Android – Google’s best strategic move ever?

Android controls 70% of the Smartphone volumes in 2012. Over the last 4 years, ever since Google launched Android, this has been one huge success story. In this post, i am looking at the 3 factors that have fueled the Android’s success story. The success generated by Android is across three key levels – Present day revenues for Google,Access to mobility for Google and generating intelligence and information about the user – creating profile and semantic patterns which is the future of advertising as we know it.

While Google’s intent behind Android was such that it was not completely shut out of the mobile Internet by a dominant OS provider. The initial fears were around the dominance of Microsoft which in the post 2007-iPhone era came to be Apple. However, it just did better – it went on to become the dominant OS in Mobiles and handhelds itself.

We all know that Google makes almost all of its money on ad revenue – 94% of Google Q4 revenues were based on advertising. Of this $8bn was generated by mobile devices of which, analysts now expect $5bn of 2013 Google Ad revenue to be from tablets alone! That makes it seem like a pretty solid investment for Google to pay whatever it does to be the default search engine in iOS ($1 billion/annual), since the iPad still holds close to half of tablet sales.

Android is Google’s footprint on mobile- An Android device, properly signed into a Google account and running all the Google Apps, generates an endless stream of little bits of ‘signalling’ information, way beyond what Google gets from a desktop search user even if they’re using Chrome. It knows where the user lives and works, how he commutes – and which phone numbers on web ads he dials. All interactions with Search, Maps and anything else can be linked together. Android, allows Google to tie searches and advertising to individual people and places. In the long term, the data that Google gets from Android users is probably just as important as Pagerank in understanding intent and relevance in search. The real structural benefit to Google from Android now comes from the understanding it gives of actual users, and the threat comes from devices that do not provide this data.

It is quite possible that even Google didnot see the scale of success of Android – Not only did it mark Google’s entry on mobiles, it also is generating revenue and most valuable user information.

Yahoo! Axis. Impressive! Hope they dont mess it this time.

In the course of the last decade Yahoo! has lost out on every major initiative whether be Yahoo profiles and chat (To Facebook) or Search (to Bing) or Flickr (To Instagram). Once the most important Internet company, Yahoo! has been reduced to a state of profitable (shrinking fast) irrelevance. There was no major stake on how Yahoo! could influence Internet browsing behavior or leverage search or take a stake in the mobile bandwagon. Therefore Yahoo! Axis a refreshing new initiative from an almost dinosaur internet company. Axis essentially is a browser for iOS devices and a browser plugin for desktop computers. It has a premise and the intent is in the right direction.

Interestingly now, Axis will help Yahoo! skip trying to compete with the dominant desktop browsers and  instead offer a plug-in that works on all of them. That enables Axis users to extend their browsing habits to the Axis apps for iPad and iPhone, which is much less settled territory. Mobile and tablet browsing is the next frontier, and Yahoo is wise to focus the next stage of its business there.

1. It essentially seeks to integrate the browsing and search experience. Users will not be required to launch a new page. Both the experiences are well knit on a single page with the usual bells and whistles. Why waste time on the search engine when the search process is built into the browser. Axis does away with the blue links that have defined internet query results for a decade and replaced them with previews of pages that might provide the information being sought.
2. Understandably the experience is touch led – which is a key to the mobility, smartphone and tablet platform. Finally then, Yahoo! has some ground on hand held devices with the Axis app.
3. Also key is the seamlessness of the experience which can be shared across all iOS devices. It would be interesting to see how Yahoo! recreates the iOS type experience across a range of disparate platforms each not exactly talking to the other. Possibly the plug-in would do the trick… but experience is the key here.
4. On the flip however, Axis is somewhat of a double edged sword because it by-passes the search results page. Yahoo still makes a quarter of its revenues from the sponsored links on this page.

However, Yahoo! is betting its future on the convenience and speed of this search concept. The seamlessness of the experience is the consumer hook. What keeps them there is the way Axis syncs browsing history between the desktop and mobile versions, so users can switch back and forth easily between devices. Once there is enough data on the users, Yahoo can sell you all its services by promoting them heavily in the app and its search results.

