Google and Apple Are Now in a Mobile-Payments War
Despite slower adoption than Tim Cook may like, Apple Pay is still the fastest-growing way to pay for things with your smartphone. But Google isn't resting on its laurels, suggests a new analyst report from Barclays, and will be coming after Apple hard—with Samsung gearing up for its own assault on your wallet.
The key issue is the underlying technology behind these mobile payment services. Apple's big innovation was to take the iPhone 6/6+ design and build in an "embedded secure element"—basically, a middleman that takes your credit card number and encrypts it so that the cash register never actually gets your real information.
It's built straight into the phone and sits near the NFC antenna in the device that does the actual transmission. Since Apple was able to muster its corporate might to get the banks, the credit card companies, and the retail chains on board, that embedded secure element has the most support in stores and with banks.
Google, on the other hand, launched its original Google Wallet NFC mobile payment service for Android devices back in 2012. To make life easier for retailers, Google chose what we call "host card emulation," where software in the phone pretends to be a card, as opposed to the embedded hardware that Apple would later go with.
Google's approach is easier for phone makers and retailers alike to use, because it's all in easily updated software. But it's less secure, and importantly, it won't ever work with the kinds of contactless card readers common on public transit systems, like the San Francisco Bay Area's Clipper.
Since then, Google Wallet has added support for embedded security elements, like the kind built into every Samsung Galaxy phone since the S3. But it doesn't need one to work. Barclays also notes that using both embedded security elements and host card emulation could provide better security than either alone.
So the big question for Google, then, is whether it will follow Apple's lead and encourage more Android manufacturers to put in more of those embedded security elements—and whether the phone makers will follow through.
That's an especially big question in light of Google's acquisition of Softcard, a mobile payments platform that was originally owned jointly by Verizon, AT&T, and T-Mobile to compete with Apple and Google, but never went anywhere. All phones that had Softcard pre-installed will soon have Google Wallet instead, drastically increasing its reach. After all, there are more Android devices than Apple in the world.
Google may be starting from a disadvantage, but it's coming after Apple Pay hard. This is especially true as Google adds more devices with fingerprint sensors, used for authentication as with Apple TouchID, to its roster. We'll probably hear more about Google's ambitions for mobile payments at the I/O event this May.
The wild card here is Samsung Pay, launching this summer in the U.S. and South Korea, which uses payment technology similar to Apple Pay. But thanks to Samsung's acquisition of LoopPay, it has something that neither other company has: The ability for a phone to pretend to be a simple magnetic-striped card. It's an add-on to the usual NFC chip, and is still contactless from the phone, but as far the cash register is concerned, you just swiped plastic.
Apple Pay is popular, sure, but it still requires specialized hardware that not every business can afford. But even the shady liquor store on the corner should be able to take a Samsung Pay swipe.
And that's not to mention that banks may start offering their own mobile payment services that bypass those altogether, especially on Android where there's no restriction on using it.
The mobile payment wars are only getting started. As more people get more devices that can use Apple Pay, Google Wallet, and Samsung Pay, these types of payments are only going to take off.
New York City Has More Uber Cars Than Taxis
Less than four years after Uber started operating in New York City, Uber vehicles now outnumber yellow taxis on the streets there, the New York Post reported Tuesday. New data from NYC's Taxi & Limousine Commission indicates that Uber has 14,088 cars operating in NYC's five boroughs, and that there are 13,587 medallion taxis in the city.
Yellow cab drivers can also work for Uber using the company's uberT program, a taxi service accessible for Uber customers through the company's mobile platform. But uberT taxis aren't considered Uber cars in this case.
Uber launched in May 2011 in New York City. New York City is one of Uber's largest markets, and was the first city Uber expanded to outside of its hometown, San Francisco.
New York City has not been without obstacles for Uber. Some drivers have contested Uber's claims that they stand to make $90,000 a year driving in New York City for the service, and in January, New York City's Taxi & Limousine Commission briefly shut down five of Uber's six bases (a basically toothless penalty for an organization that dispatches its drivers remotely).
But Uber is no worse for any troubles it's had in New York. In fact, it's doing quite well there. According to a leaked internal document, in December 2013, Uber generated $26 million in New York City, or $312 million annually. Of course, that was more than a year ago, and those numbers would presumably be even higher today.
