Microsoft and Xioami to collaborate on AI, cloud computing and hardware

After Microsoft signed a deal to test Windows 10 on Xiaomi devices in 2015 and then Xiaomi bought a trove of patents to help run other Microsoft services on its devices in 2016, today the two companies announced another chapter in its collaboration. Xiaomi and Microsoft have signed a Strategic Framework Memorandum of Understanding (MoU) to work more closely in the areas of cloud computing, AI (including Microsoft’s Cortana business) and hardware.

To date, Xiaomi has largely focused its mobile phone strategy in Asia Pacific, where Gartner revealed yesterday that it (and Huawei) were the only two vendors to increase their market shares at a time of general decline. This deal could point to how Xiaomi is looking to raise its game in the West, specifically in the US.

On the side of Microsoft, it’s particularly interesting given that the company has largely pulled back on a lot of its hardware efforts, and has visibly had some major stumbles in this area especially in mobile — most recently with its failure to take on and grow the Nokia mobile business and Windows Mobile.

Understanding that this isn’t an area that Microsoft can quite quit altogether, it seems that the company is going to have one more go now on a slightly different framework.

“Xiaomi is one of the most innovative companies in China, and it is becoming increasingly popular in various markets around the world,” said Harry Shum, EVP of Microsoft’s Artificial Intelligence and Research Group, in a statement. “Microsoft’s unique strengths and experience in AI, as well as our products like Azure, will enable Xiaomi to develop more cutting-edge technology for everyone around the world.”

“Microsoft has been a great partner and we are delighted to see both companies deepening this relationship with this strategic MoU,” Wang Xiang, Global Senior Vice President and Head of International Business, Xiaomi, added in his statement. “Xiaomi’s mission is to deliver innovation to everyone around the world. By collaborating with Microsoft on multiple technology areas, Xiaomi will accelerate our pace to bring more exciting products and services to our users. At the same time, this partnership would allow Microsoft to reach more users around the world who are using Xiaomi products.”

The deal covers four major areas of services for the two companies.

Cloud support will include Xiaomi using Microsoft Azure for data storage, bandwidth and computing and other cloud services. Meanwhile, Xiaomi’s efforts in laptops and “laptop-style devices” that run Windows will be co-marketed by Microsoft. Then Microsoft is also going to be talking with Xiaomi on how to improve collaboration on AI-powered speakers using Cortana.

That appears to be just the start for the company’s AI collaborations. They also “intend to explore multiple cooperative projects based on a broad range of Microsoft AI technologies, such as Computer Vision, Speech, Natural Language Processing, Text Input, Conversational AI, Knowledge Graph and Search, as well as related Microsoft AI products and services, such as Bing, Edge, Cortana, XiaoIce, SwiftKey, Translator, Pix, Cognitive Services and Skype,” Microsoft said in a statement.

No financial terms to the arrangement are being given but we are asking.

Google adopts a new approach to bring its AR service to China

Google has adopted a novel way to circumvent China’s internet censorship system, which continues to block its services, after it partnered directly with three OEMs to bring its augmented reality service to the country.

ARCore, the company’s augmented reality SDK for Android, launched in full today following its announcement in November.

Google says there are 100 million devices that support ARCore right now in the market. That was always its target and that was broadly assumed not to include China, like most Google services due to the censorship, but Xiaomi, Huawei and Samsung have all signed on to release devices that will include ARCore support over the coming months.

Including hardware support is easily done — these devices will all be ‘higher-end’ smartphones — but the software side is trickier since the Google Play Store is not available on Chinese soil and the third-party app store is fragmented. For that component, Xiaomi, Huawei and Samsung will release ARCore apps through their own app stores.

ARCore itself works on device, without the cloud, which means that once apps are downloaded to a phone there’s nothing that China’s internet censors can do to disrupt them.

Partnership with OEMs in this way is a first for Google. It builds on the company’s release of a “China-proofed” version of its Google Translate app last year, which was offered via a number of third-party Android stores and a direct download.

More broadly, while this ARCore-China move may not seem huge, it’s a significant step which shows that Google finally appears to have an actual strategy for China beyond ad hoc activities as it was in the past.

In past months, we’ve seen Google agree to a partnership with Tencent, invest in China-based startups — biotech-focused XtalPi and live-streaming service Cushou — and announce an AI lab in Beijing. Added to that, Google gained a large tech presence in Taiwan via the completion of its acquisition of a chunk of HTC, and it opened a presence in Shenzhen, the Chinese city known as ‘the Silicon Valley of hardware.’

