Category Archives: Google

Google’s MVNO ambitions

This is a post I had intended to write a few weeks back, when the Google MVNO rumors first started circulating, but never got around to. With Sundar Pichai’s remarks at Mobile World Congress this week rekindling the topic, I thought I’d finally set down by thoughts on this story. I haven’t been completely silent on this topic – I’ve tweeted about it quite a bit, talked to a few reporters, and discussed it on the Techpinions podcast (skip to 21:35). But I wanted to pull my thoughts together here in a coherent fashion. I’m pasting a transcript of my remarks on the podcast at the bottom of this post, because it sums this up pretty neatly, but I’ll expand a bit on the detail here.

The two rules of MVNOs

If you don’t know much about MVNOs, I’ll give you a quick primer. The first thing to know is that an MVNO is a mobile virtual network operator, which means these companies don’t own their own networks, but instead buy “airtime” (minutes, data etc) on a wholesale basis from those who do. In some markets such wholesale arrangements are mandated and regulated, but in others (including the US), both the arrangements themselves and the pricing are left to individual operators.

All this gives rise to what I like to think of as the two rules of MVNOs:

  • You can never be truly disruptive to the company whose network you’re using, because it always has the power to shut your business down
  • Wireless carriers will never support you as an MVNO unless they believe you can reach a niche or segment they can’t reach as effectively directly, rather than competing directly with them.

Partly as a result of these rules, despite the success of MVNOs in certain other markets, they’ve largely failed in the US, with many going out of business or being acquired by their host network operators. The one exception is Tracfone, which uses several major operators’ networks and targets largely low-end prepaid subscribers most of the carriers don’t want to own directly.

What this means for Google

All of which brings us to Google’s reported ambitions in the MVNO space, which are allegedly based on some sort of cooperation with T-Mobile and Sprint. In addition to the two rules above, the third thing worth bearing in mind here is most carriers’ view of Google. Google is one of the two companies that already has the most leverage over the carriers today, along with Apple. While Apple has arguably been more disruptive to most carriers with its refusal to pre-install carrier software, its direct retail and customer service relationships with many customers, its FaceTime and iMessage offerings which compete with carrier voice and text messaging and so on, Google has already demonstrated that it’s perfectly willing to disrupt carriers’ businesses too. Google Fiber, Hangouts, Google Voice, Google Wallet, Android Pay, Google Maps and other products either have already disrupted or have the potential to disrupt services offered by carriers. With both Apple and Google, carriers are already looking for ways to reduce their dependence on them and to temper their influence and power with end users.

Taking the two MVNO rules and these opinions about Google together, then, we can easily see that whatever Google wanted to do in mobile, the carriers wouldn’t support it unless it:

  • Would be complementary to their businesses
  • Would be relatively small in scale
  • Would not compete directly in any meaningful way with their existing offerings
  • Would not compete directly on price.

Three possible business models

Given all this, ideas about full-blown wireless services from Google make little sense. What makes much more sense is something that’s narrowly defined, targeted and relatively small in the grand scheme of things. Three possibilities I’ve floated are:

  • Wireless connectivity for Nexus devices, the only wireless devices Google sells directly to consumers through the Play store, such that this connectivity would be built in with the purchase, and the customer would only ever deal with Google. This would overcome some of Google’s challenges with getting carriers to carry Nexus devices directly, and fits with the new direction Google is taking with Nexus devices, moving away from the developer focus and towards a broader consumer appeal
  • Wireless connectivity for non-phone devices, such as a successor to the Chromebook Pixel, Android tablets (perhaps Nexus ones only, in keeping with the previous bullet), etc. This could potentially also include Android Wear devices with their own cellular connectivity.
  • Wireless connectivity for smart home, connected car or other non-device applications. With Google’s Nest business, Android Auto, self-driving cars and so on, Google has several non-device businesses which could benefit from direct cellular connectivity as they expand and evolve.

None of these would be hugely disruptive or competitive with carriers’ existing businesses, either because they’re too small or mostly additive to their existing activities. As such, I think each of these is entirely possible as a future for Google’s MVNO. And of course all this fits with what Sundar Pichai said at MWC this week (I’m quoting TechCrunch here in the absence of a formal transcript):

The core of Android and everything we do is to take an ecosystem approach and [a network would have] the same attributes. We have always tried to push the boundary with the innovations in hardware and software,” he said. “We want to experiment along those lines. We don’t intend to be a network operator at scale. We are actually working with carrier partners. Will announce something in the coming months.

