Tool You Can Use: iPhoneSlide
Tuesday, October 23, 2007
Epson touts "all-in-one" LCD touchscreens
Epson looks to be doing its part for the further slimming down of touchscreen-based devices, with it now touting a couple of new "all-in-one" displays that boast an integrated cover and touch panel. According to DigiTimes, two different models will be available, including 3.1-inch and 7-inch variations, each of which boast a WVGA resolution, and Epson's trademark "Photo Fine Vistarich" technology, which promises to make the screens viewable even at extreme angles. No word as to when they might actually make their way into some commercially-available products, however, but Epson will apparently be doing its best to woo potential partners at the FPD International conference in Yokohama, Japan this week.
Read
Nokia and Reuters develop an N95-based "Mobile Journalism Toolkit"
awesome
Read -- Mobile Journalism Toolkit press release
Read -- Posts from the Reuters mobile journalism trial
Read -- Toolkit contents
McIntyre: Apple (AAPL) is Not Google (GOOG)
Douglas McIntyre is the CEO of 24/7 Wall St, a New York-based financial media company. He argues here that the market's wild enthusiasm about Apple's stock and PC market share gains is misplaced.
With Apple's most impressive quarter behind it and with a forecast of a $9.2 billion quarter ahead, it would appear that Jobs & Co. cannot be stopped. They will continue to rule the portable and digital music industries. Their assault on the handset business s a smashing success. The Mac is finally getting the kind of adoption that its advocates were certain it would.
Price targets for Apple are now above $200 matching the kind of optimism that $800 price targets hold for Google.
Over the last year, Google's shares are only up 40%. Apple's are up well over 100%. Apple's price to sales is about 7x while Google's is 15x. Many would argue that is because Apple is a hardware company and can never have Google's margins.
But, the analysis is more complex than that. Google is really only in one market, which is search. It plays around in other businesses but they don't create any revenue. Google is first in search, by a wide margin.
Apple is in three businesses. In the iPod/iTune segment, it stands as No.1 and no other company is likely to catch it there. In the handset business, the iPhone may be a success, but, even if its sells 10 million units next year, it is up against companies like Nokia (NOK) which sells closer to 400 million units in a good twelve month period.
Apple's problem is even worse in the PC market. Worldwide, its share may be close to 6% and better than that in the US. But, Hewlett-Packard's (HPQ) sales are moving up twice as fast as the overall PC market, even though it is the No.1 company in the industry, Acer's growth rate is four times the industry average.
In other words, the idea that the Mac is growing faster than all other PC brands is something of a myth.
Apple is not Google because it is so far behind the competition in two of its three markets. The market sees that risk, and it means the level of concern about AAPL's share price will only grow.
Samsung: Samsung's Unleashes World's Densest Flash Memory
Samsung has managed this feat by developing a new process they are calling self-aligned double patterning technology (SaDPT). SaDPT involves a more efficient pattern transfer than used in Samsung's (older) charge trap flash (CTF) procedure, and if we get any more technical we may implode spontaneously. Both procedures are cost effective and we can expect to see higher capacity flash based drives at a reasonable price. Although a 128GB memory card at a realistic price point is optimistic, the general price of flash memory should fall as a consequence of the new development. The devices are planned to begin mass production in 2009 and an estimated market value, in a three year period, is projected to be as high as $20 billion for the new class of memory chips. [Via Press Release]
Research Note: Open Pricing and Revolutionizing Value Creation
I've been going on for a while about how open pricing is the most revolutionary innovation to hit the economy for a long time; how it will absolutely eviscerate massconomy business models; etc.
Read this - especially the numbers.
And if you're a decision-maker in any consumer industry, spend a few hours today thinking about this and talking about it with your colleagues.
Forget about all the noise - there's a lot of it, but it's largely strategically irrelevant (ie, it's trivial that NBC's Hulu move is a wash, because it vaporizes its own marginal benefits).
Focus on this for a while - because it's a really big deal.
I cannot stress enough the potential of open pricing as an innovation that the tiniest, poorest, most unexpected radical innovators can use to warp and reshape the fabric of entire industries.
That doesn't just mean the music industry - the economics driving open pricing are the same across many, many consumer markets.
I know, I know - it sounds wack if you're a beancounter. But it's not a "marketing stunt", although most journos still think it is.
That's because the economics are unstoppable, inexorable, as inevitable as the tide.
If you don't learn to leverage it - make no mistake, radical innovators will utilize it to drive you deeply and perhaps fatally into a value chasm.
