Welcome to Google's Playground, Apple

The world — at least the world outside of Phil Schiller — finally accepts that The Google has taken a bite out of Apple with Android.  More like a few bites, in fact.  Operating system parity, comparable functionality, and variations in form factor/price point, etc., have fueled Android's surging popularity and are very likely to continue doing so for an extended duration.

Those, however, are largely yesterday's issues.

Where I believe this battle is headed — and where I think Apple is in a massive world of hurt — is Web services.

In my view, hardware and core OS functionality have largely reached a near-term point of peak innovation; yes, there will be a perpetual line of newer, faster, shinier laptops/phones/tablets/etc., but improvements are likely to be only incremental to the current lineup of state-of-the-art devices.  As a result, the product itself will become effectively transparent to the end user, with attention, instead, shifting to the Web (or, cloud) services/content that those devices allow easy access to on an anywhere, anytime basis.

Welcome to Google's playground, Apple!

Almost everything Google has done since inception has focused on anywhere, anytime cloud-based computing:  Search, Gmail, Maps, Chrome, Voice, YouTube, Calendar, Drive, Plus, Local, Wallet...  Perhaps more important, Google absolutely prints money, either directly or indirectly, from use of many of these cloud-based services, even if those services are accessed via an Apple device.  And, stating the painfully obvious, Google does the cloud pretty damned well.

Apple, on the other hand, is almost at ground zero.  Most of the company's historical focus, R&D, revenue, and profit, have centered on hardware, operating system software, and the deep integration of those two elements; and, for years, it did those more elegantly and effectively than any other company on the planet, creating a harmonious, closed-loop ecosystem that "just worked."

Open Web services that function like utilities — seamlessly, across all devices, across all operating systems, all the time — at low or no incremental cost, in the face of stiff competition from all sides?  Not so much.

Not to throw iCloud, iMessage, and iTunes Match, et al, under the bus entirely, because those are certainly functional offerings upon which to build — but those are simply the mandatory "base level" offerings to even have a seat at this table; and, yet, they still come up short in this regard.

And, then... there's maps. Kidding. Well, not really kidding — it's just too easy to highlight the obvious on the topic. So, I won't.

To compete broadly on the battleground of tomorrow, Apple must break with its history and immediately introduce a broad spectrum of high-impact, high-value, mass-consumption-type Web services that function seamlessly across all vendors, all OSs, and all devices.  And, the only way I see them doing so expeditiously and successfully is through acquisition — buying services that have already proven themselves in the hands of consumers at scale.  While this approach may be somewhat anathema to Apple, Web services are, as well, so it seems apropos.

What does success on the Web services front mean for Apple?  At best, I see the beginning of a new era (and, to set the record straight, this has nothing to do with Steve Jobs), characterized by diminished influence, slower growth, declining revenue, shrinking margins, and a languishing/falling stock — not 1980s-PC-era-on-the-verge-of-going-out-of-business stuff, but painful, nonetheless.

And, what does failure look like?  1980s-PC-era-on-the-verge-of-going-out-of-business stuff.  Only kidding.

As If On Cue, Facebook Tweaks The Edges

Today, as if on cue, Facebook announced improvements to Timeline.  Classic.  This is exactly the type of tweak around the edges that I was referencing in, "Beware the '!,' Facebook."  Start changing the game all over again, Facebook, or run the risk of being yesterday's news.

"Beware the '!'" Picked Up By Business Insider!!

Nice start to the morning, with Business Insider picking up "Beware the '!'" and showing it a little love!

Beware the "!," Facebook

I’ve seen the future of Facebook, and it is... Yahoo!

Between 1994–2000, Yahoo! dominated the consumer Internet industry and much of the world’s attention.  The company’s exclamation mark cast a long, purple-hued shadow across the globe, as users flocked to its ever-expanding array of services, and online and offline companies of all sizes threw money at it (almost literally) to gain prominent visibility among its massive, segmentable audience.  Yahoo!’s page views rocketed; revenue rocketed; profits rocketed; stock price rocketed; market capitalization rocketed.  Yahoo!, it seemed, could do no wrong.

Then, the world changed.  Radically.  

Consumer behavior shifted, with individuals the world over flirting with, and then devoting themselves, to myriad other online services.  The business cycle changed and companies chose/were forced to reduce or eliminate their online advertising budgets. Then, when Internet advertising budgets returned a few years later, business behavior adjusted again, with marketers broadly diversifying their spend across the Web (following those same migrating users).  And, perhaps most significantly and most representative of both of the previous issues, Google emerged, presenting consumers with a slate of invaluable (and competitive) services and companies with a nearly perfect mechanism/venue through which to market their offerings.  

Needless-to-say, the 2000–2013 period has not been nearly so kind to the purple giant-of-yesterday — not to its metrics; nor its business; nor its stock; nor its market capitalization.

Throughout its rollercoaster-of-a-life, however, Yahoo! has remained shockingly static at its core, with a (still) massive, segmentable audience consuming an enormous volume of free content and services, surrounded by advertisements of all shapes and sizes.  That those content/service offerings now include Fantasy Football and photos from Flickr, rather than, say, news and NASDAQ quotes, is nice, but irrelevant, as is the fact that the company now offers rich media and video ads, as opposed to just sponsorships and banners.  Those are incremental changes to the story — variations on the theme; because, the fact of the matter is that — apart from its early days of minimal competition and “easy money” — Yahoo! has struggled mightily to engage its users in fundamentally new ways; unlock the true value of its global user base for its advertising clients; and, bring to market any lasting innovation that even hints at shaking the status quo all over again.

In not so subtle ways, this reminds me of Facebook.  A. Lot.  

Like Yahoo! in its early phase, Facebook hit the ball out of the park from the outset, and, it seems, hasn't yet stopped running the bases.  From the ivy covered confines of Harvard University, Zuckerberg &  Co. now attracts more than one billion users to its site globally; has enabled hundreds of billions of friend connections; sees hundreds of millions of photos uploaded daily; and, generates several billion dollars of revenue annually.   Not bad for its first nine years, right?   

And yet, since its astounding opening act, Facebook has bestowed upon us:  Gifting - blah.  News Feed algorithm changes - yawn.  Suggested Posts - meh.  Messaging - join the club.  Sponsored Stories - ummm.  Graph Search - niche.  Poking (again) - ha.  Timeline - zzzzz.  News Feed design changes - argh.  What's next, a new color scheme?  A new font?

Suffice to say, the company is not exactly setting the world on fire with these efforts; more importantly, these are not (individually or collectively) doing much (if anything) to materially enhance Facebook's relationship with its users; substantively increase the level of dependency felt by its advertising clients; and/or fundamentally alter the trajectory of its franchise or business.  Said differently, where is Facebook’s second act, like Android (acquired, transformed, and massively scaled by Google) or iPad?  Where is its money-printing AdWords product?  Where is its PayPal (acquired, and massively scaled, by eBay)?  Where its its quantum leap forward?  Where is its disruptive force?

None of this is to suggest that Facebook has, in any way, “failed;” nor is it meant to take anything away from the extraordinary space that Facebook has carved out for itself in our collective universe.  Similarly, I do not mean to imply that Facebook is necessarily destined to follow in the path of Yahoo! (after all, it would be damned near impossible to repeat all of those mistakes).  

That said, it is, hopefully, a wake-up call, because — at least to this observer — the company and its business seem far too focused on tweaking the edges of its past creation(s), rather than on changing the world all over again for both its users and advertisers.  And that, as history might suggest, is a very risky path to enduring success on the Web.

Beware the “!,” Facebook.  Beware the “!”!