Samsung told The Korea Times on Monday that it will end its LCD panel supply relationship with Apple as of next year. That’s according to a “senior Samsung source” who declined to be identified, citing insufficient margins owing to Apple’s supply pricing strategy. Samsung’s role in Apple’s LCD supply chain has dwindled, with the Korean company reportedly cut out of iPad mini production, but Samsung’s decision to pull the plug may have been a pre-emptive strike by the parts manufacturer owing to a declining relationship between the two.
Samsung is said to be fielding more orders from its consumer electronics division, as well as from Apple competitor Amazon, in volumes that could make up for the loss of Apple as an LCD component customer. Apple was Samsung’s top customer according to NPD DisplaySearch for the first half of the year, but Apple began cutting its LCD orders back in September and was reportedly shifting order volumes to LG and Sharp, as ongoing patent disputes worsened.
Pricing on Apple’s latest iPad display had caused Samsung to earn only half as much per pixel on its production compared to previous models, so narrowing margins clearly had an impact on the decision, but this also can’t help but look like a case of Samsung ending a relationship that was already on the rocks to begin with. Apple was already clearly trying to reduce its reliance on its rival’s component supplier arm, as indicated by changes to the way it designs its processor andsources RAM and NAND flash chips, but this may accelerate Apple’s intended timeline.
Apple is a massive customer of LCD panels, and is set to become an even more demanding customer with the impending probable launch of the iPad mini. Earlier, there were concerns about whether or not Samsung’s display supplier competition could produce adequate volumes to satisfy its needs, butSharp seems to have recently gotten its act together, and others like Sony have reportedly joined Apple’s stable of potential supply sources.
The question will be whether or not the timeline Samsung gave of next year will give Apple enough time to stabilize its alternate source. Still, it looks like both have been preparing for this moment for a while, so we could see each walk away relatively unscathed.
A recent study exposed an alarming trend in the tech industry. Immigrant entrepreneurs, who in recent years have launched half the startups in Silicon Valley, are founding drastically fewer companies. Except for one group: Indians. What makes entrepreneurs from India so different?
The startup study was sponsored by the Kauffman Foundation and conducted by Vivek Wadhwa, who’s the director of research at the Center for Entrepreneurship and Research Commercialization at Duke University. His data showed that the number of immigrant-founded startups in Silicon Valley has fallen from 52.4% to 43.9% since 2005, a drop that Wadhwa calls “shocking.”
Indian Startups Buck The Trend
But another statistic surprised Wadhwa as well: the number of startups founded by Indians is actually climbing. Against the decline in immigrant-founded startups – and our ever more xenophobic immigration policy – Indians are still launching startups.
“The data showed that Indians are defying gravity and starting more companies,” Wadhwa says. “The number of Indian startups went up from 26% to 33% of all immigrant startups.”
The immigrant founders surveyed in Wadhwa’s study hail from 60 different countries – but a full third of them are from India. What gives? Why are entrepreneurs from the subcontinent such overachievers?
Wadhwa says one reason is that Indian entrepreneurs have a very strong support network here in the U.S. Thirty years ago, when Indians began building momentum in Silicon Valley, that first generation of successful startup founders worked hard to help those who followed. They built organizations and created a U.S. ecosystem of successful Indian entrepreneurs – and, crucially, angel funders – to accelerate newcomers.
“It was a very conscious effort put in place by several dozen successful entrepreneurs,” Wadhwa says.
Indian Startups Are Cool
Another factor is the societal value placed on entrepreneurial endeavor. Indian kids think it’s cool to start companies. They don’t grow up aspiring to be the next Justin Bieber. They want to be the next Sabeer Bhatia.
The founder of Hotmail. “He’s a rock star in India,” Wadhwa says.
How did that happen? Wadhwa gives a brief history lesson. Just a few decades ago India was going nowhere. “The economy was stagnant, India was known as a country of beggars and snake charmers,” Wadhwa says. “Pessimism abounded. India was basically a loser of a country. Suddenly you had these people coming to Silicon Valley making extraordinary amounts of money. This caught the attention of people back home. The media was shocked that Indians could be so successful. Kids started dreaming of coming to Silicon Valley and creating companies like Hotmail.”
So OK. That’s how the Indian community pulled itself to success in Silicon Valley. What’s with other immigrant communities? Why haven’t they done the same?
