TIME Social Media

Twitter Wants to Dominate Apps By Winning Over Developers

Twitter Inc. Headquarters As Company Raises $1.8 Billion After Boosting First Debt Sale
The Twitter Inc. logo is seen on coffee mugs inside the company's headquarters in San Francisco, California, U.S., on Friday, Sept. 19, 2014. Bloomberg—Bloomberg via Getty Images

Social network wants to expand its reach beyond tweets

Twitter is trying to make itself an essential part of the app ecosystem with a new suite of tools aimed at mobile developers. Those tools, announced Wednesday and bundled together in a free service called Fabric, put Twitter in more direct competition with Google and Facebook for control of the mobile future.

Fabric is comprised of a suite of individual tools that together help developers deal with many of the issues they face getting their apps up and running. Crashlytics, a company Twitter bought in 2013, will help developers analyze crash rates for their apps and improve stability. MoPub, another recent Twitter acquisition, is an ad exchange that allows developers to easily serve ads in their apps that are bid on in real-time auctions. The third leg of Fabric, called Twitter Sign In, will let people sign into different apps using their Twitter login credentials rather than a username and password specifically for that app. Similarly, a new service called Digits will let people sign into apps using their cellphone number instead of a username and password.

Outside of Digits, Twitter had offered some form of these services before, but they hadn’t been wrapped up in one simple-to-use interface. Announced at the company’s first-ever mobile developer conference, Fabric is something of an olive branch Twitter is extending to the development community after the social network tightened access to its API a few years ago. Whether app makers will play nice with Twitter now remains to be seen.

MONEY stocks

3 Things to Know About IBM’s Sinking Stock

141020_INV_IBM
Niall Carson—PA Wire/Press Association Images

IBM's shares plunged 7% Monday after a disappointing earnings report. Can tech's ultimate survivor transform itself one more time?

International Business Machines INTERNATIONAL BUSINESS MACHINES CORP. IBM -0.8822% has long enjoyed a unique status on Wall Street — a tech growth powerhouse that investors also see as a reliable blue chip, with steady profit growth and a hefty dividend. But with the rise of new technologies like cloud computing, Big Blue has struggled to maintain that balancing act.

Now investor confidence has suffered a big blow.

On Monday the company announced the results of a pretty lousy quarter. IBM’s third-quarter operating profit was down by nearly one fifth, and the company failed to generate year-over-year revenue growth for the 10th consecutive quarter.

Big Blue also revealed plans to sell-off its struggling semiconductor business, a move that involves taking $4.7 pre-tax billion charge against IBM’s bottom line. Actually, it is paying another company to take this unit off its hand.

While CEO Virginia Rometty acknowledged she was “disappointed” with IBM’s recent performance, she’s also pledged to turn the company around, led in part by IBM’s own foray into the cloud.

Now, you don’t get to be a 103-year-old tech company without learning to adapt. That’s what IBM famously did in the ’90s, when the computer giant started to shift away from profitable PC hardware in favor of consulting and service contracts for businesses.

But Monday’s dismal earnings show just how hard repeating that trick could turn out to be.

Here’s what else you need to know about the stock:

1) You can’t really call IBM a growth company anymore since its sales aren’t rising.

When it comes to revenues, IBM ranks behind only Apple APPLE INC. AAPL 0.5075% and Hewlett-Packard HEWLETT-PACKARD CO. HPQ -0.7196% among U.S. tech companies. On a quarterly basis, though, sales have actually shrunk for 10 periods in a row, including a 4% slide in the third quarter. The big culprit is cloud computing, in which businesses can access computing services remotely via the Internet.

Since the 1990s, IBM’s model has been premised on selling powerful, expensive computers to large businesses, then earning added profits on contracts to help firms run those machines. But the cloud lets companies rent, not buy, this computing power. “You only pay for what you use,” says Janney Montgomery Scott analyst Joseph Foresi. The result: IBM’s hardware revenues sank 15% last quarter.

