TIME Companies

Google Just Took its First Step Back Into China

The Google logo is reflected in windows
The Google logo is reflected in windows of the company's China head office as the Chinese national flag flies in the wind in Beijing on March 23, 2010. AFP/Getty Images

Chinese developers can now sell their apps as exports in Google's app store

Google is trying to woo mobile developers in China.

The search giant has announced that Chinese app developers will now be able to sell apps to Google Play users in more than 130 other countries. It’s one of Google’s first attempts to engage with the Chinese marketplace since leaving the country in 2010 in following conflicts with the government over national censorship policies.

The Google Play Store is severely restricted in China, so app makers in the country will be selling their wares as exports. It’s no surprise that Google is having second thoughts on leaving the country behind: China has more than 600 million Internet users, and that figure is expected to reach 800 million next year.

This olive branch to developers may be the first step in a more ambitious strategy. Google is reportedly looking to partner with a Chinese phone manufacturer or wireless carrier to launch a full-featured version of the Play store in the country, according to the Wall Street Journal.

MONEY food and drink

Here’s Why Starbucks Will Just Keep Growing

Customers line up at a Starbucks Coffee in New York.
Mark Lennihan—AP

Starbucks is moving quickly in pursuit of several major growth opportunities.

Over the past two decades, Starbucks Corporation STARBUCKS CORP. SBUX 1.9949% has become almost synonymous with coffee. Today, Starbucks operates more than 20,000 stores across dozens of countries.

Considering how large Starbucks has become, it might seem that the company’s rapid growth can’t continue much longer. However, that couldn’t be further from the truth. Starbucks has plenty of opportunities to continue growing at a healthy pace for decades to come.

Starbucks wraps up a strong year

Starbucks recently reported its financial results for the 2014 fiscal year, which ended in late September. For the full year, Starbucks added 1,599 stores to its worldwide footprint and comparable store sales rose 6%. That boosted revenue by 11% to more than $16.4 billion.

Starbucks’ full-year adjusted EPS grew 21% year over year to $2.66, helped by strong margin performance. The company also projected that adjusted EPS will reach $3.08-$3.13 in fiscal year 15, which translates to 16%-18% growth.

Growing beyond coffee

One big growth initiative at Starbucks has been boosting non-coffee sales. In 2012, Starbucks purchased Bay Area bakery La Boulange in order to add more food items to its menu.

The chainwide rollout of La Boulange food items has been bumpy — some customers preferred the old Starbucks bakery selection — but it has still been successful overall. Food sales have been growing at a faster pace than the rest of the company, driven by strong sales of breakfast sandwiches. Starbucks recently added new lunch sandwich offerings to stimulate additional growth.

Starbucks is also starting to expand its Starbucks Evenings concept. Starbucks began testing the sale of wine, beer, and small-plate appetizers after 4 p.m. at a single Seattle location in 2010. The company has since expanded the pilot to several dozen locations.

Starbucks plans to add hundreds of Starbucks Evenings locations in 2015. In the long run, thousands of Starbucks stores could feature the Starbucks Evenings menu, driving strong sales growth in the less busy late-afternoon and evening hours.

Lastly, Starbucks has been doubling down on tea since the acquisition of Teavana in late 2012. Globally, tea is even more popular than coffee, and it represents a $90 billion market. Starbucks is adding tea bars to existing Teavana stores to boost sales of prepared beverages. It is also selling certain Teavana branded beverages in Starbucks stores.

These investments are starting to pay off, as Starbucks saw more than 20% growth in iced tea sales over the summer. Ultimately, CEO Howard Schultz wants to make Teavana the Starbucks of tea, and sees a tremendous growth opportunity there.

Mobile order and pay

Starbucks revealed yet another potential game changer last month when it announced plans to roll out mobile order and pay functionality chainwide in 2015. Customers will be able to place orders in advance and pick up their orders without waiting in line. Starbucks describes it as the urban answer to the convenience of drive-through.

Beginning next year, Starbucks will also use this platform to offer delivery in some top urban markets. Schultz’s vision is that a customer could place a standing food or drink order and have it delivered to his or her desk every day. If this concept takes off, it will represent a huge long-term differentiator — and growth driver — for Starbucks.

Lots of ways to grow

Starbucks is moving quickly in pursuit of several major growth opportunities. Investors should recognize that some of these growth initiatives are bound to be more successful than others.

However, the bottom line is that Starbucks has lots of irons in the fire, and many paths to producing significant long-term growth. (In addition to the store-based initiatives mentioned here, Starbucks is rapidly growing its consumer packaged goods business.)

Starbucks shares currently trade at about 25 times projected 2015 earnings. That still represents a premium to the broader market, but one that is easily justified by Starbucks’ numerous growth opportunities and its leading position in digital engagement. For long-term investors, Starbucks stock could be a great bargain today.

TIME apps

Microsoft Office Is Now Free for iPhones, iPads and Android

Office for iPhone Microsoft

You can now use Word, Excel and Powerpoint for free

Correction appended Nov. 7

Microsoft Office, long the standard-bearer of premium software, is now free on mobile devices, the company announced Thursday. Office users will now be able to create and edit documents in Word, Excel and PowerPoint on iPhone, iPad and Android devices at no cost. Making full use of the apps previously required a subscription to Office 365, which starts at $70 per year.

The move is a big shift for the software giant, which has continually charged for Office even as free productivity apps have proliferated in recent years. Office accounts for about a third of Microsoft’s annual revenue, according to the New York Times, so letting people access it for free is a big risk. However, the company will continue to charge for access to Office on laptops and desktops and will make some features on the mobile apps only accessible to premium users. Enterprise customers will still have to pay as well.

The free versions of Office for iPhone and iPad are available today. The Android version is available as a preview and will get a full release in 2015.

Correction: The original version of this article misstated the cost of Office 365. It starts at $70 per year.

TIME apps

Tinder CEO Sean Rad Is Stepping Down

TechCrunch Disrupt SF 2014 - Day 3
Tinder Co-Founder and CEO Sean Rad speaks onstage at TechCrunch Disrupt at Pier 48 on Sept. 10, 2014 in San Francisco. Steve Jennings—Getty Images

IAC plans to replace Rad with “an Eric Schmidt-like person"

Tinder’s CEO Sean Rad is out of the top role at the dating app that he helped to found over two years ago, a report says.

The side-swiping application is majority-owned by Barry Diller’s IAC, which has plans to replace Rad with “an Eric Schmidt-like person,” reported Forbes. Rad will remain on Tinder’s board and will act as president once the new CEO comes on board. Until then, he will stay on as the acting chief executive.

Rad has faced a tumultuous year, despite helping the dating service log 600% growth over the past 12 months. A sexual harassment lawsuit that led to the ouster of Tinder Chief Marketing Officer Justin Mateen also cast a pall over Rad’s leadership.

Whitney Wolfe, a co-founder of the app who was forced out, accused Rad and Mateen of sexually harassing her. The suit was settled in September, but not before Mateen resigned.

Rad’s demotion comes as Tinder launches an aggressive new monetization initiative for the dating service. The premium service will be an option on top of the otherwise free application and is the company’s first attempt to generate cash flow from the service.

This article originally appeared on Fortune.com

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 0.1743% 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 0.1376% and Hewlett-Packard HEWLETT-PACKARD CO. HPQ 0.8936% 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 0.6323% , Cisco CISCO SYSTEMS INC. CSCO 0.2611% , Microsoft MICROSOFT CORP. MSFT -1.4784% , HP HEWLETT-PACKARD CO. HPQ 0.8936% , and Google GOOGLE INC. GOOG 0.4992% 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.

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