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B4 | Thursday, January 7, 2016 THEWALL STREET JOURNAL.
TECHNOLOGY @wsjd | wsjd.com
Apple offers apps for its newest devices such as the Apple Watch, bringing its total tally of apps to 1.5 million.
JOHNTA
GGART
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OMBE
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could be the beginning of at-tempts to circumvent the net-neutrality rules, which gener-ally require that all Internetdata be treated equally. T-Mo-bile argues the program is inline with the regulations,keeps consumers in controlbecause it can be turned off,and is open to all video pro-viders that meet its basictechnical requirements.
Mr. Sievert notes that cus-tomers viewing YouTube vid-eos using Binge On are beingcharged for their data, but getthree times more video be-cause of the quality reduction.
Last month, YouTube saidT-Mobile is interfering with its
video traffic by effectivelythrottling, or degrading, itstraffic. The Electronic FrontierFoundation, a nonprofit pri-vacy and advocacy organiza-tion, said this week that itstests confirm T-Mobile isthrottling all video, regardlessif the video is part of BingeOn. The organization wantsthe FCC to investigate thepractice if T-Mobile doesn’tchange it. Jeremy Gillula, thestaff technologist at the EFFwho wrote the report, said thegroup wouldn’t object to theprogram if T-Mobile made itclear that all video was beingthrottled and if customerscould “opt in”.
8% since Yahoo announced onDec. 9 that it would halt theAlibaba spinoff. The com-pany’s share price has morethan doubled during Ms.Mayer’s tenure, which beganin 2012, though most of thatincrease was due to the Ali-baba stake.
Starboard, a New Yorkhedge fund, is among the mostactive of activists, launchingnew investment campaigns ata rapid clip.
Its attempts to get boardseats have largely been suc-cessful in recent years. Thefirm just this week settled apotential fight with securityprovider Brink’s Co., a pactthat gives Starboard three
ContinuedfrompageB1
seats on an eight-person boardand sets an early retirementfor the company’s chairmanand chief executive, ThomasSchievelbein. It also recentlytook board seats at AdvanceAuto Parts Inc.
Starboard could officiallynominate directors at Yahoobetween Feb. 25 and March26, though Yahoo could extendthe deadline. Given that itsstake is less than 5%, Star-board would need significantallies among the other inves-tors, some of whom have al-ready expressed support forStarboard’s argument that Ya-hoo’s core business should besold, people familiar with thematter said.
The firm has only disclosedowning 0.8% of Yahoo’s stockas of Sept. 30, though its posi-tion may be larger.
Activists gaining board
seats with only 1% stakes is nolonger uncommon, especiallyas companies increasingly lookto avoid costly and distractingproxy fights, which canamount to political campaigns.
Yahoo’s board may decideto let Ms. Mayer propose hernew plan to streamline Ya-hoo’s business, expected to re-duce the company’s headcount and eliminate costly ar-eas of the business such as on-line video.
The CEO has said she wouldshare more details about thatplan by later this month, whenthe company is scheduled toreport its fourth-quarter earn-ings. On Monday, Yahoo said itwould shut down its onlinevideo portal Screen.
Pressure from investorscould also make the boardmore open to a sale of thewhole company or its core In-
Apple Inc. said App Storebillings topped a record $20 bil-lion in 2015, but growth fromthe business appeared to sloweven as the company intro-duced apps on new devices suchas Apple TV and Apple Watch.
Apple keeps 30 cents of ev-ery dollar that flows throughthe App Store, meaning thestore generated more than $6billion in Apple revenue forthe year; the remainder of themoney goes to developers.
The figures highlight thegrowing financial importance
BY DAISUKE WAKABAYASHI
of apps for Apple, which postedrevenue of $233 billion and netincome of $53 billion in the fis-cal year ended September.
The roughly 1.5 million appsboost the appeal of Apple’shighly profitable hardware andhelp to distinguish Apple’sproducts from those of its com-petitors.
