All posts on November, 2016


ApprovedBusinessBusiness and finance

The niche in phones that are different

You’ll have to speak up, I’m on my niche phone

ON JANUARY 9th 2007 Steve Jobs stood before an audience of some 45,000 people in San Francisco and announced a “revolutionary and magical product”: a slight slab of expansive black touchscreen with just a single button. Compared with the ugly, cluttered devices of the day, the iPhone was revolutionary. It was also hugely influential. A technicolour pageant of rival designs—the clamshell, the slide, the banana, the candybar and the BlackBerry—resolved into a uniform black mirror. And nearly every smartphone on the planet still looks like the device which Jobs revealed that day.

Nor is that similarity to be found just in hardware design. Nearly a fifth of smartphones sold last year operate on Apple’s iOS software. The rest run variations of Android, an open-source operating system provided by Google. Just two companies—Apple and Samsung—accounted for over 40% of smartphones sold in 2015, according to CCS Insight, a research firm. Huawei came in a distant third with 8%.

In this bland and uniform market some producers spy an opportunity. One of those is…Continue reading

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ApprovedBusinessBusiness and finance

Los Angeles booms as a startup hub

Better than surfing down Sand Hill Road

HOLLYWOOD has produced plenty of films about underdogs rising to claim the limelight. Now Los Angeles is experiencing its own real-life Cinderella story, as the area’s technology scene has been transformed from backwater to boomtown in just a few years. Hordes of venture capitalists from northern California, once long dismissive of their southern neighbour, now regularly commute in search of deals in a less heavily hunted spot than the Bay Area. In 2016 the city’s startups received around $3bn in funding, around six times more than in 2012, according to CB Insights, a research firm.

Evan Spiegel went to Stanford University in the heart of Silicon Valley, but he wanted to live and work close to the sea. So he based his new company one block from the Pacific in Venice Beach, which is better known in Los Angeles for its silicone-enhanced bodies than the silicon chips that gave the Valley its name. Mr Spiegel’s firm, Snap, is best known for its ephemeral Snapchat social-media messages and is now valued at a whopping $18bn. Other successful technology firms are thriving nearby, including…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

Lost in transition

AIR-CONDITIONING doesn’t feel like much of a luxury in parts of India, but the taxman begs to differ. Cooled restaurants are deemed posher. Their patrons are liable to additional taxes the unventilated masses do not bear. Luckily for sweat-prone diners there is a catch: the tax only applies to the service and not the food, so only part of the tab incurs the extra levy. In their wisdom, India’s bureaucrats once decided that 60% of a restaurant’s offering is food, and so air-conditioning triggers a service tax payable on just 40% of the bill.

Indirect taxation in India often seems the product of a micromanaging bureaucracy run amok. The result of combined taxes levied by its 29 states, union territories and the central government is that the same products in different regions, or different products in the same region, are taxed at different rates. This makes it difficult to trade between states. Tariffs are enforced by internal borders at which lorries languish for hours. It also distorts the economy in favour of goods and services taxed at lower rates (usually as a result of energetic lobbying). The agreement in August to subsume all manner of…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

Free two shoes

Not a model of philanthropy

CAPITALISM has clocked the ethical consumer. Shoe brands like TOMS and Skechers tease in customers by matching purchases with a donation of a pair of shoes to a child in need. So far, TOMS has handed out 60m pairs of shoes, letting fashion-conscious consumers feel good about boosting children’s health, access to education and confidence. But evidence suggests that shoppers’ warm glow is unjustified.

Handing out aid in kind gives plenty to worry about. It could suck life from local markets, and foster a culture of aid-dependency. Handing out goods rather than cash runs the risk of spending money on things people neither need nor want. To find out if its intervention had worked, TOMS, to its credit, asked a group of academics to investigate and gave them assurances that they could publish whatever they liked. In late 2012 they randomly picked which of 1,578 children across 18 rural communities in El Salvador would receive pairs of TOMS’ black-canvas, rubber-soled shoes. By comparing the places and children who received the shoes with ones that did not, they could work out how much these boots…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

Plan v market

Lin-Keynes is on the left

IT IS not quite Keynes-Hayek, but Lin-Zhang is a marvel in its own right. Perhaps the most famous debate in the history of economics was that between John Maynard Keynes and Friedrich Hayek—a clash over the benefits and perils of government intervention that exploded in the 1930s and still reverberates today. It has echoed around Chinese lecture halls in recent months. Justin Lin, a former chief economist of the World Bank, who leans to Keynesian faith in public spending, has squared off against Zhang Weiying, a self-professed Hayekian who doubts bureaucrats can ever beat the free market.

Like their predecessors, Mr Lin and Mr Zhang have been sparring over two decades. And whereas Keynes and Hayek were down the road from each other (respectively, in Cambridge and London), the Chinese professors are now only a few paces apart, both at the prestigious Peking University. Their latest debate has been one of their fiercest, becoming a talking point for the domestic press, other academics and even officials.