TechCrunch understands that the China ARCore strategy isn’t focused on monetizing the service at this point. Instead, Google aims to open the service up to Chinese developers to allow them to create apps on the platform that could be used anywhere in the world. Likewise, it may help raise its brand among consumers if ARCore apps take off and provide an entertaining experience. There’s no reason Chinese users shouldn’t be able to enjoy that like anyone else in the world.

That focus on utilizing up Chinese talent leads back to the planned opening of an AI Lab in Beijing. Google appears to be seeking ways to tap into the developer community and skills in China without having to take big steps like relaunch the Play Store, something that has long been speculated but would be difficult to actually pull off.

Working with OEMs to distribute apps is a far more nimble and efficient approach, and it’ll be interesting to see if Google repeats this strategy in China.

Featured Image: Russell Monk/Getty Images

Momo buys Tantan, China’s Tinder, for $600M as Chinese social networks consolidate

WeChat is far and away the biggest messaging platform in China at the moment, and that is helping to drive a push among the smaller players to get together for better scale. Today, Momo, the Chinese location-based social networking app that has more recently made a big push into dating services and is traded on Nasdaq with a market cap of around $6 billion, announced that it has acquired Tantan, China’s top dating app, for $600.9 million in an all-cash deal.

It’s not clear how that price compares to Tantan’s pre-exit valuation: it had never disclosed the number. Overall, Tantan had raised $120 million, including a $70 million round last year from a mix of strategic and financial investors. Its backers included DST Global, Kleiner Perkins, video social network YY, Genesis Capital, SAIF China, Zhongwei, DCM and Bertelsmann.

We’d actually heard rumors of this acquisition recently, so it’s not coming as a complete surprise.

WeChat has in a way written the playbook in China for how to leverage a popular social platform to move into other services and it seems that would-be competitors are following suit. Other notable moves and exits in recent years have included Alibaba buying Youku Tudou and also investing heavily in WeChat competitor Weibo; selfie-making app Meitu going public and Meituan Dianping making a move into transportation. For its part, Momo had been moving into streaming services but with government pressure over the content of these services, going to its dating roots may have felt like a safer bet for now.

And the deal will indeed give Momo a big boost in its own dating business. Tantan said that it has enabled 5 billion matches since launching in 2015. (As a point of comparison, Tinder — one of the leading dating apps in the West — says that its enabled at least 8 billion matches since its launch in 2012.)

This does not signal a shift for Momo into dating exclusively (sorry for the pun), but to double down on one of the more successful ways that it’s diversified its business.

“Our core position will continue to center on social networking and this acquisition enriches our product line in the social space,” said Yan Tang, chairman and CEO of Momo, in a statement. “We will continue to invest and incubate more sub-brands to serve the social and entertainment needs of different demographics. Tantan has become widely recognized within a short period of three years since its inception, which is largely attributable to the outstanding performance of its talented team. We also respect Tantan’s product strategy that focuses on the customer experience of female users. After the acquisition, the Tantan team will continue to operate the mobile apps under the Tantan brand with our full support.”

Indeed, you can see this as similar to the strategy taken by IAC, which operates a number of dating apps alongside Tinder, such as and OKCupid.

For Tantan, the deal will give the company not just a funding boost but potentially some economies of scale in its developer backend and other areas of its business. “Momo and Tantan have their own strengths in their respective markets and among targeted customers,” said Yu Wang, chairman and CEO of Tantan, in his own statement. “The acquisition is a critical strategic upgrade to cover a greater range of user demographics and needs, and build up a larger social networking market through complementary businesses and strategic synergy. We are very confident in our future development.”

Additional reporting by Jon Russell (not this Jon Russell).

Is Uber selling its Southeast Asia business to Grab?

If you read the tech press, you might have seen reports that Uber is pursuing a sale in Southeast Asia that would see Grab, its Singapore-headquartered rival valued at $6 billion, acquire Uber’s business in the region.

Rumors of such a tie-in have been rife for a while. Uber sold its China business in exactly such an arrangement in 2016, and it made a similar exit from Russia last year. In both cases, the firm’s motivation was to purportedly shape up for a potential IPO by offloading loss-making units that had lost the local market.

Why not, then, extend that into Southeast Asia and sell to Grab?

