ZTE Attempts To Double Marketshare

China’s ZTE Corp, the world’s seventh-largest smartphone maker, wants to nearly double its U.S. market share in the next three years by increasing spending on marketing.

ZTE, which trails nearby rival Huawei Technologies Co Ltd in selling both smartphones and telecoms equipment, wants more share of the fat profit margins promised by sales of high-end phones in the United States.

But the company needs to first work on its image. Its mainstay telecom equipment business was essentially shut out of the U.S. and other markets after government officials flagged security concerns about Chinese-made equipment.

ZTE targets a U.S. market share of 10 percent by 2017 from 6 percent in 2013, Lv Qianhao, global marketing director of mobile devices, told Reuters at a company event on Thursday.

That would place it a distant third behind Apple Inc with 41 percent and Samsung Electronics Co Ltd with 26 percent, according to September-November data from researcher comScore.

To that end, ZTE will increase its U.S. marketing budget by at least 120 percent this year from last, Lv said without elaborating. Like other Chinese handset makers, ZTE is grappling with low brand awareness in the world’s second-largest smartphone market and perceptions of inferior quality.

Samsung Electronics, which earns around two-thirds of its operating profit from its mobile division, spent $597 million on marketing in the United States in 2012, according to researcher AdAge.

Last year, ZTE signed a deal with the Houston Rockets basketball team and released a Rockets-branded phone.

“We want young U.S. consumers to participate in our marketing activities, so we will have more NBA (National Basketball Association) stores and channels that sell our products,” Lv said.

Globally, ZTE aims to ship around 60 million smartphones this year compared with about 40 million smartphones last year, said Senior Vice President Zhang Renjun.

The company sees much of that growth in developed markets – including Russia and China- which accounted for 68 percent of mobile device revenue last year compared with 35 percent in 2007, said Lv.

ZTE’s mobile device business sells feature phones as well as smartphones. It was the fifth-biggest mobile phone vendor in July-September, according to researcher Gartner, though it fell out of the top five smartphone sellers list in the same period.

ZTE expects to have swung to a profit for last year having booked its first-ever loss as a public company in 2012.

It based its turnaround on cutting costs, signing fewer low-margin contracts, and winning contracts to build fourth generation telecommunication networks.

The company expects global investment in 4G to reach $100 billion this year, Zhang said.

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Bluetooth 4.1 Goes IPV6

The Bluetooth Special Interest Group (SIG) has announced Bluetooth 4.1, the first version of Bluetooth to lay the foundations for IPV6 capability.

The first hints of what the Bluetooth SIG had planned for this new version were revealed to The INQUIRER in October during our exclusive interview with Steve Hegenderfer at Appsworld. There, he revealed his aspirations for the Bluetooth protocol to become integral to the Internet of Things.

At the front end of Bluetooth 4.1, the biggest change for users is that the retry duration for lost devices has been increased to a full three minutes, so if you wander off with your wireless headphones still on, there’s more of a chance of being able to seamlessly carry on listening upon your return.

Behind the scenes, devices fitted with Bluetooth 4.1 will be able to act as both hub and end point. The advantage of this is that multiple devices can share information between them without going via the host device, so your smartwatch can talk to your heart monitor and send the combined data in a single transmission to your smartphone.

This sort of “pooling” of devices represents an “extranet of things”, and the technology can therefore be applied to a wider area in forming the “Internet of Things” too.

The other major additions are better isolation techniques to ensure that Bluetooth, which broadcasts on an unregulated band, doesn’t interfere either with itself or with signals from other protocols broadcasting at similar frequencies, including WiFi.

The Bluetooth protocol has retained complete backwards compatibility, so a new Bluetooth 4.1 enabled device will work seamlessly with a Bluetooth 1.0 dongle bought in a pound shop.

In addition, Bluetooth 4.0 devices can be Bluetooth 4.1 enabled through patches, so we should see some Bluetooth 4.1 enabled hardware arrive early in 2014.

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Banks Join Instant Chat

Goldman Sachs Group Inc, JPMorgan Chase & Co and six other financial institutions have agreed to join a new instant messaging network from Markit and Thomson Reuters Corp to connect disparate messaging systems.

