During my stay in Jakarta, I met Andy Sjarif, the founder of three-year-old Indonesian startup SITTI. Andy is a friendly, opinionated, and eloquent guy and is the father of two young daughters. In his early forties, Andy’s passion and energy matches that of any other younger entrepreneurs I know. He is frequently invited to speak at entrepreneurial events and has a firm opinion of what Indonesian startups should work on. His startup, SITTI, is an intuitive ad network that serves relevant ads to sites and searches according to keywords used; in short, it is a Google Adsense that’s proficient in the Indonesian language. It currently has a team of 47 staff, and is invested by thirteen angel investors in Indonesia

Andy’s description of his journey in SITTI so far:

SITTI is not all a story of success, let’s be clear on that. It is a roller coaster ride. SITTI is an idea that is highly radical technologically, but it is a boring ad network business. There is no book to teach us how we should go about starting this. Nobody can teach me on how to do this right; on fundraising, creating the technology, getting the right people and other startup issues. As a result, we made many mistakes, took many wrong turns; but at same time, we also achieved many exciting results that no one told us we could.

Andy’s entrepreneurship dates back to 1997 when he was in US. He started a CRM analytic consulting firm that helped companies with segmentation and analytics of databases of customers. This startup did not last long as Andy found the business not scalable and decided to pursue his other startup ideas. But this first startup was not all failure. Through doing it, Andy learned the ropes of running a company and it opened his eyes to the opportunities of doing an ad-serving technology that serves related ads when you visit websites or search for keywords. This is similar to Google Adsense but he had the idea earlier. And this is what eventually become SITTI is today.

The central idea was to create context out of a webpage. If a page is about shoes or fashion, the ads served should be fashion related. That’s simple logic. But back then, Google’s Adsense didn’t exist so it was tough to pitch this idea to potential investors, nobody understood. As such, I couldn’t get funding for it.

Moving on to 2010, Andy was finally able to launch SITTI in its fourth iteration after amassing investments from thirteen angel investors in Indonesia. Considering the year he wrote the first business plan, he took more than a decade before finally launching SITTI. So what took him so long? Andy shared that it was a mixture of market readiness for such a product and unfortunate events such as the dot com bubble burst, the Asian financial crisis and 9-11 that delayed him. Nevertheless, this wait made him hungrier for success and his belief in the product grew.

SITTI got off to an explosive start, serving up to 22 million of ad impressions a day in its first year and being an ad network, it could monetize well. However, into the second and third year, the monetization stagnated and the team was dumbfounded as to what caused it.

At 450 million impressions a month in the first year, we were massive, we were big. We could monetize as well. At second year, we found that we had huge inventory but couldn’t monetize as it should be. This was one of the first learnings. The formula seemed to be right, to create a contextual ability to produce targeted advertising based on Indonesian language, superior to that of Google in Indonesian language. Everything seemed to be right, so what went wrong?

Actually nothing went wrong. What we failed to consider is that in the US, 74% of Google’s income comes from SMEs. Economic Impact for Google 2010 says that over 60 billion of dollars of transaction in SMEs happened because there’s Google. Google did it, why can’t’ we? Here’s what happened in the US. A tire store in a rural area of Iowa (a state in US) has a website and uses a credit card to advertise on Google Adwords; it is a natural extension. We have 52 million SMEs in Indonesia producing more than 55 percent of the country’s GDP. But how many of them are online? So what are they promoting online? And what can SITTI do for them when they are mostly not online?

Knowing this, Andy started Nurbaya Initiatives, a non-profit movement that pooled help from other local technology companies within the commerce industry and other NGOs such as World Bank to help traditional businesses learn more about internet and how they can utilize it for their business. This is certainly a noble initiative that Andy is piloting and with the statistics he spelled out, the movement will not just speed up the growth in Indonesia’s e-commerce scene, it will also bring value to the hundreds of thousands of Indonesian SMEs who may be living by the edge. Which, of course, creates more potential customers for SITTI.

So what does he think of the startup scene these days? Here’s what Andy thinks Indonesian startups should work on:

Indonesian technology startups should stop thinking about being Silicon Valley. SV is about big new breakthrough ideas, disruptive technology. I’ve been through enough to learn that technology for us in Indonesia is about sustainability and impact. So the question is not about building the most advanced technology but it should be about how technology can create an impact to our people and our country. Call me a pessimist, but I don’t see a Steve Jobs coming from Indonesia coming out with an iPod or an iPhone. I don’t see a Sergy Brin coming up an algorithm so damn complex that nobody understands it. However, I think there’s enough talent from our startup community to do something impactful for this corner of the world.

I think no one likes to be censored, and that includes me. But sometimes, you can’t have total control over everything, especially when you are doing business in another country. When it was uncovered that Line is ready with filters to prevent the sending of politically sensitive words for the Chinese version of Line (branded “Lian Wo”), the natural reaction of most people was that it is a bad thing.

I thought so too. But when you cover or work in the Chinese internet industry, censorship slowly becomes the norm. It’s common practice in China, across the internet and all offline media, that you self-censor first so that you don’t even trouble the censors. If you don’t want to follow this rule, then get the hell out of China. Run far away.

Now, let me repeat that I’m not a fan of censorship. But at the same time, after complaining about why the hell China blocks certain websites and has certain restrictions, I’ve grown to understand that every country has its own rules and you have to obey them to conduct business there. Period.

So would Line be wrong if it were to really censor politically sensitive words in China? That word filter within the Line app is not yet switched on, but it’s ready to be activated. I personally don’t think Line is wrong because the company has simply followed the rules of the country and the censorship will only apply to its Chinese app. I’m sure there are people who disagree. If you are one of them, kindly share your thoughts in the comments.

China’s first tech IPO of 2013 is still in the works as the global B2B e-commerce platform LightInTheBox seeks to hit the New York Stock Exchange tickers. Now Beijing-based LightInTheBox has adjusted its IPO plan slightly and is looking to raise $100 million dollars – a rise from the earlier scope of going up to $86 million.

Aiming to list as NYSE:LITB, LightInTheBox’s new form F-6 filing with the SEC also shows that the company, which helps small business around the world source things directly from Chinese manufacturers, hopes to debut at between $8.50 to $10.50 per share.

LightInTheBox, whose primary competitor is Alibaba’s B2B global sourcing site, says it has 2.5 million users and pulled in $200 million in net revenues in 2012.

LightInTheBox has been invested in by Zhenfund during its growth stages. It has assigned Credit Suisse, Stifel, Pacific Crest Securities, and Oppenheimer and Co as its underwriters.

The new office will work to further localize and popularize WeChat, although with one million Malaysian users the app already has a solid foundation in the country. But it will also work to introduce new Tencent products to the Malaysian market, and it could even become a new source of exits for Malaysian startups. Tencent international business VP Poshu Yeung told the Malay Mail:

Tencent has conducted a lot of mergers and acquisitions around the world and we actively look for innovation as well as expansion opportunities.

So is this good news for Malaysian startups? It’s hard to say. Obviously, more capital in the region is a good thing, but Tencent has a well-earned reputation in China of copying startups’ ideas rather than acquiring them, and then using its massive war chest to bury the original product. And to be honest, we haven’t seen Tencent make a lot of acquisitions in Southeast Asia, so if I were a Malaysian startup, I might be a little wary of the arrival of this new office.

With that said, there’s no cause for undue paranoia before the office even opens, and if Tencent is publicly announcing its intent to look for innovation and potential acquisitions in Malaysia, then the door may well be open for Malaysian startups looking for funding or a potential exit. Whatever happens, it will be interesting to see how Malaysia’s startup scene responds to the presence of the Chinese tech giant once the company has finished setting up shop there.

(Malay Mail via TheNextWeb)

The century-old US luxury retailer Neiman Marcus launched in China very quietly late last year after investing $28 million in Chinese site Glamour Sales. But this week, in a major change in strategy, Neiman Marcus is closing its warehouse facility in China and scaling back its physical presence in the country.

Neiman Marcus’ Chinese site will remain online and in business, but as a Neiman spokeswoman told the WSJ, all orders will be shipped direct from America instead. The representative said this is “a better model” for the luxury retailer, and claimed not to be influenced by a recent slowdown in high-end purchases in China caused in some part by a crackdown on government corruption that makes grand displays of wealth a bad idea.

Despite the difficulties, Neiman Marcus has raised its stake in Glamour Sales at some point in the past year and now holds 44 percent of the luxury e-tailer.

The Neiman Marcus Chinese site – which stocks couture brands like Kate Spade, Helmut Lang, Valentino, and Jimmy Choo – will now ship items directly from the retail chain’s US warehouses. While that will create long shipping times and leave the site subject to currency fluctuations, it might offer some benefits. While Neiman Marcus didn’t outline what those benefits might be, it could mean actually being faster to offer new fashions and product ranges to Chinese consumers, no longer held up by local bureaucracy.

At present, the Chinese site hasn’t been updated to reflect the change in strategy and tells current customer that it ships from its Shanghai warehouse. It’s not clear when the US shipping changeover will happen.

Luxury e-commerce is a huge sector in China, principally covering couture clothing, fine wines, and curated travel.

(Source: Wall Street Journal)

Amid a stream of bad news about an executive brain drain at HTC (TPE:2498), the Taiwanese phone-maker has said today that it has sold “around five million” of its flagship HTC One phones since launch. The HTC One suffered a launch delay due to supply issues, and hit shelves a full two weeks late on March 28th.

The subliminal message from HTC is that sales are strong, despite being dwarfed by that of the Samsung Galaxy S4, which hit 10 million shipments of the S4 in just three weeks after launch. For both HTC’s and Samsung’s figures, it’s not clear how many are shipped to retailers versus actually purchased by consumers.

HTC CEO Peter Chou has vowed to resign if the HTC One doesn’t perform. HTC’s Q1 financials were grim as profit plunged 98 percent. The HTC One, the company hopes, will boost its Q2 earnings.

HTC has been roiled this month by top-level executive departures. HTC Asia CEO Lennard Hoornik is confirmed to have quit, while chief product officer Kouji Kodera is believed to be gone as well. CNET notes that other outgoing executives include global retail marketing manager Rebecca Rowland, digital marketing director John Starkweather, and product strategy manager Eric Lin. Mr. Lin has even urged others to “just quit” and “leave now” via Twitter, implying a grim and unhappy corporate atmosphere at the struggling smartphone maker.

HTC stocks have just closed at TW$282.50 per share in Thursday trading, which is the second-lowest dip taking it to one of the lowest levels for the stock price since 2005 (Updated: Changed wording and added graph below).

(Source: The Verge and WSJ Stream)

A week later, that question remains unanswered, as GREE’s proposed settlement has left many employees unsatisfied. One worker told the Beijing Times that part of the problem is that many employees put in massive amounts of overtime with the expectation that this dedication would be rewarded in the long run, and that GREE’s compensation plan doesn’t account for that. But a company spokesman told the paper that dissatisfied employees were a small minority of the total staff at GREE China.

But the real trouble for GREE from a PR perspective is that one of the laid-off employees is eight months pregnant. According to her, the loss of her job means the loss of access to pregnancy insurance she’s been paying into for ten years in addition to a maternity leave allowance, and GREE executives and the company’s lawyer have reportedly said they will not be offering her any additional support. (We’ve contacted GREE to see what they say about this and will update this post when we hear back from them). The woman says she has already filed a labor dispute with the relevant authorities in Beijing. A Beijing-based lawyer told the Beijing Times that GREE’s refusal to offer her additional support may violate Chinese labor laws, which make it difficult to terminate the contracts of pregnant women without offering significant additional compensation.

Whatever GREE ultimately decides (or is forced by the law) to do, the report has already damaged the company’s reputation. On weibo, the pregnant woman’s story has been reposted hundreds of times, and almost all the comments are in support of her rather than the company. It’s hard to believe that GREE couldn’t have seen this coming.

Frankly, whatever the law says shouldn’t matter much one way or the other; GREE stepping up to help out this woman ought to be a no-brainer, and I expect we’ll see it do that soon. Even if the law is on your side, it’s never good to bully a pregnant woman, and if paying for one birth and some extra months of maternity leave is what it takes, then GREE should just chock that up as part of the cost of shutting down its China office rather than trying to fight it in the legal system (and destroying its own reputation in China in the process).

(Beijing Times via Sina Tech)

Qihoo (NYSE:QIHU) already has a search engine and Alibaba already has a product search engine, so it makes sense for the two to work together. And that’s what they’re doing.

The tie-up between the two Chinese web giants effectively gives Qihoo a new shopping search option on its 360 Search site, which exploded onto the scene in China last summer. Thanks to Qihoo’s huge traffic from its established web browsers and web portal, Qihoo’s 360 Search instantly became China’s second largest search engine last year.

Basically, it looks to be just Alibaba’s existing eTao shopping search ported over to Qihoo’s site. That’s even evident in the URL 360.etao.com. So it’s not fundamentally new. But it means that Qihoo’s originally spartan search offerings (initially it had just ‘news’, ‘web’ and ‘video’) have now expanded to 11 options.

This partnership gives Qihoo access to everything on eTao, which is perhaps China’s most comprehensive product search engine. Though Alibaba itself has numerous e-commerce companies, eTao indexes content from nearly all of China’s e-stores, not just Alibaba’s own properties. It also gives Qihoo a big boost relative to its nemesis Baidu (NASDAQ:BIDU), which arrived alarmingly late to to this shopping search battle, only launching its own dedicated portal in February this year. ETao and other such sites have been running for years.

For Alibaba, this should be a big shot in the arm for eTao’s traffic and visibility.

Price comparison and shopping search sites are a big battleground in China, covering numerous startups and some other major web portal companies as well. Last year the startup site B5M raised over $7 million in series A funding to grow its own product.

(Hat-tip to Sina Tech (article in Chinese) for spotting this)

UniPin is a four-year-old Indonesian payment startup that aims to make payment for online games easier. It has around 30 staff working on UniPin, more than 100 games on its platform, and around 300,000 monthly active users who utilize it to buy gaming credits. Unipin is also able to draw strength from the exclusive partnership it established in its starting year with Indomaret, Indonesia’s largest chain of more than 6,000 minimarts, as points of sale for UniPin credits.

UniPin co-founder Ashadi Ang said:

The co-founders are online gamers ourselves and we understand the pain of buying game credits with vouchers in Indonesia. Previously, every game publisher had their own unique vouchers that they put in cybercafes for sales. This resulted in cybercafes selling many different types of vouchers from various publishers. The voucher is a physical good and cybercafes can’t keep too much stock. As a result, the problems of stocks running out and getting the right voucher for the right game at the value you want became a common pain point among gamers.

UniPin’s partnership with over 6,000 minimarts solves that problem by making gaming credits easily available throughout Indonesia. Gamers need just go to the minimarts and tell the cashier staff the amount of credit they want to purchase, make their payment, and they will be issued a receipt with unique codes which they need enter into their UniPin account to top up their credits. This effectively removes stocking issues and gamers can buy any amount they want.

On the game publishers front, UniPin will work with any game publisher to have UniPin’s payment API plugged into their game. Gamers can then use UniPin for any in-game purchase. This effectively solves the issue of too many types of gaming vouchers being offered by different game publishers, and it also allows the publishers to do what they are best at: making and publishing good games.

UniPin is also actively looking to get more game publishers to use its payment channel. In the near future, Ashadi shared that UniPin is looking to enable purchase of credit through ATM and bank transfer.

Earlier in the month, MOL Points, a new entrant to Indonesia with similar services, announced a collaboration with Alfamart, Alfamidi and Lawson, another chain of minimarts in Indonesia. It is worth noting that Indomog, another key player in this business of selling of gaming credits through physical stores has similar partnership with Alfamart, Alfamidi, Lawson, Carrefour and 7-Eleven in Indonesia. With more payment companies helping to make game credits easily available to end users, it only spells good news for game developers and publishers who long had difficulties monetizing their content.

The many faces of Jack Ma.

Apparently retirement isn’t doing much to keep former Alibaba CEO Jack Ma out of the limelight, or out of the center of controversy. In a recent interview with China Entrepreneur, Ma was asked why banks are afraid of Alibaba, and this is how he responded:

Why are banks afraid? Because we’re doing it right. If [we] weren’t doing it right, what would they have to worry about? If you’re doing things wrong, you can do whatever you want, the bigger the better; either way it’s no threat to me. Am I worried about about what [Jingdong CEO] Liu Qiangdong is doing today? I’ve never even met that guy, he can do whatever he wants for all I care. If the banks start to target you, it’s because you’re doing something right. Ma Yuhua’s thinking on web finance is very true; it’s better to embrace than to resist, because you can’t resist the future. [Resisting e-payment] is like the cart drivers of old Shanghai smashing the taxi cabs when they began to appear. Did that work?

