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  • feedwordpress 21:14:44 on 2014/11/16 Permalink
    Tags: Alibaba, , , , , , ,   

    The Internet Big Five: Doubling In Three Years On A Trillion Dollar Base 

    The post The Internet Big Five: Doubling In Three Years On A Trillion Dollar Base appeared first on John Battelle's Search Blog.

    From time to time I have tracked what I call the “Internet Big Five” – the key platform technology companies that are driving the Internet economy. Nearly three years ago I wrote the first of this series – The Internet Big Five. I identified Apple, Google, Microsoft, Amazon, and Facebook as the “big five,” and compared their relative strengths in financials, consumer reach, and technology strengths. Some of the metrics were admittedly subjective – ranking relative offerings in “engagement” and “data,” for example.

    It seems about time to take another look at the Big Five, and to consider a changeup – the introduction of Alibaba as a public company in the US certainly merits consideration. But before I do that, let’s quickly take a look at how the companies have fared over three short years.

    Nov. 14 big five market cap

    The first thing to observe is this: The top five Internet companies had a combined market cap of nearly one trillion dollars three years ago, a very large base to be sure. But in those three short years, the group managed to almost double their market cap – to $1.8 trillion. That’s impressive growth, and a testament to how central the markets believe these companies to be in our economy. Also, in terms of relative market cap, the Big Five have stayed pretty constant, with Facebook lapping Amazon, but not reaching the heights of Google, Microsoft, or Apple. It’s interesting to see that the market still values Microsoft above Google, something I imagine might change over the next three years.

    Stock prices show a similar trajectory. You’d have almost doubled your money if you had invested in these five companies back in late 2011:

    Nov. 14 stock big five

    Clearly these companies are killing it at a very large scale. And Alibaba, at a market cap of nearly $300 billion, can now claim its place comfortably on the list above both Facebook and Amazon.

    But what about strategic strengths? This is the area I find fascinating. Two years ago I wrote The Internet Big Five By Product Strength , and featured this chart:

    TheIntBigFiveByProdv2-1024x642

    Pulling back, it strikes me that the chart needs a refresh – something I hope to do during the more reflective down time of the coming holidays.  I’d also like to add in Alibaba. But a quick scan of this two year-old chart shows some interesting developments.

    In Operating Systems, Social, and Entertainment, each company’s position has pretty much remained constant, but Facebook’s Oculus purchase bears watching in all three fronts.  In Productivity Software, Google’s position has strengthened, as has Apple, but I’d give the edge to Google, whose Apps suite has gained serious traction. In Advertising, Facebook is now very strong, Amazon has also strengthened, and it seems Apple has determined that advertising is a necessary evil not worth pushing very hard. “Tablet” doesn’t feel like a category to break out separately anymore – in the next rev, I’ll probably just call it “mobile devices.” In that category, Microsoft keeps trying but not gaining traction, Amazon flopped with Fire Phone but holds steady with Kindle and Fire tablets, and Facebook seems uncertain if it wants to play. Google and Apple remain the kings. Search as a category that bears scrutiny – what is “search” in a post mobile world, anyway? This question is fundamental to the next five or so years in computing, I’d warrant – expect more posts on that over the holidays. In Payment, Apple has strengthened, And in Voice, almost all the players have improved as well.

    All of these companies have shifted over the past three years, some in unpredictable ways. With Page back at Google, the company has broadened its scope to include wearables, transportation, health, and energy. It’s become what I’d call the world’s first information-first conglomerate. Apple has kept its narrow hardware focus, expanding slowly into wearables (the watch) and shying from bets outside its clear wheelhouse. The market seems to be rewarding this focus. Facebook has made some big bets with drones and VR, and its advertising business is on a tear. Amazon hasn’t have any breakaway hits over the past three years, and I sense the company is uncertain how to proceed given the maturity of its core market.

    In fact, one way to think about these behemoths is to identify and explore their core cash cows, and then map their strategies to diversify from that core. To wit:

    Apple ———> Hardware

    Microsoft —–> Desktop, Enterprise SW

    Google ——–> Search Advertising

    Amazon ——-> eCommerce

    Faecbook —–> Social Advertising

    Perhaps that’ll be the fodder for another post.

    The post The Internet Big Five: Doubling In Three Years On A Trillion Dollar Base appeared first on John Battelle's Search Blog.

     
  • feedwordpress 03:00:04 on 2014/09/22 Permalink
    Tags: Alibaba, , , ,   

    Else 9.22.14: Good Design Trumps Good Code 

    The post Else 9.22.14: Good Design Trumps Good Code appeared first on John Battelle's Search Blog.

    BN-EQ088_0919al_G_20140919145705

    This week’s Else is brought to you by good design, which trumps good code any day. And by the Alibaba IPO, which kind of pissed me off (see below). Enjoy the links!

