Jawfish Games, a Seattle-based startup run by a former professional poker player and the engineering team that built the Fult Tilt Poker site, launched a gaming platform that can host more than 100,000 simultaneous players in real-time tournaments across iOS, Android and the web.
While asynchronous, turn-based games have done well on mobile platforms and Facebook over the last five years, pure, real-time multiplayer games haven’t caught on as quickly partially because data connections haven’t been fast enough and because a game developer would need a critical mass of players to match them synchronously.
But Jawfish, which has raised $3.65 million in funding from firms like Founders Fund’s angel fund, Right Side Capital and other angels, says it has built a platform to do just that. Their platform can support more than 100,000 simultaneous players and host 1 million tournaments for less than $10 in bandwidth.
Because Jawfish’s CEO Phil Gordon is a championship professional poker career who has hosted The World Series of Poker and published five books on the game, the company is doing a poker game (of course). The poker game is designed to have the look and feel of a broadcasted game with Gordon’s running commentary throughout play.
They’ve also launched a basic word search game, called Jawfish Words, that lets players compete on the getting the highest scores, finding the longest words or the most diagonals. There more obscure goals too, like finding the most words with a single vowel. They launched that game last month through a partnership with Amazon. The company has pointed out some promising stats: the average player spends 21 minutes and plays 10.7 tournaments a day. Each tournament is about 60 to 90 seconds long.
They plan to building out a suite of classic games, from casual to casino titles that make use of the platform. “Basically what we’re looking to do is to take games that people know and love and reinvent them for multiplayer real-time tournaments,” Gordon said. “That’s exactly what we’re going to do across a wide spectrum of games.”
While Jawfish hasn’t opened its platform up to third-party developers, there are other gaming networks that add multi-player mode to indie titles that are blowing up. Nextpeer, an Israeli startup, went from having just a few games in its network to well over 1,000 developers in the last several months.
“Barring a top 10-kind of franchise wanting to use our platform for multiplayer mode, it’s incredibly unlikely that we’re going to work with other studios,” Gordon said. “Certainly not for anything but the top tier. We know that our platform is the only one of its kind in the world and we think that it’s in our interest to keep the platform close to the vest and develop our own games.”
GiftCards.com, a Pittsburgh-based company that has been around for more than a decade and has sold 5 million gift cards, agreed to buy San Francisco startup Giftly to grow out a mobile platform.
The terms of the deal weren’t disclosed, but Giftly had raised about $2.8 million from investors including Baseline Ventures, SoftTech VC, Floodgate, Thrive Capital, and Techstars’ David Tisch.
Giftly built a platform that avoided the hassle of individually dealing with merchants and point-of-sale systems. They came out with a native mobile app last fall that made it easier to send presents to friends and family.
The company’s platform didn’t put any limitations on what kinds of presents you could send because the company had a web of relationships with banks and credit card processors. When a recipient would go to redeem their gift, they would pay out of their own pocket, but Giftly would reimburse them that amount through their credit card.
GiftCards.com said Giftly will be rolled into their operations, but will maintain offices in San Francisco.
“We will continue to build out Giftly,” said Giftly’s CEO Timothy Bentley. “Our backend infrastructure will be used for their next generation products. We’ll continue to expand
the ways our technology and services are available to developers, through our API, and merchants, through our merchant services.”
The company is also looking to raise a first venture round, even though it’s been around for more than 10 years. That round will go toward completing the acquisition of Giftly. GiftCards.com has been around since 1999; they sell personalized, pre-designed and discount gift cards.
For years, the iPhone has carried a small etching on the back that says ‘Designed by Apple in California. Assembled in China.’
It’s fueled the stereotype that China is the world’s factory, but hasn’t had a flexible enough education system to produce R&D talent that can also design world-class products for a global audience.
But that’s a stereotype that isn’t exactly true anymore.
A small group of companies — both small, bootstrapped app startups and multi-billion dollar giants like Tencent — are showing that they can design apps or higher-end hardware with international appeal.
Tencent, one of the country’s gargantuan Internet powers with a market cap of $72 billion dollars, often likes to point out the international reach of its messaging app Weixin or WeChat. That app has blossomed to more than 190 million monthly active users over the past year and with about 40 million of registered users outside of China.
