In June 2010, I claimed that There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All. In said piece, I asserted that Google was well positioned to knock Apple off of its perch, but more importantly that Google was also best positioned to be the leader of the new paradigm - the intersection of computing, telecommunications and media.

It's now incontrovertible that I was correct on the first assertion, see Cost Shifting Your Way To Prominence Using The Network Effect, Or Google Wins - Apple, RIM & Microsoft Have ALREADY LOST! - and from an investment perspective, Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money! Now, ample evidence of the second assertion is coming to the forefront...

It is Google's Android OS that has enabled this rapid advancement in tech, and it's Google's cut throat open source business model that has provided the impetus for the rapid drop in hardware prices that accompanies the steep spike in functionality.

Judging the tepid take-up of the new Windows 8/phone platform, and the current decline in Apple cache as well as relative market share - the Windows PC platform can now read its own obituary as Android becomes the new computing standard. At the rate things are going, my other prognostications in the space will come to fore rather prematurely...

Smartphone Hardware Manufacturers Are Dead, Long Live The Google-like Solution Providers

Computer Hardware Vendors Are Dead, Part Deux!

All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade

Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.

file iconGoogle Q1-2012 Valuation Summmary 04/20/2012

file iconGoogle Final Report 10/08/2010

A couple of bits from our archives...


There are currently 7 Google reports available. Select the "Google Final Report" and click the "Download" button. You will receive a 63 page analysis that looks like this on the cover...

The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as  valuation for each business line.

Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.

Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.

Published in BoomBustBlog

One of the inevitable results of cost shifting (see the video below) is not just the compression of margins, but the rapid advancement of adoption by the masses. This rapid adoption causes users producers, and in the tech space - programmers and hardware OEMs to dump significant amounts of resources into the product in the race for revenue and proftis. The end result? A materially superior product, even if that product started off inferior to the competition. This was the case with Windows back in the 80's and 90's, where Windows 2.0 was trash, and by the time you got to Windows 95, the application space was ubiquitous.

Well, the new millenium digital master of cost shifting, has taken its less than free product and imbued it with technology from both a hardware and software perspective that is totally unmatched by ALL of its competiion. reference this article from Bloomberg: HTC Said to Halt Larger Windows Phone on Display Resolution

 HTC Corp. (2498) scrapped plans to produce a large-screen smartphone using Microsoft Corp. (MSFT)’s operating system because the screen would have had lower resolution than competing models, a person familiar with the project said. The Windows software doesn’t support resolutions as high as that on Google Inc. (GOOG)’s Android platform, said the person, who asked not to be identified because the information isn’t public.

It should be noted that Apple's iOS can't support anything near the 1080p resolution as well. Microsoft does have the Windows RT and Pro OS lines. I'm typing this on a Windows 8 convertible tablet/notbeook (the Lenovo Yoga 13, a truly wonderful device that should make Apple iPad purchases seem daft in retrospect), but I feel it may be too little to late to make any inroads into the mobile space that will truly dent Google's prominence.

Chief Executive Officer Peter Chou’s decision to halt the project using Windows Phone 8 software leaves HTC with only Android for phones measuring larger than 5 inches diagonally, dealing a blow to Microsoft in its efforts to win share from Google and Apple Inc. (AAPL) Taoyuan, Taiwan-based HTC had planned to introduce the device next year to claw back share from Samsung Electronics Co., which offers Galaxy Note devices with larger screens using Android. Android snared 72 percent of the market in the third quarter, while Apple’s iOS software had 14 percent, according to Gartner Inc.

Microsoft isn't the only casualty here, for Bloomberg reports: First China Mobile, Now Russia's MTS Drops iPhone. Basically, the largest of the foreign carriers are either dropping Apple are demanding larger concessions from the company before they decide to carry the phone. This results in two things, unrestricted reign for Google's Android to proliferate (first indicated by BoomBustBlog nearly three years ago, Math and the Pace of Smart Phone Innovation May Take a Byte Out of Apple’s (Short-lived?) Dominance), and margn compression in Apple - a thesis presented nearly three years ago again - Android Now Outselling iOS? Explaining the Game of Chess That Google Plays in the Smart Phone Space, and perfected within a week or two of Apple's all time high and consequent fall from grace:  (see Right On Time, My Deconstructing The Most Hated Trade Of The Decade, The 375% BoomBustBlog Apple Call!! I went into detail with Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All). 

The call to short Research in Motion two years ago () was born from the same logic. We all know how that story turned out - BoomBustBlog Research Performs a RIM Job! and Another RIMM Job? It's Amazing How Many Institutions Don't Read ... Margin will not be available to companies using last millenium's software model, and fat margined hardware is dead. The hardware is quickly becoming a commodity, see Smartphone Hardware Manufacturers Are Dead, Long Live The Google-like Solution Providers and Computer Hardware Vendors Are Dead, Part 2). ALL of the hardware vendors need to do what the (use to be) pre-eminent software vendor is doing now, reference Microsoft Is Doing What The "Has Been Giants Of Yesteryear" Were Afraid To Do, Make A Radical Change BEFORE ITS TOO LATE! All of these "emergencies" are borne from Google and thier extremely dangerous cost shifting business model.

Google's cost shifting business model, explained...

Google's last three mobile phone software incarnations (Android 4.0, 4.11/2, & 4.2) are so materially superior to all of the competition in nearly everyway as to be nearly incomparable. Now, thanks to massive adoption by hundreds of OEMs around the world and the extreme rate of R&D expansion into this space, the hardware pushing the software is incomparable as well, with 8 core CPU chips and full 1080p unbreakable screens breaking the horizon next quarter, all with battery lives that can pierce the 36 hour mark. This is fascinating for smart phone shipments now handily outpace traditional PC shipments (I say traditional because smartphones are essentially ultra mobile PCs now). The company that controls the smartphone platform becomes the new age Microsoft of the last millenium. It amazing, since the old age Microsoft was the one best suited (at least it appeared) to be the new age Microsoft, but big company mentality, mixed with hubris and execution errors allowed Google to reinvent the software business model.

Could anyone have seen this coming? Of course they could have, at least they could have if they read BoomBustBlog...

Two and a half years ago, on Thursday, 05 August 2010 I penned: Android Now Outselling iOS? Explaining the Game of Chess That Google Plays in the Smart Phone Space. Let's traipse through it to see how accurate these near three year predictions in this volatile space have been:

Many commenters are lamenting on the fact that Google is not making money on Android sales since the OS is given away for close to free while Apple is making $250 per handset sold. Those who are looking at it from this perspective are missing the forest due to that big fat tree that is in their way! Yes, Apple is making a killing on its iPhone sales, and it would be difficult to attempt to catch them with a fat margined product. They have managed to produce both margin and volume and have wrapped it up with extreme customer loyalty. What the armchair pundits are missing is the power of reach. Google is developing massive reach, and developing it ridiculously quickly. A byproduct of this reach is the commoditization of the smart phone platform which will probably cut the fat margined business model off at its knees. That is not to say that Apple will be cut off at the knees, but they will have to alter their business model for the competitor-less margin that they enjoyed for the last three years will no longer be a given. It also means that anyone else reaching for the crown (including Apple) will have to spend more upfront to gain less per unit sold. This actually benefits Google, for they are not in the hardware race, yet they benefit from each and every handset, tablet, desktop and automotive unit sold. Google is trying to become the new Microsoft!