If you ignore it, you are being driven squarely into strategy decay in realtime.
Displays: Sharp Announces Micro LCD...Thanks?
OLED has lightning response times (reports of < 0.01ms), viewing angles with nearly no color fallout and contrast ratios as high as the eye can see (Sony's new 11-incher claims 1000000:1). I mean, LCD, it's not that we don't appreciate the gesture. And if Sharp could make a .68mm-thin 60" TV, we'd be all over you. But...uhh...we sorta already agreed to go to the prom with OLED...and his dad's renting a limo and everything. [avwatch]
BzzAgent is a great way to test products and services and get immediate feedback
IPG Links Up With BzzAgent
October 23, 2007
By Brian Morrissey
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Several IPG shops, including Hill, Holliday, Connors, Cosmopulos, DraftFCB and Universal McCann, already use BzzAgent for various clients. The Boston-based company has more than 300,000 "agents" who are given product samples, asked for feedback and encouraged to talk about them with their friends.
Marketers are reawakening to the power of word of mouth in product decisions. Several studies have shown that recommendations from others rank higher than traditional ad messages in swaying consumer preferences. The rise of social media has led to the development of several buzz-monitoring services for brands to determine what is being said about them.
The next step, according to Bant Breen, president of IPG's Futures Marketing Group, is turning insights into action.
"There are a variety of ways to get involved in the conversation," he said. "BzzAgent has one of the interesting ways. I don't know if we can say one company has cracked the code."
Yet at the same time, many consumers are wary of commercial interests distorting recommendations. A Burson-Marsteller survey released this week found nearly 30 percent of influential consumers felt commercial activity on opinion sites is a big problem.
The IPG-BzzAgent partnership is similar to agreements struck with TiVo and Joost. The Futures Marketing Group has also made a small investment in Facebook and Spot Runner, and houses search marketing shop Reprise Media, which IPG bought in April. IPG has not invested in BzzAgent. The agreement will give IPG preferential pricing, the companies said, and will be managed through IPG's Emerging Media Lab.
I want my iStockphoto fix
Lesa gave the Duct Tape Marketing Coach network a guided tour of iStockphoto at my annual gathering of coaches. For those of you who may not know about iStockphoto, you simply must. If you use images, illustrations and video clips in your marketing, this is a gold mine. Great, royalty free stock photos, that are easy to find and inexpensive.
- Some of my favorite tips and tricks Lesa shared had to do with ways to find great photos.
- Do a search and look deeper into the results to find great photos that might not be used by as many folks
- Search by color to find photos that possess a great deal of a color that better compliments your designs
- Search by CopySpace to find photos that are composed in a way that lets you add type to certain areas
- Filter search for shots with people, for orientation and price.
iStockphoto is also a big supporter of Duct Tape Marketing and is offering my readers 10 free credits (good for 5-10 stock photos)
Just send Lesa an email at lesa@iStockphoto.com and ask her for the special Duct Tape 10 code.
Monday, October 22, 2007
How Profitable is Google's Core Biz? 75%+ Profit Margin
Google booked free cash flow of $1.1 billion in Q3, more than any other media company we know of. The company also improved its operating margin (on net revenue) to 50%. In other words, it's a fantastically profitable $16 billion global business that is still growing at better than 50% per year.
But guess what? "Fantastically profitable" doesn't even begin to describe the earnings power of Google's core business. For example, this is not a business that has mere 50% profit margins--a level that just about every other company on earth would kill for. Rather, this is a business that probably has better than 75%+ operating margins--a level that only one of Google's fellow behemoths, Microsoft, could ever hope to match.
(And if Google has anything to say about it, Microsoft won't be enjoying its monopoly operating system and office suite profit margins for long).
How do we know Google's core search and AdSense businesses have better than 75%+ profit margins? Because, for the last four quarters, Google's rate of hiring (people) has significantly outpaced revenue growth. Salespeople and engineers take 6 months to a year to get fully productive, so most of the 6,000 employees Google has added in the past year aren't yet fully utilized...
Given the number of products Google has rolled out, moreover, only a fraction of these folks (except sales) are likely dedicated to search and AdSense. Google is not yet generating meaningful revenue from any products other than search/AdSense, so this means that these folks are dead weight on the P&L. But Google still has a profit margin of 50%.
How fast has Hiring grown relative to revenue? Here are the y/y quarterly progressions for the past three quarters: (For details, please see this online spreadsheet).