Of late Yahoo! has lurched from one crisis to another. It still makes money but the future is very uncertain given the mobile dominance building on the internet, advent of Facebook and Google. Axis is thus a step in the right direction. Yahoo! still wants to take one more fight..

Facebook needs to now change its game

Zuckerberg and the FB gang have been great aat connecting 900 million dots. Its time they take the game to a different level- monetizing the dots.

A $95bn IPO may not be top of the mind for Mark Zuckerberg who is intent and focused on getting the social strategy for Facebook right. However, to many analysts and investors, the valuation is stretched and raises a spec of concern and doubt on the ability of the FB network to make money that is commensurate with the expectations.

Interestingly enough, a positive indicator that can provide FB the fillip is that Premium “Social” ads such as sponsored stories, “likes”, comments and other endorsement of brands’ activity have increased 26% y-o-y. Typically Premium ads make up for 25% of FBs ads. The concern area is a drop in CPC (Cost per Click) for the standard ads by an equivalent 26%. Overall CPC rates have gone up 23% across both categories. Another cause of concern is that Click thru rates have also gone down by 6%.

1. The dichotomy between standard and premium ad pricing trends reflects FB’s attempt to move away from keyword targeted “direct response” advertising – the so called plain vanilla marketplace ads towards getting big brands to buy “social” campaigns. The company’s re-orientation around large brands and away from the smaller ones may the driver of the difference and a definitive forward move to justify the stretched valuations in terms of revenues.

2. Facebook also needs to prep up its mobile presence. With 55% of Facebook users accessing the site from their mobile phones, the Facebook mobile become a key access point which FB cannot miss. The FB app on mobile today is just about a decent experience for sociaal networking. How Zuck can add the “brands” angle to this is the key challenge for FB. FB has been acquiring small time smart-ups expectedly to build on the mobile presence. But acquiring is one thing, executing is quite another. We havent seen much from FB in terms of exploring mobile for brands.  

3. The other interesting rumour doing rounds is Facebook search. Fundamentally different from Google in terms of generation of leads through social network anchors – likes, location, friends. That indeed is aa very interesting angle to search given that word of mouth and social networks are big influencers.

Facebook’s success ride has beeen phenomenal. Thats got it this far… a $95 bn IPO vaaluation. However, FB will have to change a few things around fundamentally if it were to justify a $100bn valuation and how it wants to poistion itself in the future. The ingredients are all there… how they mix them around and create the dish out of it.. is worth watching out for.

Search Battle Royale (Facebook versus Google) – Part I

Presenting a two post series on the future of search as Google and Facebook are evolving it each from its core sterngth perspective. This has been reproduced from an article by Drew Olanoff: Facebook versus Google- Who can win Search?

It’s a well-known fact that most people don’t get past page one of Google’s search results. This is why Google is doubling down on integrating a social layer into everything that it does. While algorithms can crawl the entire web to find relevant information, could the things that we share on Facebook become a better and more reliable data-set?

Searching the social network could get a lot better in the near future. Facebook is rumoured to be working on an improved search engine which will help users better sift through the volume of content that members create on the site, such as status updates, and the articles, videos, and other information across the Web that people “like”. Facebook and Google have one thing in common, they absolutely love data. The only difference between the companies may soon be the way that the data is shown to us.

Google’s approach to search
Even if you’re really good at using Google, it’s hard to find exactly what you’re looking for sometimes. As it appears now, even with the launch of Google+, Google scours the web for content and then churns it through an algorithm that decides which content is more relevant. The social layer that it has instituted allows its users to validate what the machines have already decided. That’s placing Search before social, algorithm over recommendations. This works really well because people view information differently, and there really is no such thing as natural language search. If the Internet was “flat”, meaning it wasn’t indexed at all, relying on people to find the content that might be relevant to you is like pissing in the wind. Basically, the experience is going to suck big time.

