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Not even 5G could rescue smartphone sales in 2020 – TechCrunch

This was going to be the year of 5G. It was going to be the year the next-generation wireless technology helped reverse some troubling macro trends for the industry — or at the very least helped stem the bleeding some. But the best laid plans, and all that. With about a week left in the […]

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Here’s to next year

This was going to be the year of 5G. It was going to be the year the next-generation wireless technology helped reverse some troubling macro trends for the industry — or at the very least helped stem the bleeding some.

But the best laid plans, and all that. With about a week left in the year, I think it’s pretty safe to say that 2020 didn’t wind up the way the vast majority of us had hoped. It’s a list that certainly includes the lion’s share of smartphone makers. Look no further than a recent report published by Gartner to answer the question of just how bad 2020 was for smartphone sales.

It was so bad that a 5.7% global decline year-over-year for the third quarter constituted good news. In a normal year, that wouldn’t qualify as good news for too many industries outside of wax cylinder and asbestos sales. But there are few standards by which 2020 was a normal year, so now we’ll take some respite in the fact that a 5.7% drop was a considerably less pronounced drop than the ~20% we saw in Qs 1 and 2.

Some context before we get into the whys here. A thing that’s important to note up front is that mobile wasn’t one of those industries where everything was smooth sailing before everything got upended by a pandemic. In 2019 I wrote a not insignificant number of stories with headlines like “Smartphone sales expected to drop 2.5% globally this year” and “Smartphone sales declined again in Q2, surprising no one.” And even those stories were a continuation of trends from a year prior.

The reasons for the decline should be pretty familiar by now. For one thing, premium handsets got expensive, routinely topping out over $1,000. Related to that, phones have gotten good. Good news for consumers doesn’t necessarily translate to good news for manufacturers here, as upgrade cycles have slowed significantly from their traditional every two years (also an artifact of the carrier subscription model). Couple that with economic hardships, and you’ve got a recipe for slowed growth.

This March, I wrote an article titled “5G devices were less than 1% of US smartphone purchases in 2019.” There was, perhaps, a certain level of cognitive dissonance there, after many years of 5G hype. There are myriad factors at play here. First, there just weren’t a ton of different 5G models available in the States by year’s end. Second, network rollout was far from complete. And, of course, there was no 5G iPhone.

I concluded that piece by noting:

Of course, it remains to be seen how COVID-19 will impact sales. It seems safe to assume that, like every aspect of our lives, there will be a notable impact on the number of people buying expensive smartphones. Certainly things like smartphone purchases tend to lessen in importance in the face of something like a global pandemic.

In hindsight, the answer is “a lot.” I’ll be the first to admit that when I wrote those words on March 12, I had absolutely no notion of how bad it was about to get and how long it would last (hello month nine of lockdown). In the earliest days, the big issue globally was on the supply side. Asia (China specifically) was the first place to get hit and the epicenter of manufacturing buckled accordingly. Both China and its manufacturing were remarkably fast to get back online.

In the intervening months, demand has taken a massive hit. Once again, there are a number of reasons for this. For starters, people aren’t leaving their homes as much — and for that reason, the money they’ve allotted to electronics purchases has gone toward things like PCs, as they’ve shifted to a remote work set-up. The other big issue here is simple economics. So many people are out of work and so much has become uncertain that smartphones have once again been elevated to a kind of luxury status.

There are, however, reasons to be hopeful. It seems likely that 5G will eventually help right things — though it’s hard to say when. Likely much of that depends on how soon we’re able to return to “normal” in 2021. But for now, there’s some positive to be seen in early iPhone sales. After Apple went all in on 5G this year, the new handset (perhaps unsurprisingly) topped sales for all other 5G handsets for the month of October, according to analysts.

The company will offer a more complete picture (including the ever-important holiday sales) as part of its earnings report next month. For now, at least, it seems that thing are finally heading in the right direction. That trend will, hopefully, continue as the new year sees a number of Android launches.

Perhaps 2021 will be the year of 5G — because 2020 sure wasn’t.

