Detroit/San Francisco: General Motors Co said on Tuesday it will stop advertising on Facebook, even as the social networking website prepares to go public, with a source familiar with the matter saying the automaker had decided Facebook’s ads had little impact on consumers.

The decision by GM, the third-largest advertiser in the United States, marks the first highly visible crack in Facebook’s strategy and underscores doubts about whether advertising on Facebook works better than traditional media.

“This does highlight what we are arguing is the riskiness of the overall Facebook business model,” said Brian Wieser, Internet and media analyst at Pivotal Research Group.

“It is not a sure thing. It sure looks likely that it will be one of the most important ad-supported media properties, but it’s not certain because there will be marketers who are challenged to prove the effectiveness of the marketing vehicle.”

For now, these worries do not appear to be impeding strong investor demand, with Facebook Inc increasing the size of its offering by 25% to raise about $15 billion, a separate source told Reuters on Tuesday.

Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, is expected to start trading on the Nasdaq on Friday.

GM said it will still have Facebook pages, which cost nothing to create and for which it pays no fees, to market its vehicles and added that it is not unusual for it to move spending around various media outlets.

“In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers,” GM said.

Facebook declined to comment on GM’s move.

Some in favour

Concerns about advertising on Facebook are not confined to GM, with an executive at another large consumer products company saying it was hard to know if it is worth the money spent.

“Is it just a shiny new object, or is it a real value proposition?” said the executive, who asked not to be identified.

But Ford Motor Co said it was committed to advertising on Facebook and is boosting its spending, including ad buys.

“You just can’t buy your way into Facebook,” said Ford spokesman Scott Monty. “You need to have a credible presence and be doing innovative things.”

More than 20% of Ford’s marketing budget is spent on digital and social media, he said. The company launched its 2011 Explorer SUV on Facebook and other digital outlets for a fraction of the cost of a Super Bowl TV spot, which cost $3.5 million on average per 30 seconds this year.

Another fan of Facebook is Japanese automaker Subaru , which started using banner ads at the website in the past year in addition to its free content. “Advertising plus content equals more clicks to our website, which we like,” Subaru spokesman Michael McHale said.

Getting glitzy

Facebook has ramped up its outreach to Madison Avenue in recent years. Last year Facebook hired Carolyn Everson, an ad industry veteran who worked at Microsoft Corp, Viacom’s MTV Networks and Walt Disney Co, and the company hosted a splashy event in New York in March to showcase its newest ad offerings.

John Battelle, chairman of the Internet advertising network Federated Media, said Facebook may need to invest more heavily in building relationships with major advertisers.

It may also need to develop richer, more customized advertising offerings, even though such efforts would likely be less profitable than traditional display or pay-per-click advertising.

“GM is a warning shot across the bow,” said Battelle.

GM, which ranks behind Procter & Gamble Co and AT&T Inc in advertising spending, spent $1.1 billion on US ads last year, according to ad-tracking firm Kantar Media.

It spent about $271 million on online display and search ads excluding Facebook advertising.

GM spends about $40 million on its Facebook presence, but only about $10 million of that is paid to Facebook for advertising, according to the Wall Street Journal, which first reported GM’s plans to drop Facebook ads. The remaining budget covers the creation of content and the advertising and media agencies involved, the newspaper said.

Also Read | Facebook boosts IPO size by 25%, could top $16 billion

Courtesy: LiveMint

After a brief dip in late 2011, the Apple iPad has firmly reasserted its position as the dominant player in the tablet market. According to the latest figures released today from market intelligence firm iSuppli, the iPad is projected to account for 61 percent of all tablets sold this year, up from 55.1 percent in the fourth quarter of 2011.
Courtesy: Infoworld News

After more than a year of active testing and debate over LightSquared’s plan for a nationwide, wholesale 4G network, the now bankrupt company may end up as no more than a cautionary tale for mobile investors. Industry observers say there are three things that might bring some value to LightSquared’s main asset, a chunk of disputed radio spectrum: The company could swap the spectrum for another block, sell it to another carrier, or win a lawsuit against the U.S. Federal Communications Commission. But all three are unlikely, they said.
Courtesy: Infoworld News

New York/San Francisco: Facebook Inc will increase the size of its initial public offering by 25%, a source familiar with the matter said, and could raise as much as $16 billion as strong investor demand for a share of the No.1 social network trumps debate about the company’s long-term potential to make money.

Those concerns over revenue growth were underscored earlier on Tuesday, when General Motors said it planned to pull out of advertising on Facebook.

Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, will add about 85 million shares to its IPO, floating about 422 million shares in an offering expected on Friday, the source told Reuters, declining to be identified because the information was confidential.

