Monthly Archives: July 2012

Russian hacker takes iOS in-app purchasing for a ride; Apple’s response middle-of-the-road

In a feint that has galvanized the Apple community and exposed an apparent flaw in the iOS, a Russian hacker has dodged official in-app purchase procedures and conned Apple’s App Store into letting him get paid content for free, Macworld magazine reports.

Upon completing his hack last week, Alexey Borodin, the developer of the procedure, took an altruistic stance and “blessed’ all iOS users with a detailed “do-it-yourself” guide posted in his blog, In-Appstore.com, and replicated in Russian on Iguides.ru. Borodin also placed a video with exhaustive instructions on YouTube.

For the whiz kid’s followers, his modus operandi is simple. All it takes to enjoy free in-app purchases is installing two phony certificates, links to which Borodin provides in his guide, on one’s mobile device and then registering a specially-crafted DNS server in one’s Wi-Fi connection settings. The scam dupes applications into a belief they are communicating with the legitimate App Store, linking them instead to a “great pretender” — a site that passes itself off as the App Store.

The sham then “validates” a purchase by generating spoofed code receipts (which the reconfigured iOS device mistakes for authentic ones coming directly from Apple), and then signals to a respective application to give the “buyer” access to ostensibly paid content.

A user seeking free content takes certain risks, since the bogus server requires that all the same personal data be sent as would be required for a legitimate transaction. On his site, the Russian hacker claims he never steals banking card funds nor keeps users’ personal information, but verification of that appears to be impossible.

Unlike many reverse engineering products, Borodin’s hoax doesn’t call for cracking a system or installing any additional apps, nor does it alter any code. According to Macworld, the technique works with the 3.0 through 6.0 beta versions.

Beginning on July 13, Apple took action to stop the con. At least one of the servers that powered Borodin’s “philanthropy” is reportedly down, and the YouTube video has been removed. According to TNW, Alexey Borodin isn’t hiding. He claims to condemn piracy and says he is ready to cooperate as soon as Apple contacts him, which apparently it has not done. He has purportedly given up updating In-Appstore.com and hopes Apple “will hire” him for his skills.

http://www.ewdn.com/2012/07/18/russian-hacker-takes-ios-in-app-purchasing-for-a-ride-apple%E2%80%99s-response-middle-of-the-road/

News from the East-West digital News

Kirov city eyes IT technopark

Kirov city authorities intend to build a technopark specializing in information technologies. According to its plans, the Kirov technopark will be similar to Kazan’s IT Park, which is located in the Republic of Tatarstan.

The regional authorities are carrying out a number of projects to develop IT technologies and promote the digital economy in the region. In 2011, under the program name “Kirov is a Free Wi-Fi Territory,” access points were installed in several parks and recreation facilities. Wi-Fi will reportedly also be installed in public transport, which is widely used by students.

In addition, the region has widely embraced an electronic paperwork system, which has reportedly been 100% implemented in the local administration.

Another program, which started last year, aims to teach computer skills to Kirov’s inhabitants, including retired persons, the disabled, and families with two or more children.

http://www.ewdn.com/2012/07/19/kirov-city-eyes-it-technopark/

News from the East-West digital News

Association of “smart cities” to be formed in Russia

An association of “smart cities” will be formed in Russia by the end of 2012, the ITAR-TASS news agency reported last week, citing Peter Schipper, the Director of the Department of Engineering and Transport Infrastructure of Skolkovo, the state-sponsored innovation hub nearing completion near Moscow.

According to Schipper, the term ‘smart city’ implies a complex approach to construction and maintenance of residential, commercial, and public buildings and facilities. “This is a new and non-traditional approach. While old, traditional cities have been built using a radial pattern, a smart city is built around a transportation system,” he explained.

“This approach implies a well developed transport structure, good access to airports and rail stations. Residents in smart cities are not supposed to use cars with internal combustion engines. A smart city should have a high-tech waste processing complex to reduce processing costs. Water supplies should be cleansed to drinking water standards and utilized for repeated use. Rain water in a smart city can be used for developing a city’s green zone and landscape design,” Mr. Schipper concluded.

According to Schipper, the listed characteristics will be used to select those Russian cities that best correspond to these smart city criteria.

http://www.ewdn.com/2012/07/19/association-of-%E2%80%9Csmart-cities%E2%80%9D-to-be-formed-in-russia/

News from the East-West digital News

LTE tenders won by leading national operators; Sweden’s Tele2 kept off the game

The Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications (Roskomnadzor) announced the results of the long-awaited tender to allocate four natiowide LTE frequencies, which took place last week.