As clearly anticipated, Apple's margins have dropped, and are expected to drop even more and at a faster rate. Bingo! Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money!

In the meantime, Google ramps up the potential to push software as a cloud service, downloadable software and interactive, activity/context sensitive rich media ads and services to hundreds of millions of new users. This opens up a phenomenal opportunity for Google, and it appears as if many are missing the point because Google (wisely) decided not monetize it immediately, but to let it gestate and grow. Do you remember 15 years ago when many felt the same about search and the fact that Google wasn’t making any money providing search (pre-advertising)? Now this is not to say that Google is going to win the Smart Phone Wars, although at this point Google looks like the number one contender (IMO, Apple, Google and Microsoft are the ones to look out for). Apple has a very different and unique approach that is executing quite well from a profit and market share approach. Google has very strong momentum, and Microsoft has, by far, the strongest infrastructure. The only definite that I see is that this is a very exciting time to be a consumer of these products, for the competition is forcing everybody to push out the best that they have to offer – very much unlike the time when MSFT ran everything and which produced Windows Vista. Don’t believe me? Well, if you haven’t had a chance to yet, check out the features packed into the new Windows Mobile 7 OS - After Getting a Glimpse of the New Windows Phone 7 Functionality, RIMM is Looking More Like a Short Play.

Other perks from the Smart Phone Wars competition:

    • You can bet your left ass cheek that the iPhone 5 will have an Evo-sized screen with resolution to match today’s LCD flat screens, accompanied by the opening up of the iPhone to standards-based peripherals, ex. HDMI plugs and USB. The screen size increase is a definite, but peripherals is a maybe. Die hard Apple fans won’t mind that they have to jump through hoops to connect their device, but the rest of the world will lean towards an Android device if they can’t easily use their phone/tablet with existing hardware. Apple sees this as well as I do. I’m sure they’ll find a way to gimp the standard somewhat, but more open is better than less open.

The iPhone 5 did come out with a larger screen, albeit just now quiet large enough. For power users and those who are on their phone a lot  or consume significant multi-media, this is a deal breaker. Apple also went deeper into the proprietary field versus more standards based. This will give a temporary blip upwards in profits and lock-in, then ultimately cause #FAIL as Android ubiquity seeps in. This was a major error on the part of management.

    • You will probably see Nokia adopt Android or Windows Mobile on some of its devices, or you will see continued market share decline. Nokia makes some kick-ass hardware, and will challenge HTC if they had the OS to go along with it.

 As predicted, Nokia did adopt the Windows platform, and it did so en masse - reference The Nokia/Microsoft Alliance & Android's Commoditization Of the Mobile OS Platform. While many believe this to have been a foolish move on the part of Nokia, I believe it was their better bet. Now, they need to work on pushing the hardware boundaries like Samsung, HTC, et. al. This is not to say they will win, but it makes losing marginally less likely.

    • Microsoft is guaranteed to extend their hegemony on the desktop and enterprise server space to the handset, as well as their reach into the consumer living room via the Xbox. The result? More functionality, more usability, and better overall products.

Another accurate prediction as Microsoft goes full tilt into the hardware business (not peripherals, but actual computers with their Surface intiative). This was a very risky move on Microsoft's part, but something had to be done and the move is applauded by this author, as is the switch to the Windows 8 touch paradigm. Again, reference reference Microsoft Is Doing What The "Has Been Giants Of Yesteryear" Were Afraid To Do, Make A Radical Change BEFORE ITS TOO LATE!

Roughly 3 years ago in my "mobile computing wars" series, I foretold of The Creatively Destructive Pace of Technology Innovation and the Paradigm Shift known as the Mobile Computing Wars! In particular, I warned of the benefits to the consumer and pitfalls to the potential losers of the battle between Apple, Microsoft and Google, reference There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All. By the way, by Q1 2010, it was already evident to BoomBustBloggers that Research In Motion was a goner - ). While the bulk of my opinion and analysis was directed between the upcoming heated battle between Apple and Google (The Mobile Computing and Content Wars: Part 2, the Google Response to the Paradigm Shift and An Introduction to How Apple Apple Will Compete With the Google/Android Onslaught) which was accurately called, I also appeared to be the lone gunman in warning that Microsoft is not even close to being out of the race just yet - . This was early 2010. Well, nearly 3 years later, we have MSFT doing what IBM, LOTUS, HP, DELL, and a wide variety of other tech companies simply didn't have the balls to do. What is that, you ask? They risked cannibalizing their cash cow revenues and kicking their lazy, unmotivated (despite declining margins and market share, via ass whoopin's from Google and Apple) OEM's in the nuts, forcing either an exponential growth via a pheonix-like rebirth style wake-up call or a collapse from atrophy. Either way, Microsoft is attempting to position itself to benefit. The previous world tech rulers simply got too comfortable in their make money by doing nothing, cash cow, monopolistic business lines and sat around while more innovative and nimble competitors literally ate their lunch then came bombarding in demanding dinner as well (say Apple).

    • The Android clan (which is nearly everybody who is not RIM, Apple and MSFT, and maybe Nokia) will try their best to pump their R&D departments to their limits, and you will be getting bleeding edge products pushed to your door step on a quarterly basis until a clear winner is selected - which will probably be sometime from now.


Again, another very prescient call, as can be referenced through the public release of our latest report on Apple, :

Like the Galaxy Note 2 clearly makes the iPhone appear to be a toy rather than a useful device, the Surface does the same to the iPad.

Apple -Competition and Cost Structure - unlocked Page 09

Currently, the best phone on the market (feature-wise) also happens to be the cheapest phone on the market, and also happens to be a Chinese phone... Sold by a Chinese Company.

The-OPPO-Finders-Different-Views

This phone is one of the thinnest phones ever sold at 6.99 millimeters thick.

It has a 5 inch, FULL HD 1080p screen resolution with 441dpi density. This is approaching twice the resolution of the iPhone 5 and a full 1/3 greater pixels more than the "retina' screen.

The phone has the fastest chip on the market, the new quad-core Snapdgragon, materially faster than the chip inside the iPhone, and not just spec-wise but actual real world performance as well.