Apple created the App Storefor the iPhone in 2008, later add-ing apps for the iPad. Last year,it opened a softwaremarketplacefor the Apple Watch and its lat-est Apple TV box. By openingthose products to software fromoutside developers, Apple sup-plements the basic features of itsproducts with broader andmorediverse offerings.
The company said its big-gest day of sales in the AppStore was Jan. 1, when cus-tomers spent more than $144
million. Though the App Storeis expanding at an impressiveclip, there are signs of slowinggrowth. The company had saidApp Store billings increased50% in 2014, while Apple’s fig-ures suggest that sales growthfell to about 40% in 2015. It ishard to say definitively be-cause Apple didn’t provide ex-act figures for comparison.
A year ago, Apple didn’tprovide total billings for 2014,saying only it had grown 50%from a year earlier. It hadprovided a total figure ofmore than $10 billion for2013, implying that App Storebillings eclipsed $15 billion in2014.
But Apple also said Wednes-day that it had paid out nearly$40 billion to developers since2008. Last January, Apple putthat figure at $25 billion. This
implies that developers earnedabout $15 billion in 2015, mean-ing billings totaled roughly$21.4 billion, based on Apple’srevenue split with developers.
On Wednesday, Apple saidtotal billings from paid appsand purchases made withinapps from iPhone, iPad, AppleWatch and Apple TV custom-ers was “over $20 billion” in2015. Using the $21.4 billionfigure, billings would havegrown about 43% from a yearearlier, shy of last year’s 50%pace.
Apple said the business ofcreating apps for its productshas created and supported—directly and indirectly—1.9million jobs in the U.S. Thoseestimates are based on re-search partly sponsored byApple and the Progressive Pol-icy Institute.
Apple’sAppStoreSalesat$20BillionThe biggest day ofsales was Jan. 1, whencustomers spent morethan $144 million
ternet business. MaynardWebb, Yahoo’s chairman, toldinvestors last month that theboard hasn’t approved a saleprocess for its Internet busi-ness. But in a sign that manyobservers took as a signal thatYahoo is open to a sale, Mr.Webb said then that “theboard has a fiduciary duty toentertain any offers.”
A range of potential suitorshave discussed an acquisitionof Yahoo with bankers in re-cent weeks, though no formaltalks have been held, accord-ing to people familiar with thematter. Verizon Communica-tions Inc. has publicly indi-cated it would be interested inexploring a purchase, and pri-vate-equity firms includingTPG Capital have shown inter-est in acquiring parts or all ofthe business, a person familiarwith the matter said.
the fledgling smartwatch mar-ket—while staking out a lead-ing position for their respec-tive platforms.
Samsung Vice President Al-anna Cotton said the smart-watch, which the company re-leased last fall to positivereviews, would be compatiblewith Apple’s iOS operating sys-tem for phones and other de-vices. She didn’t elaborate onexactly how its smartwatchwould be compatible with iOS,and a spokesman didn’t replyto requests for comment.
Samsung’s newest smart-watch, the Gear S2, is poweredby its homegrown Tizen oper-ating system.
LAS VEGAS—SamsungElectronics Co. said on Tues-day it would make its latestsmartwatch compatible withApple Inc.’s operating system,adding another wrinkle to acomplex relationship betweenthe world’s two biggest smart-phone makers.
The announcement by Sam-sung, made in a one-sentenceremark at the end of an hour-long presentation on the side-lines of the Consumer Elec-tronics Show in Las Vegas,underscores the delicate dancebetween the two companies,which both want to expand in
BY JONATHAN CHENG
Samsung Sets Watch to Apple iOS
T-Mobile US Inc. executivesfired shots at critics who saythe carrier may be violatingnet-neutrality rules with itsfree video-streaming programand said they are “baffled” byYouTube’s objection to theprogram.
T-Mobile recently began of-fering a service that deliversvideo at lower quality in ex-change for waiving relateddata fees. YouTube and its al-lies have criticized the carrierfor lowering the quality ofvideo that isn’t part of theprogram. The spat comes asfederal regulators examine thewireless carrier’s streaming-video strategy.