Can Other Immigrants Emulate The Indians?
Wadhwa thinks Indians benefit from their heritage, which suits them better than many other immigrants to making it in America. They speak English. They come from a democratic society. More than that, they have a serious independent streak.
“Just like here, Indians are free to speak out against the government,” Wadhwa says. “There is a history of breaking the rules, just like here. Culturally, Americans and Indians are similar and that gives Indians a big advantage when they come to America because they fit right in.”
Compare that to the Chinese experience, he suggests. “In China you’re terrified of authority, you dare not speak out against the government because you’ll be taken away the next day. There is a culture shock from that perspective – people who come from authoritative regimes are afraid of defying authority. But to be an entrepreneur you need to defy authority, you need to break all the rules, you need to take a risk.”
The Indians Are Going Home
Now, a lot of Indian entrepreneurs are taking their risks back home. Although his recent study shows Indians are still starting a lot of companies in Silicon Valley, lately Wadhwa has noticed a change. U.S. immigration and employment laws have grown so unfriendly that even the indefatigable Indians are getting discouraged.
“The tide has turned,” Wadhwa says. “Many people could not get their visas to stay here after they graduated from U.S. schools so they went back to India to start their companies, taking their values, experience and education with them. Taking their money with them.”
Result: the tech startup culture in India is booming. Yes, ours is too. But for how long? Wadhwa wonders.
“We’re exporting our prosperity,” he says. “Even though Indian entrepreneurs have had tremendous success here, their numbers could be even stronger. We could have tens of thousands more startups.”
Instead, the top Indian graduates from U.S. universities are going back to the sub-continent. “Gladly returning home,” Wadhwa says. “Every year I see this more and more. There is a gradual but noticeable change in attitude. Many don’t even think of staying.”
Starbucks, the world’s biggest coffee chain, launched its first Indian outlet Friday in an upscale part of Mumbai, becoming the latest global firm to tap the urban youth’s growing taste for caffeine.
The Seattle-based firm has finally entered the vast Indian market in a joint venture with the country’s giant Tata conglomerate — with menus especially adapted to appeal to local tastes in a country better known for its tea.
Speaking at the launch, the company’s chairman and chief executive Howard Schultz described India as “one of the largest markets in the world for Starbucks” and pledged that prices would be competitive.
“The competition here is ferocious. We’re coming here priced to succeed, to make it as accessible as possible,” Schultz told reporters at the new two-storey cafe in south Mumbai’s Horniman Circle, also home to a luxury Hermes store.
Like other Western chains that have come to India, such as Pizza Hut, Starbucks is offering “Indianised” versions of its staple hot drinks and baked goods to appeal to local palates.
Items on the menu include a murg tikka panini, cardamom-flavoured elaichi mawa croissants and Himalayan mineral water.
The usual Starbucks varieties of coffee are available but some of the beans have been sourced from Tata estates in India.
The price of a medium-sized cappucino is 115 rupees ($2.15) while a caffe americano costs 110 rupees.
“We’re trying to be respectful of Indian culture,” said Schultz.
“I say with humility we must earn the respect of the Indian customer. We’re not coming here taking anything for granted but certainly we intend to succeed here.”
India has traditionally been more of a tea-drinking nation, but the coffee bean’s stature is shooting up among young and urban professional classes, who seem drawn as much to Western-style cafes as they are to the drink itself.
Starbucks will compete for their rising disposable incomes with Indian-owned Cafe Coffee Day, which dominates the market, and well-established foreign chains such as Britain’s Costa Coffee and US Coffee Bean and Tea Leaf.
But the new entrant is likely to be successful, in part thanks to being a very well-known brand globally, said Pratichee Kapoor, associate vice president in food services and agriculture at Indian consultancy Technopak.
“Starbucks provide a very good space between a cafe and a five-star hotel, if I don’t want to spend as much as at a five-star hotel,” Kapoor told AFP.
India’s cafe market, estimated at $230 million this year, is expected to grow about 13-14 percent over the next five years, according to a Technopak report ahead of the Starbucks launch.
In the last five years, 1,250 new cafes have popped up across the country, and another 1,000 are expected by 2017, the report said.
Company officials remained tight-lipped at Friday’s launch on how many cafes were planned, saying that two more were coming up in Mumbai in the next week and they would start operating in New Delhi next year.