    The UX App That’s Driving Design Everywhere, From Airbnb to Zappos - WIRED

    When I read this I thought – “Of course there’s an app for that.” And then I thought – “I gotta use this app!”

    Pranking My Roommate With Eerily Targeted Facebook Ads  - My Social Sherpa

    This is just so good, so rich, so fun. If you work in media or marketing, a must read.

    Why Is Our Sci-Fi So Glum About A.I.? - NYTimes.com

    Yes, my point exactly when I wrote my review of Her, which does not hew to the Hollywood narrative of AI Will Kill Us All.

    Apple will no longer unlock most iPhones, iPads for police, even with search warrants – The Washington Post

    Bravo, Apple, a huge play to push the data control off platform and into the hands of everyone. BRAVO.

    Tim Cook Interview: The iPhone 6, the Apple Watch, and Being Nice – Businessweek

    If you want to understand the new guy running Apple, this is the place to start.

    Amazon Tops List of Google’s 25 Biggest Search Advertisers - Advertising Age

    I wonder why? Hmmmmmmmmmm.

    The $3.2 Billion Man: Can Google’s Newest Star Outsmart Apple? | Co.Design

    I don’t think Tony Fadell thinks his job is to “outsmart Apple” but then again, it makes for a good headline. And the profile is good too.

    Yahoo Stock Crashes As Alibaba IPOs – Business Insider

    Ah yes – Alibaba. It’s not that Yahoo! exactly crashed (down 5%), but that it’s really worth very little were it not for the Alibaba holdings. That simply doesn’t make any sense.

    Thoughts On Alibaba (Searchblog)

    In which I think out loud about Alibaba. I am pretty sure I will piss a few folks off with this one. Sorry.

    Venture Capitalist Sounds Alarm on Silicon Valley Risk – WSJ

    Bill Gurley may well also have pissed some folks off, but in the end, I think he’s right in the thesis that too many companies are burning too much cash.

     

     

    The post Else 9.22.14: Good Design Trumps Good Code appeared first on John Battelle's Search Blog.

     
  • feedwordpress 02:26:41 on 2014/09/22 Permalink
    Tags: Alibaba, alibaba ipo, , , , , rants, stock market, wall street   

    Thoughts On Alibaba 

    The post Thoughts On Alibaba appeared first on John Battelle's Search Blog.

    BN-EQ088_0919al_G_20140919145705

    (image WSJ)

    A caveat before I think out loud, quite possibly getting myself into a running battle I know I can’t win: I’m not a public market stock investor, I’ve never been one, and take the following ruminations at the price they’re offered: IE, free.

    But this Alibaba stock debut doesn’t smell right to me, and it’s not the company- which is certainly a huge success story inside China, driven by a scrappy founder with a laudable (if manicured) personal narrative.

    That said, Alibaba’s star turn smells of collective greed, with a hefty side of whistling past the graveyard.

    I wouldn’t be writing this post if I didn’t have some knowledge around the deal, at least as it relates to the culture of access enjoyed by those with relationships to investment firms. I’ve missed a TON of great deals over my career, mainly due to my being a journalist (or acting like one, as it relates to holding stock) for a large percentage of my working life. But over the past few years I’ve carefully gotten into investing, mainly in early stage startups. I don’t look to invest in IPOs, but every so often, about twice a year, they get offered to me.

    This is what happened with Alibaba. I was given the opportunity to – possibly – invest a small sum in Alibaba about a month ago. I figured it was a no-lose deal, so I said “sure” and I didn’t give it much more thought.

    But as the IPO drew near, I reconsidered that decision. Not because I thought the stock was going to tank right after the IPO  - I knew there was far too much money at stake, at least in the short term, for that to happen. No, I second guessed myself because I realized I honestly don’t understand the company, or the powers that control it. I pinged the fellow who had offered me the chance to invest, so as to recant my investment. But in the end, it didn’t matter. His fund didn’t end up getting an allocation of precious “at the open” stock anyway.

    I can only imagine what it must have been like running that allocation, deciding who amongst all the wealthy, connected individuals and firms would get Alibaba stock at the opening price. It’d be like doling out rigged lottery tickets – everyone’s a winner! One thing I am sure of – it wasn’t a fair process, and I almost ended up benefitting from it by happenstance. So here’s why I am concerned about Alibaba, in no particular order:

    1. Greed. The company was considered, by everyone I’ve spoken to, a “sure bet” that would “pop at the open” just like the Internet stocks of old (and it did!).  And yet, everyone that I have spoken with also believes that Alibaba is an offering that encourages the kind of negative Wall Street behavior none of us really want to see happen again. The book closed early. The stock priced above its initial range and moved up by nearly 40% on its first day of trading. Financial institutions, uncertain if they were going to get the allocations they wanted, started currying favor and hustling and pleading and whining. There was a frenzy of money making activity going on, and it felt like…pure greed. Alibaba is the ultimate insider’s stock – pedestrian retail investors did not get access to shares at the opening price, and most likely they will be the sheep to whom the wolves of Wall Street quickly sell (if they haven’t already). Insiders – wealthy people with access to early distribution of IPO shares at the open, have already made their fast buck. And the ultimate insiders have made a huge killing: a consortium of big banks poured $8 billion into Alibaba this June at a $50 price, a quid pro quo if ever there was one for giving a Chinese company access to the US markets. This kind of behavior adds questionable value to our society. I don’t doubt that everyone who held pre-IPO or at-the-IPO shares will make money, in fact, I’m sure of it. And that smells of a rigged game.

