The Coronavirus pandemic has forced countries to implement strict lockdowns and curb international travel. Economies have fallen drastically due to lower spendings and rising unemployment. Healthcare has become a priority. Meanwhile, defense, as well as infrastructure costs, have been sidelined.
Work-from-home has become the norm and companies are actively trying to reduce operational costs. Investors have burned a lot of money since startups dependent on the gig economy are the worst hit. Raising funds right now is a herculean task and most start-ups are expected to go out of business in the coming months.
However, one company has taken full advantage of the pandemic-led lockdown. Officially called Jio Platforms, it’s an Indian telecom operator with more than 300 million active users. Dubbed Jio casually, it’s more than just a telecom operator and has managed to raise more than US$ 20 billion within a span of three months. Investors include marquee names like Google, Facebook, Qualcomm, Mubadala (sovereign fund of Abu Dhabi), Vista Equity, and more.
Google has also acquired a stake in Jio for US$ 4.5 billion. It has picked up 7.75 percent in the company, taking the total sale to 32.95 percent. The Google stake sale came to light immediately when the copy was ready for publishing and hence couldn’t be updated.
To be precise, Jio has raised US$ 20 billion from 13 companies by just selling a 25.2 percent stake. Considering the current investments, Jio is roughly valued at more than US$ 60 billion. What’s so special about this company that Facebook decided to splurge US$ 5.7 billion for just 9.99 percent?
India — the most promising market for any internet company
The US has always led the tech race in terms of research and innovation. With a developed economy, the market is self-fulfilling and companies are actively looking for new regions to expand to. The American influence is easily visible in western allies like the European Union, Japan, South Korea, as well as the Philippines.
India, on the other hand, is a developing economy that completely skipped the computer or laptop age and jumped onto the smartphone era. Today, it’s the world’s second-largest smartphone market, and 70 percent of the hardware is dominated by the Chinese. However, most phones run on Google’s Android, and American tech companies have been successful in expanding. This includes Facebook, Amazon, Netflix, Google, and more.
However, the telecom market remains hugely untapped. What will a smartphone do without wireless connectivity?
The rise of Jio and its ripple effects
At the beginning of 2016, 1GB of 3G data cost approximately INR 250 (US$ 3.3). Back then, Jio was completely owned and operated by Reliance Industries. Reliance is an Indian conglomerate that has its foothold in a plethora of segments including oil, retail, entertainment, and more. It’s one of India’s largest companies in terms of market cap and run by billionaire Mukesh Ambani. Just a few days ago, he became the seventh richest person on Earth, overtaking long-time contender Warren Buffet.
In a nutshell, Reliance pumped enough money into Jio and launched it in the middle of 2016. It was India’s first telco to offer pan-India 4G and the tariff was impossible to believe. For the first 6-9 months, unlimited 4G data was offered for free to lure customers from other networks like Airtel, Vodafone, and Idea. Considering Reliance’s backing, the company could afford to.
It also had an inherent advantage over telco’s because it directly rolled out 4G and did not support any previous standards. While other’s were figuring out inter-connection issues between 3G and 4G, Jio had already rolled out VoLTE. Jio only considered data as bandwidth and relied on internet protocol for calls, reducing its operational cost.
Within a year, 1GB of 4G data cost just US$ 0.2. India has the most affordable 4G in the world. Naturally, the competition couldn’t offer these rates without taking a hit on their profit as well as revenues. But, they had no option but to reduce tariffs. Slowly, companies like Aircel went out of business due to unsustainable rates. Vodafone merged with Indian player Idea to form Vodafone-Idea. By the end of 2019, the Indian market had only 3 players left — Jio, Airtel, and Vodafone-Idea.
Keep in mind, Jio has no debt due to its rich parent, Airtel has debt but can offload that with assets and equity, while Vodafone-Idea is on a ventilator. With more than 300 million subscribers, Jio is leading in terms of both, userbase as well as financial health.
Jio’s unique selling point — data
Reliance was planning to enter the telecom industry for a very long time and it saw it’s an opportunity with 4G. While other telcos were busy billing users for calls and SMS, Jio wanted to sell just one thing — more data. And, it came up with its own suite of services that ensured the user consumes more and more data.
