Month: April 2018

India’s technology industry is bracing itself for the next era of e-commerce warfare, which looks set to be waged and bankrolled by two gigantic corporations located halfway across the world: Amazon and Walmart.

Amazon is already deeply committed to the country, where it has pledged to deploy over $5 billion to grow its business, and now U.S. rival Walmart is said to be inching closer to a deal to buy Flipkart .

Bloomberg reports that Walmart is poised to acquire 60-80 percent of the company for $12 billion. The deal could potentially value Flipkart as high a $20 billion, which would be a major jump on the $12 billion valuation it secured last year when it landed a $1.4 billion investment from Microsoft, Tencent and eBay.

Amazon was said to have made a last-minute move to conduct talks with Flipkart, but it seems now that there is intent for Walmart to take the deal, with Flipkart’s founders said to be in favor. Bloomberg cautioned, however, that there are still unresolved issues — including which shareholders will sell, how much they will sell, and whether the Flipkart leadership remains — while there’s also no guarantee that the talks don’t break down.

That said, it is reported that Tiger Global plans to sell nearly all of its 20 percent share and SoftBank will offload “a substantial part” of its 20-percent-plus holding.

At stake is a growing online sales market as more of India’s 1.4 billion population comes online for the first time.

India is tipped to reach 500 million internet users by June 2018, according to a report from the Internet and Mobile Association of India (IAMAI) and Kantar IMRB. That’s up from 481 million six months prior, but internet penetration in rural areas is at just 20 percent compared with 65 percent in urban India. That rush online has led some analysts to predict big gains for online retail, with Morgan Stanley forecasting that 30 percent annual growth in GMV will take India’s e-commerce market to $200 billion by 2026.

Walmart’s increased focus on India comes after the retailer exited the Chinese market in 2016, selling its Yihaodian service — which it first backed in 2011 — to Alibaba rival JD.com. That deal also saw Walmart work closely with JD.com, essentially using the company as a storefront to reaching Chinese consumers.

China exit complete, it was then linked with an investment in Flipkart last year. Fast forward to today and it is poised to take a very major role in India via Flipkart, which most reports indicate remains India’s top e-commerce firm despite Amazon pushing it hard.

Amazon itself is keen to diversify. The company recently announced it has more than 100 million Prime members worldwide, having added “more members in India in its first year than any previous geography in Amazon’s history” thanks to an array of promotional offers run with local companies, including telecom operators.

Now the firm is aiming outside of its core e-commerce focus, with Amit Agarwal — the head of Amazon India — telling Reuters that he expects groceries and household products to account for half of its revenue in the country within the next five years.

Outside of Flipkart and Amazon, Alibaba has invested considerably in Paytm, which specializes in mobile payments but also includes e-commerce, digital banking and has plans for gaming. Long-time Alibaba ally SoftBank is also backing the company’s Paytm Mall effort — having led a recent $450 million investment — but the main battle looks like being Amazon and Walmart-Flipkart if things go as they are reported to be headed.

Walmart declined to comment. Flipkart did not respond to a request for comment for this story.

from TechCrunch

Pivotal has kind of a strange role for a company. On one hand its part of the EMC federation companies that Dell acquired in 2016 for a cool $67 billion, but it’s also an independently operated entity within that broader Dell family of companies — and that has to be a fine line to walk.

Whatever the challenges, the company went public yesterday and joined VMware as a  separately traded company within Dell. CEO Rob Mee says the company took the step of IPOing because it wanted additional capital.

“I think we can definitely use the capital to invest in marketing and R&D. The wider technology ecosystem is moving quickly. It does take additional investment to keep up,” Mee told TechCrunch just a few hours after his company rang the bell at the New York Stock Exchange.

As for that relationship of being a Dell company, he said that Michael Dell let him know early on after the EMC acquisition that he understood the company’s position. “From the time Dell acquired EMC, Michael was clear with me: You run the company. I’m just here to help. Dell is our largest shareholder, but we run independently. There have been opportunities to test that [since the acquisition] and it has held true,” Mee said.

Mee says that independence is essential because Pivotal has to remain technology-agnostic and it can’t favor Dell products and services over that mission. “It’s necessary because our core product is a cloud-agnostic platform. Our core value proposition is independence from any provider — and Dell and VMware are infrastructure providers,” he said.

That said, Mee also can play both sides because he can build products and services that do align with Dell and VMware offerings. “Certainly the companies inside the Dell family are customers of ours. Michael Dell has encouraged the IT group to adopt our methods and they are doing so,” he said. They have also started working more closely with VMware, announcing a container partnership last year.

Photo: Ron Miller

Overall though he sees his company’s mission in much broader terms, doing nothing less than helping the world’s largest companies transform their organizations. “Our mission is to transform how the world builds software. We are focused on the largest organizations in the world. What is a tailwind for us is that the reality is these large companies are at a tipping point of adopting how they digitize and develop software for strategic advantage,” Mee said.

The stock closed up 5 percent last night, but Mee says this isn’t about a single day. “We do very much focus on the long term. We have been executing to a quarterly cadence and have behaved like a public company inside Pivotal [even before the IPO]. We know how to do that while keeping an eye on the long term,” he said.

from TechCrunch

Stock market investors showed lukewarm enthusiasm for Pivotal Software’s debut on Friday. After pricing the IPO at $15, the company closed the day at $15.73.

Although it didn’t “pop” for new investors, pricing at the midpoint of its proposed range allowed Pivotal to raise $555 million. Its public company market cap exceeded $3 billion.

The enterprise cloud computing company has been majority-owned by Dell, which came about after its merger with EMC in 2016. It was spun off from Dell, EMC and VMware in April 2013.

After that, it raised $1.7 billion in funding from Microsoft, Ford and General Electric.

Here’s how it describes its business in the filing:

Pivotal looks to “provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. Our cloud-native platform, Pivotal  Cloud Foundry (‘PCF’), accelerates and streamlines software development by reducing the complexity of building, deploying and operating new cloud-native applications and modernizing legacy applications.”

According to the filing, Pivotal brought in $509.4 million in revenue for its fiscal year ending in February. This is up from $416.3 million in revenue for 2017 and $280.9 million in revenue the year before.

The company is still losing a lot of money, however. Losses for fiscal 2018 stood at $163.5 million, improved from the than the negative $232.5 million seen in 2017 and $282.5 million in 2016.

“We have incurred substantial losses and may not be able to generate sufficient revenue to achieve and sustain profitability,” the company warned in the requisite “risk factors” section of its IPO filing.

Pivotal also acknowledged that it faces competition from “legacy application infrastructure and middleware form vendors” like IBM and Oracle. The company says it additionally competes with “open-source based offerings supported by vendors” like RedHat. Pivotal also faces challenges from SAP Cloud Platform, Amazon Web Services and Microsoft Azure.

The company says it believes it will stand out from the pack because of its strong security and easy-to-use platform. Pivotal also claims to have strong brand awareness and a good reputation. It has 118 U.S. patents and 73 pending and is betting that it will remain innovative.

Morgan Stanley and Goldman Sachs served as lead underwriters. Davis Polk and Fenwick & West worked as counsel.

The company listed on the New York Stock Exchange.

from TechCrunch