There is competition.

Reliable data is hard to come by, but it is fairly widely accepted that Uber, once the leader in Southeast Asia, has dropped behind Grab across the region as a whole, while both companies trial local startup Go-Jek — a unicorn itself, too — in Indonesia, the only market Go-Jek operates in.

There are challenges.

Despite a cumulative population that exceeds six billion people, Southeast Asia’s ride-sharing business did just $5.1 billion last year, according to estimates from a report authored by Google and investment firm Temasek. Uber is not expected to be profitable in the region “in the near future,” CEO Dara Khosrowshahi said last year.

There is the motivation.

Uber and Grab share a common investor in SoftBank. The Japanese firm first backed Grab back in 2014, and it recently pumped in $2 billion in fresh capital alongside China’s Didi Chuxing — the company that bought Uber China and, by virtue of that deal, is also an Uber stockholder. SoftBank, of course, secured a much-publicized investment in Uber in January.

Pitting two of its portfolio together in a loss-making market probably doesn’t make sense to SoftBank at this point.

Someone, somewhere, seems very keen to make a deal happen, and so we have the reports.

Last week, CNBC cited two people “with knowledge of the matter” who said that Uber “is preparing to sell Southeast Asia unit to Grab.”

The news was widely re-reported by a number of other media. But if you skip down to the second line of the original CNBC article, the transaction seems less definitive that the title suggests.

“No deal has been reached yet, and the timing of any such deal is uncertain,” CNBC reporter Alex Sherman wrote.

Uber and Grab both declined to comment on the report when we asked.

The Grab office in Singapore

The deal can make sense in financial terms, as above, but in practice there are certainly some question marks.

Uber may have fallen behind Grab, but it still has the brand. Uber invented ride-hailing, and it can continue to maintain a sizable market share, if not close the gap with some investment.

The word Uber is already a verb to many people, such is the company’s profile, and that isn’t just limited to the English language. There’s a huge amount of consumer awareness that Uber trades on, even when its competitors push hard with discounts, marketing and other strategies, is very much alive in Southeast Asia.

The market in the region is tipped to grow massively.

The same Google-Temasek report noted that the ride-hailing market in Southeast Asia has grown four-fold since 2015 and it is tipped to reach $20.1 billion by 2025. More generally, Southeast Asia is now the world’s third-largest region for internet users — with more people online than the entire U.S. population — with upwards of 3.8 million people coming online for the first time each month.

It might be hasty for Uber to retreat at this time. Certainly, the chips are down and things have been better, but the game is far from won as it was in China, where Uber had little mainstream recognition and was spending over $1 billion just to try to keep up with Didi.

There hasn’t been much of a reaction to the reports from Uber, but this week Khosrowshahi — who was in India as part of his first Asia tour with Uber — made a series of bullish comments that seemed to reaffirm a commitment to Southeast Asia, according to Reuters.

“We expect to lose money in Southeast Asia and expect to invest aggressively in terms of marketing, subsidies etc,” Khosrowshahi told reporters in New Delhi, adding there is huge potential in the region thanks to a big population and fast internet user growth.

You could, of course, offer a counter argument that Khosrowshahi is playing hard to get or making negotiations with Grab tougher. But the Uber CEO also pointed out to press that Uber is just one shareholder and thus its aims and objective don’t represent the path that the company will take.

From Reuters again:

Khosrowshahi said SoftBank is an investor but Uber, which has a valuation of around $68 billion, will take any final decisions along with the board on mergers and partnerships.

There has certainly been some suspicion that the leaks may be coming from the investor side of Uber/Grab, given the benefits that consolidation might bring. The fact that these leaks have also intensified since SoftBank became interested in an Uber investment, certainly gives credence to that theory.

Indeed, SoftBank board member Rajeev Misra — who joined the Uber board following the investment — told the Financial Times that Uber should focus on Western markets and cut its losses in emerging regions.

Is SoftBank the source of these new leaks? You can draw your own conclusions.

So, while a deal might make some sense on paper, reports of an imminent acquisition seem wide of the mark. That said, this is the ride-hailing industry, and anything can happen.

Featured Image: ANTHONY WALLACE/Getty Images

Travel activities platform KKDay raises $10.5M led by Japanese travel firm H.I.S.

KKDay, a startup from Taiwan that operates a platform that helps travelers to Asia find local activities, has raised $10.5 million.

