Apple makes money shock
Whilst Apple making money doesn’t seem very newsworthy anymore the latest results are worth a mention. The share price had dipped (13%) and some wondered if the amazing ride was over – a stock up 70% in four months has to take a fall sometime doesn’t it?. Well not when you report an 88% increase in iPhone sales. As these charts from Business Insider point out the iPhone alone is now a $100bn business after just 5 years; as @SaulKlein tweeted that’s what you call a start up.
But can it last for ever? Will the hit products keep coming? Could the patent wars dent their amazing profitability?. There is a view that Samsung – now the biggest phone manufacturer by volume – has more and better patents and can put a lot of pressure on Apple
Amazon disrupting publishing shock
The debate around how publishing is polarizing. Some see digital as way to break up the power of the big publishers and other see Amazon, Apple and Google as new gatekeepers destroying the market.
As ever Seth Godin gets to the heart of the issue; Piracy? You Wish.
A key argument against Amazon is that they use books as a loss leader to get people to their other businesses. Which keep expanding. This week they launched a flash sales sale called My Habit.
And to strengthen one of their promotions/deals plays, they are leveraging their unrivalled expertise in collaborative filtering to create profiles for users of Amazon Local. This will allow users to like or dislike the deals they are offered, so improving the ability to target deals – which is actually little different from what Groupon or Google offer. But in the future they could use your Amazon purchases to drive recommendations – they are keeping schtumm about that possibility for now.
Targeting is the key bit of friction in this space. Everyone seems to have stories about how inappropriate the Groupon deals are for them. At an excellent Mobile Marketing Association breakfast yesterday Groupon made a rare public presentation on their business, and talked about their GrouponNow mobile service which they hope will improve targeting as it moves the model from push to pull. We were interested to hear that mobile accounts for 10% of Groupon sales by value – which would be around $400 million. They previously reported that 25% of December sales were on mobile.
Interestingly Amazons other promotion business Living Social has pulled out of their equivalent to GrouponNow, closing its Instant mobile deals business. One reason is thought to have been the hardware costs – they gave iPads to many of their merchants.
Mobile Money everywhere
We attended an interesting event for SimplyTap this week, the retailer driven mobile payments service that Visa recently invested in. With a good turn out of retail heavyweights (it’s a long time since we were in a room with so many people with partings in their hair) we heard some bullish predictions. Stuart Rose – formerly of M&S – is their chairman and had some smart insights into how retail needs this innovation. This approach echoes what’s happening with retailers in the US, where people like Walmart and Target are looking to play a major role in mobile wallets.
With Visa predicting that half their business will be mobile by 2020, lots of people want to play in this space and this week also saw O2 launch their mobile wallet. Something of a Swiss Army Penknife service, this app has a mobile wallet, the ability to send money by text (like Barclays PingIt which we mentioned last week) and a barcode scanner so they can compare prices.
Sky News have leapt off the fence to say categorically that it won’t work, as banking is not in O2s DNA but we think they have a chance. This service is less about banking and more about payments, and around the world we see numerous examples of operators having success – but it’s going to be a while before you can call anyone a winner.
And as we keep saying, the payment is not going to be the key thing in mobile money. No-one has a problem paying for stuff and for anyone to be successful they need to create a context for the payment – where they solve a problem for people and then facilitate the payment to complete the process.
Square get this. They enable anyone to take credit card payments – expanding the number of US merchant accounts by 1 million since launch. They enable the merchant to create a dialogue with their customers – including offers – and then enable the payment without needing the credit card to be swiped after the first transaction. And they are doing amazing business – estimated to have a run rate of $5 billion a year in revenue.
We think that the winner in mobile wallets will also be the winner in promotions, deals and offers – if you are doing one you would mad not to do the other. Not least because the visibility of what people buy can drive better targeted offers – which is another advantage the credit card firms have. Just as Visa are investing in people like Simply Tap and Square, we wonder how long it will be before they buy a stake in a deals business?
When asked about payments and NFC at the MMA event the Groupon guy said he thought that it was an old technology and it would be newer tech like Square that would win out. They also mentioned their strategic alliances with Nokia, Deutsche Telecom and Foursquare – how long before they partner with a payments player?
And one last bit of retail news – Walmart have launched a new service that allows online shoppers to pay with cash. The customer buys online, then goes into a walnart store to pay, then the product is delivered to them.
As store traffic is so vital to high street retailers, we can see this type of multi platform retail growing – we also heard that some high street stores are looking at handling ecommerce returns for other brands, in order to get the traffic into their stores. Smart retailers are looking to connect their various channels and mobile can be the connection.
The real Pope of the Internet
Is Marc Andreessen the smartest man in tech? Well he did invent the browser and went on to launch Netscape - the first internet IPO. He came up with the idea of cloud computing before anyone else. And he was very early into social – launching Ning in 2004 enabling people to build their own social networks.
Oh, he also invested in Skype, Twitter, Groupon, Instagram and AirBnB.
This Wired Interview with him is fascinating – especially his theory that technology wants to be free; where he feels that -when the connectivity is good enough – the processing should take place in the cloud rather than on the device. Which means the web model works better than the native app model – but we need the connectivity to catch up.
Looking at how the cloud works today, means looking at Amazon web services, and this interview with the CTO captures the huge opportunities of the cloud and networked services.
And on the webapps versus native tip, Scott Jenson of Frog thinks native apps are over. Given his experience working at Apple, Symbian and Google, his thinking carries some weight. He does accept that it’s going to take some time though. Well worth reading.
Is Facebook really worth $100bn? – this piece questions some of the thinking behind this assumption.
Google are building on their efforts to get brands to invest in mobile and have now launched the Mobile Playbook – lots of examples of brands getting Mobile right.
Last week we talked about our theory that much of mobile is a hits business – whether it’s the latest device or the coolest app there is an element of fashion – and constantly making hits is hard. New York VC Fred Wilson posted on the same subject this week and asks if apps are like TV shows. A good read.
Rory Sutherland is probably the smartest guy I have ever worked with, and this interview is a good take on his current thinking about how human behaviour can be used to drive innovation
In the last couple of week we have done interesting workshops with smart agencies looking at the mobile opportunity. If you think this would be useful for your agency or brand team, lets have a chat.
And we have a couple of desks spare in our very cool office, right in the heart of Clerkenwell. So if you know any 1 or 2 (wo)man bands looking for space, point them our way.