This very much appears to confirm the idea that it’s going to be working with devices and software it owns and controls, rather than a more open approach. It also confirms that it’s not a large-scale initiative but rather a focused one. I’m curious to see exactly what it ends up being (it could easily end up being all three of the things I described and more) but hopefully we’ll stop seeing the sort of thing we’ve been reading about Google upending the wireless industry.

Here’s that podcast transcript:

The fundamental challenge of being an MVNO is that you’re buying airtime from the very companies you’re competing with, who dictate the prices and will always structure it and sell it to you in such a way that you can’t eat their lunch… They only do it where they feel the potential MVNO can fill a gap they otherwise can’t fill directly. So in other words they’re expanding the addressable market and not competing with them directly. And this is the biggest question I’ve had about Google: what could they do, that Sprint and/or T-Mobile would be willing to support, that would not go head to head and compete directly against them? That makes me think it’s somehow a niche that they’re going after, and there are a couple of possible options around that: one is that it’s for Nexus devices, so that when they sell Nexus devices through the Google Play store it comes with bundled connectivity with some interesting structure, features and services associated with it… The other is that the Chromebook Pixel was sold with Verizon connectivity, so that’s another angle, that some of their non-phone devices that are data-only devices that would have some combination of WiFi footprint that they could take advantage of plus LTE as needed for them to fall back onto… I just cannot see Google becoming a broad-based mobile operator in the US. It just doesn’t make sense, and it doesn’t make sense that Sprint and T-Mobile would support that either.

YouTube and its alternatives

Eric Blattberg at Digiday has been doing some great work reporting on both some of the newer video initiatives at Facebook and Vessel as well as developments at the current industry powerhouse, YouTube. Eric’s latest piece today is about YouTube’s new effort to clamp down on sponsorships and advertising which bypasses its official ad products, and it’s this that I wanted to cover briefly today. I have two things I want to talk about: firstly, the potential of the newer video platforms; secondly, what Google’s YouTube moves suggest about the company as a whole.

Potential for newer platforms

I’ve been broadly skeptical of some of the newer video initiatives out there – YouTube’s lead has seemed so enormous, its position as the de facto standard for online video so entrenched, that it was hard to see how others could make a dent. Several things are starting to change my mind about this.

Firstly, Facebook’s embrace of video, and especially auto-playing video, has leveraged its massive audience into a very strong position as a video player. I’ve written elsewhere recently about the fact that every major sharing platform slowly migrates from text-based to photo-based to video sharing, but none has pursued this transformation quite as effectively as Facebook. From last month’s earnings call:

Five years ago, most of the content shared on Facebook was text and some photos. Today, it’s primarily photos with some text and video. Over the next five years, we want to keep developing new products and features to help people share the way they want.

Two things have allowed Facebook to make this leap to prominence as a video provider: the massive base of users, an the fact that Facebook is a destination, somewhere users go to spend time, rather than get something specific done. In the process, Facebook has become a massive destination for video, but almost all the video is actually hosted on other platforms. That obviously has cost advantages for Facebook, but it means that it doesn’t own the content, and therefore can’t monetize it effectively. It also means that engagement around videos on Facebook is fragmented, with popular YouTube videos attracting millions of comments scattered across hundreds of thousands of different user shares of the same video. This is starting to change, with ABC News, The Young Turks and others launching videos directly to Facebook rather than exlusively through YouTube. I think Facebook is finally in a position to be the first really large-scale platform to seriously challenge YouTube for dominance in video. The biggest challenge will be how to incorporate advertising into videos when they auto-play – pre-roll clearly isn’t the answer, but what is?

The other thing is that YouTube, with moves such as those Digiday covered today, is actually making it tougher for content creators to monetize on YouTube in the way they see fit. Videos on YouTube generate tiny amounts of money per view for content creators, and one of the ways they’ve overcome this challenge is through sponsorships. That’ll now be banned under YouTube’s new terms of service regarding advertising. At the same time, Vessel, AOL and others are targeting YouTube content creators with an emphasis on better monetization of their viewership. I’ve been skeptical of these efforts, but YouTube is playing right into their hands with some of these moves, which makes me more open to the idea that it might actually start to suffer as a result of competitive inroads from Facebook but also these smaller platforms.