The network, called Markit Collaboration Services, launched on Monday and allows members to chat with one another regardless of the proprietary messaging technology that each firm uses.

This open platform differs Bloomberg LP’s messaging system, which is a closed network only for users of Bloomberg terminals.

Bloomberg messaging is the most popular form of chat on Wall Street, and often cited as one of the reasons banks are willing to pay around $20,000 a year for a subscription to a Bloomberg terminal.

Markit and Thomson Reuters said they hoped their open messaging network will attract banks that want to chat with their clients or other financial institutions but cannot currently do so because they are on different messaging systems.

The other banks that have joined the new network are Deutsche Bank, Bank of America Merrill Lynch, Barclays, Citigroup, Credit Suisse and Morgan Stanley, according to a statement from Markit.

The banks collectively employ more than 1 million people worldwide, though it was not immediately clear how many individuals will use the new Markit service.

David Craig, president of Thomson Reuters’ Financial & Risk division, said one of the challenges facing banks is that their messaging systems do not always talk to one another. “That creates costs and complexity,” he said.

Markit and Thomson Reuters said the messages on the new network are encrypted, and the system does not store them.

Representatives from Bank of America, Deutsche Bank, Goldman Sachs and Morgan Stanley were not immediately available to comment on the new messaging system. Representatives from Barclays, Citi, Credit Suisse and JPMorgan also declined to comment.

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FTC Warns Google And FB

The Federal Trade Commission (FTC) has promised that her organisation will come down hard on companies that do not meet requirements for handling personal data.

FTC Chairwoman Edith Ramirez gave a keynote speech at the Technology Policy Institute at the Aspen Forum. She said that the FTC has a responsibility to protect consumers and prevent them from falling victim to unfair commercial practices.

“In the FTC’s actions against Google, Facebook, Myspace and others, we alleged that each of these companies deceived consumers by breaching commitments to keep their data confidential. That isn’t okay, and it is the FTC’s responsibility to make sure that companies live up to their commitments,” she said.

“All told, the FTC has brought over 40 data security cases under our unfairness and deception authority, many against very large data companies, including Lexisnexis, Choicepoint and Twitter, for failing to provide reasonable security safeguards.”

Ramirez spoke about the importance of consumer privacy, saying that there is too much “shrouding” of what happens in that area. She said that under her leadership the FTC will not be afraid of suing companies when it sees fit.

“A recurring theme I have emphasized – and one that runs through the agency’s privacy work – is the need to move commercial data practices into the sunlight. For too long, the way personal information is collected and used has been at best an enigma enshrouded in considerable smog. We need to clear the air,” she said.

Ramirez compared the work of the FTC to the work carried out by lifeguards, saying that it too has to be vigilant.

“Lifeguards have to be mindful not just of the people swimming, surfing, and playing in the sand. They also have to be alert to approaching storms, tidal patterns, and shifts in the ocean’s current. With consumer privacy, the FTC is doing just that – we are alert to the risks but confident that those risks can be managed,” she added.

“The FTC recognizes that the effective use of big data has the potential to unleash a new wave of productivity and growth. Like the lifeguard at the beach, though, the FTC will remain vigilant to ensure that while innovation pushes forward, consumer privacy is not engulfed by that wave.”

It’s all just lip service, of course. Companies might be nominally bound by US privacy laws in online commerce, and that might be overseen by the FTC, but the US National Security Agency (NSA) collects all internet traffic anyway, and makes data available to other US government agencies and even some private companies.

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Will Icahn Boot Michael Dell?

Carl Icahn reportedly is drawing up a shortlist of potential Dell CEO replacements for Michael Dell should his bid for the company be successful.

Icahn and Southeastern Asset Management have made a bid to rival that of Michael Dell and Silver Lake Partners in the high stakes fight over Dell and its board. Now it is being reported that Icahn has already started drawing up a list of candidates that he and Southeastern Asset Management will propose as replacements for Michael Dell as CEO of Dell.

Icahn has previously warned that should his offer for Dell be accepted by the shareholders he would look to not only oust Michael Dell as CEO but replace the firm’s board of directors. Reuters reports that Icahn is casting his net far and wide, including consideration of former HP CEO and current Oracle co-president Mark Hurd.