India’s data consumption is expected to exceed 11GB by 2022. Although, the tariff has barely increased by 20-25 percent in the last few years. Some estimates are even more optimistic and indicate a 40 percent annual rise.
There’s no doubt that streaming services have changed the whole scenario. But, this is where Jio has an unbeatable offering. Since day one, the company has a suite of apps like Jio News, JioTV, JioCinema, JioSaavn, and even JioMeet. Today, there are 29 apps on the Google Play Store. This ecosystem ensures the user doesn’t have to look elsewhere. And, they are yet to be fully monetized. As a Jio subscriber, they’re pretty much free-to-use at the moment.
Data is the new oil
The suite of apps is mostly made for the end consumer. But, the company has grand plans for the future as well. It has already announced a partnership with WhatsApp to launch JioMart. It’ll onboard physical stores and function as a hyperlocal online shopping experience. A segment that hasn’t really taken-off yet despite investments from Amazon, BigBasket, and Grofers.
Coming to the enterprise side, Jio has acquired a plethora of startups and established companies for their know-how. This includes American telecom-technology company Radisys, Asteria Aerospace, Embibe, Haptik, and Netradyne. The company is poised to lead the 5G race due to its healthy financials and technology innovation. The company has announced it’ll carry out 5G trials based on its own technology and won’t be relying on third-party partners like Huawei.
The company is all set for the 5G future and has equivalent investments in IoT, blockchain, and digital payments. Jio may have started out as a telco, but it’s truly turning out to be a technology company.
The most lucrative technology company
All these factors make Jio a very attractive investment. Facebook tried to enter India with Freebasics and Internet.org but failed miserably. A piece of Jio gives it a chance to explore deeper than ever. For investment companies, the pandemic is a reality check. And, Jio just turned out to be a silver lining. With more and more people working from home, wireless data consumption is bound to rise.
Even companies are realizing work-from-home is a better model in many parts of the business since you can skip expensive property investments. Even if the work-from-home model fizzles out in the coming years, personal consumption will remain largely unaffected. And with India’s developing economy, smartphone penetration is expected to steadily increase. This shall also bring in more data consumption, online shopping, and other related tasks. With Jio covering all the bases, it is perfectly positioned to lead the Indian market.
Lastly, it’s essential to understand why Reliance decided to sell slightly more than 30 percent in Jio. The parent company has a debt to pay-off and its Chairman, Mukesh Ambani, had announced it’ll go debt-free by the end of FY2020. Its most valued business of refining oil has taken a hit due to the pandemic-led crude crash.
It won’t be wise to sell an undervalued asset. At the same time, Jio reached its peak. By giving away a minority stake to a range of partners, Reliance not only raised money but also established global trust and recognition of Jio Platforms.
For the global markets, the indication is clear. India is open for business and there’s huge potential.
Xiaomi overtakes Apple as third-best smartphone seller
Improves over last year’s performance
Since Huawei’s struggles throughout the past year, the rise of other Chinese companies became inevitable. Now, we finally have proof. Fresh from a successful run, Xiaomi has overtaken Apple as the third-best smartphone seller during the third quarter of 2020.
As estimated by Gartner, Xiaomi bagged 44.4 million smartphone sales in the previous quarter. For reference, the Chinese company sold only 32.9 million smartphones in the third quarter of 2019, marking a huge increase from last year’s performance.
As a result, Xiaomi moved from fourth place to third place in Garter’s rankings. The company edged out Apple, who sold only 40.6 million smartphones in the same period. While Apple holds on to 11.1 percent market share, Xiaomi will now enjoy 12.1 percent of the total market.
Besides Xiaomi, Huawei was another big mover — at least in terms of units sold. Compared to an impressive 65.8 million smartphones sold in the third quarter of 2019, the struggling company fell to only 51.8 million units sold. Albeit still impressive, Huawei is now farther away from the top spot occupied by Samsung’s 80.8 million smartphones sold.
Speaking of which, the South Korean company moved almost 2 million more units from the previous year. Now, Samsung holds on to 22.0 percent of the market share.
