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Corporate governance after Alibaba IPO

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Corporate governance should be a concern to investors

On Friday September 19, Alibaba Group Holding Ltd (NYSE: BABA) joined the league of the world’s top conglomerates. The company had a one of kind debut after its IPO surpassed both Visa Inc’s (NYSE: VISA) and Agricultural Bank of China’s IPOs to become the largest IPO ever.

Prior to the IPO, a research had indicated that there was U.S. investor apathy arguably due to the company’s corporate governance structure. However, the company’s profitability and its market demographic countermanded this making it worth the risk. Now the IPO is gone and investors wake up to the reality that Alibaba’s corporate governance is its greatest liability.

Corporate governance and legal structure

We should not let the success of Alibaba sway us away from the underlying corporate quandary. While the company has performed exceptionally, it was then a private company. Under the public light, a lot comes into play and this is why its atypical structure came into limelight in the first place.

Some of the concerns of Alibaba’s structure revolve around two areas namely:

  • The powers of Alibaba partnership
  • The company’s VIEs structure

The power of Alibaba partnership

Alibaba partnership is a group of 27 members, including company’s co-founders and its top executives. The group nominates more than half of the board, giving it an overwhelming control over the company.

Backers of this structure will be quick to name companies in the U.S. that have done well with similar structures. Yes, the likes of Facebook Inc (NASDAQ: FB) and Google Inc (GOOG, GOOGL) have structures that impel their founders to total control positions. But remember, these are companies in a country with a good legal framework and where the rule of law prevails. Alibaba on the other hand hails from a country with an opaque economy where even social platforms such Facebook, Twitter and YoutTube are banned.

VIE Structures

Jack Ma has in the past proven that he can secretly transfer the company’s asset. He did this in 2011 when he divested Alipay without Yahoo! and SoftBank having a single clue Isn’t this a reason enough for investors to demand effective measures to tie his free hands?

Optimistic point of view

I know that the aforementioned concerns are at the back of the mind of every investor who holds Alibaba shares. Most people have decided to give Alibaba and China the benefit of the doubt.

After all, it is not totally wrong to give Jack Ma control of the company he founded from scratch. It is known that companies struggle when they sideline the company founders. Founders often have a clear picture of what they want to achieve with the company and are willing to go the extra mile to fulfil their dreams.

A good example is Apple Inc (NASDAQ: AAPL), which after sending Steve Jobs packing, had to contend with diminishing image and lack of fresh ideas to maintain the company’s name in the PC market. Steve Jobs return did not immediately reflect on the company’s performance, but it led to the company producing a revolutionary product that changed how people buy digital content.

Since Jack Ma had managed to bring Alibaba to the limelight with limited resources, he is expected to do better now that he has the backing of the stock market. And as for China, let’s pray that the Beijing may see the good in Alibaba and use it as marketing tool to make it prestigious destination for investors. Nevertheless, the success of Alibaba still heavily relies on the mercy of communist rulers of China.

The search engine giant and its interminable battles

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From ad business to mobile payments, the search engine gaint has many fights to win

Recently Google Inc (NASDAQ:GOOGL), through its executive chairman Eric Schmidt, responded to Tim Cook’s, Apple Inc. (NASDAQ:AAPL) CEO, letter on privacy.  The letter distanced Apple from use of consumer data, a practice common with data mining companies such as those engaged in ad businesses.

The response could open a war of words on privacy between these two tech giants, but this not the only war that the search engine giant is fighting. Since the company is engaged in different business niches, the company has made so many rivals and thus receiving blows from all directions. Here are Google’s current battles and how it is handling each an every one of them:

Google vs. Facebook –ad business

Over one and a half years ago, Facebook Inc (NASDAQ: FB) bought Microsoft Corp’s (NASADQ: MSFT) Atlas ad measurement and serving platform. The social media network has now revamped this app and is soon launching it to help its advertisers measure the performance of the ads they post on the social network, its apps or third party sites. And with Facebook’s mobile ads performing exceptionally well, Google has every reason to worry of its DoubleClick display ad unit.

Google is not sleeping on the job, however. The company acquired ad measurement platform Adometry and has been upgrading its system to perform better by being able to track offline and cross-device activity. Besides this, the company launched an app install ad service for AdWords search ad. This will definitely help it secure its position as the number one online advertiser.

