In Part 1 of a look at Google’s future I showed that Google’s revenues have been highly correlated with the population of Internet users in the markets it serves. If there were a causal relationship between population of users and revenue growth then the company would face a growth inflection point when that population becomes half penetrated.
In Significant Digits Episode 1 (Part 1) I showed data which suggests that the inflection point will come in 2016. Essentially the argument is that Google’s growth is ultimately limited by the population of users and that itself is a predictable number. I also used the example of the PC and smartphone penetration curves to show how the perception of the fortunes of companies whose revenues are based on those technologies were affected by inflections in their respective adoptions.
However, correlation is not causation. These users we count are not the customers who pay for Google’s services. Users (or usage) is therefore only a proxy. It may be a good proxy and intuitively it makes sense that it’s a driver of growth but fundamentally the company lives on a stream of revenues paid by advertisers. In order to really evaluate the opportunity we need to “follow the money” and track down where it comes from.
We don’t have visibility into the exact sources of these revenues but we have a top-level geographic segmentation (shown below.)
Sean Devine has a conversation with Horace Dediu of Asymco about open source software.
via 5by5 | Ruby on Rails Podcast #146: Horace Dediu of Asymco – Open Source Software.
This week Myke is joined by Horace Dediu. They discuss his work at Nokia and how that lead to starting his blog, Asymco. They also talk about the role and work of an analyst, his presentation series – Airshow – and graphs, naturally.
via 5by5 | CMD+Space #92: A New Lingua Franca, with Horace Dediu.
There are 7.1 billion people on Earth. Coincidentally there are also 7 billion mobile connections. Those connections are held by 3.45 billion unique mobile subscribers. Unsurprisingly, the largest national mobile markets (by number of subscriptions) correspond closely to the most populous nations.
Considering smartphones, last year 1 billion smartphones were sold and the number of smartphones in use is about 2 billion
Given the rapid adoption of smartphones, it’s also safe to assume that smartphone penetration will follow population distribution. In the US, where comScore data is published monthly, penetration is following a predictable logistic curve.
Assuming similar patterns world-wide we can forecast regional smartphone penetration.
This yields the following forecast for smartphone usage world-wide.
We talk about the major triumphs and minor failures of the Veronica Mars campaign on Kickstarter and kick off a series on The Capitalist’s Dilemma.
via 5by5 | The Critical Path #114: Veronicas Dilemma.
We believe there’s so much more that your portable wireless speaker should do for you. That’s why we made the AXX 200.
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The AXX 200 is now on sale for a limited time at Creative.com and Amazon.com.
We talk about CarPlay, MWC2014, Microsoft and Nokia, “Tim Cook’s outburst”, per-user value, and re-evaluating how we analyze companies in tech.
via 5by5 | The Critical Path #113: Takt Time.
When trying to assess the success of an ecosystem, the primary measure is the size of the user base or the “audience” for the product. Companies like FaceBook and WhatsApp and Twitter are measured first and foremost on this metric. Companies like Google, Amazon, Apple and Microsoft are less so. When revenues are firmly attached to products the focus shifts to “follow-the-money” rather than “follow-the-users” metrics.
That’s as it should be, but for the sake of understanding the competition between ecosystems, they should be compared on some similar basis. If the basis of competition in this day and age is ecosystems how does one evaluate Facebook’s vs. Microsoft’s? Or, more poignantly, how does one compare WhatsApp’s valuation with that of iMessage?
It’s common to value a company which aggregates audiences at a multiple of that audience size. The implication being that each member of the audience returns a certain cash flow to the aggregator and the discounting of those flows is the net present value. Which is why, for example, a newspaper is valued in terms of its subscribers. As is a TV network and as might be a social network. Using this metric, a WhatsApp (i.e. free messaging) user is worth $40 and the average social media user may be worth around $100.
The implication is that users/subscribers/audience members are loyal and will stay with the programming for some time. There is also a second implication that businesses which are not measured by audience size don’t have this loyal and recurring revenue base. The absence of an “audience” implies transience and impermanence and results in deep discounting of long-term viability.
The orthodox vs. the unorthodox: Tata, Tesla and Toyota. Why might an asymmetric competitor lose and a symmetric competitor win?
We begin with Tesla and Apple. We continue with aluminum vehicles and re-visit information asymmetry as Horace exploits it to buy a Mercedes on eBay.
We talk about car APIs (Aux input jack and ODBII) and much, much more.
A brief discussion considers the perils of endless line extension up and down the market, perhaps fueled by financialization.
This is a good one.
Asymcar 10: Asleep at the switch | Asymcar.
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