How Alibaba Could Underprice Amazon, and Other Things You Should Know

If you're not yet familiar with Alibaba, get ready. China's largest e-commerce company will likely go public in 2014. Investment banks have given the company a valuation of as much as $120 billion, a market cap that would make it the third-biggest Internet company behind Google and Amazon.
That position may eventually put it in a spot hordes of companies pine for: a significant competitor to Amazon in the U.S. In addition, Alibaba recently led a $206 million investment in retail website ShopRunner, widening its presence in the country, and is moving toward a U.S. stock sale after talks with Hong Kong’s exchange broke down, a person familiar with the matter said last month.
Even so, few U.S. consumers are well-acquainted with Alibaba. Here are a few things you should know about the company.

It's Obsessed With Marketplaces

Alibaba's e-commerce properties lean heavily toward marketplaces, putting the company head-to-head with Amazon and EBay. Key ones include a set of English-language stores called Alibaba.com and AliExpress (where you can buy a really cute dress for $14.42). The former lets merchants exchange goods with each other, while the latter gives Chinese businesses a place to sell to a global audience. The models are similar to EBay's but more global, with buyers and sellers exchanging goods on the sites in more than 220 countries and regions.
In China, Alibaba has Tmall, a business-to-consumer marketplace, and Taobao, its consumer-to-consumer marketplace that competes with EBay. However, Taobao gets revenue from advertising rather than taking a commission from sellers.

It Could Beat Amazon on Pricing

As China's largest e-commerce company, Alibaba has ready access to its sellers' supply chain of cheap Chinese goods. As Martin Pyykkonen, an analyst at Wedge Partners, notes: "It's hard to find it cheaper than on Amazon. If Alibaba could come in and, at least for Chinese-made goods, offer a cheaper price, that's interesting. That might be their edge."
Ty Rogers, a spokesman for Amazon, declined to comment.

It's an Umbrella for About 25 Business Units

Alibaba's subsidiaries include eTao, its own shopping search engine; and Alibaba Cloud Computing, its data-centric cloud platform that compares with Amazon Web Services and Rackspace. It’s also affiliated with Alipay, a Chinese online payments service akin to PayPal.

It Has a Liberal Approach to Data

Alibaba calls its business units "repositories of massive amounts of market information and statistical data" -- and it wants to share. The company is working to be the first to make all of its market data available for free to its users, giving them the ability to create smarter strategies and move with ever-changing market conditions. That would be like Amazon sharing purchasing data with third-party sellers on its site.

It Wants to Live Long and Prosper

The company, founded in 1999, wants to "flourish" for at least 102 years, spanning three centuries. The goal is indicative of the company’s long-term approach to business, said John Spelich, a spokesman for Alibaba.

Microsoft Promotes ‘Phablets’ After Smartphone, Tablet Misfires

Microsoft Corp. unveiled Windows Phone software for smartphone-tablet hybrids as well as more powerful chips as the company plays catchup to Google Inc. and Apple Inc. in mobile devices.
A bigger start menu with higher-resolution displays will enable the software to run on phones with five- and six-inch screens for the first time, Microsoft said today in a blog post. The update to Windows Phone 8 will roll out to developers tomorrow and customers in the coming months.

After losing out in smartphones and tablets to Google’s Android operating system and Apple’s iOS software, Microsoft is trying to appeal to consumers in the middle. Global shipments of so-called phablets will more than double to 60.4 million this year, research firm IHS predicted in January. That’s a fraction of the more than 1 billion smartphones researcher IDC expects to be shipped.
Nokia Oyj, which is selling its handset unit to Microsoft for $7.2 billion, released a promotion for its Oct. 22 Nokia World event, featuring an image of a phablet. Microsoft, based in Redmond, Washington, is acquiring the business in a bid to jumpstart its phone efforts while also trying to lure other manufacturers to its mobile operating system.
Windows Phone’s 3.7 percent share of the smartphone operating system market in the second quarter compares with 79 percent for Android and 13 percent for iOS, according to IDC. Windows Phone is faring better in Europe and Latin America than in the U.S., Greg Sullivan, a director in the division, said in an interview.

Seeking Partners

Terry Myerson, head of Microsoft’s operating systems unit, tried to reignite HTC Corp.’s interest in Windows Phone last month, said people familiar with the discussions. He offered to cut or eliminate the license fee to make the software attractive as a second option on handsets with Android, said the people.
Chief Executive Officer Steve Ballmer and other executives met with handset makers during a trip to Beijing to try to line up new partners and shore up current agreements, said a person with knowledge of their trip.
As part of today’s announced update, Microsoft said Windows Phone will support Qualcomm Inc.’s Snapdragon 800 chip with four cores, a processor being used in some upcoming Android gadgets. Microsoft also added a feature called driving mode, which keeps users from texting or dialing while behind the wheel.

Tesla shows off Model X SUV at new Palo Alto showroom

If Hollywood movie makers were trying to create the quintessential Silicon Valley scene, they couldn't have done any better than the one Saturday afternoon in the 4100 block of El Camino Real.