In other words, Ma is saying that Liu Qiangdong’s Jingdong (the artist formerly known as 360Buy) isn’t a threat to Alibaba at all. And while he didn’t put things very nicely, it’s hard to deny that what Jack Ma is saying is true. Alibaba services like Taobao and Tmall dominate the ecommerce market on the web, on mobile, and Jingdong is even further behind many of Alibaba’s other offerings, like payment service Alipay or music service Xiami.

(China Entrepreneur via TechWeb)

Image via Reuters

Like I said last week, it never seems to be good news for Huawei and ZTE, does it? The companies already stand accused in the EU of taking unfair subsidies from the Chinese government, and now the EU has opened second line of investigation in the form of an anti-dumping probe into the two Chinese companies.

Chinese Commerce Minister Gao Hucheng has already responded to the news, giving an interview to state wire service Xinhua in which he says the move would inevitably harm the interests of both sides and making finding a solution more difficult.

Elements on both sides are hoping to deescalate the situation with continued talks, but that looks increasingly unlikely, and the Telegraph quotes EU trade commissioner Karel De Gucht as saying: “We have already had three rounds of negotiations, but without any satisfactory outcome. It is better for the whole world economy to come to an amicable solution, but you need two to tango.”

But if a trade war is on the way, European companies may find they don’t like the way China does the tango. Late last year after ongoing negotiations seemed not to be shifting public opinion, China responded to American concerns about Huawei and ZTE and the potential security risk they pose by blasting American company Cisco in a full-on attack on the company in Chinese state media. It’s the trade equivalent of an eye for an eye: ‘if you smear our companies for security flaws, we’ll smear yours for the same thing.’

So if the EU really does levy trade duties on the Chinese telecoms and launch a full investigation into whether they’re violating anti-dumping regulations, is China likely to respond in kind? Very possibly. Several Chinese commenters on the Xinhua article have already pointed this out. “If you tax others, do you think they’re not also going to tax you in return?” wrote one. “No one takes a beating without trying to hit back,” wrote another. And there are several European telecommunications companies with interests in China that might be vulnerable to new trade duties or whatever other form of retribution China plans to bring to bear. Ericsson, Alcatel, and Siemens all have operations in China that could now be at risk.

The EU seems poised to fire the first shot, but whether or not the battle over Huawei escalates into a trade war will depend on where things go from there. At this point, China’s government is unlikely to ignore attempts to restrict or penalize Huawei and ZTE, but when it responds and comes to the aid of the companies it further reinforces the idea that they have closer ties to the government than they let on in public. Even so, China is unlikely to stop defending its largest and (in the case of Huawei) most internationally successful tech companies. And so, although no one really wants a trade war, one seems to be in the offing.

I wrote about this problem a while ago in the context of Huawei’s troubles with the United States; I think the mutual suspicion and distrust is so deep at this point that conflicts like this one are virtually inevitable. Huawei, ZTE, and China’s government have proved fairly unwilling to accept that other countries do have legitimate reasons to be concerned about some of their practices; at the same time, though, most other countries are so wary of China that any Chinese company looking to move abroad already has a significant competitive disadvantage. As time goes by, both sides seem to be willing only to dig further in, so I expect the high profile disputes like this to continue. That’s bad news for Chinese companies, and bad news for foreign companies wanting to do business in China.

With China Mobile thought to be keen to launch its 4G network nationwide later this year, the behemoth telco is prepping its biggest ever city-wide 4G trial to start soon – this time in Shanghai.

But of the metrpolis’ 23 million inhabitants, only 5,000 Shanghai citizens will be selected to take part in China Mobile’s (NYSE:CHL; HKG:0941) trial, which will begin on June 1st. The telco already has 700 outdoor TD-LTE base stations in place across the city, complemented by 300 indoor ones focused on transportation and business hubs. That should cover most of the sprawling city.

Shanghai-based testers will either make use of 4G-equipped smartphones or 4G mobile wifi dongles.

Sun Yun, the product manager of that telco’s local subsidiary, Shanghai Mobile, told Chinese tech blogs that while the company is not ready to reveal 4G tariffs for users, “4G rates will not be higher than for 3G, and they could be cheaper”.

China Mobile has been doing trials in smaller cities for the past couple of years.

Since China Mobile is using the country’s homegrown TD-LTE band, the carrier’s 4G network is not compatible with any current iPhone or iPad models. But TD-LTE will be rolled out by other carriers worldwide, so there will be more and more quality smartphones available that support the network in due course. Those include handsets from LG and Huawei, with Nokia, Samsung, and perhaps even Apple likely to support the protocol in future.

As we reported earlier this month, China Mobile will invest US$6.7 billion to build 200,000 4G base stations that will cover 344 Chinese cities this year. Though there’s no clear date from China’s tech ministry, MIIT, on a nationwide rollout, it seems that China Mobile is being given an unfair advantage and a head-start in rolling out its TD-LTE services; rivals China Unicom and China Telecom will likely not receive any permits for their FDD-LTE networks until months or possibly even a year after China Mobile.

(Source: New Business Daily – article in Chinese)

Food delivery site Foodpanda has been making headlines a lot recently. First with a $20 million financing round and then a rebrand in Vietnam. Today, Foodpanda has announced a merger with former rival Singapore Dine, though the terms of the deal haven’t been made public.

The Rocket Internet-backed startup claims to be “the market leading food delivery company in Singapore” with this merger.

Kiren Tanna, CEO Asia at Foodpanda in Singapore, said about the merger:

The merge with Singapore Dine makes us by far the market leader in the Singaporean food delivery market. Customers who want to order at Singapore Dine will be redirected to Foodpanda.sg in future to access the broadest culinary variety from more than 200 restaurants delivering island-wide. We are very happy that we can offer the leading and best food delivery platform in Singapore.

Singapore Dine started up in 2010, promising to offer “the widest index of eateries in Singapore, including buffets, coffee places, hawker centers, restaurants and more.” All those delivery options now transfer over to Foodpanda.

Foodpanda operates in nine countries across Asia.

Qihoo’s new search engine emerged nearly one year ago.

China’s Qihoo (NYSE:QIHU), a software maker and web portal turned search engine, has reported its Q1 2013 financials this morning. The company hailed a record number of users across its services – a total of 457 million active users in March 2013 – but saw mixed financial numbers.

Revenues were up slightly quarter-on-quarter to $109.9 million (up 58.6 percent in the past year). Operating income fell to $6.8 million in Q1, nearly half that in the previous quarter (and down from $14.4 million a year ago). Operating expenses crept up yet again to hit $89.2 million in the first quarter, nearly double the expense of Q1 2012.

Qihoo, which launched its search engine last summer to capitalize on all the traffic from its web portal and Windows PC software, also revealed a bunch of updated numbers:

• Total monthly active users of Qihoo’s products and services reached a record 457 million in March 2013, compared to 411 million in March 2012.
• Monthly active users of Qihoo’s ‘360 Browser’ across PC and mobile reached a record 332 million in March 2013, compared to 273 million at same point last year. User penetration of these web browser apps in China hit 69.6 percent.
• Average daily unique visitors to Qihoo’s “personal start up page” (hao.360.cn) of paid links rose to 94 million. That web portal generated approximately 489 million clicks.
• Paying users of Qihoo 360’s web game platform were approximately 281,000 in Q1.

Qihoo’s report made no detailed mention of the progress of its search engine (said by CNZZ to be at 12 percent market share in China), nor made any reference to all the company’s iOS apps being banned by Apple. Those issues will surely come up in the conference call later.

Qihoo expects a stronger second quarter with revenues between $142 million and $144 million.

See the full earnings report on the Qihoo IR homepage.

Antivirus products and services have been a renewed battleground in China in the past couple of years, enveloping several of the country’s top web businesses. According to rumors in the industry heard by TechinAsia, that battle is now taking the form of these companies vying to acquire NetQin (NYSE:NQ), a China-based expert in mobile antivirus apps. Both Baidu (NASDAQ:BIDU) and Tencent (HKG:0700) are thought to be in the running, but the market value of NetQin is proving to be a bone of contention.

NetQin executives even addressed the rumors late last week in the earnings call after revealing their Q1 2013 financials. Directly alluding to the suitors, NetQin co-CEO Omar Sharif Khan said during the call:

Over the past several months, NetQin has been approached by both strategic and financial investors for potential investment opportunities with us, while we appreciate this interest. We remain focused on delivering shareholder value to successful execution of our strategic planning initiatives. We will not fail on delivering shareholder value.

A few minutes before saying that, Khan lamented “a significant gap that exists between the market valuation and our business results”, which could well be the sticking point in negotiations with potential major investors or acquirers. NetQin is currently at $8.25 per share with a market cap of $363 million. Khan elaborated on this pricing:

We’ve also always believed that if we continue to deliver stellar results and growth, the market valuation of the company would appropriately reflect the fundamentals of the company. As both the shareholders and executive management of NetQin, we are not at all satisfied with a significant gap that exists between the market valuation and our business results. Frankly, it’s unacceptable. I want to be crystal clear, we are absolutely committed to creating shareholder value and we will put in a relentless effort to closing the before mentioned gap.

Asked by Oppenheimer analyst Andy Yeung about a 100 percent acquisition, Khan declined to reveal more except for saying that “multiple parties” had shown interest in both financial and strategic investments.

We’ve reached out to Baidu and Tencent about these rumors.

Tencent began pushing strongly into the antivirus market in China in 2010, setting themselves up on a collision course with well-known software maker Qihoo (NYSE:QIHU). After Qihoo launched a search engine last summer, Baidu has retaliated in recent months with antivirus products for Windows PCs aimed at both Chinese and overseas consumers.

Acquiring NetQin would propel Baidu into mobile antivirus products on the Android and iOS platform (where it currently has nothing), and would boost what Tencent already has in terms of mobile antivirus offerings.

NetQin shares fell 14 percent from Wall Street seeing its Q1 financials on Wednesday night to close of trading on Friday. That’s despite revenues rising to $33.2 million in Q1, with operating income up to $2.3 million.

Samsung (005930:KS) co-CEO Shin Jong-kyun has today hailed the company’s new Galaxy S4 phone as its fastest ever selling gadget. It’s expected to hit 10 million in sales next week, a mere three weeks after it first launched. JK Shin also told The Korea Times:

We are confident that we will pass more than 10 million sales of the S4 next week. It is selling much faster than the previous model S3.

He added that the Android-powered Samsung Galaxy S4 could ultimately reach 100 million units sold, a feat which would represent double the global sales of its predecessor, the Galaxy S3, which reached 50 million sales. Indeed, the S3 took 50 days to pass the 10 million sales mark.

The Galaxy S4 went on sale in South Korea on April 26, and promptly landed in the US, China, and India the next day ahead of a massive global roll-out backed up by major offline and online marketing. The big-screened S4 launched in Indonesia on May 3rd.

Samsung is the top smartphone brand in China, where it sold 30 million phones across various models in 2012.

(Source: Korea Times; via The Verge)

The reason it has taken so long to raise a seed round, according to founder Ken Wong, is that it wasn’t really necessary; the company has been profitable since 2009. But with three big game launches on the horizon, the recent cash influx will be used mostly to increase the level of marketing devoted to the new games.

And of course, the investment is something of a no-brainer on Crystal Horse’s part; the company is already profitable, which makes it the easiest kind of startup to invest in. With this investment, Nexx Studio has become the company’s eight Malaysia-based portfolio startup.

That would certainly seem to be a denial. But interestingly, reporters got a somewhat vaguer text from Sogou CEO Wang Xiaochuan, who told them simply that nothing had yet been finalized. On his microblog account, Wang has denied rumors that he’s slated to join Alibaba. And Sohu CEO Zhang Chaoyang stressed earlier this week that the company has enough cash in the bank that it doesn’t need to put Sogou up for sale.

None of these statements have done much to quash the rumors, however, because it seems no one is willing to come out and directly say: “We’re not selling (or buying) Sogou, period.” Whether or not a deal is ever finalized, the lack of absolute language in all three statements suggests that there is, at the very least, some consideration of an acquisition deal going on behind the scenes. And with Qihoo hoping to pose a more serious threat to Baidu, and Baidu wanting to prevent that, it certainly makes sense that both companies would be looking at Sogou and other minor search players as potential acquisitions to bolster their search offerings.

For now, though, we’ll just have to wait and see. Perhaps someone will outright deny the rumors, or perhaps in a few weeks or months we’ll find out that there was some truth to them when Sogou announces a new investment or merger.

(Tencent Tech via TechWeb)

Mr. Kang Hyunbin, head of business office at Line Plus Corp

Popular mobile messaging chat app Line was created by NHN Japan, with Japanese and Korean team inspired by the tragic earthquake that happened in Japan in 2011. When SMS and calls were unreliable during the disaster, data messaging became the primary mode of communication.

As Line’s popularity grew, the app was spun-off in February this year into the Line Corp subsidiary. Besides facilitating chats between users, it has truly become a mobile platform incorporating different digital content including games and manga. Growing to 150 million users in less than two years hasn’t been easy. One of the reasons why Line has been able to grow so rapidly was because it has listened closely to its users’ needs. At NHN’s headquarters in Seoul, Korea, Kang Hyunbin, who is the head of business office at Line Plus Corp, told me:

I think users in Japan and the users in the world actually provide us the reason why we develop Line and what [way] to develop Line. Our users are kinda our co-founders.

Line characters and content

Hyunbin also believes that Line’s success hinges hugely on its rich content and user interface. For example Line users can express themselves with more than just words – there are the stickers that I would call an upgraded version of emoticons, and they have been hugely popular in Asia. Line has been extremely smart in developing different personalities for each of its sticker characters.

Starting with Cony, Brown, Moon, and James, these characters, who each represent different personalities, have been a huge hit in Asia. In Japan, Line’s kawaii characters are broadcast on TV in cartoon form and can also be found for sale as plush toys, T-shirts, and other merchandise. Take the pictured screenshot as an example. Expressing our sincere goodbyes to friends using stickers can be that fun.

Line also has games to entertain its users. One of its more popular games, Line Pop, is popular not just in Japan but also Thailand and Taiwan. So much so that it even has tutorial videos on tips and tricks to get more points.

Hyunbin told me that Line’s recently released manga content has been successful in Japan and the company has plans to bring it to other parts of the world.

Line outside of Japan

Line Japan focuses on the local Japanese market while the Korean headquarters focuses on international expansion. The ambitious chat application has been aggressively expanding to China, Vietnam, and Indonesia recently using both online and offline marketing tactics.

Chatting up China

Hyunbin says that Line’s China user base has grown rapidly despite early days. He explained further:

So far, we have established the basic infrastructure that we can do some more in the mainlaind China market. For example, Google Play doesn’t work in mainland China. So we have [to work with] a lot of third-party Android market. We have to modify our ‘apk’ files to suit into these third party markets […] and attract more users to download [Line].

Besides making adjustments to its Android distribution in China, Hyunbin says that Line’s cute stickers are getting many Chinese users on board. Line even introduced customized panda stickers to suit the local tastes and has also worked with local partners like Tmall and Mogujie to set up official accounts on Line.

Line’s plan in China is to target working women who are aged 20 to 30 in ‘tier one’ cities such as Beijing, Shanghai, and Guangzhou. Hyunbin explains that the characteristics of these users are very fashion sensitive. So it is only natural to work with Chinese e-commerce sites with fashion products such as Tmall and Mogujie. Hyunbin also said that Line hasn’t started to do any large scale promotion in China as the company is still trying to understand the market better such as the media structure and user requirements.

The user-base number isn’t big in China but we have a growth trend plus our own effort, which we are going to plan in the future. I have confidence that we do have more aggressive numbers coming soon that we can reach in the future.

Tencent’s WeChat – called Weixin in China – is the clear market leader there.

Thailand, Indonesia, Spain, and more

Unlike China, Line dominates Thailand with more than 15 million users from the country. In Thailand, Line noticed a familiar trend: Users simply love their stickers. “Again, the one big phenomenon in the Thai market is that users can express themselves really well using Line’s stickers,” said Hyunbin.

