What’s on Tap for Mobile World Congress ::

BARCELONA–Thousands of telecom and tech CEOs, vendors, suppliers government officials, reporters and gadgets junkies are descending on Fira Gran Via exhibition center in Barcelona this weekend for the start of Mobile World Congress.

It may not have the cachet of the Consumer Electronics Show, held each January in Las Vegas. But MWC has over the years transformed itself–from largely a trade show for European telecom executives and telco suppliers, into a global showcase in its own right for gadgets and tech companies.

Much of the show’s new swagger comes thanks to the explosive intersection of computing and mobile devices in recent years. Underscoring its new position in the tech world, Facebook Inc.FB +3.19% CEO Mark Zuckerberg is giving one of the show’s keynotes.

Jan Koum, WhatsApp chief executive and the guy who just agreed to sell his company to Mr. Zuckerberg for $19 billion, is also addressing the congress, along with a stable of chiefs of the world’s biggest telecom companies.

And there will be plenty of old-tech CEOs, like Virginia Rometty at IBMIBM +0.36% and John Chambers from Cisco Systems.

Last year’s show attracted more than 72,000 attendees, including 4,300 CEOs from mobile operators, device manufacturers and technology firms. There were 1,700 exhibitor. Oh, and 3,400 journalists.

So what are the biggest things to watch?

– Samsung’s new flagship: Samsung hosts its “Unpacked” event on Monday evening, where the company is expected to unveil its next Galaxy S5 flagship smartphone.

–The future of Tizen: Samsung is also expected give its home-grown OS a leg up by offering its own Tizen-driven devices. They unveiled the first, a Tizen-powered smartwatch, just a few hours ago.

– Nokia’s first Android phone: Having lost its footing on the fast-growing sub-$100 smartphone market, the Finnish company is expected to introduce a low cost-smartphone, aimed for consumers in emerging markets that runs Android…without promoting Google’s services.

–Zuckerberg’s keynote: Faceook’s founder will make his first public appearance after his WhatsApp deal. The acquisition, as well as Mr. Zuckerberg’s presence at the mobile fair, highlights Facebook’s metamorphosis into a mobile company.

– Telco deals?: A long-expected wave of European telecom consolidation will also be on CEOs’ minds when they gather for closed-door meetings. Will AT&T’s Randall Stephenson and Vodafone Group’s Vittorio Colao end up in the same room together? AT&T has made no secret of its interest in buying big into the European market.

Facebook to Pay $19 Billion for WhatsApp::

Facebook Inc. FB +1.13% agreed to buy messaging company WhatsApp for $19 billion in cash and stock, a blockbuster transaction that dwarfs the already sky-high prices that other startups have been able to recently command.

The 55-employee company, which acts as a kind of replacement for text messaging, has seen its use more than double in the past nine months to 450 million monthly users. That makes its service more popular than Twitter Inc., TWTR -4.61% the widely used microblogging service which has about 240 million users and is currently valued at about $30 billion.

The transaction, which includes $3 billion in restricted stock units to be granted to WhatsApp's founders and employees over four years, ranks as the largest-ever purchase of a company backed by venture capital.

Besides making its founders billionaires, the deal marks an enormous windfall for Sequoia Capital, the only venture firm that backed WhatsApp. Sequoia invested about $60 million for a stake valued at up to $3 billion in the deal, according to a person familiar with the matter.

The deal price also easily outranks any acquisition of startups in recent years, including Facebook's purchase of photo-sharing app Instagram for more than $1 billion in 2012, and, a year earlier, Microsoft Corp.'s $8.5 billion buy of video-calling company Skype.

What isn't clear is how much revenue WhatsApp makes—the company declined to comment on its sales. It charges 99 cents a year after one year of free use and doesn't carry ads. On a conference call, Facebook Chief Executive Mark Zuckerberg said he doesn't think ads are the right way to monetize messaging systems.

