Google Shows Surprising Strength in Display Advertising

Facebook now is the largest recipient of display advertising in the U.S. market.  But Google’s display business is growing faster than anticipated, and will surpass Facebook’s next year, according to a new forecast by eMarketer.

That will come as a surprise to many who had thought it would be much harder for Google to catch up.

Net U.S. display advertising revenues at Google reached $1.71 billion in 2011, just below the $1.73 billion Facebook earned the same year. In 2012, display revenue growth at both companies will be nearly identical. 

That is a huge change in market dynamics. Google is expected to surpass Facebook in 2013. 

The overall US display advertising market, which includes spending on online video, sponsorships, rich media and banner advertisements, grew 25.2 percent to $12.4 billion in 2011, eMarketer estimates, and will increase to $15.39 billion in 2012.

Both companies are pulling away from other contenders in the display category, as well. 

What Tablets Tell Us about "Work"

Tablets have provided some important insights about the ways "work" gets done these days, with clear implications for use of PCs and even traditional "work" applications. Tablets will displace PCs to some extent. The only issue is how great the displacement trend will become. 


There is mounting evidence that tablets are, in fact, displacing PCs (especially notebooks). But "why" such displacement is occurring is what is really important. 


One might argue that user behavior, in either consumer or work roles, has changed. PCs originally were "work" devices. Though most do not remember, it was a single application, the spreadsheet (VisiCalc), that created the initial demand for PCs. Over time, other work applications, such as word processing, moved to PCs as well. 


Since the advent of the Internet, especially the World Wide Web, user behavior has morphed. A great many pursuits no longer "specifically" require a PC. 

These days, about 75 percent of everything that users do on PCs is content consumption. Most people, most of the time, even at work, are consuming created content, not “making it.” They are browsing the web, reading documents or manipulating data. People are watching video, listening to audio and using social networks.

And most content creation will involve reading and replying to email, much of the time. That can be done other ways.

The point is that, since the advent of the Internet, especially the World Wide Web, user behavior has morphed. A great many pursuits no longer "specifically" require a PC. And less total time is spent on “work” activities.

You might say that “casual computing” has become the dominant way most PCs are used.
Scanning news feeds, browsing the web, emailing, reading an eBook, connecting on Facebook and tweeting can be done on many devices, not just PCs.

One might argue that casual computing and content consumption are, for most workers, most of the time, all they need to do.

An anecdote might illustrate how much matters are changing. People do not have access to Microsoft Office on their Apple iPhones, but they still manage to do “work.” People use tablets at work, but iPads do not feature Microsoft Office. They still manage to use tablets for work purposes, or at least people often claim they do so.

Android users and some Chromebook users do not use Microsoft Office. They still seem to get work done. The point is that people now use a range of devices to support “getting work done.” In many cases, they seem to do so, without use of fundamental “work” tools such as PCs, notebooks or Microsoft Office.







Over time, more time will be spent on smart phones, tablets and other devices, based simply on the proliferation of such devices in consumer and work markets. And it also appears more "work" will be done on tablets, smart phones and other devices because much "work" does not require all the capabilities of a PC or standard office productivity applications. 

France Télécom 2012 Challenges Will Not be Unusual

France Télécom (operating as "Orange") experienced a drop in its net profit for 2011 and said competitive and financial pressures are likely to intensify. That is not likely to be confined to France Télécom alone, as European Union telecom service providers face continued pressure on revenue due to mandated European Community cuts on roaming fees. 


In its historic home market, Orange faces a fourth new mobile operator, Free, competing using aggressively discounted prices. As of Feb. 15, 2012, France Télécom had lost 201,000 subscribers, or about 0.7 percent of its total customer base in France.


The sovereign debt crisis in Europe also is part of company thinking, as France Télécom now believes it should be hanging on to more of its internally-generated cash, given the higher levels of uncertainty. 


To be sure, there are broader signs of trouble in many markets, and the additional pressure is not new. 

But company officials also said financial pressure would be coming in other ways, noting more regulatory restrictions and higher taxes as well. 


The owner of Orange brand also said it targets an operational cash flow of close to €8 billion ($10.59 billion) in 2012. France Télécom challenges 

France Télécom also cut its dividend and backed off from a promise to buy back shares, as part of the plan to strengthen cash reserves.a

The 2012 payout will be in a range of 1.21 euros to 1.35 euros a share, Chief Financial Officer Gervais Pellissier said, scrapping a previous projection for 1.40 euros. Operating cash flow will be about 8 billion euros ($10.6 billion) this year, declining from 9.3 billion euros in 2011.

Following Telefonica SA and Telekom Austria AG, France Télécom  is the latest phone company to back away from dividend forecasts. 

Deutsche Telekom and Telefonica are likely to announce dividend cuts of their own. 

So far, that dividend cut trend has not spread to U.S. tier-one providers. But Frontier Communications recently lowered its dividend. 