“It’s a very good socialising platform for people, this cafe market. It welcomes people to spend time and to have a good time. It’s very attractive to young people,” Kapoor said.
Among India’s 1.2 billion people, the average age is under 30, giving it one of the world’s youngest and biggest workforces.
Though many of them may be drawn away from traditional “chai”, it was business as usual on Friday for tea seller Narayan Gujjar on a street of south Mumbai’s business district, where his customers gathered to sip and chat.
Stirring his steaming mix of the spicy brew, he said he had never heard of Starbucks and was unruffled by the competition.
“I have my fixed customers, they will come,” he said.
Instead of waiting for Hollywood to outsource visual effects and animation work to them, well-heeled foreign companies are opening and buying studios in California.
Venkatesh Roddam may be the world’s most renowned outsourcing executive. But the 48-year-old native of Hyderabad, India, thinks conventional outsourcing is a bad idea when it comes to the movie business.
Roddam, a former chief executive of a leading Indian consulting company that provided offshoring services to the pharmaceutical, finance and telecom industries, is now in charge of Reliance MediaWorks’ film and media services business. The Mumbai, India, entertainment company is bulking up its business in Los Angeles; it is one of severalIndian and Chinese companies that have established beachheads in California.
Reliance partnered with China’s Galloping Horse last month to acquire Digital Domain,the high-profile visual effects company co-founded by director James Cameron, for $30.2 million.
In recent years, Reliance — whose parent company is Reliance Group, an Indian conglomerate controlled by billionaire Anil Ambani — also has acquired the Burbank digital film restoration company Lowry Digital, launched a U.S. regional theater chain that screens Bollywood movies, and provided key financing for Steven Spielberg‘s DreamWorks Studios.
“We truly believe that core of this business is in California and that our presence needs to be expanded here,” said Roddam, who like half a dozen other Reliance executives is moving to the company’s Burbank offices to boost its U.S. operations. “It’s not a business that can be treated like the IT business. You have to be physically close to where the customers are.”
That perspective is widespread among a new wave of Indian and Chinese foreign investors playing an increasingly influential role in California’s homegrown visual effects and postproduction sector.
Hollywood studios for many years have farmed out basic visual effects and animation work to India and other countries to take advantage of a pool of low-cost workers skilled in software engineering and computer graphics.
But well-heeled foreign companies such as Reliance are no longer waiting for work to be parceled out to them from thousands of miles away. They are setting up shop in Hollywood, opening their own studios or buying companies that have established relationships with directors and filmmakers.
The shift reflects China’s and India’s rise as global economic powers with the resources and desire to expand their own cultural industries. In another high-profile example, Chinese media company Dalian Wanda Group recently acquired AMC Entertainment, the United States’ second-largest theater chain.
“In order for countries like India and China to play the top role … like the U.S., they have to make their cultural industries top notch, which means that they have to make investments or help their own private companies to acquire American technology, talent and know-how,” said Demos Vardiabasis, a professor of economics at Pepperdine University’s Graziadio School of Business and Management. “It’s a must for them.”
Technology also has leveled the playing the field. The visual effects industry was once dominated by a few California companies with proprietary techniques and tools and staffs of artists trained to use them. But the advent of low-cost computer software and readily available digital workforces have created a global industry.
“Truly great technology and accomplished artists are now as available in Paris, Moscow, Beijing, Bangalore and Wellington as they are in London and Los Angeles,” said David Unger, an agent at ICM Partners who represents clients from India and China.
The rise in global competition has put the squeeze on California companies. Rivals have studios inCanada, Britain and India, where labor costs are as much as 60% cheaper. At least six California companies, including three in Los Angeles, have shut their doors in the last four years.
Others, such as Digital Domain, have been kept alive by the infusion of international investment. Its parent company filed for bankruptcy protection this summer, and its creditors included Reliance, which was owed $4.6 million. Digital Domain, which already operates studios in L.A.’s Venice neighborhood and Vancouver, Canada, had previously formed a partnership with Reliance to open studios in London and Mumbai.
Ed Ulbrich, Digital Domain’s newly appointed CEO, said the relationship with Galloping Horse and Reliance gives his company more resources to invest in the kind of pioneering research and development for which it was known when it worked on such movies as “The Curious Case of Benjamin Button.” The company also can expand business in the fast-growing Indian and Chinese film markets, he said.