Beyond revenue, the deal could help shelter the social network against the shifting tastes of teen users, some of whom have grown cool to it, and bolster its position internationally. WhatsApp is particularly popular outside of the U.S.

The transaction comes in the wake of Facebook's failed attempt to purchase another messaging service popular with younger users, Snapchat, for roughly $3 billion last year.

WhatsApp has long been seen as a takeover target for Internet giants. Google Inc. had reached out to buy the company several years ago, two people familiar with the situation said, while two other people said deal talks between the two companies also took place recently. A Google spokesman declined to comment.

Even by the get-big-fast standards of Silicon Valley, WhatsApp's story is remarkable. The company, founded in 2009 by Ukrainian Jan Koum and American Brian Acton, reached 450 million users faster than any company in history, wrote Jim Goetz, a partner at investor Sequoia Capital.

Facebook had fewer than 150 million users after its fourth year, one third that of WhatsApp in the same time period.

WhatsApp processes 50 billion messages a day, Mr. Goetz wrote, yet has only 32 engineers and doesn't employ any marketing or public-relations people.

WhatsApp built its business on the idea of offering instant messaging without the fees that carriers often charge. The app lets uses send text, pictures and video to anyone with the software, free. Unlike Apple Inc.'s iMessage, it works on all the major mobile operating systems.

The company goes out of its way to remain private, offering little in the way of information to government agencies trying to track people. Once delivered, messages are deleted from the company's servers. Privacy was particularly important to Mr. Koum, who grew up in a communist country with a secret police.

"Jan's childhood made him appreciate communication that was not bugged or taped," Mr. Goetz wrote. "When he arrived in the U.S. as a 16-year-old immigrant living on food stamps, he had the extra incentive of wanting to stay in touch with his family in Russia and the Ukraine."

The deal came together in less than two weeks, though Messrs. Zuckerberg and Koum first met nearly two years ago.

Mr. Zuckerberg first reached out to Mr. Koum via email in the spring of 2012, according to a person familiar with the matter. A month later, the two men met at a coffee shop in Los Altos in Silicon Valley. Following their initial meeting, Messrs. Zuckerberg and Koum talked regularly, sometimes at dinner and on hikes.

On Feb. 9, Mr. Zuckerberg gave Mr. Koum the hard pitch: "Let's go connect the world," he said.

Then, on Valentine's day, he visited Mr. Zuckerberg's home in Los Altos, and the two men came to an agreement. Following the meeting, Mr. Zuckerberg joked that Mr. Koum crashed his Valentine's dinner with Mr. Zuckerberg's wife, Priscilla.

Mr. Koum, who previously spent about a decade at Yahoo Inc. as an engineer, will join Facebook's board of directors.

The demographics of WhatsApp's users were likely a draw for Facebook, said Rebecca Lieb, analyst at Altimeter Group. "This is clearly also a play at securing their base of younger users who are married to text messaging," she said.

Equally enticing is the percentage of WhatsApp users who log onto the service at least once a day. That figure sits at 70%, even higher than Facebook's 61%.

Such "engagement" percentages are valuable because the more users interact with a service, the more ads or other products can be sold to them.

"Facebook's always working to find new reasons for people to come back," said Forrester Research analyst Nate Elliott. "Facebook is desperate to keep people coming back every day."

On a per-user basis, Facebook is paying around $40 apiece for WhatsApp, roughly in line with the amount that other social media companies that have been acquired in recent years.

WhatsApp, based in Mountain View, Calif., will stay in its headquarters and continue to operate independently of its new parent company, which is based nearby in Menlo Park.

Other figures disclosed in a Securities and Exchange Commission filing show metrics that made it particularly attractive to Facebook. WhatsApp users every day upload 600 million photos, for example, and send 100 million video messages every day.

On the conference call, Messrs. Zuckerberg and Koum said it was important the company operate separately and retain the mentality of a startup, a strategy Mr. Zuckerberg said has worked with Instagram.