It has a 2.1 mega-pixel front facing camera that can do full HD video conferencing and a 12 mega-pixel rear facing camera with dual xenon flash (one of the highest resolutions in the market).

This cell phone will outrun and outperform a Macbook air laptop in many instances!

It is not a cheap Chinese knock-off. If anything, the iPhone 5 is a cheap American designed, Chinese made knock-off. Try doing this with your iPhone 5....

Oh yeah! A two year old already tried it, not with a grown man via hammer and nails, but just with her mommy's keys (may I add that iFixit is a well respected outfit):

Long story short, if anything, the iPhone 5 is the cheap knock off in terms of speed, durabilty or functionality!

This phone retails, unsubsidized and fully unlocked for just over $500 USD, as compared to the iPhone 5 which starts at $649. As I have been saying for quite some time, Apple is WAAAAYYYY behind the curve in terms of functionality, specs and quality and the only way they can catch up to the Android clan (that is if they even can catch up) is through share price destroying #MarginCompression, as told throughout this blog's Apple research history (see, again, Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money).

Must read Smart Phone Wars commentary from 3 years ago becomes true in real time:

    1. There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All
    2. The Mobile Computing and Content Wars: Part 2, the Google Response to the Paradigm Shift
    3. An Introduction to How Apple Apple Will Compete With the Google/Android Onslaught
Google's "less than free" business model has successfully put it on track to becoming the next Microsoft. Once it has 90+% market share in mobile OSs (it's currently knocking on 89%'s door), it will have the door opened to lead as the de facto provider of cloud services, basically acting as the Windows operating system (remember the importance of this OS in the 1990s) of the Web. We're not even broaching the topic of Google being the shepherd of global data and information throughout the web and the Internet connected world!

I have lamented several times before the anti-Apple rhetoric hit the MSM, Which Is The More Sustainable Business Model - Selling The World's Information or Selling Shiny New Things??? as Apple Bias In The Media Has Simply Gone Too Far, Potentially Hoodwinking Investors Into Believing Apple Has Not Reached Its Zenith!

Related BoomBustBlog Subscription-only Research:

Apple 4Q2012 update professional & institutional

Apple 4Q2012 update - retail

 

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All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade

Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.

file iconGoogle Q1-2012 Valuation Summmary 04/20/2012

file iconGoogle Final Report 10/08/2010

A couple of bits from our archives...


There are currently 7 Google reports available. Select the "Google Final Report" and click the "Download" button. You will receive a 63 page analysis that looks like this on the cover...

The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as  valuation for each business line.

Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.

Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.

Published in BoomBustBlog

The iPad mini appears to be on track to actually outsell the iPad 4 according to a news report by Cnet:iPad Mini set to eclipse Retina iPad. This further corroborates my theory of margin compression at Apple. Apple released the iPad mini in response to the success of 7 inch form factor tablets running Google's Android, namely the Nexus 7, Barnes and Noble Nook HD and Amazon Kindle HD - all of which are considerably cheaper and much lower margin than the Apple iPad.

Our extremely profitable Apple research clearly outlined this pattern many months ago, Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All. this research accurately predicted the supply crunch involving LG, the price war involving Android, the refresh cycle compression and supremacy of Android and most notably the marigin compression Apple would suffer in attempting to rectify these ills:

Apple -Competition and Cost Structure - unlocked Page 03 

Apple -Competition and Cost Structure - unlocked Page 04 copy 

Apple -Competition and Cost Structure - unlocked Page 05 

Apple -Competition and Cost Structure - unlocked Page 08 

Published in BoomBustBlog

Isn't it amazing that you can get more notoriety for showing your ass and a pretty smile than you can get for outing the scam of the decade through intellectual analysis? More money was lost through the Facebook scam IPO at $38 than Bernie Madoff could ever have pulled off. Notice that Bernie went to jail for his relative pennies, while the bankers selling and snake oil in the form of overpriced Facebook shares got paid record bonuses on the back of taxpayer bailouts!!!Often times people can see a blatant fact, a seemingly undeniable truth, and totally ignore it as if it doesn't exist. In the US, the Wall Street banks are masters of this marketing derived form of prestidigitation. Wall Street banks pay humongous bonuses (from your tax dollars) based on the dispensing of bogus advice, despite the fact that it can be proven beyond a shadow of a doubt that there are many other entities that have advised better, considerably more accurately and have done so consistently (Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best?). Go figure...

Media celebrities are also adept at garnering significant mind share, although it's a bit more understandable why this is so. Some are beautiful, some sound good, others act well on stage - basically, they are capable of doing more than simply muppetizing clients (Goldman Sachs Executive Director Corroborates Reggie Middleton's Stance: Business Model Designed To Walk Over Clients). This article looks to counter that magic that allows those who consistently under perform to continuously be looked upon as masters of the universe, while those who have performed consistently are thought of as "alternative" or "fringe", simply because they don't garner the mindshare of the sexy celebrity or the "Masters of the Intellectual Universe Investment Bank". Well, there's a new sheriff in town! Here comes that new, "Intellectual Celebrity". One should consider me the Kim Khardashian of global finance and investment. Instead of big ass and a pretty face, I offer a massively analytical perspective, a damn near offensive intellectual honesty and an unyielding penchant for spitting the facts that few want to hear. So, it's not Jay-Z! It's Reg-G!. Here we go...

Reggie_Middleton_hunting_the_Squid_Known_As_Goldman_Sachs_GSThere's a new celebrity in town. He sports acute intellectual capacity instead of ass, is much more aggressive and aims to make the masses aware, despite who he may offend. Yes, I know... It may take some getting used to!

This article is segmented, and those who have followed me can skip my history with Facebook valuation vs the Wall Street banks and move forward to the Google+ Communities vs Facebook Groups comparison...

How the Facebook story got started...

Facebook started its institutional investment life as a very popular, very well known company. Goldman took this story (private) stock and went bananas with it, as meticulously illustrated in the following blog posts:

  1. Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
  2. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
  3. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
  4. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models
  5. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!

I issued private research to my subscribers while publicly warning that Facebook at, or anywhere near, its IPO price was a blatant bald faced SCAM & RIPOFF!!!

  1. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1
  2. The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly

As the actual IPO arrived, JP Morgan, Morgan Stanley, Goldman Sachs, etc. piled on the Bullshit, basically espousing how great an investment this was at $38, screaming that this was a once in a lifetime opportunity. Basically, they took the opposite stance of yours truly. And how did that worked out??? BoomBustBlog Challenges Face Ripping Facebook Share Peddlers That Left Muppets Faceless And Nearly 50% Poorer After IPO.

The stock debuted at $38, went up to about $44 that day, then hasn't seen the high or IPO price since, dropping to $17 or so and now trading around $27 on additional analyst upgrades (because the Muppets didn't get bent over hard enough the first time around).