What all this says about Google

Which brings us on to what this all says about Google. YouTube’s management must understand the risks associated with these moves, so why are they doing this? The only thing I can think of is that YouTube’s revenue growth has become so critical to Google’s overall performance that they have to keep squeezing harder and harder to get more money out, despite the longer-term strategic costs. Because Google doesn’t break out performance by business, we have essentially zero visibility into YouTube’s performance, but it’s been one of the strongest growth drivers for the company for years, and as the other parts of the business face increasing headwinds, it’s all the more important that YouTube continue to deliver strong growth.

On the positive side, YouTube’s management under Susan Wojicki is clearly thinking about how best to monetize much of the usage on the site that currently goes unmonetized or under-monetized. That includes YouTube Music Key and the work YouTube is apparently doing on building subscription models for content creators. The challenge is that almost all the moves YouTube is making are either content-creator-friendly at the cost of being user friendly (charging for content users have been receiving for free) or hostile to content creators. There’s very little that YouTube is doing which seems likely to please both users and content creators. I’m curious to see what else we see from YouTube in the coming months, but my worry is that Wojicki has been sent in to crank the handle on revenue in the short term and that this will have long-term strategic costs as other video platforms snatch away both viewership and content creators.

Quick thoughts: Another way to think about Nest

A couple of good blog posts from other analysts this morning triggered a thought in my mind about Nest.

The first of the two blog posts is from my fellow Techpinions contributor Ben Bajarin. I recommend reading the whole thing, but here’s the key thought:

Apple’s customers are higher value customers and their growing installed base means they are amassing one of the largest, if not the largest, installed base of premium customers on the planet. This observation has some striking implications…

He goes on to talk about two of the implications, and I think the insight there in  particular is great. One of them is the impact this has on the competition, among which of course we find Google, which owns the mobile operating system that’s mopping up the vast majority of the non-Apple customers.

Something else I read this morning (a post from Benedict Evans that’s really about something completely different) prompted me to think about this in the context of Google’s Nest acquisition. I’ve been thinking about Nest primarily as Google’s strategic play in the smart home space, and as the hub and vehicle for the rest of what Google will do in the home. And I think that may well be in large part what that Nest acquisition is about.

But thinking about Nest in the context of Ben Bajarin’s piece made me see Nest in a different way. Think about Nest for a minute: its characteristics as a product, the people it’s likely to attract, even the people who work there. This is a very Apple-like product, made by a former Apple executive, and I’ve always said that Nest was a much better fit at Apple than at Google. It’s even sold in Apple stores.

What if Nest is at least in part about capturing those very lucrative and attractive Apple customers without having to convert them to Android? What if what Google is building with Nest is at least in part a concession that Android and phones based on Android aren’t likely to attract these customers, but by playing in a completely different space – the smart home – Google can in fact attract those customers? And once it has them there, perhaps convert them to other aspects of the Google ecosystem, which after all is where Google really makes its money? There’s no particular reason why Google needs to have all its customers on Android anymore – it’s served its function of preventing Microsoft and Apple from dominating the mobile world. And of course, there’s been lots of talk about even Google’s services making more money on iPhones than on Android. What if Google could establish a different beachhead in devices that’s not dependent on first converting people to Android? What’s fascinating about Nest is that it’s about the only recent Google initiative that’s not about reinforcing Android as a platform – Android Wear, Android Auto and Android TV are all about extending Android specifically into new domains rather than simply spreading Google services into new domains.

I’ve no idea if this was actually part of the thinking behind the acquisition of Nest – most likely, like other acquisitions, it wasn’t about a single strategic objective but rather several. But it would certainly be an interesting response to the emerging reality that Apple has captured the vast majority of the most valuable customers within its ecosystem, and trying to win them back through phones seems to be a losing strategy.

The big downside to this, of course, is that Google has very deliberately kept Nest somewhat at arm’s length from the rest of the company (a point Benedict raised in his post). But this strategy only works if Google continues to build links between the two, as it’s already begun to do with Google Now integration. With Tony Fadell now overseeing Glass as well, there’s obviously even more linkage between Google proper and the Nest team, and it’s another sign that Fadell might be asked to oversee more Google devices and pursue the same strategy.

