IBM forges mobile app partnership with China Telecom

(GNN) - International Business Machines (IBM) (IBM.N) has struck a deal with China Telecom Corp Ltd (0728.HK) to offer and manage corporate-grade mobile apps, the latest in a string of tie-ups with Chinese firms.

Under the agreement, state-owned China Telecom will host on its servers IBM's MobileFirst service, which helps corporations manage apps for Apple Inc's (AAPL.O) iPhone and iPad devices.

The two companies have not yet disclosed any customers but will seek out everything from large, state-owned enterprises in sectors like banking and insurance to private startups, Nancy Thomas, a Beijing-based managing partner of global business services, said in a telephone interview.

IBM's strategy has been to deepen its presence and win favor in China through partnerships with local firms despite political headwinds.

Citing cybersecurity concerns, the Chinese government recently announced regulations that encourage state-affiliated companies to procure more tech products from domestic suppliers and shun international vendors. Western business lobbies say this is an unfair tactic to protect Chinese companies or spur technology transfer.

IBM Chief Executive Virginia Rometty said in a speech before business and political elite in Beijing last week that the company would share its technology and help Chinese companies to continue doing business in the country.

Thomas, the Beijing-based executive, said IBM intended to collaborate closely with China Telecom, the largest cloud provider in China and the largest fixed-line carrier.

"When we think about technology sharing, that is the first foundation we'll be working on when we're bringing MobileFirst to China Telecom's cloud," Thomas said.

MobileFirst is the result of a collaboration between IBM and Apple. IBM has released dozens of iPhone and iPad apps that for instance help shipping companies manage freight or provide records on-the-go for medical doctors.

Although sources have told Reuters Beijing has unofficially forbidden the use of iPhones in sensitive departments, Thomas spoke of the broad market opportunity for a Chinese economy that is moving rapidly into the mobile age.

Thomas said the deal with Telecom was set in motion before the Chinese government announced the regulations and could not comment on the policies' effect on the MobileFirst business.

"We're looking to China Telecom to be the foundation to give clients confidence" in the service's security, she added.

Twenty-four apps have been translated into Chinese, and additional ones will be tailored for retail, travel, transportation, government and healthcare, among other sectors, Thomas said.

(Reuters)(Additional reporting by Matthew Miller; editing by Susan Thomas)

Square Buys Kili Technology For Payment Hardware; HQ To Become Toronto Office

(GNN) - Mobile payments and retail tech company Square has acquired Kili Technology, a Toronto-based startup specializing in silicon, electronic and software design for improvement payment processing.

The newly-acquired company will remain in Toronto, which will now act as a second Canadian office for Square, which had previously opened its country HQ in Waterloo, home of one of the most-respected engineering schools in North America.

Kili is made up of a team of payment industry veterans, including co-founder’s Greg Wolfond (who founded his first financial software company in 1983 and exited to IBM in 1995) and Afshin Rezayee (whose previous experience includes secure electronics design at SecureKey and other companies). The company produces custom system-on-chips aimed at providing FIPS (Federal Information Processing Standard) level security with embedded NFC transmission features, which is perfect for in-store terminal deployment purposes in retail operations.

It also holds a variety of patents and intellectual property rights regarding related tech, creates firmware for payment hardware OEMs, and has created reference designs for software, firmware, applications and other mobile point-of-sale technologies.

The acquisition brings some top-notch hardware and technical security chops to Square’s team, which could help expand its offerings in terms of merchant-side infrastructure for supporting mobile payments, and Kili brings expertise in EMV tech as well.

#GNN Tech - #IBM, Lenovo server deal gets final clearance from US regulators

#Summary: The Committee on Foreign Investment in the United States approved the $2.3 billion sale of IBM's x86 server business to Chinese PC maker Lenovo.

IBM received good news from the Committee on Foreign Investment in the United States (CFIUS) on Friday regarding the proposed sale of its x86-based server business to Chinese PC maker Lenovo.

Following a period of intense scrutiny fueled by national security concerns, US regulators have approved the $2.3 billion sale, which gives Lenovo control of IBM's x86 servers, blade networking and maintenance operations.