The funding round was led by Japanese travel operator H.I.S. with participation from existing backer MindWorks Ventures, the Hong Kong-based VC.

KKDay is one of a number of services that cater to Asia’s burgeoning regional tourism market. The idea is to allow travelers to find experiences, tours and travel in their destination city, for example, a river cruise, museum visit, or city sightseeing tour. Since we all have a smartphone these days, the KKDay lets people browse their options and book their choices ahead of time or on-the-ground.

The target is to digitize and then take a slice of the travel tour and activities market that is predicted to grow by one-third to reach $183 billion by 2020, according to travel-focused analyst firm Phocuswright.

To get there, KKDay is turning to a traditional player for help.

H.I.S. was established in 1980 and today it employs close to 17,000 people with offices in over 150 cities in some-80 countries worldwide. The company, which recorded more than $5.5 billion in annual sales, is an old school, bricks and mortar travel firm, whereas three-year-old KKDay is a new, digital entrant that’s predominantly Asia-focused. Hence there is plenty of potential to work together.

“H.I.S. is not just a financial investor, but is valued as a strategic investor. Their product can use our platform and internet channel to expand their business globally,” KKDay CEO Ming Chen told TechCrunch in an interview.

On the reverse side, KKDay benefits by boosting its inventory with H.I.S.’s decades-old business. On the customer support-side, its network of country-based offices and agents can give KKDay customers a physical point of call if they need it, or simply the peace of mind that comes with that.

The match sounds ideal, so why not go the full hog and bring the two companies together? That’s not happening, according to KKDay CFO Weichun Liu.

“We made it very clear that this partnership is a means for both us to do what we are best at. There is no discussion on merger and acquisition so far,” she explained to TechCrunch.

But Liu believes that the relationship is essentially preparation for when large online travel giants enter the travel activity space.

“If a Priceline or Expedia jumps into the market, they have more resources,” she explained. “We will try to get an early start on the finer and more difficult parts to reach first [so that] even when the bigger guys enter the market we are ahead of the game.”

Ahead of the game means taking control of the experiences themselves rather than just selling them. Already, Liu said, KKDay tailors its packages by using its own people — for example as tour guides and by renting buses itself — or works closely with contractors, but H.I.M.’s firepower and presence can supercharge that.

To illustrate the ultimate goal, Liu turns to e-commerce where, she said, consumers are happier to buy products through Amazon rather than direct from retailers.

“Amazon means a certain level of quality and guarantee, that’s our aspiration,” she said.

Longer-term goals aside, KKDay is initially looking to grow its customer numbers in China and among Western markets like Europe and the U.S.. As of now, Hong Kong, Taiwan and Korea are its largest countries, according to CEO Chen, while the H.I.M. alliance is likely to massively boost its Japan-based business.

India, another huge population, isn’t in the plans right now because outbound travel numbers from the country are lower than the likes of Korea and Japan, Liu explained.

China may be a hugely challenging market, but Chen is convinced that there’s potential for travel products if they are presented and done right.

“We can provide very high-quality products. Young Chinese today expect high-quality travel services, not only those that are cheap. They once were price sensitive before but they are now more affluent,” he said.

Beyond more traditional travel services, KKDay’s most direct rival is Klook, a business that is predominantly focused on China. The Hong Kong-based startup has raised over $90 million, including a recent $60 million Series C round in October, from investors that include Goldman Sachs, Sequoia and Matrix Partners.

Klook said it clocked five million bookings in 2016 and its claims to process one million bookings per month. KKDay doesn’t provide booking numbers, but the service claims to host over 10,000 experiences from 500-plus cities in more than 80 countries.

Featured Image: Hamza Butt/Flickr (IMAGE HAS BEEN MODIFIED)

Uber CEO plans to ‘invest aggressively’ to compete with rivals Southeast Asia

Uber CEO Dara Khosrowshahi has distanced the company from reports that it might exit Southeast Asia and India.

Currently in India on his maiden visit to Asia as Uber boss, Khosrowshahi told an audience that the company plans to continue to invest in Southeast Asia, where Uber has slipped behind Grab and Indonesia-based Go-Jek.

“We expect to lose money in Southeast Asia and expect to invest aggressively in terms of marketing, subsidies etc,” Khosrowshahi told reporters, according to Reuters. “From a competitive standpoint we think we can improve.”

“Right now the plan for Southeast Asia is to go forward, lean forward and to invest,” he added.