2) IBM is racing to be a leader in cloud computing, but with mixed results.

The company has identified four alternative areas of growth. One is the cloud, the very technology eating into IBM’s hardware sales. Big Blue has spent more than $7 billion on cloud-related acquisitions. It’s also going after mobile, IT security, and big data, the analysis of information sets that are too large for traditional computers. An example of that is Watson. IBM’s artificial-intelligence project, which won Jeopardy! in 2011, is being marketed to businesses in finance and health care.

These initiatives have promise, but IBM’s size is a curse. For instance, the company’s cloud revenues jumped 69% to $4.4 billion last year, but with nearly $100 billion in overall sales, “it’s hard to move the needle,” says S&P Capital IQ analyst Scott Kessler.

3) The stock is now much cheaper than its tech peers, but it may deserve to be.

Investors willing to wait and see if these moves will transform IBM may take comfort in the fact that the stock looks cheap. What’s more, the shares yield 2.4%, vs. 2% for the broad market. This could make the company look like a good value.

But investors should tread carefully, says Ivan Feinseth, chief investment officer at Tigress Financial Partners. He notes IBM has spent $90 billion on stock buybacks in the past decade, which has kept the P/E low by increasing earnings per share. Yet none of that money was invested for growth, as evidenced by IBM’s sluggish annual growth rate. It is hard to imagine IBM outmuscling Amazon AMAZON.COM INC. AMZN -0.7484% , Cisco CISCO SYSTEMS INC. CSCO -1.0634% , Microsoft MICROSOFT CORP. MSFT -1.1141% , HP HEWLETT-PACKARD CO. HPQ -0.7196% , and Google GOOGLE INC. GOOG 1.1718% in the cloud — and there are better values in tech.

TIME technology

Why Apple Pay May Be the Company’s Most Challenging Move Yet

For Apple Pay to work, Apple needs to get customers, retailers and banks all in lockstep

Our smartphones have already become our de facto camera, music player, navigational device and personal assistant. Now Silicon Valley wants to make them our wallet, too.

Several tech firms have spent the last few years trying to convince consumers their phone is a more convenient payment method than cash or plastic. Most shoppers have balked. But on Monday, Apple is entering the fray, and experts say that could be a turning point for the long-hyped mobile payments industry.

Apple’s service, dubbed Apple Pay, allows customers to buy goods in physical stores with a simple tap of their iPhone 6, iPhone 6 Plus or Apple Watch smartwatch, when that device hits shelves in early 2015. Apple Pay users load their credit card information onto the phone, then press their device’s Touch ID fingerprint scanner in the checkout line to authenticate the purchase. The process is faster than using a debit card — and more secure. Apple generates a unique ID number for each transaction, meaning users’ credit card data numbers are not shared with merchants.

Apple Pay is launching just as the smartphone is becoming a central point of commerce for the average shopper. Consumers spent $110 billion via their mobile devices last year, according to research firm Euromonitor, and they used their phones plenty more to research products before buying them in stores. Meanwhile, person-to-person payment apps like Venmo have made people comfortable loading their phones with dollars to make simple transactions.

“All of that is really conditioning consumers to trust their phones when it comes to payments,” says Michelle Evans, a senior consumer finance analyst at Euromonitor.

But consumers are still reluctant to give up their credit cards. Mobile payments generated $4.9 billion in sales in 2014, a paltry figure compared to the year’s $4.8 trillion in card transactions, according to Euromonitor. Google’s own mobile payments service, Google Wallet, offers much of Apple Pay’s functionality but hasn’t seen widespread adoption. Startup Square abandoned its much-hyped mobile wallet platform earlier this year, instead pivoting to an order-ahead service like Seamless. PayPal, which is spinning off from eBay in 2015, has also struggled find a mobile formula that works in stores.

“It’s definitely starting to catch on, but I don’t think anybody has quite nailed the overarching reason to pull out your phone to pay,” says Anuj Nayar, PayPal’s senior director of global initiatives.

