Apr 202015
 
Local village

One of the tech buzzwords, or acronyms, a few years back was SoLoMo – Social Local Mobile. In reviewing the slides for the Future Proofing Your Business presentation next week, the term came up in one of the notes.

It’s interesting look at the fates of the three different concepts over the past few years; mobile has boomed and redefined computing and social has become big business with Facebook growing into a hundred billion dollar company.

Local though has struggled with Google, Facebook and a host of smaller and newer startups struggling while the Yellow Pages franchise dies. Despite the power of maps and geolocation, local just isn’t doing as well as the other two.

This could be down to the difficulty in harvesting the massive amounts of disparate data available to any service trying to draw an accurate picture of what’s in the neighbourhood.

Google Places tried to standardise that information for local businesses but the complexity of the service and its opaque, arbitrary rules meant adoption has been slow and merchants are reluctant to update details in case they fall foul of the rules.

Local services’ failure to take off has also had a consequence for the media as its in hyperlocal services that publishers have possibly their best opportunity to rebuild their fortunes.

That failure to properly harness mobile has also hurt merchants as many local operations are struggling to find useful places to advertise given Google Adwords and Facebook can be extremely expensive places to advertise.

So the mobile space is still ripe for a smart entrepreneur – a new Google or Facebook – to dominate.

Feb 152015
 
Networks and computers connecting to the web

Tech journalist Kara Swisher has a twenty-five minute interview with President Obama on his relationship with the technology industry and Silicon Valley, it’s an interesting snapshot on how the United States sees its role as custodian of the internet.

In talking about European agencies’ efforts to reign in the power of companies like Google the President is dismissive; “we have owned the Internet. Our companies have created it, expanded it, perfected it, in ways they can’t compete. And oftentimes what is portrayed as high-minded positions on issues sometimes is designed to carve out their commercial interests.”

Obama is absolutely correct to say the Internet currently belongs to the United States, it was the US that developed the technologies and built the initial infrastructure for the global network in a similar way it did for the GPS system.

The internet probably won’t remain the US’s sole domain as China, Indian, Russia and other powers find control of the global communication network resting with the US isn’t in their interests and develop work arounds or rival technologies.

Just as Spain and then the English once dominated the world’s shipping and communications, it may well be the US’s dominance of the Internet is not permanent.

Feb 012015
 
apple-iPhone5s-5Up_Features_iOS8_PRINT

Last week Google and Facebook announced their quarterly results with the search engine giant continuing its worrying slowing of advertising revenue. The respective changes of the two online services show how online advertising is changing.

While Google slows, Facebook is showing accelerating growth for its advertising, driven mainly by mobile users, illustrating the shift in internet usage from desktops to smartphones.

In its 2014 New Digital Consumer report, market research company Nielsen observed that US consumers in 2013 were spending more time accessing the internet on their smartphones than on personal computers; PC use had fallen seven percent to 27 hours a week while mobile use had surged 40% in 2013 to 34 hours.

Television still remained dominant with the combination of live and time shifted TV viewing making up 144 hours of the average American’s week, although it did fall slightly.

Nielsen-time-spent-per-device-2013

Those figures are a year out of date and there’s no doubt the numbers have accelerated since then. One of Tim Cook’s triumphs at Apple has been the release of the iPhone 6 and the larger form factors in the current generation of smartphones is a response to consumers’ demand to watch video on their devices.

Bigger Android, Windows and Apple smartphones will only seen even more people using their mobiles to watch video and surf the web.

Which puts Google’s predicament in sharp focus; we are definitely in the post-PC world yet their revenue still overwhelmingly comes in from desktop users while Facebook’s is increasingly coming from mobile consumers.

A strength Google has is that its revenues still dwarf the social media upstart’s – Google’s income is currently six times greater and its gross profit margin doubles that of Facebook’s – giving it plenty of leeway to change.

The question is where do the new revenues come from? Probably the biggest opportunity Google missed was in replacing the Yellow Pages franchises with their own local small business listings with Google Your Business (aka Google Place and Google Plus for Business) being lost in a confused and bureaucratic corporate strategy.

Compounding the problem for Google in the small business space is Apple’s entry and while Apple Maps is no contender against Google’s far superior product, an integration with Apple Pay would give Apple far more rich data to enhance listings with – not to mention more of an incentive for merchants to sign up.

With the changing web, Google are going to have to change as well. If advertising is going to remain the mainstay of their business then the company needs to find a way to capture smartphone users.

It could be worse however, a report from consulting firm Strategy Analytics estimates print media’s share of advertising revenue fell another seven percent this year. Time is running out for newspapers.

strategy-analytics-share-of-advertising-revenue

While print is ailing, the advertising battleground is mobile digital although TV still dwarfs the market. How this evolves in the next five years will define the next generation of media tycoons.

Jan 312015
 
google-larry-page-sergei-brin-driverless-car

The one factor that saw Microsoft become the biggest computer software company was the rise of the personal computer, similarly the decline of the PC has seen Microsoft stagnate.