The deal received approval in China last month.

While IBM says the sale of its low-end server business will allow the company to focus on system and software innovations such as cognitive computing, Big Data and cloud infrastructure, security concerns have hovered over the deal since it was first announced back in January.

The main issue revolves around the sensitive deployments of the x86 servers – they are not only used in the nation's communications networks, but also within the data centers that run the Pentagon's computer network.

Lenovo will now maintain those deployments, as per the terms of the deal, which critics say could lead to weakened security via hackers or Chinese spies.

But obviously US regulators found the threat to be minimal, and IBM and Lenovo said in a press release that they look forward closing the transaction.

When Payment Processing Becomes A Commodity

#GNN - #Editor’s note: Christoffer O. Hernæs is partner at Core Group, a Norwegian management consulting company. Christoffer is currently engaged by Sparebank1, one of Norway’s largest financial institutions; this analysis is based on public sources and is not connected to any client engagements.

One of the big subjects of discussion in the banking industry earlier this year was the publication of the Millennial Disruption Index, stating that millennials view banks as irrelevant and placing traditional retail banking at the highest risk of disruption compared to other B2C industries. Accenture’s Banking 2020 report confirms this and draws a parallel to the challenges the telecom industry faced 20 years ago and states that non-banks will take a third of incumbent banks revenues by 2020.

With the rise of mobile wallets, peer-to-peer payment, micro lending and various personal finance tools, the banking industry faces a new breed of competitors from the technology industry. Notable examples include eBay which has been in the payment space for a long time with PayPal, and is now strengthening its foothold in mobile payment by integrating Apples fingerprint reader into PayPal.

Google has tried entering the payment space with the discontinued Google Checkout and Google Wallet. Amazon is targeting the mobile payment space through acquisition of GoPago, as well as challenging Square with a planned launch of a similar payment processing solution. Facebook, on the other hand, is targeting the $500+ billion global remittance market.

The common denominator for the challengers is that the majority of the companies are targeting the payment processing space. Both Bank of America and Capital One say not to worry, since this is old news and it only disrupts the peripherals of the banking value chain. But the real implication as with any form of value chain disruption is the probability of payment processing becoming a commodity.

A catalyst for a commoditization of payment processing is the introduction of cryptocurrencies and new payment protocols like bitcoin and Ripple, which renders clearing obsolete and dramatically lowers the transaction cost for merchants. As a comparison, the transaction cost for payments through Visa/Mastercard/PayPal is ranging between 3-5 percent depending on the transaction size. The transaction cost for bitcoin on the other side is as low as 1 percent with continuing efforts to reduce transaction fees from the bitcoin community.

To accelerate the development Bitpay recently announced removed the transaction fees on the starter plan, offering free unlimited payment processing to merchants accepting BitCoin. With eBay considering integrating bitcoin into PayPal and Apple reentering bitcoin wallets like Blockchain into the App Store cryptocurrencies as a default payment method becomes an alluring option for profit-seeking merchants looking for cost effective solutions. This places the challengers in a sweet spot somewhere between the banking and the retail industries through digital wallets and disruptive payment platforms.

A commoditization of payment processing will require new business models where cash no longer is king, but analysis of the information gathered through transactions is the new competitive advantage in the digital payment processing space. Ovum’s report, “Loyalty and Location Based Payment Services” predicts that loyalty and analytics is the primary growth driver for mobile payments. It states that this will require new partnerships between payment providers, merchants and third-party analytics vendors like Oracle and IBM, where the latter already has entered a partnership with Monitise in order to deliver cloud-based mobile solutions for the financial services industry.

Starbucks is one example of the business potential in combining loyalty programs and payments and reports that mobile payments stands for over 15 percent of U.S. sales from the third quarter, and is considering selling its software to other merchants.

These changes to combined with increasing sector complexity due to industry convergence, capital requirement regulations, industry consolidation and diminishing ROE (Return of Equity) compared to before the financial crisis poses great challenges for banks in the years to come and creates a perfect storm seemingly favoring new entrants and the technology industry’s inherent ability to experiment and willingness to try and fail.