Reliance, which operates India’s largest cinema chain, has facilities in India and Britain that provide a variety of postproduction services, including visual effects and film processing. L.A.-based rivals Rhythm & Hues Studios Inc. and Technicolor also have facilities in India.
“To be a digital effects provider now, you have to be able to deploy mass-scale digital production globally, and you have to be able to do it in a way that takes advantage of cheaper labor, tax incentives and rebates from governments,” Ulbrich said.
Roddam, formerly a senior banking executive with Deutsche Bank, said he wants to expand Reliance’s Burbank office, which employs about 75 people, and open a studio in New York. He was appointed by Reliance’s board as part of a restructuring that led to the resignation of then-CEO Anil Arjun in August. The company said in a filing that the changes were part of an effort to boost revenues that have been offset in recent years by heavy investments in new facilities in Mumbai, where it owns eight soundstages, and Britain.
Of course, a big bankroll and low-cost labor don’t guarantee success in Hollywood.
Tata Elxsi’s Visual Computing Labs, part of Indian conglomerate Tata, unveiled an office in Santa Monica in December 2009, citing its ability to achieve “significant economies” for its clients. The California studio hired Academy Award-winning visual effects supervisor Joel Hynek and other Hollywood veterans.
But although Tata has worked on some big projects, including “Spider-Man 3,” it has struggled to retain local talent. Two of Hynek’s colleagues — Tricia Ashford, the head of production, and Treva Blue, head of trailer production — recently resigned after clashes with management, said a person close to the studio who asked not to be identified for fear of reprisals. Tata representatives did not respond to requests for comment.
Another Indian firm making its mark on postproduction scene is Prime Focus, which in 2007 acquired Post Logic Studios, based in New York, and Frantic Films’ visual effects offices in Los Angeles, Vancouver and Winnipeg, Canada. Prime Focus has emerged as a leading player in converting movies into 3-D, getting work on such films as “Clash of the Titans” “Star Wars” and“Men in Black 3.”
Work is spread out among some 18 facilities in a digital pipeline spanning three continents. “I like to believe we’re not an Indian company but a truly global company,” said Namit Malhotra, CEO and founder of Prime Focus.
Malhotra also sees his role as helping cement cultural ties between the two countries. He recently provided technical assistance to Indian film director Vidhu Vinod Chopra, who is shooting an Indian film in California called “Broken Horses,” and has helped U.S. studios break into the Indian film market. “I felt there was an opportunity for me to build this bridge, to truly connect Hollywood and Bollywood,” he said.
Google, the search engine company that also happens to do 35 other things, is expanding its horizons once again with a new financial services division. On Monday, the multi-billion dollar corporation is set to launch a new credit business in the United Kingdom with plans to expand to other countries in the next few weeks, according to the Financial Times.
Based on what we know so far, the program will let businesses take out a line of credit — between $200 and $10,000 — to spend on Google’s money-making AdWords program. Google’s treasurer Brent Callinicos told the FT that businesses just “weren’t buying Adwords as much as they need to,” and a pilot program in the United States last year showed that offering loans made customers advertise more. Callinicos admitted that the company is “not doing this to lose money” and they’re also “not trying to run the financing business as a profit centre.” Starting in the U.S. and then spreading to other countries, however, Google will issue credit cards as part of the new financing program, with initial interest rates for small- to medium-sized businesses at a competitive 8.99 percent.
The move comes just a few days after news emerged that Amazon was launching its own loan business. Though details are still unconfirmed since Amazon hasn’t formally launched the program, Amazon Lending will provide capital to small business to stock up on inventory before the holiday seasons. Since Amazon takes a cut of all the sales through its website, helping small shops sell more goods makes great sense. “These spot loans will help these folks grow by getting them extra cash to buy more product,” said Scot Wingo, chief executive of e-commerce advisory firm ChannelAdvisor, told the Mercury News. “This is definitely cheaper than credit cards and faster and easier than banks, so may fill a big hole for sellers.”
Don’t expect to see Google and Amazon ATMs on the street corner any time soon, though. For now, both of the companies’ programs will focus on commercial loans. Of course, this is a company that’s already busy trading energy, rigging up high-speed WiFi in middle America, developing self-driving cars and tryingto make everybody look like Star Trek characters. So who knows how far they’re willing to go.