On the other hand, when you want to ask people for recommendations, you don’t even know where to start. For example, if you want to eat dinner but are`n’t sure what type of food you want, Google doesn’t really help other than to give you a list of sites that have lists of restaurants in your area.

Basically, Google has an extra step if you want recommendations.

Continued here

Search Battle Royale (Facebook versus Google) – Part II

Presenting a two post series on the future of search as Google and Facebook are evolving it each from its core sterngth perspective. This has been reproduced from an article by Drew Olanoff: Facebook versus Google- Who can win Search?

Continued from earlier post

Facebook’s (potential) approach to search

By cropdusting the web with “Like” buttons, Facebook has a huge set of data and information curated by all of us, without the fluff that Google scrapes daily. Think of it as a super-fine set of information that has already been pre-screened by humans. Now if Facebook wanted to “improve” its search, it wouldn’t be as simple as making an algorithm that mimics the experience that we have today on Google.

With lists, subscriptions, likes, and location data, Facebook could let us perform a very direct query with a finite group of people. Basically, a set of our friends or colleagues would be our “search engine”. What would that experience look like? Well, I imagine that you’d type a natural language query and then drill down to whose data you’d like to use to perform the search.

For example, I wanted a taco, I wouldn’t necessarily type taco into an open search box like I would on Google. I’d choose a location or a group of friends and then search for “taco”. Based on where they’ve checked in on foursquare or Facebook, or things that they’ve liked, I could be given results to check out.

It’s not perfect, but it’s not bad either.

Who wins?

First, you have to remember to stop referring to these companies as one “thing” or another. Google isn’t a “search company” and Facebook isn’t a “social network”. They are both companies who want to change the world and make money. We all know that there’s big money in big data. These companies have different approaches to how they’re collecting and displaying the data, but at the end of the day, they’re kind of doing the same thing.
We’re watching a potential clash of the titans where two things are extremely obvious: Google is late to social, and Facebook is late to search. Sure, Facebook has Microsoft in its corner which could help them out a great deal, but as Bing stands, it’s extremely similar to the experience we have on Google today.

The next big step for search is outside of the box completely, with less data and more relevant results. The question is, do you trust regular people like you and I to decide what’s best, or do you prefer to let a bunch of machines try to figure it out for you. The answer is a mix of both, but who will do it better?

At the end of the day, we’re going to use what works best for us. Until Facebook makes a move, it’s still a Google world. However, Mark Zuckerberg and company aren’t going to sit back and watch the stream of data and dollar signs pass them by. It’s going to be an epic battle and it could be anyone’s game.

Hey Scott! Here’s the challenge. (Yahoo!’s future)

In 5 years, Yahoo! had 4 CEOs leading it starting from Terry Semel, Jerry Yang, Carol Bartz and Scott Thompson (the latest recruit). The appointment raised questions among analysts, since Mr Thompson, 54, has no experience in online content and advertising, Yahoo’s chief sources of revenue. The timing of Mr Thompson’s hiring also came as a surprise, given that Yahoo’s board has been considering a sale of all or part of the company since firing Ms Bartz four months ago. Yahoo’s stock hasn’t traded above US$20 in more than three years. Microsoft Corp offered to buy Yahoo in its entirety for US$33 per share, or US$47.5 billion, in May 2008. Yahoo trades at $15.58 now which is less than half of what Microsoft wanted to buy it for.Analysts estimate Yahoo’s revenue last year totalled about US$5 billion, down from nearly US$7 billion in 2007. During the same span, Google’s revenue soared from US$17 billion to an estimated US$38 billion. Thanks largely to cost-cutting measures imposed by Ms Bartz, Yahoo has become more profitable. Last year, it earned an estimated US$1.1 billion, up from US$660 million in 2007. Still, investors are disappointed with the downturn in revenue at a time when advertisers are spending more money on the Internet. Yahoo! is a waning off fast and thick and it now is Mr Thompson’s gamble to bring back some respectability to the beleaguered Internet giant.