You Can Now Buy an Electric Car Directly From Tesla in New Jersey
On Wednesday, New Jersey Gov. Chris Christie signed into law a bill that allows Tesla to sell its electric cars directly to consumers, no dealers necessary.
"I said last year that if the Legislature changed the law, I would sign new legislation put on my desk and that is exactly what I'm doing today," Governor Christie said in a statement. "We're pleased that manufacturers like Tesla will now have the opportunity to establish direct sales operations for consumers in a manner lawfully in New Jersey."
According the governor's office, "the bill changes the law in New Jersey and removes the prohibition on direct sales by auto manufacturers who do not have franchise agreements, giving manufacturers of zero emission cars, including Tesla, the ability to sell directly to New Jersey consumers at up to four locations in the state."
The law stipulates that manufacturers will have to maintain service centers at locations where they conduct direct sales. Tesla has been waging an ongoing battle against the very entrenched network of car dealers in the U.S. Franchise laws prohibit automakers from selling the cars directly to buyers.
Instead, car dealers act as middlemen, holding cars in inventory, providing financing and insurance services, marketing in their regions, and servicing vehicles. Each state has its own laws on the books, so Tesla has been fighting its battle on a state-by-state basis. With the New Jersey bill becoming law, Tesla buyers can now go to one of the company's stores in the state and actually place an order for a car.
Technically speaking, Christie's action on Wednesday altered the existing law—and restored Tesla's legal right to use a direct-sales model in New Jersey that it had been forced to abandon in early 2014. It remains to be seen whether New Jersey will be an isolated case—or spur other states to change their dealer franchise laws.
In late 2014, Tesla seemed to have conceded that the company might have to pursue a hybrid of direct sales and dealer franchising as it expands.
Robo-Advisers Are Marching Into the Wealth-Management Industry
UBS, Bank of America, and Morgan Stanley stand out in the global wealth-management industry, with each responsible for handling more than $1 trillion in investors' assets. But they're now under siege from well-funded startups that offer a wide array of advisory services at a low cost thanks to broad use of automated functions.
These are the robo-advisers.
We're only in the first round of the wealth-management wars, but the sector—which has historically been dominated by well-staffed big banks and a network of good-old-boy relationships—is seeing its competitive landscape evolve rapidly.
While these old-school firms continue to draw multimillion-dollar clients, the robo-advisers have attracted so-called HENRY (that's “High Earning, Not Rich Yet”) clients, a new Goldman Sachs report says.
Betterment, Wealthfront, FutureAdvisor, and Personal Capital are among these new firms.
Many of these startups are actually backed by the competitors to Wall Street's incumbents in the wealth-management space. Citi Ventures is among the backers that have contributed more than $100 million to Betterment, and Personal Capital counts both USAA and BlackRock among its investors.
Startups in the wealth-management arena differentiate themselves, particularly with new HENRY millennials, through automated advising. According to Goldman, “viral customer acquisition strategies” target clients' tendency to tap into their social network to generate investing ideas. They're also doing it with lower fees than the incumbents.
In the short run, it's meant to get more millennials onto wealth-management platforms earlier. In the long run, it aims to keep them engaged as they grow older and need to manage more cash—by that point, startups are aiming to have scaled up client services to better compete with the bigger players.
The fees are key to big banks and other fund managers. Bank of America's Merrill Lynch unit is responsible for a double-digit portion of the bank's top line. It's even more meaningful for other fund managers, like Charles Schwab.
Another big advantage startups enjoy is their low investment minimums: between $0 and $100,000 (with Personal Capital being the highest). They need less in fees to pay a smaller staff, and lower fees also lets startups scale up faster with smaller investors.
One Wall Street source notes that banks' wealth-management operations offer services that most startups cannot: estate planning and a broader range of investment options.
“The robo-advisers work for middle class, or young people, who don't have much and just need to avoid fees,” one Wall Street pro points out. “They can't replace full-service advisers.”
Still, the Wall Street incumbents aren't just sitting there. Competitors to the new class of wealth-management firms have clearly taken note of the HENRY trend: Earlier this month, fund manager Charles Schwab launched its Intelligent Portfolios platform, promoting lower fees through automated technology.