All should still be aware of the primary factor in this "growth company" stock's story....

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These facts should not have been a surprise, and blog subscribers were made aware nearly a 2 years ago, as excerpted from our 2nd most recent forensic analysis.

 

FB IPO Analysis  Valuation Note Page 04

I want to focus on the Google+ effect mentioned in the research page above. JC Kendall of SocialMedia Today posed the question "Google+ Communities: The Last Nail In The Facebook Coffin?". Basically, he ponders whether or not the release of the Google's recent answer to Facebook's Groups product will drive Facebook the way of MySpace. I will excerpt the parts pertinent to this discussion, but I urge you to visit the full article and also keep in mind that Mr. Kendall is a socail media professional, hence may have a different perspective than that of the casual user. Here's some very interesting highlights of what he had to say:

  • Back in March of 2012, Facebook reported that on average only 16% of Facebook Brand Page posts were read on average by the fans of those pages.  For all the money spent on Facebook advertisements, they resulted in a CRT (click-through-rate) of 0.051%.
  • In May of 2012, Facebook began allowing business to “Promote their Posts” after killing off the previous “Reach Generator”, a program that GUARANTEED at launch that it would reach 75% of Facebook users that had liked a Brand Page, but only produced an average of 16% reach. 
  • In June 2012, fed up with what he concluded as Facebook blocking his ability to reach his huge audience of Facebook fans, George Takei of [Lieutenant Sulu] Star Trek fame contacted Facebook about his concerns, and was told “buy more promoted posts.”  Takei watched his reach dwindle while the number of his posts remained the same, and decided it was due to EdgeRank, the Facebook algorithm that determines who gets to see a user’s updates. ....Facebook determines who sees users posts, not the users and you get to pay for this!   In June, George Takei established a profile on Google+, where 100% of his messages would be available to his friends at zero cost.  
  • {In} Google+, all posts, no matter how large the audience, are free of charge to 100% of your followers. 

When I talk to businesses about why, in the face of such dismal advertising returns, they are still concentrating their Social Media efforts on Facebook, the answer is the same, about 90% of the time:  Facebook Groups.  

Google+ Communities is less than a week old, and its growing like a weed!

  • ... all those things you did from your Facebook Groups to develop a relevant and interested audience for your business, could be done easier, smarter, more effectively, and free of charge? Google+ Communities, because of the added services available to Google+ Users and integration with all the other benefits of the Google infrastructure, simply blows Facebook Groups out of the water. 
  • ...Here is the kicker:  All of the content from a Public Google+ Community is indexed, and discoverable through Search on both Google and Google+. This is something that Public Google+ Community Moderators need to consider when creating their destinations.
  • ... to maintain a level of real privacy, there are two options for Private Communities as well. Private Communities can be restricted to its invited members only, but remaining discoverable by search.  Or, a fully private Community can be created, similar to a private YouTube channel, where it can be found only by knowing the specific URL of the Community. 
  • Any organization can create a Google+ Community that is open and available to anyone without an invitation necessary.  To get the word out, all the moderator needs to do on Google, is share their Community to the Public Stream, which will inform not only 100% their circled followers,  but the announcement is now part of the worldwide Google Index, and available through a keyword search, along with the content of every post, every image, every video. 
  • Contrast this with Facebook, where after a Facebook Group is created, the moderator now has to determine whether or not they wish to pay.  The price is determined by the number of Facebook friends who might see it, in order to reach 100% of their audience.  Consider that this is true not only to announce the Group, but the organization must also pay for EVERY update (promoted post) they make during the lifecycle of the Group’s initiative. For any Business or Organization with their eyes on the bottom line, the choice is clear. You can spend your  budget on managing and performing your daily activities from a Google+ Community,  with its various ways to allow users to either see you or find you, or you can devote a chunk of your resources to paying Facebook for the right to let all of your friends know what you are doing, with no guarantee of a decent CTR result. 
  • If I were a decision maker for an organization migrating from Facebook to Google+,  I may pay to send a single promoted post to my Facebook friends and followers, to let them know that my charity drive now and for the future can be found  now be found on Google+.  But, if my Facebook friends have any problem finding my Community Based Charitable initiative, not to worry, because they can (duh) GOOGLE IT. 
  • It is not as though someone cannot be a member of both Google+ and Facebook at the same time, so why would an Organization of any kind, pay more for much less on Facebook?  In addition, the SEO (search engine optimization) advantages of Google+ Communities cannot be overstated, along with the Google Authorship potential for preventing fraudulent association or duplication with your Google+ Community.

Google Hangout is a group video conferencing and video broadcast platform within Google+. It's very handy for multi-media publishing and has no match anywhere near its price - of free!

  • Google+ Hangouts can be scheduled by event and run from within a Google+ Community, with Hangout invitations sent to all members automatically.  Members of communities do not have to be within their community to share comments and information; they can post directly to their Communities from their public streams. 
  • On Google+, users can share files from Google drive both inside and outside their Google+ Communities. Users can both link to and distribute documents of all kinds, and even HOST A WEB SITE from their Google Drive with JavaScript support built in.  Pow! 
  • Suppose two (or up to ten) persons within a Google+ Community share an interest and want to speak RIGHT NOW to each other? They have the option of starting a video Hangout together, or should one of the two not have a web cam, use Google’s Voice services to place a free international call to the other person from within the hangout itself!  Did I mention FREE, and no limit to amount of usage?
  • Google, with the introduction of Google+ communities, has essentially matched or surpassed every level of functionality available on Facebook for a Business to develop its brand, and attract a growing number of followers to its audience. The additional features of SEO, Authority, and Trust associated with a Google+ presence is a difficult thing to pass up, and I predict that the steady stream of Businesses building a Brand Presence on Google+ will soon, with the addition of Google+ Communities will soon become a flood. 

  • Because Facebook has no public search engine, all content is confined within its forums. Facebook will not be able anytime soon to emulate what Google has done with SEO, Authorship or even Hangouts.  You see, the video performance of Hangouts cannot be duplicated without an associated fiber-network between datacenters like those Google has built. 
  • Google+ users connect through this network, away from all of the latency adding routers, switches, repeaters that connect together the rest of the internet. Creating desktop video conferencing for up to 10, or (15 users with a paid Google Apps account) is basically impossible given today’s video compression standards.  Google has promised HD Hangouts in the not too distant future.  I would expect to see those first along Google’s Fiber rollout for users in Kansas City, MO. 