Despite an entrepreneurial spirit and independence from antiquated legacy systems, barriers to entry are rising. Glen Fossella states in an interview with American Banker that regulatory complexity and compliance demands will become such a growing burden for new entrants, that it is both faster and cheaper for incumbents to acquire or partner with startups. Square learned this the hard way and was fined $507,000 in Florida for operating without a license. He also advises banks to invest in startups, acquire and hire entrepreneurs or hire talent from technology companies.

The leading example when it comes to preparing for the rise of digital payments is Visa. Visa CEO Charles W. Scharf stated that the leading payment network is counting on new digital services to power future growth, although Visa presented an 11 percent rise in third-quarter earnings from global payments. One of these initiatives is the creation of Visa Digital Solutions with a wide array of offerings.

This includes the launch of Visa Checkout, the successor to V.me, Visa Cloud Payment Solutions and, more exciting, the tokenization service that substitutes traditional credit card numbers with a digital token. Visa also opens up for collaboration with developers and technology companies with these new services. In addition Visa revealed an investment in LoopPay, a mobile payments solution accepted at the majority of point-of-sale terminals.

Through these initiatives, Visa sets a leading example for incumbents in the payment ecosystem by showing a try-and-fail mentality, as well as long-term commitment through repeated mobile wallet initiatives, willingness to invest in promising startups as well as collaborating with partners to encourage open innovation. Banks and financial institutions should view Visa as a leading example in order to secure a position in the digital payment ecosystem.

And let’s face it. A bank will never be viewed as cool for the millennial generation. But banks represent safety for the consumer, and it is possible to make banking somewhat less boring through adapting new technology and acquiring new innovations.

IMAGE BY SHUTTERSTOCK USER PETR KOPKA (IMAGE HAS BEEN MODIFIED)

BlackBerry Ends Its Three-Year Workforce Reduction And Looks To Begin Modest Growth

#GNN - #BlackBerry has closed the book on its three-year extensive workforce reduction process, according to an internal memo to employees obtained by Reuters.

The note from BlackBerry CEO John Chen says that all notifications which were sent out to employees being let go as part of the restructuring have now gone out, and in fact, the company will begin hiring in key areas including product development, sales and customer service, in modest numbers and provided the market doesn’t get unexpectedly worse.

BlackBerry’s employee base has seen drastic cuts over the last three years, with a restructuring that was begun in earnest under former CEO Thorsten Heins. The process continued under Chen as planned, and the resulting BlackBerry is a much leaner organization, having dropped around 60 percent of its headcount from its total workforce size three years go.

The memo also highlighted BlackBerry’s new ability to make strategic acquisitions, like when it purchased Secusmart last week, the German firm that creates high-level encryption that is designed to thwart even government attempts to infiltrate networks and communications.

The memo ended with a call for the company to rally behind its new upcoming hardware launches, which include the BlackBerry Passport and BlackBerry Passport, both of which are scheduled to become available this fall for consumers.

This is a key turning point in BlackBerry’s attempt at a turnaround – watching it pivot to a focus on growth after a protracted period of cost-cutting measures will offer more insight into Chen’s plan to save the company, and what that might entail.

Given the level of attention paid by BlackBerry on the Passport, devices still form an important part of that picture, but its enterprise sales side now has to deal with a joint attack by IBM and Apple. One thing’s certain: even with the major workforce restructuring behind them, BlackBerry still has plenty of challenges left to face.

Via MobileSyrup

#Enterprise Investments Surge To Over $5.4 Billion

#GNN - After years of backing headline-grabbing consumer internet deals, it seems that venture capitalists are paying more attention (and more money) to the seemingly staid and stodgy enterprise technology companies (the businesses that sell technology to make businesses work better).

Their mission: to explore new ways of organizing data, to seek out new models for efficiency and security for business customers of all shapes and sizes, and to develop new technologies for marketing and selling on devices that no one has done before.

Investments into enterprise software companies of all stripes are soaring. The amount of capital invested in these startups has already surged to over $5.4 billion in the first half of 2014. That’s roughly the same amount that enterprise-facing companies raised in the entire year for 2013, according to data from CrunchBase.