According to Reuters’ sources Cisco director Michael Capellas, IBM services head Michael Daniels and Oracle’s Hurd are all in the frame, although none of the individuals would confirm having been approached by Icahn.

Michael Dell’s initial plan to buy back the company he founded has met with strong opposition by existing shareholders, some of whom think they are getting shortchanged. According to Michael Dell, the firm’s reorganisation into an enterprise IT vendor will be easier if the company goes private and doesn’t face investor and market scrutiny.

So far Dell’s board is backing Michael Dell’s and Silver Lake Partners’ buyout offer, suggesting that Icahn’s offer is short of cash. However some of Dell’s investors might like the drastic action that Icahn is promising, along with the fact that his offer allows existing shareholders to maintain a diluted stake in the company.

Should Icahn manage to get his takeover offer accepted by Dell’s shareholders, it will set up a sensational return to the PC industry for Hurd and give Dell renewed momentum to compete with HP.

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Will SoftBank Raise The Stakes?

SoftBank Corp President Masayoshi Son may get a less than enthusiastic reception when he comes to the United States this week to meet Sprint Nextel Corp’s major shareholders, as he tries to drum up support for the Japanese company’s proposed takeover of the No. 3 U.S. wireless service provider.

SoftBank’s billionaire founder, who proposed a $20 billion deal for a 70 percent stake in the U.S. wireless carrier, said on Tuesday that he would discuss the deal with shareholders in a bid to fight off rival Dish Network, a U.S. satellite TV provider, which offered Sprint a $25.5 billion bid.

The executive for the Japanese mobile operator may have a tough time selling the deal, as several shareholders have told Reuters that SoftBank would need to raise its bid in order to win their vote at Sprint’s June 12 shareholder meeting.

Two big Sprint shareholders, Paulson & Co and Omega Advisors, have publicly said the Dish offer looks better than SoftBank’s. Other shareholders said on Tuesday that they would go to meet Son during his trip but they were skeptical about his arguments against Dish.

While Dish’s offer would provide more cash upfront to shareholders, Son has argued that Dish would not be good for the company as it would require Sprint to take on a heavy debt load. He also promises a July 1 close for the deal and warned that Dish regulatory approval may not come until 2014.

Robert Lynch, the director of research for Westchester Capital Management, which owned over 14 million shares in Sprint at the end of December, said that the prospect of a quicker deal close would not be enough to win over his company’s vote.

“We think right now that Dish has a better offer on the table. We think SoftBank’s going to have to improve their offer,” Lynch said, noting that SoftBank’s comments about the prospective debt leverage from a Dish deal were overdone.

“We think the leverage is manageable. We think there are synergies here. While raising the leverage is something we looked at we think its not as big of a obstacle as SoftBank is saying,” Lynch said.

A big Sprint investor who asked not to be named said they were happy to meet with Son while he is in the United States but that they were hoping to convince him to raise his bid.

“If Mr. Son wants to own Sprint he will have to raise his bid,” said the person from a top 25 Sprint shareholder who did not want to be quoted by name ahead of the meeting.

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Will Zynga Survive?

Nobody expected Zynga’s results for this quarter to be great, so nobody was exactly surprised when the company announced a decline in almost every number that matters. It turned a small profit, but that’s a bright spot in an otherwise deeply unimpressive set of results. The really important figures – the number of people playing and, crucially, the number of people paying – are all down. Zynga’s business may not be hemorrhaging money, but it’s losing audience, and in a business so heavily focused on scale, that’s a really bad thing.

The company likes to present itself as being on the cusp of a turnaround, or perhaps already embarked upon a slow but steady turn. If so, it’s the oddest turnaround imaginable. The firm’s MAUs – Monthly Active Users – dropped from 292 million to 253 million year on year, so nearly 40 million people have simply stopped logging in to a Zynga game even once a month. Worse still, though, is the disproportionate fall in the number of Monthly Unique Payers – those who make at least one transaction during a month-long period. This number fell from 3.5 million to 2.5 million, a precipitous year-on-year drop of almost 30%.