Whew! That's a lot of info to digest. I apologize for excerpting so much of JC's content, but he had so much of relevance to contribute I had to. This is not all of it, by a long shot, so I again urge you to read the original SocialMedia Today article. The obvious question is, "Does he actually make a valid point?" BoomBustBloggers as well as FB and Google investors really need to know. Even though Facebook Does The Reverse Gravity Thing, Defies Logic, I still had to quip  - Hey Muppets, Only Another 100% Climb In Share Price To Go Before You Break Even With MS/GS/FB Investment Advice. Let's turn to my site's stats to reveal some actual facts and stats.

 image017

As you can see from the chart above, the social network to beat for actual site referrals is Twitter. I believe that is due in large part to the nature of my site (financial analysis, which has a penchant towards real time information seekers). It is also due in part to a social media push that I have started, in which Twitter has the richest 3rd party publishing tools - something that I feel the other participants in the chart have erred in not directing significant resources. Time will tell if I'm correct.

Google search has always been a large contributor to site traffic, and when combined with Google Plus and Google.com referrals, is still number one despite the aggregate social media push. Google has integrated Google Plus into practically all of it properties, which makes the use of almost any Google product an indirect use of Google Plus. A wise move, one that (at least at this time) benefits the end user, and a move that significantly disadvantages its competitors - primarily Facebook! My Facebook account has been active for a couple of years, yet I just started a Facebook Company page last year, and it has been mostly inactive. I recently started adding content to it, along with a Google Plus page and LinkedIn Page (used to be active, then I stopped adding content and recently started again). Twitter has been active for about a year. At this point all of the major social media platforms get the same content posted simultaneously, and you can see the results. The content is formatted for Twitter, which may give Twitter an edge in this comparison.

What makes this comparison even more interesting is the fact that Google Plus is less than a year old while all of the other competitors are several years old. That makes Google Plus's competitiveness and growth appear outstanding. It is a true, clear, and credible threat to Facebook (as well as the others, and that's without considering the tech advancements) and I feel that FB investors are hardly giving this the attentition that it deserves. Google is out-Facebooking Facebook at an incredibly alarming rate!

 image019

The site stats mirror my description of the newness of my social media push. The new visits come mostly from my push onto new social media platforms. Of interest is the fact that Google Plus has a very high bounce rate, which denotes a lower quality of traffic, but the small amount of sample data being used is not conclusive. In addition, since the content is being formatted for Twitter's short form input rules, it fails to take full advantage of Facebook's and Google Plus's rich media capabilities. I will experiment with this theory by hosting a Google Plus Hangout Group Video session on my Facebook and Google research and opinion to see if this materially changes the stats. I believe it will, for the interaction in the content that I've posted on Google Plus, when there is interaction, is much greater than the other platforms - Twitter included!

 image016

The pages per visit metric is another measure of the quality of traffic. Here you see the Google search properties reign supreme, primarily because that traffic is pushed onto my site (the people are actively looking for me) as opposed to being pulled onto the site (I'm pushing content to them to entice them to come in). By effectively combining search with social media (which Google is doing) Google can convert Plus into a push versus pull scenario. Now for the most important point: Google Plus has just been launched, and it is now just launching new aspects of the platform. All of these platform aspects from Google are absolutely free. If you factor in the cost of paid advertising on LinkedIn, Twitter, or Facebook and cost per page visit, Google Plus shoots way up to the top. WAAAAYYYYYYY UPPPP!!!! Try ti for yourself. Divide the cost of advertising on these platforms plus the cost of content creation and management by the net visitor or engagment session or purchase (or however you measure success) and you will find Google Plus to end up at the top of the list - and that is despite its highly nascent state! Imagine what happens once Google actually gets the ball rolling!!!

This is going to be a problem for all of those social media sites whose business models are predicated on ad revenue. How can you charge for something when your competitor gives the same thing away (arguably on a better platform) for free? This is the question of doom that proved to be the death of the classifieds industry, soon the news industry as we know it, and the smartphone OS industry (ask RIMM if I know what I'm taking about BoomBustBlog Research Performs a RIM Job!, or even Apple Deconstructing The Most Hated Trade Of The Decade, The w 375% BoomBustBlog Apple Call!! and Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All).

Google is able to disintermediate these industries through a process known as cost shifting - basically offering a competitors cash cow product for free to the end user by shifting the cost of making and delivering said product to a natural producer who must incur said costs anyway, thereby totaly disrupting the business models and crushing the margins of the established status quo. With the newness of Facebook et. al., it may be hard for old timers to consider them status quo, but in Internet Time, Facebook is old school and faces disintermediation through cost shifting if they don't figure something out, and figure it out fast! 

Here I break down Google Cost Shifting on the Max Keiser (who, after being broadcast on China TV, may very well be the most seen independent newscaster in the world) Show

So, why aren't you hearing this from those big Wall Street banks that were clamoring to sell you those Facebook shares at $38?

Well, I've Told You Before, And I'll Tell You Again - Goldman Sachs Investment Advice Sucks!!! I thought everyone would be asking the question Is It Now Common Knowledge ThatGoldman's Investment Advice Sucks?, but since they aren't I'm here to fan the flames. The reason why you don't here this from those banks is because their business model is predicated upon your ignorance. Independent investors and analysts (say BoomBustBlog) are to the extant, big Wall Street bank as Google Plus is to Facebook, a source of pending disintermediation and margin compression. As excerpted from BoomBustBlog Challenges Face Ripping Facebook Share Peddlers That Left Muppets Faceless And Nearly 50% Poorer After IPO:

I made it clear that those who lost roughly half of their capital at or near the IPO price simply forfeited those funds from not reading BoomBustBlog, and this situation was virtually guaranteed. I felt so strongly about it that I made much of my opinion available for free this time.

Here's where I broke it down on Capital Account

I also happened to do the same on the Max Kesier show...

I discussed Facebook on the Peter Schiff radio show, the Facebook excerpt is below...

Additional Facebook analysis, valuation and commentary.

On Max Keiser, go to the 13:55 marker for more on Facebook...

Double your money by shorting the Street's advice! Once Again!

Here is a full year of free blog posts and paid research material warning that ANYBODY following the lead of Goldman, Morgan Stanley and JP Morgan on the Facebook offering would get their Face(book)s RIPPED!!! Could you imagine me on a reality TV show based on this stuff??? Well, it's coming...

  1. Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
  2. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
  3. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
  4. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models
  5. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!
  6. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1
  7. The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly
  8. On Top Of The 2x-10x Return Had Off Of BoomBustBlog Facebook Research, Our Models Show How Much More Is Available...
  9. Is Time For Facebook Investors To Literally Face the Book (Value)?
  10. Facebook Bubble Blowing Justification Exercises Commence Today
  11. Facebook Options Are Now Trading, Or At Least The PUTS Are!
  12. Reggie Middleton breaks down "Muppetology," Face Ripping IPO's, and the Chinese Wall!
  13. Facebooking The Chinese Wall: How A Blog Has Outperformed Wall Street For 5 Yrs
  14. Why Shouldn't Practitioners Of Muppetology Get Swallowed In A Facebook IPO Class Action Suit?
  15. Shorting Federal Facebook Notes Are Not Allowed Today ?
  16. As I Promised Last Year, Facebook Is Being Proven To Be Overhyped and Overpriced!