At issue is one of the big questions facing China’s economy: does industrial policy…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

Turning off the tap

EUROPE has yet to produce a rival to Silicon Valley, but London’s “Silicon Roundabout” by Old Street station is closest. As a funding hub, the city’s venture-capital industry tends to attract more money than rivals in Berlin, Munich or Paris. And more venture capital is invested in Britain, relative to its GDP, than in any other big European economy. Britain’s vote to leave the European Union threatens this lead. Besides unknown risks, there is a prosaic worry: the most important backer of such firms is the European Investment Fund (EIF), an EU institution, whose mandate includes “fostering EU objectives”.

As the biggest investor in European venture funds, the EIF supplied almost a fifth of all commitments last year, with Britain, France and Germany the main recipients. It is also among the largest and earliest investors in any fund. For every pound it pumped into Britain in 2015, the EIF reckons it mobilised another four of private capital. Venture-capital managers debate the extent to which the EIF spurs private investment, but generally accept it is a linchpin of the industry. Nenad Marovac, of DN Capital, a technology…Continue reading

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ApprovedBusiness and financeFINANCEFinance and economics

Net debt, big returns

AS DONALD TRUMP sees it, America’s trade deficit is a sign of economic weakness, proof that lousy trade deals have sent production overseas. But Uncle Sam does not just import goods from the rest of the world and send nothing in return (though that would be a lucrative arrangement). Rather, the net inflow of goods is matched by a net outflow of stocks, bonds and other financial assets.

That makes America a debtor. In theory the interest and dividends paid to foreigners should chip away at national wealth in future. Since 1989 foreigners have owned more assets in America than Americans have owned overseas; in the jargon, the net international investment position (NIIP) has been negative. But America is an unusual borrower. For almost all of that time, it has received more income on its overseas investments than it has paid out to foreigners. This is strange: it is akin to someone’s savings earning more than enough interest to service his far bigger debts.

This contrast is getting starker (see chart). In recent years the NIIP has tumbled to -44% of GDP, the lowest since 1976, when the data begin. Yet net primary income—the…Continue reading

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ApprovedBusinessBusiness and finance

Political business

AS AMERICA’S presidential election approaches the country’s business class is in its weakest political position for decades. Twenty years ago both parties competed to be the most pro-business. Today they compete to denounce the malefactors of great wealth. The most startling change is that business has lost control of its ancestral party, the Republicans. Donald Trump may well embody many an American business type: somebody who inherits a fortune and goes on to make it even bigger. But he has taken over the Republican Party by channelling blue-collar anger against all elites.

Mr Trump has trashed free trade, liberal immigration rules and other corporate non-negotiables. Big companies have shied away from donating to his campaign. Meg Whitman, the boss of Hewlett Packard Enterprise, has called him “reckless and uninformed”. Tom Donohue, head of the United States Chamber of Commerce, has described his policies as “pretty sort of stupid”.

All this has driven lots of business people to cross the political aisle: an Ipsos poll shows that 53% of those earning $250,000 or more (the top 5% of households) plan to vote for Hillary Clinton,…Continue reading

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Vendors

Microsoft Rebrands

Microsoft recently rebranded its business software offerings and the effect largely has been positive. Still, it must be emphasized that the cumulative effect of the deck chairs moved in performing the exercise remains to be seen. One of the effects is surely that all of the ERP and CRM solutions now are offered online, as the “Dynamics 365” moniker implies.

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Tablets

Lenovo’s Yoga Book Aims for Top Shelf

Lenovo’s recently unveiled 2-in-1, the Yoga Book, is available in Android Marshmallow and Windows 10 Home versions. Reviews have been mixed, with some praising its look and feel, but some considering its capabilities not up to scratch. Its Intel Atom processor doesn’t provide enough power for a workhorse device, they’ve argued. The Android version costs $500 and the Windows version goes for $550.

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Wall Street

Amazon Builds Fulfillment Centers, Investors Grouse

Amazon shares closed at $785.14 on Monday, having failed to rebound from last week’s slide. The company’s stock had closed at $818.36 last Thursday, just before the company reported third-quarter earnings that unpleasantly surprised Wall Street. Its share price dove $40-plus on Friday. Amazon’s net income rose 52 cents a share, in the quarter, but analysts had expected 78 cents a share.

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Tech Law

Tech Industry Lambasts New FCC Privacy Rules

The U.S. FCC last week adopted privacy rules for both wired and wireless broadband ISPs aimed at giving consumers greater control over their data, more privacy, and stronger security safeguards for that data. The rules implement Section 222 of the Communications Act. They establish a framework of customer consent required for ISPs to use and share their customers’ personal information.

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Trends

Many Customers Aren’t on Board With Self-Service Trend

Enterprises have been warming to digital transformation, but it’s crucial that they maintain a human element in their customer interactions, according to a study Verint published last week. Researchers surveyed more than 24,000 consumers and 1,000 businesses across 12 countries for the study. Organizations have to balance digital and human customer engagement to thrive and survive.

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Emerging Tech

MIT’s Nightmare Machine Churns Out AI-Generated Horror

In honor of Halloween, researchers at the Massachusetts Institute of Technology Media Lab launched the Nightmare Machine website, which allows visitors to vote on AI-generated horror images created via an open source deep neural network algorithm developed last year. Scientists from the Australian Commonwealth Scientific and Industrial Research Organization collaborated on the project.

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