing new capabilities into Azure.

    With that, assuming that this platform performs as designed, and Verizon can continue to treat Terremark’s cloud folks like they belong to a fast-moving start-up and not an ossified pipe provider, Verizon may have a shot at being one of the leaders in this market. Without that, the Verizon Cloud is likely to be relegated to a niche, just like every other provider whose capabilities stop at the level of offering infrastructure resources.

    From: Amazon.com Announces Third Quarter Sales up 24% to $17.09 Billion [press release, Oct 24, 2013]

    • Amazon Web Services (AWS) introduced more than 15 new features and enhancements to its fully managed relational and NoSQL database services. Amazon Relational Database Service (RDS) now supports Oracle Statspack performance diagnostics and has expanded MySQL support, including capabilities for zero downtime data migration. Enhancements to Amazon DynamoDB include new cross-region support, a local test tool, and location-based query capabilities.
    • AWS continued to bolster its management services, making it easier to provision and manage more AWS resources with AWS CloudFormation and AWS OpsWorks, which both added support for Amazon Virtual Private Cloud (VPC). AWS also enhanced the AWS Console mobile app and introduced a new Command Line Interface.
    • AWS continued to gain momentum in the public sector and now has more than 2,400 education institutions and 600 government agencies as customers, including recent new projects with customers such as the U.S. Federal Drug Administration.

    THE JULY PRICE CUT

    From Amazon.com Announces Second Quarter Sales up 22% to $15.70 Billion [press release, July 25, 2013]

    • AWS announced it had lowered prices by up to 80% on Amazon EC2 Dedicated Instances, instances that run on single-tenant hardware dedicated to a single customer account. In addition, AWS lowered prices on Amazon RDS instances with On-Demand price reductions of up to 28% and Reserved Instance (RI) price reductions of up to 27%.
    • Amazon Web Services (AWS) became the first major cloud provider to achieve FedRAMP Compliance which recognizes the ability of AWS to meet extensive security requirements and compliance mandates for running sensitive US government applications and protecting data. FedRAMP certification simplifies and speeds the ability for government agencies to evaluate and adopt AWS for a wide range of applications and workloads.
    • AWS announced the launch of the AWS Certification Program, which recognizes IT professionals that possess the skills and technical knowledge necessary for building and maintaining applications and services on the AWS Cloud. AWS Certifications help organizations identify candidates and consultants who are proficient at architecting and developing for the cloud.
    • AWS further enhanced its security and identity management capabilities across several services – introducing resource-level permissions for Amazon Elastic Compute Cloud (EC2) and Amazon Relational Database Service (RDS), adding identity federation to AWS Identity and Access Management (IAM), extending Amazon Simple Storage Service (S3) Server Side Encryption support to Amazon Elastic Map Reduce (EMR), and adding custom SSL certificate support for CloudFront. These enhancements give customers more granular security controls over their AWS deployments, applications and sensitive data.

    Some directly related and general/major previous press releases from that overall list:

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