– January 27, 2015

Phone makers look to emerging markets for growth 

(AP) — Here's the rub for companies: A good part of the key markets they serve already own smartphones and use them to connect various Internet services. How do you grow from there?

Services from Facebook to Firefox are looking to emerging markets for the next few billion people. They are not only targeting the obvious high-population countries such as India and China, but also see potential in Latin America, Africa and just about everywhere beyond the U.S., Canada, western Europe and a few Asian nations.

One message has been clear this week at the Mobile World Congress wireless show in Barcelona, Spain: Even as the affluent crave the latest iPhones or Android phones, most of the world can't afford the hundreds of dollars they cost.

So there's been a push to get mobile devices cheap enough to reach emerging markets without sacrificing so much performance that first-time smartphone owners will give up on the Internet and forgo a second smartphone down the road.

It's a delicate balance.

When Motorola Mobility introduced the low-cost Moto G smartphone last fall, the company emphasized how it was bringing the features of high-end smartphones to a device that starts at just $179. Even then, it had to sacrifice camera resolution and connectivity to the faster 4G LTE cellular networks. And $179 is still expensive for many.

At the Barcelona show this week, Nokia Corp. unveiled the Nokia X series, starting at 89 euros ($122).
"In the growth market ... a couple of bucks make a huge difference," said Timo Toikkanen, Nokia's executive vice president for mobile phones.

Still too expensive? Try some of the $50 to $70 smartphones based on Firefox OS, a system adapted from the popular Firefox Web browser. Mozilla, the organization behind Firefox, announced a partnership with Chinese chipmaker Spreadtrum Communications Inc. to create a blueprint for any phone maker to make $25 smartphones.

Microsoft Corp., meanwhile, said it was relaxing hardware requirements to keep phone costs down. For instance, phones no longer need physical camera and control buttons. Those can now be done through software instead.

It is also working with Qualcomm Inc. on blueprints for any phone maker to quickly design a Windows phone. While global brands such as Apple and Samsung reign in industrialized countries, smaller, regional manufacturers thrive in emerging markets because of lower distribution costs and better tailoring to local needs.
Internet services also see opportunities in finding the next few billions in emerging markets.

In fact, getting the smartphone and the connectivity is just the beginning, Facebook CEO Mark Zuckerberg said during Monday's keynote. More important, he said, is giving people a reason to connect: basic financial services, access to health care information and educational materials. He sees Facebook as the "on ramp" to all those services.

In many ways, emerging markets provide unmatched opportunities.

Apple has insisted on making premium smartphones. Even last fall's iPhone 5c was just $100 cheaper, at $549, than the more-advanced iPhone 5s. That's way beyond the reach of many people in poorer countries.

"They are focusing on the premium segment," Lenovo CEO Yang Yuanqing told The Associated Press. "Their market has become mature, saturated. So now, if you want to further grow, you must focus on those emerging markets, particular those poor people."

He said Lenovo releases 40 or 50 smartphones a year to meet the diversity of needs in those markets.

Making cheap phones available will help companies expand in developed countries, too. Even in the U.S., not everyone wants or can afford a high-end smartphone, Sony Mobile President Kunimasa Suzuki said in an interview.

But emerging markets also pose challenges unfamiliar in the industrialized world.

The easy one to solve is to support two SIM cards in the same phone. Pricing and plans vary so much in emerging markets that it's common for people to use different carriers for different circumstances. The Moto G, the Nokia X and Sony's new Xperia M2 phone support that, and Microsoft will enable that in Windows Phone this spring.

More challenging is dealing with expensive data connections, something Zuckerberg posed as a bigger barrier than smartphone affordability.

Chris Weasler, whose role at Facebook is to improve access to Internet services around the world, said he has met many smartphone owners who forgo data services and use the devices instead as mobile computers and cameras.