“I’m very glad to see the internationalization of Tencent,” said the company’s CEO Pony Ma this month at the GMIC conference in Beijing. He later added, “The manufacturing sector in China went globalized and the service industry can be internationalized as well…. It’s difficult, but if we can make it, it would be a revolution.”
Interestingly enough, WeChat’s growth abroad is being fueled by the Chinese diaspora — immigrants are taking WeChat with them to stay in touch with their families back home, according to app-tracking services like Onavo. They base this hypothesis on the correlation of WeChat active usage with that of other Chinese-language apps.
“A lot of people are surprised when they find out we’re a Chinese company,” said Louisa Cao, who heads marketing for the company. It helps that exchanging business cards is much more ritualized and formal in China and Japan than it is in the West, so that gives startups in Asia a competitive edge on understanding what consumers want in a product in this area. Similarly, messaging apps out of Asia like Line, Kakao and WeChat are leading the way, with Western startups like Path arguably borrowing some of their strategies like stickers.
Blux, another company out of Xian, the second-tier Chinese city that’s home to the famous army of Terra Cotta warriors, has built a higher-end photo app called Blux Camera that’s been featured by Apple more than 100 times on the iTunes homepage for global audiences. As the cost advantages that China has over Western markets narrows, the co-founder Jo Yin told me that it now can make economic sense to run global market-facing startups outside of the traditional hubs of Beijing and Shanghai (as they’ve become too expensive).
One of the reasons that all of these startups can built products for foreign audiences is because they’ve been trained either at Western universities or through working for multi-nationals. Some are run by “sea turtles” or Chinese who have returned home after years of working or studying abroad. Intsig’s CEO Michael Zhen spent years at Motorola where he picked up ideas on how to manage teams and think globally.
To be fair, achieving global reach is something only a small fraction of local Chinese startups can do. It requires an international fluency; founders have to understand what kind of design and marketing attracts foreigners. Chinese web services can seem noisy and busy; they can be filled with more links and text as Mandarin characters are complicated to create on QWERTY keyboards.
There are even a few U.S. growth-stage companies that haven’t been dissuaded by Google’s very public about-face on the Chinese market and are hiring design and developer talent locally. Evernote recently launched a China-focused version of its enterprise service and they very intentionally took on local hires to develop product.
“It’s easy to sell your products everywhere. But when we say we want to be a global company, it’s because we want to make our products everywhere,” said Evernote CEO Phil Libin, when he launched Evernote for Business locally in China.
He went on to say that China’s copycat reputation is unfair.
“Chinese companies don’t have a good reputation for innovation in the West. The reputation that Chinese companies have is that they don’t really innovate. They just copy and I don’t think this reputation is right. It’s not a problem that Chinese companies copy. It’s that everyone copies. Chinese companies don’t just copy. They copy and improve. Copy and improve is what everyone does everywhere. That’s what Apple does. That’s what Microsoft does. That’s what Facebook does. Very few companies start with a first-of-a-kind idea.”
Indeed, probably the most interesting company to watch as it expands globally is Xiaomi, which did just that. They took Android and improved upon it.
They’re probably the best example of how China is moving up the value-chain from low-cost manufacturing into high-end design.
Just three years afters being founded, the company is on track to do $4.5 billion in handset and accessory sales. Some have made the metaphor that Xiaomi is the “Apple of Android” in that it’s an integrated hardware and software maker that has built its own special skin of Android and sells high-end hardware at or around the cost of materials. They compete head-to-head against Samsung in mainland China, and according to third-party mobile app analytic services like Umeng, they’re in second place.
Although Xiaomi will only publicly talk about its plans to sell handsets in Hong Kong and Taiwan, a source close to the company says it’s been on the lookout for a general manager that could bring their Android skin, the MIUI, to North American audiences.
They’ve been able to develop a rabid fan base locally in China because they allow people to participate in the designing of the phone by requesting features. Internally, they have small teams of engineers, product managers and designers that work alongside each other on a very fast cycle. They release a new version of the MIUI every week.
But they don’t know if the model will translate abroad yet. Chinese consumers are very comfortable with paying for the full-cost of the phones upfront and buying devices online instead of through brick-and-mortar stores.
“We don’t know how developed regions like Taiwan and Hong Kong will accept products like Xiaomi,” said co-founder Lin Bin in an interview. “Greater China is just one step beyond mainland China.”
The biggest difference from one year ago with China’s mobile startups is that the local market is actually viable.