Again, we're only in the first inning of the wealth-management wars.
If You Want a “.Sucks” Domain Name, It Could Cost You $2,500
Starting March 30, you'll be able to buy a .sucks name for your website—if you can afford the prices of up to $2,500, as MarketingLand reports.
Vox Populi, the company that will be selling the .sucks website names, will charge $2,500 for certain registered trademarks with a .sucks name. For your own, nontrademarked usage (like MattWeinberger.sucks), it's $199 until June 1, when the price goes up to $249.
There's some controversy amid the buildup to the release of .sucks domains. Before he left office, Sen. Jay Rockefeller of West Virginia called Vox Populi's pricing plan "little more than a predatory shakedown scheme” designed to gouge companies who will rush to buy their own names to defend against trolls and other Internet mischief-makers, reports MarketingLand.
(Just as an example of what companies should be worried about with ".sucks," check out the very unofficial Walmart.horse website.)
Consumer advocate groups will be able to buy a subsidized .sucks domain for only $9.95 per month, but they won't be able to use it for a website criticizing a company. Instead, Vox Populi will force users at this price tier to go to a discussion forum hosted on its own site, Everything.sucks.
For its part, Vox Populi says that by pricing domains in the hundreds or thousands of dollars, it's stopping trolls and scalpers from buying them in bulk. As Ars Technica points out, using a .sucks website to criticize of a company is most likely protected under the law, as long as the site's not libelous.
Criticizing Columbia Journalism School's $92,933 Price Tag Is Easy. Here's Why You Shouldn't.
Columbia's graduate journalism school is planning to cut staff and shrink class sizes. In a story on the news, Bloomberg relays the following: "Estimated tuition, fees, and living expenses for a full-time master's degree student are $92,933, according to the school website."
People who work in the media industry lost their minds over this line on Twitter on Wednesday night. After all, $92,933 is a lot of money for an industry that doesn't promise investment-banking-type riches. Or, to be more current, it doesn't promise app-maker riches.
Here's a guy I know who works in media saying people don't need to go to journalism school:
PSA to anyone who wants to become a journalist: You don’t have to go to journalism school. Don’t go! http://t.co/VZaPOlj0Bx— Farhad Manjoo (@fmanjoo) March 11, 2015
He's half-right. You don't have to go to journalism school if you want to be a journalist. But that doesn't mean you shouldn't go. I went to journalism school, and it was one of the best decisions I've made in my life.
Here's my story: I graduated from the University of Delaware in 2002 with a BA in economics. I didn't do any internships while in college. When I graduated, the economy was in the toilet thanks to the collapse of the dot-com bubble and 9/11. I had no experience in my field.
And frankly, I didn't know what I wanted to do with my life. I couldn't land a real job. Turns out that when you go for a job interview and the person asks, "Why do you want to work here?" you shouldn't answer with, "I just want a job."
I spent the next five years working a middling job at the University of Pennsylvania. I was working at the photocopy shop at Wharton—Reprographics. My coworkers were great fun to be around, but they were not high achievers. One guy, for instance, literally slept on the job. Out in the open in front of everyone, he just took a nap every day. He also brought in his weights and tried to set up a mini gym in a storage space so that he could work out while on the clock.
The job was mind-numbing, but it was easy. I was able to listen to music and talk radio. It also allowed me to take two classes per semester free at Penn. I took lots of art classes. I learned how to use Photoshop. I took a bunch of photography classes. I took a few classes on video and a few writing classes.
Somewhere along the way, I decided I needed to do something more productive with my life. I was between going to school for filmmaking and journalism. I chose journalism because I thought I would have a better shot at landing a job when I was done.
(In retrospect, journalism was a perfect fit for me. I like taking classes and learning new things. I also like the creativity of art like photography and video. Journalism is built on constant learning. It requires creativity to tell stories. Also, I love talk radio, which is what modern journalism is most like.)
When I decided to do journalism school, I went to my writing professor at Penn, Robert Strauss, for advice. His advice: Don't go! It's a waste of time and money. He said I should just start writing, doing freelance for local papers.
For a certain kind of person, that's great advice. For me, it made no sense. I literally could not think of one idea to pitch the local papers. And even if I did have an idea, I would have had no clue how to execute the idea.