Line acknowledges that Thailand is a big market for them. In the future, it is looking to introduce Line branded merchandise in Thailand and also more localized content including Thai-language content such as news, manga, and celebrity accounts. Hyunbin is also open to work with local Thai-based game developers who are able to build games with a regional vision.

Besides China and Thailand, Line has been very active in Taiwan, Indonesia, Vietnam, The Philippines, and also the Spanish-speaking markets. Hyunbin explains that the popularity of Line in Spain has helped Line to organically grow in South American markets which mostly communicate in Spanish. In Spain, Line already has more than 12 million users.

Hyunbin highlighted that Indonesia is a key market for Line in Southeast Asia, stating the rapid growth in smartphone usage could signify that more people will be consuming mobile applications and content in the future. Based on Line’s internal data, it claims that it is the most popular chat application by user count.

The company declined to reveal user numbers for country-specific breakdowns, but said that out of 150 million users, 45 million of them are from Japan. So 70 percent of Line’s users are outside of Japan.

“We have no time to be worried about IPO.”

As Line grows into a giant mobile platform, there is more and more content on the mobile chat application. Hyunbin acknowledges that there could be a case where Line users (just like Facebook is experiencing now) may find the service complicated and overloaded with content. The team is careful with that and is constantly trying to simplify its features. On content selection, Line picks content to suit the local market, ensuring that they are relevant for its users. Hyunbin gave me a case in point:

For example in e-commerce there are global big players. But in each market, there are also local key players. In some ways, we [would like] to partner with the local companies to bring the best experience to users in specific markets.

When I asked when Line will go public, Hyunbin says that the company has no plans for that, saying that users are still their top priority. Jin-woo Lee, head of Line’s Southeast Asia team added:

A lot of people think that Line is quite big already. But if you take a look at the growth rate, in a year or two, we can be two or three times bigger than now. It all depends on expansion first. We need to create a bigger user-base then everything will be quite natural for an IPO. We have no time to be worried about IPO.

In Line’s first quarterly financial results that came out last week, the subsidiary revealed that it recorded $58 million in revenue in Q4.

China’s biggest web company by revenue has just posted its Q1 2013 financial report. Tencent (HKG:0700) reports rocketing revenues and profits for the whole group, which covers products across social media, gaming, advertising, e-commerce, media, and more. Tencent’s quarterly revenues hit US$2.161 billion, up 11.5 percent on Q4 last year, and up 40.4 percent from the same period last year; net profits reached $649.4 million in Q1, up 17.3 percent QoQ or 37.4 percent YoY.

Tencent makes China’s biggest social export, WeChat. In today’s report, the company revealed that it now has nearly 195 million monthly active users on the social messaging app (194.4 million to be precise); that’s up 23.1 percent on the previous quarter, which is up 228.4 percent in a year. WeChat has over 300 million registered users, and is likely to exceed 400 million some time this month. As we noted last week, WeChat’s significant number of active users puts it close to surpassing Whatsapps’s 200 million actives, though about 90 percent of WeChat’s user-base is within mainland China, so it’s not that much of a global success yet.

Other social numbers:

• QQ instant messenger hit 825.4 million monthly active users, up 9.8 percent on Q1 2012. QQ’s peak simultaneous users reached 173.0 million, which was down 3.3 percent across the year.
• Qzone, the broader social network around QQ, got up to 611 million monthly actives, up 5.9 percent in a year.
• QQ Game Platform saw peak simultaneous users of 9.2 million, up 5.9 percent over the same period.

In other financial data, value-added services accounted for 78.7 percent of revenues in Q1 this year, reaching $1.72 billion. That’s up 13.6 percent from the last quarter. Online gaming revenues increased 19.3 percent over the same period to amount to $1.21 billion. That was mostly down to China-area gamers on things like Crossfire, and was boosted by increased gaming activity during Chinese New Year.

Founder, chairman, and CEO Pony Ma says in today’s report:

During the first quarter of 2013, we saw broad-based growth in user engagement and revenue across our key activities. This growth has enabled us to fund investments in longer-term opportunities such as WeChat international user acquisition, online video content aggregation, and e-commerce footprint expansion, while maintaining a healthy expansion rate in earnings and cash flow. We saw both strategic and financial benefits from our portfolio of investee companies, including a further special dividend from Mail.ru.

We will continue to invest proactively in innovation and technology, and to cultivate our open platform, in order to capture the mobile opportunities ahead and strengthen our position as the leading internet platform company in China.

WeChat hasn’t really been monetized so far, but Tencent will soon endow it with social gaming integration similar to what has been done by rival apps Line and KakaoTalk.

Find the full report on Tencent’s investor relations page.

The newest earnings report from SingTel (SGX:T48) makes for painful reading. The giant Singapore-based telco, which has over 420 million subscribers on numerous networks across Asia-Pacific, saw its first full year drop in revenues for 14 years in today’s stats for Q4 and FY 2012. The only ray of light comes from SingTel’s digital business, which saw a 156 percent rise in revenues. Perhaps inspired by this, SingTel will set aside US$1.6 billion for startup acquisitions so as to find “next-generation growth engines in the digital space”.

That $1.6 billion investment will be spread over the next three years, and will be largely ploughed into strategic acquisitions in the online space that can tie in with SingTel’s phone services across the region.

Indeed, we’ve already seen SingTel doing this over the past couple of years, having acquired the mobile ad company Amobee for $321 million, snapped up the food recommendation startup HungryGoWhere, and made investments in things like TheMobileGamer. Plus the telco has a VC arm called SingTel Innov8 that has made lots of significant investments across the region. The most recent one was in the China-based mobile game developer and publisher Yodo1.

Profits down

Getting back to SingTel’s latest numbers, net profit fell 12 percent year-on-year to s$3.51 billion ($2.83 billion) at the end of March 2013. Group revenue fell 3.4 percent to S$18.18 billion ($14.66 billion) for the full year.

SingTel wholly owns Australia’s Optus, and has significant stakes in telcos like India’s Bharti, Philippines’ Globe, and several others.

See more financial data on the SingTel IR homepage or on ZDnet.

(Hat-tip to ZDnet for spotting this)

I wrote about Vietnam’s food delivery landscape earlier this month, and already there are some new developments in the space. Today, Rocket Internet is finally bringing Vietnam into the branding fold by changing the name of its own food delivery service from Hungrypanda to Foodpanda.

The rebranding just means that the previous domain, Hungrypanda.vn that Vietnamese users have been going to for their deliveries will be shooting over to Foodpanda.vn. As Don Phan, the managing director at Foodpanda says:

We are excited to be now part of the global Foodpanda movement. The rebrand and our new, big partners take us further towards becoming Vietnam’s leading food delivery service. For our customers, we want to provide the best and most convenient way of ordering food.

The rebranding also comes along with the announcement that Foodpanda.vn has now integrated Gloria Jean’s Coffees, NYDC, BreadTalk, Tokyo Deli, and Subway onto their list of deliverables.

Despite the three big factors of uniting with the international brand, getting a huge infusion of cash, and getting some new restaurants on their online menu, Foodpanda is still going to have to work hard to deal with local incumbents, Eat.vn and Vietnammm, which have been in the market since 2011. So I wouldn’t say Foodpanda is on top of the Vietnamese market yet – it still got some way to go. That being said, Rocket’s two other big, Southeast Asia-oriented e-commerce properties, Lazada and Zalora, have been outspending local e-commerce sites in Vietnam and seeing huge growth spurts. The same is true for the chat apps like KakaoTalk, Zalo, and Line, who have seen huge user increases as they’ve upped their spending on television ads and visibility in the country. With a product as simple and consumer-scalable as food delivery, is it a matter of time before Foodpanda steamrolls the local incumbents? We’ll see.

Last week we reported that Foodpanda raised over $20 million to expand across Asia. It already operates in nine Asian countries.

Malaysia’s media giant Catcha Media Berhad and social news network Says.com have today shaken hands and agreed on a $20 million merger to form a digital advertising business under their combined wing.

The merger will see Says.com and Catch Media subsidiaries enjoy a combined reach of 9.78 million Malaysians each month, which represents about 30 percent of Malaysia’s population. Catcha Media’s publishing business includes 15 magazine titles while Says.com serves over 80 brands including Nike and Coca-Cola which highlight both companies’ media dominance in the country.

Patrick Grove, CEO of Catcha Media Berhad explained more about the merger:

This new company offers a tremendous opportunity to dominate the future of digital marketing in Malaysia by pairing two clear leaders in the space in a manner that creates a holistic and complete solution for any brand looking to ride the crest of the new media wave. We intend to expand this business regionally and the expected profitability of this merged entity should make us able to consider an IPO within the coming 12 months.”

Says.com was co-founded by entrepreneur Khailee Ng who previously founded Groupsmore, a Malaysia-based deals site that was acquired by Groupon in 2011.

(Image credit)

TMI, a Taiwan-based early stage investment firm founded in 2012 by US venture firm WI Harper Group, Kaifu Lee, and ITRI, has just invested in three different startups.

• CitieSocial: It’s a hip social discovery site in Taiwan that mostly features designer items and gourmet food.
• Driving Curve: An iOS app that basically collects data on a user’s speed and fuel efficiency when driving, thus presumably improving their driving skills. Also, this startup is from Taiwan.
• PeerIdea: It’s currently not clear yet what this startup does.

I took a look at CitieSocial, and it’s pretty cool. I already found a pencil sharpener I really want to buy. The idea is pretty niche in that it’s all luxury and novelty products so it’ll entice users to come through and check out products that they wouldn’t find elsewhere in more obvious e-commerce sites that feature normal branded products. It currently has over 100,000 members, and more than 100 brand partners. It’s a bit like Fab.com and other so-called designer-to-consumer sites.

So far, Driving Curve has had humble beginnings with only 20,000+ downloads and is gaining popularity on the other side of the world in France. According to Lucas Wang, CEO of TMI:

TMI has had a keen interest in apps related to the auto sector. Driving Curve has an exceptional product and stylish UI design. Most importantly, the team is top-notch: focused, passionate and ambitious. We believe our cooperation has unlimited potential.”

Lastly, PeerIdea hasn’t revealed much about what the company does. We just know that it’s started by Weiting Liu, who was also behind SocialPicks, a social finance startup founded in 2009, and he also designed an app on the Facebook platform that got more than 10 million downloads. TMI’s clearly investing in the potential of the founder in this case.

We reached out to TMI for details on the numbers, but with seed capital for these nascent startups, you can be sure it’s under a million dollars, just enough for the companies to scale.

For more info on TMI, which was founded last year, check out our recent feature.

The one millionth customer was Singaporean mum-to-be Kelly Nguyen, who was surprised by the Zalora team at her workplace, who handed over her order (a maternity dress) free of charge.

The Zalora crew also concocted a little infographic (below) to show some of its other stats. For example, the e-commerce service has shipped to 16,853 towns in the region so far, and over 23,000 new products are added to the site each week. To hold all that stock, the company has over 20,000 square meters of warehouse space, which is the equivalent of five football fields.

Zalora released its iPhone app last month, and attracted a further $26 million in funding back in March.

In Vietnam, one of the most popular models for internet companies and startups to make money in the consumer space is online marketing. It’s only natural, after all, since Vietnamese consumers are still warming up to newer payment methods. That makes selling ads are an easy way to make money. Now, Google is opening up Google Adsense with Vietnamese language support.

Rumor has it that Google makes more money here in Vietnam, a country of about 90 million, than in Indonesia, a country of almost 250 million people. Vietnamese companies are obviously eager for business and growth, and Vietnamese consumers are eager to shop. So Google Adsense coming into the country makes sense, especially as smartphone usage booms in the country. In the announcement, Google also posted Vietnam’s hockey stick growth for internet penetration. Google can no longer ignore Vietnam:

And they especially cannot ignore Vietnam if new search players like Wada and CocCoc are getting really aggressive about attacking Google’s market share in the 13th biggest country in the world.

The announcement, which came on May 10th, has already got major sites like HaiVL signing up, and we’re sure to see bigger sites like Zing Me, and the major Vietnamese newspapers sporting Google Adsense. It’s simply much easier to go through Adsense than to go direct to companies for display banners. With this, we’re sure to see more money pouring into the online space as internet penetration grows and content (hopefully) gets better.

Yesterday, Sina Tech sub-site Startup Stories posted an interesting op-ed from T.H. Capital CEO Hou Xiaotian entitled “Why is Sina’s Stock Undervalued on Wall Street?” In it, Hou argues that given that Alibaba valued Sina Weibo at $32.56/share for its big Weibo investment, when you add in the value of Sina’s (NASDAQ:SINA) other services, the company’s stock ought to be up around $73, yet it continues to languish in the $50-$60 range instead.

Of course, some have argued that Alibaba gave Sina a pretty sweet deal in terms of Weibo’s valuation, but Hou asserts that the Alibaba number is actually quite reasonable, and lays out five reasons why this is the case:

1. “Weibo has a monopoly on the market.” Hou says that 85% percent of all time spent microblogging in China is spent on Sina Weibo, and it has more than 500 million registered users. Tencent Weibo has big numbers too, of course, but Hou says that it’s much less actively used.
2. “Weibo is a real-life platform.” Hou argues that beyond real-name registration, users actually build real “micro-lives” on Weibo complete with their own social circles, entertainment, news, and a lot of voluntary sharing about their real lives. It’s almost like an online journal in some ways.
3. “Weibo creates web 2.0 content.” To explain this, Hou compares Weibo search — where users can find the answers to questions (because the hottest posts on any given topic tend to be what most people are looking for) — to traditional search where users find “a pile of indexed links” that can be hard to sort through”. Weibo, Hou argues, produces a ton of content that sorts itself more or less automatically, and it’s always timely and based on what users want.
4. “Weibo is an entrance point for the mobile web.” Hou says Weibo’s daily traffic exceeds 1 billion pageviews per day, and that 75% of it comes via mobile clients.
5. “Weibo is a kind of self-run media.” Hou points out that Weibo has been exceedingly valuable as a way of spreading information and has arguably increased transparency in Chinese society, even if the information it spreads is sometimes of dubious veracity.

I’m not an investor, or an expert in how companies are valued, so I won’t dispute any of Hou’s specific numbers. But I do think that she’s viewing Weibo with a particularly rosy set of glasses — perhaps it’s not a coincidence this article was published on Sina Tech — and there do seem to be some legitimate reasons to think Alibaba’s Weibo valuation was a bit over the top.

To begin with, some of Hou’s numbers are pretty shocking. She doesn’t cite sources for any of them but I’m guessing most of them come from T.H. Capital’s own research, but even so a few jump out as questionable. For instance: Sina Weibo gets more daily traffic and pageviews than Baidu? That would be pretty surprising. And while yes, Weibo does have 500 million registered users, only a small fraction of them are active (a study published in March found that only 200 million or so users had ever posted, and only 30 million users wrote unique posts in a given week).

Hou’s point about Weibo’s search being more valuable than Baidu’s is interesting but, I think, misleading in some ways. Weibo search is extremely effective at helping users find certain kinds of information. If you want the latest trends, to see what people are saying about a particular actress, or to hear the latest about a political scandal, for example, Weibo search is probably better than Baidu. But at the same time, if you’re looking for biographical information about a historical figure, a link to a popular e-commerce site, or information about the lineup of an NBA team (for example), Baidu is going to be far more effective than Sina. At one point in her article, Hou asserts that Sina’s Weibo search should be valued at double what Baidu’s search is worth per capita because it is more effective, but that is only true for a specific sort of search. Personally, I do a fair amount of searching for my job, and while sometimes Weibo search is the right tool, most of the time my search begins and ends with Baidu.

Finally, I think Hou is understating the threat that Weibo faces from WeChat. Granted, WeChat doesn’t offer the quasi-journal-like features Weibo has, but frankly Weibo isn’t that great for journaling either. Both platforms are best at communicating the here and now, what’s happening within your circles of contacts, and while there are significant differences between the services, WeChat’s growth should still be pretty alarming to Sina — even CEO Charles Chao has said WeChat poses a threat — and it’s no surprise it’s also affecting Sina’s stock price. Users, after all, only have so much time in the day, and the more time they spend on WeChat, the less time they’re spending on Weibo.

There are other reasons to be bearish on Sina — Weibo faces regulatory threat constantly, Sina has had a really tough time monetizing it — but generally speaking, I do think Weibo is a very valuable service. Is it as valuable as the $32.56 per share that Aliababa paid for it? Right now, I’d argue it’s definitely not, but then again, Alibaba didn’t invest just to make a quick buck, and over the long term if it can help Sina make Weibo profitable, the service certainly could be worth that, and a great deal more.