China now has more active iOS and Android devices than the U.S., up from about 40-50 million in circulation the last time I visited in late 2011. What that means is local entrepreneurs can finally build real, scalable mobile software businesses.
iDreamSky, which started four years ago, is one of the companies riding this wave.
They started back in 2009 and have grown to about 200 people through publishing some of the West’s best-known mobile games like Halfbrick’s Fruit Ninja and Imangi’s Temple Run in China.
The Chinese market isn’t like the rest of the world. There are myriad Android app stores, run independently of Google. There are different social media channels through platforms like Tencent’s WeChat and Sina Weibo. Then there are different local tastes for music and art.
“Finding a partner that knows how to localize your game doesn’t mean just translating the game in Chinese,” said co-founder and executive vice president Jeff Lyndon. “It’s also about adding unique content.”
He said in Fruit Ninja, iDreamSky added Chinese blades for cutting the fruit and localized backgrounds.
They also changed the monetization strategy in Temple Run. The Western version of the game asks players to buy virtual gems to revive their character. But in the Chinese version, Temple Run will ask players to either buy virtual gems or directly pay 2 renminbi (about 33 cents) to revive their runner.
Lyndon said re-routing players through a separate interstitial to choose packs of gems deterred Chinese players. “It’s counterproductive to impulsive buying behavior,” he said.
While other top local developers like Chukong have revealed that they’ve been making between $6 million per month, mainly from the Chinese market, Lyndon said top foreign indie games could realistically gross $4 million to 5 million per year before iDreamSky’s take.
The company splits revenue 70-30 with the developer getting the bulk, but they graduate their take to 50-50 for better-performing games. Their network has grown to about 15 million daily actives in China.
“There’s a new batch of the competitors, but the market is big enough for all of us to survive,” Lyndon said.
But he said one advantage that iDreamSky has is that it doesn’t have a dual role. It only publishes games; it doesn’t make its own titles. Having a dual model can sometimes lead to conflicts of interest if a studio promotes its own games over a third-party title, or even borrows ideas liberally from a third-party studio, he said.
“We have a very strong mandate,” he said. “If we want to be a publisher, we should never be a developer.”
“WeChat is going to be one of the biggest trendsetting elements of 2013 for the Chinese market,” he said. “Once it opens up, as Kakao and Line being have already shown, WeChat will deliver the same results or even better.”
For foreigners, Lyndon said there’s a limited window to break into the Chinese mobile gaming market (which might be a bit of a self-serving thing to say.)
He said local developers are getting increasingly better at catering to the local market, and they already dominate the charts with the exception of titles like King’s Candy Crush Saga.
“The Chinese market has changed dramatically. It’s getting harder for Western developers to come in,” he said. “If you don’t come into China earlier, you might not be able to come in in after next 24 months.”
While there’s a perennial debate on the West Coast about whether and when business cards might become irrelevant, they continue to be at the center of business customs in China and Japan.
It’s just basic etiquette when meeting a new contact to offer your card with two hands and a slight bow.
That’s why it’s natural that a Chinese company — not an American one — might be able to dominate this market and behavior globally. LinkedIn’s Cardmunch had scanned 2 million business cards a year after their 2011 acquisition, and hasn’t released stats since.
But Shanghai’s CamCard boasts 10 million monthly active users, with 50 million registered in total. About half of them are outside of China.
The company is part of a new wave of Chinese startups that are either run by very internationalized Chinese founders or foreigners that are able to build and design consumer products and apps with global appeal.
Intsig, the company behind CamCard, originally launched the app back in 2009 and has quietly grown it since.
They use a freemium model that caters to both consumers and enterprises. On the consumer side, there’s a free version of the app. And then there’s a paid version, which costs about $2.99 in the West or $11.99 in Asia. It feels like price discrimination but Intsig justifies it by saying it’s more technically different to do optical character recognition for Chinese and Japanese and because Asian consumers may be willing to pay more for a business card service.
The paid version has a cloud syncing service that lets people save cards across all of their different devices.
On the enterprise side, companies pay for extra security features to make sure their client and business partner lists stay safe. In China, the vast majority of smartphones are Android devices and Chinese consumers are much more concerned about getting viruses.
As for the parent company itself, Intsig has raised roughly $10 million from investors including Matrix Partners in China and other local investors. The company’s CEO Michael Zhen had a long career at Motorola, where he says he picked up the skills and ideas necessary to start his own company.
I’ve seen one other regional competitor, Japan’s Sansan. They’re an older rival that is transitioning to a smartphone-centric world through a card-scanning app called Eight. Before that, they were actually leasing scanners to local Japanese businesses.
QFPay‘s card reader admittedly looks a bit clunkier than its U.S. or European equivalents Square or iZettle.
It looks like a wonky, old calculator. But that’s because Chinese consumers don’t trust merchants easily and a basic phonejack reader without a keypad makes them nervous, says COO Tim Lee. He says consumers are worried that their PINs will get stolen by unscrupulous merchants.
“Aesthetically, it’s not that beautiful,” he said. “Square is very Apple-like and we’d want to have good design, but we are practical for two reasons. We must have a PIN pad in China and secondly, we have limited money so we’d want to build a minimum viable product and then keep on improving.”
Because of these more practical modifications, QFPay is seeing traction that has it processing close to $400 million per year on an annualized basis.
They have 30,000 merchants all over China and recently picked up funding from Sequoia China, although the size of the round is still undisclosed.
Among their clients are better-known names like Groupon-like 55Tuan, which uses QFPay to collect fees from merchants all across China.
QFPay’s model is slightly different than Square’s. For one, they don’t give away their readers for free. They charge 899 renminbi or just under $150 for each one. Competitors like Lakala also charge for their readers at about 199 renminbi a pop.
QFPay’s transaction fees also legally have to be a lot lower than what U.S. and European companies can charge. They don’t charge more than 0.78 percent per transaction, which is one-third of the 2.75 percent that Square charges. That cuts the company’s margins on every swipe, although Lee says that R&D costs are substantially lower in China.
QFPay also recently released an API that lets third-party developers create payment experiences. (Square does not currently offer an API.) It’s still early so there just 100 developers on the platform.
The Chinese market has myriad challenges, which could also be good opportunities for QFPay.
For one, penetration for point-of-sale terminals is still quite low. Lee says only about 5 million merchants out of China’s estimated 100 million have proper point-of-sale machines, so QFPay has to do a lot of education on why its products are valuable.
The country is also heterogeneous with different provinces having different business cultures.
“In the north, merchants just have a leisure life. They open the shop and go home at 5 of 6 p.m.,” he said. “But in the Southern provinces, they will stay open until midnight.” The Western provinces are also far less developed than the coasts, with many Chinese merchants still carrying feature phones.
Lee said they started working on the company about six months after Square launched. The company’s management team has experience working for Paypal, Mastercard, HSBC and Western Union; that breadth of experience spans the entire history of digital payments in the country.
They face internal competitors like Lakala and iBoxPay, but Lee says those are consumer-facing solutions. He says they basically target reader sales at consumers that want to pay for utilities and other services through their phones.
But QFPay is aimed at merchants and the company is working on all sorts of software tools to handle CRM, analytics and loyalty products.
QFPay‘s card reader admittedly looks a bit clunkier than its U.S. or European equivalents Square or iZettle.
It looks like a wonky, old calculator. But that’s because Chinese consumers don’t trust merchants easily and a basic phonejack reader without a keypad makes them nervous, says COO Tim Lee. He says consumers are worried that their PINs will get stolen by unscrupulous merchants.
“Aesthetically, it’s not that beautiful,” he said. “Square is very Apple-like and we’d want to have good design, but we are practical for two reasons. We must have a PIN pad in China and secondly, we have limited money so we’d want to build a minimum viable product and then keep on improving.”
Because of these more practical modifications, QFPay is seeing traction that has it processing close to $400 million per year on an annualized basis.
They have 30,000 merchants all over China and recently picked up funding from Sequoia China, although the size of the round is still undisclosed.
Among their clients are better-known names like Groupon-like 55Tuan, which uses QFPay to collect fees from merchants all across China.
QFPay’s model is slightly different from Square’s. For one, they don’t give away their readers for free. They charge 899 renminbi or just under $150 for each one. Competitors like Lakala also charge for their readers at about 199 renminbi a pop.
QFPay’s transaction fees also legally have to be a lot lower than what U.S. and European companies can charge. They don’t charge more than 0.78 percent per transaction, which is one-third of the 2.75 percent that Square charges. That cuts the company’s margins on every swipe, although Lee says that R&D costs are substantially lower in China.
QFPay also recently released an API that lets third-party developers create payment experiences. (Square does not currently offer an API.) It’s still early so there just 100 developers on the platform.
The Chinese market has myriad challenges, which could also be good opportunities for QFPay.
For one, penetration for point-of-sale terminals is still quite low. Lee says only about 5 million merchants out of China’s estimated 100 million have proper point-of-sale machines, so QFPay has to do a lot of education on why its products are valuable.
The country is also heterogeneous with different provinces having different business cultures.
“In the north, merchants just have a leisure life. They open the shop and go home at 5 of 6 p.m.,” he said. “But in the Southern provinces, they will stay open until midnight.” The Western provinces are also far less developed than the coasts, with many Chinese merchants still carrying feature phones.
Lee said they started working on the company about six months after Square launched. The company’s management team has experience working for PayPal, MasterCard, HSBC and Western Union; that breadth of experience spans the entire history of digital payments in the country.
They face internal competitors like Lakala and iBoxPay, but Lee says those are consumer-facing solutions. He says they basically target reader sales at consumers that want to pay for utilities and other services through their phones.
But QFPay is aimed at merchants and the company is working on all sorts of software tools to handle CRM, analytics and loyalty products.
One interesting thing to watch is how social networking platforms mature divergently as businesses around the world.
Sina Weibo, the public microblogging platform that has had a huge impact on online discourse in China, is veering down a path toward e-commerce and transactions after Alibaba took a stake worth $586 million in it last month. The platform is one of the two more influential social networks in China today, with the other being Tencent’s messaging app WeChat.
But unlike WeChat, Sina Weibo’s growth has slowed over the last year and its parent company Sina has had visible issues in monetizing the platform. (It feels a little bit like the heat Twitter had a few years ago for taking longer to bring in revenue-making products like promoted tweets and in-stream ads.)
“Weibo is pretty mature right now,” said Alibaba CTO Wang Jian in an interview. “It’s not in a fast growth period.”
In the Sina’s last earnings report, the company said Weibo made just under $50 million in revenue, or about 12 percent of overall advertising revenue. But investments in the company contributed to an $8.5 million operating loss for Sina last year.
Now with Alibaba’s investment, it looks like Weibo will take a different money-making path than its Western counterparts, which are more dependent on sponsored stories or in-stream ads.
“I think the best way to monetize Weibo is through e-commerce, not by ads,” Jian said. “That’s what I believe. That’s my personal thought. Weibo has a very good chance to integrate with the Alibaba business.”
It’s a win-win deal. Alibaba, which is veering toward an IPO, is China’s dominant e-commerce company and has an extremely data-driven culture. But it hasn’t been as successful with its own homegrown social networking efforts. At the same time, Sina isn’t widely considered to have the same caliber of technical talent as China’s other flagship Internet companies.
While Jian didn’t give a lot of detail on how they would integrate the two platforms, one could imagine that users could get targeted offers on goods and services related to things they’ve posted status updates about.
“We just need time to find out how to have a synergy of data between the two companies,” Jian said. “Weibo just gave us a new challenge for that.”
As for Aliyun, the smartphone OS that Jian is overseeing, Jian says that he doesn’t think the platform will fit Weibo — which is sort of hard to believe considering that Weibo is a mobile-centric product.
“I don’t think Aliyun really fits the Weibo deal,” he said.
While Tencent’s WeChat, which has surged to 190 million monthly active users over the past year, isn’t a direct competitor, Jian says it is in terms of other metrics.
“If you’re thinking about time that people spend on their devices, then you can say it’s a direct competitor. If you look at it from just a media perspective, I don’t think it’s direct competition. Two years ago, everyone spent time on Weibo, and now Weixin (WeChat) is becoming that app. It’s really a time spending problem.”
Lei Jun, the CEO of Android handset and OS maker Xiaomi, is arguably the face of tech entrepreneurship in China as a long-time angel investor and serial entrepreneur behind companies like Amazon-acquired Joyo.cn and the recently IPO’d YY.
He’s been called the “Steve Jobs of China” in the sense that Xiaomi is an integrated hardware and software maker that has altered Android for Chinese tastes. They sell high-end Android phones at or slightly above the cost of materials and profit through accessories and eventually, software and services. While the country has been known for lower-end hardware makers, Xiaomi is pushing the idea that world-class products can be both made and designed in China.
The company has its own fanboys to prove it. Just two years after launching their first device, Xiaomi plans to sell 15 million devices this year, bringing the company $4.5 billion in revenue. Last year, they sold 7 million phones. Sales in batches of 200K to 300K phones on their website regularly sell out — sometimes in less than an hour.
Lei Jun
But Xiaomi also has incredibly high expectations to realize; the company’s valuation is not just predicated on raw hardware sales, but also on the idea that Xiaomi will eventually be able to monetize software services — something it has yet to prove against giants like Alibaba and Tencent in the ridiculously competitive Chinese market.
While founding the company three years ago, Jun thought about the history of Chinese business and entrepreneurship to find role models.
“What kind of company in China can last for a century?” he asked at the GMIC conference in Beijing this week.
He said he ultimately looked up to two companies: a 340-year-old traditional Chinese medicine company called Tongrentang and hot pot chain Hai Di Lao.
He said Tongrentang’s mission taught him two things — never produce lower-quality products for the sake of cost and never spare any effort in creating the best quality products.
Hai Di Lao, which is indeed a delicious hot pot chain (yes, I’ve tried it), taught him about the value of customer service. In a separate interview, co-founder and president Lin Bin suggested that I order items not on the menu or even praise the dishware in the restaurant.
“They take customer feedback very, very seriously and always leave you with a surprise,” Bin said.
In a way, Jun is critical of the prevailing business culture in China. “There’s a big problem with integrity in China,” he said. “People sell pigs but you’re not eating pork,” he added on-stage, alluding to recent health scares where rat meat has been marked as lamb.
Appealing to a Fanbase
Paired with this focus on high-quality parts is a marketing model that’s unusual for any handset maker globally.
Xiaomi sold 72 percent of its phones directly through its online store last year, bypassing the costly logistical headache of dealing with brick-and-mortar retailers. Right now, they have two models: one that retails for 1999 renminbi ($326) and a more basic version that goes for 1499 renminbi ($245).
They can do this because the company has cultivated a unique participatory model of designing phones. Every week, the company releases a new version of its customized Android experience: the miUI.
Of their millions of customers, there are a few hundred thousand “hardcore” fans who do the teardowns, scrutinize every spec and offer suggestions on how to change the phone.
“Chinese consumers are actually very critical in the sense that they compare not just the build and look and feel of phones, but also everything that goes inside — the CPU, memory, speed, the specs,” Bin said. “They are pretty savvy about the money they pay for these phones.”
Jun uses Weibo, the public Chinese social networking platform that sometimes draws comparisons to Twitter, to solicit advice and communicate with Xiaomi fans. He’s offered different levels of hard drive storage based on user feedback. He said they even added a sound recording app at the behest of a reporter.
“We co-develop the phone,” Jun said in another interview. “I’ve used more than 70 phones in the last couple years. I have lots of suggestions, but will they change their phone? Even Nokia? Most likely not. So I created a model where I’ve invited all of my fans to be involved in designing the phone. It’s one of the most exciting things for them.”
He says this is a key part of why Xiaomi spends less than its peers on marketing.
“If you invented a feature in the Xiaomi phone, will you tell your classmates and friends that you invented a feature? Most likely you will.”
Their approach ties into a big trend that is fueling a hardware Renaissance globally: the ability to feel out product-market fit through social media before a capital-intensive manufacturing process — be it through Twitter, Weibo or a Kickstarter campaign.
Through that feedback and Xiaomi’s own in-house engineers and designers, miUI includes improvements over the standard flavor of Android. Jun says that they’ve tweaked how applications run in the background so that a Xiaomi phone can go up to six or seven days without a recharge. (I’ve been carrying an older Xiaomi around and it has held up for a few days at a time, unlike my iPhone, which needs to be recharged every day.) There are also lots of UI flourishes that are, frankly, Apple-like.
Software For Profit And As A Protective Moat
While Xiaomi has done well at positioning itself as much more than a commodity hardware maker, one of its next challenges will be to prove that it can make money off software and services. Because it sells phones at or near the cost of the build of materials, Xiaomi will rely on accessories and services to boost its margins.
Jun is reluctant to say whether Xiaomi is at heart more of a software or hardware company (a question that has also perplexed analysts of Apple).
“We positioned ourselves as triathlon athletes,” Jun said. “We do software, hardware and Internet services, so if you would ask which part of the three is stronger, my answer is: would you ask a triathlon athlete whether they are best at running, swimming or cycling?”
They’ve shared some vanity stats showing traction, although it’s hard to understand what they mean. Xiaomi’s app store sees 3.5 million app downloads a day, 3.5 million photos uploaded to its cloud service a day and has seen 2 billion messages uploaded cumulatively. Its messaging app MiTalk is way behind Tencent’s WeChat, which is the other big China tech story of the year with 190 million active users.
There are some promising metrics, though. Bin says Xiaomi’s customers are twice as active on the mobile web as those of other manufacturers. That sort of engagement could lend itself to interesting revenue opportunities down the line in gaming and e-commerce, although the company declined to share specifics.
Two other growth areas for Xiaomi are international markets and in other types of hardware. The company is expanding to greater China — or Taiwan and Hong Kong. Bin is reluctant to talk about even more international markets, saying that the company just wants to prove itself in these two areas first.
There are unique challenges. For one, these markets rely on more of the subsidized model that’s common in the West where carriers lower the list price through post-paid plans. In China, many consumers pay for the full cost of the phone upfront. They also don’t know whether the marketing model where they heavily engage a core set of fans will work outside of mainland China.
The other growth area is with Xiaomi’s new set-top boxes. It was a rocky start with the initial sales of the set-top boxes blocked by Chinese regulations around TV content. But they re-launched two months ago. Bin and Jun declined to share figures on sales so far, except to say that Jun has seen second-hand models show up on eBay and Taobao for $90 (which is about twice the list price of 299 renminbi).
Bin is hesitant to share too many targets, because he claims that Xiaomi doesn’t really even have that many internally. Even the goal to get to 15 million handsets is to produce that many, not necessarily to sell that many (although they invariably sell out).
“We don’t have any KPIs (key performance indicators) — not even internally,” Bin said. “Our KPI is to get handsets to everyone who can place an order online and make a full payment.”
Parse, the mobile back-end startup that Facebook recently bought to set up a new developer-focused business, just launched hosting. Parse It’s meant to help mobile developers that have a desktop web presence or companion experience on the web. The acquisition has already given Parse a boost, with the number of apps it hosts up 33% to 80,000 since the deal was announced.
“People were building mobile apps using Parse. But when they wanted a web presence or a dot-com landing page, they were using the Parse for the log-in, but the website was being served from something else like Heroku or App Engine,” explained Parse co-founder Ilya Sukhar. “So we’re launching a fully featured web hosting platform.”
Sukhar said the project has been in the works for the last four to six weeks, even while the Facebook negotiations were going on.
The new hosting service lets developers host landing pages, and display user data retrieved using the Parse API. Say if a developer wants to show a leaderboard for their game on the web, they can do it using both the new hosting service and the standard Parse data product.
Parse Hosting comes on top of other products that help mobile developers manage push notifications and user identities and log-ins.
He added that the Facebook deal, which we had independently heard was worth $85 million excluding retention incentives, hadn’t scared away developers. They’re at 80,000 apps now, from the 60,000 apps they said they had when the Facebook deal was announced. “There was an interesting debate about whether people would move off Parse, but all of our metrics are up,” he said.
Facebook had won the deal to buy Parse even as many of the Valley’s best known companies like Apple, Yahoo and Dropbox had looked or expressed interest. They’re starting their very first business-to-business revenue stream through the Parse acquisition and had — like in the case of Instagram — promised the team a fair amount of autonomy to grow their products as they see fit. They’re not tampering with Parse’s SaaS-based revenue model.
He also said that the company hadn’t celebrated the deal yet. “We have a lot of stuff on our plate,” he said.
Mobile Miscellany: week of May 20th, 2013
Connectify Switchboard ditches original server plans, is available now for $90
CrunchWeek: Yahoo’s $1.1B Tumblr Purchase, Lyft’s Big Raise, And Microsoft’s Xbox One
Alt-week 5.25.13: regenerating limbs, robo-politans and science’s playground
Misfit Wearables Drops Android Support For Its Shine Activity Tracker Ahead Of Summer Launch
Functional Apple 1 auctioned off for $671.4K, sets new Sotheby’s record
Will The Xbox One Rule The Living Room? Price Will Determine The Size Of Its Kingdom