So I decided to enroll in NYU's Business and Economic Reporting graduate program. I don't remember how much it cost. It was relatively expensive, but I got a student loan.
That program was a year-and-a-half-long immersion program in journalism. I learned more in 1 1/2 years at school than I would have freelancing for three years.
For instance, on my first day of my first class I was told to write a story finding someone who took out a subprime loan. Step one was to figure out what a subprime loan was. Step two was to have a complete meltdown about the fact that I had no idea how to find someone with a subprime loan. I sat in my apartment and thought, "I can't do this. I am totally screwed." Then I thought, "If you can't do this, then you're really screwed, because there is no plan B." I eventually figured it out. School helped me learn how to report and learn the rules of journalism.
The student loan allowed me to afford life while going to school. If I was freelancing, I'm not sure I would have been able to afford life.
It also led to my interning at a website called Silicon Alley Insider (the site that would become Business Insider) as well as BusinessWeek. There's just no way either organization is hiring a guy with no journalism training as an intern. And if I didn't intern at Silicon Alley Insider, then I wouldn't be a deputy editor at Business Insider.
So things worked out for me very nicely!
To people balking at spending $100,000 to go to journalism school, here's what I would say: It can be a power boost that propels you into the industry. It's sort of like venture capital money. Sure, you could bootstrap and grow slowly, or you could take an investment, burn the cash, and scale quickly, then figure out profitability later.
Now, this doesn't mean everyone has to go to journalism school.
The guy whose tweet I highlighted above—Farhad Manjoo—never went to journalism school, and he's making a lot of money practicing journalism. I haven't talked to him about it, but my guess is that he was always focused on doing journalism. If that's the case, then yes, journalism school isn't necessary. If you know you want to be a journalist from day one, then there are plenty of other things you should do. I would recommend doing a computer science degree and working for your school newspaper or writing a blog. Then go intern at Business Insider, or BuzzFeed, or Vox.
There's no repeatable straight line to success in life. That's one reason we write stories about people who are successful. We want to learn from their example and see what we can apply to our lives. It's never the same story.
So, people who tell you not to go to journalism school aren't necessarily right. They didn't go to school and it worked for them, so they think they're right. People who did go to journalism school and had it work will recommend it. They're not necessarily right either.
It's your call. If you think you can write your way into a journalism job, then do it. If you want to invest in training through school, then do it.
(Also, while we're here, lots of people say you can't make money in journalism. I remember on my first day of journalism school the professors were talking to us as if we decided to become monks. My parents were teachers, so I don't have the best sense of what making money is for people, but I can tell you based on following this industry that you don't have to become a monk. If you work hard, you will be rewarded. Not app-maker money, but still good money for a really fun job.)
Thank Aldi For Sending British Supermarkets Into a Death Spiral
In the days before the Internet, families would spend hours in their "favorite" supermarket at the weekend, buying in bulk, running up massive bills and keeping the physical tills ringing.
When I was growing up, it was received wisdom that the more expensive the supermarket, the "better" and the "healthier" it was, and the better the customer service would be. You knew that if you were shopping in Sainsbury's, mum and dad were probably doing a bit better than the parents who were raiding the aisles of cut price goods at Asda.
The market was structured on that basis. Waitrose was at the top for the richest people, followed by Sainsburys, Tesco and Morrisons, depending on your rung on the ladder. The quality of the food increased alongside the price, and the relative poshness of the supermarket brand selling it. The three things—quality, price and store brand—were inherently connected.
All that has turned out to be wrong. The Germans know the UK market better than the British do. In the last two years, the UK supermarket business has turned into a bloodbath of misconceptions. And the Old Guard—Tesco, Sainsburys, and Morrisons—are losing.
Just look at this chart by market researchers at Kantar Worldpanel. From 2012 to 2015, the German discount chains Aldi boosted their market share. Aldi went to 5 percent, from 2.6 percent; while Lidl's share rose to 3.5 percent from 2.5 percent. They have taken nearly 9 percent of the market in just two years:
Sometime in the 1990s, British people started taking food seriously and realized that price was often no guide to taste or freshness. Online shopping and celebrity chefs like Jamie Oliver and A Girl Called Jack showed Britons that you can have quality food for a fraction of the price at supermarkets, if you know what you're doing.