Instagram founder Kevin Systrom, he said, has "gotten a huge amount of value on being able to use Facebook infrastructure," while remaining separate.

WhatsApp, despite its surging popularity in recent years, has been wary of raising capital and entertaining suitors. Mr. Koum told The Wall Street Journal last December that WhatsApp has "no plans to sell, IPO, exit," or get new funding.

Facebook was advised by Allen & Co. LLC and Weil, Gotshal & Manges LLP; and WhatsApp was advised by Morgan Stanley and Fenwick & West LLP.

Nokia to release its first Android phone this month::

Nokia is set to launch its first Android smartphone at Mobile World Congress later this month, according to the Wall Street Journal.

Nokia is getting ready to take the wraps off of its first Android-powered smartphone, according to the Wall Street Journal. The Finnish device maker is set to introduce the heavily rumored “Normandy” handset at Mobile World Congress in Barcelona.

The timing of this announcement is interesting, as Microsoft’s acquisition of Nokia’s device business is expected to close this quarter. That would make it seem like it’s high time for a big Windows Phone announcement, but according to the Verge, Nokia is likely to spend more time discussing its Android smartphone at its MWC press conference.

Neither report offers up any new details about the purported handset. The WSJ reaffirms that, while the device will be powered by Android, it will be running a modified version that doesn’t come with the Google Play app store. Instead, the UI will look similar to Windows Phone and come preloaded with a mix of apps from Microsoft and Nokia. This is similar to what Amazon does with its Kindle Fire tablets.

This approach could provide Nokia with a replacement for its low-cost Asha phone line, and provide users with an entry-level device that makes them more likely to upgrade to Windows Phone in the future.

Born Online, Facebook Now Wants to Be Your ‘Paper’

Print and broadcast news outlets have long been the world’s gatekeepers of information. Now,FacebookFB +2.44%wants a turn.

On Thursday, Facebookintroduced a long-awaited mobile app, called Paper, that offers users a personalized stream of news. Facebook said it will be available Feb. 3 for the iPhone; there is no date yet for Android.

Instead of editors and reporters, Facebook’s publication is staffed by a computer algorithm and human “curators.” The content comes from outside sources, based on links shared by the social network’s 1.2 billion users. During a recent demonstration, the curated content featured articles from The New York TimesNYT -2.68%, TheWashington PostGHC -2.62% and Time Magazine, among others.

The move is part of Facebook’s long-term strategy to be more than just a popular app, or a destination on the Internet. Facebook wants to be the global hub of human communication, essential in the lives of its users.

It’s also part of a Facebook push to develop a suite of apps that will co-exist alongside the main Facebook app. So far, the effort has had mixed results: CEO Mark Zuckerberg Wednesday said use of Facebook’s Messenger app had increased 70% during the past three months. Facebook’s instant-message Poke app has been less successful. Zuckerberg Wednesday hinted at more apps to come.

Paper, which was demonstrated to The Wall Street Journal on Tuesday, is smooth and sleek, performing most of the functions in Facebook’s existing mobile app. But Paper has some important new features, including an interactive way of looking at photos that utilizes gyroscopic and other sensors inside mobile phones. The feature allows users to pan back and forth across a photo simply by moving the phone from side to side.

Paper displays information in segments — such as Headlines, Pop Life, Score, Enterprise and Home – similar to the sections of a newspaper. Clicking on a section opens a preview of articles. Users can open an article by swiping their fingers across it, causing an animation of a piece of paper being peeled back.

The animation and articles in Paper are constantly being loaded in the background, so that swiping through the app happens lightning fast – a feature that works best on newer phones and won’t work on iPhones older than the iPhone 4.

The app, under development since the middle of 2012, was developed by a roughly 15-person unit led by product manager Michael Reckhow and designer Mike Matas, who worked on the Nest thermostat, among other things, before moving to Facebook in 2011.