Last week, a CNBC report suggested Uber was planning to offload its loss-making Southeast Asia business to rival Grab, which is valued at $6 billion and also counts SoftBank as an investor.

There has also been speculation of a deal between Ola, which SoftBank has also invested in, and Uber. The Uber CEO denied having M&A plans in India but said it is “fun to speculate about.”

Khosrowshahi has previously spoken of challenging economics in Southeast Asia — where ride-sharing revenues are estimated at $5.1 billion last year and Uber is not profitable — but he said that the company “should actively be investing” in regions where there’s growth potential, such as Asia and Latin America.

Southeast Asia certainly has potential. A recent Google-Temasek report noted that the ride-hailing market in the region has grown four-fold since 2015 and it is tipped to reach $20.1 billion by 2025. More generally, Southeast Asia is now the world’s third-largest region for internet users — with more people online than the entire U.S. population — with upwards of 3.8 million people coming online for the first time each month.

India, meanwhile, is already a key market. Today it accounts for over 10 percent of Uber’s ride volumes but it is not yet profitable, according to Khosrowshahi.

“The greatest value that we can create here is to continue to invest and grow our business here, not just for India but the role it is going to play in shaping our product for the rest of the world,” he said.

Featured Image: Andre Coelho/Bloomberg via Getty Images

Gartner reports first ever global decline in smartphone sales

Global smartphone sales have not been firing on all cylinders for several years now but Gartner’s latest figures record the first ever decline since the analyst began tracking the market all the way back in 2004. (Though it’s not the first analyst to call a decline.)

Gartner’s figures peg sales of smartphones to end users in Q4 2017 at nearly 408 million units — a 5.6 per cent decline over its Q4 2016 figure.

It says No.1 ranked smartphone maker Samsung saw a year-on-year unit decline of 3.6 per cent in Q4, while sales of Apple’s iPhones fell 5 per cent in the holiday quarter, though it says Cupertino stabilized its second-place marketshare.

Gartner says two main factors led to the Q4 sales drop: A slowing of upgrades from feature phones to smartphones due to a lack of quality “ultra-low-cost” smartphones; and existing smartphone owners selecting quality models and keeping them for longer, lengthening the replacement cycle.

Apple’s performance in Q4 was also impacted by the later availability of its new top-of-the-range iPhone X, which drove slower upgrades of its other two new smartphones, the iPhone 8 and 8 Plus. While component shortages and manufacturing capacity constraints also contributed to a long delivery cycle for the iPhone X.

Gartner says it’s expecting a delayed sales boost for Apple in the first quarter of 2018, now that the flagship’s delivery cycle has returned to normal.

It’s also expecting a boost for Samsung in Q1 as it unpacks its successor Galaxy flagships.

For full year 2017, Samsung carved out a 20.9 per cent marketshare to Apple’s 14.0 per cent.

Far East

Last month analyst Canalys reported a first annual decline in smartphone shipments in China — which for years took up the baton on smartphone growth from saturated Western markets. But even Chinese buyers appear to be getting tapped out.

It’s still a growth story for Chinese OEMs, though. And Gartner says the combined market share of Chinese vendors in the top five increased by 4.2 percentage points in 2017, while the market share of the top two, Samsung and Apple, remained unchanged.

China’s Huawei and Xiaomi were the only smartphone vendors to actively increase their market shares in Q4, according to Gartner, with year-on-year unit growth in the holiday quarter of 7.6 and 79 per cent, respectively.

The analyst credits Huawei’s uplift to broadening the appeal of its portfolio with new handset launches in the quarter. It also says Xiaomi’s “competitive” portfolio accelerating its growth in the emerging APAC market and helped it win back lost share in China.

Huawei remained in third place in the global smartphone vendor rankings, taking a 9.8 per cent share in full year 2017 and shrinking the gap with Apple and Samsung.

Overall, Gartner says total smartphone sales exceeded 1.5 billion units in 2017 — a year-on-year increase of 2.7 per cent.

On the OS front, Google’s Android platform extended its lead in 2017, taking an 86 per cent share of the total market, up 1.1 percentage points from a year ago. While iOS took 14 per cent. (The “other OS” category shriveled to a nearly non-existent 0.1 per cent.)

And as the world’s biggest mobile tradeshow, MWC, rolls around again, there will be some fresh Android-powered handsets being unboxed in the coming days — including from Samsung, Nokia-branded HMD and others.