Schlagwort-Archive: Services

The Evolution of Messengers at Google

Google has announced three new communication apps this week: Spaces, Allo and Duo. That’s in addition to the three it already has. To understand why it’s doing this, and why it’ll do it again, we only need to look to its past.

Twelve years ago, Google began its shift from being „just“ the world’s most popular search engine to something much more: It released Gmail. Soon, the company was offering several options for communication. By 2009 Google users had a pretty robust set of tools at their disposal. Gmail for email, Talk for real-time text and voice chats, Voice for VoIP calling, and Android to facilitate everything else. Unfortunately, this simple delineation would quickly disappear as the company launched more and more services.

Google Wave was the first addition. Announced in mid-2009, it mashed together elements of bulletin boards, instant messaging and collaborative editing to pretty awesome effect. It grew a small but fervent community — I was a big fan — until Google halted development.

Then came Buzz. Launched in 2010, it was Google’s first attempt at a bona fide social network. It failed miserably, not least due to complaints about the way Google forced it upon users and some valid privacy concerns. Although neither Wave nor Buzz really competed with what the company was already offering, that would change when Google launched its next attempt at a social network, Google+.

In addition to standard social networking, Google+ also had two features that facilitated direct communication with individuals and groups: Hangouts and Huddles. Not to be mistaken with the current app, Hangouts at the time offered multiuser video chat for people in the same Circle. Huddle, on the other hand, was an instant messaging app for talking with other Google+ users.

Huddle would soon become Google+ Messenger, offering the same functionality as Google Talk, while Hangouts would expand to seriously encroach on Google Voice. Within a year, Google had added the ability to make „audio-only“ calls by inviting users to join Hangouts over a regular phone line.

Google now had two apps for everything, coupled with the problem that many users — even on its Android platform — were still using SMS to communicate on the go. It began work to rectify this and unify its disparate platforms. In 2013 we got an all-new Hangouts, available cross-platform and on the web. It merged the functionality of Hangouts and Messenger, and it also replaced Talk within Gmail if you opted to upgrade. Voice was still out in the cold and SMS wasn’t integrated, but the company was moving in the right direction.

In late 2013, Google added SMS to Hangouts, and in Android 4.4 it replaced Messaging as the OS default for texting. By Oct. 2014 Google had integrated VoIP into Hangouts as well. It finally had one app for everything.

You could assert that Hangouts was a better app because of the confusing mess that preceded it. Google tried lots of things and put the best elements from all of its offerings into a single app.

That arguably should have been the end of the story, but it’s not. For whatever reason — probably because it figured out that a lot of Android users didn’t use Hangouts — Google released another app in Nov. 2014 called Messenger. This Messenger had nothing to do with Google+ but instead was a simple app focused on SMS and MMS. Hangouts could and can still handle your texts, but Messenger is now standard on Nexus phones and can be installed on any Android phone from the Play Store. This confusing muddle means that if you have, say, a new flagship Samsung phone, you’ll have two apps capable of handling your SMS (Samsung’s app and Hangouts), with the possibility of adding a third with Messenger.

Hangouts, for the most part, has been doing a fine job.

Still, SMS isn’t exactly a burning priority for most people, and Hangouts, for the most part, has been doing a fine job. I can’t say I use it that often — my conversations are mostly through Facebook Messenger and WhatsApp, because that’s where my friends are — but when I do, it’s a pleasant-enough experience. The same can be said for Google+: It’s actually a great social network now, aside from the fact that barely anyone uses it.

That’s the issue that Google faces today and the reason why these new apps exist. More people are using Facebook Messenger than Hangouts. More people are using WhatsApp than Hangouts. More people are using Snapchat than Hangouts. And everyone uses everything other than Google+.

So we now have three new apps from Google, each performing pretty different tasks. The first is Spaces. Think of it as Google+ redux redux redux. It takes the service’s fresh focus on communities and collections and puts it into an app that exists outside the social network. The end result is a mashup of Slack, Pinterest, Facebook Groups and Trello. It’s promising, but, as of writing, it’s very much a work in progress.

Next up is Allo, a reaction to Facebook Messenger and Microsoft’s efforts in the chatbot space. It uses machine learning to streamline conversations with auto replies and also offers a virtual assistant that’ll book restaurants for you, answer questions and do other chatbotty things. Just like Spaces exists outside Google+, Allo exists outside Hangouts. You don’t even need a Google account to sign up, just a phone number — much like how WhatsApp doesn’t require a Facebook account.

Finally we have Duo, which is by far the most focused of the three. It basically duplicates Hangouts‘ original function: video calling. According to the PR, it makes mobile video calls „fast“ and „simple,“ and it’s only going to be available on Android and iOS. Both Duo and Allo also have the distinction of offering end-to-end encryption — although Allo doesn’t do so by default — the absence of which has been something privacy advocates have hated about Hangouts.