Supermarkets that don't provide great, cheap food are hurting as a result: Morrisons reported its worst set of profit results in eight years, today. Its pre-tax profit plunged 52 percent to £345 million ($517 million), compared to the previous year, while revenues fell 4.9 percent to £16.8 billion in 2014, from £17.68 billion in 2013.
"This is a rout, not a reversal," said Phil Dorrell, director of retail consultants at Retail Remedy. "With the most dated stores and weakest business strategy of the old guard grocers, Morrisons has truly been put to the sword by the rise of Aldi and Lidl."
The war is making food cheaper, too. Kantar Worldpanel says food prices in Britain dropped by 1.6 percent in 2014, compared with the previous year. That has helped consumers save £400 million.
"We keep prices constantly low while keeping product quality consistently high, which is exactly what shoppers want," said Roman Heini, Aldi's UK group managing director in September last year. "They had become used to thinking you have to pay more for better products. We've shown them this doesn't have to be the case."
Aldi and Lidl's growth trajectories are insane. Aldi sales rocketed 19.3 percent in the 12 weeks ending March 1, 2015, compared with a year ago. That was the slowest rate of growth since June 2011. It still managed to rack up 5 percent market share from 2.6 percent the year before. Lidl, which is a privately owned company based in Germany and therefore does not have to reported its earnings in the same way as a public company, also posted growth of 13.6 percent.
On March 10 this year, Ocado, the food equivalent of Amazon, reported a 19 percent jump in gross group sales for the 12 weeks to February 22 2015, compared to a year ago. In other words, the new players are growing. The traditional British chains that once anchored every high street are shrinking.
For some of them, even being a supermarket is a liability. "It’s hard to see a way out for Morrisons, the minnow of the supermarket group, as more and more people are preferring to do the weekly shop online, making physical stores more of a drain on an already weak balance sheet," said Augustin Eden, a research analyst at Accendo Markets.
Now look at Britain's largest supermarket, Tesco. Despite the Tesco recording its best performance in 18 months in the 12 weeks leading to 1 March, sales were only up 1.1 percent. This period included the Christmas and New Year related discounts.
“Supermarkets have to get used to this ‘new normal’ of low profit margins and must adapt accordingly. The discount retailers like Aldi and Lidl have fundamentally disrupted the market and the Big Four—Tesco, Morrisons, Asda and Sainsbury's—must accept their losing market share,” said Professor Heiner Evanschitzky, professor and chair of marketing at Aston Business School.
“The best option for them now is to shrink their businesses gracefully,” he says.
A Dollar and a Euro Could Soon Be Worth the Same Thing
The euro crumbled below a new benchmark in early trading Tuesday, falling below $1.08 for the first time in 11 years, and just kept sliding all day. At 4:30 p.m. GMT (12:30 a.m. ET) it dropped to as low as low as $1.0709, down 1.32 percent.
Less than a week ago, it was above $1.10. And just 12 months ago, the euro reached an 18-month high against the dollar, at nearly $1.40. It has plunged 22.5 percent since then. Here's how it looks:
The rapid decline of the euro is raising questions about whether and when the two currencies might reach parity again, according to the FT. They have not been one for one since 2002.
Here's the FT:
"It's a risk that the market will move towards parity," says Jane Foley, senior FX strategist at Rabobank. "It's something which may happen during the course of the year."
As Divyang Shah, global strategist at IFR Markets, puts it: "The trend remains your friend on this one and we see a strong possibility for the unit to trade at parity this year."
Oxford Economics and Goldman Sachs had forecast that the euro would drop to parity against the dollar by the end of 2016, though that could happen a lot sooner at the speed at which the euro is weakening. Many forecasters started the year with a $1.15 forecast for the euro at the end of the 2015. Unless the euro strengthens considerably from now on, that's not looking like a very good projection.
Generally, the European Central Bank's new quantitative-easing program should tend to weaken the euro, and the Federal Reserve's likely rate hikes should strengthen the US currency: When investments made in dollars can get a better return through higher interest rates, demand for dollars goes up, and so the currency strengthens against others.
And as far as pretty much anyone is concerned, in the next couple of years the ECB will keep monetary policy loose, while the Fed will be looking to raise rates steadily. That makes parity between the euro and dollar a real possibility.