The results brought no surprises, with the “Big Three” Russian mobile operators MTS, Megafon andVimpelcom, as well as the national telecom operator Rostelecom, walking away with 7.5 MHz frequencies in the 791-862 MHz and 2.5-2.69 GHz ranges.

Summa Telecom, a telecom operator covering several regions of the country, TransTeleCom, a subsidiary of the national railways company RZD, and Tele2, a subsidiary of the Swedish telecom operator, did not obtain any frequencies.

Under the terms of the tender, the winners have just one year to complete conversion and deployment operations, with commercial launch scheduled for July 1, 2013. Each of the four winners has committed to investing 15 billion rubles, or almost $500 milllion, per year in infrastructure development over the next  seven years.

Under current plans,  all Russian cities of 50,000 inhabitants or more will be covered by LTE networks by 2019.

These networks will already have been made accessible to 38.5 million inhabitants by the end of 2012, according to telecommunications minister Nikolai Nikiforov.

http://www.ewdn.com/2012/07/19/lte-tenders-won-by-leading-national-operators-swedens-tele2-kept-off-the-game/

News from the East-West digital News

Alternative accomodation websites attract VC money

Renthome.ru, a HomeAway.com clone offering short-term vacation rentals across Russia and the CIS, closed earlier this month an angel investment round of approximately $1 million.

Participants in this round of investment include Russian and foreign entrepreneurs, as well as investors from the real estate market and finance sector, announced Fast Lane Ventures, which invested in the company earlier this year.

The better part of the investment will be allocated to developing a regional network and to marketing. Already operating in Moscow, Renthome.ru will expand its physical presence into ten more Russian cities and one city in Ukraine, with at least one regional representative in each city.

For the last eight months, the company has managed to compile the largest online database of real estate listings, Fast Lane Ventures claims. Renthome.ru has nearly 17,000 active properties which are located in over 700 Russian, CIS and European cities and towns. Renthome.ru aims to reach as many as 25,000 properties on offer by the end of the year.

Last month, Airbnb copycat TravelRent, another portfolio company of Fast Lane Ventures, secured $2 million from Frontier Ventures, a Russian venture fund established earlier this year.

Another service, Apartator.ru, differentiates itself by focusing on professional management companies. Defining itself as “a booking solution rather than a platform for travelers and landlords,” the site claims to offer “instantly bookable apartments in a mere 2 hours.”

Launched in early 2011, Apartator is in the process of securing its first round of funding by external investors, co-founder Anton Malkov told East-West Digital News. “We are actively hiring to develop marketing with the objective to cover 90 Russian cities or resorts within a year as well as pilots in 10 locations globally,” he added.

Another site, Tvil.ru, also operates in the alternative accommodation segment, but did not respond to our requests for information.

http://www.ewdn.com/2012/07/20/alternative-accomodation-websites-attract-vc-money/

News from the East-West Digital News

Kayak.com paddles limply into Russia

Good luck guys! Fresh off its insignificant $91 million IPO on NASDAQ, news is trickling in about Kayak.com’s ambitions in the Russian market.

Stories on the web actually started breaking on July 19th, the day before the IPO, after the Quintura blog noted that Kayak.ru is forwarding to Kayak.com and identified the Russia & CIS Managing Director through his LinkedIn profile. This was quickly followed by VentureBeat and TechCrunch postings about Kayak.com’s entry into Russia.

The company has not made any public statements about its entry into Russia, probably due to restrictions during the offering period. Quite a botched PR approach to the Russian market!

There is quite a sensible reason for keeping a low profile. Kayak.com is merely the latest in a string of foreign technology/e-commerce companies either entering or boosting their presence on the Russian market, including eBay, PayPal and Airbnb. All are woefully behind their Russian competitors.

Kayak.com operates essentially as search engine specifically devoted to travel, where users search for the best deals on air tickets, hotels, car rentals and more. It earns most of its money from online advertising and referral fees, similar to Google’s business model but without the contextual aspects. Companies offering all-inclusive vacations, for instance, are able to promote them on the Kayak site. It generally does not have direct commercial relationships with the actual travel service providers such as airlines or hotels.