It bears emphasising just how bad that actually is. For a social gaming business, MUPs are the real customers. There is huge value to having a large audience (MAUs), of course, and companies need to be very careful about not trying to force players into becoming paying customers before they’re good and ready – but ultimately, non-paying users are like footfall in a store. They’re not customers, in a strict business sense. Zynga’s not-quite-so-bad loss of 13% of its players (MAUs) is a side-show compared to the fact that it’s lost 30% of its paying customers (MUPs). Imagine, by comparison, a shop loudly announcing that the number of people walking past its window had fallen 13%, distracting from the fact that the number who came in and bought something had fallen 30%.

Of course, the two figures are related, and the disproportionately large drop in MUPs figures into that relationship to some degree. The process of encouraging players of a social game to spend money is focused around a number of principles, but the key temptation lies in buying items or currency that will give you the ability to match or overtake your friends’ progress, or to create a fantastic character, farm, castle or whatever which will “impress” the many friends who are also playing the same game.

For that psychology to work, of course, you actually need to have lots of friends playing the game. Most social games, as the name suggests, don’t work terribly well if you don’t have friends active in the game. “Active” is a key aspect here too – if you see that your friends are losing interest, logging in less often or spending less time tending to their farm, castle, town or whatever, then you also tend to lose interest rapidly. Hence, a game that gives the impression of being “in decline” – with players losing interest in some visible manner – will likely experience a precipitous decline in revenue, because even though lots of people are still playing, the sense of decline removes the key psychological drive to spend money on the game. (It doesn’t help, of course, that social game operators have established a pattern of shutting down unsuccessful games rapidly, which creates a feedback loop in which players are unwilling to spend money on a game they think might be in commercial trouble.)

The psychology of what Zynga is experiencing is clear enough, then, but the figures on the bottom line are still pretty dreadful. Whatever the reasons or the mechanism, the company is losing paying customers, and that kind of damage is extremely hard to recover from.

A stark contrast to Zynga’s woes can be found on the other side of the Pacific, where mobile developer GungHo this week topped a $9 billion valuation on the Osaka Stock Exchange, making it into a larger mobile gaming company than even fellow Japanese giants GREE and DeNA. GungHo’s valuation is ridiculous, a bubble that will inevitably pop in relatively short order, but there’s a genuine success driving the excitement – a single game, Puzzle and Dragons, which is the most successful mobile game in Japan (and is launching in other territories as well). Puzzle and Dragons reportedly makes about $2 million a day; it certainly makes enough to justify prime-time adverts in evening slots on Japanese TV.

GungHo is an extreme example of a phenomenon which is completely unavoidable in the social and casual game sphere. Mobile utterly dominates this sphere. Facebook, it turns out, was a flash in the pan in gaming terms. Smartphones, and to some extent tablets (though they’re arguably more “midcore”), are the social gaming platforms of today. Zynga, for all its cash (the company still has plenty of liquid assets), its clout and its former dominance, still hasn’t made a successful transition to being a mobile-first company. Clinging to the wreckage of the Facebook social gaming model which it so successful exploited (in doing so, perhaps hastening the downfall), Zynga is being overtaken time and again by smaller companies who have mobile gaming in their DNA from the outset. With this week’s results came a fresh claim that the company will be focusing more heavily on mobile, but a good, nimble firm would have accomplished that focus shift 12 months ago, at least. Zynga right now feels like it’s plodding along in everyone else’s wake.

The other great white hope for the company, of course, is gambling. It has cautiously launched gambling services – what it calls “real money gaming” – in the UK, and wants to expand into other territories. Plenty of pundits like to tap their noses sagely and suggest that Zynga will become a gambling giant down the line – although in doing so, they’re just following in the well-worn footsteps of a large number of video games industry pundits, executives and even developers who have regarded the gambling industry with something like the avaricious wonder of wannabe prospectors hearing about a new gold rush.

I don’t see any gold rush for Zynga in “real money gaming”. Investors and executives consistently overstate the allure and possibilities of this kind of gaming, because by dint of being investors and executives, they tend to be exactly the sort of person who is very attracted to gambling risks (you wouldn’t have an investment, or a career, anywhere within spitting distance of tech stocks otherwise). Moreover, by moving into the online gambling arena, Zynga is entering a market that’s already incredibly crowded with companies who are deeply, deeply expert in this field – not just in the customer-facing psychology of the casino, but also in the legal and regulatory minefield of operating a gambling enterprise online. Many major markets simply aren’t open to this kind of business; most others require you to jump through all manner of hoops simply in order to set up shop. The notion of Zynga having an open goal in “real money gaming” is born either from complete naivety or utter desperation – it could make money in the gambling business, but it has its work cut out for it.