Much of that capital was invested in the monster financing for new database technology, Cloudera, but it points to a belief among investors that there’s a huge change coming in the way that technology effects business. And these venture capitalists are hoping to cash in.

The surge in investment dollars is actually accompanied by a slowdown in commitments to new technology companies, indicating that investors’ confidence in the sector’s strength is matched by a belief that this current crop of business technology companies is maturing. In the second quarter of 2013, investors backed 328 startups in the enterprise software category, by the second quarter of 2014 that number had declined to 205.

While the numbers indicate a slowdown in the commitments going to business-focused technologies, some investors insist this is only the beginning. The idea of selling software as a hosted online service has been around for nearly a decade, beginning with the Salesforce.com customer relationship management revolution, but the technologies that are moving to the cloud were never part of core business operations, they argue. Now, these hosted software businesses are everywhere, and taking over core functions that used to be the purview of internal information technology departments.

Data storage is now a service, and even enterprise resource planning software can be bought as a service (and if there’s anything more important to a business than where it keeps its information and how it manages and organizes the use of its resources I’m not sure what it would be). Furthermore, new companies are taking advantage of the extremely powerful new infrastructure technologies that are available to rethink how customer service and other business processes can be automated to a degree that wasn’t possible before.

That’s why Salesforce.com is snapping up young cloud computing companies as if it were Oracle a decade ago, Microsoft has its head in the cloud, and why IBM and Apple have partnered to deliver software to mobile business users.

One need only look at the fact that Salesforce and Red Hat now trade above Oracle to see how momentum has shifted away from the traditional software vendors (although at 179.67 billion Oracle’s market capitalization is still over five times that of Salesforce.com’s $33.7 billion market cap). Not to mention the big bets that venture capitalists, corporate investors, and hedge funds and money managers are placing on technology like Hadoop and NoSQL.

“This is that next future data platform that in 30 years from now the vast majority that structured and semi-structured data would be stored in,” said Joseph Ansanelli, a partner at Cloudera backer Greylock Partners, in an April interview. “Oracle? Their core database is basically under attack from Hadoop.”

If Hadoop and NoSQL are eating at the core of the infrastructure businesses use to operate, then a slew of software as a service offerings, and technology solutions are attacking big enterprise companies on their periphery with services that better apply the new architecture of hardware, software, and cloud-sourced services with open interfaces for application integration.

“One of the themes we’ve invested heavily behind is this intersection between big data and traditional enterprise application software,” says Ajay Agarwal of Bain Capital Ventures. Indeed, Bain’s newest partner, Enrique Salem, the former chief executive of Symantec, sees business technologies on the cusp of a still-greater transformation.

“Historically some of these cycles have been a five-to-ten year change, but we are just at the beginning of this transformation,” says Salem. “Historically, $120 billion was spent on hardware implemented inside data centers. Now consumers will start running and picking their own applications and that $120 billion spend that was inside the four walls of the data center? A majority of the spend will not be in the data center, but in companies that are delivering services.”

Photo via Flickr user Scott Maxwell

(IMAGE HAS BEEN MODIFIED)

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Tokyo stocks open up 0.28 percent

(GNN) - TOKYO: Tokyo stocks opened 0.28 percent higher on Thursday after the blue-chip Dow index powered to a new record on Wall Street thanks to robust US company earnings.

The Nikkei 225 index gained 43.57 points to 15,422.87 at the start. The Dow Jones Industrial Average ended at a record high Wednesday as strong Intel earnings and a new IBM venture with Apple boosted the blue-chip index.

The 30-issue Dow jumped 0.45 percent to 17,138.20 while the broad-based S&P 500 gained 0.42 percent to 1,981.57.The dollar was firm after a US Federal Reserve report said economic activity continued to pick up steam across the world´s largest economy.

The greenback was changing hands at 101.64 yen in early Asian trade Thursday compared with 101.69 yen in New York Wednesday afternoon.

The euro bought $1.3527 and 137.49 yen against $1.3524 and 137.55 yen in US trade.