Since Kayak.com has no direct customer relationships, the whole business is vulnerable to the latest, greatest, coolest, innovator. Personally, I regularly use the site but have never transacted or clicked on their links. I use it to make sure I’m not missing any bargains. If something would indeed turn up, I would bypass the site completely and transact directly with the airline or hotel. I don’t think I’m alone.

Let’s have a look at the competitive environment in Russia:

  • Amongst foreign companies, Edinburgh-based Skyscanner has had a Russian version of its service since at least 2009, and pursues more or less the same strategy as Kayak.com.
  • Locally-based Aviasales.ru (known internationally as JetRadar.com) is probably the most entrenched existing player.Jizo.ru, while having a questionable pedigree by virtue of its main funder, also does many similar things, although it has only been around since 2011.
  • Large and established Russian portals such as Yandex (ticket.yandex.ru) and Rambler-Avia (avia.rambler.ru) are also in this space but take a more bare-bones approach and render their interfaces more like austere search engines, which is their legacy. If the market becomes larger, Yandex certainly has the resources to focus more on the travel sector.
  • Finally, online “travel agent” sites like Expedia, Orbitz, etc. and their local equivalents in Russia (Ostrovok.ru, Oktogo.ru, Travelmenu.ru) represent another form of competitor, albeit more focused on direct bookings and customer relationships.

As I understand, Russia is not integrated into any global travel reservations market, so the Russian branch of Kayak would have to develop new systems to index all the relevant data on Russian travel, a 3-6 month project, at least.

That’s not to say there’s no room for Kayak.com. The online travel sector in Russia, as in most sectors of e-commerce, is in its early days and poised for tremendous growth, so there’s plenty of pie left for Kayak.com.

The main questions will be the company’s commitment to the Russian market, and whether the Russian operations will reach scale in the context of the entire company. The company’s US roots will certainly place it at a disadvantage compared to Skyscanner, as it needs to “learn” how to succeed internationally and such markets are arguably not material to its short-term success. Being a publicly-traded company only accentuates this short-term focus. This is not to mention the stiff competition from Russian-based companies.

Still, there are very few barriers to switching travel search engines, so apart from being the quickest, cheapest and most comprehensive, the services compete on their user friendliness. The more services which can be built to hook users, through personalization, rewards schemes or other means, the better for their long-term competitive advantage.

http://www.ewdn.com/2012/07/23/kayak-com-paddles-limply-into-russia/

News from the East-West digital News

Moscow startup Gfranq turns amateurs into professional photographers

Gfranq, a photo editing site launched just four months ago, is getting strong traction among amateur photographers, with more than 100,000 users in its first three months. Gfranq’s idea is to provide a simple, yet poweful image processing service to the average online user who has no knowledge of complex image processing software, allowing the user to achieve professional quality photoediting results.

The service allows users to upload any photo from their PC, mobile device or web-cam, rotate or crop it, apply their choice of 42 professional filters, attach comments, store the photos in a personal photo album, and instantly share lomo- or retro-style photos with friends across multiple social networks. Mobile photo fans can access a mobile web version of Gfranq as well as an Android app. An iOS app is announced for soon.

Gfranq is a multi-interface service with a social dimension more so than a Instagram- or Pinterest-like social network featuring pictures, explained Artem Orlov and Vladlena Orlova, the young couple who created the startup, to East-West Digital News. “We have our own ideas about social networking, and we plan to introduce innovative ratings and other features in the near future,” they said.

In April, Gfranq secured seed funding from Igor Ryabenkiy, a Vienna-based Russian business angel who also invested in LinguaLeo. “Being a semi-professional hobby photographer, I understood at first sight the value this service can bring to millions of users,” he said to EWDN.

So far the service has attracted users mainly from Russia and neighboring countries, but it was designed in five languages with a view to further international expansion. “Our combination of simplicity and quality doesn’t exist anywhere else in Russia or abroad,” claims Brand Manager Ekaterina Artemyeva.

Gfranq has not generated any revenues so far, but envisions both offline and online monetization. “When we’ll introduce advertising, we’ll see to it that it remains almost unnoticeable to users,” says Artemyeva, perhaps not fully in line with the expectations of the startup’s future advertisers.

http://www.ewdn.com/2012/07/24/moscow-startup-gfranq-turns-amateurs-into-professional-photographers

News from the East-West digital News

International research study sheds full light on Russian e-commerce

Today, East-West Digital News is releasing a 316-page research study on the Russian online retail market – one of the fastest growing but least known (and most misunderstood) on the planet.