Google vs. Samsung: the entry of Tizen OS

The South Korean electronincs company Samsung has been gradually developing its OS known as Tizen. The system is not only meant for smartphones, but also tablets and home appliances. This bad news to Google as Samsung has been the real force behind Android dominance in the smartphone market.

To replace Samsung, Google has partnered with HTC to make its next 9-inch Nexus tablets. Both Google and HTC are poised to benefit from this deal. The search engine giant will be reducing reliance on Samsung through supplier diversification, while the Chinese gadget maker will benefit from the Nexus effect.

Payment Service: Google VS. Apple

On Sept 9 Apple unveiled its iPhone 6, and also making its debut was Apple Pay, a mobile payment solution. While Google was a first mover in the mobile payment market, the search giant failed to make any impact. But Apple has been able to convince financial industry players such as merchants, banks and insurers to accept its mobile payment service. Already some top-tier merchants are on-board including McDonald’s, Whole Foods, Duane Reade, Subway, Macy’s, Bloomingdale’s, Staples and Disney.

In response to Apple’s onslaught on e-Payments solutions, Google is rumoured to be working with eBay Inc’s (NASDAQ: EBAY) subsidiary PayPal. This has even prompted rumours that Google might as well acquire eBay or its subsidiary.  Whatever the case, partnership with PayPal, which has gained global traction as an online payment network, will be a perfect response. Also the availability of iOS 8 mobile payment solution has created a gap for a similar solution for android. Actually, industry players will be quick to embrace an android mobile payment solution as it the largest mobile community.

Conclusion

Google has ventured in virtually every business that relates to the internet. This has created different angles for competition as each player scramble for the open market. While the search giant has many battles to fight, it has nothing to fear as it has a formidable defence thanks to huge amount of money on its coffers.

iPhone 6 and 6 Plus in China’s Black Market

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iPhone 6 and 6 Plus sells like hot dogs in China’s Black Market

The third week of September, to be precise on Friday 19th, was a very important period in the tech world. As the Chinese e-commerce giant Alibaba (NYSE: BABA) was making its debut on the New York stock market, Apple Inc’s (NASDAQ: AAPL) iPhone 6 and 6 Plus were making their debuts in Apple stores. However, in China things were different as both the stock investors and smartphone consumers were blocked from enjoying these with the rest of the world.

On September 9th, Smartphone consumers in countries such as US, Australia, Hong Kong and Japan were elated to hear that iPhone 6 and 6 plus would be available in their respective countries on September 19th. And since the smart devices made their debuts, consumers have been queuing in large numbers at Apple shops. The consumers in China have to wait a while longer as their country is not even listed among the countries where iPhone 6 and 6 Plus are to be shipped this month.

China Black Market

China has a huge appetite for Apple products, and this has led to massive growth of a well organised underground market. The market consists of rogue vendors and private individual willing to risk to take advantage of the thirsty market.

While iPhone 6 and 6 Plus have not been officially launched in China, approximately 5 millions units have already been smuggled into the country. This is according to research agency Counterpoint Research. Nevertheless, the devices are prohibitively expensive.

Over the years, the government of China has promoted local products at the expense of their foreign rivals. Pending the approval of the new iPhone models in China, the black market has thrived with a number of Chinese consumers flocking Hong Kong, Japan and Australia to smuggle these smartphone to their country.

Chinese consumers had to wait for 3 months for iPhone 5 to officially start selling in China. During this whole time, the black market offered them a backdoor to acquire the device, albeit at a higher price.

The hype and buzz surrounding the debuts of iPhone in China has often rejuvenated the market. When the iPhone 5 eventually launched in China in December 2012, 47.8 million units were sold.

Currently, a new iPhone 6 handset fetches as much as $5,000 in mainland China, while in Hong Kong it retails at about $1,300.  The same phone is just about $700 on Apple’s Hong Kong website. On the other hand, the Hong Kong vendors sell iPhone 6 Plus at about $3,600, which is more than double the price of its sister.

Conclusion

China’s black market has demonstrated how far people in China, where Apple trails local tech companies and Samsung in market share, are willing to go to get hands on the new iPhone. Isn’t this good news for Apple? However, it is up to the company to speed up its engagement with the Chinese government to sanction the sale of iPhone 6 and 6 Plus in this market, and help its consumers from being exploited by the black market. Until then, the grey market will continue to expand.