(image via Sina Tech)

I’ll say it again: if there is one mobile game out there right now that people in Japan will remember in 10 years, it’s Puzzle and Dragons.

The game, which boasts 13 million registered users in this country (10 percent of the population), has generated US$113 million in sales in April.

Since late last year, maker GungHo’s market cap at the Osaka Stock Exchange kept rising and rising – to about $10 billion – to the point that the company is worth more than Mobage operator DeNA, GREE, and Zynga combined.

The Korean version of GungHo’s money-raking game.

And today, GungHo (3765.OS) shares jumped limit-up by 300,000 yen to 1,342,000 yen (up 28.8 percent) in just a few minutes of trading, until the stock was bid-only.

As a consequence, the company’s market cap now reached 1.54 trillion yen, which translates to $15.1 billion. With this number, GungHo topped Nintendo’s market cap of US$1.53 trillion yen (or US$15.0 billion).

The US$15.1 billion market cap is also higher than that of Nikon, Fujitsu, Isuzu, Sanyo, All Nippon Airways, Sharp, or Mitsubishi Motors.

It’s a new world we live in.

Other market caps (Monday, May 13 at 11:30am JST):

• GREE: $2.8 billion
• DeNA: $3.6 billion
• Zynga at $2.6 billion
• Electronic Arts: $6.7 billion
• Activision Blizzard: $16.7 billion

GungHo’s new owner SoftBank can be very happy.

I know that India’s Just Dial has been on the verge of an IPO before, but this time it’s for real. The local search engine, which now operates in seven countries and is accessible both online and by SMS, has just filed for its IPO, which will hit stock tickers on May 20th.

Just Dial seeks to raise as much as Rs 950 crore – that’s a little under US$175 million. It will list locally on the BSE, NSE, and MCX-SX markets, thereby foregoing a long anticipated US IPO. In contrast, the travel portal MakeMyTrip raised nearly $80 million in its 2010 IPO on NASDAQ.

Sequoia Capital has been a major investor in Just Dial over the years. It started up in 1994.

After Just Dial, it’s likely that BharatMatrimony and HomeShop18 will go public soon too, giving a big boost to India’s tech sector, which has previously seen few web company IPOs. But HomeShop18’s listing might not happen until 2014.

Over the weekend, Google quietly killed off its SMS search feature, which will be a shot in the arm for Just Dial and other ‘dumbphone’-oriented search services like SMSgyan.

Alibaba CEO, Jonanthan Lu and his management team

Now that we’ve heard Jack Ma’s final speech as Alibaba’s CEO, we can focus on his successor, Jonathan Lu. Compared to Ma, fewer people will have heard of Lu. But Ma’s last big decision at Alibaba as CEO was perhaps to appoint Lu as CEO.

In his first speech as Alibaba CEO last Friday, Jonathan Lu thanked Ma for giving the one-time waiter at a hotel a chance to shine under Alibaba’s wings. Lu’s leadership quality and great execution has seen him in several leadership positions within Alibaba. 13 years in Alibaba made him one of the early team members to have followed Ma’s journey, seeing the e-commerce firm grow from a David to a Goliath.

I have translated most (like 90+ percent) of his speech. If anything, his speech somewhat echoed Ma’s thoughts which centered around Alibaba’s mission, values, responsibilities, and customers.

“If not me, who? If not now, when?”

Jonathan Lu: Hi family and friends. Today marks my 13th anniversary working with Alibaba. I’m very thankful, as Mr. Jack Ma says, “We are lucky.” But for me, I think that I’m extremely lucky. Because from tomorrow onwards, I’m taking over Alibaba’s mission, our values, responsibility. Taking over our vision of having an open and responsible internet spirit.

I worked at Alibaba’s B2B website for more than three years […] and Taobao for about four years and then back to B2B (Alibaba.com), and then on to big data and also managed our mobile operating system, Yun OS. Through this journey, I learned a lot. But I feel more gratitude. It is because of all of you, that’s why I’m able to learn and grow. It is because of our customers who have helped us grow. I’m very thankful to everyone and Jack Ma. Before Alibaba, I was working in a hotel as a waiter.

Jonathan Lu and Jack Ma saying their thanks with a hug

But today, I have this chance to take over Alibaba’s culture, fight for our dream. This is really an honor. Alibaba been through a lot and our mission and values are what we need to uphold. We insist that customers are our number one priority. In the future, we will continue to uphold and pass on our values and mission. […]

Today, because we have so many customers and so much data, we have a chance to let every customer be on the platform and have their own space and growth opportunities. Alibaba and Taobao are built for the customers. I hope our team can achieve our mission and let Alibaba’s customers enjoy the best experience when they are onboard our platforms.

Another thing we need to uphold is innovation. For the last 13 years, from Alibaba B2B, Taobao, Alipay [online payment solution], Juhuasuan [deals site], Aliyun [cloud computing], to AliFinance [micro-financing service], we have been innovating from the very start and will continue to do so in the future. My team and I will push harder for innovation. […]

For the last 13 years, Alibaba has done very well in upholding its belief and executing our plans. […] Everyone has this signature at the end of their emails: “If not me, who? If not now, when?”

This is a responsibility, a task […] A big dream and vision requires good execution to complete it. Because of our great execution, customers trust us better. […] Thanks to our customers, partners, and competitors who allow us to continue fighting. Our customers give us warmth. Taobao went through seven non-profitable years, but it has grown thanks to customers’ trust. In the future, the thing that pushes us forward is our dream and family.

Moving forward, I hope we can continue to gain the support of our customers, friends, partners, and family. And I hope everyone at Alibaba and Taobao can stay happy and lead a fruitful life. Thank you, everyone!

Jack Ma, Chairman at Alibaba

Last Friday in Hangzhou, China, Alibaba celebrated Taobao’s tenth anniversary (pictures below). But it didn’t feel like it was really entirely a celebration for Taobao. I’m sure that while enjoying the songs and dances at this concert-style event, at the back of the mind of everyone at the stadium was that it was Jack Ma’s last day as CEO.

True enough, Jack Ma’s speech reflected that. It felt a little more like a goodbye speech from the founder as he moves on to become chairman. It was a speech that paved the way for Jonathan Lu to take over his position as Alibaba’s CEO.

“Small businesses are where most of the Chinese dreams live”

After a couple of hours of music and extravaganza – including Ma himself singing – he gave his speech to the roaring stadium audience of over 20,000 employees, merchants, and guests. Below is our unofficial translation of Jack’s speech. I do hope it captured a large part of what he communicated:

Jack Ma: In the last ten years, there are many people who have paid a big price to live this dream. For our dream, we have walked ten years. I have been thinking, even if someone had removed 99 percent of Alibaba’s assets, we are still worthy. We have no regrets. We have our team, our partners, and friends. What is the thing that has made Alibaba what it is today? What is the thing that has made me what I am today? I have no reasons to succeed. Alibaba and Taobao have no reasons to succeed either. But today, we have walked so far and for so many years with so many aspirations for the future. I believe, it is trust that has made us walk this far.

When no one believes in the future, we chose to believe… we chose to trust.. that 10 years later, China will be better. We chose to believe that our colleagues will do better than myself. I believe, the younger generation of Chinese will do better than us. I’m very thankful that my colleagues have trusted me. It’s tough to be a CEO but being a CEO’s employee is even tougher. At times when trust was doubted, people actually bought things online, even when they haven’t even seen the items before. Over thousands of kilometers, through an unknown person, the goods fall safely into your hands. Today’s China has trust and belief. Everyday, there are 24 million transactions on Taobao signifying China’s trust.

I’m proud to be everyone’s colleague and working partner. Even after life, we will still be colleagues. Because of you, it allows this generation to see hope. All of you are building a new kind of trust. This trust helps to make the world more open, more transparent, and more responsible. I feel proud of you. Today’s world is ever-changing. 30 years ago, we didn’t expect what would have happened today. We didn’t expect China to be a manufacturing giant. We didn’t expect computers to be part of everyone’s life. We didn’t expect the internet in China could grow so rapidly. We didn’t expect Taobao can rise. We didn’t expect Yahoo could become what it is today. We’re in a rapidly changing world. We didn’t expect we can all sit together today to celebrate and look forward to the future.

Computers are fast, the internet is even faster. When we haven’t really understood what is mobile internet, big data comes along. Times of change are for the younger generation. Today, a lot of young people think that big companies like Google, Baidu, Tencent, and Alibaba took all of your chances to succeed. Ten years ago, when we saw numerous giant companies, we were also once lost and worried. Do we have a chance? But ten years of determination, we have walked to today. If it wasn’t a time of change, the younger generation would not have a chance. We don’t need a rich father to succeed. What we have is determination and a vision. A lot of people hate change, but because we have embraced this change that’s why we have a future. The next 30 years, this world and China, will have even more change. This change is an opportunity for everyone. Grab this chance.

A lot of people complain about yesterday. We have no power to change yesterday. But this very day, 30 years later, is what we can control and decide. Change yourself, take baby steps, and stay determined for ten years. I thank the times of change and everyone’s complaints. Because when everyone is complaining, that is your chance, an opportunity. It’s only in times of change that someone can be clear of what he has and wants, and what he needs to give up.

Building Alibaba for 14 years, I’m honored that I’m a businessman. As we enter the modern age, it’s a pity that business people don’t get the respect they deserve. Business people in this age aren’t just doing business for profits. I think, we are the same as any artist, educator, and politician who’s doing our best to make this society complete. 14 years in business made me understand life, hardship, determination, and responsibility. It also made me understand that when other people succeed it means we have succeeded as well. What we look forward to most is the smile on our employees’ faces.

After today, I will no longer be a CEO. From tomorrow onwards, business will not be my sole focus. 14 years into business, I feel proud. In this world, no one can say that they will not age – make no mistakes, and be undefeatable. To make sure a company doesn’t age and make no mistakes, I chose to believe the younger generation. By believing in them, you also believe in the future. So I will not return to Alibaba as CEO. There’s no use for me to return because all of you will do better.

Building a company to this size, I feel humbled and proud. But what we have contributed to society is only just a start for Alibaba. What we achieved today, has greatly surpassed the efforts we have put in. This society, at this time, for Alibaba to continue to prosper, we have to solve problems in society. There are so many problems in society and these are opportunities for everyone. If there isn’t any problem, then there’s no need for all of you. All people of Alibaba, please continue to serve small businesses. Because small businesses are where most of the Chinese dreams live. 14 years ago, we set a mission that there will be no business too hard to do, helping small enterprises to grow. Today, this mission lies in your hands. People say e-commerce and the internet created an unfair advantage. But my understanding is that the internet created a truly fair platform.

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).

I’m very honored to introduce you to Alibaba’s future leader and team. They have worked with me for many years and understood me better than myself. Jonathan Lu worked for 13 years at Alibaba and has been through multiple positions and hardships. I should say both tears and smiles are equally the same. Taking over Ma Yun’s (Jack Ma’s) position is very difficult. I can walk till today all thanks to everyone’s trust. Because of trust, it has made the journey easy. I believe and I also urge everyone to support and trust Jonathan Lu and the team as you have always supported and trusted me.

Thank you everyone! From tomorrow onwards, I will live my own life of choice. From tomorrow onwards, life will be my work.

Swedish music streaming company Spotify recently stepped into Asia; specifically Singapore, Hong Kong, and Malaysia. Spotify’s Sriram Krishnan, head of new markets and Asia-pacific at Spotify, explained to us that Asia was picked because piracy is high in this part of the world.

Sad but true, Singapore is one of the leading nations for digital pirates. According to the International Federation of the Phonographic Industry (IFPI), about half of Singaporeans visit unlicensed sites for music and movies. The report also says that Singapore has an average of about 300,000 incidences of illegal downloading a month. Citing a 2011 report by the Malaysia International Intellectual Property Alliance (IIPA), Spotify pointed out that Malaysia is ranked 26th in the world in terms of the amount of connections to unauthorized peer-to-peer file sharing. Sriram added:

Spotify was set up as a better, simpler, faster alternative to piracy […] With the high level of piracy in this part of the world, it made sense for us to enter the Asia market through these markets. According to IFPI, 95 percent of all digital music was illegally downloaded, so combating piracy is by far our, and in turn the industry’s, most serious challenge.

I know it might sound like some corporate bullshit that Spotify was built to fight piracy. But thinking deeper, it actually makes sense. Spotify gets content from labels who in turn make money when people buy their music. But folks who download music from illegal sources – and at no cost – hurt the labels’ bottom line. So this makes piracy a common enemy for music labels and Spotify. The more people use Spotify, the higher the chance to convert them to paying users, thus driving revenue for music labels and also Spotify.

To date, Spotify has 24 million users with about 25 percent of them paying monthly. I guess if you can’t get 100 percent to pay for music, then it’s perhaps good enough to have 25 percent of them paying. But we’ll have to wait and see if that conversion rate from free to paid users also applies to the startup’s new venture in Asia.

In Asia, Spotify faces major competition from Taiwan’s KKBOX which claims to be the largest Chinese music library in the world with 10 million songs from 500 international labels.

AutoNavi is China’s top online mapping company, so the most obvious benefits for Alibaba are mapping-related. If the company is interested in moving into location-based services and commerce — and it obviously is — there’s no better partner in China than Autonavi, as no one has better maps or more location data than the company. And if Alibaba and AutoNavi can integrate their systems effectively, Alibaba will be able to quickly amass a remarkably precise database of things like purchases and consumer behavior based on location.

This data could be used in all kinds of ways. For example, Alibaba could monitor public pollution data and then automatically market air filters and masks to people who are located in the most polluted areas. Its system could analyze trends and notice that people in your neighborhood tend to buy more of one type of product than the general public, and then market that product more heavily to anyone from the neighborhood. It could even analyze AutoNavi’s data to determine which areas lack easy access to which brick-and-mortar businesses and then push those products more heavily online. ‘We see you live six miles from the nearest store that sells maternity clothing; why not buy it online instead?’

But another more easily overlooked aspect of AutoNavi’s appeal may be its userbase. The company has more than 100 million users on its mobile apps alone, and Alibaba certainly recognizes that China’s internet is getting increasingly mobile, so any access the company can get to large groups of mobile users is certainly valuable. And there are certainly ways to integrate location-based marketing like I’ve described above into AutoNavi’s existing apps, should the company choose to do so.

Still, with all these investments it’s starting to feel like Alibaba has some very specific course laid out for itself, the details of which aren’t yet clear to the public. The company has obviously embraced Big Data with both arms (it apparently wants to know what you’re saying, where you’re going, and even what music you’re listening to) but the ultimate endgame remains something of a mystery. Uber-targeted marketing? A groundbreaking new social commerce mobile app? Major changes to its web platforms to make them more social and localized? All of the above? We’ll have to wait and see.

That number comes from a “knowledgable” but anonymous source and, as usual, it should be taken with a grain of salt. But Renren spokespeople did admit to Sina Tech that some personnel adjustment was happening, characterizing it as being part of “an attempt at an internal startup mechanism [within Renren],” whatever that means. They also suggested that some of those laid off might be re-hired internally for work on more promising projects like Nuomi and Renren Games. (On a related note, Renren denied outright reports that there were also layoffs at Nuomi, saying that the team is actually in the process of expanding and that there have been no layoffs there).

We’ve already seen Renren beginning to move away from traditional social networking and toward games and mobile apps, so it shouldn’t be too surprising that a strategic shift of that magnitude would result in a little internal upheaval and personnel turnover. It seems there have been some layoffs, but I don’t think it’s time for Renren fans to panic just yet.

(Sina Tech via TechWeb)

This is what Alibaba wants: Autonavi’s mobile maps know-how and market reach.

You can wait years for a big deal to hit the Chinese web, but recently the blockbuster moves are coming in thick and fast. The latest sees e-commerce company Alibaba taking an approximate 28 percent stake in Autonavi (NASDAQ:AMAP), makers of online maps and navigation. This comes just two weeks after Alibaba got more social by taking a 18 percent stake in Sina Weibo, the country’s hottest social network right now.

Autonavi is China’s top independent online mapping company, with over 100 million users on its mobile apps, constituting just over 25 percent market share among mobile maps in China. Search giant Baidu is second in this sector, while Google Maps continues to lose market share. This evening’s announcement points out:

The parties plan to share certain data, including AutoNavi’s map data and location-related information of the merchants on Alibaba’s e-commerce platforms, including Taobao Marketplace and Tmall.com. AutoNavi and Alibaba will also cooperate in the areas of map engine, location search, navigation and cloud computing services and will cross-promote their respective products and services, with a goal of developing new location-based business models.

