Category Archives: Google

Will we persist with two mobile app ecosystems?

By | Apple, Google, Mobile, Uncategorized | 5 Comments

In the Apple App Store and the Google Play Store we currently have two vibrant mobile app ecosystems. Going back a few years the prevailing wisdom was that network effects would ultimately make this a winner takes all markets and that over time users and developers would eventually coalesce on a single platform. That was the lesson we all learned from Windows in the 1990s.

Then more recently people have been saying that both the ecosystems are large enough to be self-sustaining and that Google and Apple have both ‘won’.

That view made sense to me. Both ecosystems were growing and Apple’s dominance at the high end meant that developers mostly built for iOS first giving them sustainability in the face of Android’s faster growth. That’s part of the reason I ditched my long term allegiance to Android and bought an iPhone earlier this year.

Now new data from Apple and Google compiled by Benedict Evans is an early indication that the duopoly might not be stable after all (caveat: this analysis is based on a small number of datapoints and may be subject to large rounding errors).

IOS Growth Slow

The news is that iOS growth looks like it has stopped – Apple App Store revenue has flatlined at $10bn. Meanwhile Google Play Store revenues are continuing to grow fast. Extrapolating the trend lines for the last year suggests that Play Store revenues could overtake App Store Revenues this year.

There are many more Android devices out there and hence the revenue per device is significantly lower on Android, but there too the gap is closing.

For developers gross revenue on the platform and average revenue per device are key numbers and if/when the Play Store passes the App Store on these metrics I expect increasing numbers of developers will choose to go Android first, which will bring users across and further accelerate the growth of Play Store revenues. That in turn will encourage more developers to switch and we may see a repeat of the Windows movie from the 1990s when the winner takes all.

And I will have to switch back to Android.

 

App store discovery a little less broken?

By | Apple, Google, Mobile | 11 Comments

It’s a common refrain that the process by which apps are found or discovered is broken. Discovery and hence download volumes are driven more than anything by ‘app store placement’ and by being ‘featured’, both of which seem to be more down to the whim of Apple and Google than the merit of the app. What we need is an equivalent of Google’s Page Rank, but for apps. That way good apps would float to the top and discovery would be more meritocratic. That would be better for startups who often have great products but lack the resources or the networks to curry favour with Google and Apple.

The current discovery process isn’t completely broken, in that Apple and Google do take the quality of the app and it’s popularity into consideration, but it isn’t right. Consider these stories. Two similar stage startups that we are close to have recently been playing the App Store game with Apple. They both networked hard to get close to the right people at Apple, developed features that Apple suggested they should and then held back release of those features in the hope of getting promoted. One got promoted in a big way (Stylect) and the other got only a low placement in an App Store category with little traffic. Neither knew until the day of the promotion. That can’t be the best way to do things.

However, Apple and Google are both heavily invested in the status quo. Their app stores earn them a lot of money and are a protective moat for their mobile phone businesses. So I’m not expecting things to change quickly. Thus I was surprised to read this morning that app store competition is increasing. Tomasz Tunguz has found that app store volatility has increased substantially over the last twelve months which indicates that new entrants are doing better and that discovery is getting less broken.

That’s a little bit of good news for startups in an area where they don’t usually get much. I like to think that one day we will have an open system on mobile, but until we do life will be harder for young companies than it needs to be and we will get less investment and innovation in mobile than we could.

Space; the next frontier – now at the mainframe computing moment

By | Google, Startup general interest, Venture Capital | 4 Comments

There were two Tweets about satellites in my newsfeed this morning. Usually there aren’t any.

The first was an Economist article about nano-satellites describing how satellites are getting smaller and cheaper. Remember what that did to the computer market? We could well be on the brink of something similarly transformational in satellites. Nano-satellites weigh as little as a few kilos and are ‘thousands of times cheaper’ than their larger brethren, and launch costs are falling rapidly too (the article doesn’t provide detail on the speed with which launch costs are falling, but I guess they correlate with weight). Nano-satellites are less capable, or course, but can still do useful tasks.