The transition to mobile payments is a challenging one because it requires buy-in from so many different players. Consumers have to be convinced it’s worth their time to learn a new buying behavior. Retailers have to pay for new equipment so their point-of-sale systems can accept payment from phones and smartwatches. Banks and credit card issuers also have to buy in. “It’s a lot of people to get in lockstep,” says Evans.

Apple does have a few key advantages over its competitors. The company has a knack for convincing people to change their digital lifestyles, whether by downloading MP3s, surfing the web on a phone or using a large tablet to watch videos. And thanks to the iTunes Store, Apple has more than 500 million credit cards already on file. Those customers will be able to seamlessly start using the same accounts they use to buy apps and music to buy goods in the real world when they first boot up Apple Pay. “We’ve never had this large of a base in a starting country” for a mobile payment system, says Matt Dill, Visa’s senior vice president for Innovation & Strategic Partnerships, Commerce and Network Payments.

However, analysts say convincing shoppers to give up credit cards, which are already fairly painless to use, will take more than just offering convenience. The most successful mobile payments platform to date is the Starbucks app, which rewards customers who pay via their phones with free drinks and other perks. Today, Starbucks processes about 15% of all its transactions on the app, or about 6 million per week.

“The customers really feel It’s not just about payments,” says Ben Straley, Starbucks’ vice president for digital products. “It’s also about being rewarded for their loyalty.”

But even if Apple can convince consumers to take their money mobile, some merchants aren’t playing ball. Wal-Mart, America’s largest retailer, won’t support Apple Pay at launch. Instead, it and other big-box stores like Best Buy are developing a competing mobile payments platform called CurrentC, set to launch sometime next year. Such merchants would have to be the driving force behind any effective loyalty rewards program that convinced shoppers to abandon their credit cards.

With so many competitors offering mobile payment options, analysts expect the segment will finally take off soon. Euromonitor projects in-store purchases via phone will rise to $74 billion by 2019 — though that’s still a far cry from the trillions in card purchases we see today. Mobile devices are already becoming a common tool for buying things in the virtual world. It could very well happen in the real world, too. “It’s just shopping, whether you’re buying it in a store or buying it online,” says PayPal’s Nayar. “The lines between what that looks like have started to disappear.”

Read next: Apple Pay Starts Monday for iPhone 6 Users

TIME Gaming

Angry Birds Maker Rovio Plans to Cut Up to 130 Jobs

The Toy Fair
Angry Birds plush toys on display at the Toy Fair 2011 at Olympia Exhibition Centre on Jan. 25, 2011 in London, England. Tim Whitby—Getty Images

This represents 16% of the Finnish company's workforce

Rovio Entertainment, the company that brought Angry Birds to smartphones, toy stores and theme parks, said on Thursday it plans to cut up to 130 employees, or 16% of its workforce, “towards a simplified organization.”

Cue puns of the Finnish gaming company’s clipped wings and prematurely counted chickens.

Rovio announced in March that its 2013 net profit dropped by 50% from the prior year and, in August, the company replaced its chief executive.

“We have been building our team on assumptions of faster growth than have materialized,” Rovio said in a statement Thursday. But, maintaining a light tone, Rovio added, “as we consider these painful measures, we keep our eye on always delighting our fans with products they love.”

TIME technology

Amazon’s Fire Phone Is Now Just 99 Cents

AN AT&T worker holds the new Amazon Fire phone at an AT&T store on July 25, 2014 in San Francisco.
AN AT&T worker holds the new Amazon Fire phone at an AT&T store on July 25, 2014 in San Francisco. Justin Sullivan—Getty Images

Critics turned off by an over-emphasis on selling the user Amazon products

Amazon’s first-ever smartphone now costs under a buck, the company announced Monday, after less than two months on the market. The Fire phone’s price has been cut to just 99 cents under a two-year contract with AT&T.

The online retailer is notoriously reticent to divulge sales figures for its specific products, but the fact that the Fire phone has tumbled nearly $200 in price in a matter of weeks implies that its sales were not up to Amazon’s expectations.