It will take a miracle to revive Yahoo. For long,Yahoo! has rested on its banner ads and scale based business models to make money and has skipped taking stakes in two generations of Internet based services: Mobility and Social Web. The question that Yahoo! needs to answer itself is “What is their business competency and how do they intend to deliver value to their consumers?”.

Even now Yahoo! bets on its scale to do something around a very mediocore competency area- online advertising,media and content. There are many others in the same business and there is nothing really differentiated that Yahoo! currently seems to be planning to take it to its future.

To my limited understanding, Scott Thompson has to provide answers/action to the following questions fast

1. What is Yahoo!’s future business? Yahoo! will need to really search deep into the future to figure out which businesses would make sense to it and what competencies could be brought to the fore.

2. Yahoo! must exit its long tail services as soon as it can- This will increase focus on what it really could do with any difference and possibly provide capital for a larger scope in online business.

3. Yahoo! must stop being quintessential US and regionalize fast- Yahoo! could look at taking the pole position in emerging economies such as India, Indonesia, China, South Africa with a regional focus. The next big growth curve is past Europe and America and if Yahoo is able to capitalize its internet lead in these nations, there might still be a story waiting to happen.

4. Is there a story in enterprise search or vertical searches on small screen computing devices? There may be a choice out there. Is there a case for search engine for Apps?

5. Can Yahoo! create the ability to search through integrated user linked information across Flickr, Yahoo mail accounts, tweets, FB updates

6. Is there a case for Yahoo! becoming world’s largest content aggregator? It sure has the bits and pieces. Yahoo! will need to think about stitching all the disparate pieces together in quick time.

This may not yet be the magic portion, but Yahoo! needs to look at discontinuity in its product lines, in its DNA and its thinking to get ahead.

Generations in computing interfaces and the Promise held out by Siri

The future of computing devices is really about how people interface with computing devices.

Generation #1:Many would remember the ubiquitous keyboard and the QWERTY keys which defined the early days of mobile computing. Remember having to key an SMS while navigating your car. It was not just difficult, it was fatal.

Generation #2: Haptic or touch based interface for computing was around for many years, but it was Apple’s iPhone and iPad range of devices along with Androids which truely revolutionized this scene and in effect put the Generation #1 devices into history books.

Generation #3: Gesture control and gesture recognition is really a evolution of the Generation #2 Haptic feedback devices on a much larger scale in tersm of being able to read body movements in a 3D plane. Interestingly this input mechanism came through from the world of gaming. Microsoft Kinect and to a some extent Microsoft Surface defined this generation of interfaces.

Generation #4: The easiest human interface is that of Speech. And after defining the interfaces with multi-touch, it was Apple which took this one step much further into future than Andbody else. Yes! Google had the speech recognition technology much ahead of Apple. However it was Apple’s fate to add the dash of character and spunk to Voice recognition – called Siri which holds a huge promise into future.

This presentation analyzes the factors why Siri could ultimately do something none could ever do before it- Challenge the Search paradigm. Again the simplicity of the voice interface and Siri’s character and spunk is what differentiates Siri. But in some time, Siri could be the de-facto standard, with app developers and Apple’s presence across a huge range of consumer based devices chnaging the way people search – by saying it out. Apple could take the whole paradigm further with intelligence on the voice enabled platform. It would be an interesting duel between Apple and Google and Siri could change the future.

Google Panda: Algorithm versus Wisdom

Google’s search engine is a triumph of technology. There’s no denying that. It was the capstone that completed the initial structure of the Internet.

With over a decade and more of dominance beyond any thought and competition the biggest challenge for Google lately has been the declining potency of its search engine. In recent years, Google searches have become a lot less useful and a lot more frustrating. It has become more difficult to find stuff that is on the internet — even stuff that was featured previously. Another example is pages that have posted to the web more recently. They get overpowered in the Google algorithm by older pages that have had time to accumulate more incoming links.