Subaru Is Now Building Cars That Avoid Crashes, No Hands Necessary
We have reached a new phase in automotive safety. For several decades, safety features have centered on reducing the chance of serious injury or death in a crash. Things like airbags, anti-lock brakes, and crumple zones assume collisions are inevitable. Now we're on the cusp of dramatically reducing that probability.
Subaru has added this amazing technology called EyeSight to its cars. Cameras mounted near the top of the car's windshield watch for approaching obstacles and warn the driver. If the driver doesn't respond, the car stops itself.
The Subaru Legacy and Outback equipped with EyeSight both earned the Insurance Institute for Highway Safety's top crash-avoidance rating recently, but here's the game-changing part: the IIHS—the same agency that helped make crash test dummies famous—is now testing crash avoidance.
That's big, and here's why: If enough automakers succeed at designing cars that can successfully, and autonomously, avoid a collision, accident rates will fall, and eventually so will insurance premiums.
But there's another upside. Crash-avoidance technology is also helping steer the auto industry toward self-driving vehicles. These safety features use strategically mounted cameras and sensors to help the vehicle interact with its surroundings.
We now have cars that can tell you when you're drifting into another lane, and they can tell you whether another car is in your blind spot. Many have active cruise control, which monitors the distance between you and the vehicle up ahead.
All of these are precursors to vehicles that will eventually drive themselves. Mercedes is nailing this with the new S-Class. And it's not just passenger cars that are benefiting from this technology.
Now that the IIHS is ranking vehicles for how well they avoid crashes, we can expect more automakers to bring this technology to market and to eventually see our roads become a much safer place.
The Russian Economy's Screwed, So Putin Is Taking a Pay Cut
Russian President Vladimir Putin signed three new decrees into law that will slash government salaries—including his own and that of Prime Minister Dmitry Medvedev—by 10 percent starting on May 1 of this year. The government has also announced plans to cut the number of government officials by 5 percent to 20 percent.
The measures are part of the government's emergency plan to address collapsing revenues due to the fall in global oil prices and economic sanctions imposed on the country. Crude oil is trading at about $60 a barrel, but the federal budget was based on oil prices of $100 a barrel, leaving a big black hole in the state's finances that needs to be plugged.
Putin is unlikely to be fazed by the erosion of his take-home pay. As he told members of the press during his annual Q&A session in December: "Frankly, I don't even know my own salary — they just give it to me, and I put it away in my account."
Others in his administration, however, may be less sanguine about the cuts. Especially as they could represent the beginning of a wider program to scale back the country's public-sector workforce in response to the country's economic woes.
The news comes a week after Russian finance minister Anton Siluanov asked parliament to approve spending 3.2 trillion rubles (£34 billion, $51 billion) from the Reserve Fund, one of Russia's sovereign wealth funds, as part of his so-called anti-crisis plan. That figure is more than half of the value of the fund and well in excess of the 500 billion rubles that the government had initially planned to draw down.
The moves suggest the state is still struggling under the weight of sanctions and low oil prices. Inflation in the country rose to 16.7 percent in February, a rate of price increases not seen for over a decade, as the weaker ruble and self-imposed sanctions on Western imports continued to drive up consumer prices. Russians are expected to have to spend half of their salaries just on food in 2015.
The International Monetary Fund forecasts that Russia's economy is set to contract by 3 percent this year and 1 percent in 2016. Many of these forecasts, however, relied on the assumption that sanctions over Russia's involvement in the ongoing Ukraine crisis would be eased off over the next few months—a prospect that is far from guaranteed.
Yet as the Russian government waits to see whether the latest cease-fire agreement between Kiev and pro-Russian separatists in eastern Ukraine holds, the country's domestic economy continues to suffer. On Friday, Gazprom Neft, the oil arm of the state-owned gas behemoth, asked the government for 198 billion rubles in financial aid following similar requests from Rosneft, the country's largest oil company.
Siluanov warned that the pain these companies were suffering may worsen before improving. He told the government that the oil price could still drop, according to The Wall Street Journal.
"It is worth noting the remaining risks on the oil market," he said, "where supply keeps on exceeding demand and oil inventories are growing fast."