The research – in which PwC in Russia and the Moscow Higher School of Economics, among others, took part – is based on interviews with 80 Russian and international market players, from eBay and DHL to local retailers Ozon.ru and KupiVip.ru.

For the first time, international audiences are provided with reliable and precise data on this market, which amounted to just $10.5 billion last year, but could reach some $50 billion before the end of the decade.

The report includes a full set of data regarding investments in Russian e-commerce companies, with Fast Lane Ventures Senior Analyst Andrey Kulikov adding his commentaries on venture investment trends.

The report also explores the regional e-commerce scene – now nearing the tipping point in a market thus far dominated by Moscow and St. Petersburg.

“Yet our report is, above all, a practical guide,” says Chief editor Adrien Henni. “150 pages are dedicated to analysis of and concrete advice for each of the key issues defining the industry – from marketing to payments, from fulfillment to legal requirements and on to little known HR challenges.”

“With already 60 million unique Internet users, Russia will become one of the largest online retail markets in Europe,” says Damian Doberstein, who co-founded the Russian branch of global venture fund E-Ventures. “Combined with still weak consumer involvement in e-commerce, this creates huge growth potential for online retailers. In Russia today, only 30% of online users shop online, compared to 97% in Germany. Another ‘pro’ is that competition on the Russian e-commerce scene is relatively low compared to China and Brazil, not to mention Western countries.”

“Infrastructure, from broadband, to electronic payments, to logistics, improves slowly, bringing significant improvements in operating conditions year after year. But for foreigners to succeed in Russian e-commerce, a strong knowledge of local specifics is required,” notes Vardan Gasparyan, senior consultant in supply chain management at PwC in Russia.

A special chapter is dedicated to cross border sales – a particularly opaque area – with exclusive data from PayPal and the Russian Post, as well as practical advice for players operating from abroad on how to organize sales to Russia.

E-Ventures, Fast Lane Ventures, Mangrove Capital Partners, the Russian Venture Company (RVC)and other leading Russian and international venture funds took an active part in the research.

http://www.ewdn.com/2012/07/24/international-research-study-sheds-full-light-on-russian-online-retail/

News from the East-West digital News

Hyundai to sell tablets in Russia; cars seen as facilitator

Next month, Hyundai IT, a Chinese-based IT-focused subsidiary of Korea’s Hyundai Motors, is launching Russian sales of new Hyundai-branded tablets and has plans to localize the assembly of the tablets in Russia in the late fall, the Russian business daily Vedomosti reported last week, citing a tête-à-tête with an IT Hyundai source.

Hyundai is reportedly confident enough to project sales of about 200,000 new devices in the inaugural year alone. The first four Korean tablets to hit the Russian market will be the seven-to-ten inch models cashing out locally at 7,000-12,000 rubles (approximately $215-370).

The newcomers will have to compete with well-established Russian-assembled brands such as Prestigio and IconBit as well as the older Hyundai tablets designed for the Chinese market and selling well here at a generous $160.

A novice in Russia, Hyundai IT is building its marketing strategy in Russia around the popularity of Hyundai cars, especially the best-selling Solaris. The automobile marque’s reputation is expected to help get tablet sales off the ground; in fact, one of the tablet models will enable the testing of a Korean car at sales and service centers where the tablet will also be sold, Hyundai IT said.

According to PMR Publications, more than 1.13 million tablet PCs were sold in Russia last year at an average price of $625 per device.

http://www.ewdn.com/2012/07/16/hyundai-to-sell-tablets-in-russia-cars-seen-as-facilitator/

News from the East-West Digital News

Russia’s computer game market to top $1.5 billion by 2015

The Russian computer game market is predicted to nearly double over the next three years – from $850 million to over $1.5 billion, according to projections from Electronic Arts. Although it is already the biggest market in Central and Eastern Europe, Russia is still far behind the global leader, the United States. According to the NPD Group, the U.S. market turnover reached $21.6 billion last year; global turnover totaled $74 billion.

Tony Watkins, head of Electronic Arts Russia, said that over the next three years, the Russian computer game market will expand mainly by virtue of free-to-play games – applications that allow their authors to make money from players buying various bonuses and artifacts to move their characters through the games faster – as well as of social networking games.

http://www.ewdn.com/category/internet/online-games/

News from the East – West Digital News