NET REVENUE: 66%, 63%, 62%
EMPLOYEES: 80%, 74%, 70%
That's a lot of unproductive weight that has been easily absorbed.
Why is this important? First because it gives Google an amazing amount of cash flow to reinvest in other businesses. Of the $2+ billion a year that Google is currently spending on engineering, for example, probably only half of it is dedicated to supporting the current core businesses (Google says 70%, but this seems unlikely).
Second, because all those salespeople the company has hired over the past year are eventually going to get fully productive, and when they do, revenue should grow far faster than headcount. This means that,
Third, Google's latent earnings power is enormous. At some point, the company will finally scale back hiring (from Schmidt's comments on the call, it sounds like this has just happened). As it does, expense growth will slow, while revenue productivity from existing employees will grow. Unless the company rapidly ramps spending on other non-revenue generating projects, therefore, Google's profit margin could leap upwards in the coming year.
By the way, we've just seen this movie before--with Google's CAPEX spending and free cash flow. Two years ago, when it realized how big its opportunity was, Google ramped CAPEX spending far faster than revenue. For six quarters, this held its Free Cash Flow down, at a level of about $2 billion a year. In the last two quarters, however, Google's CAPEX has stabilized, while the company's revenue has skyrocked. This combination has caused Free Cash Flow to go through the roof:
NET REVENUE: 73%, 66%, 63%, 62%
CAPEX: 49%, 73%, -18%, 12%
FREE CASH FLOW: 32%, 30%, 363%, 111%
What's that called? Earnings power.
Click Fraud Up Modestly in Q3, Including Google
Click auditing firm Click Forensics released its Q3 report on industry-wide click fraud. The news continues to be bleak for third-party content networks, including those operated by Google and Yahoo. (Note that some of Google's Q3 upside came from its content network, along with our minor concern about this). Among the findings: -Industry average click fraud rate was 16.2% for Q3, up from 13.8% from 2006 and from 15.8% for Q2.
-Average click fraud rate of PPC advertisements on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 28.1%. That's up from 25.6 percent for Q2, 21.9% for Q1, 19.2% for Q4.
-Over 60 percent of traffic from parked domains and made-for-ad sites was click fraud. Click Forensics estimates that more than 70% of the sites in the Google and Yahoo networks fall into one of these two categories. However, we estimate that these sites account for only about 25% of the paid clicks in both networks.
-In Q3, the greatest percentage of click fraud originating from countries outside North America came from France (4.2 percent) China (4.1 percent) and Germany (3.7 percent).
Click Forensics CEO Tom Cuthbert has been having a public pissing match with Google click-fraud czar Shuman Ghosemajumder. Ghosemajumder says CF and other third-party auditors have no idea what they're talking about. Cuthbert says Ghosemajumder knows exactly what they're talking about--and won't come clean about it. After listening to both sides (and others), here's our take:
- It's getting worse.
- It is more prevalent and more of a concern on third-party ad networks (distributed search/Adsense for content) than on Google's and Yahoo's own sponsored search.
- It's especially bad news for content providers who make a living using AdSense, et al.
- It is something advertisers should pay attention to and spend money analyzing
- If nothing else, the use of a good third-party auditing firm provides comfort that money isn't being thrown away.
- Google et al could/should consider providing more detail about, at the very least, the number of total clicks vs. the number of clicks the advertiser was charged for. It should also give advertisers more ability to select which sites they advertise on.
Industry Click Fraud Rate Hits 16.2 Percent in Third Quarter 2007
Click Fraud Rate for Content Networks Reaches 28.1 Percent
AUSTIN, Texas - Oct. 18, 2007 - Click Forensics[TM], Inc. today released industry pay-per-click (PPC) fraud figures for the third quarter 2007 from the search advertising industry's leading independent click fraud reporting service - the Click Fraud Index[TM] (www.ClickFraudIndex.com).
Now in its second year, the Click Fraud Index monitors and reports on data gathered from the Click Fraud Network[TM], which more than 4,000 online advertisers and agencies have joined. The Click Fraud Network provides statistically significant industry PPC data collected from online advertising campaigns for both large and small companies across all the leading search engines. Key findings from data reported for Q3 2007 includ
-The overall industry average click fraud rate was 16.2 percent for Q3 2007. This is an increase from 13.8 percent for the same quarter in 2006 and from 15.8 percent for Q2 2007.
-The average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 28.1 percent in Q3 2007. That's up from 25.6 percent for Q2 2007, 21.9 percent for Q1 2007 and 19.2 percent for Q4 of 2006.