Local wireless carriers will need to better educate their customers on the value of connectivity, he said, while app developers need to tweak their services to work on slower, less reliable networks. He said Facebook learned that when a team went to Africa and couldn't use Facebook's Android app because it pulled too much data.

Firefox phones have FM radio tuners built in so owners won't waste data connection on streaming services, while another emerging system, Ubuntu, tries to make sure it has apps that work well offline.

To address the lack of credit cards in emerging markets, Nokia replaced Android's card-based app store with one that permits billing directly to mobile operators.

Ultimately, companies need to figure out what to sacrifice to bring costs down. Forget high-resolution video or a giant screen, such as the 5.1-inch display on the Samsung Galaxy S5 that was announced Monday. Not only are those features expensive, they require faster processors and longer battery life, adding to expenses.

Cellular connectivity through 4G is also something often dropped, as many emerging markets are lucky just to have the slower 3G.

But what's good enough? Leo Li, CEO of Spreadtrum, said phones using his company's blueprints work as good as Apple's iPhone 4. But that's a 4-year-old phone. Nonetheless, he said performance is better than the basic phones that first-timers are upgrading from.

By upgrading, people can truly access the Web and aren't limited to the few services that phone makers already included.

"To spend a little more for a true Web experience is pretty good, even if the resolution isn't as good as the iPhone," said Jay Sullivan, Mozilla's chief operating officer. "People want to be connected. They want to be online and have access to all the information and all the things we do, like maps, as they explore new places."
AP Technology Writer Barbara Ortutay in New York contributed to this story..