Joseph C. Tsai, executive vice chairman of Alibaba, and Eddie Wu, president of Alibaba’s mobile products division, will join AutoNavi’s board of directors upon the closing of the transaction. The transaction is expected to close in the near future, subject to the satisfaction of customary closing conditions.

Alibaba, which is today celebrating 10 years of Taobao, its eBay-beating C2C shopping site, has been diversifying in the past year. Aside from acquiring the social music service Xiami last year and today’s significant stake in Autonavi, there’s lots of talk that the e-shopping behemoth is planning to do a lot of shopping of its own, with rumors of acquisitions/stakes in Umeng (mobile ads and analytics for app developers) and UCWeb, makers of the hugely popular mobile browser UC Browser. It’s no coincidence that these all relate to mobile.

Rebright Partners, a Japan-based incubator and one of the parties behind Indonesian VC firm Batavia Incubator has recently launched its new investment fund for startups in Southeast Asia. It has secured two investment deals with the first being made to online ad platform Adskom, which we talked about last week. We spoke with Rebright Partners CEO Takeshi Ebihara (pictured right) to find out more about the fund.

Ebihara first explained that there will be no conflict of interest with another VC firm Batavia Incubator. Batavia Incubator will focus on Indonesian startups with an eye on the domestic market, while Rebright Partners itself will focus on startups who are looking to target multiple countries in Southeast Asia. He explains further about the fund:

Our fund LP investors are Japanese well track recorded entrepreneurs and Corporations. So that the portfolio company can expect LPs wisdom insights and networks to grow own business. In that sense, the fund can be said Super Entrepreneurs Fund.

Regarding the kind of startups they target, Ebihara says that he wants to invest in internet startups as well as those covering the mobile space like media, e-commerce, and mobile apps. Ebihara prefers consumer internet service primarily, and that investing in the B2B business model is a rarity. He admits that Adskom is one of such rare cases. Does Ebihara consider himself as having a hands-on approach to his startup portfolios? He says yes:

In most of investment cases we take the lead position and in some cases our partners will be seated on board. Though we do not deny being in the non-lead minority sometimes.

Talking about the startup scene in Southeast Asia

Ebihara himself said that he has been watching the region closely as mentor for the Founder’s Institute in offices like Jakarta, Singapore, Ho Chi Minh City, and Kuala Lumpur, and that he likes what he sees. The scene around the region is getting hotter, Bangkok’s current situation reminds him of Jakarta two years back, there are more and more startup accelerators and co-working spaces spotted in Kuala Lumpur. “It is worth trying to find young talented hackers and entrepreneurs in this region,” said Ebihara.

He ends it with an invitation: “If you are a startup or entrepreneur trying to cover large Southeast Asian Internet and mobile space, we are now accepting applications.”

The debate in Indonesia about the upcoming government regulations for the e-commerce industry is still ongoing. While the regulations are now official, they won’t be enacted until the ministry regulation drafts (RPM) ¹ are specified and finalized.

Those regulations – to be fully enacted in 2015 – have the potential to really complicate and hinder the e-commerce industry in Indonesia. The e-commerce players here, represented by the Indonesian e-commerce association (Idea), voiced their concerns to the government at a public discussion held a couple of days ago.

Kompas did a good job yesterday in summarizing the big points of discussion during that talk. Here are four of them:

1. Where are the incentives?

If the government wants to support the e-commerce industry, rather than creating further regulations, the industry will be better off if given incentives. At least the government should also provide the latter.

East Ventures co-founder Willson Cuaca ² explained that the Singapore government is more focused on building the infrastructure rather than compiling regulations. The government gives funding incentives to help the startups as well as building the infrastructure like tens of thousands of free WiFi spots all over the country.

2. Sketchy definitions

The other concern is about the sketchy definitions laid out on the new regulations. Two definitions in the spotlight here are for “electronic transactions” and “public service.” First, there are quite a few online activities going on around the various e-commerce business models. For example, there aren’t any transactions between the buyer and seller happening inside C2C marketplace TokoBagus so, in this case the company acts only as a platform. Is TokoBagus culpable of the government’s regulations concerning the online transaction clause?

‘Idea’ demands the government clarify which processes are deemed as electronic transactions.

‘Idea’ also does not agree on the point where e-commerce players are specified as public services. Head of public policy and government relations of Google Indonesia, Shinto Nugroho, argued that e-commerce cannot be put in the same place as a hospital. He said that all the activities and processes happening inside the e-commerce trade are fully private, and everyone has freedom whether they want to shop online or not.

According to other definitions of public service mentioned on previous regulations like the UU no. 25/2009 and PP no. 96/2012, e-commerce players cannot be classified as a public service.

3. Data centers in Indonesia are more expensive

The argument from the government side is this: Indonesian e-commerce sites need to use local data centers for security purposes. if there is a violation of law due to e-commerce activities, then the government can easily investigate the matter by looking into the internet data stored inside the local data centers. The same cannot be achieved if the e-commerce players are using data centers in other countries.

Fact of the matter is, most of the e-commerce players in Indonesia use data centers in other countries because they are more affordable. Multiply Indonesia country manager Daniel Tumiwa and Biznet Network president director Adi Kusma said that the cost of local data centers here is two times more than the ones abroad.

This is where the issue of incentives arises again. The government should take a deeper look into the fate of the e-commerce industry.

There is one exception to this regulation though, and that is if the players are using tier 4 data centers, then it is okay to use foreign ones. That’s because there aren’t any tier 4 data centers yet in Indonesia.

4. Local domains

There is also a clause obligating the nation’s e-commerce sites to use local “.id.” domains. The reason behind it is similar to the data center argument, which is for e-commerce security for the public.

Tokopedia co-founder William Tanuwijaya – together with some of the other players – don’t agree with this clause, arguing that it can hinder local e-commerce sites from competing globally. He pointed out an example that even China – whose internet industry is filled with a lot of local content – doesn’t mandate the usage of local domains for business.

Daniel asked if there are a lot of frauds and scams happening in the e-commerce sector, and if that is just a really small portion compared to the industry as a whole. The government official answered that there are a lot of reports lodged with the government concerning such security risks. But who knows what the authorities mean by “a lot”.

Fending off potential foreign players?

All in all, the e-commerce industry players are hoping that the upcoming regulation can be more supportive than being a hindrance. But so far, it is looking more like the latter. There is still hope that the government can amend some of the clauses to better suit the needs of the industry.

On the other hand, there is this theory that the lengthy certifications and data center requirements are done in order to stave off further competition from foreign e-commerce businesses gunning for the Indonesian market in light of the upcoming ASEAN Free Trade Area (AFTA) in 2015.

We will definitely keep you posted on the progress of this e-commerce regulation.

(Source: Kompas)

Japan-based social gaming platform DeNA (TYO:2432) has just rolled out its Q4 and full-year 2012 financials. After an expensive previous quarter in which profits dipped, the same thing happened again for DeNA in Q4 (up to March 31st 2013) with an operating profit of $184 million, which is down from $216 million in Q3, but up three percent on the previous year.

Quarterly revenue was $528 million (up 22 percent from same time last year), but below Q3’s record-breaking figure.

Things are rosier for the whole of the 2102 fiscal year, in which DeNA brought in a record $2.04 billion in revenues and $775 million in profit. Here’s the key table:

DeNA chose its quarterly highlights as:

• MobaCoin consumption in Japan was 58.3 billion yen ($588 million), 2.5 percent lower than the previous quarter.
• Overseas MobaCoin consumption showed strong and steady quarter-to-quarter increase, approaching $70 million.
• Increased user engagement drove monetization growth. As a result, Mobage titles occupied top ranks in US Google Play’s top-grossing chart.
• DeNA and Nexon formed a global business alliance to bring new Nexon-developed games to Mobage networks.
• Groovy, DeNA’s new music player app was launched in Japan.

For the current Q1 2013, DeNA expects to make $175 million in operating profit (UPDATE: Corrected that figure. It’s for Q1 only, not FY13).

See the full stats on DeNA’s IR homepage.

Consisting of an incubator, accelerator program, and a final contest, ChainLabs is now seeking its first ever intake, with applications open until June 1st. It’ll begin one month later, with November 7th slated for the final demo day and competition.

This new incubator is run by Hong Kong-based company Chain Media, which also operates specialist logistics magazines and Chain.net, a “supply chain social network”. Though the program is based in Shanghai, it’s open to startups from around the world.

ChainLabs principal and Chain Media CEO Max Henry says in today’s announcement:

As the first supply chain accelerator in the world, ChainLabs will provide seed funding, a virtual workspace, mentoring program and a demo day that nurtures skills and relationships to enable entrepreneurs to build remarkable supply chain, procurement and logistics solutions.

While it won’t produce any sexy apps or anything that most of us will ever use, it’s an interesting move that broadens the startup landscape in the region.

Interested startups with big ideas for moving stuff around can apply for ChainLabs here.

Sina’s report cites a “knowledgable” source in “investment circles” as saying that Sogou is looking for a buyout, and the three aforementioned internet giants have jumped at the chance. According to the source, Qihoo has offered a $140 million deal that includes cash and stock options, Baidu is offering more in cash (he doesn’t cite a specific sum), and Tencent is mostly in the mix because it wants to be sure Sogou doesn’t go to Qihoo.

Furthermore, the report suggests a difference of opinion high in Sogou’s ranks, with CEO Wang Xiaochuan wanting to take the Qihoo 360 deal while board chair Zhang Chaoyang would prefer to sell to Baidu. But as Zhang has reportedly been taking more personal time of late, Wang has been taking the front seat in the proceedings, and Sina’s source says, “it’s a bit more likely that [Qihoo] 360 will win.”

Of course, this is still just a rumor, even if these kinds of rumors do seem to be coming true a bit lately. We’ve contacted Baidu, Qihoo 360, and Tencent for comment, and will update this story if we hear back, but we don’t expect much as most companies have a general policy of not commenting on rumors. All three of them declined to comment for the Sina Tech story (although apparently none of them denied it outright, which is interesting). Sogou CEO Wang Xiaoquan has called the rumor “unreliable” on his Weibo account.

By some counts, Sogou has the third-largest market share in Chinese search, so acquiring it would be a big boost for Qihoo, which has been struggling to close in on Baidu after its initial grab of more than 10% of the market shortly following its launch. But Sogou’s real value may lie in its widely-used Chinese input method software. The company has already begun to integrate search into its input method in a way that I think is potentially very significant. New applications of that concept could be a nice — and very valuable — bonus that comes along with the boost in market share of buying Sogou.

(via Sina Tech, image deleted)

It’s worth noting that compared with Q4 2011, Alibaba also has had the strongest growth both in revenue and profits.

If these numbers are any indication, Alibaba is likely to hold that top spot on the profit charts for some time to come. But of course, all of these companies are making gobs of money, so I don’t imagine any of them are going to be all that upset about who places where on this ladder.

It’s also worth noting that Tencent’s fall in profits could be due to increased investment in WeChat, which is fighting similar apps like Line and KakaoTalk for international users, and which hasn’t been fully monetized yet. Baidu is also moving internationally – we just spotted the company making inroads into Indonesia — and splashed some cash on a big local acquisition, too. And of course, Alibaba is clearly not going to be content to rest on its laurels, as it just invested a boatload in Sina Weibo and rumors are swirling about a number of other acquisitions and a possible IPO on the horizon.

(via Sina Tech)

While we were doing our usual browsing of the web we stumbled on something very interesting: a new site by China’s Baidu (NASDAQ:BIDU) that’s an Indonesian version of its web links portal Hao123. Just like Baidu’s other Hao123 sites outside of China, the new portal for Indonesia uses Google’s search engine rather than Baidu’s. Baidu declined to comment about this stealthy launch.

Baidu also runs its Hao123 portal – which is a sort of web directory like AOL or Excite – in other Asian and Mid-East countries in their local languages, like Vietnamese, Japanese, Thai, and Arabic. Plus it operates in Portuguese for Brazilian netizens.

Like all such web directory sites, Baidu’s Hao123 monetizes from advertising and paid links. The Indonesian site has links to local web favorites such as Kaskus and Tokobagus, plus lots of other local and global media and social sites. It’s not clear if those are all paid link. Of the five search options on the Baidu Hao123 site, three lead to Google searches, while ‘video’ leads to Youtube, and ‘music’ goes to the notorious piracy site 4Shared.

Earlier this year, another Chinese company made a move into Indonesia when Tencent president Martin Lau was cautious in saying that it’s in talks with local company MNC Media about the possibility of launching a search engine in the country.

While it’s not guaranteed that Indonesia will see the launch of Baidu’s search engine any time soon, Baidu is doing research into Southeast Asian languages at its new Singapore R&D lab, so it’s core search engine could finally expand to somewhere other than China and Japan.

Baidu, which is China’s top search engine, has been looking overseas a lot more in the past year; aside from that lab, it has launched antivirus products for Southeast Asian markets, and zoned in on north Africa and the Mid-East with its mobile browser app.

With over 90 million users today, KakaoTalk’s success seems like an overnight fairytale. It isn’t. The company has had its fair share of struggles. Like any startup, Kakao’s road to success was paved with blood and sweat.

In December 2003, JB Lee graduated from Seoul National University. Upon graduation, he a company that does document solutions for web and mobile. While working on that, he got to know Brian Kim, an influential figure in Korea’s tech ecosystem. Brian founded Hangame, a giant gaming company, which eventually merged with search engine Naver to form NHN.

Together with Brian, the duo founded IWILAB in 2006 and started to work on several web 2.0 projects but with only limited success. Things began to change when the first smartphone was introduced in Korea in 2009 and eventually went mainstream. It was then that some of the team saw the opportunity to build a world-class smartphone application.

Unfortunately, not everyone was convinced. The team was torn between building products for PC and mobile, and only after much discussion did Brian and JB decide that going mobile was the way to go. Not everyone was happy about that choice, but JB says the decision was a pivotal moment for the company:

The atmosphere during the discussion was very miserable and depressing. Brian came out with the idea of mobile smartphone apps. There was a lot discussion and debate. But we came to the conclusion to focus on mobile.

Having made the decision to focus on mobile, the team didn’t know exactly what to work on. There were a number of ideas. So in the end, the team formed three groups to work on different projects.

KakaoTalk was born

One of the ideas was KakaoTalk, which was launched on March 2010. With zero ad spending, KakaoTalk grew very quickly and organically while the other two applications were unfortunately getting little traction. The team made the decision to shut down the other applications to focus on KakaoTalk and IWILAB’s corporate name was eventually also changed to Kakao.

By September 2010, six months after it was launched, KakaoTalk had already recorded one million users. Three months later, in December 2010, KakaoTalk hit five million users. The growth didn’t stop and in fact, it accelerated. Today, KakaoTalk is used by over 90 million people worldwide and is expanding aggressively in Vietnam and Indonesia. I was curious as to how a young company like Kakao Corp could manage this explosive growth so well. JB was quick to credit his team. He said:

We have very experienced engineers who have worked at big companies such as NHN before. Our CTO, Young Lee, who used to work for NHN, has a very strong engineering background. He has experience dealing with huge traffic loads. Brian and our CFO, Dean Song, who used to work at CJ internet, also help KakaoTalk manage its fast growth.

JB also explained that they wanted Kakao Corp’s culture to be open and horizontal. This is especially attractive to talents who want their voices and opinions to be heard. Kakao’s culture stood out among other Korean big corporations that usually have the traditional top down approach. JB also says that great talents attract each other and he is thankful that Kakao Corp had a strong group of founding team members who attracted more talent through their network and influence.

One and half years ago, Sirgoo Lee, a reporter and lawyer turned management veteran, joined Kakao Corp as co-CEO. Prior to joining Kakao Corp, Sirgoo had experience working at IBM and NHN. Plus, recently Kakao Corp has acquired four startups to grab the engineering talents it needs to scale its business worldwide.

Kakao’s smart funding

Like any other startup, Kakao Corp needed financial resources to keep it growing fast without worrying about revenue. Brian funded the company for the first three years. In January 2011, Kakao Corp received its first external funding of $5 million from 13 top-level tech influencers in Korea, including the founders of Nexon, Hangame, and NC Soft.