-Over 60 percent of traffic from parked domains and made for ad sites was click fraud
-In Q3 2007, the greatest percentage of click fraud originating from countries outside North America came from France (4.2 percent) China (4.1 percent) and Germany (3.7 percent).
Publishers and advertisers have recently felt the impact click fraud is having in the content networks. Increasingly, publishers are seeing a performance drop in the content network traffic quality. Advertisers are seeing their conversion rates drop significantly on content networks because of bad traffic coming from parked domains and other low quality sources.
"Click fraud activity continues to grow especially on made for ad sites, parked domains and on the content networks," said Tom Cuthbert, president and CEO of Click Forensics. "Advertisers, publishers and search engines need to take notice because content networks are becoming the fastest growing source of click fraud. Ensuring their quality is essential for the pay per click advertising market to continue its growth."
The Click Fraud Index publishes data collected from the Click Fraud Network (www.ClickFraudNetwork.com), the industry's first independent third-party click fraud detection service dedicated to helping companies more accurately monitor their online advertising campaigns for pay-per-click fraud. Click fraud data is tracked and published on a quarterly basis for specific search providers, industries and trends. The service is unique in that it monitors online campaigns for click fraud by correlating data collected from search provider campaigns and the advertisers' own web sites - providing the industry's most accurate view of click fraud to date.
About Click Forensics, Inc.
Click Forensics[TM] is the leading provider of click fraud management solutions that help online advertisers, agencies and search providers identify and eliminate pay-per-click fraud. The company also runs the Click Fraud Network[TM], the industry's top independent click fraud monitoring and reporting service with over 4,000 members. Click Forensics is headquartered in Austin , TX and is privately held with funding from Austin Ventures and Shasta Ventures. More information on Click Forensics and its offerings is available at www.ClickForensics.com.
Apple Q4 Analysis: Mac Red Hot, iPhone Price Cut Doubles Sales Rate
SAI's Apple earnings analysis is brought to you by Petsky Prunier LLC, a leading specialty investment bank serving the marketing sector. Petsky's clients include companies in the marketing services & technology, interactive advertising, digital content & commerce and specialty media industries.
Release
SAI Apple Analysis Spreadsheet
Initial Assessment: Strong quarter across the board. Easily beat consensus revenue, crushed consensus EPS, driven by strong Mac (laptop and desktop) sales. iPhone sales also well ahead of expectations.
Post-Call Analysis:
Another record quarter for Mac sales proves that Apple is more than just an iPod factory. Apple sold 2.2 million Macs during Q4, almost 25% more units than during Q3 and a 35% year-over-year unit-sales jump. Desktop Mac unit sales, which had essentially been flat for the last 2.5 years, jumped about 30% both sequentially and year-over-year, thanks to (we think) the super-thin, new iMac design, and built-up interest from the creative community, which was waiting for Adobe's CS3 suite to come out before buying new Macs.
The surprise $200 iPhone price cut doubled Apple's phone sales rate. Apple sold 389,000 iPhones in the 19 days between Sept. 11, when it announced its 1 millionth iPhone sale, and Sept. 29, when the quarter ended. That works out to about 20,000 iPhones sold per day. Prior to Sept. 11, Apple sold 730,000 iPhones in the first 72 days of Q4, averaging about 10,000 per day. (In the first two days the iPhone was on sale, Apple sold 270,000, or about 135,000 per day.) So the 33% price cut has effectively doubled Apple's iPhone sales rate. Apple management said during today's conference call that perhaps as many as 250,000 of the iPhones sold so far -- more than 15% -- were bought by people who want to unlock them to work on other networks. That's a lot, and Apple doesn't get any AT&T revenue from those phones.
Apple is expecting a monster December quarter. Management gave guidance for $9.2 billion in Q1 revenue, representing 30% year-over-year top-line growth. How will it get there? Macs, new iPods, and selling more expensive iPhones in Europe will help: by hopping the pond, Apple expands its iPhone market opportunity by 60%.
Key Stats:
- Revenue: $6.22 billion (vs. expected $6.07 billion)
- Gross Profit, Margin: $2.09 billion, 34%
- Operating Income: $1.06 billion
- Net Income: $904 million
- Earnings Per Share: $1.01 (diluted)
- iPods Sold: 10.2 million
- iPhones Sold: 1.12 million (vs. expected 975,000)
Mary Meeker on Technology/Internet: Key Points
Morgan Stanley's Mary Meeker gave an excellent overview of the state of tech and Internet sector at Web 2.0. This high-level perspective is Mary's forte, and she's really good at it. Full presentation here. Some interesting points below:A People-Driven Medium:
- Consumer IP traffic should surpass enterprise for first time in 2008
- IP traffic should double every two years through 2011 (high def video)
- 10% of 3.2 billion global mobile subs now on 3G or better.