Source: https://techcrunch.com/2020/12/24/not-even-5g-could-rescue-smartphone-sales-in-2020/

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South Korean antitrust regulator fines Google $177M for abusing market dominance – TechCrunch

The Korea Fair Trade Commission (KFTC) said on Tuesday it fined Google $177 million for abusing its market dominance in the Android operating system (OS) market. The U.S. tech company has restricted market competition by prohibiting local smartphone makers like Samsung Electronics and LG Electronics from customizing their Android OS, through Google’s anti-fragmentation agreements (AFA), […]

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The Korea Fair Trade Commission (KFTC) said on Tuesday it fined Google $177 million for abusing its market dominance in the Android operating system (OS) market.

The U.S. tech company has restricted market competition by prohibiting local smartphone makers like Samsung Electronics and LG Electronics from customizing their Android OS, through Google’s anti-fragmentation agreements (AFA), according to the antitrust regulator statement.

Under the AFA, smartphone developers are not allowed to install or develop “Android forks”, modified versions of Android.

The KFTC banned Google LLC, Google Asia Pacific and Google Korea from imposing local smartphone developers to sign the AFA and make changes on details about the existing version. The new measure in South Korea will be applied to not only mobiles devices but also other Android-powered smart devices including watches and TVs.

Android has spurred innovation among Korean mobile operator owners and software developers and that has led to a better user experience for Korean consumers, Google said in its statement. “The KFTC’s decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers. Google intends to appeal the KFTC’s decision,” a spokesperson at Google said.

The commission has been investigating Google over the anti-competition practice in OS market since July 2016, a spokesperson at KFTC said.

Google’s global mobile OS market share excluding China has been increased to 97.7% in 2019 from 38% in 2010, as per KFTC’s announcement.

Google’s AFA has also limited to launch tech companies’ new devices like smart watches and TVs using the operating system (OS) including Samsung’s smart watch in 2013, LG Electronics’ LTE smart speaker in 2018 as well as Amazon’s smart TV in 2018.

South Korea’s watchdog is probing into three other cases including the Play Store app market, billing system and the advertisement market.

Meanwhile, South Korea’s “anti-Google law”, takes effect on 14 September, based on Korea Communications Commission’s press release.

In late August, South Korea passed a bill to curb global tech companies including Google and Apple from imposing their own proprietary in-app payment service and commissions on app developers.

Source: https://techcrunch.com/2021/09/14/south-korean-antitrust-regulator-fines-google-177m-for-abusing-market-dominance/

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The SEC and the DOJ just charged this startup founder with fraud, saying he lied to Tiger and others – TechCrunch

Today, both the U.S. Department of Justice and the Securities and Exchange Commission charged Manish Lachwani, cofounder of a mobile app testing company Headspin, with fraud. The SEC says he violated antifraud provisions, and the civil penalties it’s seeking include a permanent injunction, a conduct-based injunction, and to bar him for serving as a corporate […]

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Today, both the U.S. Department of Justice and the Securities and Exchange Commission charged Manish Lachwani, cofounder of a mobile app testing company Headspin, with fraud. The SEC says he violated antifraud provisions, and the civil penalties it’s seeking include a permanent injunction, a conduct-based injunction, and to bar him for serving as a corporate executive or board member.

The DOJ, which arrested Lachwani earlier, has accused him of one count of wire fraud and one count of securities fraud, and the associated penalties if he’s found guilty are are more harsh, including, for wire fraud, a maximum sentence of 20 years in prison and a fine of $250,000. If he’s found guilty of securities fraud, he faces a maximum sentence of 20 years in prison and a fine of $5,000,000.

Both the the SEC and the DOJ say Lachwani — who led the six-year-old company as CEO until May of last year — defrauded investors out of $80 million by falsely claiming that his company, Headspin, had “achieved strong and consistent growth in acquiring customers and generating revenue” when he was pitching its Series C round to potential backers.

By the SEC’s telling, his fabrications were designed to help secure the round at a so-called unicorn valuation. That apparent plan worked, too, with Palo Alto-based Headspin attracting coverage in Forbes in February of last year after Dell Technologies Capital, Iconiq Capital and Tiger Global provided the company with $60 million in Series C funding at a $1.16 billion valuation. Forbes reported at the time that the valuation was double the valuation investors assigned HeadSpin when it closed its Series B round in October 2018.