It would seem that Facebook Finally Faces The Fact Of BoomBustBlog AnalysisProfessional and institutional BoomBustBlog subscribers have access to a simplified unlocked version of the valuation model used for this report, available for immediate download - Facebook Valuation Model 08Feb2012. I just nominally input some very generous numbers and the best case scenario chart (see the chart tab after your own individual inputs) is quite revealing, indeed! The full forensic opinion is available to all subscribers here FaceBook IPO & Valuation Note Update, and the latest iteration can be found here FB IPO Analysis & Valuation Note - update with per share valuation 05/21/2012. It is recommended that subscribers (click here to subscribe) also review the original analyses (file iconFB note final 01/11/2011).

 

Industry Leading, Subscription Based Google Research

All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade

Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.

Subscription research:

file iconGoogle Final Report 10/08/2010

A couple of bits from our archives...


There are currently 7 Google reports available. Select the "Google Final Report" and click the "Download" button. You will receive a 63 page analysis that looks like this on the cover...

The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as  valuation for each business line.

Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.

Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.

Published in BoomBustBlog

Last week I told the world that hardware vendors are DEAD! At least the fat margin business model hardware vendors (like those whose name rhymes with Snapple). The post Smartphone Hardware Manufacturers Are Dead, Long Live The Google-like Solution Providers, pretty much says it all - or does it. You see, this is about mobile computing, not smartphones (reference The mobile computing wars from 3 yrs ago). Google has just launched a major salvo into the bastion of those companies who dare apsire to sell notebook computer/software bundles for over 22% margin!

Google offering $99 Samsung Series 5 Chromebooks to public shool teachers and students

If you reference the Google press release, you'll see that this offer includes a special, discounted price of $99 including hardware, management and support! Now that's CHEAP! An equivalent Macbook Air with the same package would run more than 10x the prices, that's right, well over $!,000! Margin compression here we come! 

Google ascendance, here we come! For those who don't know how the Google biz model works and why they actually want the cost of hardware to go down to zero, watch this piece that I did on the Max Keiser show...

Google's "less than free" business model has successfully put it on track to becoming the next Microsoft. Once it has 90+% market share in mobile OSs (it's currently knocking on 89%'s door), it will have the door opened to lead as the de facto provider of cloud services, basically acting as the Windows operating system (remember the importance of this OS in the 1990s) of the Web. We're not even broaching the topic of Google being the shepherd of global data and information throughout the web and the Internet connected world!

Related BoomBustBlog Subscription-only Research:

Apple 4Q2012 update professional & institutional

Apple 4Q2012 update - retail

All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade

Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.

file iconGoogle Q1-2012 Valuation Summmary 04/20/2012

file iconGoogle Final Report 10/08/2010

A couple of bits from our archives...


There are currently 7 Google reports available. Select the "Google Final Report" and click the "Download" button. You will receive a 63 page analysis that looks like this on the cover...

The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as  valuation for each business line.

Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.

Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.

Published in BoomBustBlog

Apple continues to under-perform, yet continues to go exactly as anticipated by the latest 3 quarters of BoomBustBlog research. Let's take a more granular look at this, shall we...

appl copy

Believe it or not there are still many naysayers who are attempting to hold on to the notion that Apple is simply in  temporary dip, despite having a precise historical template from which to read the #margincompression theory (see Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money!) tea leaves from. Those tea leaves are steeped in a essence of Blackberry (reference BoomBustBlog Research Performs a RIM Job!) and they demonstrate clearly how quickly a seemingly fundamentally strong company that is an adored brand name can hit the skids when it fails to cannibalize its own margins. Basically, if you don't do it, someone else will do it for you.

For those of you who feel that Apple's slide is correlated with the fall of the NAZ, simply look again at the chart above. Apple's fall has taken on a macro-fundamental- forward looking fall of its own. Why is that? Well, after Deconstructing The Most Hated Trade Of The Decade, The 375% BoomBustBlog Apple Call!! I went into detail with Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All. But wait, it goes deeper than that. The seminal research that we released that predicted the rise of Samsung over Apple  over a year ago has been proven accurate beyond a shadow of a doubt, now...


Apple -Competition and Cost Structure - unlocked Page 08Apple -Competition and Cost Structure - unlocked Page 08

Apple -Competition and Cost Structure - unlocked Page 09Apple -Competition and Cost Structure - unlocked Page 09

As can be corroborated through the latest findings by research company IDC: Q3 share of smart connected device market is: Apple 15.1%; Samsung 21.8%

Top 5 Smart Connected Device Vendors, Shipments, and Market Share, Q3 2012 (shipments in millions) 

Vendor

3Q12 Unit Shipments

3Q12 Market Share

3Q11 Unit Shipments

3Q11 Market Share

3Q12/3Q11 Growth

Samsung

66.1

21.8%

33.5

14.0%

97.5%

Apple

45.8

15.1%

33.1

13.9%

38.3%

Lenovo

21.1

7.0%

13.2

5.5%

60.0%

HP

14.0

4.6%

17.6

7.4%

-20.5%

Sony

11.0

3.6%

8.7

3.7%

25.4%

Other

145.6

48.0%

132.7

55.6%

9.7%

Total

303.6

100.0%

238.9

100.0%

27.1%

 

What many may fail to notice is the slot below Apple, occupied by Lenovo. The Chinese companies are bustin' ass once it comes to Android phones, not just in price, but also in features and quality as well. As stated in my last missive on this topic, no one can complain about not wanting a phone due to low Chinese quality because they're all Chinese now - including the iPhones and the Galaxy's - reference Smartphone Hardware Manufacturers Are Dead, Long Live The Google-like Solution Providers (this is an article that is a must read for those who do not know what is going in China re: Android phones and technology!).

Currently, the best phone on the market (feature-wise) also happens to be the cheapest phone on the market, and also happens to be a Chinese phone... Sold by a Chinese Company.

The-OPPO-Finders-Different-Views

This phone is one of the thinnest phones ever sold at 6.99 millimeters thick.

It has a 5 inch, FULL HD 1080p screen resolutionwith 441dpi density. This is approaching twice the resolution of the iPhone 5 and a full 1/3 greater pixels more than the "retina' screen.

The phone has the fastest chip on the market, the new quad-core Snapdgragon, materially faster than the chip inside the iPhone, and not just spec-wise but actual real world performance as well.

It has a 2.1 mega-pixel front facing camera that can do full HD video conferencing and a 12 mega-pixel rear facing camera with dual xenon flash (one of the highest resolutions in the market).