Latest Local News

Written on 01/27/2015, 10:50 am by Business Journal staff
(AP) — Federal agriculture officials said last week they found avian influenza in a commercial turkey flock in central California.
Written on 01/27/2015, 10:47 am by YOUKYUNG LEE, 
BARBARA ORTUTAY, AP Technology Writers
(AP) — For many, the hour without a Facebook was a golden opportunity for a joke — or a marketing pitch — on other social media sites. Facebook said the outage that made its sites inaccessible worldwide for about an hour Tuesday was self-inflicted. Users in the Eastern U.S. itching to post photos of the big snowstorm had to turn to other outlets, while companies, like the dating app Tinder, that depend on Facebook and Instagram to reach their customers, had to wait. For many, though, the outage was just a blip, a sign that while Facebook has become an important communications tool for some 1.35 billion people worldwide, a temporary shutdown does not have the same crippling effect as the shutoff of electricity, water, the Internet or a city's public transit system. It's also a lesson, perhaps, in what happens when we rely on a free service that, while very stable, does not promise 100 percent uptime. Facebook's last significant outage was nearly 5 years ago. People took to Twitter to complain and joke about the outage, while companies such as Coca-Cola took it as a viral marketing opportunity. The hashtag "#facebookdown" generated a cascade of tweets, including an image of a T-shirt with the words "I survived #facebookdown." "Kind of like the snowstorm that was supposed to cripple New York City, this didn't have much of an impact on Facebook," said Debra Aho Williamson, an analyst with research firm eMarketer. "It was over quickly, it was easily fixed and life came back to normal fairly quickly." She added that while it's possible that companies that rely on Facebook's login tool to let people access their sites and apps lost a "little bit of traffic" or a tiny bit of ad revenue, for the length of time that the outage lasted it's unlikely to have had a big effect. "Life will go on, I think we'll all survive," Williamson said. Users of PCs and Facebook's mobile app reported they lost access in Asia, the United States, Australia and the U.K. Facebook-owned Instagram was also inaccessible. Facebook said the disruption was caused by a technical change and wasn't a cyberattack. "This was not the result of a third party attack but instead occurred after we introduced a change that affected our configuration systems," its statement said. The temporary loss of service may be Facebook's biggest outage since Sept. 24, 2010, when it was down for about 2.5 hours. Outages were more common in the site's early years, when its backup systems and data centers were not as robust as they are now. These days, the Menlo Park, California-based company routinely tests its infrastructure and sometimes even takes down part of it intentionally to check its resilience. On its website for developers, Facebook said the "major outage" lasted one hour. The outage occurred at midday in Asia, and after Facebook was restored, some users reported that the site was loading slowly or not functioning fully. Lizard Squad, a group notorious for attention-seeking antics online, claimed responsibility on Twitter for the outages, but Facebook said this was not the case. Guillermo Lafuente, security consultant at MWR InfoSecurity, said a technical fault was more plausible. A denial-of-service attack would have made the sites unreachable rather than accessible with an error message displayed, he said. Facebook's use of multiple data centers also meant an attack on one would have affected one region, while this outage was worldwide. Also, restoring service would be a matter of reversing the technical changes, which matched with the brevity of the outage, LaFuente said. Facebook has about 1.35 billion active users and Instagram has some 300 million. The outage came a day ahead of Facebook reporting its quarterly earnings. Lizard Squad on Monday claimed it had defaced the Malaysia Airlines website and would release data from the airline. Its previous hacking claims have been mostly aimed at gaming or media companies.
Written on 01/27/2015, 10:26 am by The Associated Press
(AP) — The pink mustache is out. Ride-hailing company Lyft has pulled the pink furry mustache that drivers display on the front of their cars and replaced it with a 5-inch-long pink "glowstache" that goes on the dashboard. About 300 Lyft drivers on Monday formed a line that stretched three blocks from the company's San Francisco headquarters while they waited to receive the new glow-in-the-dark mustache for their cars. Lyft is one of several companies that allow customers to use a smartphone app to book and pay for rides in a private car.
Written on 01/27/2015, 10:23 am by BRANDON BAILEY, AP Technology Writer