Why I’m more bullish on Facebook than Google

This is mostly a Facebook earnings post in disguise – part of my series on major tech companies’ earnings. Google reports this afternoon and it’s my hope to get this out before their results hit the wires. I did a big deck full of charts and comparisons for Facebook for subscribers – sign up or read more about that offering here.

Google and Facebook are the two largest online advertising businesses in the US, and as such face similar market conditions. But they’re coming from very different places, while managing the challenges in very different ways. I maintain that the best way to look at Facebook’s growth potential (and Twitter’s, incidentally) is through three key metrics:

  • User growth: measured in growth in monthly active users (MAUs) year on year
  • Engagement: growth in DAUs as a % of MAUs
  • Monetization: growth in average revenue per user.

The chart below summarizes the state of affairs with regard to Facebook according to these three metrics:

Facebook core growth leversAs you can see, two of the three look very healthy over the longer term, with engagement growing steadily and monetization increasing rapidly. User growth has slowed a little from past rates, but Facebook still adds over 150 million new MAUs every year, and the number’s actually begun to tick up slightly. Engagement stalled a bit this past quarter, as DAUs appeared to plateau at 64%. That was driven by slight declines in Asia and the Rest of World segment, along with flat numbers elsewhere. But it’s a one-quarter phenomenon for now, so we shouldn’t get overly worked up about it. We’ll see what happens next quarter. Engagement is, at any rate, merely a means to an end, as one of two drivers of monetization, which is doing fine. In short, Facebook’s core levers for growth are going well.

At the same time,  this can’t go on forever:

  • Facebook’s user growth can’t keep going at the same rate forever – almost all services eventually start reaching saturation of the addressable market, and with 60% penetration of the total population and 75% penetration of the mobile population in the US and Canada, it’s already bumping up against a ceiling in some regions. Elsewhere, notably in Asia, penetration remains low, but isn’t growing rapidly either.
  • Engagement can’t keep going up forever either – some users will always be occasional rather than regular visitors to Facebook’s properties, and they can only spend so much time on the core Facebook experience in a day.
  • Monetization will start to slow eventually too – both the limits to overall ad spend and increasing competition from other companies in mobile advertising generally and app-install ads specifically will start to eat into Facebook’s growth prospects.

I believe Facebook is aware of all these things, which is why it’s invested in several new businesses, among them WhatsApp and Instagram in the messaging/photo sharing space and Oculus Rift in the interfaces business. It’s also broken Facebook Messenger out as a separate service, which has been controversial but seems to have paid off in spades. Here are the user numbers for the three messaging apps:

Facebook messaging MAUsNone of these is generating significant revenue today, but as Mark Zuckerberg said on yesterday’s earnings call, they all have potential to to do so in future, and Facebook will be very careful about turning the profit spigot on for each of them in the meantime. In other words, Facebook has invested for the future, and has several products waiting in the wings which can start to generate additional revenue (mostly through advertising though potentially through payments or other streams) when they’re needed to shore up overall growth.

Perhaps the most heartening thing about Facebook, though, is that it’s been so clear about two things: the strategy behind these products, and the metrics associated with them. The underlying drivers behind both Facebook’s business today and its business tomorrow are clear for all to see, and we’ve just looked at them. You can draw different conclusions about where those trends might be going longer term, but at least you’re looking at the same data Facebook is looking at as an outsider, and especially as an investor.

This is where Google comes in. I’ve written elsewhere, and especially in a couple of recent pieces on Techpinions, about the fundamental risks to Google’s business in the near term. But I’m more worried than anything else about the fact that Google (a) doesn’t provide good enough transparency into the drivers of its current business, and (b) hasn’t articulated a clear vision for how and when its equivalent investments for the future will pay off. It is neither providing outsiders (including investors) with the understanding they need of how its current business will develop, nor is it telling a compelling story about how its business will evolve over time.