Alibaba shares roars as it make its debut at the NYSE

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Alibaba shares gains 38% on debut making new millionaires

After courting investors for months, on Friday Alibaba Group Holding Ltd (NYSE: BABA) finally made its debut in the U.S. stock market, the NYSE, in a frenzy after it received oversubscription of its shares. Alibaba shares were priced at $68 but open trading at $92.70 and closed 38% above its IPO price.

The Hangzhou based e-commerce giant has been the subject of discussion in the investment world. There were fears that there would be investor apathy, but the stock traded more than 100 million shares just moments after its Chairman Jack Ma rang the opening bell to herald the entry of Alibaba in the stock market.

The company raised about $21.8bn in its share sale, and sold additional 48 million shares through the green-shoe option after investors demonstrated a strong appetite for its stock. In total the China’s e-commerce giant raised over $25 billion, breaking China’s Agricultural Bank that raised $22.1 billion in 2010.

Millionaires from Alibaba IPO

Every tech IPO makes millionaires and Alibaba IPO is no exception. From its founders, employees to investors, Alibaba is has produced millionaires through its debut in the stock New York market.

Here are some of the beneficiaries of this IPO:

Masayoshi Son, SoftBank CEO

Japanese SoftBank is the largest Alibaba shareholder with a 32% stake. The company expected a total of $4.6 billion from a successful Alibaba IPO. The IPO was not just successful; it was outstanding as the share price opened trading at $24.7 higher than its IPO price and jumped 38% on its first day of trading.

Considering that Masayoshi Son invested just $20 million in Alibaba in 2000, his investment will pay handsomely.

Yahoo Shareholders

The U.S. internet pioneer Yahoo! (NASDAQ:YHOO) is Alibaba’s second largest shareholder 24% stake. However, the floundering American tech giant is known to have sold part of its stake. As I said in the past, Yahoo and SoftBank shares provided a shortcut to benefiting from Alibaba IPO. It appears many people took this advice and just after the Alibaba IPO, Yahoo traded over 90 million shares, 3 times more that its daily average volume.

Alibaba Founders

Alibaba chairman Jack Ma and vice chairman Joseph Tsai lead a team of other Alibaba 10 top executives who are smiling all the way to bank after the Friday IPO. Initial filings show that Ma had 206.1 million shares, while his vice had $83.5 million shares. Even at the IPO price of $68, this shares are worth a fortune. The remaining 10 executives owned close to 52.3 million shares stake.

Alibaba’s second biggest individual windfall will be for Tsai, Alibaba’s vice chairman. His 83.5 million shares will be worth between $5.5 billion and $5.68 billion at the current price range. And he’s selling around $300 million worth of shares.

 

About Alibaba

Alibaba is a leading e-commerce company that operates various online marketplaces in China. The company controls over 80% of China’s e-commerce and is now seeking to reach the more advanced markets such as the U.S. and Europe, and emerging markets such as Malaysia, India and many more.

Alibaba is an internet harbinger for the first trillion dollar company. It transacts more sales than Amazon and eBay combined. What’s more, it does not stock products as Amazon does, and so its expenses are relatively low.

Alibaba is also into banking services and operated a payment service unit known as Alipay. However, the company furtively divested this unit and this was among the thorny issues Jack Ma had to explain to investors. As at now the PayPal-like payment unit is an affiliate of Alibaba.

The company has also invested heavily in the digital entertainment market. The company has stake in video games segment, movies and many more. The company recently completed acquisition of ChinaVision and renamed it Alibaba Pictures. In the digital entertainment industry, Alibaba competes with Asia’s largest public listed company Tencent Holding Ltd. (OTCPK: TCEHY).

Apple introduce new encryption iOS 8 Software

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The new iOS 8 software will be able to encrypt user’s data by default

There have been several cases where Android users have lost their private information through hacking and other illegal means but this will soon be a thing of the past. Google and Apple are set to introduce a new mobile operating system that will be able to protect users’ private information through default encryption. This will make it impossible for anyone to access user’s information including Apple Company itself. Therefore even incidences of users’ private information being given to law enforcing authorities without their consent will no longer be there.

All mobile devices running the new iOS 8 software will be encrypted by default thus assuring protection to user’s data. Google and Apple have offered the encryption for quite some time now although many of the Android users were not aware of it and therefore were not running it on their devices.

Mr. Tim Cook, Apple’s boss, through an online message said that the company’s main commitment is to provide their clients with the greatest user experience without compromising their privacy. The new software will assure users their privacy as they use their mobile devices.