The device, Amazon’s latest ambitious foray into the world of electronics, launched during the summer to middling reviews. Critics praised its high-quality camera and 3D screen but were turned off by the limited app store offerings and over-emphasis on selling the user Amazon products.

Amazon’s price-drop comes one day before Apple is expected to launch two new, larger iPhones and a smartwatch.

TIME Companies

Facebook Now Has 100 Million Users in Africa

10% of all Africans now use the social network on a regular basis

While Facebook’s growth tapers off in the U.S., the social network is continuing to rack up new users abroad. The social network announced Monday that it now has more than 100 million monthly active users in Africa.

The figure means that nearly 10% of all Africans use Facebook on a regular basis. That’s also half of the 200 million Africans that are connected to the Internet, according to Facebook. More than 80% of Facebook’s users in Africa are visiting the site via mobile devices.

Facebook does not regularly break out userbase figures for specific countries, so there are no specific earlier numbers from Africa to compare it to, but the company had 411 million monthly active users outside Asia, Europe, the U.S. and Canada as of June, according to its latest quarterly earnings report. The company announced in April that it also had 100 million users in India.

Much of the company’s focus right now is on attracting more users in the developing world. Facebook’s Internet.org initiative recently launched a mobile app that provides free Internet access to wireless subscribers in Zambia. Earlier this year the social network also bought a drone company, which it plans to use to beam Internet access to remote areas.

TIME Innovation

Five Best Ideas of the Day: September 4

1. The results of the NATO summit and the alliance’s stance on ISIS and Ukraine will define President Obama’s foreign policy legacy.

By Jonathan Alter in the Daily Beast

2. Intense boot camps for highly skilled careers may displace costly graduate degrees and get more people working.

By Kevin Carey in Washington Monthly

3. To make a splash in the mobile market despite poor sales of its Windows phone, Microsoft is selling apps to iPhone and Android users.

By Dan Frommer in Quartz

4. The street children of India are publishing a quarterly newspaper, finding a purpose and a passion in telling their stories.

By Mariah Wilson, Chander Bhan and Paul Ewen in Vocativ

5. Harm reduction – versus a law-enforcement focused “war on drugs” – could reduce overdose deaths.

By Josh Eidelson in Bloomberg Business Week

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

MONEY Saving

This App May Let You Retire on Your Spare Change

Acorn App
Acorn

The new Acorns app rounds up card purchases and invests the difference for growth, with no minimums and low fees.

Americans spend $11 trillion a year while saving very little. So it makes sense to link the two, as a number of financial companies have tried to do over the past decade. The latest is the startup Acorns, which hopes to hook millennials on the merits of mobile micro investing over many decades.

Through the Acorns app, released for iPhone this week, you sock away “spare change” every time you use your linked credit or debit card. The app rounds up purchases to the nearest dollar, takes the difference from your checking account, and plunks it in a solid, no-frills investment portfolio. So when you spend, say, $1.29 for a song on iTunes, the app reads that as $2 and pushes 71¢ into your Acorns account. With a swipe, you can also contribute small or large sums separate from any spending.

The Acorns portfolio is purposely simple: Your money gets spread among six basic index funds. The weighting in each fund depends on your risk profile, which you can dial up or down on your iPhone. More aggressive settings put more money in stocks. But you always have some money in each fund, remaining diversified among large and small company stocks, emerging markets, real estate, government and corporate bonds. The app will be available for Android in a few weeks and through a website in a few months.

Why Millennials Are the Target

Micro investing via a mobile device clearly targets millennials, who show great interest in saving but have been largely ignored by financial advisers and large banks. Young people may not have enough assets to meet the minimum requirements of big financial houses like Fidelity, Vanguard, and Schwab. With Acorns, there are no minimums. There are also none of the commissions that can render investing in small doses prohibitively expensive. “We want small investors who can grow with us over time,” says Acorns co-founder Jeff Cruttenden.