It’s worth highlighting, all the same, that Zynga did make a small profit this quarter – it may only be one bright spot, but it’s bright all the same. The company’s scale still also arguably works in its favour, allowing it to buy talent and IP that smaller firms could never afford. Yet after several grim quarters, it’s also worth highlighting that talk of a “turnaround” is optimistic at best. Something about Zynga – its culture, its leadership or a combination of both – is blocking this company from moving in the agile, intelligent way a firm in its position desperately needs. Inventing fairy stories about the magical potential of gambling games or constantly reassuring the world that a pivot to mobile is definitely happening any day now won’t cover up the cracks for much longer. If Zynga wants the world to buy the “turnaround” story, it needs to start showing evidence; if not, it needs to start making big changes, starting right at the top.

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Lenovo To Buy NEC’s Mobile Phone Unit

Japan’s NEC Corp is in negotiations to sell its struggling mobile phone unit to its PC venture partner Lenovo Group Ltd, a source familiar with the discussions said, confirming media reports of the negotiations.

NEC is also in talks with potential domestic buyers, the source said on condition that he wasn’t identified.

NEC has until now said its mobile business is an important part of its overall operations. But after two years of losses the company is shedding assets to bolster profitability.

“Amid the rapidly changing market we are considering a number of ways to bolster the competitiveness of our mobile phone business, but nothing has been decided,” NEC said in a statement through the Tokyo Stock Exchange on Friday in response to the media reports.

Lenovo officials could not be immediately reached for comment.

Japanese phone makers have struggled to gain traction overseas inmarkets dominated by Samsung Electronics Co Ltd and Apple Inc where they are also being challenged by upcoming Chinese makers. In Japan, the two foreign giants are whittling down their share of cell phone sales.

Last October, NEC cut its mobile phone sales target for the year ending March to 4.3 million from a previous estimate of 5 million units. Lenovo, the world’s No.2 maker of PCs, is cranking up overseas expansion in smartphones after solid growth in China.

Japan’s biggest cell phone maker, Sony Corp, is vying with China’s Huawei Technology Co and ZTE Corp to be No.3 in the global smartphone market.

NEC also plans to sell its mobile services subsidiary NEC Mobiling Ltd for as much as $850 million, separate sources told Reuters this month.

Marubeni Corp’s telecommunications unit and TD Mobile, a joint venture between Toyota Tsusho Corp and Denso Corp, are vying for the 51 percent stake, the sources said.

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AMD And Oracle Join Forces

AMD is taking part in the OpenJDK project “Sumatra” in collaboration with Oracle.

The project aims to bring heterogeneous computing capabilities to Java for servers and clouds. It will look at how the Java virtual machine, language and APIs, can be spruced up to allow applications to take advantage of GPU acceleration, either in discrete graphics cards or in high-performance graphics processor cores such as those found in AMD APUs.

Manju Hegde, corporate vice president heterogeneous applications and developer solutions at AMD said that the OpenJDK Project represents the next step towards bringing heterogeneous computing to millions of Java developers. AMD has an established track record of collaboration with open-software development communities from OpenCL to the heterogeneous system architecture (HSA) foundation, and with this initiative we will help further the development of graphics acceleration within the Java community, he said.

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Dell Buys Quest Software

Dell is set to buy Quest software for $2.5 billion. The move trumps the bid by Insight Venture Partners and was done on the quiet.

The No. 2 U.S. personal computer maker kept its name out of the limelight when Quest disclosed on Thursday that it had received an offer from a “strategic bidder” of $25.50 per share. Quest’s shares rose more than 9 percent to finish at $26.06 on Thursday.

Dell has been actively buying companies to expand its offerings to business and diversify away from personal computers. It told investors its focus on the hardware and software needs of corporate customers was gaining momentum. Quest could help Dell’s businesses in data management and protection and Windows server management.

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