For the first time, Google has eclipsed Microsoft to become the second largest technology company in the world. Google’s market value is fluctuating near $248.6 billion, millions of dollars larger than Microsoft.
The new rank comes two years after investors drove Apple’s value past Microsoft for the first time since 1989. Microsoft’s growth has stagnated since the 1999 US antitrust judgement against it.
For Google, however, the climb to the top spot among tech companies would be a steeper one. Apple’s market value is over $100 billion greater than the combined value of Microsoft and Google.
Growing Its Influence, Klout Gets Strategic Investment From Microsoft — And Serious Bing Integration
Klout hasn’t just defied influential tech pundits, its social reputation scorecard has won them over. Now the sometimes-controversial startup is aiming at search. The startup has just signed a strategic investment and partnership with Microsoft that, on top of new funding, will create a product and business relationship with the Bing team.
You’ll begin seeing Klout scores — the combined measure of a person’s influence across Twitter, Facebook and other social networks — show up in the search engine today. The initial implementation will show Klout scores for friends in the “People Who Know” section of the right-hand column, alongside other third parties already in there, including Twitter and Quora. Search for a hot topic like “Facebook advertising”, you’ll see people with socially-proven expertise showing up. Mouse over an expert’s name, and their Klout score will appear, along with their Klout-determined areas of expertise.
Meanwhile, search data in Bing will now begin contributing to Klout rankings.
For now, experts will get a boost in Klout whenever they show up in “People Who Know” for queries. But raw search data will also become part of the mix. ”Let’s say you write an article,” Klout chief executive Joe Fernandez explains, “and that article appears when somebody does a search, then the user clicks through. We’ll associate that click with your [Klout] name.”
Klout users who have Wikipedia entries associated with their accounts will also get Klout boosts for the number of times that those entries show up and get clicked on in search results.
For Microsoft, this is another move to define itself as the “open search platform” — a term that Bing corporate vice president Derrick Connell used repeatedly during my briefing call today. As with the Facebook, Twitter, Quora and even Google+ integrations, Klout helps position Microsoft as the more open and socially-attuned alternative to Google’s still-dominant search product.
The deal today isn’t exclusive for either party, both sides confirmed with me, so maybe we’ll see Klout start becoming a factor in Google rankings. But so far the search giant has appeared more focused on using Google+ data to power social relevance in rankings.
Klout, meanwhile, gets traffic and brand marketing from yet another big name, and money (both funding and revenue). I don’t have the exact terms, but this type of relationship reminds me of Microsoft’s now-legendary strategic investment/partnership with Facebook back in 2007.
Speaking of Facebook, founder Mark Zuckerberg has recently started talking about expanding his company’s own efforts in search. But both Bing and Klout use Facebook as a core way for determining relevancy in their services (you’ll even have to sign in with Facebook to get access to the Klout integration). I have to wonder if there’s any friction emerging here between the companies? Anyway, for now, this looks like a mutually beneficial win for all parties versus their shared enemy.
Klout measures influence based on the ability to drive action across the social web. Any person can connect their social network accounts and Klout will generate a score on a scale of 1-100 that represents their ability to engage other people and inspire social actions. Klout enables everyone to gain insights that help them better understand how they influence others. Klout also provides people with opportunities to shape and be recognized for their influence.
Sony is expected to approve a plan to invest around $642 million (50 billion yen) in Olympus. As the Japanese manufacturer of cameras, optics and reprography products is currently facing a trial for having hidden investment losses for the past 20 years, it has been looking for a potential investor for months. By injecting that capital investment, Sony will become the largest shareholder.
After rumors of a Panasonic investment in June, Reuters confirmed from three different sources that Sony and Olympus are ready to announce an investment that would represent 10 percent of the capital.
Olympus reported a net loss of $630 million (49 billion yen) for the last fiscal year, mainly due to wrong financial decisions and the repercussions of the past scandalous affair. Today, the company and three former high-ranking executives pleaded guilty. Over a couple of decades, around $1.7 billion of losses were faked.
Olympus announced in June that it would cut 2,700 jobs and scrap 40 percent of its factories in order to reduce costs. Last quarter, the company reported a 60 percent drop in operating profit.
