Apple, Google and microsoft in the battle for Cloud
Cloud storage and applications are quickly becoming critical to consumers’ mobile lives in a converged world. The age of carrying personal memory devices or mailing documents to oneself is yesterday. Cloud-based productivity tools are now principal and key to manage documents access content and control one’s data from multiple devices. The cloud truly represents the future of storage beyond physical media.
The launch of Google Drive drives the competition in clouds to the next level. Apple, Google and Microsoft (the trio yet again) are at it… each trying to reinvent and redisgn cloud to augment their world of converged services and seamless connectivity. Google starts off from Gmail by providing all account holders 5GB space in the cloud. One can opt for higher capacities in storage albeit for a price.
Interestingly enough Microsoft which was magnanimous with 25GB of Skydrive space has offered a miserly 7GB. The cost factor can be a real dampener both for Google and Microsoft. Even while Microsoft seems to have a better product compared to Apple and Google and Google needs to perfect its cloud storage solution….Again the pricing and storage is a masterstroke from Apple given that most of the storage is used in media files. By tightly integrating and controlling media (video, audio and games) in its eco-system and making the storage of such items free, Apple is offering a value to the consumer in terms of judicious and prudent use of storage space.
Here’s how the three giants stack up on the cloud storage solutions -
Let the battle of cloud spaces begin….
Facebook: Standing upto formidable expectations
Facebook’s mid May 2012 IPO is pegged at $103bn. Given that FB made $1 billion revenue last year, that 103X Facebook’s earnings. Assuming a 50% increment in revenues this year and an equal amount in the year next, It’s about 70X this year’s estimated earning and about 50X next year’s estimated earnings. To put that in perspective, it’s about 1/2 of Google’s market cap, Facebook’s revenue, meanwhile, is less than 1/10th of Google’s revenue and Facebook’s revenue, is about 1/3rd of Google’s free cash flow.
Apple and Google, both tech giants trade with the following multiples.
103X looks very very steep in that perspective and it is quite a challenge to keep the growth engines revving at such pace especially with decelerating revenue growth. Facebook investors are really counting on some massive cash flow growth in future years. Given that Facebook has registered profit and revenue decline in 1Q,2012, the valuation just proves that Facebook is going to have tough time meeting upto the market expectations of earnings.
To make matters a little interesting, Facebook‘s CEO Mark Zuckerberg has clearly said that Facebook’s business is designed to support its social mission, and not vice versa. Of course, Facebook appears to be just at the beginning of “monetizing” what will soon be more than 1 billion global users. Many believe that Facebook has grossly underinvested in its monetization over the last few years and that even a little more focus on this could produce huge results.In addition to the products it has already rolled out, Facebook could well launch other huge products in the future, such as a search engine that competes with Google, or a distributed ad network that competes with Google.With respect to both of those businesses, Facebook’s vast number of users and vast network of “like” buttons all around the Internet could prove to be major competitive weapons.
Facebook could also take on a position of being “user identity” on the internet – a quasi UIDAI. Facebook is quite really there in terms of making Facebook logins as the alternate logins in many other internet destinations. Leveraging social discoverability and making Facebook the generic on Internet is key for Facebook’s run through a successful listing and beyond.
With 500 million of the 900 million users logging into facebook from mobile, and smartphone phenomenon on the rise, Facebook looks very brilliently poised to take advantage of the huge numbers in mobiles. If Mobiles be the access windows of Internet, Facebook has a pretty strong position on mobile usage which should drive growth.
Just how the numbers would stak up is anybody’s guess out there.
The choices for Sony!
Presenting the final profile of the decline at Sony. Read the first and second posts.This post examines the options that Kirai provides Sony.
Sony had all the makings of a winner with great competence and expertise across all key categories. However, the typical Steve Job’esy intellect to connect all elements into one wholesome synergistic company has been missing with different parts of the company working in silos which impeded the emergence of a coherent strategy. By the time the different divisions had been corralled into cooperating, Sony had lost its foothold in two crucial product categories: televisions and portable music devices. It was late to flat-panel displays, as well as to digital music players like the iPod. After disappointing sales, Sony pulled the plug on its answer to Apple’s iTunes, the Sony Connect online store, after just three years. It has not been able to offer up a comprehensive alternative since.
Sony’s woes mirror a wider decline in Japanese electronics and many of the Japanese giants have lost their technology leadership in many areas. A strong Yen has hurt exports, but a deeper issue is that the economy and the businesses has simply run out of innovative ideas. Mr. Hirai, the new C.E.O., has said that the company will focus on three businesses: mobile devices, including smartphones and tablets; cameras and camcorders; and games. Analysts and Industry watchers are already writing Sony off from the TV space. However, Mr Hirai says that Sony will not retreat in TVs.
