THEWALL STREET JOURNAL. Wednesday, May 8, 2013 | 11

relatively high.”However, SMEs also present

problems for Turkey’s compli-ance with Basel II, because SMEsoften lack proper accountingsystems and don’t have creditratings, he says.

Access to financing is the topcomplaint about doing businessin Turkey, cited by 14.1% ofrespondents in theWorldEconomic Forum’s GlobalCompetitiveness Report for2012-2013. Turkey ranks No. 44

out of 144 countries for financialmarket development in the report.

In the European Bank forReconstruction and Develop-ment’s 2012 Transition Report,Turkey scores between 3-minusand 4-minus on a scale from 1(standards of a centrally plannedeconomy) to 4-plus (standards ofan industrialized marketeconomy) for the developmentof its banking, insurance, privateequity, capital markets andmicro, small andmedium

enterprises finance.Turkey offers opportunities to

develop capital markets, Mr.Tsitsiragos says. “The financialsector has done well and is wellmanaged.The banks arecompetitive. It’s one of the fewmarkets for investment into thebanking sector—Russian banksand someMiddle Eastern banksare acquiring Turkish assets. Butit will be good for Turkey to focusmore on capital markets tofinance infrastructure,” he says.

FURTHER OPPORTUNITIESLong-term corporate bonds

are starting to be issued in capitalmarkets, Dr. Bakir says, thoughit still doesn’t constitute a largeportion of external fundingfor companies.

Other opportunities in thefinancial sector include retire-ment and insurance, bothunderdeveloped to date. Agovernment program subsidizessavings set aside for retirementfunds, and Turks are takingadvantage, he says. Just as moreTurks are adopting personalretirement savings, they also arebuying insurance. “A lot ofpeople didn’t have propertyinsurance for their homes orcars, or health insurance, so thepotential is huge,” he says.

Special Advertising Section

Ahealthy financialsector has been akey driver ofeconomic growthin Turkey over the

past decade—something fewother countries around theworld can claim.

When the global financialcrisis began in 2008, “Turkishbanks were well-capitalized.Their open positions were atrelatively sound levels andnon-performing loans were atlow levels,” says Caner Bakir,associate professor of interna-tional political economy at KoçUniversity in Istanbul.

Turkey’s bank-capital-to-assetsratio was 12% last year, a levelthat’s held steady since 2008,according to theWorld Bank. Bycontrast, Germany’s ratio was4.4% last year. Under the Basel IIinternational banking rules thecore capital ratio must be 7%,with certain exceptions.

Turkey’s sole weakness wasits reliance on foreign short-term capital inflows, whichshrank dramatically when thecrisis hit. “Offshore fundingopportunities were limited andthe cost was high,” Dr. Bakirsays. “That was a big challengefor Turkish companies and thebanking sector.”

FOREIgN ExcHaNgE maTTERSForeign exchange dried up.

“Short-term foreign exchangeinflows are very important foreconomic growth in Turkey,” Dr.Bakir says. Turkey’s central bankresponded by injecting liquidityinto themarket through severalavenues. It suspended foreign-exchange buying auctions andlaunched foreign-exchangebuying options; it increasedtransaction limits for commercialbanks in the foreign-exchangedeposit market; it reducedlending rates; it lowered theforeign-exchange reserverequirement to 9% from 11% andit increased export limits. Inaddition, it increased exportrediscount credit limits andrelevant legislation was reconfig-ured tomake it easier forexporters to access credit, Dr.Bakir says.

Meanwhile, the globaleconomic crisis was reducingdemand for Turkish exports,especially to the EuropeanUnion.The central bank responded bylowering “its policy rates morethan any other central bank in

emerging markets operating inan inflation-targeting frame-work in 2009,” Dr. Bakir says.“The cuts were vital in affectingeconomic activity.”

At the same time, banks—wanting to avoid risk—scaledback new loans. Loans to smallandmedium-size enterprises(SMEs) declined sharply in theeconomic downturn, thoughconsumer, commercial andcorporate loans shrank as well,he says.

EcONOmy HaS blOOmEdSince 2010, Turkey has

observed increased foreigncapital inflows, bank loans havegrown about 11% a year and asmuch as 16% at the end of lastyear, and the economy hasbloomed, with 9.2% growth ingross domestic product in 2010,8.5% in 2011 and 2.2% in 2012.Profits in the banking sector rose19% last year to 23.6 billion lira($13 billion), according to theTurkish Banking Regulation andSupervision Agency.

The boom in banking is likelyto continue in 2013, thanks tolow interest rates. Turkish banksexpected a rise in demand forretail and commercial loans thisyear, according to a centralbank survey.

Demand for credit is particu-larly strong from SMEs, whichaccount for about 70% of jobs inTurkey.The biggest constraintfor SMEs to grow is a lack ofaccess to financing, says DimitrisTsitsiragos, vice president,

Europe, Central Asia, MiddleEast and North Africa for theInternational Finance Corp., whois based in Istanbul.