The expanded size, coupled with Facebook’s recently announced plans to raise the IPO price range, would make Facebook the third-largest initial share sale in US history after Visa Inc and GM. Facebook declined to comment on the increased IPO size, which was first reported by CNBC on Tuesday.

The social networking company is drumming up massive demand for the offering even as slowing revenue and user growth spur questions about the long-term Facebook story.

“This is much more a spectacle, a media event and a cultural moment than it is an IPO,” said Max Wolff, an analyst at GreenCrest Capital. “This is not a game of models and fundamentals at this point.”

GM’s announcement, while ill-timed, should not seriously hurt Facebook’s IPO reception for now as it may not be representative of advertisers’ overall attitude, said Brian Wieser, an analyst with Pivotal Research Group. “The demand for the IPO probably won’t be affected materially by this,” he said, noting, however, there were probably a lot of calls between underwriters and investors following GM’s announcement.

The IPO, Silicon Valley’s largest, eclipses the roughly $2 billion debut by Google Inc in 2004.

Facebook raised the target price range to $34-$38 per share in response to strong demand, from $28-$35, according to a Tuesday filing. That would value the company at $93-$104 billion, rivaling the market value of Internet powerhouses such as Amazon.com Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.

The increased price range made it very unlikely that Facebook shares would double on their trading debut as they might have if the company had come out at the low end of its initial price range, Wolff said. He expects a first-day gain of about 10%.

“No rational person thought they were buying the stock for $28,” said Wedbush Securities analyst Michael Patcher, noting Facebook had traded as high as $44 in the secondary markets in recent months.

Facebook said in its latest filing that it arrived at the higher IPO price range after one week of marketing the offering – part of a cross-country roadshow in which CEO Zuckerberg has taken the stage to lay out his vision for the company’s money-making potential and its top priorities.

The price range hike, coupled with strong results from Internet and social media players Groupon Inc and China’s Renren Inc, contributed to a dotcom rally on Wall Street on Tuesday. Shares of Pandora Media Inc rose 10.3%, Zynga Inc was up 7.7%, Groupon climbed 3.7% and Renren gained 6.4%.

Long-Term Growth

Before the IPO size was increased, Facebook would have raised about $12.1 billion based on the midpoint price of $36 and the 337.4 million shares on offer originally.

At this midpoint, Facebook would be valued at roughly 27 times its 2011 revenue, or 99 times earnings. Google went public at a valuation of $23 billion, or 16 times its trailing revenue and 218 times earnings. Apple Inc went public in 1980 at a valuation of 25 times its revenue and 102 times earnings.

Facebook’s IPO comes as some investors worry the company has not yet figured out a way to make money from a growing number of users who access the social network on mobile devices such as smartphones. Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.

With some 900 million users, it had $1 billion in net income on revenue of $3.7 billion in 2011.

The company has also extended the time frame for its $1 billion acquisition of mobile app maker Instagram, projecting the deal would close this year instead of the second quarter as it previously indicated.

It provided no reasons, though a source familiar with the matter told Reuters last week that the US Federal Trade Commission has reached out to Google and Twitter as part of the agency’s standard review for deals of that size.

Facebook is scheduled to price its shares on Thursday and begin trading on the Nasdaq on Friday. A host of Wall Street banks are underwriting the offering, with Morgan Stanley, JPMorgan and Goldman Sachs serving as leads.

Courtesy: LiveMint

Visitors to Wikipedia who see advertisements on the site have most likely fallen victim to a browser-based malware infection, Wikimedia Foundation, the organization operating the website, said on Monday.
Courtesy: Infoworld News

More than half of global PC users admit that they pirate software at least occasionally, contributing to a black-market economy estimated at $63.4 billion in 2011, up from $58.8 billion the previous year, according to a new survey from the Business Software Alliance.
Courtesy: Infoworld News

New Delhi: Women talk more on the phone. So says the just-released Nielsen Informate Mobile Insights survey. Shedding light on the phone usage habits of the sexes in India, the survey spotlights the increasing importance of women for smartphone companies.

“In the current economy, women are increasingly important decision makers, both inside and outside their homes,” said Farshad Family, managing director, media, at Nielsen India. “Taking this into consideration, capturing smartphone data is an innovative method of understanding how women use the device beyond making calls and sending text messages.”

Sandeep Bhatnagar/Mint

A key finding of the survey: women spend on an average three hours more on calls than men. They also spend four times the amount of time men spend on instant messaging (or chat) applications. They use chat clients such as WhatsApp, Google Talk and Nimbuzz.

“They like to share and talk about things. They make a better brand ambassador for a chat app compared with men,” said Jamshed V. Rajan, chief product officer at Nimbuzz.

Adds Varun Krishnan, editor-in-chief at FoneArena.com: “Generally, women are a bit more social than men and have a bigger friends circle.”