Clarification

Mr. Cook also emphasized that the new iOS 8 software is meant to improve customers’ privacy only and Apple will not use its clients’ private information to disseminate any advertisement information to them from Google or any other partners. He said that Apple does not use information stored by clients on their iPhone or iCloud to advertise to them nor do they read any messages or emails stores on users’ devices. He also said that Apple has a specific function for business advertisement called iAd, which users can disable.

Google announced their support on the default encryption saying that the encryption had been offered by Android for the past three years although it was not on default mode. Since the new encryption will be by default, Android users will not be required to turn it on.

Apple and Google are now following the footsteps of Blackberry which has offered default data encryption for quite some time. The move by the two companies to launch the new iOS 8 software comes following the leakage of some nude photos of celebrities over the internet in earlier September. Among those affected was Jennifer Lawrence and the leakage was attributed to iCloud storage services offered by Apple.

Law Enforcing Authorities   

With the new iOS 8 software, most US companies will also be secured against their private information being handed over to law enforcing authorities without their consent. Various US firms in technology industry including Google, Facebook, Microsoft, Dropbox and Twitter have been fighting against their private information being handed over to law enforcing authorities thus threatening their privacy.

David Emm, a researcher at Kaspersky Lab, told BBC that default encryption is more about privacy rather than protection. He said that with automatic encryption, it will be difficult for users’ private information to be accessed by third parties. He also clarified that the protection will only apply to data on Apple or Android devices, but any information stored on iCloud could still be accessed by law enforcing authorities.

Could it be time to sell Apple Shares?

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Right Time to Pull Back Apple Shares and bank profit

Apple is a steadfast enterprise and has reaped nearly $40 billion in the past twelve months, not to mention, on September 9 it unveiled fresh products including the large display iPhone 6 Plus, iPhone 6 Apple Pay, and Apple Watch. 55 analysts covering Apple rate it a buy, 10 rate it a hold, and 3 rate it a sell. Believably, the analysts with he hold or sell rating are correct and at that point I would be taking profits if I were a shareholder. Not that I don’t fancy sporting Apple products, at times that can well be frustrating; it is more a function of the facts I am going to detail below as they relate to the share price which stagnates at $101.66, pretty within $2 of its all time highs.

Waning Profit margin

The graph below illustrates the downtrend in Apple’s profit margin is a since 2012. Profit margin is the ratio of net income to revenues. For every $1 of revenues Apple retains roughly $.21, which is down from $.27 cents in 2012, an apparent 22% decrease.

High profit margins denote that a company has costs within reins. Multiple reasons could attest to Apple’s inflated cost based on the suppliers that Apple uses and the logistics that piece everything together. While the graph shows Apple’s a slight improvement of .64% in 2014 profit margin, it still clearly falls below 2012 levels; it is still too early to detect if the growth is meaningful or sustainable.

Falling Return on Assets

Aside the declining profit margin since 2012, as seen in the graph, Apple’s return on assets has taken a noose dive. Return on assets illustrates the efficiency of a company in using assets to create profit; it is the ratios of dollars earned to the dollars of assets a company controls. Apple earns less on its assets, falling down to a little over 18% in 2014 from over 31% in 2012. This trend of decrease implies profitability is deteriorating.

Diminishing Market Share

The past three years has seen Apple’s iOS market share for smartphones take a downtrend, while the key competitor rise steadily. The table below shows a comparison of smartphone’s market share between Apple iOS and Android.

Evidently the consumer is ditching Apple for Android and the gap is widening. Here are a few possibilities that could be behind the exodus:

  • Costly Apple products – there are a vast options of inexpensive Android smartphones in the market.
  • Apple’s rigid and closed ecosystem – Android is open and has multiple manufacturers.
  • Frustrating customer experience –examples, iOS is incompatible with Adobe Flash, Apple iPad lacks USB port or needs expensive proprietary connectors.
  • Apple’s customization possibilities are limited compared to Android

Apple’s Lousy Product Launch

I had detailed in a previous article why the Apple’s September product launch was uninspiring and lacking of zest. Instead of unleashing groundbreaking products, Apple sought to catch up with rivals or unveil “me-too” products. For example:

  • With the wide screen iPhone 6, Apple wanted to catch up with Samsung and other Android manufacturers
  • The Apple Watch was a “me-too” release as five other manufacturers had already announced and showcased smartwatches.
  • Apple Pay is another “me-too” unleashed late behind the Google Wallet and CurrentC.