Almost 65% of bank loans goto commercial and corporateenterprises, including SMEs,says Dr. Bakir. “The bankingcommunity these days are keento make loans to these enter-prises. SME profit margins are

“It’s one of the fewmarkets for InvestmentInto the bankIngsector—russIan banksand some mIddle easternbanks are acquIrIngturkIsh assets.”

Profits in Turkey’s banking sector rose 19% last year, accordingto the Turkish Banking Regulation and Supervision Agency.

bY makIng JudIcIous cuts and scalIng back on loansthe fInancIal sector has maIntaIned good health

Thenation’sbanking boomcontinues

FOCUS ON TURKEY

The text of this SpecialAdvertising Section waswritten by Catherine Bolgar.

22 | Wednesday, May 8, 2013 THEWALL STREET JOURNAL.

The Quest for Another Mobile PlatformSome of the world’s biggest

handset makers and telecom carri-ers are embracing alternative mo-bile operating systems this year ina quest to become credible chal-lengers to smartphones run by Ap-ple Inc. and Google Inc.

These companies are hoping theycan outgun attempts by MicrosoftCorp. and Research In Motion Ltd.to emerge as a third alternative plat-form to the iPhone and Android de-vices, which have a virtual strangle-hold on the market.

Manufacturers such as HuaweiTechnologies Co., LG ElectronicsInc. and ZTE Corp. are buildingphones for Mozilla’s Firefox OS dueout this year with the support ofseveral major carriers.

The first mobile phone using Ti-zen, a system co-developed by Sam-sung Electronics Co. and IntelCorp., is slated to be unveiled in thethird quarter. London-based Canoni-cal Ltd. is making a smartphone ver-sion of its Linux-based computer op-erating system called Ubuntu, withplans to ship the software on phonesthrough mobile operators in theearly part of 2014.

And Jolla Ltd., a Finland startup,plans to launch a smartphone basedon its own proprietary “Sailfish”platform later this year.

Handset makers and telecom op-erators say diversification is neededto bring down the cost of handsetsand subsidies. Some of them alsofear that market leader Google is be-

coming too dominant.But any new mobile operating

system faces an uphill battle againstdeep-pocketed early movers Googleand Apple. In order to gain meaning-ful market share, a third alternativeneeds to earn the support of handsetmakers, carriers and app developers.

Even some executives of handsetmakers that are supporting alterna-tive operating systems such as Fire-fox privately express some skepti-cism.

The alternative platforms mustbe able to attract enough softwaredevelopers to create good native ap-plications for the devices—some-thing even BlackBerry and Microsofthave been battling to achieve.

“Adopting a new platform is likean insurance policy and successisn’t guaranteed,” said one executiveat a handset maker.

For years, Samsung and NokiaCorp., two of the world’s biggesthandset makers, invested in theirown operating systems with littlesuccess despite their scale and rela-tionship with carriers because theyweren’t able to attract developers tocreate good applications.

Nokia’s Symbian and Samsung’sBada had unfriendly user interfaces,slow browsers and they didn’tseamlessly sync with other devices.As a result, Nokia ended up drop-ping the Symbian platform in favorof Microsoft’s Windows-based de-vices. Samsung plans to integrateBada into Tizen.

“If Microsoft with almost unlim-ited resources can’t break in, it’s go-ing to make someone think twice,”

said Gartner analyst Hugues de laVergne.

Last year, Android and Apple’siOS accounted for 87.6% of the 722.4million smartphones shipped world-wide, up from 68.1% in 2011, accord-ing to data from market-researchfirm IDC.

Samsung is the single-biggestmaker of Android smartphones andwill continue to use Google’s soft-ware for its phones. But J.K. Shin,co-chief executive of Samsung, saidthe company is also open to otheroperating platforms like Tizen togive consumers and telecom opera-tors more flexibility.

To improve its user interface andsoftware for Tizen, Samsung hasbeen luring app developers andsoftware engineers from overseasincluding India, Mr. Shin said.

Canonical product manager Ri-chard Collins said that Ubuntu has agrowing developer community andit supports native apps.

He said Ubuntu makes it quickerand easier to find apps and contentthan other smartphones by swipingfrom the screen edges rather thangoing in and out with the home but-ton to find and switch applications.

Canonical also has a partnershipwith Qualcomm Inc. to launch a de-vice that will use the U.S. company’schipsets.

“We want to offer a viable, non-fragmented alternative to Androidwhere both mobile operators andOEMs have a greater degree of flexi-bility for both service and user inter-face customization,”Mr. Collins said.

Mozilla says lower costs are akey motivation for the new ecosys-tems. While the developed worldhas deep penetration of smartphoneuse, that isn’t yet true in emergingmarkets and having an accessibleprice point will be important.