In other news, OPPO, another Chinese rival to Huawei, slightly performed less this year: selling 29.9 million smartphones (compared to 30.6 million units last year) for the fifth spot below Apple.
iPad and MacBook production to shift from China to Vietnam
Apple’s preparing for the worst
Foxconn’s moving some iPad and MacBook production lines to Vietnam at Apple’s request. Apple intends to take a step back to protect its manufacturing might due to the ongoing trade hostilities between the US and China
According to a Reuters report, the new assembly lines in Vietnam will be operational in the first half of next year at Foxconn’s Bac Giang province. It’s not clear how much production is being moved, but the fact that a shift is already on the table means even the mightiest American company isn’t immune to the trade war.
“Apple requested the move,” a person with knowledge of the plan told Reuters. “It wants to diversify production following the trade war.”
Foxconn has announced a US$ 270 million investment to create a new subsidiary in Vietnam called FuKang Technology. Furthermore, the manufacturing vendor aims to make televisions in the plant for clients like Sony.
This will be the first time Apple has moved its iPad assembly line out of China. However, it’s also not surprising because the Cupertino giant started chalking redundancy plans months ago. Apple has announced a multi-billion dollar investment in India to expand its existing iPhone assembly line.
Trade War just isn’t pretty for anybody
While the trade war and ongoing hostilities between the US and China are yet to affect Apple directly, it intends to take no chance. It’s also considered a pragmatic reaction because many giants like Huawei, ZTE, and ByteDance have been caught in the middle, decimating their future ambitions and scope of expansion.
While American companies are yet to face the wrath directly, the deteriorating situation has prepared them to create back-up plans. Similarly, many other technology giants like Nintendo are also shifting their facilities to Vietnam in search of political stability and a business-friendly environment.
Dyson to hire 400 engineers in the Philippines for its new software R&D lab
The company believes in the country’s young and great engineering talent pool.
Technology company Dyson — the one behind those revolutionary hair styling tools and vacuums — is opening a new software lab in the Philippines. The company plans to hire 400 Filipino engineers with aims to develop embedded software for a new generation of intelligent machines.
“The Philippines is home to bright, young engineers who share Dyson’s ambition to develop technologies for the future,” Dyson Chief Operating Officer Scott Maguire said.
“Dyson has been growing in the Philippines for this reason and it is a nation that clearly celebrates both engineers and technology,” Maguire added, noting the existence of good technical universities in the country.
“We hire a lot of people straight from university. I came from university into Dyson,” admitted Maguire. “Our culture is very much about young, bright engineers filled with energy,” he added. “We’re confident that the talent pool is there.”
In 2016, Dyson opened its Philippines Advanced Manufacturing (PAM) facility in Laguna. The facility, which is responsible for producing the company’s Hyperdymium motor, spans ten thousand square meters and employs 600 people. This particular motor is at the heart of the company’s vacuums, the Supersonic Hairdryer, and the AirWrap.
The new software lab will be located in Alabang and is part of Dyson’s GBP 2.75 billion investment in future technology. The company is hoping to double its product portfolio by 2025. It’s also expected to accelerate the development of new Dyson machines that are often tasked with solving everyday problems intelligently.
It will also form part of Dyson’s global Research, Design and Development team, which spans, USA, UK, Shanghai, Singapore, and Malaysia.
Dyson recognizes Filipino talent
The announcement of the new software lab comes at the heels of a Filipino being the first ever sustainability winner of the James Dyson Award (JDA).
Called the AuREUS system, it’s invented by Filipino electrical engineering student Carvey Ehren Maigue from Mapua University. AuREUS is a material derived from rotting fruits and vegertables and can be attached to a pre-existing structure or surface to harvest UV light. It then converts it to visible light to generate electricity in a way that traditional solar panels can’t. Carvey’s ingenuity impressed James Dyson himself and received a prize of PhP 1,900,000.
Beyond the Philippines
The major investment in R&D also brings interesting developments in two other countries.
In Singapore, Dyson is progressing plans to open its new global head office complex. Its R&D facilities will also be expanded to cover a growing number of fields including machine learning and robotics.
A new University research program is also set to be established to drive product development. Plans are also being made for a new advanced manufacturing hub in the country.
Meanwhile, in the UK, the company is delving deeper into robotics research and AI, investing in the Dyson UK Innovation Campuses both Malmesbury and Hullavington. Both campuses employ over 4,000 people and are expected to drive new research in fields of study including products for sustainable healthy indoor environments and well-being.
Roles in the Philippines software lab will include embedded software engineers, automation test engineers, program managers, release train engineers, and more.
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