Couple of months ago the latest revenue figures from Google were announced as a result of their winning Android mobile operating system and how the market share of the sales of Android smart phones topped Apple’s iPhone after what seemed like a never ending dominance by Apple. This got me thinking about who’s turn it would be next ? Which company has the potential to out play Google? I am also looking at the business models and how other companies like Facebook, Twitter, and LinkedIn change models to stay as players in their fields or face the pain of take overs.
The playing field
The smart phone market has for sure had its share of players, from the early Symbian phones, Palm pilots, to the latest iOS from Apple, Android from Google, BlackBerry, and Phone 8 from Microsoft. But the market is not just about phones, these giant companies are competing and changing their business models to sustain their presence in an industry that seems to have no limits. So Google moved from just a big search engine with billions of net profit just from the ads on their search engine to the 2nd provider of smart phones and mobile operating systems. I say the second, since as of the time of writing this article, Apple iOS was still considered by the market as the leader. Earlier in 2013, BlackBerry launched its BlackBerry 10 operating system which was rumored by many as the last stroke from the company to remain as a major player. However, building a business only on smart phones seem not to cut it and as such, unless RIM comes up with another product or service many speculate that they are not going to withstand the pressure.
Business Models and market advantage
Anyone in the world of business and especially the digital field understands the need to up the game and be ready for the shifts that break the toughest players. The fight for survival led companies like Samsung, LG, and Google for example to revamp their business model and extend to cover mobiles. It seems natural for a company like Samsung to build phones and focus less on building operating systems same for Google since they are a software house at the end of the day and their skills better invested in what they are good at.
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In that context, Apple has recently talked about looking into extending its line of products to cover watches, and televisions. The release date for the iWatch is yet to be revealed, however, it is hard to speculate if someone with an iPhone & an iPod would look into getting yet another watch just because it is from Apple. However, personally I could not believe that consumers would go for the mini-iPad knowing that it is just a smaller form factor. I am no apple fan, read my other blog about when I decided to use an iPad, but one must admit that the company is still fighting to remain the most innovative in the eyes of the market.
So the big question is, what companies like Facebook, Twitter, and LinkedIn can do to remain in business and actually strive to be more than a big database of subscribers? how can that evaluate to profitable business that can sustain their presence in the market?
Digital services in a dynamic market
Anyone following the progress of LinkedIn would be actually impressed. Historically, their main stream of cash came from Job advertisements, text ads, and paid membership that provided some extra privacy privileges to corporate users. When they launched their service for Job Recruiters back around October of 2011, the New York Times published that the new “Talent Pipeline” paid service for job recruiters will enable them to find, track, and understand candidates available in the market and target them with job offers if they knew about their intention to find jobs. Using the service, companies that acquired this will be able to post jobs and track applicants instead of having to build career portals at their own sites.
From where I stand, this is a long term sustainable business model that LinkedIn and similar companies can depend on since the search for jobs and the need for applicants would always survive the test of time. There are no guarantees nevertheless, and although we do see a winning model in LinkedIn, they can go wrong with some bad management and lose their advantage for another player.
Where does this leave Facebook and Twitter?
I have attended a conference recently in London UK and both Facebook and Twitter were talking about providing consulting services to other companies on how to set up their social presence? Don’t get me wrong, that might seem very complex if you are a start-up in this field and don’t have a clue what social media can do for your business ? If you are, there are many agencies that can help you and would charge much less than Facebook or Twitter.
So the way I see it, unless these two come up with a really compelling business model, their only prospect would be in catching the eyes of Google or Microsoft and settling comfortably under their wings for as long as they wish.
We all must have heard the jokes when Facebook held its Initial Public Offering (IPO) in May of 2012 for $104 billion and fell to less than half of that in the first 3 months of public trading. We also know that their CEO continues to refuse payouts from other companies one of which was Yahoo back in 2006. However, companies have bought and continue to buy shares from Facebook, one of which is Microsoft. We also see their new partnership with Facebook introducing the search graph and adapting bing to enhance this feature.
Microsoft Vs Google
In summary, the way I see it, Facebook will continue to find ways to outlive the market. Microsoft will continue to follow up and if Facebook still remained a profitable acquisition, will take over to equalize with Google who seem to have an edge with a mobile operating system, search engine, and a social network. Microsoft is in need of Facebook having lost its own battle with keeping MySpace alive.
With Skype also with Microsoft, I see a company like Viber or WhatsApp being purchased by Google to equalize the playing field and to win, one of these two need to get Twitter on board.
Twitter can remain active on its own for a while, and can keep a very low overhead that will be covered with the profit they are making from their new music and video based line of products. It can also cope with the partnership it is building with other companies that live off its open “Application Programming Interface” API. Once those endeavors prove to be more than they can handle; we are looking at another take over that might be the tipping point for the battle between Microsoft and Google.
Share your thoughts, add a comment, what do you think? can all these companies live and survive the test of time or the big giants will consume them all? Do you see Apple moving away from its comfort zone and trying to grab a piece of the pie?