One of the companies that benefited from the forces that pushed Microsoft into stagnation was Google and now it appears they could be suffering the same fate.

Yesterday Google released their quarterly results which showed the rate of growth in online advertising is slowing, which is a worry for the company as internet marketing accounts for 90% of the firm’s income.

Like Microsoft, Google has to diversify. Whether it’s the internet of things, smartphones, apps, driverless cars or something else remains to be seen but the pressure is building. Should the shift to mobile or other advertising mediums accelerate, Google could be looking at a declining market and the same problems as Microsoft.

Jan 102015
 
we need to treat chinese markets carefully

Today’s links have a distinctly Chinese flavour around them with a look at how the country’s smartphone manufacturers are coming to dominate their market, Tencent’s plans for global domination and how property developers are looking to the internet to save their falling sales.

Uber and Microsoft make their regular appearances to round out the links in their changes to billing and security.

Chinese property developers turn to the web

Faced with declining sales, Chinese property developers embrace – the Internet!

How Chinese smartphone makers are beginning to dominate the market

The rise of China’s smartphone makers: 10 of the top 17 smartphone manufacturers now come from China.

An interview with Tencent

Business Insider has an intriguing interview with one of the VPs of Chinese internet giant Tencent.

In his Q&A, S. Y. Lau discusses how Chinese communities are seeing their incomes rise due to the internet. One of the famous case studies of connectivity are India’s Kerala fishermen who used SMS to arbitrage their market. We may be seeing a similar story with Chinese tea farmers.

Microsoft restrict warning of patches to paying customers

In a short term money grabbing exercise, Microsoft have unveiled a plan to only inform enterprise customers of upcoming security patches. My prediction is this won’t last.

Uber cuts prices

Car hiring service Uber has cut its fares in thirty US cities while guaranteeing drivers their incomes. This is probably a move to keep competitors like Lyft at bay.

Oct 282014
 
twitter-headquarters

Twitter yesterday released its third quarter 2014 results which saw the stock drop a stunning thirteen percent in the half hour after the announcement.

For Twitter’s management and shareholders the worrying thing about the stock drop is the result was in line with analyst’s expectations, the shares fell because its clear the service isn’t getting the traction investors believe is necessary to succeed online.

Investors however have only themselves to blame; as a business Twitter is simply not worth it’s thirty billion dollar stock market capitalisation; it may be worth five billion, it may be worth ten but it’s desperately overpriced at its current prices.

Zuckerberg’s curse

Almost all social media services, and many tech startups, are suffering the curse of Mark Zuckerburg — Facebook’s success has led investors to believe that all online businesses should be valued in the ten of billions.

Making matters worse, Facebook’s billion dollar purchases of Instagram, Oculus VR and WhatsApp have baked the expectation of huge valuations into the startup community. Now every service with a modest user base believes it’s worth something similar to WhatsApp’s $19 billion.

The worry is that companies like Twitter carry out dumb and ill advised things to emulate Facebook and maintain its overvalued stockprice which will damage both their brands and customer base.

For many of these social media services it might be worthwhile admitting that they aren’t Facebook and accept they are a niche product.

It may well be those niches are more profitable than being a mass market product and the idea that online success involves huge takeup is just another relic of the Twentieth Century broadcast model.

Unfortunately while Facebook dominates the social media market and Google continues to draw most of its revenue from online advertising, the wild over valuations and flawed business models will continue.

Aug 242014
 
Webvan-home-delivery

At the peak of the dotcom mania in 1998 delivery services were all the go, those days are back reports Claire Cain Miller in the New York Times.

“We’re really well funded, so that is not something we’re as worried about,” Aditya Shah, Instacart’s general manager says. “Growth is the most important factor.”

This is the classic Silicon Valley Greater Fool model, where the aim is to get as many customers as possible to make the business attractive to a cashed up large corporation.

It might work, but the odds of being an Amazon or Salesforce – both companies have barely made a profit in the decade and a half they’ve been running – is unlikely.

One of the big problems is that delivery doesn’t scale, the ‘last mile’ problem of getting the goods to the customer remains the most complex and expensive part of the process.

Drones may solve the labour cost problem and sophisticated algorithms from companies like Uber may make the process more efficient but it’s unlikely an ad-hoc delivery service can ever scale to the degree these entrepreneurs project, unlike the post office and courier services where the system is built around predictable delivery routines.

Uber is the company that validated the model of today’s delivery startups, as Miller mentions;

“Meanwhile, venture capitalists joke that every other entrepreneur they meet pitches an “Uber for X,” bringing goods and services on demand: laundry (Washio), ice cream (Ice Cream Life), marijuana (Eaze) and so on.”

It’s hard to see how the current craze of delivery startups will end any better than the Webvans and dozens of other services that soared and crashed in the late 1990s, however business models are changing and it may be one of these will find the formula that works in the new economy.