Mobile Fix: The influence of GAFA
As Google, Apple, Facebook and Amazon all report earnings this week, Simon Andrews, founder of Addictive!, takes a look at how the tech giants are shaping the market.
GAFA all report earnings this week so we’ll look at how they are faring. GAFA is one factor that drives so much of our work – with their huge reach they shape the market for everyone else; people and businesses.
Apple reported first. Despite record sales for iPhones and iPads investors were disappointed by the guidance for the next quarter and shares dropped by around 8%.
The problem Apple has is that people expect them to keep inventing amazing new products. And because it’s been a while since the last one people are getting nervous. And Apple’s institutional secrecy doesn’t help.
We suspect that Apple is poised to announce new products in payments, TV and wearables.
Tim Cook dropped some hints:
“…the mobile payments area in general is one we’ve been intrigued with.”
“We’re working on things you can’t see today.”
“We have zero issue coming up with things that we want to do that we think we can disrupt in a major way… The challenge is always to focus to the very few that deserve all of our energy.”
And there are some clues. On payments they have moved one of their key execs to focus on this space. And on the site Apple TV has moved from the iPod page to its own section and the same status as the iPhone and the iPad.
They are hiring talent from disparate industries and with $159 billion in cash, almost 600 million credit card relationships and an army of devoted fans you would be foolish to write Apple off.
Facebook went next and amazed many. Revenues were up by 76% on the same quarter last year at $2.34 billion – with mobile accounting for 53% – double then proportion of a year earlier.
Growth in daily and monthly active users occurred in all regions and mobile MAUs reached 945 million – mobile DAUs are 556 million. It’s worth flicking through the deck that accompanied the announcement.
Digging into this data we see that in every territory user growth continues and the proportion of MAUs that are DAU also grew – now at 62% – so the much publicised exodus on teenagers isn’t actually happening – although this group is more promiscuous in its use of other social apps.
So Facebook is clearly a mobile business now and after dropping hints about more mobile products has now announced Paper – a standalone mobile app that feels much more content focused. It’s clearly influenced by Flipboard and offers new ways of sharing content. It launches for iOS in the US next week – no news yet on when it comes it Europe or Android. Why they announced it before it’s available is unclear though.
The initial reaction is good and we should expect Facebook to continue to offer discreet apps that do the multitude of things that Facebook offers – especially given the success of the Facebook Messenger app. This plays to the clear issues around navigation in mobile – a separate icon on the home screen is probably more efficient that searching within the app.
The initial version doesn’t appear to have any advertising, so seeing how they add that will be interesting. And it looks like video ads on mobile Facebook are imminent in the UK – a one-off pop-up offers you the option of restricting the silent autoplays to when you are on WiFi by adjusting your settings.
If you want more background on Facebook this interview with Zuck is worthwhile.
Even before announcing their results Google have been busy this week. They paid $400 million for London start up Deep Mind, underlining their commitment to Artificial Intelligence and Robotics. As they use their deep pockets to buy up business focusing on this area, one of their people said that Google employs “less than 50 per cent but certainly more than 5 per cent” of the world’s leading experts on machine learning.
And that’s before the Deep Mind acquisition. They hadn’t released any product but were apparently working on a better recommendation engine for e-commerce, image search and games.
They then surprised everyone with the sale of Motorola to Chinese tech firm Lenovo for $3 billion – which means they paid just $4 billion in total for all the patents that Motorola had. In their time Google have revitalised Motorola and the product line is now not bad. With the focus of Lenovo behind Moto, Google may have created an effective competitor for Samsung and rebalanced the Android ecology.
When the results did come out the Motorola sale made sense – the losses for Motorola had continued losing $384 million in Q4. Otherwise the figures were good beating estimates in everything but earnings per share.
The surge in the number of clicks bought – largely driven by mobile – compensated for the fall in the cost per click – largely driven by mobile. This suggests that the best way for Google to boost its performance in the next year is to demonstrate the efficacy of mobile clicks – so brands are willing to pay more. We already see initiatives to improve mobile destinations and should expect an increased effort.
Everything Google does is designed to gather data – search, maps, Android, Nest – and no one is better at monetizing data than Google through their ad products. This interview with Susan Wojcicki shows the level of Googles ambition for extending their success into brand advertising. A must read.
Amazon seem poised to move into payments too. Their customer base isn’t as large as Apple, but with 230 million credit card relationships they can have a big influence. And of course the data they get on what people buy offline helps make their online sales smarter. The Kindle is central to the idea and would work as a checkout system. Amazon have already extended their reach online with a pay with Amazon option.
This is an edited and abridged version of Mobile Fix – click here to read the full article on Addictive!’s website