But, the Internet is now in the midst of a dramatic remodel and it’s unclear whether Google search will get the refresh it needs to make it more appealing than ever or if it will be one of the things that gets painted over.
1.) The search results on Google are becoming increasingly ineffective because they were littered with “web spam” and articles from “content farms” (sites creating faux content to turn as many ads as possible).
2.) Social media has been replacing traditional web search for many different kinds of information gathering and Google hasn’t have a legitimate play in social (till Google+. After several high-profiled social flameouts — such as Google Wave and Google Buzz — Google+ seems to have made the mark)

Ironically, the biggest problem for Google is its greatest cash cow, SEO — Search Engine Optimization. A whole cottage industry has arisen around helping sites optimize their pages to get ranked as highly as possible in Google. As a result, the sites that land at the top of Google search results have become more about which sites are best optimized rather than which ones have the best and most relevant content.

Even worse, whole companies have emerged whose entire purpose is to create low-quality content that is highly-optimized for Google and loaded up with ads to turn a quick buck. These “content farms” have become big business.

Recognizing the growing risks points 1. and 2.pose to Google’s relationship with users, and ultimately its business model, the company has moved aggressively in 2011 to fix the situation. Google called it Panda. Panda was released in February 2011 with newer versions in April 2011, May 2011, June 2011 and September 2011.

However, the Panda update has had a difficult time targeting content farms and has accidentally affected a lot of good stuff. So for every eHow and Demand Media (bogus content sites) that Panda obliterated, Panda also killed some like TechRepublic (genuine content host).

Google argues that this creates a fairer and more objective system, and that introducing human filtering into the system would make it biased and subjective. While that may be true, the big question is whether human intervention would make Google search more effective, and ultimately more accurate. The problem with the algorithm (and artificial intelligence in general) is that it has no common sense or wisdom — at least not yet. Meanwhile, the systems that Google search is increasingly competing with for information discovery — social search and mobile apps — use the collective wisdom of the community or targeted experts to deliver better information more quickly than Google search, in many cases.

So far, Google (even with Panda) has had a difficult time targeting content farms and it has ended up accidentally removing a bunch of useful content in the process. The big question now is whether Google can learn from this experience and change, or if it will eventually fade into becoming a fallback mechanism that people use when they can’t find the information they need from social search (asking their Twitter or Facebook friends) or a mobile app.

Yahoo! Present Tense, Future Unsure!

There are two separate and contrasting reports on the fate of Yahoo! post the exit of Carol Bartz. Yahoo!’s which could be regarded as the largest Web 1.0 dinosaur has possibly seen all its glory days and is simply unable to find its niche in the fast changing, quickly evolving Web 2.0-3.0 space. That is a pity considering that Yahoo! Was one of the first social companies (Yahoo! Chat anyone?). But then it lost the plot in SEO (Search Optimization) and then again in SNS (Social Networking). By the time Yahoo! Moved away from its display advertisement focused domain, the landscape had changed very nearly completely and the likes of Facebook and Google were well past it. Yahoo again had the first movers in Mobile space with some early link ups with Nokia- Yahoo on the go! but again lost the plot. Read up on the Fall of Yahoo! here

Coming back to the reports: the first one was about Yahoo! Preparing for a strategic sell-out and the fact that Yahoo! board should have sold out to Microsoft long back when Ballmer made a very generous offer. Yahoo’s long-time advisers Goldman Sachs and Allen & Co are preparing to give potential buyers financial information which is a sign that Yahoo is about to put itself on the auction block. Sale appears to be the best way forward ro get rid of the biggest millstone about the company’s neck – its board.

Yahoo has been consistently underperforming and made some howler decisions. Attempts including a very aggressive positioning effort (by Ms. Bartz) to turn the company around failed and the share price is much lower than it was when Ballmer made his bid.