This summer, when Duo and Allo become available, Google users will be at another confusing impasse. Want to send a message to a friend? Pick from Hangouts, Allo or Messenger. Want to make a video call? Hangouts or Duo. Group chat? Hangouts, Allo or Spaces. It’s not user-friendly, and it’s not sustainable.

Sure, Facebook sustains two chat services (WhatsApp and its own Messenger) just fine, but it bought WhatsApp as a fully independent, hugely popular app and has barely changed a thing. Google doesn’t have that luxury. Instead, it’ll borrow another Facebook play: Test new features on a small audience and integrate. Over the past couple of years Facebook has released Slingshot, Rooms, Paper, Riff, Strobe, Shout, Selfied and Moments. I’m probably missing a few.

All of these apps were essentially built around a single feature: private chats, ephemeral messaging, a prettier news feed, selfies, etc. The vast majority won’t get traction on their own, but their features might prove useful enough to fold into the main Facebook and Messenger apps. And if one of them takes off, no problem, you’ve got another successful app.

This has to be Google’s strategy for Allo, Duo and Spaces. We don’t know what Google’s communication offerings will look like at the end of this year, let alone 2017. But chances are that Google will continue to float new ideas before eventually merging the best of them into a single, coherent application, as it did with Hangouts. And then it’ll start the process again. In the meantime, Google will spend money developing x number of duplicate apps, and users will have to deal with a confusing mess of applications on their home screens.


Apples next 50 Billion Dollar Business

Apple, the world’s most valuable company, isn’t shy about revealing how many of its computers, tablets, phones, and smartwatches are in use: over 1 billion, according to CEO Tim Cook.

But that number isn’t a good reflection of how many users Apple has, because many iPhone users also own a Mac or iPad, for example.

Analysts from Credit Suisse have crunched the numbers and collected some survey data, and have figured out a good starting point for the number of global Apple users.

Apple has 588 million users worldwide, Credit Suisse estimated in a note published on Monday. If there are exactly 1 billion active Apple devices in use, these findings mean the average Apple user owns 1.7 devices.

This figure is important as Apple is trying to change its story: The vast majority of its revenue comes from selling premium hardware. But Apple wants to become „a services company,“ like Google or Microsoft, because services provide a lot of the value in using a particular device — the best phone in the world with a sub-par mapping service, for instance, isn’t as useful as a cheaper phone that knows exactly where you are.

(Those companies also trade at a much higher price-earnings ratio than Apple does. The PE ratio is the market price of the stock divided by the last four quarters of income. The higher the PE ratio, the more expensive the stock.)

To understand a services business, analysts need to know how many users it has. Credit Suisse looked into products like iTunes, App Store, Apple Music, iCloud, and Apple Pay, and concluded that Apple’s services growth and potential means that the company warrants a higher valuation than it’s currently getting.

Apple as a subscription

In fact, the note estimates that Apple services revenue could more than double by 2020 to $53 billion. Apple bragged that it managed to book $21 billion in services revenue last year, while alluding that that figure by itself was larger than some of its competitors. (Facebook reported $17.9 billion in revenue for 2015, for example.)

But it’s not just the size of Apple’s installed base that makes its services an attractive investment. Apple users are significantly richer than non-Apple users. According to Credit Suisse:

  • Emerging market Apple users have 50% higher per-capita incomes
  • Apple users use their devices more often with 63% of mobile traffic coming from Apple devices compared to 29% from Android
  • Apple users tend to replace their old devices regularly
  • Apple enjoys a nearly 90% retention rate among its customers

As Credit Suisse points out, Apple doesn’t even necessarily directly charge for all of its services. Its popular iMessage texting service, for example, is free, which means its price is essentially built into the cost of an iPhone or iPad.

As the analysts write:

While monetizing many of these services is not Apple’s primary objective, it does allow the company to price at premium levels. We would argue that whether it is the customer lock-in and essential headache of leaving the iOS ecosystem or the loyalty to the brand, the output is the same – once an individual or family is part of the Apple ecosystem, they will very rarely leave it.

The end conclusion is that while Apple books its revenues and earnings based largely upon a point of sale, the actual installed base of over 1bn active devices presents a largely reoccurring cash flow stream as users will replace and upgrade their devices due to the innovation and introduction of new products over time.

So the challenge for Apple is to increase the amount of services revenue it can generate from one of its customers — getting him or her to sign up for iCloud storage and Apple Music, for example, which come with monthly fees — while still providing good value for its premium computers and phones, which have Apple services baked into the price.

One problem is that Apple’s services can be unreliable, and have attracted snickers from those who think the company lags behind Google, Microsoft, and Amazon at providing basic software services like data storage.

But Apple’s clearly investing in this field. For example, it’s planning to open up several data centers and it’s been hiring distributed computing experts. It reportedly has a effort called „Project McQueen“ to do more of its online computing in-house. Online services are a critical challenge for the world’s most valuable company if it wants to become even more valuable.

Credit Suisse adjusted its target price for Apple to $150 from $140 per share.