The app includes a message feature and allows users to browse their news feeds and look at their friends’ profiles. Reckhow said the app gives users an alternate way to use Facebook on their mobile phones, without disrupting people who have gotten used to the old app.

Paper isn’t available on desktop or tablets.

http://vimeo.com/85421325

China Goes Native for New Operating System::

Rule number one for the technology industry in China: if the world is doing something, a Chinese company must do it.
That trend was on full display this week as the China Academy of Sciences and Liantong Network Communication Technology announced a new locally developed operating system.
Ostensibly created to serve as a competitor to foreign platforms like Google'sGOOG -0.49% Android and Apple'sAAPL -2.46% iOS which currently dominate the market, the new operating system is creatively named China Operating System or COS for short.
In recent decades, the Chinese government has spent billions of dollars to ensure that in the high-tech industry the country has homegrown options to match foreign competitors. Though the country lags in many spaces, it has local champions in industries as diverse as semiconductors, telecom equipment, chip design, social media and even online gaming.
But the smartphone operating system has quietly eluded the government. Android and iOS have come to control more than 90% of the China market in 2013, according to data from research firm IDC.
In March last year, the China Academy of Telecommunication Research, which is associated with China’s Ministry of Industry and Information Technology hit out at Android, arguing that China is too reliant on the platform. The report also accused Google of using its dominance to discriminate against local hardware manufacturers. Google has previously denied those allegations.The new platform, which is based on Linux and can run applications built for HTML 5, works for smartphones and other devices, according to Penny Huang, a spokeswoman for telecom firm Liantong. It has been tested on a range of devices, according to Huang, who would not elaborate on which manufacturers might bring a phone to market with the operating system.
According to a person familiar with the matter, HTC engineers were heavily involved in the development of the software, but Huang said that the project was the product of exclusive cooperation between Liantong and the Chinese Academy of Sciences. The Wall Street Journal first reported in August that HTC was developing an operating system for Chinese consumers.
“HTC remains focused on working with its current OS partners and we do not comment on speculation regarding other operating systems,” an HTC spokeswoman said Friday.
The dominance of Android and iOS, combined with the millions of applications that have been developed for the two operating systems, means that COS, even if technically comparable to its rivals, is likely to have a hard time competing. Still, some analysts say that China’s state-owned providers, as well as smartphone makers, might get behind the operating system as a sign of support for the government initiative.
Huang said the company’s goal is “to offer another choice to consumers and developers.”
She added that by having only one application store it will also enable the platform to offer a more secure experience that avoids the software piracy rampant on the Chinese Internet.

Apple marketing chief Schiller unfollows Nest & Tony Fadell on Twitter following Google deal::

Only a few days after “father of the iPod” Tony Fadell agreed to sell thermostat and smoke detector maker Nest to Google for north of three billion dollars, Apple senior vice president (and former Fadell colleague) Phil Schiller has unfollowed the Nest CEO and the Nest company on Twitter.

Here’s Schiller’s following list from a recent cache:

Apple CEO Tim Cook Appears at China Mobile iPhone Kickoff::

iPhone sales have begun at China Mobile January 17th. The world’s largest carrier made a deal with Apple back in December 2013 to carry the iPhone 5s and iPhone 5c on their wireless network.

9to5Mac:

To celebrate January 17th  launch, Cook and China Mobile Chairman Xi Guohua attended the opening at a China Mobile store. In celebration, Cook and the China Mobile executive offered autographed iPhone 5s and iPhone 5c units to the first customers to enter the store.

Cook also consented to a few questions and made a statement at a store opening.

Bloomberg reports that Cook said, “today is just the beginning of China Mobile and Apple coming together to deliver the best experience in the world.” When asked is a bigger-screened version of the iPhone was in the cards, Cook surprised no one by answering, “We never talk about future things. We have great things we are working on but we want to keep them secret. That way you will be so much happier when you see it.”