Mobile Fix: The Chinese are coming

Mobile Fix: The Chinese are coming

There is much we can learn from the way the Chinese digital giants operate writes, Simon Andrews, founder of Addictive! as he rounds up another week in mobile.

The Alibaba IPO was the biggest float ever, raising $25bn and completely eclipsing the $16bn that Facebook raised. Some have questioned the ethics of investing here, largely because the Chinese digital giants – Baidu, Alibaba, Tencent (BAT) – benefit from having no competition from Google, Facebook, Amazon, eBay et al in their home market.

Yet there is a lot to learn from how these companies operate and we now look at BAT when we consider the vertical stacks of GAFA. And this good article examines how important China has become to the global tech economy – with good insight into their M&A activity.

But perhaps the most immediate effect of the IPO is that it (probably) puts Yahoo into play.

Yahoo’s market capitalisation is about $39 billion, while its Alibaba stake is worth $37 billion and its Yahoo Japan stake is worth $8 billion.

So someone could buy Yahoo and sell those stakes and essentially get Yahoo for free. Who could that be? No doubt clever private equity people are hunched over their calculators right now, but to GAFA, Yahoo would be a valuable acquisition.

Despite some misgivings over their progress under Marissa Mayer, Yahoo still has huge reach (on desktop and mobile) and throws off huge amounts of cash.

Given that Yahoo is still a major player in search, it’s hard to see the EU allowing Google to swallow it without divesting the search business to Bing. As for Facebook and Apple, they would get lots of content to feed their userbase. And Amazon would get lots of potential buyers that it currently has to advertise with Google to reach. And perhaps even Microsoft or Murdoch could be interested?

Or how about Softbank? This Japanese company has been very aggressively trying to grow the US business with the merger with Sprint, but its pursuit of T-Mobile has been unsuccessful. Combining an operator with a content business like Yahoo has been talked about lots, but this could be a first.

As JV partners in Yahoo Japan, the two sides know each other well. And, of course, Softbank now has a new leader who knows a little about the digital space; Nikesh Aurora moved over from Google a few months ago. Is this how he makes his mark in his new role?

We think it’s unlikely that the Wolves of Wall Street will leave something this vulnerable (and valuable) alone, so watch this space.

Mobile and money

As the details of Apple Pay become clearer, analysts are generally positive – although not quite as bullish as the Chamath Palihapitiya view we shared last week. Many people site Starbucks as evidence that payments can and do work.

In the last data we saw, Starbucks dominates mobile payments in the US. In 2012 around $500m was spent using them – and Starbucks was around 90% of that. They have been hugely successful and now 15% of all their US transactions are using their app – but Starbucks’ chief digital officer points out it’s not just about payments: the loyalty aspect has been a big driver.

It is one one of the brands that Apple has partnered with for Pay – but interestingly they don’t intend to let people buy coffee with Pay – just top up their Starbucks app. Its brand is so strong they have ambitions to expand outside of Starbucks;

We want to get mobile ordering right first, but you could be hearing more about us in the mobile wallet or universal loyalty space sooner than later.

A smart Fix reader made a similar point about the Oyster card and how it could have become a means of paying for items outside of Tube tickets. Now with a plethora of new players like PayM, Zapp Powa etc – as well as the mobile operator wallets, PayPal, Google and iPhone et al – users have a lot of options. But it seems to us that Pay will become a real Anchor for Apple by making it so easy.

And as more people use Pay, more retailers will come on board. Talking with UK supermarkets, they have resisted payments because they tended to slow down the checkouts. Starbucks has focused on its point of sale tech and processes;

We were able to save 10 seconds a swipe for any kind of Starbucks card, mobile payment, credit card or debit card transaction. That ended up saving us 900,000 hours of line time a year.

If Apple Pay can contribute to that sort of improved efficiency, people will rush to sign up.

By the way: one of most hyped mobile money start-ups has been Clinkle; run by a 23 year old, it raised $25m seed money and has a long list of VCs as investors, along with Richard Branson. Lots of smart people have joined and many have quickly left. And it was in stealth so no-one knew quite what they were up to.

After three years it has finally launched a rather average debit card linked to an app. Sounds a lot like the Osper card we mentioned the other week.


Just like big data, there is rather more talk about Beacons than there is action. It’s clear there is huge potential, but so far few people have actually started to use them. This piece looks at some of the innovations around the internet of things that use beacons – but there isn’t a killer app. Yet.

The people at Estimote have done much to shape the market, and this article considers how they see the potential – including indoor locations. We think that Beacons will be used for simple ideas that improve various situations. For example, when Starbucks gets around to pre-ordering, how does it stop the coffee going cold before you get there? A beacon could detect when you arrive at the store and the coffee is made then and there – and you don’t need to wait.

This example of coupons in Passbook working really well shows the potential – and Beacons could add another dimension. There is a huge opportunity for good old fashioned sales promotion thinking (or Shopper Marketing as its now called).

We’re keen to help kick start this area and hungry to work with retailers, restaurateurs etc to test out ideas and try and make some progress.

This is an edited and abridged version of Mobile Fix – click here to read the full article on Addictive!’s website

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