Data Sheet—Friday, October 17, 2014

Happy Friday, Data Sheet readers. Google’s traditional search business fueled a 20% increase in Q3 revenue, but analysts want to hear more about what’s next. AMD is slashing 7% of its workforce. Plus, every marketer wants to get more personal. This startup helps your brand get closer to total online strangers. Enjoy your weekend!

Profit miss forces AMD workforce reduction. The chipmaker's third-quarter results included an unexpected 65% decline in profits. CEO Lisa Su, barely in her job for a week, promptly announced layoffs—the third round in the past three years. The news caught many analysts off guard, especially after Intel's record-breaking quarter. Wall Street Journal

CLOUD CHATTER

Google seeks script for next act. With more than $16.5 billion in revenue for its third quarter (up 20%), the giant Internet search and cloud computing company is still growing fast. But signs of a slowdown are there, and analysts find its mobile strategy lacking (partly because results aren't broken out separately). Google's "other" business (such as sales of mobile apps) leapt 50% for the quarter to $1.8 billion. But its research and development costs soared $2.7 billion, compared with $1.8 billion just one year ago. New York Times

STATS & SPECS

The skinny on Apple's launch. Its refreshed tablet portfolio includes the super-svelte iPad Air 2, which has a 9.7-inch screen and is 18% thinner than its predecessor. The bigger breakthrough, however, could be what's inside: an Apple SIM card, which means owners won't be locked into a specific carrier.

Plus, more than 500 financial institutions will be on board with Apple Pay when the mobile payment service launches next Monday, including smaller regional lenders. Fortune, Wall Street Journal

Smartphones trump tablets. People tend to rush out and replace smartphones as soon as they're outdated or broken. Not so with the tablet form factor: new Gartner research figures that average lifespans are lengthening to three years. As will grow only 11% this year to about 229 million units, far slower than the 55% expansion this mobile segment recorded for 2013.

STARTUPS & DISRUPTORS

KKR bets on automation. The private equity firm just bought a minority stake in Arago, which sells technology that puts IT operations tasks on autopilot. It's not disclosing the size of the infusion, but reports put it at $55 million. KKR has invested more than $9 billion in software, e-commerce and semiconductors since 1999.

Virtual fitting room for e-commerce sites. British company Metail's visualization technology lets online shoppers use their measurements to create a "MeModel" they can use to "try on" clothing they see online. The model can be used in more than one place, fueling the founder's vision to become the "Google of sizing and shape." Metail just raised another $12 million in funding to enhance its mobile technology, led by Hong Kong's TAL Group. TechCrunch

FAQ

This startup helps your brand talk to online strangers

Can we get personal for a moment? Pretty much every marketing professional would kill for that opportunity, and there are plenty of software companies rushing to oblige. So what makes two-year-old Reflektion stand out?

It isn't just the company's backers, which include Intel Capital and Nike, or its prominent angels: Salesforce founder Marc Benioff and former Oracle COO Ray Lane. It is Reflektion's ability to create "personal" e-commerce experiences not just for a brand's repeat customers or registered visitors but also for the equivalent of walk-in shoppers, people who have never been to the site before.

"The technology hasn't been there to do this for millions of visitors," said Reflektion CEO Sean Moran, who has a deep background in e-commerce technology that includes working on programs with Amazon and eBay. "There has been lots of stuff done to reach the 3% to 4% who buy."

Reflektion's algorithms—developed by a team led by founder Amar Chokhawala, a former Google Adsense engineer—gather information as an individual browses a site, taking note where he or she has paused or clicked. It uses that knowledge plus data about what sort of device doing the browsing (smartphone versus desktop versus tablet) to reshape what the visitor sees—prioritizing the products that he or she encounters much like Amazon does with "recommendations" for registered accountholders. The technology even affects the search results seen by individual visitors, Moran said.

The service, which will cost a company anywhere from $100,000 to several million dollars, is being used by about 20 companies including Disney, Gander Mountain and Nike. It does really matter what e-commerce technology is being used, Reflektion has worked on integrations involving e-commerce technology from Demandware, IBM WebSphere, Magento and Oracle ATG.

"The most common thing we're competing against is nothing," Moran said. Actually, Certona (a technology used by the Steve Madden brand) and RichRelevance (used by Costco, Target and Marks & Spencer) also are focused on "omnichannel personalization." The leaders for those two companies were behind technologies that are part of marketing services at Adobe and Amazon, respectively.

So far, Reflektion has raised a total of $11.3 million in venture capital. Several weeks ago, Reflektion's board added another experienced e-commerce executive Steve Papa, founder of Endeca (swallowed by Oracle in 2011 for a reported $1.1 billion). The former CEO of Wal-Mart US, Eduardo Castro Wright, is also a director along with Benioff and Lane.

"[Reflektion's] platform demonstrates the fusion of traditional customer experience management with the leading edge of advertising monetization," noted Papa. "Not only is it the next generation of e-commerce personalization, it has broader applications to all customer-facing web applications."

ONE MORE THING

Wal-Mart, Alibaba reinvent e-commerce. eBay's traditional marketplace may be floundering, but it doesn’t seem to matter for two big rivals. Retail powerhouse Wal-Mart expects $12.billion in online sales this year, up 25%. To be fair, it's losing money on the operation, mainly because of the roughly $1 billion it will spend this year alone on systems and distribution centers to support this.

"We know who we are and what matters. We're going to deliver Wal-Mart your way," Wal-Mart e-commerce chief Neil Ashe told analysts this week "If you shop with us in multiple formats, you'll shop with us more than anyone else."

China's Alibaba, meanwhile, is stepping up mobile technology investments as more consumers use smartphones to make purchases. Exhibit A: its Alipay division is testing how fingerprint sensors and facial recognition can be used to secure transactions. ZDNet, WSJ