Over the Top Messaging Hits Mobile Revenue $13.9 Billion in 2011

Mobile service providers lost $8.7 billion in lost text messaging revenues in 2010, and $13.9 billion in 2011, say researchers at Ovum, directly from over the top social messaging


That represents about six percent of total messaging revenue in 2010 and nine percent of 2011 messaging revenues, Ovum says. $13.9 billion in 2011

There is growing evidence that the high-margin mobile text messaging market is past its peak.

Danish SMS traffic, for example, decreased by over 20 percent in the first six months of 2011, according to Strand Consult, and the trend will continue in 2012.

Social media networks appear to be the reason people are sending fewer text messages.

Text messaging volumes and revenue are not declining in all markets, but is slowing in most developed markets. The most-recent data from the CTIA suggests slowing growth in the U.S. text messaging market of about nine percent.

In the Danish market, three out of four mobile operators have been experiencing a steady decrease in their test messaging (short message service, or SMS) traffic month after month.

From 2010 to 2011, TDC experienced an SMS traffic drop of 17 percent, Telia lost 18 percent and Telenor 26 percent, while the fourth operator 3 was the only operator that had growth in their SMS traffic.

That 3 saw text messaging growth is largely attributable to the fact that 3 is gaining customers and share in the market. SMS traffic on the 3 network grew by 29 percent.

But, overall, the number of Danish SMS messages fell during the first half of 2010 to 6.4 billion and to 6.2 billion during the first half of 2011. That is a drop of about seven percent from 2010 to 2011.

Facebook messaging is the reason for the drop, Strand Consult argues. We often forget that all products have a life cycle. Fixed line voice is past its peak, and now text messaging likewise seems to be nearing or past the peak of its product cycle in some markets, though it will continue to grow in other younger markets.

So what are Danish operators doing? They are bundling mobile broadband with SMS and MMS packages as part of a smart phone purchase. That means service providers get paid even as the volume of text messages declines.

There is

Finland's largest carrier, Sonera, for example, recorded a 22 percent decline in texting on Christmas Eve in 2011, versus the same night in 2010.

It isn't that people are communicating less. They are just using different methods of communicating. Text Messaging Declines

Hong Kong also apparently saw a similar decrease on Christmas, dropping 14% from the same day in 2010. Netherlands service provider KPN provided an early warning when it announced significant declines in messaging volume earlier in 2010. KPN text message declines 

Dutch telecoms regulator, OPTA, which shows a significant decline in the number of SMS sent in the Netherlands in first half of 2011 compared to the previous six-month period.

The country's largest operator, KPN, has also reported declining year-on-year messaging volumes over the last few quarters due to what it calls "changing customer behavior."

Wireless Intelligence says text messaging volumes are falling in France, Ireland, Spain and Portugal as well.

According to OPTA, the total number of SMS sent in the Netherlands stood at 5.7 billion for the first six months of the year, down 2.5 percent from 5.9 billion in the second half of 2010, even though total text messaging revenue rose slightly (0.6 percent) to EUR378 million during the period.

New Nook Tablet

Barnes & Noble has unveiled its new Nook tablet, a device with 8 GBytes of memory, a seven-inch screenn and priced at $199. That is an obvious positioning directly head to head with the Kindle Fire.

In addition, the company’s Nook Color e-reader has been repriced at $169. The new Nook tablet can be bought online or at Barnes & Noble retail locations.

So Far, LTE is About PC Access, More than Phones

According to the  Global Mobile Suppliers Association (GSA), there have been 49 Long Term Evolution network launches so far, and most have launched with an emphasis on PC connectivity, not use of smart phones. There also has been a big emphasis on what might be called fixed line substitution (if there was any widespread fixed line broadband to displace). 


In large part, that reflects the relative paucity of LTE handsets available to sell. 

Some 285 service providers have committed to commercial LTE network deployments or are engaged in trials, technology testing or studies, the GSA reports.

The GSA report also confirms 226 firm commercial LTE network deployments. 

Some 49 LTE networks, which is more than double the number 6 months ago, have launched commercial services in 29 countries: Armenia, Australia, Austria, Bahrain, Belarus, Brazil, Canada, Denmark, Estonia, Finland, Germany, Hong Kong, Hungary, Japan, Kuwait, Latvia, Lithuania, Norway, Philippines, Poland, Puerto Rico, Saudi Arabia, Singapore, South Korea, Sweden, UAE, Uruguay, USA, and Uzbekistan.

66% of Users 24 to 34 Own Smart Phones

While overall smart phone penetration stood at 48 percent in January, those in the 24 to 34 age group showed the greatest proportion of smart phone ownership, at 66 percent. 

In the same age group, 80 percent of those that had gotten a new device in the last three months chose a smart phone. 

Among those who chose a device in the last three months, more than half of those under 65 had chosen a smart phone, by way of comparison. 

Income also plays a significant role. When age and income are both taken into account, older subscribers with higher incomes are more likely to have a smart phone. 

For example, those 55 to 64 making over $100,000 a year are almost as likely to have a smart phone as those in the 35 to 44 age bracket making $35,000 to $75,000 per year.