Hundreds of people, nearly all of them snapping photos with iPhones, milled about at the opening of America's newest Tesla store, one mile from Stanford University and three miles from Google's campus. The sleek, white showroom gleamed. Flat screen monitors touted the benefits of the company's pricey and tech-hip all-electric vehicles. Music from a live DJ pulsed. And the valet parking was thick with visitors arriving in Tesla Model S sedans they already owned.
"It's awesome. It looks easy to drive, and it
looks so much better than a minivan. Minivans are for old people," said Vilma Estacio-Melamed, of San Jose, who admired a white Model X, Tesla's new SUV, which is scheduled to begin production next year.
 

The 27,000 square foot retail outlet, the vehicular equivalent of an Apple store, is the fifth Tesla location in the Bay Area, joining stores and service centers at Santana Row in San Jose, Fremont, Burlingame and San Rafael. Tesla now has 41 locations in North America.
"It's in the heart of Silicon Valley," said Telsa spokeswoman Alexis Georgeson. "The market is very strong for us in the Bay Area and Silicon Valley. We're opening stores in places where we expect to sell vehicles."
 
Founded in 2003, Palo Alto-based Tesla Motors has become a darling of high-tech set and environmentalists. From 2008 to 2012, the company sold 2,400 of its first vehicle, the Tesla Roadster, a two-seat electric sports car, with a base price of $109,000.
Its second car, the Model S, is a sedan that came out last year to rave reviews. The vehicle, which goes up to 265 miles on an electric charge and accelerates from 0 to 60 mph in 5.6 seconds, was named 2013 Car of the Year by Motor Trend magazine and received the highest score ever for a vehicle from Consumer Reports. The car has a base price of $69,900 to $79,900 before tax credits, depending on the battery pack.
 
"It's the first expensive car we've ever bought," said Christine Sireci, of Saratoga, who bought a dark blue Model S in March with her husband, Don, and visited the store Saturday. "I was driving a 2000 Chevy Astro. But I drove the Tesla and I fell in love with it."
Through June 30, Tesla sold 13,000 Model S cars and expects to sell 21,000 this year, Georgeson said.
Despite the huge buzz for the company -- whose CEO, Elon Musk, is a celebrity and whose stock price has jumped from $22 a share in January 2012 to $178 on Friday -- electric vehicles still represent less than 1 percent of American car sales. By comparison, General Motors sells 10 million vehicles a year.
 
There is also plenty of competition in the green motoring space. For much of the year, the top-selling car in California has been the Toyota Prius, which has sold more than 4 million worldwide since its launch in 1997. Larger carmakers, such as Nissan, with its all-electric Leaf, and Chevrolet, with its plug-in hybrid Volt, sell alternative vehicles for half to one third the cost of a Tesla.
And after a year of glowing press coverage, Tesla hit some bumps in the road when a video showing a Model S bursting into flames went viral earlier this month. The fire was the result of a driver near
freeway. As the stock dropped, Musk reassured the public that the fire was a freak occurrence and that the driver was not injured. A gasoline-powered car would have burned much worse in the same accident, he said.The company has so far received 6,000 orders for its Model X SUV, with customers putting down $5,000 for the standard version and $40,000 for the signature version, even though Tesla has not announced the price of the vehicle or exactly when it will begin delivery. Most deliveries are expected in 2015, and the base price is expected to range from $70,000 to $90,000.
That is a lot of money, said Estacio-Melamed, snapping a photo of the Model X on Saturday in the new Palo Alto showroom.
"But if it is better than all the other cars," she said, "maybe it's worth it."

Microsoft's phone update to feature driving mode

 

 Microsoft is updating its Windows software for cellphones to accommodate larger devices and make it easier for motorists to reduce distractions while driving.

It's the third update to Windows Phone 8 software since the system's release a year ago. Devices with this update will start appearing in the coming weeks, and older phones will be eligible for a free upgrade, too.
Something that may appeal to motorists: a new Driving Mode will automatically silence incoming calls and texts so that you can focus on the road. You also can configure the feature to automatically send out a reply to say that you're driving.
It can be activated automatically when the phone is linked wirelessly with a Bluetooth device in the car, such as a headset. Apple (AAPL) has a Do Not Disturb feature for iPhones, but that needs to be turned on manually.
What the Driving Mode won't do, however, is block outgoing calls or texts. And there will be ways to override it. The feature won't stop a teenager from texting while driving, but it will help reduce distractions for those who want that, says Greg Sullivan, director for Microsoft's Windows Phone business.
The new update also will allow for better resolution to accommodate larger phones. Currently, the system supports a maximum resolution of 1280 pixels by 768 pixels, which is adequate for phones with screens no larger than 5 inches on the diagonal. But video and image quality degrades when stretched out on larger phones, such as a 6.3-inch Android phone from Samsung.
The layout for larger phones also will change. Phones may now sport a third column of tiles, for instance. Contact lists and other features will be able to fit in more information. That's a contrast to Android, where text and images simply get bigger with larger screens, without actually fitting in more content.
Microsoft's Windows Phone software holds a distant third place behind Apple's iOS and Google's (GOOG) Android, with a worldwide market share of 3.7 percent in the second quarter, according to research firm IDC. But shipments of Windows Phone devices grew 78 percent to 8.7 million in the April-to-June period, compared with the same time a year ago. The tile-based layout in Windows Phone is the inspiration for the Windows 8 software powering tablets and personal computers.
There are a few ways Microsoft Corp. will catch up to the iPhone and Android phones with the new update.
For the first time, Windows phones will have a rotation lock function, so that the screen won't switch back and forth between horizontal and vertical mode while you're curled up in bed. There also will be a central way to close open apps. Before, you had to go into each open app and press and hold the back button.
And Microsoft is launching a program to give app developers early access to the new software. Apple has had a similar program for the iOS software behind iPhones and iPads, while Google often has worked with selected developers on unreleased features.