Meanwhile, there are significant headwinds coming up for Google: despite its efforts to shore up its control of Android, it’s arguably in greater danger than ever of losing control over this core platform. Between Chinese OEMs, Amazon and Samsung each customizing the platform to meet their own needs, Cyanogen threatening to take it away, and Microsoft investing in Cyanogen, there are several threats to Google’s ability to continue to control and drive revenue through Android. Internet growth is slowing worldwide, and the new users who come online will have and command far less spending power, while gravitating towards local alternatives and app rather than web models in their usage. Google really doesn’t seem to have an answer for any of these. So far, their earnings are holding up (we’ll see what happens today), but I think it’s only a matter of time before these cracks begin to show.

For those interested, below is a screenshot of the Facebook deck, with some of the metrics described above and many others. Again, click here to find out more or to sign up.Facebook deck overview

Visualizing cross-platform development

Much has been made recently of Microsoft’s shift from a Windows-centric worldview to a cross-platform approach to the development of applications and services. Sometimes, efforts like this are difficult to visualize, so I wanted to take some time to analyze the actual numbers around all this in an attempt to provide a visualization of the degree to which Microsoft has transformed itself. In the process, I’ll highlight a few other points too.

First, the overall numbers

Let’s start with some numbers. These numbers represent the number of apps each of the three major platform companies makes for each of the three main platforms. Specifically, I’m looking here at installable apps, not those that come pre-installed on phones (there is a slight issue here with the fact that Google offers many of its pre-installed apps in the Play store too, but for the sake of simplicity I’ve ignored that). The table below summarizes the current state of affairs (I’ve broken out the mobile and PC operating systems to provide additional granularity):

Cross platform development tableNow, let’s drill into some specific companies.

Apple – still living by Steve Jobs’ maxim

There’s room for debate about the extent to which Apple still reflects Steve Jobs’ values and policies, and how far it has moved beyond those. One area where it seems to have stuck pretty closely to Steve Jobs’ philosophy is cross-platform development. One of my favorite quotes on this topic comes from Walter Isaacson’s biography of Steve Jobs, in which Jobs described his attitude towards developing an iTunes app for Android thus:

We put iTunes on Windows in order to sell more iPods. But I don’t see an advantage of putting our music app on Android, except to make Android users happy. And I don’t want to make Android users happy.

That perfectly encapsulates Steve Jobs’ philosophy, and Apple’s approach in general, towards cross-platform development: do it when you have to, to enable you to sell devices to people not using Macs, but don’t do it for its own sake. Apple has remained true to that maxim so far under Tim Cook – the chart below has the relevant cells highlighted:

Apple cross platform developmentThe key conclusion here is that Apple has focused very much on its own platforms, developing a little over a dozen apps for both iOS and OS X beyond those pre-installed on devices, but barely touching the other platforms at all. Where it does so, it’s exclusively to support major Apple services for iPhone and iPad users who also use Windows: iCloud Drive and iTunes are two of the three apps, while QuickTime – necessary for playing Apple-generated video files – is the third. Development of Safari on Windows – arguably a departure from Apple’s usual rules for a time – has been discontinued. It’s also worth noting that, even on its own platforms, Apple isn’t developing dozens of apps – there’s a small, focused number, which reflects another key Apple principle: keeping things simple, and focusing on what it does best.

The one thing I’ve left out of the chart above is the Beats Music app. I left it out because it was acquired by Apple, rather than developed in-house, and because I suspect that at some point it will be replaced by something integrated with iTunes in the coming months. When that happens, it will be extremely interesting to watch what Apple does from a cross-platform perspective. Will it merely strictly honor its promises at the time of the acquisition and keep the old Beats app around for whoever wants to use it on Android, while developing an iTunes-branded alternative that’s more exclusive in its reach? Or will it use this as an opportunity to reinvent both Beats and iTunes while launching an Apple app on Android for the first time?

Google – developing for the platforms that matter most

Google’s incentives when it comes to cross-platform development are quite different, because its revenue and profits are driven by having the broadest possible audience and not by preferring its own platform. It also has a much more diverse and diffuse set of apps and services it makes available on all platforms though the web. Another favorite quote is this one from Andy Rubin (as quoted by Steven Levy in his book In the Plex), which somewhat summarizes Google’s philosophy:

We don’t monetize the thing we create… We monetize the people that use it. The more people that use our products, the more opportunity we have to advertise to them.