(AP) — Big jumps in sales of its Surface tablets, cloud computing software and Lumia smartphones drove Microsoft's quarterly revenue above expectations, as CEO Satya Nadella continues to steer toward the mobile gadget market and shift Microsoft away from its traditional focus on the PC. Revenue from cloud computing products, in which businesses pay to use online software housed in Microsoft's data centers, more than doubled. The division is now on track to bring in $5.5 billion in sales this year. Surface revenue spiked 24 percent to over $1 billion. Another big seller? Xbox — which sold 6.6 million consoles in the holiday quarter. And while profit dropped on big charges for layoffs, other restructuring efforts and integrating the Nokia phone business, Microsoft's earnings matched Wall Street estimates. So why is the stock down over 4 percent after-hours? BGC Partners analyst Colin Gillis said investors are reacting to results in Microsoft's "core" business of Windows software, which he called "not great." While Nadella is pointing Microsoft toward mobile, the Redmond, Washington, company still relies heavily on selling Windows software for PCs. And that flagship business is struggling as global shipments of personal computers have fallen for the last ten quarters in a row, according to research firm IDC. "The PC isn't dead, but people are much more mobile and they don't spend all their time on their PC," said Anthony Clendenen, a tech expert at En Pointe, a California firm that helps businesses buy and install commercial software from Microsoft and other companies. Microsoft's Windows licensing revenue dropped 13 percent during the period, partly due to weak PC sales in China and Japan. The company also is no longer enjoying an overall boost in sales that came last year when it stopped providing support for the older Windows version known as XP. The end of XP support drove many consumers and businesses to buy new PCs equipped with newer versions of Windows. Gillis said "the cracks in the core business have people realizing, 'Oh gee, there's going to be a transition,' " that will take some time. Nadella's strategy of building new business segments is sensible, "but those types of strategies don't come without some bumps in the road," he added. All told, Microsoft's net income fell more than 10 percent to $5.86 billion for the three months that ended Dec. 31, due to hefty costs. Revenue rose 8 percent year-over-year to $26.47 billion, including more than $2 billion in sales from the Nokia smartphone business it acquired last year. Earnings per share of 71 cents matched expectations of analysts surveyed by FactSet. Revenue of $26.47 billion edged past the $26.3 billion analysts expected. Looking ahead to fiscal third-quarter results, Chief Financial Officer Amy Hood said on a conference call with analysts that a strong dollar will dent revenue by 4 percent. All eyes will be on the launch later this year of Windows 10, the next version of Microsoft's flagship operating system. Designed to be equally familiar and easy to use on PCS and mobile gadgets, Nadella is hoping Windows 10 will capture both consumers and the developers who create apps for phones and tablets. Also up: Tech wizardry in the form of HoloLens computerized glasses — built on Windows 10 — that let wearers see and interact with three-dimensional holograms. It's one more way Nadella is showing he wants to change the perception of Windows for the mobile generation, said analyst Daniel Ives of FBR Capital Markets. Microsoft shares fell $2.06, or 4.4 percent, to $44.95 in aftermarket trading. The stock had closed down 17 cents at $47.01 before the report.
Written on 01/27/2015, 10:18 am by KRISTIN J. BENDER, Associated Press
 (AP) — Kaiser Permanente nurses in California approved a new contract that boosts pay and improves patient care along with health and safety protections for nurses, a union official said Monday. Registered nurses and nurse practitioners who work at 21 hospitals and 65 clinics across Northern and Central California voted last week to approve the new three-year deal, the California Nurses Association said. The deal includes a 14 percent pay raise over three years, the union said.About 18,000 Kaiser nurses in the state went on a two-day strike in November, and another walkout had been planned for last week but an agreement was reached. The association represents the Kaiser nurses. Those workers are part of the National Nurses United organization. Under the new contract, about 540 registered nurse positions will be added, which nurses said should substantially improve the quality of care for hospitalized patients. It also signals a renewed commitment to training and employment opportunities for new graduates at a time when many hospitals have frozen hiring, the union said. Under the contract, a new committee of nurses will work with management to address concerns nurses have about care standards at Kaiser facilities. The contract includes paid time for 25 registered nurses annually to participate in the union's disaster-relief program, which has dispatched hundreds of nurses to help with medical services following disasters such as Hurricane Katrina, the Haiti earthquake and Typhoon Haiyan in the Philippines. The union appreciates the commitment Kaiser's leadership made to address concerns, Executive Director RoseAnn DeMoro said. Kaiser Permanente Northern California Senior Vice President of Human Resources Gay Westfall said the agreement accomplishes the key objectives the company laid out at the beginning of bargaining that include providing better benefits to nurses and increasing workplace flexibility. "The agreement demonstrates that Kaiser Permanente and our nurses have a shared commitment to quality, service, and affordability for our members," Westfall said. "Although we have had disagreements at times with CNA, as this agreement reflects, we have been able to work through those disagreements." The union said it is now committed to helping mental health workers finalize a contract. About 2,600 psychologists, counselors and therapists held a two-day strike earlier this month to bring attention to what they say are inadequate staffing and long wait times for appointments.