This approach places Acorns in the middle a rash of low-fee, online financial firms geared at young adults—including Square, Betterment, Robinhood, and Wealthfront. Such firms hope to capitalize on young adults’ penchant for tech solutions and lingering mistrust of large financial institutions. Cruttenden says a third of Acorns users are under age 22. They like to save in dribs and drabs—and manage everything from a mobile device.

Acorns charges a flat $1 monthly fee and between 0.25% and 0.5% of assets each year. The typical mutual fund has fees of 1% or more. Yet many index fund fees run lower. The Vanguard S&P 500 ETF, which invests in large company stocks, charges just 0.05%. If you have a few thousand dollars to open an account, and the discipline to invest a set amount each month, you might do better there. But remember that is just one fund. With Acorns you get diversification across six asset classes—along with the rounding up feature, which seems to have appeal.

Acorns has been testing the app all summer and says the average account holder contributes $7 a day through lump sums and a total of 500,000 round ups. Cruttenden says he is a typical user and through rounding up his card purchases has added $521.63 to his account over three months.

A New Twist on an Old Concept

Mortgage experts tout rounding up as a way to pay off your mortgage quicker. On a $200,000 loan at 4.5% for 30 years your payment would be $1,013.38. Rounding up to the nearest $100, or to $1,100, would cut your payoff time by 52 months and save you $26,821.20 in interest. Rounding up your card purchases works much the same way—only you are accumulating savings, not cutting your interest expense.

Bank of America offers a Keep the Change program, which rounds up debit-card purchases to the nearest buck and then pushes the difference into a savings account. Upromise offers credit card holders rewards that help pay for college. But Acorns’ approach is different: the money goes into an actual investment account with solid long-term growth potential.

One possible drawback is that this is a taxable account, which means you fund the Acorns account with after-tax money. Young adults starting a career with a company that offers a tax-deferred 401(k) plan with a match would be better served putting money in that account, if they must choose. But if you are like millions of people who throw spare change in a drawer anyway, Acorns is a way to do it electronically and let those nickels, dimes, and pennies go to work for you in a more meaningful way.

Read more on getting a jump on saving and investing:

 

MONEY stocks

What the Financial Press Isn’t Telling Us About Google and Other Tech Companies

Google on iPhone 5
Iain Masterton—Alamy

The search engine's ongoing struggles in mobile highlight problems cropping up throughout the tech sector — yet you wouldn't know it by the reactions of investors and the media.

This was an awful week for tech, as many of the sector’s biggest names announced disappointing results that point to slowing growth and troubled strategies.

Yet you wouldn’t know it by how the markets — or the media — reacted this week.

Late Thursday, the search engine giant Google reported the amount of money that advertisers are willing to pay whenever someone clicks on an online ad continues to fall. So-called “average costs per click” for Google fell 6% in the quarter, compared with the same period a year earlier. This continues a trend that’s been going on for some time. In the first quarter, for example, costs per click sank 9%.

There are two explanations for why this is happening and neither is good news for Google. One is that online sites are increasingly being viewed through mobile devices such as smart phones and tablets, and mobile ad platforms are not paying the premium that traditional web ads have. The other reason is that Google is no longer the only game in town when it comes to online advertising, and Facebook’s recent efforts to boost its mobile presence are clearly succeeding.

Yet instead, most news accounts focused on the rosier parts of Google’s quarterly results, such as the fact that overall revenues grew 22%.

The same thing happened all week throughout the sector:

* eBay

On Wednesday, the online auction site reported sales that fell short of the Street’s expectations. In fact, on a quarterly basis, revenues have been flat for several quarters. Instead, headlines focused on profits meeting consensus forecasts.

* Yahoo

The portal, which is making a huge push to try to be a big player in online advertising, reported on Tuesday that display ad revenues declined. Yet instead, many publications focused on how Yahoo’s mobile efforts were improving or that the company was going to sell a smaller-than-expected stake in Alibaba, the giant Chinese online retailer and auction site that is expected to go public later this summer.