With that investment, Sony will become the largest shareholder, and the two companies will create a new business unit focused on medical equipment. As a brand-new market for Sony, it is a way to diversify its revenue.
Yet, last quarter, despite $19.2 billion in sales, Sony’s operating profit was down 77 percent to only $79 million. Standard & Poor’s downgraded Sony, as well, which could make investment more difficult in the future.
As Vic Gundotra said in another situation, “two turkeys do not make an eagle.” When it comes to Japanese investments, they are often hard to understand for a foreigner. Two companies following a downward trend won’t find an easy solution by partnering. It remains to be seen if they can now focus on producing innovative new products.
Every once in a while gag sites pop up in our email that make us chortle lightly and say “Sure, we’ll bite.” To wit: SexDistance.com allows you to see, ummm, how far you go when you have intimate relations with another person. You feel me? You see where this is going?
To use it you enter your, ummm, length and effort expended in the achievement of great justice. The service then calculates how far the old rook took the queen, as they say in the world of competitive chess.
The creators, who remained anonymous, noted that the service can be used to measure:
Last time’s covered distance,
Last summer vacation total distance,
Marriage’s sexual life quality measured by the distance covered instead of only the number of intercourses as a means of quality assessment,
Personal lifetime distance,
Below you will note my own back of the envelope calculations for a trip I took to Spain once (not really).
No word on business model but they’ve got some ads up there and heck, everyone loves them some sex-themed web services, right? Right? Sadly, there’s no API, because I could imagine some really interesting Arduino projects.
He put the blame squarely on the back of the CFO of Facebook. Talk about getting it 180 degrees wrong.
Have you ever been to an auction where the selling party told a buyer to reduce their price because they were worried that the item might not hold its value? Neither have I.
If the CFO of Facebook came on SharkTank and told me that he was able to sell his shares to the public for $38 a share, but turned down the opportunity, I would crush him for being an idiot.
Facebook was able to raise about 10 BILLION DOLLARS in this IPO. His job is not to manage shareholder portfolios. His job is to help Facebook succeed. I don’t know about you, but putting $10 billion in the bank in my opinion is one way to help them succeed.
Whose job is it to help manage the portfolios of FB investors? If an investor doesn’t manage their own portfolio, the brokers who sold them the stock are responsible. That is their job. It’s their job to read the prospectus if you as an investor are too lazy to do so. It is the job of the broker to help the investor understand the value of the company and make a buying decision. No question that there are a lot of brokers out there that did not do their jobs.
As far as traders who bought the stock hoping for a pop: No one cares about them. Seriously. You trade, you know you are going to lose on trades. That is how things work.
I bought and sold Facebook shares as a trade, not an investment. I lost money. When the stock didn’t bounce as I thought/hoped it would, I realized I was wrong and got out. It wasn’t the fault of the Facebook CFO that I lost money. It was my fault. I know that no one sells me shares of stock because they expect the price of the stock to go up. So someone saw me coming and they sold me the stock. That is the way the stock market works. When you sit at the trading terminal you look for the sucker. When you don’t see one, it’s you. In this case it was me.
If the goal of the company is to maximize the cash obtained from the IPO, then the CFO should absolutely price the stock to maximize the return. If the goal of the company is to get a 1 day pop to make a PR splash, that is a completely different strategy. It obviously was not the strategy of Facebook. Facebook maximized the cash available to it. They have been very clear that they will not manage the stock, they will manage the company to reach the goals they have been very open and honest about. Good for them.
Andrew did try to make one cogent argument that Facebook faced the risk of employees leaving because their options were underwater. Apparently Andrew forgot that companies can reprice their options. Problem solved.
February 11, 2009: Google Reprices Employee Stock Options
Google Inc. is showing its love for its employees by giving them a second chance to profit from their wilting stock options. But the move irked shareholders still stuck with agonizing losses on their investments.Nevertheless, Google’s willingness to reset more than 8 million stock options at lower prices is likely to spur similar gestures by companies hoping to motivate their employees during a demoralizing recession.
“There is a lot of momentum building” to reprice stock options, said Alexander Cwirko-Godycki, a research manager for executive compensation specialist Equilar. “Everyone has just been sort of waiting for a big name to do it.”
Watch below to find out why Facebook’s tanking stock isn’t Ebersman’s fault: