11:39 am: A few introductory remarks, and Ina Fried welcomes Roese to the AsiaD stage.

Ina Fried: Hi again, everyone. I’m very excited that our next speaker is John Roese of Huawei. Huawei, for those of you who don’t know — I’m sure everyone in this room does — is, you know, a huge Chinese networking giant involved in all kinds of areas, from making devices, making the networks that devices run on, and has quietly, over the last many years, amassed just a huge talent pool, not just here in Asia, but also in the United States. And John Roese oversees the U.S. R&D arm, which I actually didn’t realize is composed of as many thousands of engineers as it is. John also has an interesting career as CEO of Nortel, and several other technology companies before that. So, without further ado, John Roese.

Maybe, I think, John, the most helpful thing would be to talk first a little bit just about Huawei and what are the businesses it’s in.

John Roese: Most importantly, everybody knows that Huawei is a telecom company selling things to carriers. But this year the company has gone through a complete transformation to become an ICT company, and it’s based on the premise that in the future, most problems will not be solved purely by the consumer, the carrier, or the enterprise ecosystem. You actually have to combine the technologies from them to solve problems.

And so while we had a big carrier business and continue to be currently the second-largest carrier company in the world, in terms of equipment suppliers we quietly have emerged as a consumer company with a multibillion dollar consumer company in the handset business, and now have entered the market as an enterprise player with … about $4 billion in enterprise sales, which makes us probably the second or third largest in the world.

So the company is redefining itself on a premise that the future is not about distinct silos of technology, but how you put them together in a coherent way to actually solve more complex problems in this next generation of ICT.

Ina Fried: So everything’s all related, but let’s break it into silos for a second. What are the different products you guys make? You have networking — both, I think, wired and wireless — although carriers are certainly what you’re best known for. You guys make phones and tablets which have been less in the U.S. but starting to show up first, I think, through smaller carriers and now through some of the major carriers. What other kinds of products do you make?

John Roese: To put it into context, my role in the U.S., I’m responsible for advanced technology across all of the business lines. And I kind of joke with people that, in just my organization, you can go from dealing with people developing photovoltaic technology, to cloud technology, to next-generation cellular technology, to enterprise switches and routers, to core optical networks, to handsets and tablets and smartphones. It’s really the entire spectrum, and it’s probably one of the broadest toolkits of any company in the industry, in terms of providing the communication infrastructure for — everything. It’s a strange answer, but if there’s a way to communicate, there is probably Huawei technology involved in that communication ecosystem.

Ina Fried: And let’s talk about the organization you oversee. First of all, explain to people the scale. Because I certainly didn’t have an appreciation for just how many people Huawei had in the U.S. And talk about what they’re doing.

John Roese: So, obviously, over the years Huawei has gone from out-executing a lot of people in front of us to now out-innovating and being the leader in many segments. We’re now the market share leader and the innovation leader. And as part of that, we realized we had to operate globally. We had to create a global ecosystem of innovation. The biggest change in that was this conscious decision to expand our innovation organization worldwide.

So my charter was to come in and essentially scale the North American organization from a few hundred people to well over a thousand people now, that are all chief scientists, chief technology officers. The average seniority in my organization, from an engineering perspective, is probably 25 to 30 years in the industry, these deep, deep experts that, quite frankly, have created many of the industries that we’re dealing with, in terms of technology. So that thousand-plus people that’s emerged over the last year is the tip of an arrow that, behind it, is today approaching almost 60,000 engineers around the world, many of them in India and Europe, and a huge portion of them in Shenzhen, Beijing and other provinces in China.

Ina Fried: So, 60,000 engineers — some huge percentage of the company’s overall workforce — are actually engineers.

John Roese: Absolutely. As a technical guy, and having been an executive of many companies, one of the things that attracted me to Huawei was it’s still a very technical company. Almost 50 percent of the company is R&D. There are very few companies that have this kind of emphasis on the development of technology, as opposed to other aspects of the business.

Ina Fried: And how did you build this workforce in the U.S.? You’re in many sites in the U.S. and Canada; um, from what I recall, you’ve basically cherry-picked some of the companies on the downturn and grew that way.

John Roese: I answered that question to some folks in the U.S. government; they asked the same question about how, isn’t it challenging to attract people? It was kind of an interesting conversation. I answered it, “One person at a time.” We candidly looked at where innovation was happening and tried to make sure that we had a presence close by, so we could tap into those ecosystems if you want to do advanced terminals, smartphones, tablets. A great place to do that is San Diego.

So we opened a big facility in San Diego. If you want to do cellular wireless — Chicago; Ottawa; Bridgewater, N.J. — great places to do that. Our biggest sites are actually in Santa Clara, where you have this — ecosystem where you can almost find any technology within about three miles of our facility. So it was a very conscious decision to say that there are clusters of intellect within the North American market, and instead of trying to assume that you can bring them to you, it was better for us to go to them and attract them into the organization.

Ina Fried: And I understand that you guys — your chief recruiter — you owe a big debt to Larry Ellison?

John Roese: Well, we actually kind of find it very useful when there’s mergers and acquisitions and consolidations. So when Sun and Oracle combined, we found a lot of people at Sun that basically wanted to rethink where they wanted to work. Sun is a fantastically innovative company, as is Oracle, but the cultures are different. So it was a great boon to us that we were able to be down the street, and be growing very rapidly, and have this idea where people could take their ideas and turn it into actual reality. By the way, we did the same thing up at Ottawa. When Nortel kind of disappeared, one of the things that happened very quickly, en masse, some of the top technical experts in Nortel just kind of walked across the street to a new facility while they opened, and joined the company.

Ina Fried: And that’s how you came to the company, right?

John Roese: Well, I was a little bit later than that. Actually, that team, most of them who worked for me came into Huawei, and then I was kind of off doing other things, and then as we decided to scale it, I guess they gave me a good reference and they say, “Well you should go attract this guy because we liked working for him, he built a good innovation culture and maybe can help you take it to the next level.”

Ina Fried: And talk about that: What was your thinking, how well did you know Huawei when they first approached you? I mean, obviously, some of your former workers were there. What were your concerns? What excited you about it?

John Roese: Well, I think most people, to quote my former neighbor up in Ottawa, the mayor of Ottawa — Larry O’Brien, at the time — he opened the R&D facility for us up there, and his comment was, “Huawei is the largest company I’ve never heard of.” And that was very common in our engagements. And for me personally, I knew about Huawei, I had competed with them, I even tested their technology to prove whether or not it worked and whether it was a real threat, and learned very quickly it was a very real threat to companies like Nortel. But for me personally, I had kind of checked out of the industry after Nortel. I said, four Fortune 500 CTO roles, it’s time to go do something else, I’ll go to that Ph.D. in cultural anthropology.

But then I started talking to Huawei. I saw some of my best and brightest people — people that were Nortel fellows — come into the company, and as I got talking to them, when I came over to SenJen, when I met with the management team, when I met with the folks that were running the company, what I realized is, this is one of those companies that actually truly values technology; understands that you have to invest heavily into it and was genuinely excited about, not what happened yesterday, but what was going to go in the future. For me, as a technologist — every technologist, any engineer — the most valuable thing you can do is take an idea and turn it into reality. It’s not about making money, it’s not about prestige, it’s about turning your ideas into reality. When I saw this engine here, and this desire to innovate into the future, it was just a complete no-brainer to join.

Ina Fried: Now, you talked about building your organization one person at a time, and part of the reason why Huawei has built its organization in the U.S. one person at a time is because the U.S. government won’t let you acquire just about anyone. You guys have tried a couple times. How challenging is that, in a technology industry that is largely built by acquisition? You came from Broadcom; they gobble up a dozen companies a year.

John Roese: No one will accuse government policy of preceding the technical ecosystems and industries. It usually is a couple generations behind. So the current status of our relationship with the U.S. government is really that we’re a bit out of sync. In most of the industries that we compete in right now, the industries have been highly globalized. If you wanted to build a wireless network today in the U.S., your choice of vendors would be, let’s see, a Swedish vendor, a Finnish vendor, a French vendor and two Chinese vendors. Those are the tier-ones. There’s no North American vendor that can build that for you. The last one was Nortel; it’s not there anymore.

So part of our challenge is educating the U.S. government, educating the politicians. And not just the U.S. — around the world — that we’re in a highly globalized environment, the innovation has shifted, the structure of the industry has shifted and there needs to be a rethinking of how public policy and governmental policy relates to understanding a technology and its application and networks.

Today we build the networks for 45 of the top 50 operators in the world. The remaining five, a chunk of them, happen to be in the U.S. And so we’re very patient. Candidly, we’re now engaging very heavily, we’re dispelling myths on a regular basis, and it does make my life a lot more difficult. In fact, some of the U.S. government people made that comment. They said, “We applaud what you’re doing because you’re hiring lots of people in the U.S.” And we’re exporting $6 billion of goods and services into our global supply chain out of the U.S., we’re a great corporate citizen. But we kind of have to get in sync between the public policy and the actual reality of the industry.

Ina Fried: And what do you think it is? Because, I mean, you mention all of your competitors are global, non-U.S. based companies, is it xenophobia, what is really fueling this fear, and are any of the concerns legitimate or are they all fear-based?

John Roese: Well, I think I would say none of the concerns are legitimate in the reality, but perception is sometimes reality in people’s minds. So the punch line is, some people still think the industry that we exist in is the Bell Labs and the Lucents of the past. So, again, we do have to educate them about this future. The second is an unknown. My comment about Larry O’Brien — I mean, the biggest company he’s never heard of. Well, if I went and polled people in Washington, every senator and congressman, and asked them, “Do you even know how to pronounce Huawei?” — the answer would be, probably not. So we have to engage.

There’s an interesting thing: It’s a $30 billion company; our definition of an emerging market is the United States. So when a U.S. company comes into China, there’s a big educational process to kind of convince people that the company is legitimate, it can provide goo technology, it can be a good partner. And so it’s really just a systematic process of getting them to understand the reality. It doesn’t hurt now that we have a highly globalized workforce, that we have a big presence in the U.S., that we’re not in front of them and dialoging and being present. But more important, the thing that will ultimately overcome this is innovation. There is — you can prevent or avoid certain companies, until the technology they develop is so far superior to what you have at your disposal currently, that it creates a competitive disadvantage. And we believe, given our investment in innovation, that we are almost at that point. In many places ,we are clearly out innovating our competitors, and it just is sound public policy to let the carrier infrastructure of the United States — or the terminal industry or the enterprise industry– use the best technology to solve the best problem, because the correlation between global development, economic advancement, user experience, is entirely tied to using the best technology.

If I told you you couldn’t use any state-of-the-art tablet because I didn’t like the country of origin, and you had to go back to using a typewriter, would you do it? Of course not. We’re not quite there yet, but I think that will occur.

Ina Fried: So I want to turn to one of the topics that’s near and dear to my heart — and certainly to much of the audience — which is this mobile revolution. You guys are playing in that in several areas. You’re building, as you mentioned, the gear that a lot of these networks run on. Perhaps not the ones that I get to use in the States, but a lot of the other networks that I use when I travel, as well as, increasingly, some of the devices. And one of the areas that Huawei and ZTE and a number of Asian companies are making huge influences, democratizing these smartphones. Can you talk about the world you guys see, with smartphones everywhere on the planet?

John Roese: Absolutely. We’ve been through this before. A long time ago, Huawei decided that cellular technology — mobility — should be everywhere. And at that time, most of the big players said it wasn’t cost effective to build cellular networks that could be deployed in sub-Saharan Africa or in the developing world. Huawei was one of the few companies that said, “No, no, no — we need to figure out how to do this.” The result was skipping of generations, massive penetration, and today we have a couple billion people sitting on our networks, which is a good step.

Now we’re in a different phase. The different phase is now that you have these mobile networks, there is still a bit of a have-and-have-not world, and that is the smartphone versus the feature phone. I think the day before yesterday somebody mentioned, “Would it be great if there was $100 smartphone, or something better than that”? Well, there is, we build them. In fact, in the U.S. right now, you could go purchase — there are commercials on television from some of the tier-two operators. They’re our customers that essentially are describing $29 Android smartphones, Huawei-branded, no contract, no commitment.

Ina Fried: Now, does that mean you’re building a phone that costs less than $29 to make?

John Roese: Well, the economics are slightly different and more complex, but clearly they’re in that strata of the sub-$100 smart phone. The advantage of that is, once you get rid of this concept of feature phone/smartphone, that everybody has a mobile broadband device, everybody has a media-capable device — think about the capability that can unlock. I mean, I think Vice President Gore mentioned this concept of five billion people on mobile networks, and less than one billion on smartphones. Well, as soon as everybody is on smartphones, every interesting piece of technology you saw here over the last couple of days is contingent on having an interface that can actually do media, can do data, can be fully interactive. There is a huge opportunity, and the democratization of smartphones — which is clearly our message — we are absolutely trying to make sure that wherever there is a mobile user, they are a fully featured mobile user. That has a huge, profound impact; not just on the mobile networks and the devices, but all of these very interesting, over-the-top applications, cloud services and other things that are contingent on a better terminal and a better mobile experience.

Ina Fried: That growth you mentioned is also contingent, of course, on having networks that can handle that capacity; having enough spectrum. How much time does your organization spend looking at solutions? It’s great to say, wouldn’t it be great if the whole world has smartphones. I think we’d have a problem if any country went to 100% penetration. Data networks are struggling today. How much of your time is spent looking at that issue, and what are some of the things you guys are looking at?

John Roese: A huge portion. I mean, the good news is, I did a calculation a couple of years ago to say, how well have we executed as an industry in improving the bandwidth efficiency of networks — and this was wireline networks. But over a 20-year period, we had improved the cost-per-bit ratio by 22 million to one. That’s a pretty good ratio, if you will. We are very good, as an industry, at figuring out ways to increase the available bandwidth. Now the challenge is, it gets a lot harder when you have to deal with laws of physics, when you deal with things like Shannon’s Law and channel bandwidth. And so we are spending a huge amount of time. Given the composition of my organizations and the people in the organizations I run, they’re all advanced technologists and they’re the place where we are exploring not just how to make it more spectrally efficient, but how do we architect the cellular network. Instead of having these big monster cell sites all over the place, move to heterogeneous networks that have multiple tiers and multiple devices and ways to access, different kinds of networks to interface with, spread the spectrum over multiple spectrum channels.

At the same time, we go and lobby very heavily to get the digital dividend, free up spectrum, increase spectrum. That’s a very precious commodity. But more importantly, think about ways to use that spectrum efficiently. Now, most people don’t understand that a lot of the inefficiency in the network is based on the way it’s designed, and the fact that things like the modulation rate degrades as you move away from the cell site. If you can fix that, then the efficient use of spectrum can improve dramatically. Those are the kinds of things that we keep working on.

I actually have a very high degree of confidence that, contrary to public belief, we’re going to run out of capacity on the cellular networks. I think our industry is actually quite good at figuring out ways, creative ways, of improving that cost per bit of the available spectrum or the available capacity of the network. Occasionally we hit a wall, but usually we figure out a way around it. We innovate, we come up with a new approach and we continue to provide that kind of foundational attribute, which is capacity for people to connect.

Ina Fried: I want to get to questions in just a second, so definitely be thinking of them. But since a lot of people don’t know Huawei, and don’t know what you guys do, take us through the labs. What are some of the coolest projects that you can talk about, that you guys are working on? What are the things that you could tell your cousin, and they’d be like, “Wow?”

John Roese: Yeah, absolutely. So, one of the most interesting ones that I’m really excited about is cloud. So everybody knows the term “cloud”; the problem is, it’s kind of cloudy — we don’t actually know what it really defines. But right now, there’s kind of two schools of thought about cloud. There’s this idea that cloud is just a virtualized data center, and it doesn’t really change much; it just makes things slightly more efficient. And then there’s this very disruptive model that people like Amazon and Google have been focused on, which is, let’s just rethink things like storage and compute and really change the economics so that we can kind of give storage away for free and make it up on advertising. So they had to really rethink how the world was created, in terms of some very foundational components like storage and compute.

So we have a huge amount of projects. I think today we have almost 2,500 engineers across Huawei working on cloud-based projects; which, by the way, is bigger than the total R&D staff of most of our competitors in many markets. But most importantly what we have to acknowledge is, the thing that we have to build is not just a minor iteration of the historical data center, but we have to actually take what people like Amazon and Google philosophically have created, which is a radical rethinking of storage and computing, and turn that into commercial offerings.

We are just about to start trialing and putting out technology to show some of these technologies. But imagine an environment where the cost of storage could be one-tenth what it is today. And you do that by delayering and stripping out a ton of technology so that it’s just very simple architecture, very well-architected and orchestrated. If you change the cost of storage fundamentally for a carrier or for a consumer, for an enterprise, what is the implication of that? Everything. You could change your business model; you can no longer worry about, you only get one gigabyte of storage for your email or don’t make those big files because I don’t have anywhere to put them or be concerned about the cost of those hard drives, or the backup is too complex. If you can get rid of all of that by just changing this fundamental component of the cost of storage, it cascades through every one of these ICT ecosystems. So we call that single cloud, it’s a piece of our overall cloud architecture; and, candidly, I think it’s going to be one of these very big disruptions in the overall industry. Beyond that, obviously we’re doing stuff in everything you could imagine, next-generation wireless. Imagine, if you’ve played with an LTE network today, it’s pretty exciting. A 30-millisecond round-trip time, a 20-30 megabit per second of realistic bandwidth; the theoreticals are much higher. The stuff we’re working on pushed the envelope up to hundreds of megabits or gigabits per second over the wireless environment.

Now, it’s hard to say what you do with that. But I have no doubt that creative people will find a very interesting thing to do with gigabit wireless.

Ina Fried: Really fast dropped calls.

John Roese: Well, it’s funny, I was just at MIT last week, and they were showing me holographic video. I asked them a simple question: How much bandwidth does this take? And they said, “Well, basically it’s the equivalent of a whole bunch of high-definition channels combined to create this three-dimensional, high-definition visualization.” So they were talking hundreds of megs or gigabits of capacity to do holographic video. We think holographs are kind of neat, and they’re interesting. I’ve heard it come up a couple times in the last couple of days. But to move that over a network, we’re going to have to rethink and redesign the networks, which might be one of those first applications, but even if that isn’t the one, I have no doubt people will figure out what to do with it.

Ina Fried: Even making Netflix cost-effective. I mean, their pure data shows that right now we’re not in that place where it’s really you can get Netflix for $7.99 a month, but the cost of delivering a movie is approaching that same rate.

Moving on now to the Q&A with the audience …

Q: On this topic of spectrum and bandwidth, we actually had Mr. Gore here mention that one of the main challenges that the networks are facing is video delivery, broadband delivery; this is definitely one of the drivers. And if that’s an issue not only over typical wired networks, it is only more an issue if every single one of us started to want to stream video or these other high-bandwidth applications over the networks. It’s a significant challenge, which as I understand it, faces two very serious walls, which you’ve alluded to. One is the physics itself. And the second is a political wall. As an example, in Europe, one of the issues is you have a lot of small countries and space; they have to divide the spectrum in ways that are actually very, very inefficient and leave very little spectrum for a given country. So my question is, is this actually really a technical problem, or is it more of a political problem that needs to be solved, that will allow us to get that kind of bandwidth necessary?

John Roese: Yeah, well it’s a great question. I mean, the bottom line is, yes, there’s clearly a political piece to the equation. If you carve up spectrum in funny ways, or you decide that it can only be used in certain ways — like frequency division duplexing versus time division duplexing — these create an unnatural burden. Spectrum is a spectrum; it’s just a segment of the airwaves. We’d like to see a little more rational spectrum policy. Clearly it’s improving, and people I think, now — definitely the FCC, and around the world — are really thinking about how to free up spectrum. But it just takes quite a long time to actually accomplish that. But don’t underestimate the technical problem. There is clearly a technical problem that needs to be solved. You cannot take a network that was historically designed to move very low-bit-rate voice calls, GSM and SMS, and suddenly assume it can be an ultrabroadband wireless delivery vehicle for high-definition video, without really rethinking not just how you do things like modulation on the cellular side, but also how you design the network. And so, that heterogenous networking model, which I think is where most of the action is going to be for the next several years, starts to say, well maybe we should redesign the way the network works. Instead of having one tier, let’s have two tiers, let’s have small cells, let’s spectrum up in the 5- and 6GHz range in coordination with 700 megahertz spectrum.

Imagine a device, five years from now, that’s always connected over a 700MHz channel. So it’s got long range, great building penetration, it’s kind of the control channel — that’s where the important stuff flows. But it’s seamlessly able to invoke additional radios when it’s nearby a small cell, that gives it 100MHz wide channel, 4×4 MIMO, so it has a gigabit of capacity potentially to consume video. So those are all theoretically possible. There are technologies that can be built that way, but the design of the network is very different. It means that now you have to start putting those small cells somewhere; you have to decide that it’s okay to put them on light poles or on building walls, and if we have to have a permitting process that says it takes six months and $10,000 per site to get the permit to hang something on a light pole that just is a small cell in the second tier, that’s just not going to work. So you’re absolutely right, both are important pieces of the equation, both are resolvable, but if you just solve one without the other, it probably isn’t going to get us there.

Q: I have a question about Huawei and potential market share and mindshare in the U.S. One thing that I found really disrupting recently was, Google has shifted Chromebooks with an allocation of Verizon data for free each month. And I think that model is — it’s an incredible model, and I think if you were to put it on lower in phones, you could get people to dig in to this data so that they would see the value of it and want to purchase it, but it’s hardly anywhere. I’m just wondering if you have tried this in any markets around the world, and if you think that this might be something that would be disruptive enough to get traction in America? Because there’s no one offering that.

Ina Fried: So the drug-dealer model — the first hit is free. [laughter]

John Roese: Yeah, we’d rather not use that analogy, but generally it’s not us that are going to create that model, in the sense that it’s the carrier that ultimately has to decide what makes economic sense. Now, the good news is that carriers are now more and more engaged with us saying — they used to think of Hauwei as kind of a supplier of technology that kind of kept the other suppliers honest. That’s when we were in the fast-follower mode. Now that we’re the innovator, the dialogue we’re having with customers is fascinating. So I think you’re on to something, and I think that there are markets where the carriers are looking for ways to increase the penetration rate. And I think now Huawei has an opportunity to actually describe new business models, and the carriers are much more willing to listen to us, because they view us more as an innovator. So I haven’t had that discussion especially, but I’m pretty much, on a weekly basis, sitting down with either CEOs or CTOs or the operators.So maybe the next one, I’ll bounce it off of them and see what they say. I think it’s a great idea, and there’s many other examples in the enterprise world where we’ve done that as an industry and it has worked really well. Get people excited.

Cloud storage is a great example. Give them the first 20 Gb, and see what happens. If they like it, they’ll buy more.That’s what Picasa does, that’s what many of these systems do. You’re absolutely right, it needs to be applied to other markets.

Q: I have a question about your intellectual property strategy. Traditionally, IP is still a little bit of a stigma over here, especially in China. But Huawei has a very impressive IP strategy, so I want to know how it is received internationally, and how it compares to when you were at other international companies.

John Roese: I think you’re absolutely right. The perception is that intellectual property isn’t important. Some companies historically — Huawei, seven or eight years ago — said, no, this is really important. And in the last couple of years we’ve been in the top five intellectual property producers in the world, in all industries — a couple of the years we were, I think, number two. Today we have about 50,000 patents PCTs and patent applications globally. So, my — to answer your question very briefly, compared to Western companies I’ve been CTO of, in fact the patent portfolio is larger and the discipline and desire to create it and the willingness to invest in it is absolutely higher in Huawei. They get it, they understand it and I think realize that intellectual property is a critical part of actually being able to compete in the global marketplace.

Q: It seems like on the one hand you have Moore’s law, giving us faster and faster devices capable of consuming bandwidth, and new business models springing up to accelerate that consumption. On the other hand, you have networks struggling to provide enough spectra. I’d like the answer of, well, technology is going to find a way, but do you think that a period of just real latency is almost inevitable at this point, and if not, do you see solutions coming from outside the network world, like smart flash to do caching, to smooth peak times?

John Roese: Absolutely. The solution to these problems will not be just more bandwidth in the network. That’s a great vehicle. I joke that I’ve been in this industry long enough that we go — we oscillate as an industry between finding really long-term solutions to problems by looking at the end-end ecosystem technically, to moments of time where suddenly the network provides more bandwidth, and we think that you can solve every problem by just throwing bandwidth at it. We’re right now approaching a point in wireless where we can’t just throw bandwidth at it. LT is going to give us a bit of a bump, but it’s a bit more time before we get to LT advanced, and in between there, we will have to get very creative on content management, caching, dynamic transcoding, the intelligence of the endpoint, multi-tiered topologies — those are not cellular problems. And so, you’re absolutely correct, which is great for Huawei, because we actually touch all of those, as opposed to only having one tool to solve the problem.

Q: And do you think that’s going to result in an inevitable period where there’s just going to be a lot of latency?

John Roese: I think it’s going to slow things down in certain markets and certain business models, where the assumption of unlimited bandwidth in all environments is true. But you look over the last 20 years, and it has always gone through those cycles. I’m an optimist, I’ve seen us work through them before. The technical work to solve it when you’re in those “periods of latency” is much more complex. And then eventually we have a breakthrough on bandwidth capacity and everybody kind of breathes a sigh of relief and rapid innovation occurs. And then we do it to ourselves again. It’s inevitable.

John Roese Session Photos

iKnow, demoed today at AsiaD, aims to be just such an innovator.

The product was billed as a “personal learning assistant” that calculates an individualized study schedule based on a user’s learning and retention patterns.

Algorithms determine the best order in which to learn a set of “items” (a foreign word or phrase, for example), and, more important, the best time for the user to review the items already learned.

“Research has shown that there is an optimum moment to review whatever you’re studying, and that moment is right before you’re likely to forget it,” said Andrew Smith Lewis, co-founder of iKnow developer Cerego.

iKnow hopes to take the guesswork out of the equation and tell students exactly when their brains are primed for a review.

The user interface includes a dashboard with each of the student’s classes, as well as study targets, progress trackers and an upcoming study schedule. Students can turn on email study reminders to avoid falling behind.

Optional Android and iPhone apps can sync with the user’s computer.

The company’s demo unveiled its latest development, a text-parsing tool that will allow users to capture content from blogs or articles and use that text to customize a learning session.

The program extracts the most important words in the article and adds them to the user’s study list. It’s currently aimed at English-learners in Japan, but also offers an extensive core of Japanese-language instruction and a nascent Chinese core.

Businesses and schools can sign up for a subscription service that allows a group of students or employees to interact in a given class.

And therein lies perhaps the most useful feature of iKnow: Administrators can get access to analytics showing the progress of individual students and the entire group. This could help teachers get beyond blank stares to see which concepts students are grasping and which segments may need more time.

Video and photos from the demo below.

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]]> http://allthingsd.com/20111020/iknow-asia-d-demo/feed/ 0 http://allthingsd.com/20111020/kazuo-hirai-asia/ http://allthingsd.com/20111020/kazuo-hirai-asia/#comments Thu, 20 Oct 2011 23:51:37 +0000 Ina Fried http://allthingsd.com/?p=133904 Sony, a pioneer in consumer electronics, is looking to regain lost ground with its latest generation of tablets and game players.

One of the key players in that effort is Kazuo Hirai, a longtime game unit executive who is now widely seen as second in command of the entire company behind CEO Howard Stringer.

The company continues to have challenges, though, with its next-generation Vita game player delayed until next year and its first Android tablets just now making their way into the global market.

8:07 am: Just getting started here on the final day of AsiaD.

On his role: If it is a product that is being picked up by a consumer and it’s got the Sony name on it, it’s under my name.

8:09 am: Talking about the TV business.

Hirai says the jury is still out on 3-D, but there is a chicken-and-egg problem.

“It really is dependent on how much good content there is.”

One of the driving factors is probably going to be gaming, he said, because it appeals to a younger set. And, because it is not tied to live content, it is easier to tweak 3-D to make it a good experience.

“Gamers are willing to try new things.”

8:12 am: What about Internet-connected TVs? Those also haven’t taken off all that well, Walt says.

Hirai: “I think that it is a function of several things. Again, it’s a bit of a chicken-and-egg.”

8:16 am: On Google TV and Apple TV: Everyone is looking for a prominent space in the living room.

“It’s a very competitive market,” Hirai said.

If it is a fight for the living room, the TV is a natural way to get into that space.

Game consoles are another way, as Sony has done with PlayStation 3.

“That’s another way to make sure we have a place in the living room.”

8:20 am: Walt: Where do things stand with the competition with Xbox?

Hirai: We have a much larger install base in Japan. We were neck and neck in Europe.

In the U.S., though, Xbox has a larger install base.

Hirai says they expect a 10-year lifespan for the PS3, and see it eventually having a greater install base than any console.

8:21 am: What about the impact on handheld gaming of Apple and smartphone apps? How much of a challenge is that to the traditional structure of gaming?

Hirai: Whether we are talking about iPods, iPads or any Android, they’ve had an impact on the traditional videogame business, no question about it.

Not all negative impact, though. It has also introduced new customers to gaming.

Hirai notes that Sony is bringing PlayStation games to Android, and is now opening it up to some other PlayStation developers.

As much as those casual games are fun to play, they’re not the same as a dedicated player like Sony’s forthcoming PlayStation Vita portable videogame device. It’s coming to Japan in December, and to the rest of the world early next year, Hirai said.

It’s optimized for gaming with physical buttons, Hirai said, and allows for input on the back. It can also play HD movies and do other things.

Walt tries putting it in his pocket. Hirai quips that Walt has a stash of devices backstage. “They should have a metal detector.”

It has a 3G card for cellular connectivity (for data). In the U.S., it will cost $299 for the 3G model and $249 for the Wi-Fi-only model.

Walt: Who is the target market?

Hirai: Same people who have bought PSP and PlayStation 3, as well as those who have gotten into gaming from phones and tablets and iPod touch devices.

“If we can convert even a small percentage of those players … then we have also gained.”

8:31 am: Hirai notes that the company just started preorders in Japan, and there were people lining up at stores just to order one.

8:31 am: On to phones — is Sony interested in buying out Ericsson in its Sony Ericsson joint venture?

Hirai: I’m not going to comment on the speculation. After April, when Sony made its latest reorganization, one of the things I’ve done with Sony’s CEO and Sony Ericsson’s CEO is recognize that Sony Ericsson is an important part of Sony’s overall strategy, and that the two are in lockstep, whether it is a joint venture or not. That’s one of the things we are embarking on.

“Those are the kinds of things we need to work on to make sure it is a seamless experience.”

8:38 am: Why did you sell your camera sensors to Apple?

Hirai: Can you really define who your competitors are, these days?

We sell to Apple. We buy from Samsung. We sell to Samsung.

8:42 am: Walt: You are not in the top tier of smartphones.

Hirai: In certain regions, you are right.

Walt: So, are you going to buy out Ericsson in the cellphone space?

Again, Hirai says he won’t comment on speculation. The most important thing is that we are able to work a lot closer with the folks at Sony Ericsson.

Hirai is now showing Sony’s clamshell Android tablet — the Tablet P. Walt notes that when you open it up, you have a tablet with a big black bar in the middle.

Sony also has the slate-shaped Tablet S, which acts as a remote control, and which is already on sale in most markets.

8:48 am: Q&A: What is Sony doing to reinvigorate the videogame business?

Hirai notes that this question comes up every time the industry is in midcycle, and there are lots of sequels.

When we launch PlayStation Vita, we will have new titles.

Next question is on why there are only three PlayStation-certified Android devices — the Xperia Play phone and Sony’s two tablets. Will this expand to non-Sony devices?

Hirai: This is not a case where we want to keep it in the Sony family. We are in discussions with non-Sony makers. We’ll make the announcements as the time comes to go public. “This is not just for Sony devices.”

8:52 am: On cameras, Hirai said that there are continued innovations coming in the point-and-shoot business, despite the rise of camera phones.

“Stay tuned.”

Walt: Are you actually optimistic about that business?

Hirai: “It’s not a growing business. I get that. The numbers speak for themselves.”

8:54 am: Last question, from Joanna Stern of the Verge. What are Sony’s plans to make all the devices work better together? Where are you guys going with that? It seems like that is a software challenge — an area where you have struggled.

Hirai: The point you made is a very good one. He notes there is a new group looking at cross-device strategy, particularly among networked devices.

“I don’t know about clock radios.”

Unfortunately, because this is a hardware business, I’d like to think we can change everything overnight, but we can’t.

Kazuo Hirai Session Photos

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]]> http://allthingsd.com/20111020/kazuo-hirai-asia/feed/ 0 http://allthingsd.com/20111020/bradley-horowitz-highlights-from-asiad-video/ http://allthingsd.com/20111020/bradley-horowitz-highlights-from-asiad-video/#comments Thu, 20 Oct 2011 15:11:07 +0000 Beth Callaghan http://allthingsd.com/?p=134956 Google+ project manager Bradley Horowitz joined Peter Kafka on the AsiaD stage today to talk about Larry Page’s leadership, privacy and the lessons Google has learned.

]]> http://allthingsd.com/20111020/bradley-horowitz-highlights-from-asiad-video/feed/ 1 http://allthingsd.com/20111020/won-pyo-hong-video-highlights-from-asiad-video/ http://allthingsd.com/20111020/won-pyo-hong-video-highlights-from-asiad-video/#comments Thu, 20 Oct 2011 13:29:53 +0000 Beth Callaghan http://allthingsd.com/?p=134845 In his interview today with Walt Mossberg at AsiaD, Samsung’s Won-Pyo Hong — who heads global product strategy for the Korean company’s mobile business — talked a little bit about the “multidimensional relationships” his company enjoys, including its relationship with Apple, which features mutual lawsuits as well as large volumes of trade. That and more in the following highlight reel:

]]> http://allthingsd.com/20111020/won-pyo-hong-video-highlights-from-asiad-video/feed/ 3 http://allthingsd.com/20111020/cher-wang-video-highlights-from-asiad-video/ http://allthingsd.com/20111020/cher-wang-video-highlights-from-asiad-video/#comments Thu, 20 Oct 2011 13:08:35 +0000 Beth Callaghan http://allthingsd.com/?p=134822 Cher Wang, co-founder and chairwoman of HTC, got her start in tech selling motherboards many years ago, so that she could create smaller devices to power “easier communication.” She communicated with Walt Mossberg at AsiaD about some of the devices her company is creating today, about HTC’s partnership with Android, and about her belief in the stylus.

]]> http://allthingsd.com/20111020/cher-wang-video-highlights-from-asiad-video/feed/ 1 http://allthingsd.com/20111020/what-is-yahoo-still-one-of-lifes-unanswerable-questions/ http://allthingsd.com/20111020/what-is-yahoo-still-one-of-lifes-unanswerable-questions/#comments Thu, 20 Oct 2011 12:30:15 +0000 John Paczkowski http://allthingsd.com/?p=134820 What is Yahoo?

That question has been put to the company’s leadership innumerable times over the past few years, each time with wildly different answers:

At D6 in 2008, Yahoo co-founder and then-CEO Jerry Yang said the company is a consumer starting point on the Web. “We want you to start your day at Yahoo,” he said.

At D7 a year later, Yang’s successor, the recently ousted Carol Bartz, defined the company as something entirely different: “The place where people find relevant contextual information about things they care about.”

And in 2010, when the question was asked of Yahoo EVP Blake Irving, he replied with the most unwieldy, nonsensical answer of all.

“Yahoo is a global series of Web experiences delivered across a variety of devices that gives people what they want,” he said. “It connects advertisers to a global audience. Yahoo is all about delivering experiences to individuals that make them engage with each other. Folks always ask, ‘Is Yahoo a search company? A content company? A communications company?’ In a world where people only have so much time, we’d like to help them engage with the things that matter most to them.”

That’s a pretty lousy elevator pitch.

So when the “What is Yahoo” question was put to Yang once again, at AsiaD today, expectations for a decent answer weren’t particularly high. Good thing, too, because he didn’t exactly raise the bar with his reply.

What is Yahoo? “It’s the premier digital media company,” Yang said.

The premier digital media company? Really? I imagine Apple, Amazon and YouTube might have a thing or two to say about that — even if Yahoo’s video and entertainment offerings in India are as big as Yang claims.

So again, what is Yahoo?

Who knows? But maybe it’s time to stop asking.

]]> http://allthingsd.com/20111020/what-is-yahoo-still-one-of-lifes-unanswerable-questions/feed/ 0 http://allthingsd.com/20111020/kibot-demo-at-asiad-video/ http://allthingsd.com/20111020/kibot-demo-at-asiad-video/#comments Thu, 20 Oct 2011 12:03:59 +0000 Beth Callaghan http://allthingsd.com/?p=134813 Korea Telecom demoed Kibot, its kids’ robot, at AsiaD today. The plastic monkey combines games and education, which is nothing too unique, but as shown in the video below, it also allows parents to call, videochat with their child, and even control the robot remotely.

]]> http://allthingsd.com/20111020/kibot-demo-at-asiad-video/feed/ 0 http://allthingsd.com/20111020/livingsocial-video-highlights-from-asiad-video/ http://allthingsd.com/20111020/livingsocial-video-highlights-from-asiad-video/#comments Thu, 20 Oct 2011 11:50:55 +0000 Beth Callaghan http://allthingsd.com/?p=134808 LivingSocial CEO Tim O’Shaughnessy took the stage at AsiaD today alongside the co-founders and CEO of two companies he’s recently acquired — Ticket Monster’s Daniel Shin and Ensogo Group’s Paul Srivorakul — to dish with Ina Fried about the daily deals racket. Video highlights below:

]]> http://allthingsd.com/20111020/livingsocial-video-highlights-from-asiad-video/feed/ 0 http://allthingsd.com/20111020/surveymonkey%e2%80%99s-dave-goldberg-joyus%e2%80%99-sukhinder-singh-cassidy-and-airbnb%e2%80%99s-brian-chesky-video-highlights-from-asiad-video/ http://allthingsd.com/20111020/surveymonkey%e2%80%99s-dave-goldberg-joyus%e2%80%99-sukhinder-singh-cassidy-and-airbnb%e2%80%99s-brian-chesky-video-highlights-from-asiad-video/#comments Thu, 20 Oct 2011 11:24:58 +0000 Beth Callaghan http://allthingsd.com/?p=134794 Three Silicon Valley founders formed AllThingsD’s first-ever panel of entrepreneurs today at AsiaD. Brian Chesky of Airbnb, Dave Goldberg of SurveyMonkey and Sukhinder Singh Cassidy of Joyus joined Peter Kafka onstage for a discussion of the issues surrounding expanding their businesses into Asian markets. Video highlights below:

]]> http://allthingsd.com/20111020/surveymonkey%e2%80%99s-dave-goldberg-joyus%e2%80%99-sukhinder-singh-cassidy-and-airbnb%e2%80%99s-brian-chesky-video-highlights-from-asiad-video/feed/ 0 http://allthingsd.com/20111020/jack-dorsey-video-highlights-from-asiad/ http://allthingsd.com/20111020/jack-dorsey-video-highlights-from-asiad/#comments Thu, 20 Oct 2011 09:20:10 +0000 Beth Callaghan http://allthingsd.com/?p=134709 Twitter is a big deal in Asia, according to Jack Dorsey, its very busy co-founder and executive chairman. By 2008, the company was translating into Japanese due to a massive amount of tamagotchi activity on the service in Japan. In China, though, not so much. Dorsey spoke with Walt Mossberg today at the AsiaD conference in Hong Kong about Asia, Twitter and Square, among other things. A highlight reel from the interview follows.

]]> http://allthingsd.com/20111020/jack-dorsey-video-highlights-from-asiad/feed/ 0 http://allthingsd.com/20111020/andy-lees-video-highlights-from-asiad/ http://allthingsd.com/20111020/andy-lees-video-highlights-from-asiad/#comments Thu, 20 Oct 2011 08:31:20 +0000 Beth Callaghan http://allthingsd.com/?p=134682 Andy Lees, president of Microsoft’s Windows Phone division, is enthusiastic about the future for Windows Phone 7. A new deal with Samsung and a new version of Metro that’s been refreshed to target developing Asian markets are just two of the things he feels optimistic about — that arose in his conversation with Ina Fried today at AllThingsD‘s AsiaD conference. Some highlights from that discussion below.

]]> http://allthingsd.com/20111020/andy-lees-video-highlights-from-asiad/feed/ 0 http://allthingsd.com/20111020/any-time-youre-ready-yahoo/ http://allthingsd.com/20111020/any-time-youre-ready-yahoo/#comments Thu, 20 Oct 2011 08:03:15 +0000 Voices http://allthingsd.com/?p=134748

We’ve been working with Yahoo for years to buy a portion of them or buy them out. Money is not the problem. The problem is what Yahoo wants to do.

– Alibaba CEO Jack Ma at AsiaD

]]> http://allthingsd.com/20111020/any-time-youre-ready-yahoo/feed/ 0 http://allthingsd.com/20111020/cher-wang-asia/ http://allthingsd.com/20111020/cher-wang-asia/#comments Thu, 20 Oct 2011 07:50:55 +0000 John Paczkowski http://allthingsd.com/?p=133851 When Cher Wang co-founded HTC in the late 1990s, the company was a manufacturer of notebook computers. These days, its bread and butter are smartphones and tablets, two of the fastest-growing consumer electronic segments in the world. Wang was instrumental in that transition, spearheading HTC’s partnership with Google to build the Dream, the first phone to run the company’s Android mobile OS. That alliance has brought HTC great success, but it has also left the company largely dependent on Android. Little wonder, then, that HTC is rumored to be keen on acquiring a mobile OS of its own, a move that could help differentiate the smartphone manufacturer from its rivals.

3:57 pm: Walt welcomes Cher Wang to the stage.

Walt: So your title at HTC is chair, is that right? Or chairwoman? How do you … ?

Cher Wang: Chairwoman.

Walt: Chairwoman. Good. Okay. I want to get around to talking about the company and all of that stuff, but I think you have a fascinating life story, and could you just kind of tell it briefly?

Cher Wang: I thought this is a technology forum.

Walt: It’s a technology forum, but we’re also interested in the human side.

Cher Wang: Okay.

Walt: So how did you get your start?

Cher Wang: Well, you know, I actually started with making model boards before, a long, long time ago, maybe 30 years ago. And actually, well, let me tell you about HTC again. Actually, I started dreaming about mobile lifestyles, things that was … and we have to put in these motherboard into the …

Walt: You were selling these motherboards.

Cher Wang: Yes … a case, right? And I have — I was in Europe and I have to drag up and down the train stations. And it was very tiring, you know, dragging this big, you know, PC, and showing the customer the performance. So — and while it’s very tiring, you know, you’re always daydreaming in the train and start … about these mobile phones.

Walt: So basically you were dreaming about the mobile phone so that you wouldn’t have to carry a big box?

Cher Wang: Yes, that we can actually communicate with our loved ones and listen to music. And that’s how I started. And these dreams actually are coming true these days, that mobile lifestyle. And it’s actually very interesting and very exciting to me.

Walt: So when did you found HTC?

Cher Wang: 1997.

Walt: And you also founded some other companies, this motherboard company, I don’t know what the name of it was.

Cher Wang: Oh, that’s a long time ago. It’s called FIC.

Walt: But there’s another one, right? VIA?

Cher Wang: Yes.

Walt: Which is a semiconductor company.

Cher Wang: Yes.

Walt: And you have some other investments in broadcasting and other things that you do, right?

Cher Wang: Yes.

Walt: So you — you’re just a multitalented woman.

Cher Wang: Well, you know, I’m basically just a curious person and when — this world is just very fascinating and it’s very exciting. So you see something new, right, and you want to pop in and really get to know what’s going on. And you find the right people with you that have the same vision, you just want to start with something, right?

Walt: Okay. So in 1997 you started HTC. And the company for a long time was — primarily it made phones for other brands. Is that right?

Cher Wang: Yes. Yes, we actually very — it was very early that we started with these handheld device. And we have this dream. And we actually tried pedaling our technology, you know, our innovation, to these OEMs. And it’s just very hard to communicate with something new. And it’s very hard also to get our consumers understand what’s our value. So, you know, it’s just we actually decided that we have to really communicate our innovation through our brand name.

Walt: And that’s — what year was that you really kind of shifted to try and establish the brand?

Cher Wang: 2007.

Walt: So not that long ago, right?

Cher Wang: That’s right.

Walt: When Android came out, you were the principal hardware partner, I think ,doing Android phones. And it almost became synonymous. Motorola, you know, did some, but I think the G1 was yours and you were — like at least I associated, and a lot of people associate HTC with Android. I think the — my sense is in the last year, 18 months, things have shifted some, mostlybecause Samsung, which is a much bigger company, has decided to make a giant push into this. Talk to me about that. How do you — is the competition harder than it was?

Cher Wang: Well, you know what? I think that mobile lifestyle and personal smartphone devices is still in the very young stage. And sometimes people get ahead, sometimes other people get ahead, and sometimes we get ahead, but it’s just — the market is so big and so exciting and, you know, you just have to keep looking. And our phone is great, right? It’s the competition, we welcome the competition. And the competition is ourself.

Walt: So who do you think of, when you guys sit and make your plans, as the principal competitor, and who do you not worry about?

Cher Wang: I really believe that the competition is within ourself, how do we really be determined, how do we really look into the opportunity and really want to bring people’s life better and give them value. I really believe that.

Walt: I believe you that you really believe it, but you’re also really smart, so you must have some sense of there are other companies out there competing for people’s dollars. And people have a finite amount of money. Most people, not counting this audience, probably are only going to buy one smartphone at a time. There are probably people here with three or four, but I’m looking at you first row I think, you know, but so they’re either going to buy an HTC phone or they’re going to buy an iPhone or they’re going to buy a Galaxy or they’re going to buy a Motorola or when, you know, some — a Nokia Windows phone when they become available. You have a lot of competitors out there, right?

Cher Wang: Yes. Yes.

Walt: Tell me if I’m right or wrong that Samsung has come on in a strong way.

Cher Wang: Well, I really believe that the smartphone is still in the very young stage.

Walt: Yes, you said that.

Cher Wang: And there is a lot of innovation that can be implemented into your smartphone, and today that we are better, and sometimes some people have choice of other phones. But once that you touch our HTC, you will never try to put it down.

Walt: So you’re just not going to talk about Samsung? Is that right?

Cher Wang: Who is that?

Walt: Okay. There’s a — obviously, another booming, booming market in tablets. You have a couple of tablets, am I right?

Cher Wang: Yes.

Walt: But it doesn’t seem to be as big a focus for HTC as for some of the other companies. Can you talk about this? Do you think it’s the right moment for tablets? Is it just iPads and they happened to be lucky or what’s the deal? What’s going on? How do you look at the whole tablet market?

Cher Wang: Yes, I really think tablet is also in the even younger stage.

Walt: Yeah.

Cher Wang: And it’s — the most important thing is the — how do you actually bring these holistic experience about software and hardware and combined with the smartphone and different type of mobile devices. And, again, for the — your customer, end user — these holistic values and experience, that’s the most important. And I really think tablet is still in a very young stage.

Walt: Do you really believe the stylus is a competitive advantage?

Cher Wang: Yes. I really believe that. So there is a lot of applications. The mobile lifestyle is just so enormous … interesting and a lot of innovation. And that’s a lot of like entertainment, education, health, you know, social networking. There’s a lot of innovation coming in. And it’s going to combine with your smartphone and your tablet. It’s another, you know, pen actually. You know, I really believe that …

Walt: So how many tablets have you sold? Not smartphones, tablets.

Cher Wang: Oh, I think you know better than me, Walt.

Walt: Well, if I had to guess, I’d say not very many.

Cher Wang: Well, it’s going to be many. It’s going to be. You know, you will be surprised.

Walt: So your next tablet is going to sell big?

Cher Wang: I think we are improving all the time. And as I repeat that tablet is still in the very young stage. And we believe that at HTC, we believe we are the forerunner of the smartphone. That smartphone is really the central units that you can hold in your hand and control the world.

Walt: Do you worry about competing with companies that are much bigger than you that have the ability to bring into the system their own chips, their own, you know, hardware components, their own glass, things like that? You’re — you are innovative. I agree. You’ve been a very innovative company and you’ve built a good, highly respected brand. I wouldn’t have you here on stage if that wasn’t true. But you’re a smaller company than some of the people competing with you. I mean, Apple now, you know, designs their own processor. Ironically, it’s made by Samsung, but, you know, they design it. They buy, in gigantic scale, flash memory and glass. And Samsung, of course, is a company that has divisions that makes all of these things. Does this put you at a disadvantage in this competition?

Cher Wang: You know, Walt, if you actually visit our company, you will be amazed of our engineer capabilities, not only in chipset designing, integrations, and also that our software capability. And also one thing about HTC I think is an advantage over a lot of companies, that we are very good with partners. The partners actually bring their technology to us and try to ask us to actually bring their technology up. … In the beginning that when we started HTC and we already believed that if we want to be successful, we have to really bring — embrace all talents, all of the international talent in our company. So actually that if you walk into our meeting room, not even — even R&D, that you will — actually it’s just like the United Nations.

Walt: What’s your No. 1 goal? To have the biggest market share?

Cher Wang: Well, you — of course, but I really believe that how you really change people’s lives and bring the value to our customers. You know, I believe that technology can change people’s lives.

Walt: What about people that can’t afford smartphones? What are you doing there?

Cher Wang: Yes, I think technology is getting better and better, and cheaper and cheaper. Well, I think that one, that smartphone is going to give the people tremendous value even for the people who cannot afford it. This is something that really bridge, you know, talk about a bridge the digital gap. The smartphone is going to bring people that type of experience. And I believe that technology just keep improving.

Cher Wang Session Photos

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]]> http://allthingsd.com/20111020/cher-wang-asia/feed/ 0 http://allthingsd.com/20111020/jack-ma-video-highlights-from-asiad/ http://allthingsd.com/20111020/jack-ma-video-highlights-from-asiad/#comments Thu, 20 Oct 2011 07:30:45 +0000 Beth Callaghan http://allthingsd.com/?p=134659 Alibaba’s Jack Ma sat down with Peter Kafka this morning at AsiaD, our inaugural international conference, for a broad conversation that touched on philanthropy, pricing and, of course, Yahoo. Video highlights below:

]]> http://allthingsd.com/20111020/jack-ma-video-highlights-from-asiad/feed/ 0 http://allthingsd.com/20111019/livingsocial-dishes-about-its-deals-live-at-asiad/ http://allthingsd.com/20111019/livingsocial-dishes-about-its-deals-live-at-asiad/#comments Thu, 20 Oct 2011 06:45:43 +0000 Peter Kafka http://allthingsd.com/?p=133862 While AllThingsD is just making its debut in Asia, LivingSocial has been on the ground for a while here, recently scooping up deal sites in Thailand, Korea and elsewhere.

CEO Tim O’Shaughnessy is being joined on stage by Daniel Shin and Paul Srivorakul, the heads of the two Asian acquisitions, to talk about things here as well as some of the broader issues of overload, fatigue and competition facing the deals industry. I think the word “Groupon” might come up once or twice as well.

2:48 pm: Good afternoon. Joining Ina and the gang a minute or two late.

Tim is explaining the evolution of daily deals — and the room left for growth in the industry.

Ina: You guys pioneered the use of “instant” deals to dump off unsold inventory right away. How’s that working out?

Tim: It’s live in 15 cities so far. We’re “starting to see some pretty strong growth.” For consumers, “it’s really a paradigm shift that has to occur” — when they think about going to lunch, they don’t think about LivingSocial. But three and a half years from now, we want LivingSocial to be the first place they go.

Ina: Give us all the details about your next funding round. Kara commands it.

Tim: Like Dave Goldberg said, “everybody gets funding at some point in time.”

Ina: Private versus public — what’s your preference?

Tim: Obviously, being private gives you more flexibility. It lets us try out things like Instant, because our investors are comfortable with experimentation, etc.

Ina: So what does Groupon’s IPO mean for you?

Tim: It gives them something to worry about that we don’t have to worry about. But obviously there are good things about going public, too.

Ina: So when are you going public?

Tim: Like Dave Goldberg said … But you’re not going to see an S-1 from us tomorrow.

Ina: Daniel, Paul, talk a bunch, ok?

Daniel: I grew up in the States, and when I moved to Korea, the fact that Korean venture wasn’t really as developed helped us. And the group-buying concept made a lot of sense once we started talking to merchants. We launched Ticket Monster in May 2010 with $10k in capital. We grew very quickly — we did a lot of things that LivingSocial is doing. We expanded product categories quickly. Right now, local business makes up a meaningful part of our business, but not the majority. And linking up with LivingSocial made a lot of sense because it allowed us to expand all over the world.

Ina: And now you’re in the shoe business?

Daniel: Heh. We launched a fashion shoe site a week ago.

Paul: Our market is still in its infancy. We funded a digital agency as well as an ad network. And when we saw the daily deal market in January, we realized right away how much potential there was — how it connected advertising directly to sales.

We funded the company — my two older brothers and I — with $100,000.

My middle brother is the CTO. My oldest brother does sales. We started in Thailand first. It’s changing how consumers behave. Someone walked into our office, holding a phone, showing us a picture of a deal he wanted. This model has leap-frogged the traditional e-commerce model.

In a lot of our markets, we had to start with ATM transfers, because we didn’t have enough trust built up to do credit card deals. But now we’re getting there — in Indonesia, we do phone payments.

Ina: So how far can you push into new markets once you have this customer relationship?

Tim: We’ve got a giant megaphone in every city we work in — more subscribers in most cities than the daily newspaper for that town. So that’s a valuable communication mechanism.

So far it’s been a big landgrab, planting the flag both in the U.S. and internationally. But the next evolution of the business will be about bringing technology into the ecosystem, and bringing the offline part of this into the experience.

Ina: Give me examples of deals that worked in one country that you ported to other markets.

Paul: We’ve learned a lot from TicketMonster and from LivingSocial. LivingSocial in particular has given us a three-year head start, technologically speaking, from our competitiors.

Ina: And have international markets affected how LivingSocial has done work in America?

Tim: A little bit. You see the ways that people operate, the stuff that they sell — half of our employee base is overseas, so it’s hard not to be influenced.

Ina: Amazon is now an investor and a channel for you. How’s that working?

Tim: We power Amazon Local. It gives our merchants a chance to appear on other places, so that’s good. And Amazon knows a lot about e-commerce, so that’s very very helpful.

Ina: And now Amazon is doing deals on its Kindles — what does that mean for you guys?

Tim: I think it means consumers will accept ads if they get something cheaper or free — that’s a model that’s proven out over time.

Ina: What about deal fatigue?

Tim: The signal-to-noise ratio is off on that, based on the data we see. “We see very very strong performance” on our deals — that’s why we can invest so heavily on this stuff. Our share of wallet will go up over time — we’d be doing a bad job if it wasn’t.

Ina: Jack Dorsey was on earlier talking about building an intelligence network for stores, via Square. It seems like you are doing analogous stuff — does that make him a competitior?

Tim: It’s pretty early to see where Square is going. But overall, “the merchant business is going to be massively disrupted” in the next couple years. Right now they all have tons of different systems, none of which are very compatible, or easy to modify. Think about how much pain is involved in that.

Ina: In a year, are we still going to think of you as a daily deal company, instead of local commerce, etc?

Tim: In three to five years, if consumers want to interact with a local business, and they’re not actually there — we want them to come to us.

Q&A:
Q: If you did go public, how would your S-1 differ from Groupon’s? What metrics would you use?

Tim: People have lots of questions about profitability — regardless of S-1 issues. But “that story can be told in a very very strong way … and that story will get heard over time, more and more.”

Ina: So daily deals is a real, strong business, not just an abitrage/float business.

Q: What’s your China approach, compared to Groupon?

Tim: So far “a lot of observation.” We look around at different markets, and every six months, we consider a new market, and if we think we can be profitable in 24 months, we go in. But we haven’t seen that yet in China.

Ina: Other big markets you’re circling around?

Tim: We’re in 25 countries so far. There’s probably double that with the right characteristics, but we have to be disciplined about our approach.

Ina: How much demand are you getting from customer retention tools, as opposed to customer acquisition?

Tim: So the first part is to get people through the door. And we take retention seriously, but “working down that funnel” requires a lot of technology investment down the line. Consumers get the paradigm of punchcards/loyalty cards, and there hasn’t been a digital version of that. But that will come.

Paul: We have a loyalty rewards program — cash back for customers. That works well for retention.

Daniel: In Korea, we’re sponsoring punchcards for our merchants. But one day we’ll move that to a digital app. Also we want the coupons to be easier to use — that will make the transaction more accurate, and easier to track.

Ina: How big is mobile to your future?

Tim: “I think of mobile devices as walking local devices.” Our best users, a disproportionate number of them, purchase through mobile apps. And ratio of purchases via mobile is growing at a point a month. Right now mobile is still a minority, “but it’s well into double digits.”

And we’re done. Thanks for reading.

LivingSocial Session Photos

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