But Kakao didn’t need the money. Rather, JB explained that the move was made to form close relationships with key influencers in Korea. This ensured that the top executives at various tech companies in Korea had skin in Kakao. Kakao then raised $20 million from DCM, Cyberagent Ventures, and Maverick Ventures. Its latest financing round came from Tencent and WeMade, who invested more than $80 million in total with Tencent also taking a board seat.

Users define Kakao’s Future

With a whopping 90 million people chatting on KakaoTalk, the Korean startup has truly become a platform for hosting games and other digital content. Co-CEO Sirgoo Lee explained that it is only natural for KakaoTalk to expand into a platform. JB added:

Communication shouldn’t just be limited to emoticons, images, and text. Third-party developers could be part of Kakao’s platform.

He uses SundayToz’s hit mobile game Anipang as an example, saying that Anipang showed that this hypothesis was right. In 39 days after Anipang was launched, the game received over 10 million downloads through KakaoTalk. On Kakao’s future, Sirgoo says that the company will keep innovating to be at the forefront of the mobile messaging technology. He explained further:

We pride ourselves on being innovators, trying new things and being willing to learn from others. We look to our users and keep learning from feedback. We are willing to upgrade and change our service to maintain the leadership in innovation. You can copy features and design. But you can’t copy the spirit and philosophy of the company. We are dedicated to creating a healthy ecosystem for developers, rather than doing everything ourselves. The ecosystem is the innovation source for Kakao.

As a platform, Kakao’s journey has just begun and it’ll be exciting to see how the Korean company will manage to expand overseas while fending off competition from the likes of WeChat and Line.

Last time we got some China numbers from Evernote, makers of the notes syncing service, it had hit 1.1 million users in the country in July 2012, a mere two months after launching its Chinese operations. At today’s Global Mobile Internet Conference (GMIC) in Beijing, Evernote CEO Phil Libin gave some updated figures, revealing that his company now has four million Chinese users.

Earlier today, the Evernote China team in Beijing flipped the switch on the Chinese version of its Evernote Business service (see here). That team has now grown to 17 people.

Aside from the stats and that launch, Phil talked about how China is an integral part of Evernote’s strategy of being a long-term startup that can survive up against the world’s top web giants. Speaking of China’s own web ecosystem, he said that the next decade will see Chinese tech companies going global, and the nation will, as it shifts away from manufacturing and towards a knowledge-based economy, become a creative melting pot. Startups in China will fit into that melting pot, Phil added, by being an innovation furnace.

Evernote still has two rivals larger than it in China: Shanda’s Mknote (five million users last year), and Netease’s Cloud Notes, which reached eight million users in December.

(Source: 36Kr – article in Chinese; Photo by @chadcat)

This is part of our coverage of GMIC 2013 in Beijing, running today and tomorrow (May 7 and 8). For other stories from this event, click here.

Well, the rumors are true. Chinese search company Baidu (NASDAQ:BIDU) announced today that it has acquired PPS.tv’s streaming video service for $370 million. The acquisition bolsters Baidu’s video offerings (it already owns iQiyi) and puts it in a position to challenge market leader Youku-Tudou (NYSE:YOKU) for a bigger share of China’s web video marketplace. By some user counts, this acquisition makes Baidu the proud new owner of China’s biggest video platform. (UPDATE: Unsurprisingly, representatives from Youku-Tudou dispute the claim that Baidu is now China’s largest video platform. Baidu’s official press release states that the acquisition “create[s] China’s largest online video platform” but does not cite specific numbers; however, Tech in Asia believes this claim to be based on data collected by a domestic market research firm.)

PPS.tv will continue to operate as a sub-brand of iQiyi, according to the release, but current iQiyi CEO Gong Yu will also be CEO of the new PPS sub-brand. Current PPS president Xu Weifeng and CEO Zhang Hongyu will remain onboard as co-presidents.

In a TechWeb poll from before the news became official, respondents were split on whether Baidu’s newest acquisition could help it win the video market, but the massive move to mobile is complicating the question further. Chinese net users watch billions of hours of video each month, but increasingly they’re doing it from mobile devices, and on that front Baidu’s iQiyi is already closing in on Youku-Tudou. (iQiyi claims 200 million monthly mobile users to Youku-Tudou’s 150 million daily users).

Even so, Youku-Tudou president Dele Liu says he welcomes the competition. Responding to rumors of the merger two weeks ago, Liu told reporters:

After the success and synergy created by the Youku-Tudou merger, increasing consolidation was inevitable throughout the video industry. We are happy to see this purchase go forward; we expect this acquisition will further rationalize the industry and help reduce piracy in the sector.

Nevertheless, the news poses serious questions for Youku-Tudou, and puts Baidu in a better position than ever to challenge for dominance of the streaming video market, especially on mobile devices.

UPDATE: Updated 11:38 to add “monthly” and “daily” to better clarify the Youku and iQiyi mobile numbers.

Despite a lack of regulatory approval yet, the world’s biggest mobile telco by user-base, China Mobile (NYSE:CHL; HKG:0941) is said to be ready to make a massive final push to get the infrastructure in place to launch China’s first national 4G network later this year. According to informed sources cited by QQ Tech, China Mobile will invest RMB 41.7 billion (US$6.7 billion) to build 200,000 base stations that will cover 344 Chinese cities this year.

Regulatory approval is said to be announced on May 17th, with China Mobile hoping to switch on its nationwide 4G network this August.

China Mobile has been conducting extensive city-area 4G trials for over a year, most recently in the cities of Hangzhou and Wenzhou on the outskirts of Shanghai.

Whereas China Mobile will use the TD-LTE system for 4G (also known as TDD-LTE), rivals China Unicom and China Telecom will have FDD-LTE networks. But that means China Mobile’s network doesn’t work with any of Apple’s mobile devices, initially leaving the new service – as with the company’s homegrown TD-SCDMA 3G variant – devoid of support for iPhones or iPads (except basic calling, texting, and 2G of course).

China Mobile is rumored to have already selected eight companies to serve as initial network equipment partners, including Huawei, ZTE, Ericsson, and Nokia Siemens (Update: Corrected that they’re not providing handsets).

With relatively small numbers coming from 4G networks in nations like Japan and Singapore, one research group estimates there’ll only be about 72 million people on LTE networks in Asia by the end of this year. But China, pushing ahead faster than the previously anticipated 2014 launch, could bring a big bump to that number.

Across China’s three telcos, there are over 230 million subscribers on 3G (Update: Corrected this figure).

(Source: QQ Tech – article in Chinese)

Last Thursday, we had our second ever Tech in Asia Meetup in Singapore. This one featured Hyungseok Dino Ha, CEO and founder of Memebox Korea. To those who are not familiar with Memebox, it is basically the Birchbox of South Korea- a beauty sample subscription e-commerce service that is currently leading in terms of market share.

During the session, we were pleased to have Dino share with us his startup story, as well as providing insightful (and honest) answers to the questions posed by our audience during the Q&A segment.

Here are the highlights just in case you have missed the event. You can also watch the full video at the bottom of this post.

Humble beginnings

At the beginning, the three co-founders raised about $35,000 which Dino mentioned was not a huge amount of money, but just enough to get it running for about two to three months. They did not raise investment during the early stage because they simply did not have the luxury of time to prepare financial statements or reports for VCs. Thus, they decided that rather than wasting time preparing such reports, they’d focus on running the business.

In the first month, the Memebox team achieved $19,000 in revenue, followed by $54,000 in the second and $180,000 in the third. And so they accumulated sufficient funds to get the business going.

Hiring and motivating staff with few resources

In order to bootstrap, their first strategy was to hire interns from university and college at a salary of about $200 per month. Though it was really low, the interns still accepted the offer. Memebox retained their talent by keeping their promise on subsequent pay raises. As for the co-founders, they took home a salary of $700 each month.

Dino mentioned that in Korea, startups are a megatrend among intelligent people. Their main motivator is not the money, but the ambition of wanting to build the future. In fact, the first questions these talented individuals posed to the company was about the vision and culture, not about their salary and employee benefits.

Memebox marketing tactics

Dino emphasized that the co-founders’ DNA is in sales. For the first six months, they didn’t believe in hiring any engineers or designers, and instead outsourced everything cheaply. Thus in order not to lose focus, they invested only in hiring sales people at the start as an excellent sales team will drive sales.

Furthermore, they focused mainly on partnering with great brands, thinking that if they have good products on the site, subscribers will naturally start pouring in. No investments were made in Google Adwords, but instead, they engaged on social platforms such as Facebook and Twitter to spread the word on Memebox.

Complimentary Memebox samples were also distributed to bloggers to review, and Memebox also entered into a revenue-share model partnership with a Korean television talk show called Get it Beauty.

Another interesting fact: the company also roped in the famous entertainer PSY to collaborate for a special Memebox called PSY Energy Factory without having to fork out a single cent.

Before seeing the video of the Singapore event, you might like to know our next Meetup is back in Jakarta on Thursday May 16th, featuring Lichi Wu from Millennial Media who’ll share tips on mobile app monetization. You may refer here for event and registration details. We certainly hope to see you there! Here’s the Singapore Meetup video in full:

Not forgetting, a huge thank you to our awesome Sponsors:

Corporate sponsors

VC sponsors

Startup sponsors

In a surprise move, Amazon (NASDAQ:AMZN) has opened its Android-oriented Appstore in China today. That’s despite the fact that China wasn’t listed on Amazon’s Appstore expansion roadmap last month, in which the company took its service into 200 new countries, including over a dozen major Asian markets.

The Amazon Appstore launch in China means that the American e-tailer has leapt the final hurdle in its long pursuit of selling its own hardware in China. Though the Amazon Appstore can be used with any Android device (and is now available in Chinese here), it features as the main store on Amazon’s own Kindle Fire tablets. It’s now likely that these tablets will launch in China soon, perhaps accompanied by the Kindle e-reader.

Amazon is promising Chinese users that there’ll be a host of locally made and overseas gaming titles on the store, including ones from Tencent (HKG:0700) and Sina (NASDAQ:SINA).

This comes just a few weeks after Amazon rolled out its Cloud Drive storage service in China, and over four months after its e-bookstore launched in the nation. In theory, everything’s in place for all of Amazon’s hardware to hit the Chinese market.

While Amazon’s Appstore isn’t the first third-party Android app store to accept payments in China, it should boost revenues for app developers by placing a stronger emphasis on paying for digital content. The Google Play store only supports free apps in China.

(Hat-tip to 36Kr for spotting this)

The Samsung Galaxy S4 officially launched today in Indonesia. Kompas today quotes Febri Rusli, the product marketing manager of Samsung Indonesia, as saying that the 5,000 stocked phones for pre-orders are all sold out. The pre-order period started two weeks ago, but Febri said that the stocks of new Samsung Galaxy S4 phones was effectively snapped up in the first week of that period.

In contrast, around 7,000 Blackberry Z10 and iPhone 5 phones were sold during pre-orders here. But that is because the two companies stocked more phones in the country during the period.

Samsung (005930:KS) claims to be the king of the smartphone market in Indonesia, saying that four out of five Android phones sold in the country are Samsung devices.

Of course, the more Samsung Galaxy S4 models sold here means bad news for makers of cheaper big-screen smartphones, such as the Chinese handset maker Oppo, which expanded its company reach to Indonesia recently. Will they still get a lot of buyers here in Indonesia?

Samsung top in Indonesia?

Research firm IDC gave us an overview about the Indonesian mobile phone market. Here’s what they had to say:

IDC can say Indonesia’s mobile phone market is a very good market with a very healthy year-on-year growth, which we can see already from 2011 to 2012 when we booked 15 percent year-on-year growth. IDC also forecasted that the Indonesian mobile phone market shipments will reach close to 60 million units – and 14 percent of them being smartphones.

We also asked IDC about how popular Samsung handsets really are in Indonesia. An IDC representative explains to us:

As for Samsung, they are definitely one of major players in the Indonesian market. They will be in the top five smartphone players in Indonesia. They have been one of the global vendors that are able to target every market segment in Indonesia, from screen size, and price point. from the recent IDC Indonesia mobile phone tracker data, we can see Samsung has recorded 10 percent drops due to the slower demands in the market and it is expected to bounce back in Q1 2013 with a very strong growth in the smartphone segment.

IDC didn’t verify if Samsung is top in Indonesia. But Andreas Rompis, vice president of Samsung Indonesia told Detik that Samsung is already the number one mobile phone brand in Indonesia. He also mentioned that research firm Gfk backs the claim. The company also claimed to be the biggest vendor based on sales generated from both feature phones and smartphones.

Don’t forget about Blackberry

I’m curious what Blackberry’s next move will be, especially for the middle and lower tier market. The handset’s domination on the lower and middle tier is waning thanks to the existence of affordable Android handsets like the ones Samsung sells. If there are fewer people using Blackberry, then the Blackberry Messenger (BBM) ecosystem which binds people into sticking to that phone becomes weaker too. Don’t forget that chatting apps like WeChat, Line, and KakaoTalk are becoming more popular here too, and they can act as alternatives to using BBM. Those apps now have their own BBM-like data packages from mobile telcos too.

With the Blackberry Z10 already launched, the next move will be its hard keyboard phone, the Q10, which might appeal to the nation’s hardcore messagers. We’re eager to see what will happen then.

(Sources: Kompas and Detik)

So it was a bit of a breath of fresh air when the Bank of the Philippine Islands (BPI) announced the development of what they hope will give them an edge in the burgeoning e-commerce and mobile purchasing field, the BPI mPOS, or Mobile Point of Sale.

Simply put, the mPOS is an attachment device for your smartphone or wi-fi enabled tablet, which will transform it into a mobile point-of-sale system. Currently available for iOS and Android devices, with a Blackberry version in the works, the mPOS connects via the headphone jack, allowing users to accept credit card payments, accepting both Visa and MasterCard. The device is basically a credit card scanner, and through a downloadable app, scanned transaction information is transmitted via wi-fi or mobile cellular connections to BPI’s central server.

One point of interest, though not necessarily good or bad, is that the mPOS device does not function on jailbroken devices, so it’s a no-go for users with jailbroken iPhones. No specific mention was made if this applied to rooted Android devices as well.

Officially unveiled for testing last April 28th, BPI representatives have stated that, though already highly successful in other countries like the United States with Square, this is first in the Philippines, a pioneering step in BPI’s efforts to promote e-commerce in the country.

Currently in a six month test phase, BPI chose Singapore-based Swift systems integrator for the device, emphasizing the determining and solution of such issues that future mPOS merchants might encounter. These range from issues such as cellular signal quality and strength, as well as the wireless capabilities of the mPOS device itself. After all, mobility is good and all out in the field, but what about inside buildings and other establishments? As is, the device is being tested by over 600 business and establishment owners, on a myriad selection of phones.

Another major concern, perhaps the most crucial of all, is security, and rightfully so. Credit card security and credit card fraud are of paramount concern in this day and age, and any successful online commerce endeavor must be up to this challenge if it is to succeed. In this regard, BPI has stated that the mobile app will require users to provide their signature using the phone or tablets touch-screen functionality. All transactions are credited to your BPI settlement account the very next day. The mPOS is also 100 percent paperless, so no receipts will be issued immediately, and will instead be emailed to the customer once the purchase is confirmed. BPI has also assured users that privacy is key, and that no credit card or user information will be saved within the device. This makes the mPOS compliant with both the Payment Card Industry Data Security Standard (PCIDSS) and Payment Application Data Security Standard (PA-DSS) systems.

Source: newsbytes.ph

Specifically, a source told the paper that Li was taken from his home by police on the evening of April 27. While it’s not known what Li is being questioned about, it’s likely related to the apparent corruption case police have been pursuing since former China Mobile chairman Zhang Chunjiang was indicted back in 2010.

While Li has served as Guangzhou Mobile’s CEO since 2009, it is also possible that he’s being investigated for wrongdoing that predates his appointment to that position (he was the company’s marketing director from 2003 to 2009).

Of course no charges have been made public yet, and while China Business News is generally a reliable publication, one should always take anonymously-sourced stories with a few grains of salt. If China Mobile executives are guilty of corruption, it will be announced officially sooner or later. But the news of such high-profile detentions certainly doesn’t help the company, and I suspectit’s making other China Mobile executives who might have skeletons in their closets very nervous.

(China Business News via Sina Tech)

It’s worth pointing out that for some reason TechWeb didn’t offer a straight-up “no” option, but even so, it seems pretty clear readers are split on this. Frankly, I agree with them — it’s very hard to say. On the one hand, Youku-Tudou has been holding the number one spot for a while and even with PPS’s market share in hand, Baidu’s services wouldn’t surpass it. On the other hand, though, Baidu has a lot more money, and a much more diverse platform it can use to integrate video in a number of ways that might tempt viewers away from Youku-Tudou, assuming that it can match that site for quality of content.