While women are more active users of chat applications, men are more experimental in downloading and exploring other applications. On an average, men install 16 applications in a month compared with just 11 by women and 20% of these are online apps.

Online apps are those which use Internet (games, chat apps, social network websites, etc), while offline apps may include health trackers, currency converters, dictionary, academic apps, among others.

“Men generally tend to explore their phone a lot more and, hence, they tend to download more apps,” Krishnan said.

Women are also more loyal to an application than men, who tend to move on quickly, Rajan said. “Once they (women) are in the network, they are bound to stay longer and experiment more, whereas men have a short span of attention. They always keep looking for new applications,” he said.

At a broader level, the survey pointed out that both sexes spend the same amount of time—about 81 hours a month—on their smartphones despite the contrasting breakdown of activities.

Among other findings, men spend 50% more time browsing the Web on their smartphones than women, visiting on an average 20 sites a month as compared with 14 by women. And, while women surf the Internet less than men, they do it more when visiting social networking websites, which constitute 43% to pages visited by them against 32% for men. Other categories of Web browsing include search, adult content, webmail, VAS portals, video and others. VAS refers to value-added services such as ringtones, SMS alerts, games, video clips and music on demand, mobile wallpaper downloads, billing services, etc.

One finding seems to bear out the cliche that men don’t like to ask for directions. According to the survey, men access Google Maps more often than women presumably so they don’t need to stop and ask, although this could also be because men tend to drive more than women.

One finding seems to bear out the cliche that men don’t like to ask for directions

There are divergent opinions about this.

“Men believe that others are also like them, and even if they won’t know, they will send them in some random direction,” said Anuj Sharma, a student. On the other hand, Santosh Shah, an IT professional, thinks that women are poor with directions and get baffled by a map.

More men use smartphones than women who are content with feature phones. But this, too, is changing as women discover the benefits a smartphone has over a feature phone.

Nidhi Singh, a human resource (HR) management executive, says: “Being an HR professional, I have to be constantly updated with all the current mails and constant support needs to be there. Smartphones definitely help me in being connected all the time. Moreover, easy access to social network also helps me stay in touch with my friends off work.”

Overall, an average smartphone user spends 2.5 hours a day using her phone, with 72% of that time spent on activities such as gaming, entertainment, apps and Internet-related content, according to the survey. The most active smartphone users are in the age group of 15-25 years where usage is as high as three hours a day.

Nielsen Informate Mobile Insights gathers data on smartphone usage almost on a real-time basis from a panel spread across India, the company said. This is measured through an app installed on the smartphone that captures user activity. As of now, the app is installed on phones belonging to a panel of more than 5,500, a number that is steadily growing, Nielsen said.

Courtesy: LiveMint

Microsoft today declined to comment when asked whether it believed it’s required to offer a ballot screen in Windows 8 to European users for selecting rival browsers in the new operating system’s desktop mode. Yet the settlement specifically called out future editions of Windows.
Courtesy: Infoworld News

Apple on Monday issued its first security-related update for OS X 10.5, or Leopard, in nearly a year, to disable long-outdated versions of Adobe’s Flash Player. Security Update 2012-003 does not patch any known vulnerabilities, but is instead a Leopard-specific version of what Apple released last week for OS X 10.6, or Snow Leopard, and the newer OS X 10.7, better known as Lion.
Courtesy: Infoworld News

Mumbai: A decade back, Nokia’s leadership position in India and globally was almost unassailable. But riding on the success of Android-based phones, South Korean handset maker Samsung Electronics Co. Ltd has severely dented the Finnish company’s fortunes.

Head-to-head: A mobile phone shop in Delhi. Samsung has already toppled Nokia in the Indian smartphone segment. Photo: Ramesh Pathania/Mint

This year, not only did Samsung break Nokia’s 14-year record of being the world’s largest handset maker by overtaking it in terms of unit shipments in the January-March quarter, according to a report in April by research firm Strategy Analytics, it is also threatening to upstage Nokia in the overall Indian mobile phone market.

It has already toppled Nokia in the Indian smartphone segment. Research firm Convergence Catalyst pegs Samsung’s share in India in the January-March quarter at 45%, way above Nokia’s 25-30%. It estimates 9-9.5 million smartphones to have been sold in India in 2011.

“The year was also significant in that smartphones breached the $100 (around Rs 5,300) price point with Android devices being launched in the market in Q4 2011,” said Jayanth Kolla, co-founder and partner, Convergence Catalyst. “Although Nokia had a strong lead in the smartphone segment in the first half of the year (started 2011 with close to 60% and ended Q4 with sub-40% share), Samsung has gained significant market share in the last two quarters (June-December) and is the player to watch in 2012.”