Conclusion

To emphasize what came at the beginning of the article, Apple is a great company piling lots of cash. Based on iPhone pre-orders, current Apple consumers are definitely trading upwards for larger smartphones. However, the profit deterioration metrics, added to unstable market share and the lack of creative new products in respect to Apple’s current elevated share price predicts a notable pullback in the shares and investors taking profits.

Alibaba IPO and the U.S. Market

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Is the U.S. E-Commerce Vulnerable to the Alibaba Wave?

I have been following Alibaba IPO development in the online retailing market for quite sometime now. From AliFest event in Hangzhou, China, where Jack Ma addressed adoring fans and buyer/sellers at its various online marketplaces, to events in New York where Alibaba intends to get listed.

Alibaba’s IPO may turn out to be the biggest ever primary offering in world’s history. Extensive media coverage pushed for this possibility, exposing Alibaba to countless Western business executives, previously not acquainted with the Chinese company.

Don Davis projects that China’s dominant e-commerce company load its coffers with about $8 billion following its planned IPO. Lots of speculations remain as to what its innovative chairman Jack Ma will do with that money, including those that the company raise through its subsidiaries or profits outside China in the coming years.

The proceeds from this IPO are likely to be banked in a Western bank account. Alibaba is registered in the Cayman Islands and had put it expressly that it has no intention of getting the money back to China, nor does it really need to while it rakes in $5 billion profits a year in China.

The U.S. Market and Competition

Jack Ma jumped on the opportunity to reap from free listing; not charge to list and no commission on sales. He adopted the free business model and drew millions on entrepreneurs to Taobao. Shoppers and merchants flocked Taobao alike, then Ma started charging merchants for ads that lifted their profiles above the din of 8 million outlets competing the marketplace. Alibaba began getting rich from advertisements.

Jack Ma and Alibaba carry an illustrious story that has found ways into numerous publications. It will surprise many that Alibaba does more online sales worldwide than eBay and Amazon combined.

You may be compelled to wonder if Alibaba will try to take on eBay and Amazon on their home turf. For a start, it’s a yes as the company has already established its division in the U.S. market. However, the success of this division will be determined by a host of factors.

The U.S. online market is much advanced and has small room for growth compared to China. The latter can still absorb more players and this explains why eBay has been able to penetrate the online market in China by attempting the very business model it used in the U.S., which is charging retailers to list their products and taking a commission on sales.

Another thing, there is a question as to whether the U.S. consumers can accept Alibaba’s model now that it has set foot there. Its U.S. division, 11 main, does not offer similar return policy as its U.S. rivals. Nevertheless, this is a subject of another day.

11Main.com marketplace launched last June offers dramatically lower commissions but both eBay and Amazon could still match the price if need be. Actually, the U.S. market has seen many e-commerce debutants but they hardly make it. And even if Alibaba’s 11main is to make it, it is not just eBay and Amazon, but Best Buy, Macy’s, WalMart and many others are also clinching tighter on the web. Jack reckons that taking them head on wouldn’t be a smart strategy.

Facebook capture of mobile ad disturbs Google

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Is Facebook a Daunting Threat to Google?

Facebook Inc (NASDAQ: FB) and Google Inc. (NASDAQ: GOOG, GOOGL) lead in ad revenue. Google is way ahead of Facebook; but the world’s number social network has been making impressive progress in the mobile space. The search engine giant this year landed ad revenue of $14.3 billion in the second quarter compared to Facebook’s $2.68 billion. Ad revenue covers 90% of the companies’ overall revenue.

Facebook seems to have captured the mobile scene as Google remains struggling.  Facebook’s mobile ads hit 60% of its total ad revenues while Google reaches only 12%.   Chances are the social networking company is becoming the world king of mobile ads in two to three years.

Facebook mobile ad kit

Facebook has pinched a few plays from Google, such as the self-service tool, a clear knock-off from Google AdWords. In October 2012, Facebook also launched Mobile app-install ads. App-installs drive more traffic to Facebook ads and lure users to download them. Since the introduction, Facebook has had more than 350 million apps downloaded. With $2 to $4 paid per download, Facebook is reaping big, according to Macquarie Equities Research. Facebook has also added lots of tools to drive traffic too mobile ads such as Use App, Watch Video, Listen Now, Shop Now, Play Game and Open Link.