This is one where I think we’re all just going to have to wait and see.

(via TechWeb)

The move is the latest in a competitive battle between China’s major telecom companies to offer the lowest international roaming rates, and it has been excellent for consumers. For example, China Telecom calls from the US, South Korea, Singapore, or Taiwan to mainland Chinese numbers now cost just 0.99 RMB/minute ($0.15/minute). Of course, that’s still quite a bit more expensive than domestic calling rates, it is quite a bit cheaper than most international competitors. A similar international roaming call made with America’s Verizon Wireless, for example, costs $1.99/minute. In other words, China Telecom is more than ten times cheaper.

And the battle may not yet be over. China Mobile dropped its international roaming rates in February in a move to gain a competitive advantage, and Telecom’s latest price drop could trigger a response from either it or China Unicom. Here’s hoping it does; this kind of price war may be hell for the telecoms but it’s awesome for consumers!

(Beijing News via Sina Tech)

With millions of apps in the major app stores – the iTunes App Store, Google Play, and more – getting visibility for your app isn’t easy. But often, promotional strategies are treated as an afterthought – or not treated strategically at all.

Because it’s easy to make mistakes when you’re entering this arena, I’ve put together the following list of potential pitfalls that can reduce your overall effectiveness or derail your whole app marketing launch.

1. Pinning your hopes on being featured or going viral. Getting featured in a major app store or getting some great press are good things, for sure. But at the end of the day, if those goals aren’t married to clear actions, you’re simply hoping for the best – and hope isn’t a marketing strategy. App marketing success can include good press outreach and social promotion, but at its core starts with a plan that includes paid promotion.

2. Focusing too closely on cost per installation (CPI). A low CPI is fine – it’s a key metric for marketers looking to get the most out of their budgets. But it shouldn’t be the centerpiece of an app marketing campaign. Users who simply install your app don’t generate revenue: high quality users do. That means people who register, make in-app purchases, use your app regularly – whatever fits your business model. Optimize on cost per loyal user to get the most out of your advertising spend.

3. Concentrating your ad spend too narrowly. It can be tempting to just pick one or two leading ad networks and do all your spending with them. While you may get okay results with just a couple of networks, you simply won’t be addressing the widest possible audience. Include both local and global networks in your plans: in India, you’d consider Admob, InMobi, Komli, and more.

4. Not optimizing across networks. Even using a range of networks isn’t enough: some networks may be a better fit for your particular app. Comparing costs and results over time will let you concentrate your spend on those that perform the best.

5. Not optimizing within networks. Moving money to the networks that are performing best is a bare minimum – to truly get the best results, you’ll need to look one level deeper, at the particular ads, bids, and targeting options you’re running. Ads that do well on one network may fail on another, and you may be able to find extremely valuable sub-segments of traffic within networks that underperform overall.

6. Letting your best performing ads suffer from saturation. Everyone loves a winner – but once you’ve found a great-performing ad, it’s easy to overuse it and wear out your audience. Be ready to refresh your ads regularly to avoid decaying performance.

7. Relying on underpowered reporting and analytics from multiple sources. Most advertising channels will provide top-level reporting to track your results, but you’ll need a comprehensive view of all your campaigns. Unfortunately, combining reports from disparate sources can lead to muddy data and massive reporting headaches. Look for a partner who makes it easy to track all of your ad campaigns in one place, including incent, non-incent, real time bidding, social, email, 2D, and other types of app marketing.

8. Using incent networks in small volumes. Incentivized download networks can be a very effective way to drive download volumes and loyal usage – but not when done halfway. When using incent networks, make sure you spend enough to get a significant app store ranking lift: the resulting organic users you get from the improved rank are the real prize in incentivized app marketing.

9. “Bursting” too quickly. Bursting is a tactic that involves focusing your marketing dollars in a very short time frame to get a big spike in downloads. This propels your app up the ranks, which brings in more organic downloads. But using up your budget for one glorious day at the top of the charts won’t deliver best results: it takes a while for organics to kick in. Our experience shows that a “burst and sustain” approach, where the initial push is followed up with additional days of advertising to support the new rank, delivers much more value.

10. Choosing a media partner who’s not 100% mobile-focused. Most traditional media agencies have grown up using traditional media. And while many have developed strength in search engine marketing and online display, they may not be versed in mobile advertising. The mobile advertising space is evolving so quickly that keeping on top of the latest developments is a real challenge – particularly if mobile isn’t your main focus. Long-term success in app marketing starts with the expertise only a company dedicated to the mobile space can provide.

By avoiding these pitfalls, you should be able to put together a solid, effective marketing plan for your app. Good luck!

(Image credit: Adobe)

[Update: Andi has written the English version of his blog. You can see it here.]

The demise of e-commerce site Multiply in both Indonesia and the Philippines is one of the biggest shocks of the year so far. We’ve written our thoughts about it, as have others. One blog post that I found interesting is this one by Ideosource founder Andi S. Boediman yesterday. The original is written in Indonesian; we’ve received permission from Andi to paraphrase it in English here.

Andi starts by talking about the e-commerce scene in Indonesia. He says that it is looking very good right now. In 2012, the internet users here has passed the 60 million mark, and five percent of them – around three million people – have bought something online. This figure is outside the purchases made for airlines, hotels, and concerts. And the future looks bright as the internet adoption rate, as well as the online transactions, will increase significantly in the next five years.

According to Andi, the decision to close Multiply came not from a lack of e-commerce growth, but from a strategic perspective of investment. He echoed our own explanation of Multiply’s business model as part of the problem, pointing out that Multiply’s shipping subsidies cost the company a lot of money.

Basically, Multiply wasn’t making much money and it was going to take a long time for it to reach a desired level of profitability. Even if Multiply’s persistence had come to fruition, it would have been easy for rivals like Tokobagus to simply copy the company’s business model at that point. Tokobagus is doing quite well anyway though, and it seems that it is investor MIH’s main e-commerce asset in Indonesia.

Multiply Helped Indonesia’s E-commerce Industry Grow

Multiply’s demise may not be a bad thing. In fact, Andi believes that it can benefit the e-commerce industry in Indonesia. Multiply’s downfall means that a lot of its high quality human resources will suddenly disperse to the other e-commerce businesses and they will share their knowledge and experience in running the business.

Andi recalls his own experience when he departed e-commerce site Plasa.com. The founding group that he gathered have now become leaders in various internet and e-commerce companies. The same thing happened when social network Koprol was disbanded and when news site Detik got acquired too. The industry grows more quickly when company breakups speed the proliferation of high-quality talents.

These high-quality human resources now have the option to either work at another company or start their own e-commerce startups. Either way, that’s a good thing for Indonesia’s e-commerce market.

(Source: Andisboediman.blogspot.com)

On Sunday, Ren addressed both of these rumors directly in an email sent to internal team members but subsequently published by the Chinese tech press. In it, he firmly denies the rumors of an IPO, writing that in the next five to ten years, Huawei has no plans for an IPO or for any kind of merger, segmentation, or acquisition that would get the company into capital markets. “The rumors that [Huawei] will IPO have no basis,” wrote Ren in his letter.

He was, if anything, even more blunt in his rebuttal of claims that he planned to appoint a member of his family as his successor. After laying out a number of qualities he feels his successor must have such as vision, character, and a number of business-specific abilities, he wrote:

None of my family members possess these qualities; therefore, they will never be included in the sequence of successors [for Huawei].

Harsh words if you’re a member of Ren’s family, but it’s good to see that he’s willing to address both of these rumors clearly and directly and deny them both in very clear terms. I can’t believe I’m about to write this about Huawei, but other Chinese tech companies would do well to learn from Ren’s example when it comes to squashing rumors.

(via Sina Tech)

China’s top e-commerce company has secured what could be the biggest web deal of the year in the country. Alibaba, which has been a lot more keen to venture into social media recently, has taken an 18 percent stake in Sina Weibo, the Twitter-like microblogging service run by Sina (NASDAQ:SINA).

Sina Weibo has over 500 million registered users, and has been China’s most talked about social network in the past couple of years. Despite all that enthusiasm, only 46.3 million are daily active users of Weibo, and the service has been a headache for Sina in terms of real-time censorship and great difficulty in monetizing it.

Alibaba’s stake in Sina Weibo comes with an option to increase that, notes the New York Times’ Dealbook blog, to 30 percent in the future. The deal also involves cooperation between these two Chinese web giants that will fuse social media and e-commerce. Sina and Alibaba expect such projects to bring in about $380 million in revenue from Weibo in the next three years.

What forms could such social commerce take? Last year, the startup phone-maker Xiaomi made use of Sina Weibo to sell some of its phones. This little experiment – it was not a long-term sales channel – yielded amazing results, with 1.3 million reservations for the phones made in just five minutes. We’ll likely see Sina Weibo do more like that – but on a more permanent basis, and with Alibaba’s consumer-oriented e-commerce sites, Taobao and Tmall.

Alibaba has invested in a few social media startups in the past few months, such as a funding round put into a flirting app, and the acquisition of one music streaming site.

In a statement this evening, Alibaba founder and chairman Jack Ma said:

We believe that the cooperation of our two robust platforms will bring unique and valuable services to Weibo users, as well as making the mobile internet a core part of Alibaba’s strategy.

120 million users ain’t enough for Line. Together with Takaratomy, the popular mobile chat application is targeting kids with its upcoming Line toy smartphone. Rick from Startup Dating reports that the phone is not a functional smartphone but will have NFC to allow kids to exchange stamps and messages when two toy Line phones are in contact. The toy is scheduled to launch on August 8 and will cost around $70.

It’s an interesting strategy from Line and probably the first of its kind among mobile chat apps. Japan-based Line Corp also recently launched its own cartoon series which probably has the same target group in mind. It’s perhaps fair to speculate that manga or kids-only games will be developed along the way to serve this audience if it proves to be profitable.

[Source: SD Japan via Impress]

Tokobagus founders Arnold Sebastian Egg and Remco Lupker left the company back in August last year. But Arnold and Remco will be happy to hear that their online classified listings site continues to grow under the management of Michal Klar.

Each month, Michal says that “well over 10 million Indonesians” are recorded visiting Tokobagus with a total of 1.8 million ads now active on the site. Tokobagus continues to grow but Michal remains tight-lipped about Tokobagus’ key stats. Tokobagus continues to spend heavily on both online and offline advertising. If you are in Indonesia, it’s likely that you will see a Tokobagus commercial on TV (see an example below), and even in places like elevators.

Most online business people will be skeptical about the conversion rate of offline ads to online users. Since Tokobagus has been doing it consistently for such a long time, the efforts much have somehow paid off. Michal confirmed that traditional advertising proved to be effective and measuring its impact is highly complicated. When asked how much Tokobagus is spending on advertising, Michal says it will be the last number that he will ever share.

With MIH as its latest backer, the site isn’t at all focused on being a profitable venture yet. When talking about revenue, Michal is confident that ads and premium listings for sellers are the right paths to generate revenue. Case in point: Craigslist, the world’s largest online classifieds site, makes more than $100 million each year. A fast growing Russian classified site, Avito, recorded 40 million monthly unique visitors generating over $30 million revenue in 2012.

Tokobagus currently has just over 100 employees in its newly furnished office, with one-third each working on IT, marketing, and quality control.

Chinese web company Qihoo has lost its second lawsuit and legal tussle this week. This time, Qihoo (NYSE:QIHU) was up against search engine rival Baidu (NASDAQ:BIDU) in the Beijing High People’s Court, where a judge ruled in favor of Baidu’s unfair competition suit and ordered Qihoo to pay a fine and publish an apology.

Just two days earlier, another court ruled that Qihoo should pay damages to Tencent in a separate case – and say it’s very sorry.

The Baidu lawsuit against Qihoo dates back to the events of last fall, shortly after Qihoo – initially a web portal and software maker – launched its own search engine. While the Beijing court only imposed a fine of RMB 450,000 (US$72,000), smaller than the damages that must be paid to Tencent, Baidu’s legal claims were quite significant, accusing Qihoo of things like violating industry practices by circumventing Baidu’s block on Qihoo indexing Baidu’s content on sites such as Baike, which is a sort of Wikipedia clone. The court ruling today also accused Qihoo of utilizing Baidu’s search results in its own new search engine.

The leading search engine had earlier accused the newcomer of illegal seizure of Baidu’s intellectual property, and was seeking RMB 100 million ($15 million) in damages. Clearly the judges had a different idea of the value of that content.

Qihoo’s apology to Baidu must be displayed for 15 days [1] – coincidentally the same period of time as its apology to Tencent. But, as noted by Rihanna, I’m guessing that the perpetrator is not very sorry.

(Source: NBD – article in Chinese)

(Source: NBD – article in Chinese)

Friday’s news about e-commerce site Multiply closing down is a shocker. No one could’ve predicted this. Just last December we met up with CEO Stefan Magdalinski and Indonesia country manager Daniel Tumiwa, and they were enthusiastically talking about the future. Everyone was geared towards 2013.

A lot of people in Indonesia’s startup scene are also in shock. They told me how they’ve just met with the Multiply’s higher-ups and discussed about the company’s plans and new features to be launched. It seems even the people inside Multiply are in shock as much as we are. Why on earth did this happen?

Multiply’s transitional setback might be one of the main reasons.

The chaotic transition

The e-commerce site officially rebranded last month, complete with a brand new logo. But the transition was not a smooth one. This comment made by one of the sellers explains how difficult it is to sell products under the new system:

• The site only shows some of her product listings since the transition. It is most probably an error.
• After a buyer orders lipstick, there is no information about which color she ordered.
• It is quite difficult for the seller to contact her buyer. The new site no longer has comments or a private message feature. She can only send an email to her buyer.

That comment was made on April 5th, around two weeks after the new site launched. There was also the issue of sellers not receiving their money from the sales made on Multiply. That case has apparently been solved by the company, but a few people have lost faith in Multiply as a lot of their phone calls and emails went unanswered even after the incident.

It also seems some sellers’ conversation history with their buyers went totally bust. This comment made by one of the sellers says that she has built her contacts for over three years, and now it is all gone. She also added that her whole product listings on Multiply, which were listed on Google’s first page, is now gone.

On a personal note, even Multiply’s terms and conditions page now looks very confusing. The page mixes both Indonesian and English, and it doesn’t make Multiply look like a company that has control of its operations.

Two months ago, Multiply was ranked 17th in the Philippines and 47th in Indonesia. At the time of this writing, the company is now ranked at 50th in the Philippines and 344th in Indonesia.

Very high burn rate

Credit: wondergressive.com

Of course, in the end it will always be about money. Besides lots of money to fix the whole fiasco described above, Multiply would also need time to reclaim the long-built reputation and faith from its sellers and buyers alike. That’s a huge setback for sure.

According to an unnamed source, Multiply is the number one e-commerce site for one of Indonesia’s largest bank BCA. In fact, the revenue Multiply records is twice as much as the second placed BCA e-commerce partner. That means Multiply is recording very huge transactions over the past years, but because of Multiply’s business model it also means that the company is burning huge amount of money too.

Multiply doesn’t take any transaction fees from its sellers. This was originally done by previous CEO Peter Pezaris as Multiply’s promotional program for its brand new e-commerce service in 2011. But since then, it has been extended up until today. So Multiply hasn’t taken any transaction fees from its sellers in the last one and a half year.

That is more or less similar to what rival Tokopedia does, but Multiply offers something more. The latter site offers delivery fee subsidy of IDR 25,000 (US$2.5) for every IDR 100,000 ($10.3) minimum transaction on selected items. A lot of popular items get this offer, and that would mean that Multiply is burning a lot of money in subsidizing these delivery offers to a lot of its users. Thus the higher the transaction, the higher the cost for Multiply. Just like the free transaction fee, this subsidy offer has been in effect since 2011.

Refocusing efforts

According to the explanation given by Stefan, Multiply shareholder MIH remains optimistic about the e-commerce industry in Indonesia and the Philippines, and has increased its funding to other portfolio companies TokoBagus and Sulit.com.ph. That “increased funding” could mean MIH’s strategy changed to focus its funds on more promising companies. Perhaps MIH has decided that backing up Multiply was no longer worth the effort.