And as with computers declining cost has resulted in increased unit volumes. Around 1,000 large operational satellites are circling the earth, and in the last year they have been joined by around 100 nano-satellites. And 1,000 more nano-satellites are expected over the next five years.

In rough summary, costs have fallen by around three orders of magnitude and number of new satellites in the next five years will be roughly equal to total the number previously launched (forgetting about satellites that have been launched but are no longer operational).

If I was to map this to the computing industry I would say costs and unit volumes are comparable with somewhere in the late 1950s, the first decade of the mainframe era. In 1953 it was estimated there were 100 computers in the world.

You have probably guessed where I’m going with this – we could be on the cusp of a wave of satellite based innovation, and if so there will be startups… I don’t think satellites will be as transformative to society as computers, but it could nonetheless be powerful. It’s true that it’s difficult to envisage what that transformation might look like, but then the same was true of computers in the 1950s. It wasn’t until the 1970s that Bill Gates said he wanted to put a computer in every home, and even then people thought he was crazy.

The second piece of news was that Google has bought nano-satellite company Skybox for a rumoured $1.2bn. It seems they are thinking along the same lines I am and that space is the next frontier. (I wanted space to be the final frontier, but if space is next, then I think the human body, or maybe human brain, will be the final frontier.)

$40bn wiped off newspaper ad revenues in ten years

By | Google, Startup general interest | 3 Comments

Newspaper ad revenues

In 1942 Joseph Schumpeter wrote that creative destruction is an ‘essential fact of capitalism’. Old ways of doing things need to fall aside to make space for more productive methods. Another essential fact of capitalism is that it drives an ever increasing pace of change, and we see these two essential facts coming together in the chart above which shows $40bn in revenues disappearing from the newspaper industry in little over ten years – an amazingly rapid collapse by historical standards.

That money hasn’t disappeared, it’s been taken by something else, and the good news behind this chart is that innovators somewhere have captured this $40bn and harnessed it for the good of their companies. Some of those innovators are in the news industry, but most will be in other industries entirely.

As the pace of change and creative destruction continues to increase we will see charts like this more and more often. Banking revenues is one I’m particularly looking forward to, however, it won’t just be old world industries that suffer. Operating systems and personal productivity software are two newer categories that are suffering the same fate and I wouldn’t be surprised if search advertising goes the same way before too much longer.

Google slashes cloud prices

By | Amazon, Google, Startup general interest | No Comments

I love Amazon and AWS for the way they keep cutting their prices and for the way they support the startup ecosystem. As an example they offer Forward Partners companies, and the companies from many accelerator programmes $10,000 of AWS credits, effectively making it free to get started on their platform. For these reasons Amazon is the first choice for most startups.

However, Google just slashed its cloud prices and is not cheaper than Amazon for all but the heaviest users. Significantly cheaper in fact. Pricing for these products is complicated, but by the analysis of cloud management software company Rightscale Google is 30-60% cheaper for on-demand usage (i.e. light usage), 21-32% cheaper for 1 year heavy reserved instance pricing (i.e. moderate usage) and 3-19% more expensive for 3 year heavy reserved instance pricing (i.e. heavy usage).

Price decreases come regularly in this market and I’m sure Amazon will take action soon, otherwise startups will start turning to Google. I can watch this sort of price competition all day long, but it will be interesting to see how Google fairs playing the price game against Amazon. Historically they have been a high margin monopoly type business whilst Amazon has always been about low prices.

What Google looks for when hiring – hint: not good grades

By | Google, Startup general interest | No Comments

I’ve just read about an interview with Laszlo Bock, head of hiring for Google. Here’s what they look for in candidates:

  • Cognitive ability – the ability to learn, to process on the fly, and to pull together disparate information
  • Emergent leadership – the ability to step up and lead when necessary and to step back when it’s best for others to lead
  • Ownership – taking responsibility for solving problems
  • Humility – the ability to step back and accept other people’s solutions and to learn from failure (rather than attribute it to shortcomings of others or lack of resources..)
  • Expertise – the least important of the five

Interesting things that aren’t on the list

  • Good grades
  • IQ
  • Traditional leadership (e.g. Captain of the Chess Club)

These are pretty good lists for anyone to use, and they’re not just intuited, they are data driven. Google being Google scores candidates on multiple dimensions and correlates the scores with performance on the job. Over time they have found that the criteria above are the best predictors of success post hire.

