Google Fourth Quarter Results Disappoint

Google reported revenues of $10.58 billion for the quarter ended December 31, 2011, an increase of 25 percent compared to the fourth quarter of 2010, and a record for Google.

Though a revenue record, investors were expecting more, primarily on the earnings front, putting pressure on Google's equity price. Google Results

Some think investors are worried about the growing regulatory scrutiny Google is facing, or the implications of its ownership of Motorola Mobility.

But most executives would probably love to have such problems. Consider Google's share of display advertising, which probably will pass Yahoo early in 2012.


Long criticized as being a revenue one trick pony, Google's display ad business now amounts to about 10 percent of total revenues, which continue to be lead by search advertising. 

Remarkably Consistent Smart Phone Video Consumption in France, UK, US Markets

It will come as no surprise to just about anyone that people who own smart phones watch video on those devices. What is interesting, in this bit of survey research, is the consistency of the behavior in different markets. As it turns out, the percentage of respondents to a Yankee Group survey who say they watch video at least once a week on their smart phones is precisely 42 percent each, in France, the United Kingdom and the United States. 


As you also would guess, feature phone users watch far less video. 

AT&T Price Hike Illustrates Trend

Beginning March 1,2012, AT&T's base rate for "measured phone service" in California will rise $3 a month to $15.37 from $12.37, — a 25 percent increase. The charge for additional local calls will be three cents per minute. Separately, AT&T's flat-rate charge for unlimited local calls will increase $1.05, to $21 a month. Some think the rates are not justified. Granted, it's always hard to determine whether retail rates are "fair" or not. But the rates do illustrate one often-forgotten and fundamental change in AT&T's cost structure.

As more and more customers abandon landline service for mobile service or rival providers, a fundamental issue is that a smaller customer base means fixed overhead costs of the network must necessarily be shared by a smaller number of customers. line loss

That means higher costs for the remaining customers, and the process will not stop as customers continue to shift their communications spending to other providers or other types of service.


Capital intensive networks are susceptible to changes in demand. In Denver, where we live in an arid climate and are highly susceptible to drought, residents continually are exhorted to use less water. We have done so. The result is higher rates. Why? Because the water utility's fixed expenses have to be covered, even in the face of lower usage (what we were asked to do), which lowers Denver Water's revenue. 

Predictions about Mobile Web Experiences Will Be Wrong

Union Square Ventures Partner Andy Weissman argues that, up to this point, most observers have assumed that mobile versions of PC experiences would be be similar to the bigger screen experiences, with relatively similar take rates, use cases and business opportunities.

He now suggests that we might have been wrong, and have been applying old rules in a new context, where the predictive value of the older assumptions isn’t as accurate. One might therefore guess that lots of unexpected change will occur as the smart phone experience begins to mature into a very distinct medium.

Reading, social networking, payments, learning, location services, medicine and media are some of the areas where expectations of end user behavior, value and revenue creation could be different than expected.

Think back to Netscape (if you are old enough) when it first was introduced in 1994, or even 1995 and 1996.  What were the then-current experiences Netscape enabled? Keep in mind this was before Amazon, eBay and Google, before e-commerce, before web mail, before Netflix, iTunes.

Who would have predicted then, the way the web has developed? Much the same is likely to happen with mobile web and smart phone-enabled experiences.

Unpredictable mobile impact

The Device is the Disruption

“Disruption” is the whole reason most companies receive venture capital backing. Disruption largely defines what has been happening in the telecom business for several decades. And yet there is extreme sensitivity about the notion. For good reason, one might argue.

Just one example: Microsoft owns Skype, which soon will be available on every major smart phone operating system used globally. Oddly, Microsoft is the last remaining major OS where Skype has not been supported.

So the irony is that voice revenues, which continue to represent 70 percent to 75 percent of all mobile service revenues, now will start to be challenged by mobile VoIP that is simply built in to the smart phones that represent the industry’s future.

Disruption, in other words, now has become a feature of the very devices the mobile networks themselves depend on for future growth. Mobile VoIP forecast

M2M Revenue $35 Billion in 2016?

The machine-to-machine (M2M) market, basically the ability of sensors to communicate using wrieless means to servers, generally is viewed as one of the key three to four areas where the mobile services industry can look for growth in coming years, especially once sales of mobile broadband services become saturated.

By the end of 2011, most major mobile operators in North America, Europe, and the Asia-Pacific region had established M2M business units, in part because of a belief that connections will rise from about 110 million in 2011 to approximately 365 million connections by 2016.

The caveat is that some observers consider tablet, e-book and mobile PC connections to be M2M, while others do not.

Still, the 27 percent compounded annual growth rate between now and 2016 and translates to about $35 billion in connectivity services revenue.

The two largest cellular M2M market segments over the forecast period, by revenue, will be automotive telematics and smart energy.  

Automotive telematics, including factory-installed systems such as GM’s OnStar service, aftermarket services such as usage-based insurance, and fleet management systems, will together represent more than $15.5 billion in 2016, according to ABI Research.

Meanwhile, smart energy, specifically cellular connectivity to smart meters and data concentrators, will represent more than $7.5 billion in 2016.  M2M

Android, Apple iOS Continue to Dominate

If you want to know why Research in Motion is in trouble, just look at RIM's market share. 





Android, iOS dominate smart phone OS market