The cost to propel Multiply into the kind of company it was before the shutdown was quite high. Rebuilding its reputation and spending more of that money may no longer be the logical option. Rather than patching up your weaknesses, you might be better off putting that effort into your strengths. For MIH in this case, its strengths are TokoBagus (ranked 14th in Indonesia) and Sulit (ranked 8th in the Philippines).

A lot of Multiply users are also quite shocked and sad about this. Just last month we saw more blood shed by Japan’s e-commerce company Rakuten in its joint venture project in Indonesia.

Besides those two companies, we’ve also recently seen two popular Indonesian startups Koprol and Saling Silang raising white flags too. Could these be just the start of natural selection setting its course here in Indonesia? What do you think?

Inside Foxconn’s factory. (Image credit: qz.com)

After some delays, it looks like Taiwanese company Hon Hai – commonly known as Foxconn – is set to build a plant in Indonesia. According to Reuters, Foxconn is looking to seal the deal with the Indonesian government next month. It was also reported that Foxcon “has no plan to export phones from Indonesia and will not make Apple products there.” Rather, it is the Indonesian domestic market that Foxconn is interested in, which a spokesperson claims is a $2.4 billion market for phones.

There’s no news on where the plant will be, but the government is willing to provide tax incentives if it were to be built outside of Java island, presumably to take jobs to less developed regions. With Foxconn coming into the country, it could create one million jobs in the nation, which certainly could be good news.

For folks who are interested to take a look at what’s inside an average Foxconn factory, check out this video.

(Source: Reuters)

There is no end to the Puzzle and Dragons hype in Japan, it seems.

The country’s top smartphone game now has over 12 million users, is generating a staggering US$62 million to $86 million per month, and has been advertised with a new campaign on national TV since the end of March.

Maker GungHo (3765.OS) has just announced a Nintendo DS version of the RPG/puzzle hybrid game for later this year, in addition to the release of a spin-off dubbed Puzzle and Dragons Challenge for iOS and Android a few days ago. both titles are for Japan only at this point.

And recently, the company rolled out a Puzzle and Dragons English version on Android (here is the iOS version that came out late last year).

GungHo is listed on the Osaka Stock Exchange, and I have pointed out how their market cap has risen over the last few months (driven almost exclusively by Puzzle and Dragons’ growth) quite a few times in the past.

As a reaction to the two Puzzle and Dragons spin-offs and the new English-language Android version of the game, GungHo’s stock price went through the roof.

After adding close to 15 percent in a single day, GungHo’s market cap now stands at a mind-blowing US$9 billion (Editor’s note: It’s $10 billion as of now). In that area, GungHo destroys every mobile game company out there, including:

• DeNA ($4 billion)

• GREE ($2.8 billion)

• Zynga ($2.4 billion)

With over $10 billion, GungHo’s market cap exceeds that of national airline ANA, Daihatsu, Mitsubishi Motors, Sanyo Electric, NEC, or Sharp: that’s what one successful smartphone game – a potential new billion dollar franchise – can trigger on the Japanese market.

We’ve received news from several readers that social network turned e-commerce marketplace Multiply is shutting down.

According to an email sent to Multiply merchants (see below), the site will be online till May 6, and will discontinue all operations on May 31. With further searching, you will find announcements on its Southeast Asia/Philippines and Indonesian sites.

Multiply’s merchants are advised to move to a new e-commerce marketplace. In Indonesia, there’s no shortage of choice of marketplaces, including Tokobagus, Kaskus, and Tokopedia. The news comes as a huge surprise as many would have thought Multiply is growing pretty well.

It was just last year that Multiply said it will discontinue its blog operations, move its headquarters to Jakarta, Indonesia, and move full force into e-commerce. Back then Multiply also revealed that it had 100,000 Indonesian sellers and around 75,000 Filipino sellers.

We’ve contacted Multiply’s country managers in the Philippines and Indonesia and will update if we hear from them. Here’s the letter sent out to merchants today:

Dear Multiply Merchant,

We regret to inform you that Multiply will be closing the marketplace on May 6, 2013 and discontinuing all business operations by May 31, 2013.

Multiply will maintain normal site operations through May 6th and will wind things down through to the end of the month. We will use the rest of May to make sure that all accounts are settled and that you receive all funds you earned on the platform. We hope this provides you time needed to identify and migrate to alternative ecommerce platforms, settle all payments on items bought and delivered, and try to minimize disruption to your business.

In order to ensure that all your earnings are disbursed to you in full prior to May 31, we will cut off buying activity on May 6, 2013. This will ensure that all orders have sufficient time to be completed and delivered to your customers before the end of the month.

If you have a Trust Badge, please contact our customer support team and we will ensure that you receive a pro-rated refund for the remaining time on your subscription.

If my team can be of any assistance to you during this transition, we will do our best to help.

The new statistic comes from KoryoLink CEO Ezz Heikal, who’s based in Pyongyang. The telco is a joint venture between Egyptian company Orascom and the state-owned Korea Post and Telecommunications Corporation (KPTC). KoryoLink was started up in late 2008, but usage seems to have only taken off since Kim Jong-un took over as the newest (but not dearest) leader in December 2011.

But, as always with North Korea, there are complications.

North Korean authorities permitted KoryoLink to sell uncensored 3G data packages to foreign businesspeople and longer-term visitors in February of this year. But that was halted a few weeks later. And so you have to wonder how many of KoryoLink’s subscribers are active users – or visitors who now find their service partially cut off.

Note that North Koreans who use KoryoLink’s 3G cannot access the proper internet, and are restricted to the national intranet – plus voice calls and SMS.

Tensions between North Korea and the west remain high, with no sign of a sustained opening up policy that would give North Koreans greater access to things like smartphones. Or food.

(Source: NorthKoreaTech)

Image via Reuters

So it turns out Huawei may not be as Cartman-esque as we originally suggested. After the Financial Times reported earlier in the week that Huawei’s executive VP stated the company is no longer interested in the US, a Huawei spokesman told the Beijing News that actually, the FT report is based on a mistranslation and Huawei does not intend to abandon the US market.

According to the Huawei spokesperson, VP Eric Xu was asked by a reporter about where the company’s new growth markets would be in the future, and he responded that they would be in developed countries, not including the United States. “This does not mean that Huawei is giving up on the US market,” said the Huawei spokesman.

But it does seem the company is placing less importance on the US. The company’s CTO Liu Sanqi said Tuesday that Huawei was “not focusing on the US market,” a quote that the company does not seem to be disputing. So, while Huawei hasn’t totally given up on the US, it certainly has turned its focus elsewhere, specifically towards Europe and Asia.

(Beijing News via Sina Tech)

China’s leading search engine, Baidu (NASDAQ:BIDU), is said to have acquired a rival social video site for $300 million to $400 million. This rumored acquisition of PPS.tv would bolster Baidu’s own Hulu-esque video-streaming site iQiyi.

The buy-out will reportedly merge PPS into Baidu’s iQiyi. PPS is an old favorite with Chinese netizens from when it used to be packed with pirated TV shows and movies – that’s before PPS cleaned up with licensed content in the past couple of years.

We reached out to Baidu this afternoon, but a Baidu spokesperson declined to comment.

The Baidu-PPS rumors have actually rumbled on for about a month, but today’s reports suggest that it’s a done deal that will be announced soon.

Interestingly – and somewhat bizarrely – the company behind China’s top social video site, Youku Tudou (NYSE:YOKU), issued a statement about the Baidu-PPS rumors. Youku president Dele Liu says:

After the success and synergy created by the Youku Tudou merger, increasing consolidation was inevitable throughout the video industry. We are happy to see this purchase go forward, we expect this acquisition will further rationalize the industry and help reduce piracy in the sector.

But Dele Liu was just responding to the rumors, not insinuating that the news is true.

However, it is true that consolidation is inevitable in this pricey and heated sector where it costs millions of dollars to secure the exclusive rights to Chinese, Korean, or western TV dramas and movies. China’s biggest web company Tencent (HKG:0700) has also been bolstering its video site in the past year.

According to ComScore, China’s netizens watch upwards of four billion hours of web videos each month, making social video portals and licensed content an increasingly important part of the Chinese web scene.

(Source: Techweb – article in Chinese)

The Rakuten Indonesia site.

Nikkei first broke the news last month that the joint venture between MNC and Rakuten (JSD:4755) is over in Indonesia. We reached out to both MNC and Rakuten but no one wanted to speak about the situation on the record. The e-commerce site Rakuten Belanja Online is still running, though who knows what’s going on behind the scenes with MNC and Rakuten. This morning Rakuten finally broke the silence, sending us an official statement from Toru Shimada, senior executive officer and head of Asia HQ, who said:

Two years ago, Rakuten launched Rakuten Belanja Online in Indonesia with our JV partner MNC Group. We are very pleased with the growth of the business, where today we offer the widest range of products from Indonesia’s top merchants, as well as the tremendous response we have seen from Indonesian merchants and consumers alike.

From the beginning, we recognized Indonesia’s potential to become one of the biggest e-commerce markets in Asia, and our confidence in the market has only increased in the last two years. With the launch of Rakuten’s regional headquarters in Singapore last year, we are now able to accelerate the growth of our businesses around the region and will be increasing our investment in this exciting market.

We believe that through deepened focus and investment, we’ll be well positioned to not only accelerate the value that our B2B2C model and e-commerce platform brings to both empowering merchants and consumers, but also help spur the evolution of the Indonesian e-commerce landscape.

It’s a pity it doesn’t explain exactly what happened between MNC and Rakuten. But at least we now know Rakuten will still continue to be in Indonesia.

Rakuten told the media that it will not be commenting further on this issue. But the company did say that more of its APAC plans will be shared at its Q2 2013 earnings conference call on May 9.

If there was any doubt that Japan is still a hot market for startups, this news should clear any doubts. Yahoo Japan and SoftBank Capital are joining forces to pump $20 million into helping early-stage mobile and social American companies expanding into Japan. This will certainly be good news for startups in the Valley who have been eyeing the Eight Islands.

Toshiaki Chiku, who is now heading the US operations via SoftBank’s office in New York, had this to say:

Yahoo Japan is making a big effort to expand our venture capital impact in the United States, and we are firmly committed to helping companies at all growth stages get into the Japanese market. Japan can be challenging for many U.S. companies, and given our scale and affiliation with SoftBank, we’re in a great position to help them grow and succeed.

SoftBank Capital is the venture branch of one of Japan’s largest telcos, SoftBank Corporation (TYO:9984), and thus has strong interests in promoting products and services that will be used on top of its wires. Yahoo Japan is set to report its Q4 earnings today and mobile advertising has long been its largest division, contributing to 20 percent of its earnings. Yahoo Japan is also Japan’s leading search engine and reaches over 80 percent of Japan’s Internet users through its many services. Yahoo Japan also went in with GREE Ventures to invest $2 million into social gaming just a few months ago.

SoftBank has been quite aggressive in expanding US startups in Japan. Not only did it invest early in Yahoo Japan in 1995 but also recently announced another $250 million to create the PrinceVille Fund aimed at getting US startups competing in Asia. SoftBank’s already got some considerable success with exiting companies. It sold Bluefin Labs to Twitter, BuddyMedia to Salesforce, HuffingtonPost to AOL, Hyperpublic to Groupon, and OMGPOP to Zynga. It’s looking to do the same in Japan.

Given the above interests, it makes sense for the two companies to double down on mobile and encourage innovation. Japan’s mobile consumers are also quite willing to pay for mobile services as evidenced by it being the top mobile ad market until late last year.

Full Press Release below:

SoftBank Capital and Yahoo! JAPAN Announce Partnership and $20M Fund Investment to Help Bring More U.S. Startups to the Japanese Market

Japan’s leading Internet company to fund early-stage companies via SoftBank Capital and help startups drive business in Japan

New York, NY & Tokyo, Japan – April 24, 2013 – Yahoo Japan Corp. (“Yahoo!JAPAN”), Japan’s largest web portal and one of the largest e-commerce platforms, and SoftBank Capital, a venture group affiliated with Japan’s SoftBank Corp. (“SoftBank”), today announced an investment and partnership designed to help U.S. startups of all sizes in everything from early-stage funding to later-stage expansion.

SoftBank Capital’s early-stage Technology Fund ’10 has been investing $100 million on behalf of SoftBank, which has anchored SoftBank Capital’s investing activities since 1995. Yahoo! JAPAN, a joint venture between U.S. Internet company Yahoo! Inc. and SoftBank, has invested $20 million into the early stage fund. This complements the $250 million PrinceVille Investments, L.P. fund (“PrinceVille Fund”) announced in February.

In addition to its investment, Yahoo! JAPAN is announcing Toshiaki Chiku as its head of U.S. operations, where he will oversee investments and partnerships while working out of Softbank Capital’s Manhattan office.

“Yahoo! JAPAN is making a big effort to expand our venture capital impact in the United States, and we are firmly committed to helping companies at all growth stages get into the Japanese market,” Chiku said. “Japan can be challenging for many U.S. companies, and given our scale and affiliation with SoftBank Corp., we’re in a great position to help them grow and succeed.”

Yahoo! JAPAN’s influence in the Japanese market allows its partners to fully harness the market’s opportunities. Every month, Yahoo! JAPAN reaches more than 80percent* of Japan’s Internet users through its services. Criteo, the global leader in performance display advertising, recently began an expansion into Asia after completing a Series D round with investors including SoftBank Capital and Yahoo! JAPAN.

“Our partnerships with SoftBank Capital and Yahoo! JAPAN have been crucial in helping us establish our presence in Asia, with Yahoo! JAPAN enabling us to rapidly scale our business by tapping into one of the largest sources of premium inventory on Japan’s leading Internet portal,” Criteo CEO JB Rudelle said.

Yahoo! JAPAN’s partnership with SoftBank Capital is one of many developments further cementing Softbank Capital’s reputation as the premier investment partner for U.S. companies looking to expand into Asia. The fund has been investing on behalf of SoftBank, which has brought many U.S. companies to the Japanese market starting with Yahoo! JAPAN in 1995. The investment firm recently announced its $250 million PrinceVille Fund designed to help growth-stage entrepreneurs and their businesses compete in and expand into Asia.

Yahoo! JAPAN and SoftBank Capital are looking to invest in companies in the mobile applications, social media, e-commerce, online advertising, gaming and cloud computing spaces. SoftBank Capital’s previous exits include Bluefin Labs acquired by Twitter, Buddy Media acquired by Salesforce.com, Huffington Post acquired by AOL, Hyperpublic acquired by Groupon and OMGPOP acquired by Zynga.

“We like to say that our expertise and partnerships give our portfolio companies an ‘unfair advantage’ when it comes to growth opportunities in Asian markets,” said Ron Fisher, Managing Partner of SoftBank Capital. “Partners like Yahoo! JAPAN allow us to deliver on that message and become a preferred partner that can help our portfolio companies forge the relationships necessary to further expand their international presence.”

Source: Nielsen (NetView JP), brand level data, access from home and office using PCs（excluding Internet application, February 2013

“We had our best quarter ever in China,” said Apple CEO Tim Cook earlier today. In its post-earnings conference call for Q2 of fiscal 2013, Cook revealed that Apple sales to Chinese consumers (in the Greater China area, not just the mainland) amounted to $8.8 billion in that period of time, which was up 11 percent year-on-year. In response to a question from a call participant, he denied that Apple had hit a wall in China with the iPhone and iPad. The company also revealed that it plans to double its count of official Apple Stores in Greater China (currently 11).

The Greater China stats cover Hong Kong, Taiwan, Macao, and mainland China. Looking only at the mainland, sales were up eight percent. That’s not so hot when compared to slow growth in the US at a rate of seven percent.

Earlier data from IDC has made clear that 73.2 percent of all mobiles sold in China are smartphones, but the on-the-ground market is far from saturated.

56 percent of Apple’s revenue now comes from non-US markets – representing $24.3 billion in sales. Apple’s total revenues for Q2 hit $43.6 billion, beating analysts’ estimates. But profit nonetheless slipped 18 percent.

Cook inevitably dodged insinuations, notes TechCrunch, about building a budget iPhone, and instead stressed that Apple is selling the older iPhone 4 and 4S in markets like China as a more affordable option for lower-income folks who are trashing their feature phones.

The positive numbers from China come as a relief for Apple after a rough month of public attacks by state media, accusing the company of treating Chinese consumers unfairly when it comes to customer service and repairing devices. Also remember that Android is China’s top smartphone OS, with an estimated 160 million active Android owners right now.

(Source: TechCrunch)