Android is on a path to total dominance

By | Apple, Google | No Comments

screen-shot-2014-01-08-at-3-19-49-pm

As you can see from the chart above (produced by Microsoft) Android devices have been outselling iOS devices for a couple of years now. However,  many of the Android devices were barely smartphones and device sales were only half the story. The app economy was the other half of the story, and iOS was stronger here. For most startups the app economy is the more important side of the story because it’s a better proxy than device sales for revenue and customer acquisition potential.

Note that I say ‘was stronger’. As you can see from the tables below the two app ecosystems are now comparable. Judging by review numbers Android users are doing more with free apps and iOS users are doing more with paid apps, perhaps reflecting the different demographics between the platforms and the higher proportion of low end devices on Android, but on balance there isn’t much difference between the two. (Slight caveat: it would be interesting to see this analysis for total app revenue, including in-app purchases.)

 

14.01.06-Top_200Given Android’s massive volume advantage, I expect that now the app ecosystems are at parity Android will swiftly move into a clear number one position on all metrics, particularly as low end devices become more app-capable. In my experience tech early adopters still prefer Apple, by and large, so we may not feel the shift anecdotally until it is quite advanced.

 

YouTube revenues forecast to hit $5.6bn this year

By | Google, TV | No Comments

YouTube logoeMarketer are predicting that YouTube revenues will hit $5.6bn this year, 50% up on last year (reported in the Guarian). Here are some other relevant facts:

  • Projections of YouTube’s revenues are increasing over time – in May Morgan Stanley were predicting $4bn
  • The growth is coming from young people who are watching most of their television online – this is a good example of a behaviour from a fringe group that is likely to become mainstream
  • Television’s share of advertising budgets has peaked
  • YouTube is now at 1.7% of global digital advertising spend – more than Twitter

For me there are two big takeaways. Firstly the advertising shift from TV to the internet has started and the trend will only be one way from here. Secondly Google is sitting on a major media asset. Their $1.7bn acquisition of YouTube in 2006 now looks amazingly prescient.

 

Google acquires seven robotics startups

By | Google | No Comments

box_picking

Over the last six months Google has secretly acquired seven robotics startups. They are all being merged into a secret project managed by Andy Rubin the former chief of Android, and the project is being viewed similarly to other Google moonshot projects like Google Glass and Project Loon. Judging by statements from Larry Page their ambitions are for robots to free humans from laborious and repetitive tasks so we can focus on being creative or take our leisure.

Today’s production line robots are awesome for repeating single tasks over and over, but whilst recent improvements in mobility and moving hands and arms have improved multi-tasking abilities Google is working on the improvements in sensors and software that are required to make industrial robots sufficiently flexible and autonomous to take over many of the tasks currently carried out by humans. Apparently they are looking on this as a ten year project, although the companies they’ve just acquired had robots capable of autonomously unloading boxes from lorries and building curvilinear walls.

It sounds to me like Google is building technologies that other companies can use in their production processes. It’s great to see their investment in this area and I’m looking forward to seeing startups that leverage robots to cost effectively build advanced products with short production runs. I expect these products to be great because they are manufactured with higher levels of precision and customisation than is currently possible. As I’ve said before, robots will revolutionise manufacturing and hence retail.

 

 

Google’s project Loon

By | Google | No Comments

I love Google for their bold innovation – driverless cars, Google Glass, but most of all Project Loon. For those that haven’t come across it Project Loon plans to bring internet connectivity to the world through a network of balloons floating twelve miles high in the upper atmosphere. These balloons will be blown around the world and navigating the winds to provide even coverage by pumping air in or out of the balloon to move up or down. Each balloon is projected to stay in the air for 100 days during which time it will circumnavigate the world three times.

As they say in the video of the launch flight below Project Loon sounds crazy, but it might just work. Either way it’s good to try. And the name makes me smile a little every time I hear it.

Look for the way they quickly get online after the balloon is launched. It’s very cool.

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