This cell phone will outrun and outperform a Macbook air laptop in many instances!

It is not a cheap Chinese knock-off. If anything, the iPhone 5 is a cheap American designed, Chinese made knock-off. Try doing this with your iPhone 5....

Oh yeah! A two year old already tried it, not with a grown man via hammer and nails, but just with her mommy's keys (may I add that iFixit is a well respected outfit):

Long story short, if anything, the iPhone 5 is the cheap knock off in terms of speed, durabilty or functionality!

This phone retails, unsubsidized and fully unlocked for just over $500 USD, as compared to the iPhone 5 which starts at $649. As I have been saying for quite some time, Apple is WAAAAYYYY behind the curve in terms of functionality, specs and quality and the only way they can catch up to the Android clan (that is if they even can catch up) is through share price destroying #MarginCompression, as told throughout this blog's Apple research history (see, again, Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money).

This is not a trading site, but the obvious is... Well... Obvious!

Subscribers, as recommended at the release of the iPhone 5, positions should have been moved to lean towards the pessimistic scenario in the lastest Apple report. Now that we have clearly pierced the optimistic and base case scenario valuations, I am now more convinced than ever that the pessimistic scenario will remain the focus in the upcoming months. If you have ridden this long until the iPhone 5 release then shorted, you should have ample profits. Profit protection is key, so to avoid a pop in the stock, take profits and set up a position to assume the realization of the pessimistic scenario in the upcoming quarters. 

The latest valuation bands can be accessed in the last few pages of the reports below by paying subscribers (click here to subscribe). I'd like to make clear that this research is worth significantly more than the relatively paltry subscription price it takes to access it. In just the last month, it's already worth more than $34,852,564,500 ($34,852,564,500 - That's How Much BoomBustBlog's Apple Research Was Worth Today!). In addition, it would've, could've, should've saved an entire renknown brokergage firm/investment bank from failure, reference The Blog That Could Have Saved That Institutional Broker - Or - Beware Of Those Poison Apples!!!

Subscribers, reference:

Apple 4Q2012 update professional & institutional
Apple 4Q2012 update - retail

Published in BoomBustBlog

 Yes, $34,852,564,500! That's how much BoomBustBlog Apple research was worth today as Apple dropped nearly 7% out of nowhere (as it gained over 7% for the exact same reason a couple of weeks ago). That's also the amount of money it took to turn the lights on in the hedge fund roach motel. Prepare to see ~240 funds who DO NOT subscribe to the blog start scurrying and scampering about, as per ZeroHedge:

 

So, you asked for what the research behind the firewall said, and now you have it:

apple puts small

Up 8% one day, down 7% in one day two weeks later... Apple is now comparable in volatility to Greek bonds!!! You know what that means... It may get worse once the pudits wake up and realize that the Apple App Store Has 4x Google Play Store Revenue, But Google's Store Growing Ridiculously 24x Faster! #MarginCompression! You see, the Apple App Store is the glue that holds Apple's customers in house. It's basically the network effect at work at its greatest. The problem is, if you no longer have the largest network, you know longer have the effect. This was clearly articulated last year, see I Absolutely Dare Anyone To Read This And Still Not Consider The Probability (Not Possibility) Of Apple Suffering From Margin Compression.

Subscribers see Apple 4Q2012 update professional & institutional and Apple 4Q2012 update - retail.

Published in BoomBustBlog

Coming off of my post this morning lamenting on how most smartphone hardware manufacturers are dead in the water, I am reminded of the rant from August before last - The Mobile Computing Wars Are Progressing Exactly As Anticipated - Google Is Killin' Them!!! Well,I was right and as the investment world started coming to their senses, Apple's share prices visited physics 101 and danced with gravity, reference:

Many brand name following die hards think this is just a momo trading dip (BTFD), but those of you who follow my paid research closely know better, despite what those white shoe squid types may lead one to believe. As reported by Venture Beat's John KoetsierApple's app store revenue is 4X Google Play's … but Google Play is growing 24X faster and as gleaned directly from App Annie's blog:

 

jelly-bean-vs-ios6-620x325iOS revenues 4x that of Google Play, but watch out for Google Play’s growth

The gap between global revenues on iOS and Google Play is significant, but it’s gradually closing. Whilst iOS revenues are four times larger than its counterpart, Google Play revenue grew 17.9% in the last month, whilst iOS revenue contracted 0.7% in the same time period.

Apple’s App Store is still the king of mobile apps stores, with four times the revenue of Google Play, but Google Play is growing much, much faster than the App Store.

"While the iOS app store revenues grew 12.9 percent in 2012, Google Play grew an astonishing 313 percent. That’s something I wondered about in July when Apple’s third quarter sales results showed a $100 million drop in iTunes store revenues, but I lacked data at the time to make a full case. The same trend was visible in free downloads, where even though iOS users download 10 apps for every 9 apps Android users download, Google Play grew 47 percent to iOS’s 4.5 percent."

Interestingly, Japan’s Google Play store outsold all others in October 2012 — the first time a non-U.S. country has led in revenues on a major app store. That’s particularly amazing since Japanese users download at a rate that’s one-fourth the rate of U.S. user downloads.

“This represents a major tectonic shift in the international app store economy and one that I’m sure publishers will be looking to take advantage of,” said Schmitt.

 About a year and a half ago I opined on Why Software Developers Can Make More Money On Android. Of course, many developers chimed in by saying that I was out of my mind. It's amazing how rare pragmatic foresight is in this day and age. With revenue growingat 24x the rate of the market leader and not from an insignificant base, methinks I may have had a very valid point.
From App Annie's blog and downloadable report (click here for the source and the original report):
AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 03AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 05AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 06AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 07AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 08AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 09AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 10AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 11AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 12AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 13AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 14AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 15AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 16AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 17

We have created a revenue model that empirically compares the revenue generation potential to a software developer on Android and on Apple - assuming equal efforts are applied on both platforms! The last phrase is key. The results should be obvious to most, but alas there are probably many who may find it hard to grasp...

As of the last two quarters, the Android would have thrown off significantly more cash than iOS for a given app. That is not all. The assumptions used to derive these figures were heavily, heavily in favor of iOS. While there may have been objective cause to tweak heavily in favor of iOS due to the ubiquity of the Apple App Store in the past in comparison to the nascent nature of the Android ecosystem, Android's Marketplace now has between 150,000 and 200,000 apps and is reportedly adding 50,000 apps per quarter. Adding that to the fact that Android has the world's largest installed base AND the largest growth rate in the industry and this should be a no-brainer. Alas, in order to err on the conservative side if to err at all, we tweaked heavily in favor of iOS.