As such, Google develops apps very broadly, not just for its own platforms, but for Apple’s too:

Google cross platform development

Google actually offers more installable apps for iOS than Apple itself does. In fact, it’s likely that Google is among the most prolific developers for iOS around. All of Google’s core services are now available in some form on iOS, though it hasn’t made the same investment in apps on OS X, largely because these services run perfectly fine in a web browser. Google does make a handful of native apps – such as Picasa, Google Drive and Google Earth – available on both OS X and Windows, but neither platform has been a significant source of investment for Google. Meanwhile, its own Chrome OS has almost 40 apps available, largely because these are simply packaged websites.

Microsoft – broadest cross-platform development

To return to the point that sparked this post, Microsoft clearly has the broadest approach to cross-platform development of the three, developing significant numbers of apps for its own platforms but also those of Google and Apple. Within the last few weeks, Microsoft has announced its intention to add the full version of Office to the list of apps it offers on Android, and last week it released a slew of new MSN branded apps on iOS. The Microsoft column highlighted below really brings out quite how pervasive the company’s presence is on the other two companies’ platforms:

Microsoft cross platform developmentMicrosoft’s count of apps for its own platforms is skewed quite a bit by the large number of Xbox-branded games on Windows and Windows Phone, but there are also huge numbers of legacy enterprise apps on Windows in particular. But it also has almost 50 apps on iOS and over 50 on Android already, and the number looks set to grow even further. It’s worth noting that this hasn’t all happened in the past year: Microsoft has, in fact, been doing a lot of this for quite some time, so it doesn’t just reflect some Nadella epiphany. But the number and nature of those apps available on Apple and Google’s platforms has begun to increase under Nadella, and I think this will continue.

Windows – the platform only a mother could love

All of which brings us to the lonely last rows in the table, those representing Microsoft’s two platforms. While Microsoft develops for all three platforms, Google develops only for iOS and its own platforms, and Apple keeps to itself. Windows and Windows Phone are the platforms that get the least love from the other two, with hardly any apps from either Google or Apple:

Windows cross platform developmentThis is particularly remarkable because Google’s objective, as stated above, is to get its services in as many users’ hands as possible. It is likely that the calculus behind Google’s absence from Windows Phone in particular is twofold:

  • First, the investment needed to bring key services to Windows Phone is such that the current user base doesn’t justify the time and expense
  • Second, there may be a strategic element to withholding Google’s services from its traditional rival, even if Apple seems a more direct threat in many ways.

There may also be an element of leaving Windows Phone to the Microsoft-centric users, though it’s clear from the number of ersatz apps in the Windows Phone store that there’s strong demand for Google apps on the platform. More broadly, though, it’s likely that the first of those two bullet points is the real answer: it simply isn’t worth Google’s time and money to develop for a platform with very small market share and an increasing tendency towards low-end devices. This, of course, mirrors my recent piece on the Windows Phone app gap, and the broader challenge for Windows Phone. And all of this reinforces the need for Microsoft to embrace cross-platform development in the first place: as long as smartphone and tablet users continue to choose platforms owned by the other two companies, users aren’t coming to Microsoft, so Microsoft will have to go where they are, and that’s increasingly on iOS and Android.

Techpinions Insiders post on Mozilla, Google and Apple

Going forward, while I’ll continue to post regularly here, I’ll also be contributing increasingly to the Techpinions Insiders service, which is a subscription-based offering that complements the publicly-available content on Techpinions. Right now it’s $5 per month, and subscribers get lots of extra content for that $5. I highly recommend subscribing.

My first post for the service is a quick take on the news from yesterday that Mozilla is switching its default search engine for Firefox from Google to Yahoo, ending a long-standing relationship. I examine the key data around both search engine and browser market share, as well as the changing economics of Google’s search business, and I also talk about Apple’s slow and subtle move away from Google for search. I encourage you to go take a look (individual pieces may be read for a micropayment of 25 cents).

Oh, and I also have my regular weekly post on Techpinions today, which is about the various lenses through which one can see Google, and the implications.