The “cross-platform platform” mobile development tool announced by Facebook during this year’s f8 developer conference, among others, is set to be mobile developer friendly as it cuts across Android, iOS, and Windows devices. This is bound to lure many mobile developers. Facebook is additionally offering the mega SDK (software developer kit) to mobile app developers that will be created around app marketing services.

Google’s Key Vantage Points

There is no gainsaying Google is facing a tight competition from Facebook as far as monetizing ads is concerned, especially mobile ads. However, Facebook can’t touch the paid search Google’s money pot, and has no product to compete with that.

For now marketers still prefer Google to Facebook as a digital marketing platform. Forrester Research’s last year survey confirmed that people still prefer search marketing, which is Google main forte.

Forrester Researcher’s Nate Elliot, in an open letter, questioned Facebook chief executive Mark Zuckerberg for failing marketers. Only 16% of Facebook users ever see a brand post. Worse, only 15% of the ads ever hit the target of audience. In short, Facebook reaps big but hardly get marketers reaching their intended target audience.

This is not Facebook’s fault since they face the dilemma of satisfying the marketers and making itself unpopular to users by serving unsolicited ads or service less ads to retain a happier traffic.

Google however has a free way here as their ads responds to certain keywords users place in their search queries, making them more helpful to users.

Google has faced a decline in CPC due to two main reasons. One: more clicks come form emerging markets outside North America and secondly, the growth of mobile ads pulls down the CPC, given Mobile CPC is typically lower than desktop CPC.

Bottom line

Facebook is rapidly rising as one of the most dominant players in online ad scene, but this is in no way impacting negatively on Google’s growth. With the two giants running roughly distinctive paths in a fast growing market, there is sufficient space for co-existence without a cause of brawl.

iPhone 6 debuts alongside Apple Watch and Apple Pay

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Apple Watch and  iPhone 6 debuts bring mobile payment with them

Finally, Apple Inc. (NASDAQ: AAPL) has unveiled the iPhone 6, a larger handsets than its previous models. iPhone 6 is available in 4.7 inches (11.9cm) and 5.5 inches (14.0cm) models, a move that is directly aimed at preventing losing customers to the android platform that has seen its phone makers make such larger smartphone models. Also making their debut on the September 9th event are Apple Pay and the phenomenal Apple’s One More Thing, the iWatch. Here are the reviews of the three products unveiled by Apple yesterday:

iPhone 6 Features

Apple has conformed to its customers’ demand and finally it has delivered an iPhone with a larger than the traditional 4.5-inch screen. As a matter of fact, you’ll have a choice between the 4.7-inch iPhone 6 and the 5.5-inch iPhone 6 Plus. Physical appearance

  • iPhone 6 has a wafer-like metal design, curved lines and feels more like the iPod touch models.
  • Its body is larger, yet slimmer (6.9-millimeters thin), and has more rounded edges than its predecessors.
  • The company did not completely abandon Steve Job’s “fits into the palm” philosophy! The smaller model feels more massive but perfectly fits into the palm and allows you to navigate through the screen.  Even the 5.5-inch version can be controlled by one hand, thanks to iOS 8 capabilities.
  • Available in gold, silver and space gray colours.

Screen The smaller screen is larger than the previous models 4-inch screen. However, its 4.7 inches is still small considering the current large screen standards. The screen features include:

  • Retina HD display
  •  Has pixel density of 326p and 1080p for the 4.7-inch and 5.5-inch respectively.
  • The smaller iPhone has 1,334×750 pixels, while the larger, which by today’s standard is called the phablet has higher 1,334×750 pixels.

There are a lot more other features that I will review in my later, but now let us look into the other two products also unveiled yesterday. The iPhone 6 debuts in shops from September 19th.

The Apple Watch

The Apple Watch is Apple’s first product line since the demise of the legendary Apple founder Steve Jobs. The device could open another revenue front for the iPhone maker; however most of its functionalities are already offered by the iPhone. Perhaps Apple Watch’s selling point is its “digital crown” feature that allows users to magnify its contents or scroll through. To scroll or magnify contents, the user uses a dial on the watch’s side, and the same button acts as a home button when pressed inwards. Capabilities of the watch

  • Serve the functions of a heart rate monitor, thanks to its rear composition of LEDs and sensors.
  • It runs Siri, Apple’s voice control personal assistance service
  • It can display maps and issue notifications.
  • To prolong battery life, its apps can be processed on the iPhone
  • It comes with its own charging cable.
  • You can make contactless payment through Apple Pay services on the watch.

I’m still working on more about this watch. The watch will not be available for purchase until 2015.