- 91% of mobile users keep handset within 1 meter reach 24/7
- Control freak incumbent carriers still getting in the way....
- 70% of PCs outside US
- 86% of Internet users outside US
- Emerging market users growing 30%+, US 3%
- Non-US mobile users: 92% of global market
- China Internet market capitalization now $50 billion, up from $5 5 years ago
- Web 2.0 technology to drive next big corporate purchasing cycle
- Corporate technology spending shows signs of accelerating
- Productivity gains may be on upswing again.
- Don't underestimate importance of sub-prime problems.
- Average GDP growth forecasts already cut to 2% from 3% over just 4 months
- Only good news: US share of global GDP has declined to 19%
- Ads: 26% growth Y/Y., still only 10% of total
- Commerce: 19% growth y/y, still only 4% of total
- Online music: +107% y/y, 11% of total (global)
- 208 million global users, up 185% year over year
- 21 billion minutes, up 335%
- 220 million users, up 94%
- About 7% of wireless users, 5% of wireline.
- Compelling pitches for many of them, including Facebook, Joost, Demand Media, and Slide.
- 2% of public companies create 100% of the wealth.
Casual Game Ad Space Heats Up
Yesterday Jane brought news of Google actively reaching out to game developers to partner with its Adsense/Adscape network. I just got word that San Francisco-based casual game ad network Mochi Media is partnering with London-based MyGame.com, a casual game site with a user-created flavor.
MyGame.com is also an offshoot of King.com, a truly gigantic game network that boasts 10 million active monthly users (according to a spokeswoman) that recently partnered with RealNetworks (RNWK). Mochi Media's MochiAds division creates a revenue source for Flash game developers; it already has partnerships with massive casual hits like the beloved Desktop Tower Defense. MyGame has a comparable program in which developers can upload their games and — if the games prove popular — share revenue with the company. (More or less a YouTube-meets-casual games proposition, not unlike Kongregate.)
Where is all this going?
Hard to tell, but with Google (GOOG) sniffing around, there's sure to be even more activity in this space — partnerships made, buyouts offered, startups launched, and so on. At the same time, it's difficult to determine how much revenue can be generated from advertising linked to casual games.
As it happens, Gamasutra just published a great article on business models for Flash games featuring extensive conversations with Kongregate CEO Jim Greer and MochiAds CEO Jameson Hsu. While Hsu touts developers who make thousands of dollars monthly with Mochi, Greer emphasizes the modest income even at the upper level: "Let's say Armor Games gives you a sponsorship for $2,000," he says. "You get another $1,000 from ad revenue, another $1,500 from prize money, maybe Miniclip licenses your game for $5,000…you might make $10,000 to $15,000 on your Flash game — and that's a really successful Flash game." Greer prefers the model used by Electronic Arts' (ERTS) casual game site Pogo, which gets ad revenue for their free games, but also charges a modest subscriber fee for added benefits. (About 1.5 million Pogo players out of some 13 million have paid that $40 yearly subscription.)
All in all, this reminds me of the tumult over YouTube and other user-created video sites from the last few years — before Google took out its checkbook. If that history is any guide, expect a lot of furious activity and money spent over this war for casual game eyeballs, followed by the industry's morning-after question, "OK, explain again how we make money from all this?"
eMachines announces new low-cost desktops for the holidays
Filed under: Desktops
eMachines looks to be trying to make its already budget-priced desktops even more attractive to consumers this holiday season, with it today introducing a pair of models that it says strike just the right balance between performance and value. The most affordable of the pair is the company's T3626 desktop (a slight variation on the T3616), which starts at just $350 after a $50 mail-in rebate. For that price you'll get a 2.2GHz AMD Sempron 3800+ processor, along with NVIDIA GeForce 6100 graphics, 1GB of RAM, a 160GB hard drive, and a DVD burner, among other standard specs. Taking things up a notch, the $435 (again, after a $50 rebate) T5234 model packs a AMD Athlon 64 X2 4000+ processor, along with slightly beefer NVIDIA GeForce 6150SE graphics, 1GB of RAM, a 320GB hard drive, and that same DVD burner. According to eMachines, both should be available at all the usual locations immediately.
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