* Intel

Intel shares hit a decade-high after releasing earnings results on Tuesday that showed better-than-expected PC sales expectations and overall revenue growth. As Reuters reported, chief financial officer Stacy Smith said “PC sales had stabilized, easing fears about the four-year decline in computer sales as consumers turn increasingly to tablets and smartphones.”

Great. That means the dying part of the industry is dying a little less rapidly than was previously thought. Meanwhile, investors glossed over the fact that revenues for the mobile and communications chip group sales were down 67% compared with the prior quarter and off 83% versus last year.

* Microsoft

The company announced the biggest layoffs in its history on Thursday, cutting its workforce by 18,000 — many of those coming from its recently acquired Nokia division. As MONEY’s Ian Salisbury reported, the historic cuts show how far this once-dominant tech company has fallen as it struggles to find its place in the sector. Yet many sites looked at the situation as glass-half-full, noting how the stock was rising on news that Microsoft was retrenching.

Of course, that’s what happens when investors fall in love with a particular group of stocks that have collectively posted a better-than-expected run. They start viewing those shares through rose-colored glasses.

TIME Video Games

Microsoft CEO Satya Nadella Suggests the Future of Xbox Could Be Mobile

Microsoft's CEO responds to concerns he might spin off the company's games division, doubling down on Microsoft's commitment to Xbox gaming.

Fresh-minted Microsoft CEO Satya Nadella has a lot to say about the company in a mammoth missive released this morning that outlines his vision for Microsoft rolling forward, soup to nuts. I’m going to focus on just a portion of it, specifically the part about halfway through where he addresses the Xbox.

Speculation in recent months, driven by presumptive sideline analysts and echo chamber punditry, to be fair, was that Nadella might try to spin off the Xbox brand at some point. Why? Because, assumed said analysts and pundits, Nadella’s a software guy, not a hardware guy. And so naturally he’d want to divest himself of something he hadn’t had much to do with, at least directly, during his tenure with the company.

That, no surprise to me, is effectively the opposite of what Nadella’s saying in his publicly promoted “fiscal year 2015″ email to company employees.

How important is Xbox to Nadella’s Microsoft? Not the company’s core, which he defines elsewhere as a “productivity and platform company for the mobile-first and cloud-first world.” But he follows by stating, “It’s important to make smart choices on other businesses in which we can have fundamental impact and success.”

“The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming,” writes Nadella in the letter, adding that Microsoft is “fortunate” to have the Xbox brand, and that the company “will continue to vigorously innovate and delight gamers with Xbox.”

And then he trumpets all the gaming-spawned technologies feeding other aspects of Microsoft’s platform-sphere: core graphics, NUI in Windows, Skype speech recognition, Kinect for Windows camera tech, GPU-related Azure cloud improvements and so forth. “Bottom line,” says Nadella, “We will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft.”

It’s as bold a line in the sand as you’d want from a CEO on strategic direction — as surely aimed at those wrongheaded analysts and nervous pundits as existing Xbox 360 owners and the company’s burgeoning Xbox One base.

Curiously, Nadella then shifts the conversation to mobile, noting we’re in the “infant stages” of a mobile-first world, saying that in the coming years, we’ll see significant category growth in mobile experiences “that span a variety of devices of all screen sizes.” I don’t think that statement’s proximity to Nadella’s confidence-bolstering paragraph about the Xbox is coincidental.

What Nadella must surely realize, though he doesn’t say or even allude to it here, is that Xbox is a pretty clunky-sounding brand name when you start thinking about it in terms of devices that aren’t actual boxes. The Xbox One isn’t just a box, it’s a 1990s-era desktop-computer-style boat. A phone obviously isn’t an Xbox, nor a watch, nor a pair of glasses, nor anything else you’re going to put on your person. People and mobile and things you’d describe as “boxes” don’t mix. So my bet is that whatever happens in the living room space with set-tops, there’s less an abandonment strategy in the offing for Microsoft’s highly visible and profitable gaming wing, so much as a rebranding one.

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