Written on 01/27/2015, 10:17 am by Business Journal Staff
The National Association of Home Builders (NAHB) recognized Fresno architect Arthur Dyson with two awards as part of the organization’s 2014 Best in American Living Awards (BALA), an annual event held January 21 during the NAHB International Builders’ Show in Las Vegas. Dyson’s winning projects “demonstrate innovate design and give a preview of design trends home buyers will see over the next several years,” said 2014 BALA Chairman Stephen C. Moore, senior partner with BSB Design Inc. in Des Moines, Iowa. Dyson won the Silver Award for his design of the Charles & Lela Hilton residence in Panama City Beach, Florida, in the One-of-a-Kind Custom Home over 6,500 square feet category. He also won the Gold Award in Restoration, a special recognition by this year’s judging panel, for the restoration of Frank Lloyd Wright’s Fawcett House in Los Banos. The Hilton residence is a 9,500-square-foot, curvilinear home located on the Gulf of Mexico. “The shapes were motivated by the clients’ affinity for curves and the desire to resist hurricane forces,” Dyson said. The Randal and Harriett Fawcett home designed by Frank Lloyd Wright in 1955 was carefully researched and detailed by Dyson to reflect the great architect’s original vision for the home. Dyson’s apprenticeship with Wright and his extensive knowledge of the architect played a major role in the restoration of this mid-century masterpiece in Los Banos, noted the panel of judges. “It is always gratifying to receive an award, but it is especially pleasing to see Central California residents receiving national and international recognition,” Dyson said. “The craftsmanship performed by BMY Construction and their sub-contractors, all from the Valley, was an essential factor in the restoration of the Fawcett house.” Now in its 31st year, BALA recognizes outstanding achievement by builders and design professionals in all sectors of the residential housing industry.
Written on 01/27/2015, 10:12 am by BRANDON BAILEY, AP Technology Writer
(AP) — Calling it "ridiculous" and "baseless," IBM on Monday dismissed a report that said the technology giant plans to lay off 1 in 4 of its workers, or 100,000 people. The company "flatly denies" the Forbes report, IBM spokesman Ian Colley said in a phone interview. IBM previously has announced layoffs affecting "several thousand people," only "a small fraction" of the number predicted last week by a blogger on, IBM said in a statement. Employees may be relieved, but investors appeared to have welcomed the idea of big changes at Big Blue. Between Thursday, when the report was posted online and Monday morning's denial, IBM shares rose about 4 percent to peak at $159.46. The stock closed up just 49 cents at $156.36. Investors may be looking for IBM to make some significant changes, said Morningstar stock analyst Peter Wahlstrom, although 100,000 job cuts is more than he would expect. These kinds of rumors come up periodically, Wahlstrom said, though they get "snuffed out pretty quickly" if there's no weight to them. BlackBerry investors got excited earlier this month when Reuters, citing an unnamed source, reported that Samsung was in talks to buy the Canadian smartphone maker. Shares spiked 30 percent but the surge stalled after both companies denied the report. Some analysts said that rumor was plausible because a tie-up could be the boost both companies need. However, laying off a quarter of IBM's workforce would be "off the charts," said Daniel Morgan, senior portfolio manager at Synovus Trust Company, which holds about 300,000 IBM shares. "I can't see that. But I wouldn't be surprised if we did hear of some more layoffs." IBM has had three big reorganizations in previous decades, he noted. "They do let people go. I think that's why this is gaining some traction." Such a huge layoff would be disruptive and "inconsistent" with IBM's recent statements, Bernstein Research analyst A.M. Sacconaghi said in a note to investors. But, "ironically, given the stock's increase over the last couple trading days, we also see the potential for disappointment if a meaningful workforce action is not announced in the near-term." IBM is confronting a sales slump as it struggles to adapt to big changes in the way businesses buy software and other commercial technology. It issued another disappointing earnings report last week, as both revenue and profit fell in the December quarter. CEO Virginia Rometty says she's working to refocus the Armonk, New York, company on new tech markets, including data analytics, artificial intelligence and cloud computing. Its planned layoffs are aimed making cuts in some areas to then hire about 15,000 workers with new skills. As of the end of 2013, IBM had 431, 212 workers.
Written on 01/27/2015, 10:01 am by The Associated Press