Apple's spaceship is landing in the wrong place

 

To fans of Apple's (AAPL) proposed spaceship headquarters in Cupertino, the most important thing is that it will provide Silicon Valley with the landmark it's long lacked.

I'd suggest those fans, including my fellow columnist Scott Herhold, have been bamboozled by the company's infamous "reality distortion field."
Apple's new campus is going to be a traffic nightmare that offers little benefit to the surrounding community. Instead of being a symbol for Silicon Valley, it will be emblematic of urban planning gone way wrong.
Worse, the project
can be characterized by a word that will make Apple and its fans shudder: phony. The forest park surrounding the spaceship building, which seems to have captured the fans' imagination almost as much as the building itself, is as inauthentic as the felt and leather backgrounds that Apple recently excised from iOS, the software underlying the iPhone.The forest is merely a fig leaf -- a greenwashing, if you will -- for a behemoth development that's too large for its neighborhood and designed without any consideration to its context. It's completely out of place.
Whatever the project's architectural merits, the spaceship building is going to be huge. At 2.8 million square feet, it will be one of the largest buildings in the country, more capacious even than the Empire State Building and more than five times larger than the Transamerica Pyramid.
Apple says the spaceship's actual footprint will be smaller than the existing buildings on the site, because its floor space will be spread across four stories. But there will be more to the campus than just the spaceship. Add up the buildings that will house the corporate fitness center, the parking garage and an auditorium, and you get nearly 6 million square feet of space, which is within spitting distance of the size of the Pentagon.
That size may be appropriate for a downtown metropolis or a rural setting with little else around it, but it doesn't belong smack dab in the middle of single-family homes and strip malls. Would you want the Empire State Building or the Pentagon in your backyard?
The new campus will accommodate 14,200 workers, some 12,000 in the spaceship alone. That's nearly three times the number of people who currently work in buildings on the 176-acre site. Is it any wonder that the environmental report commissioned by the city of Cupertino expects widespread and severe traffic problems around the proposed site?
Drivers can expect backups not only near the Interstate 280

offramps to Wolfe Road, which runs alongside the proposed site, but also on area surface streets and all along I-280 from Winchester Boulevard all the way up to Foothill Expressway. So if you already are frustrated by traffic jams in the area, just wait until the Apple project gets built!The traffic congestion will result not just from the large number of Apple employees but because of the lack of transportation alternatives available to them. The new headquarters will be far from the Caltrain or VTA rail lines that lead to San Francisco, San Jose and the Peninsula -- where the vast majority of Apple's workers live. Those folks will have little choice but to drive or ride the company's shuttle buses.
In addition to terrible traffic, neighbors can also expect to have Apple employees and visitors to the campus parking en masse in their neighborhood. That's because Apple is providing fewer than 11,000 parking spots on the campus for use by both employees and visitors.
Apple has promised to address some of the traffic problems. But many of the proposed solutions could take years to put in place.
And for all those traffic and parking problems, nearby residents can expect little benefit from the project. Those bucolic scenes of people walking through the forested grounds or eating lunch in the grass near the spaceship? Those will all be employees -- assuming they're able to break away from their desks. Apple says the campus will be closed to the public, and a fence around the perimeter of the property will guarantee that. The public won't even get to use a long-planned creek trail that would have run through the southeastern corner of the property, because Cupertino acquiesced to Apple's paranoid security concerns.
Area restaurants and shops shouldn't get too excited about having Apple move into the neighborhood, because employees are likely to stick to campus most of the time. Because the main building is set back from the street and the project is in a largely residential area, there are few retail businesses within easy walking distance. Also, Apple is doing what it can to encourage employees to stay on site, including a corporate fitness center and a large cafe inside the campus.
As for the great architectural icon that my colleague Scott salivates over, it's going to be largely invisible to the public, hidden behind all those trees. Sure, the outside world might be able to catch some glimpses of it from certain angles, but passers-by won't be able to see the entire building.
It will be a landmark that can't really be seen. All the public will see is the traffic mess it has caused