The SEC also says that Lachwani was looking to enrich himself, saying he did so “by selling $2.5 million of his HeadSpin shares in a fundraising round during which he made misrepresentations to an existing HeadSpin investor.” (It isn’t clear from its complaint whether the SEC is referring to the Series C or an earlier round.)

The DOJ’s federal complaint suggests that Lachwani’s alleged scheming dates back to at least November 2019, when the company was fundraising. It says it was then that the success of Palo Alto-based Headspin — which helps apps and devices work in different environments around the world – was being knowingly misrepresented to investors by Lachwani.

More specifically, the complaint alleges that “in materials and presentations to potential investors, Lachwani reported false revenue and overstated key financial metrics of the company. . . he maintained control over operations, sales, and record-keeping, including invoicing, and he was the final decision maker on what revenue was booked and included in the company’s financial records.”

In the investigation that led to the DOJ’s charges, the FBI discovered “multiple examples” of Lachwani “instructing employees to include revenue from potential customers that inquired but did not engage Headspin, from past customers who no longer did business with Headspin, and from existing customers whose business was far less than the reported revenue,” says the department.

How far off were these collective calculations? The complaint says that ultimately, Lachwani “provided investors false information that overstated Headspin’s annual recurring revenue . . . by approximately $51 to $55 million.”

According to the complaint, Lachwani’s fraud unraveled after the company’s board of directors conducted an internal investigation and revised HeadSpin’s valuation down from $1.1 billion to $300 million. Indeed, in August of last year, The Information reported that the company was planning to lower the value of its Series C stock by nearly 80%.

The outlet reported at the time that Lachwani had already been replaced by another executive. That person, according to LinkedIn, is Rajeev Butani, who joined Headspin as its chief sales officer around the time its Series C round was being announced in February of last year.

Nikesh Arora, a former SoftBank president, the current CEO and chairman of Palo Alto Networks helped lead the internal review as a then-director on the board of Headspin, said The Information.

The SEC says it’s investigation is continuing. Meanwhile, the DOJ notes in its announcement that “a complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.”

Either way, the outlook doesn’t look very promising right now for Lachwani, who, according to Forbes, previously sold a mobile cloud business to Google and wound up co-founding Headspin after Yahoo cofounder Jerry Yang introduced him to Brien Colwell, a former Palantir and Quora engineer was working at the time on a different startup.

Colwell remains with Headspin as its CTO. He has not been named in either the SEC or the DOJ’s complaints relating to Headspin.

The company itself, which says it has been cooperating with the government’s investigation, was also not charged.

Pictured above, left to right, Headspin founders Lachwani and Colwell.

The DOJ’s federal complaint suggests that Lachwani’s alleged scheming dates back to at least November 2019, when the company was fundraising. It says it was then that the success of Palo Alto-based Headspin — which helps apps and devices work in different environments around the world – was being knowingly misrepresented to investors by Lachwani.

Source: https://techcrunch.com/2021/08/25/the-sec-and-the-doj-just-charged-this-startup-ceo-with-fraud-saying-he-lied-to-tiger-and-others/

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Blockchain startup XREX gets $17M to make cross-border trade faster – TechCrunch

A substantial portion of the world’s trade is done in United States dollars, creating problems for businesses in countries with a dollar shortage. Blockchain startup XREX was launched to help cross-border businesses in emerging markets perform faster transactions with products like a payment escrow service and crypto-fiat exchange platform. The Taipei-headquartered company announced today it has […]

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Blockchain startup co-founders Winston Hsiao and Wayne Huang in front of the company's logo

XREX co-founders Winston Hsiao and Wayne Huang

A substantial portion of the world’s trade is done in United States dollars, creating problems for businesses in countries with a dollar shortage. Blockchain startup XREX was launched to help cross-border businesses in emerging markets perform faster transactions with products like a payment escrow service and crypto-fiat exchange platform.