Hirai is very keen to focus on its Xperia line of smartphones, which according to Sony is fast becoming a hub in the technology ecosystem. He said he would make Sony a leader in the mobile field and triple sales in that business in three years, to 1.8 trillion yen, or $22 billion. Sony’s purchase of Ericsson stake in Mobile venture for $1.5bn is a step in the direction of getting serious and full control of the mobile domain. The intent is to integrate its Xperia smartphones with Sony tablets, personal computers and game consoles, allowing users seamless access to content across devices — a long-trumpeted but so far largely elusive strategy.
Sony is also keen to leverage its vast catalog of music, movies and games to differentiate its content business,and hopefully replicate the success of the Apple iTunes online store. Sony has said it intends to expand its popular PlayStation game network to offer music and video, replacing the disjointed lineup of content delivery platforms it now operates. Sony hopes to increase Sales in games to 1 trillion yen ($12 billion) by the end of March 2015, from slightly more than 800 billion yen ($10 billion), and to more than double operating profit.
Sony’s digital imaging business which includes digital cameras and camcorders will also see considerable step up of action to multiply sales from $12 billion currently to $19 billion by 2015. Interestingly enough, Kirai is also scouting growth in the medical field and is looking at acquisitions and investments. Sony has emerged as one suitor for the medical equipment maker Olympus
On the ailing Televisions, Analysts are of the view that Sony needs to exit the business after 8 straight years of losses. However, Hirai has very different thoughts on that. According to Mr. Hirai -TV’s are at the center of every home and a part of Sony’s DNA. Sony would try breaking in back to profitability by 60% reduction in fixed costs (and possibly work force cust). Sometimes letting go is the hardest feat.
Profiling Sony’s accumulated losses across categories
Sony’s loss in key categories such as Music and Televisions is the key to a accelerated downward spiral. The second part of the three series (Read part 1 here) blog examines the losses by the electronics giant across its key categories.
Music
With its catalog of music and foundation in electronics, Sony had the tools to create a version of the iPod long before Apple introduced it in 2001. The Sony co-founder, Akio Morita, envisioned as early as the 1980s marrying digital technology with media content for a completely new user experience. It didn’t happen. Initially, Sony engineers resisted the power of the company’s media divisions. Then Sony wrestled with how to build devices that let consumers download and copy music without undermining music sales or agreements with its artists. The company went its own way: its early digital music players, for instance, used proprietary files and were incompatible with the fast-growing MP3 format.
Television
Sony held aces in Televisions till about middle of last decade with impressive technologies such as Trinitron. However, lower-cost manufacturers from South Korea, China and elsewhere, are increasingly undercutting Sony. As TV’s shifted to larger and typically thinner formats, Samsung truly leveraged its expertise in thin panel screens to dislodge Sony and take the top mantle in Televisions. As Sony’s brand started losing much of its luster, the company found that it had a harder time charging a premium for its products.
The conundrum of many
Sony still makes a confusing catalog of gadgets that overlap or even cannibalize one another. It has also continued to let its product lines mushroom: 10 different consumer-level camcorders and almost 30 different TVs, for instance, crowd and confuse consumers. The diffused attention on multiple product lines has led to a divergence in focus (in sharp contrast to Apple’s focused strategy)
Gaming
An area where Sony has found success — and perhaps one that most crystallizes the transition from stand-alone consumer electronics into a digital, Internet-centered world — is video games. Sony marketed its PlayStation 3 console, for example as an integrated entertainment system that serves as a hub in the living room, connecting the Internet and television. But Sony’s obsession with hardware has marred that strategy. A delay in developing the console’s Blu-ray DVD player forced Sony to push back its release. Sales suffered because the PlayStation 3 cost much more than rival models from Nintendo and Microsoft. Sony was also slow to move into the world of online games, giving Microsoft a head start.
Online
Sony’s online strategy is problematic as well. The company has yet to come up with an integrated common platform to deliver music, movies and games, each of which, until recently, had its own network, with other platforms like the PlayMemories photo- and video-sharing services to boot. Now, these disjointed services, developed by far-flung units, are being forced into the Sony Entertainment Network, which Sony says will be its overarching content delivery platform. Experts say it will have to start exiting some product lines. It has already spun off a chemicals business, for instance, and some analysts wonder about its money-losing TV business.
to be continued
The “Like” economy and Google
Internet in general has stood for one philosophy: Creative destruction of standards (Brittanica for instance) and the wisdom of crowds (Wikipedia amongst others).However, Google has been one constant through out last decade of Internet which can hence be referred to as largely iconoclastic.
Google with its venerated search algorithim and its links has reigned supreme throughout the last decade of Internet. But now, as we go from a Web 2.0 to a Web 3.0 economy, even the once invulnerable Google might be in trouble. With real identities generating enormous amounts of data, the linked and sponsored economy of Internet is now migrating to the “like” economy… or +1 as Google would have it.
The dramatic shift from traditional search to social media was underlined last week in a speech by Tanya Corduroy the London Guardian’s director for digital development. Eighteen months ago, Corduroy revealed, search made up 40% of the Guardian’s traffic and social only made up 2%. Last month, however, she acknowledged a “seismic shift” in the Guardian’s referral traffic, with Facebook driving more traffic than Google and making up more than 30% of the newspaper’s referrals.