Apple Pay

iPhone 6 and Apple Watch users will no longer have to use their credit cards for payments, thanks to the an NFC (near field communication) chip integrated in both the devices. To make payments, the either of the device is waved above an NFC reader at a shop’s till. While Apple has finally entered the contactless payments, analysts expected more. What’s the point of doing away with credit card wavering and replacing it iPhone or iWatch wavering? Many had expected a more sophisticated but easy to use payment system.

More to follow

There are a lot more about these two gadgets and the Apple Pay payments service that I would like us to delve into. However, let us save them for another day. The iPhone 6 debut alongside Apple Watch, or the iWatch as it is already  known, is likely to cause market jitters. Keep it here for every discovery around these Apple’s product lines.

A letter to Alibaba investors by Jack Ma

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Jack Ma writes to investors after pricing Alibaba

Alibaba (pending NYSE: BABA) has priced its IPO in the range of $60 to $66, valuing the company slightly below $160 billion. This is according to the e-commerce giant’s documents with the Securities and Exchange Commission revealed last Friday. While Alibaba is much profitable than its U.S. rival Amazon.com (NASDAQ: AMZN), the price range makes its a little bit cheaper.

Alibaba chairman has penned a letter to the company’s potential investor. Here is his letter:

Dear Investors,

Thank you for taking the time to read our prospectus, and for considering investing your precious resources in our company. If you invest with us, you will be embarking on a journey with Alibaba, and in this letter I would like to share with you some of our thoughts and beliefs for the future.

Our Mission and Vision

Alibaba is a values-based company driven by our mission “to make it easy to do business anywhere.” Our proposition is simple: we want to help small businesses grow by solving their problems through Internet technology. We fight for the little guy. Since our founding in 1999, we have helped millions of small businesses to achieve a brighter future, and we hope to do this for at least 102 years, thus spanning our company’s life over at least three centuries.

We do not simply attempt to push the boundaries of technology—instead we seek to harness technological improvements to expand the boundaries of business. Alibaba is not the creation of a few technology innovations or a couple of whiz kids. We have developed an ecosystem that has been built by tens of millions of participants who are passionate about the future and steadfast in their belief that the Internet should be fair, open, transparent and shared. Together, these participants have invested time, energy and passion into this ecosystem, and today the world can see what they have accomplished.

From the very beginning our founders have aspired to create a company founded by Chinese people but that belongs to the world. In the past decade, we measured ourselves by how much we changed China. In the future, we will be judged by how much progress we bring to the world. This challenge is enormous, but it is also a blessing to have this rare opportunity. This challenge requires us to do our best day-to-day, but most importantly it requires us to think about what is best over the long-term.

Our Ecosystem-based Business Model

Alibaba’s mission makes it impossible for us to become an empire-like business. We believe that only by creating an open, collaborative and prosperous ecosystem that enables its constituents to fully participate can we truly help our small business and consumer customers. As stewards of this ecosystem, we spend our focus, effort, time and energy on initiatives that will benefit the greater good of the ecosystem and its various participants. We can only be successful if our customers and business partners are successful.

We firmly believe that businesses in the 21st century must take responsibility to help solve the problems of society. In the history of our development, social responsibility has always been embedded in our corporate DNA. We believe that a healthy and prosperous ecosystem can only be achieved through solving large-scale problems of society.

The Internet has given us a once-in-a-lifetime opportunity to create a new business paradigm in China. This transformative work will not be easy, and it will require us to be consistent, to work across many dimensions, and to focus on what’s best for the long-term benefit of our ecosystem and its participants. In addition, our mission requires our company to behave with the utmost degree of fairness, transparency and efficiency toward participants in the ecosystem. This is not only a moral duty, but also the foundation of our own survival and growth. Our hard work has awarded us unique advantages — the complexity of our ecosystem and the challenges of sustaining its vigor mean that it is not easily replicated by others.

If you own shares in our company, you will become a part of our ecosystem. This means that the Alibaba team will have a duty to look after your interests. But it will also mean that you will have an important responsibility to help us maintain and grow our ecosystem by sharing our view that success will be defined as sustainable, long-term growth and prosperity.

How We Will Meet Our Challenges

Our journey over the past 15 years has not been easy, and we have faced our share of challenges. We have often found ourselves in complex situations where we must make difficult choices among competing interests: between buyers and sellers; between competing sellers; between entrepreneurialism and regulation; between innovation and the need for stability. Behind every substantial innovation or step forward, we have encountered and will continue to encounter resistance from vested interests who prefer the status quo.