To compound matters, according to an April report by market tracker GfK-Nielsen, Samsung India also overtook Nokia in India in overall retail revenue in March. It had a 34.2% share of mobile phone retail revenue in March 2012 as against Nokia’s 33.8%.

Samsung, however, lags behind Nokia in unit shipments (volumes) in India. In the overall mobile phone space in India, Nokia retained leadership with a 30% marketshare in the October-December 2011 quarter, with Samsung following at 14.4%, according to shipment numbers by CyberMedia Research. But the research firm also reveals that Nokia has been steadily losing marketshare in India, dropping over the years: 2008 (55%), 2009 (54%), 2010 (30%), 2011 (30%).

With Samsung at its heels, the Nokia India management is leaving nothing to chance.

“Nokia is in transition, but on the dot as far as the markets are concerned,” said D. Shivakumar, senior vice-president, sales (India, Middle East and Africa), Nokia. “We are following the global Nokia strategy of strengthening three pillars. The first is our partnership with Microsoft Corp. for Lumia phones based on the company’s Windows operating system (OS). We have received good success here. The second pillar is about connecting the next billion to the Internet with mobile-Internet phones. And the third is about ‘future disruptions’.”

The company is attempting to get its act together by strengthening its portfolio with the introduction of the Lumia 900 and adding the Nokia 808 PureView to add to its smartphone arsenal. Both are expected to be launched by the end of this month, he said.

In the smartphone segment, the company has two models—the Lumia 710 and 800—which sold between 18,000 units and 22,000 units together per month in the January-March quarter, according to industry estimates. Nokia does not give India figures for the Lumia brands, which were introduced in December 2011.

With the PureView, which boasts a 41 megapixel (MP) camera, Nokia is expected to target users who want to benefit from augmented reality (AR) technology that will allow them to get additional data on hotels, monuments and other points of interest by simply aiming the camera at such locations. PureView, according to industry buzz, will be priced at around Rs 30,000.

On “connecting the next billion to the Internet”, Shivakumar said in the last four months, Nokia India had introduced eight products under the Asha brand, which comprises Internet-connected phones. Moreover, the company has dual-SIM phones as also around 80,000 applications or apps. “We are adding around 300 apps daily,” said Shivakumar.

Nokia this month announced partnerships with Vodafone India and Bharti Airtel to offer integrated billing solutions on the Nokia Store. Nokia Store India currently sees more than 60 million downloads a month.

It’s also strengthening its offering with features such as Nokia Maps, Nokia Drive and location-based services to increase stickability. “Today, the Internet is well organized around the ‘what’ and the ‘who’ via search engines and social networks, and Nokia is committed to provide the answer to the ‘where’,” said Vipul Mehrotra, director and head (smart devices), Nokia India.

The company rolled out the Nokia Drive traffic service in the country this March, that’s aimed at helping users avoid jams.

The service, available to users in Delhi and Mumbai, will potentially be able to deliver comprehensive, real-time traffic information to users, the company said. The traffic update is available on Symbian smartphones through Nokia Drive, and on Nokia Lumia 800 and Nokia Lumia 710 through Nokia Maps.

“Globally, our maps are used 100 million times a day, and 2.4 million changes are made daily to these maps, making them a ‘learning platform’,” said Mehrotra. “In India, our maps cover over 20 million points of interest.”

While Nokia is getting its act together, analysts maintain that Google’s Android OS has helped Samsung gain traction while Nokia is betting on Windows.

“Both Android and Bada (Samsung’s mobile OS) gained significant market share in Q4 2011, largely due to Samsung’s strong momentum in the smartphone segment,” said Kolla of Convergence Catalyst.

He reasoned that Samsung has more Android devices and only a few of those that run the Windows OS, which is helping the South Korean company. “By Q4 2011, the Android share in India grew close to that of Symbian and is expected to overtake it in 2012,” Kolla said.

While the decline of the Symbian OS, which Nokia plans to phase out by 2016, “is expected to be far more drastic globally, we expect it to still hold a respectable 23.3% share in 2012, based on the strong equity that Nokia has in India. However, we do not expect Windows Phone to be a major player in 2012 as it will not be available in the low- and mid-end price ranges, unlike Android,” he said.

Naveen Mishra, lead analyst, CyberMedia Research telecoms practice, said Nokia would have to widen its Lumia range in the country to fight competitors but added that the dual-SIM phones and the Asha series would help boost sales in India.

“Nokia’s efforts are in the right direction,” he said. “Nokia Drive, Nokia Music and Nokia Maps—all of which are offered free to Nokia users—are differentiating features. However, one will have to see how the Lumia series adoption picks up in this market.”

leslie.m@livemint.com

Courtesy: LiveMint