Published in BoomBustBlog

Coming off of my post this morning lamenting on how most smartphone hardware manufacturers are dead in the water, I am reminded of the rant from August before last - The Mobile Computing Wars Are Progressing Exactly As Anticipated - Google Is Killin' Them!!! Well,I was right and as the investment world started coming to their senses, Apple's share prices visited physics 101 and danced with gravity, reference:

Many brand name following die hards think this is just a momo trading dip (BTFD), but
those of you who follow my paid research closely know better, despite what those white shoe squid types may lead one to believe (reference pick to the left). As reported by Venture Beat's John KoetsierApple's app store revenue is 4X Google Play's … but Google Play is growing 24X faster and as gleaned directly from App Annie's blog:

 

jelly-bean-vs-ios6-620x325iOS revenues 4x that of Google Play, but watch out for Google Play’s growth

The gap between global revenues on iOS and Google Play is significant, but it’s gradually closing. Whilst iOS revenues are four times larger than its counterpart, Google Play revenue grew 17.9% in the last month, whilst iOS revenue contracted 0.7% in the same time period.

Apple’s App Store is still the king of mobile apps stores, with four times the revenue of Google Play, but Google Play is growing much, much faster than the App Store.

"While the iOS app store revenues grew 12.9 percent in 2012, Google Play grew an astonishing 313 percent. That’s something I wondered about in July when Apple’s third quarter sales results showed a $100 million drop in iTunes store revenues, but I lacked data at the time to make a full case. The same trend was visible in free downloads, where even though iOS users download 10 apps for every 9 apps Android users download, Google Play grew 47 percent to iOS’s 4.5 percent."

Interestingly, Japan’s Google Play store outsold all others in October 2012 — the first time a non-U.S. country has led in revenues on a major app store. That’s particularly amazing since Japanese users download at a rate that’s one-fourth the rate of U.S. user downloads.

“This represents a major tectonic shift in the international app store economy and one that I’m sure publishers will be looking to take advantage of,” said Schmitt.

 About a year and a half ago I opined on Why Software Developers Can Make More Money On Android. Of course, many developers chimed in by saying that I was out of my mind. It's amazing how rare pragmatic foresight is in this day and age. With revenue growingat 24x the rate of the market leader and not from an insignificant base, methinks I may have had a very valid point.
From App Annie's blog and downloadable report (click here for the source and the original report):
AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 03AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 05AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 06AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 07AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 08AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 09AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 10AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 11AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 12AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 13AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 14AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 15AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 16AppAnnieIndexNov2012Report.pdf utm sourceappannieutm mediumblogutm campaignc00041 Page 17

We have created a revenue model that empirically compares the revenue generation potential to a software developer on Android and on Apple - assuming equal efforts are applied on both platforms! The last phrase is key. The results should be obvious to most, but alas there are probably many who may find it hard to grasp...

As of the last two quarters, the Android would have thrown off significantly more cash than iOS for a given app. That is not all. The assumptions used to derive these figures were heavily, heavily in favor of iOS. While there may have been objective cause to tweak heavily in favor of iOS due to the ubiquity of the Apple App Store in the past in comparison to the nascent nature of the Android ecosystem, Android's Marketplace now has between 150,000 and 200,000 apps and is reportedly adding 50,000 apps per quarter. Adding that to the fact that Android has the world's largest installed base AND the largest growth rate in the industry and this should be a no-brainer. Alas, in order to err on the conservative side if to err at all, we tweaked heavily in favor of iOS.

Published in BoomBustBlog

Two and a half years ago I declared in my mobile computing wars series that Google would commoditized the mobile computing space, thereby turning the industry on its head dramatically changing business models and margin outlooks. Curiously enough, despite rampant evidence that I've been nothing but correct, investors, pundits and even leading industry participants still don't get it. CNBC ran the following article this morning... Chinese Smartphone Users Snub Apple for Local Brands

Sales of smartphones in China are outpacing sales in the U.S., and yet many Chinese shoppers are choosing cheaper, local brands, which now have more than 50 percent market share. The Financial Times reports.

What CNBC failed to realize was that the primary beneficiary of all of this is Google, who benefits from volume in handset and tablet sales, not margin. I made this point clear in my paid research reports, free blog posts and multiple interviews - to wit:

Google's "less than free" business model has successfully put it on track to becoming the next Microsoft. Once it has 90+% market share in mobile OSs (it's currently knocking on 89%'s door), it will have the door opened to lead as the de facto provider of cloud services, basically acting as the Windows operating system (remember the importance of this OS in the 1990s) of the Web. We're not even broaching the topic of Google being the shepherd of global data and information throughout the web and the Internet connected world!

Let's face it, Smartphone Hardware Manufacturers Are Dead, Long Live The Google-like Solution Providers! 

For those who disbelieve this statement, remember, there are no such things as cheap Chinese knockoffs anymore. It's all made in China, at least from a hardware perspective. The only thing that wasn't outsourced to Cheap Chinese Labor (CCL, but soon to be known as iCCL - inflation dinged not so cheap anymore Chinese Labor) was the IP and tech behind the OS and software. Here, Google easily reigns supreme, with its only viable competitors being Microsoft Windows Phone 8/RT/Pro and Apple's iOS6. Apple is nearly out of the picture, its just that the Hoi Polloi haven't received the memo yet (as was the case with our view of RIMM 2 1/2 years ago, and you see how that ended). Microsoft is simply an OTM call option with a decent amount of time premium still on it.

chinese wholesale android

Here you have a device available right now for just $160 retail, even less wholesale, unsubsidized. It actually blows the spec pants off of the iPhone 4S and keeps the iPhone 5 in the conversation! For the record, the iPhone 5 retails for $650 to $850 dollars!

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Potentially profitable and disruptive? Ask the classified and newspaper industries (or at least what’s left of them) if Google knows what it’s doing!!!!

As excerpted from our nearly 70 page forensic Google report (Subscribers, see Google Final Report 10/08/2010), I attempt to educate on the investment prowess of Google (that is both internal investment and external acquisition). Remember, many of Google's investments have become the largest instances of their type in the indsutry. The largest web video presence: YouTube! The largest mobile OS? Android! The largest mobile ad presence? Admob! the largest online productivity suite? Docs/Drive! I can go on with Gmail, Voice, etc., but if I haven't driven the message home yet then I probably never will. Google management has made it clear that YouTube will compete with major networks and Google Docs will compete and is actually pulling some business from Microsoft Office in the Enterprise. These are mere anecdotal examples. We all know the Android story already...

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Industry Leading, Subscription Based Google Research

All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade

Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.

Subscription research:

file iconGoogle Final Report 10/08/2010

A couple of bits from our archives...


There are currently 7 Google reports available. Select the "Google Final Report" and click the "Download" button. You will receive a 63 page analysis that looks like this on the cover...

The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as  valuation for each business line.

Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.

Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.

Published in BoomBustBlog