In addition, many problems in the real world manifest themselves in different shapes and forms in our ecosystem, including intellectual property infringement and those who seek to exploit our ecosystem for unfair gains. Like all companies today, we must grapple with these tough issues. Even an ecosystem built on the Internet cannot be entirely free from problems in the traditional economy, because the participants in our ecosystem and their activities cannot be isolated from the physical world. It is by no means easy to handle these issues because there are no perfect solutions to regulate an economy to begin with. By the same token, an ecosystem cannot be perfectly designed ahead of time because it evolves organically. Alibaba’s development therefore must embrace rapid change according to our evolving environment.

After we become a public company in the United States, we will face new challenging issues. When an Internet company of our scale that originated from China enters the global scene, you should expect that it will encounter skepticism from different directions due to differences in cultural perspectives, values and even geopolitical positioning. While it may be difficult for a public Alibaba to side-step controversy, we hope that controversies generate constructive debate and add fresh perspectives to the dialogue on globalization.

It is not our style to shy away from challenges. As a shareholder of Alibaba, you can rest assured that we will stick to our ideals, be ourselves, focus on the future and adhere to the principles of integrity and transparency in our corporate governance. We will act in a way to safeguard the long-term value and sustainability of the ecosystem. Your trust and support will be our greatest asset, and our creed is to not forsake the trust that people have in us.

How We Set Priorities

I have said on numerous occasions that we will put “customers first, employees second, and shareholders third.” I can see that investors who hear this for the first time may find it a bit hard to understand.

Let me be clear: as fiduciaries of the company, we believe that the only way for Alibaba to create long-term value for shareholders is to create sustainable value for customers. So customers must come first.

Next come our employees, because in today’s knowledge economy, employees are most important in having satisfied customers. Without talented, happy, diligent and passionately committed employees, our commitment to serving customers will be empty. A company that does not have satisfied employees will not have satisfied customers, and without satisfied customers, we could not possibly have satisfied shareholders.

We respect and are grateful for investors who support us with their precious capital. Our history with long-term investors, including Yahoo YHOO +0.57% and SoftBank, has demonstrated that our investors can benefit substantially from sharing our long-term approach. Not only that, our investors will also derive satisfaction in knowing that they will help Alibaba to create jobs, spur innovation, level the playing field for small businesses, and drive transformation for social and economic growth.

Our company will not make decisions based on short-term revenues or profits. Our strategies will be implemented with mission-driven, long-term development in mind. Our people, capital, technology and resources will be utilized to safeguard the sustainable development and growth of the Alibaba ecosystem. We welcome investors with the same long-term mindset.

Corporate Governance

To ensure the sustainability of the company and the interests of our customers, employees, investors and other ecosystem participants, we have always operated under the principles of collaboration and shared commitment among those who are responsible for our business. This operating philosophy is embodied in the Alibaba Partnership. We believe that our partnership approach has helped us to better manage our business, with the peer nature of the partnership enabling senior managers to work as a team and override bureaucracy and hierarchy.

Our ecosystem is too complex — and too important — for us to depend on one or two founders or executives, no matter how capable they are. We must deal with the issue of sustainability and succession systematically. Our partnership system promotes people with different skill sets but all having the same beliefs and values. It is not a system established to protect individual interests. It exists to safeguard our mission, values, vision and culture. Each year, by admitting new partners, we inject new energy and perspectives. In this way, we can ensure that our operations will continue to improve with time and scale.

In the interest of building a business ecosystem that is healthy, sustainable and growing, the corporate charter of the company empowers the partners in the Alibaba Partnership to have a strong say in charting the strategic direction and moral compass of the company. We have invested a lot of thought into creating this structure and, with a heavy sense of responsibility, we exercise great care in the selection and admission of partners to the partnership. I encourage you to study the description of the Alibaba Partnership in the prospectus to learn more about our philosophical approach to this important aspect of corporate governance, an aspect that we believe is unique and innovative.

Following our IPO, you will receive a letter like this one each year in our annual report. My partners in the Alibaba Partnership will take turns writing the annual letter.

I would like to thank you for considering an ownership in Alibaba. My colleagues and I would like to assure you that we are committed to serving the Alibaba ecosystem for the benefit of all of its constituents.

Jack Ma

Executive Chairman

Alibaba Group Holding Limited