Techpinions post: Google and Microsoft’s platform problems

My post on Techpinions today is about Google and Microsoft’s platform challenges, which appear very different on the face of it, but actually have a lot in common. Microsoft increasingly wants its third-party services to succeed on platforms owned by (arguably) its two main competitors, Google and Apple. While Google is struggling to compete on a platform it theoretically owns (Android), which has been increasingly co-opted by both official Android licensees and users of the AOSP version of Android such as Chinese OEMs and Amazon. Microsoft’s challenges are particularly stark, and stem in part from the business models it and its competitors employ for key services:

Microsoft competing against freeHead over to Techpinions to read the full post.

 

Techpinions post: potential acquisitions for Apple, Google and Microsoft

This week’s Techpinions column was prompted by a tweet from Alex Wilhelm of TechCrunch, who asked which companies Apple, Google and Microsoft should acquire next. I fired off a quick response, but decided that this would make an interesting post in its own right, and spent some more time drawing up a list. I also added Amazon to the list of potential acquirers just for fun. Here’s what I came up with:

  • Apple – Bose, Broadcom’s baseband business, Yelp
  • Google – Spotify, Jawbone/Fitbit/Withings, Pinterest
  • Microsoft – Here, Foursquare, Everpix/Picturelife
  • Amazon – Hulu, Pandora, Etsy/Shopify.

You can read the full post, which includes my rationale behind each of these choices, over on Techpinions.

Thoughts on Google earnings for Q2 2014

Last quarter, I did a series of posts on big consumer tech companies’ earnings. You can see the full series here. I’m kicking off my thoughts on Q2 earnings with Google, which reported this afternoon. Last quarter’s post on Google is here, and I’ll revisit some of the themes from last time, along with some new ones.

Ad metrics – more detail highlights different trajectories

As promised, Google provided a little more detail on its key ad metrics: growth in the number of paid clicks, and the price per click. Previously, it’s only provided growth numbers for the ad business as a whole, but this time around it broke the metrics down by Google’s own websites (Sites) and third parties (Network). What Google actually reports is quarter on quarter and year on year growth rates, which are all over the place, and so hard to read. I find it makes things a lot more interesting to pick a point in time and then index results back to that point using the sequential quarterly growth rates, as shown in the charts below.

The first chart shows the aggregate rate, which Google has reported for a long time, and I’ve indexed it to Q2 2011, as that’s when the price per click started to fall, a pattern that has essentially continued ever since, although prices have started to flatten in the last couple of quarters:

Google aggregate ad metrics Q2 2014Now, here’s the same indexed approach using the splits Google provided for the first time today. It only provided a few quarters of history, unfortunately, so there’s less context here:
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The three problems with Android Wear

I’ve been using an Android Wear device – the Samsung Galaxy Live – since I picked it up at I/O last week. I’ve tried a number of other smartwatches before now, and it’s interesting to see the differences. As it’s currently constituted, I see three flaws with Google Wear, two of which seem to be pretty fundamental, and one of which should be fixed soon:

Cards are a bad UI for small screens

Cards make a ton of sense on smartphones and tablets and on the web, where they provide useful visual separation between discrete chunks of information, and they work well on Twitter.com, in Google Now on smartphones, and elsewhere. But on a space-constrained screen they really don’t work because they’re a terribly inefficient use of screen real estate. There are several different layers of information in Android Wear, as shown in this triptych:Android Wear triptych 560px

The first screen is what you see before you interact with a card – the card stays in the bottom half, and takes up just a third of the screen. The amount of information presented is extremely limited. If I then interact with the card, I get the middle screen, which is slightly richer but still takes up only half the pixels on the display. If I then swipe, I get even more information as shown on the right. But the card still only takes up half the screen. Compare this with the Galaxy Gear 2, which (though not a paragon of great UI) uses the whole screen to display notifications. This is a minor annoyance with the weather card from Google Now, but it’s really annoying when a notification comes in about a new email, and just a tiny amount of the email shows by default – I almost always have to tap on the small card to make it big enough to have a real sense of what it’s about. The “glanceability” factor just isn’t there.

The cards UI, with its limited use of the screen space, and the rest given over to a background that really adds nothing, is just not a good fit for such a small screen. It’s a great example of the problem with applying a single design language, essentially without modifications, to multiple form factors. It’s a problem that Microsoft has struggled with too in the form of Windows 8, and one that Apple so far seems to have managed to avoid in providing useful integration between iOS and OS X without taking things too far.

Google Now is still too much just in case and not enough just in time

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