The Taipei-headquartered company announced today it has raised $17 million in pre-Series A funding led by CDIB Capital Group. The oversubscribed round also included participation from SBI Investment (a subsidiary of SBI Holdings), Global Founders Capital, ThreeD Capital, E.Sun Venture Capital, Systex Corporation, MetaPlanet Holdings, AppWorks, BlackMarble, New Economy Ventures and Seraph Group. XREX’s last funding was a $7 million seed round in 2019.

Part of the new round will be use to apply for financial licenses in Singapore, Hong Kong and South Africa, and partner with banks and financial institutions, like payment gateways.

“We specifically wanted to build a regulatory-friendly cap table,” XREX co-founder and chief executive officer Wayne Huang told TechCrunch. “It’s really hard for a startup like us to raise from banks and public companies, but as you can see, this round we deliberately to do that and we were successful.”

Huang sold his previous startup, anti-malware SaaS developer Armorize Technologies, to Proofpoint in 2013. Armorize analyzed source code to find vulnerabilities, and many of its clients were developers in Bangalore and Chennai, so Huang spent a lot of time traveling there.

“We ran into all sorts of cross-border money transfer issues. It seemed almost unstoppable,” Huang said. “Growing up in the U.S. and then in Taiwan, we were not exposed to those issues. So that planted a seed, and then when Satoshi [Nakamoto] published the bitcoin white paper, of course that was a big thing for all cybersecurity experts.”

He began thinking of how blockchain can support financial inclusion in emerging markets like India. The idea came to fruition Huang teamed up with XREX co-founder Winston Hsiao, the founder of BTCEx-TW, one of Taiwan’s first bitcoin exchanges. Hsiao grew up in India and founded Verico International, exporting Taiwan-manufactured semiconductors and electronics to other countries, so he was also familiar with cross-border trade issues.

XREX Crypto Services give merchants, especially those in countries with low U.S. dollar liquidity, tools to conduct trade in digital fiat currencies. “They have to get quick access to the U.S. dollar and be able to pay it out quick enough for them to secure important commodities that they want to import, and that’s the problem we want to solve,” said Huang.

To use the platform, merchants and their customers sign up for XREX’s wallet, which includes a commercial escrow service called Bitcheck. Huang said it is similar to having a standby letter of credit from a commercial bank, because buyers can use it to guarantee they will be able to make payments. Bitcheck uses digital currencies like USDT and USDC, stablecoins that are pegged to the U.S. dollar.

Merchants pay stablecoin to suppliers and XREX escrows the funds until the supplier provides proof of shipment, at which point it moves the payment to them. XREX’s crypto-fiat exchange allows users to convert USDT and USDC to U.S. dollars, which they can also withdraw and deposit through the platform.

Part of XREX’s funding will be used to expand its fiat currency platform, though Huang said it doesn’t plan to add too many cryptocurrencies “because we’re not built for crypto traders, we’re built for businesses and brand really matters to them. Brand and compliance, so whatever the U.S. Comptroller of the Currency says is a good stablecoin is what they’re going to use.”

Some of XREX’s partners include compliance and anti-money laundering providers like CipherTrace, Sum&Substance and TRISA. Part of XREX’s funding will be used to expand its security and compliance features, including Public Profiles, which are mandatory for customers, and user Reputation Index to increase transparency.

In a statement about the funding, CDIB Capital Innovation Fund head Ryan Kuo said, “CDIB was an early investor in XREX. After witnessing the company’s fast revenue growth and their commitment to compliance, we were determined to double our investment and lead this strategic round.”

The Taipei-headquartered company announced today it has raised $17 million in pre-Series A funding led by CDIB Capital Group. The oversubscribed round also included participation from SBI Investment (a subsidiary of SBI Holdings), Global Founders Capital, ThreeD Capital, E.Sun Venture Capital, Systex Corporation, MetaPlanet Holdings, AppWorks, BlackMarble, New Economy Ventures and Seraph Group. XREX’s last funding was a $7 million seed round in 2019.

Source: https://techcrunch.com/2021/08/22/blockchain-startup-xrex-gets-17m-to-make-cross-border-trade-faster/

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