At a Citigroup investor con-ference Wednesday, T-Mobileexecutives shot back, sayingYouTube’s stance is “absurd.”YouTube is owned by Alpha-bet Inc. “We are kind ofdumbfounded, that a companylike YouTube would think thatadding this choice wouldsomehow be a bad thing,” saidT-Mobile Chief Operating Offi-cer Mike Sievert. He said You-Tube hasn’t “done the workyet to become part of the freeservice.”
YouTube didn’t immediatelyrespond to requests for com-ment. A T-Mobile spokes-woman declined to commentbeyond the executives’ state-ments. Binge On, T-Mobile’sfree streaming program, hasworried some consumer advo-cates, who warn the service
BY THOMAS GRYTA
T-Mobile Defends Free Video Service
T-Mobile’s Mike Sievert has fired back at critics of the program.
BLOOMBE
RGYAHOO
Netflix Inc. said Wednesdaythat it had tripled its reachglobally by expanding into anadditional 130 countries as thevideo-streaming service tookits most aggressive step yet inits plans for internationalgrowth.
The announcement, madeby Netflix Chief ExecutiveReed Hastings at the annualConsumer Electronics Show inLas Vegas, boosted the com-pany’s stock price. Shares, up144% over the past year, rose9% to $117.68.
With the expansion intonew markets like Russia, India,Singapore and Poland, Netflixis now available in more than190 countries. The companyalso added service in Arabic,Korean and Chinese dialects tothe 17 languages already sup-ported. Netflix said its originalprogramming, including“Daredevil,” “Jessica Jones,”“Narcos” and “Marco Polo,”will be available to consumersin all markets. That won’t bethe case, at least initially, withmany popular shows producedand distributed by major Hol-lywood studios. Netflix hasglobal rights to some showslike Fox’s “Gotham,” AMC’s“Breaking Bad” and ABC’s“How to Get Away with Mur-der” but is still working to se-cure such rights for manyshows. In an interview, Mr.Hastings said the originals willnonetheless be the foundationof a compelling content offer-ing. “As we looked at our newmarkets like Spain and Italy,the viewing of our originals isjust huge,” Mr. Hastings said.
Eventually, Netflix’s goal isfor all of its services globallyto have similar content offer-ings, including all of the majorshows consumers are accus-tomed to finding on the U.S.version of the service. “It willtake a while to bring the cata-logs together,” he said. There
is resistance from foreign me-dia companies seeking thesame rights in their homemarkets and studio executiveswho are wary of Netflix’sgrowing power.
Netflix isn’t yet available inChina but said it continues toexplore options for providingthe service. “Right now we’rein the relationship-buildingphase,” Mr. Hastings said.“Getting to know partners andgovernment.”
Netflix also won’t be avail-able in Crimea, North Koreaand Syria because of U.S. gov-ernment restrictions on Amer-ican companies.
At the start of 2015, Netflixreleased a letter to sharehold-ers unveiling plans to branchinto 200 countries. The com-pany has signaled it plans tocomplete the global rollout bythe end of this year.
The company has beengrowing faster overseas thanin the U.S. In the third quar-ter, the streaming-video pro-vider added 880,000 domesticsubscribers, lower than the1.15 million subscribers it pro-jected in July and a slowdownfrom the addition of 980,000customers in the year-earlierquarter.
Overseas, however, thecompany signed up more usersthan it expected, adding 2.74million subscribers comparedwith a forecast of 2.4 million.
As Netflix has expanded,costs and exposure to cur-rency volatility have in-creased. In the latest reportedquarter, international opera-tions again weighed on profit,as the segment’s third-quarterloss more than doubled to $68million.
BY EZEQUIEL MINAYAAND AMOL SHARMA
Netflix Expands GlobalReach to 190 Countries
Netflix plans to offersimilar content onall its internationalservices.
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