In the wake of Facebook and Twitter dominated social spaces, Google hasn’t quite been just the spectator. In fact, Google now has 4 products that it has tried to rope in the “social” space – Buzz, wave, Google+ and now Search plus your world (SPYW). Each of these are evolution of how Google is trying to make the shift from the search algorithim to the social and collective criteria. Google has also made headway into 170 million customers through the G+ (as against 900 million in Facebook), but the fact that the average user spends a total of 3.3 minutes on Google+ is testimony of the fact that Google still has some distnace to cover.
The concern here is that in trying to catch up with “social” Google seems to be violating its own matra of “Do no evil”. Google’s announcement this January, that it intended to consolidate personal data across its different products and services — from Gmail to YouTube to Google + to SPYW to Google maps to traditional search – had one concerned technology writer suggest that Google will now know more about us than our wives.
As a fact, Google is as evil or as bonafide as any other company or organzation in this world, but there is a good reason to fear Google’s bloodlust for user data across it properties.Afterall, Google’s business model remains primarily the sale of advertising around its free consumer products. Thus, Google’s desire to intimately know us is primarily driven by its core business objective of — one way or the other – selling that knowledge to advertisers.
This threat was laid out chillingly by the Center for Digital Democracy in a complaint about its new privacy policy to the U.S. Federal Trade Commission (FTC): “In particular, Google fails to inform its users that the new privacy regime is based on its own business imperatives: To address competition from Facebook, to grow its capacity to finely profile and target through audience buying; to collect, integrate, and utilize a user’s information in order to expand its social media, social search, and mobile marketing activities …”. A number of governments and other citizen agancies are increasingly wary of Google. Antitrust litigations against Google is on the rise. FCC, WhiteHouse, EU have taken exception to Google’s privacy policies.
While its still early, 2012 looks to be the year when Google fortunes could begin to wane.With a global outburst against its privacy policies, anti-trust litigations piling up and decline in public trust, Google looks far from dominating the “like” economy like the way it dominated the “link” economy.
An infographic explaining the evolution and changes in Google’s search algorthim over time. Such tweaks and changes have helped Google stay ahead in the Linked internet economy.
Image Ckurtesy: Outrider
Sony: Of lost opportunities and bygone glories
Profiling the fall in Sony in a series of three posts. This is Part I of the series
In an event on April 12th, Kazuo Hirai, Sony’s executive officer heralded change in Sony saying that “The time for Sony to change is now.I believe Sony can change.” In-spite of Sony’s impressive tech credentials – not many outside and inside of Sony believe that “Change” could happen. Sony which once defined itself as vanguard of technological prowess is suddenly faced with a deficit of strong ideas to keep it relevant. Coupled with the rising Asian rivals and a strong Yen, Sony suddenly has seen a huge dip in competitiveness. Sony has not turned profit since 2008, is expected to return a loss of $6.4 billion this year and hasn’t delivered a hit product in years.
Sony’s stock value has been on the dip for most of the last decade and is 89% off its historic highs. It is trading at a quarter of the price of last decade. Sony’s m-cap is 1/9th of Samsung’s and 1/13th of Apple’s.
Sony’s stock price
What went wrong is a tale of lost opportunities and disastrous infighting. It is also the story of a proud company that was unwilling or unable to adapt to realities of the global marketplace. Sony’s gravest mistake was that it failed to ride some of the biggest waves of technological innovation in recent decades: digitalization, a shift toward software and the importance of the Internet. One by one, every sphere where the company competed — from hardware to software to communications to content — was turned topsy-turvy by disruptive new technology and unforeseen rivals. And these changes only highlighted the conflicts and divisions within Sony.
Sony: Of lost opportunities and bygone glories
In an event on April 12th, Kazuo Hirai, Sony’s executive officer heralded change in Sony saying that “The time for Sony to change is now.I believe Sony can change.” In-spite of Sony’s impressive tech credentials – not many outside and inside of Sony believe that “Change” could happen. Sony which once defined itself as vanguard of technological prowess is suddenly faced with a deficit of strong ideas to keep it relevant. Coupled with the rising Asian rivals and a strong Yen, Sony suddenly has seen a huge dip in competitiveness. Sony has not turned profit since 2008, is expected to return a loss of $6.4 billion this year and hasn’t delivered a hit product in years.
Sony’s stock value has been on the dip for most of the last decade and is 89% off its historic highs. It is trading at a quarter of the price of last decade. Sony’s m-cap is 1/9th of Samsung’s and 1/13th of Apple’s.
What went wrong is a tale of lost opportunities and disastrous infighting. It is also the story of a proud company that was unwilling or unable to adapt to realities of the global marketplace. Sony’s gravest mistake was that it failed to ride some of the biggest waves of technological innovation in recent decades: digitalization, a shift toward software and the importance of the Internet. One by one, every sphere where the company competed — from hardware to software to communications to content — was turned topsy-turvy by disruptive new technology and unforeseen rivals. And these changes only highlighted the conflicts and divisions within Sony.
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