Monday, 30 April 2012

What I've been reading this week

I’m of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

This (now: last) week: Samsung overtakes Nokia, Facebook & Netflix results disappoint while Apple and Amazon delight, Cameron mines asteroids ; MIT weaves a building.

New business models

In case you were under a rock this week, one of the biggest stories was Samsung overtaking Nokia as the world’s largest mobile handset manufacturer. My only caveat on this story is that I’m not a massive fan of Strategy Analytics’ data – it tends to have a slight slant, particularly as they’re the only people Samsung give data to. Still, the writing’s clearly on the wall for Nokia...

...and all’s not well internally – here, Nokia’s Windows strategy receives a good kicking from former executive Lee Williams. He really doesn’t like Stephen Elop. Bad times in Espoo.

I quite like Google Wallet, but one thing that I can see coming is that the Android licensees (think Samsung, Sony, LG etc...) might want to try their own payment platforms in competition with their patron. In any case, Big G are much more likely to succeed than the existing payment oligarchs or the telecoms majors.

US online consumers spend 23% of their disposable income online. That’s a pretty big proportion and demonstrates why the above story is important. Another big takeaway is that 11% of UK consumers spend more than 50% of their disposable income online (the highest proportion in the group), demonstrating why we in the UK have a great opportunity to be online innovators.

If you haven’t already seen it, the Valve employee handbook is well worth flicking through. This is how to engage employees...

I can’t decide whether (as the article suggests) there’s really a market for Green Affluents who’ll live in a $3.5Mn house but drive a $35k Prius. I suspect practicality is the key reason they choose said vehicle. Sports cars are great but bloody annoying in traffic, hence the success of the MINI. Interesting article, nonetheless.

Digital media

As regulars will know, I’m bearish about Facebook. Their latest results are worrying as it seems to me that for every user they add their margins decline. That’s what happens when you’re not able to innovate in step changes, but instead iteratively reduce the functionality of a platform that is increasingly unusable and uncool. I still think there’s a good business in there somewhere. Wholesale changes are needed to let it out.

I’m bearish about Netflix too and so, it appears, are the markets. Here’s why: it’s competing with pay TV companies with much deeper pockets and its own suppliers (Sony & Disney in particular) who have their own vision for the future of post-theatre distribution.

Zynga, however, seems to be diversifying away from Facebook – it only got about 88% of revenue from them last quarter, compared to 93% in the previous. I’ll be watching that trend with interest as Zynga is in some ways are more compelling platform than Facebook.

Games, however, are no longer the main time-hog on phones, at least according to Flurry, who are sometimes right about these things. As an aside, it entertains me how many companies claim that their way of telling what users are doing is the best, when really they’re all different lenses on the same thing.

Still, the naysayers can ignore Jimmy Wales, who should stick to encyclopaedias and free expression. Hollywood is really just a funding mechanism and won’t be disrupted as he describes. The tech industry fundamentally doesn’t get media.

TV is more indispensible than social networking according to Ipsos. This tallies with all of my own research into this question, however I am glad we don’t have to actually choose!

An expose on Yahoo’s content strategy, which seems to be to compete for mass market brand audience with TV. Except TV has mass market eyeballs and Yahoo doesn’t...

The article is a bit “so what?”, but these are six interesting London digital businesses, regardless of the sex of their founders.

Comscore talk up some data about how (un)important click through is as a measure of ad campaign effectiveness, but isn’t this self-evident? If I find the page an ad is on interesting, then I’m more likely to pay the ad more attention and therefore click on it?

Emerging markets

Another example of how the Indian government is seemingly seeking to impede the growth of the country’s stagnating economy; this time by forcing web companies to physically locate their infrastructure in India. Digital innovation is one of India’s obvious growth areas (and desperately needed as labour arbitrage decreases), so why stifle that creativity? Because it’s easier than doing the things that are actually needed, like reducing corruption and bureaucracy and creating a sustainable physical infrastructure, probably.

I hope Germany will forgive me for including it in emerging markets, but from a digital point of view it is Europe’s laggard and therefore the focus of considerable interest. In this case, two of the major broadcasters are launching their own VOD portal.

New technology

Asteroid mining might seem pretty science fiction, but a NASA study last year did admit that it was already technically possible provided $1.5Bn of capital was available for start up costs. Since there are 9,000 near Earth asteroids of diameter 45m or over and each of those could contain the equivalent of a year’s worth of earthbound platinum mining, it’s not surprising that these guys have some pretty serious backing for their scheme to mine them.

A new way of using a robot to “weave” a building, courtesy of MIT. Neat.

Superpower politics

It was a week of results. The biggest news was that Apple defied the (muppets) in the financial markets whose uninformed gambling had led to a run of falls in the tech’ company’s valuation over the preceding weeks. Apple sells great products with margins greater than most software companies and does so in increasing volumes. The latter will continue to grow in my view as Apple starts to sell in more markets – it’s share in most categories (apart from tablets) is small and it’s yet to sell iOS to enterprise in significant volumes. That’s for quarters hence.

Amazon’s results were pretty good too, with earnings a little down but crucially sales of platform extending device the Kindle Fire were up and the device is now nearly 55% of the Android tablet market. The important word in the statement is “gifted”. At its price point this is a major way in which Fire will end up in consumers’ hands...

A neat blog from WSJ about why Google and Facebook aren’t making a big hit in mobile. Simply put, their employees don’t commute. Personally, I think that Google are doing an okay job, but then they have global operations that don’t have the luxuries of their Silicon Valley campus. Enough said about Facebook, the better.

The launch of Google Drive as competition to iCloud was a well publicised development this week. Here’s a succinct comparison of them.

Just for fun

This is the ultimate New York pad. Warning: no TMT content!

I love these NASA visions of the future from the 1970’s. Pop cool.


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