In this context, the second report quotes Shashi Seth, who heads the Yahoo!’s global search and marketplaces business and the efforts around Yahoo!’s (yet again) turn around. This comes at the face of the fact that key executives at Yahoo! are leaving in hordes. Seth re-emphasizes on focus on making great products, experiences and learn how to monetize them. The key according to Mr. Seth is redefining how search has traditionally been understood and breaking the old paradigm of search to focus on new growth engines. Yahoo!’s new growth mantra focuses on
• Creating a search engine for Apps
• Focusing on Mobile search
• Ability to search through integrated user linked information across Flickr, Picassa, e-mail accounts, tweets, FB updates

With due respect to Mr. Seth, the plan sounds nice (as did every other Yahoo! turn around plan) but there are huge many gapping large holes in the scheme of things that Mr. Seth puts. Firstly, the mobility space is taken… Androids will push Google, WPs shall push Bing and Apple doesn’t care, because the whole app experience in terms of App look up and search is so well integrated in Apple that they won’t need Yahoo! to give them the solutions. That kind of rules out Points 1 and 2 listed above as the platforms will inevitably push their native search engines. The UX of Yahoo! search could also be a dampener. This applies to the two of the largest device platforms: Smartphones and Tablets.

Ability to search through integrated user linked information across user accounts is a great idea, but I suspect that the Google’s of the world are already doing it in some measure and are integrating things faster. What really enables Google and Bing is that they have a teams of developers working on their platforms using the native Google and Bing search apps. Yahoo seems to have realized the potential in mobile a little late for any real action coming through to them.

Yahoo seems to be serially missing out on another huge property that they have in terms of 12+ years of content. A content management system with optimization could bet Yahoo!’s answer … much like the Guardian example. However, I don’t think that it has the ability to turn Yahoo! around.

Is it there yet?(Afraid not)-Bing continues to be drain money for Microsoft even while results are not as desired

2 yrs back, Microsoft launched an aggressive attack on Google’s search with its Bing search engine. It also put in place, an agreement with Yahoo powering the Yahoo search at the backend. 2yrs on, Microsoft is still at it, loosing loads of monies to the tune of $700 million a quarter. The costs for Microsoft, meanwhile, keep mounting. In the latest fiscal year, ended in June, the online services division — mainly the search business — lost $2.56 billion. The unit’s revenue rose 15 percent, to $2.53 billion, but the losses still exceeded the revenue.

While there are some results in terms of 14% of search market share in US, it isn’t as encouraging as Microsoft would have wanted it to be. Add the searches that Microsoft handles for Yahoo, and Microsoft’s search technology fields 30 percent of the total. It was always going to be difficult- Google was more than a search, it was a generic- a search behavior! (Read Launch notes of Bing, Part I, Part II, Part III, Part IV)

Microsoft’s assault on Google in Internet search and search advertising may be the steepest competitive challenge in business today. It is certainly among the most costly. Trying to go head-to-head with Google costs Microsoft upward of $5 billion a year, industry executives and analysts estimate.

As the overwhelming search leader, Google has advantages that tend to reinforce one another. It has the most people typing in searches — billions a day — and that generates more data for Google’s algorithms to mine to improve its search results. All those users attract advertisers. And there is the huge behavioral advantage: “Google” is synonymous with search, the habitual choice. Once it starts, this cycle of prosperity snowballs — more users, more data, and more ad dollars. Economists call the phenomenon “network effects”; business executives just call it momentum.

Bing’s gains have not come at the expense of Google. Its two-thirds share of the market in the United States — Google claims an even higher share in many foreign markets — has remained unchanged in the last two years. The share losers have been Yahoo and smaller search players.

Even while Microsoft is a big, rich company, investors are growing restless at the cost of its search campaign. The inability to make effective inroads into Google’s Search stronghold is seen to be a failure in Ballmer’s strategy. While the gas tank of investments at Microsoft is an seemingly an endless pit, the lack of results (as desired) on the Bing search engine and the drain on investments is beginning to show up in terms of Investors, Analysts questioning the path, intent and approach. Challenging Google in real terms on search is a long drawn battle and it all depends on how long is Bing ready to bleed as against how quickly does Bing get measurable real results for investors to approve the spends.

Revisiting the Bing Strategy (Contd)