“Several billion people are goingto come online in the next few yearswith their first smartphone,” saidMozilla Chief Operating Officer JaySullivan. The organization expectsFirefox OS devices to launch thissummer, first in Colombia, Poland,Spain and Venezuela.

Firefox is based on HTML5 tech-nology that is used on many web-sites and allows easier integration

with the mobile browser.Tizen and Ubuntu also use

HTML5 in their development, some-thing that should allow applicationson both operating systems to be in-teroperable. More important,HTML5 removes a layer of softwarefrom Android, said Mr. Sullivan, andthus drives down the cost of hard-ware needed to run it.

Another entrant, Jolla, says its‘Sailfish’ platform is a second-gen-eration operating system like Black-Berry’s BB10 and is easy to use be-cause it has a gesture-based userinterface and is designed to avoidpatent litigation.

“Android is open and can beused by licensees and the user in-terface can be modified, but thesemodifications are not supported byGoogle’s release,” said Jolla Chair-man Antti Saarnio. “Sailfish is de-signed to support the business part-ners’ business models.”

Jolla, established by formerNokia engineers, set up a HongKong office last December and isaiming to expand in China withmid-to-high end smartphones.

“In the short term, these newmobile operating systems will notmake a significant dent in the mar-ket,” said Ramon Llamas, researchmanager at IDC.

“But from a long-term perspec-tive, I expect Android to feel morepressure…and until Apple reveals alow-cost iPhone, other operatingsystems are going to be in a positionto take share,” Mr. Llamas said.

—Amir Efraticontributed to this article.

BY YUN-HEE KIMAND THOMAS GRYTA

BUSINESS & FINANCE

Source: IDC The Wall Street Journal

Phone WarsGoogle’s Android and Apple’siOS software power the majorityof the world's smartphones

ANDROID

IOS

BLACKBERRY

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20

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SYMBIANWINDOWSPHONE/WINDOWSMOBILE

OTHERS

2011 2012

MicrosoftTriesReboottober.

Microsoft’s willingness to shiftstrategy on Windows 8 is a test forMicrosoft Chief Executive SteveBallmer, who placed a high-profilebet on a computing philosophy thatPCs, tablet computers and smart-phones should share common ele-ments, style and underlying soft-ware.

The hiccups for Windows 8, how-ever, have spotlighted the some-times-awkward fit when a softwareis grafted onto both a tablet com-puter used for watching movies andsurfing the Web, and on a 27-inchdesktop computer primarily forworkplace functions. Microsoft rivalApple Inc. has different software fortablets and for computers, believingthe tablet is a separate computingcategory altogether and it shouldn’ttry to be a PC in a different guise.

As part of a wave of changes Mi-crosoft is planning in comingmonths, Ms. Reller also outlinedhow Microsoft is working on helpingpeople overcome obstacles to learn-ing a dramatically revamped soft-ware, altering the shopping experi-ence for consumers, getting more ofpeople’s favorite apps available forWindows 8, and making sure awider array of Windows 8 comput-ing devices will be on sale.

Ms. Reller said what Windows 8users and retailers have said formany months—Windows 8 is a bet-ter experience on touch-screen com-puters—and vowed that Microsoftwill put all its weight behind touch-screen devices. But Ms. Reller con-ceded Microsoft missed a sales op-portunity by not having enoughtouch-screen Windows 8 devices outof the gate.

“If we could have done a better

Continued from page 19 job accomplishing that in the holi-day launch or in the selling seasonfollowing, that certainly would havemade a positive difference,” Ms. Rel-ler said. She said Microsoft has beenhaving discussions with PC makerssuch as Dell Inc. to help them figureout what devices should get themost attention.

Microsoft also missed a salesboom of the small tablets that sud-denly became popular with consum-ers last fall. People familiar with Mi-crosoft’s product plans have said thecompany didn’t anticipate the riseof sub-8-inch tablets, which com-prised nearly half of the tablet mar-ket in the fourth quarter, accordingto IDC.

Ms. Reller in the interview saidWindows technical staff responded“awfully darn fast” to the surge ofsales of devices such as GoogleInc.’s 7-inch Nexus tablet and Ap-ple’s 7.9-inch iPad Mini.

Ms. Reller declined to discussMicrosoft’s plans for more home-grown computing devices in addi-tion to two models of its Surfacetablet-style computer introducedsince October. The Wall Street Jour-nal has reported Microsoft is work-ing on a new lineup of its own de-vices including a 7-inch tablet.

For the updated Windows soft-ware, Microsoft plans two updatesin coming weeks.

First up will be details aboutpricing, packaging and an officialname to replace the Blue code name.The new software will be availablelater this year in time for the holi-day season, Ms. Reller said.

A second Blue update will ex-plain the technical vision, addresscustomer feedback about Windows8 and outline options for new typesof Windows 8 machines, she said.

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