(AP) — The plan to build a football stadium in the Los Angeles suburbs that could become home for an NFL team has taken a step forward. Organizers behind the project submitted more than 20,000 petition signatures Monday to get the plan before voters in Inglewood, where the stadium would be built. The Los Angeles Times says that's more than twice as many as needed to put the measure on the ballot later this year. County election officials must verify the signatures. The proposal envisions a domed, 80,000-seat stadium rising on the site of a defunct horse track, as part of a larger development of homes, parks and office space. Developers behind the plan include The Kroenke Group, a company controlled by St. Louis Rams owner Stan Kroenke.
Written on 01/27/2015, 9:56 am by TERRY TANG, Associated Press
(AP) — For some travelers visiting Arizona for the Super Bowl, the trip may be just as memorable as the game. Hundreds of luxury jets will arrive at the eight airports around metropolitan Phoenix by kickoff Sunday, adding to the thousands of flights expected over the weekend. The Federal Aviation Administration and area airports have been planning for the influx for the past year. Private jet-setters will receive VIP treatment. Many travel with companies that allow individuals and businesses to own a portion of an aircraft or to buy flight hours and that lavish perks on customers including goody-filled swag bags, a concert by country group Lady Antebellum, complimentary cocktails and high-end catering once they emerge from their Lear Jets and Gulfstreams. "We've got a team that greets every airplane. We do roll out — it's maybe not red carpet — but there is carpet that's rolled out," said Eric Lamper, NetJets' vice president of flight operations. The boost in private jet traffic for the Super Bowl is a sign of how the big game has increasingly become a VIP event, from the many celebrity parties to tickets running several thousand dollars. Starting Thursday, NetJets will have a temporary furnished lounge where customers can relax with complimentary food, drinks, television and Wi-Fi. They will also get a Super Bowl goody bag and admission to a party Saturday night in Scottsdale with Lady Antebellum as the headline entertainment. Dallas-based Flexjet has hired Press, a Phoenix-based food truck, to serve complimentary Italian street eats to passengers starting Thursday. The specialty menu will include mini sausage-bread-pudding muffins, caprese salad skewers and raspberry-filled bombolones, which are Italian doughnuts. "These little details really matter," said Megan Wolf, Flexjet's vice president of customer experience. "They'll remember years later that we had this really great food truck and how fun it was, and they'll tell their friends. So, it makes a difference." Commercial travelers should not worry that their departures Sunday or Monday will get pushed aside in favor of their luxury counterparts. Phoenix Sky Harbor International Airport, the main hub, has parking space for 250 private jets. The movements of private jets will be based around commercial traffic, which has priority, airport spokeswoman Heather Lissner said. The area will be inundated with between 1,200 and 1,400 private and commercial flights, but plans are in place to handle the load. The FAA, airport operators and aviation businesses have collaborated on a reservation system to manage the flights, especially on Sunday with many of the expected departures. Every flight will be scheduled in an orderly fashion to prevent air traffic control systems from getting overwhelmed, Gregor said. The FAA will add staffing and operating hours at air traffic control facilities as needed, he said. The Super Bowl is the grand finale in a week that includes the Waste Management Phoenix Open, a golf tournament in the Phoenix suburb of Scottsdale. Both events will have the Scottsdale Airport dealing with an expected 54 percent increase in corporate jet traffic, meaning more than 520 additional aircraft. That was the increase seen when both events took place in Arizona in February 2008, airport spokeswoman Sarah Ferrara said. Ferrara, who employed by the airport in 2008, said she is looking forward to seeing two to three flights taking off every few minutes. "I just hear the departures are going to be fantastic — these beautiful jets departing one after another," Ferrara said.
Written on 01/27/2015, 9:44 am by Business Journal staff
Communities First Financial Corp., the recently formed parent company of Fresno First Bank, announced net income of $2.12 million for 2014 — light years ahead of 2013's income of $26,000. “We are very pleased with our performance in 2014,” stated Rick Whitsell, president and CEOof Communities First. “We accomplished a lot during 2014. Breaking through $2 million in netincome for the first time, once again posting double digit growth in loans, deposits and assets,and the formation of our holding company are all things we are proud of as we continue ourwork to enhance shareholder value.” Fourth-quarter income rose to $538,000 compared to $509,000 last year. At the end of 2014, the bank had total assets of $253.7 million, up nearly 16 percent from 2013. Loans were up 19.7 percent last year to a total of $162.4 million outstanding, while deposits increased 15.7 percent to $227.8 million.

Latest State News

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