    2. Shallow understanding. If you’re reading this, and you bought the stock at $93 (roughly the price of its first public trade, up from $68), tell me – have you ever used Alibaba’s services? Do you really understand the company? I doubt it, because Alibaba is a Chinese company. Most of us here in the US don’t speak Chinese, or have a reason to use Alibaba’s services. But for some reason we all seem willing to buy into the “Chinese eBay,” or the “Chinese Facebook,” as if throwing those successful public companies’ reputation over Alibaba’s frame somehow equates to quality. It’s a “bet on China,” as most of the press puts it. Certainly that sounds good, given the country’s growth and early stages, but it leads me to wonder… will most analysts who are covering the stock have done core due diligence on Alibaba – the kind where you go to the market in question and talk to customers, suppliers, and regulators? That would mean they have access and understanding of the culture that controls Alibaba, and I’m pretty sure that culture will not ever allow such diligence to occur (more on that below). What bankers and analysts will tell you is they’ve run the numbers that Alibaba has given them, and they are fantastic. Then again, so are the numbers on Chinese GDP growth – and most well informed people I’ve spoken to say those numbers are unreliable. (Oh, and by the way, if you think the $81 billion China just injected into its own economy was a shrug, I guess you should buy Alibaba without concern). Which leads to…

    3. Controlled by a corrupt government. Do you know how China works? I don’t, but I’ve talked to enough folks who have lived and worked in China to get a pretty clear picture: The economic and government culture does not hew to US standards, to put it mildly. And like every other company in China, Alibaba is ultimately controlled by the whims of the Chinese government. It’s something of an open secret that Chinese corporate culture is definitionally corrupt by US standards. So…does listing it on the US stock markets change this fact? I could be wrong (see my caveat at the top), but I don’t believe it does. At least when companies are corrupt in the United States, we have a free and open press, and a democratic rule of law, to keep them in check.  One could reasonably argue that it’s a supreme proof of our capitalist system that now Alibaba is public in the US, so it will now have to play by US regulations. I wish I could buy into that narrative, but I sense all we’ll really get is a company well versed at playing our game, rather than a company that is an active builder of value in our society and in other free markets.

    Let me put this another way: Here are a list of Internet leaders who decided to forego China, because the government has made it nearly impossible for them to do business in the way that built our capital markets: eBay, Yelp, Twitter, Google, Facebook….and that’s just off the top of my head. So by buying into Alibaba, we’re buying into a system that has, through government fiat, denied innovative US companies growth in the world’s largest market, then capitalized that fiat into a stock it’s now selling back to us. Again, that just seems wrong.

    4. Hazy growth outside core markets. Many observers are expecting Alibaba to come into the US and other large markets, and either buy or compete its way in, so as to fuel its long term growth. This I find to be difficult to believe, on many levels. Sure, Alibaba could try to buy…Yahoo!, Yelp, Twitter, hell, maybe even Box or Square or one of the other heavily funded “unicorns.” But…does anyone really believe it can *manage* those companies to success post transaction? To get a sense of how odd that sounds, imagine Google or Facebook buying a slate of Chinese companies and then managing them well. Sounds pretty risky to me.

    Anyway, I’ve gone on long enough, and undoubtedly I’ve managed to piss off any number of friends and colleagues across multiple industries. So let me repeat: I’m no expert in Chinese markets, nor am I a professional public market stock investor. I’m just an industry observer, making industry observations. Caveat emptor.

    The post Thoughts On Alibaba appeared first on John Battelle's Search Blog.

     
  • feedwordpress 19:08:22 on 2014/05/19 Permalink
    Tags: , Alibaba, , , EU, , , , transparency   

    Else 5.19.14: I Too, Shall Be Forgotten (At Least By Europe) 

    The post Else 5.19.14: I Too, Shall Be Forgotten (At Least By Europe) appeared first on John Battelle's Search Blog.

    Oh-Im-sorry.-I-forgot-I-only-exist-when-you-need-something.(image) If ever you wanted proof we are renegotiating our social contract in the Internet age, this week’s roundup of the best links provides plenty of fodder. Onwards…

    The Myths & Realities Of How Of The EU’s New “Right To Be Forgotten” In Google Works - MarketingLand Google and other search engines will have to hew to new EU rules. But how they will be implemented is a big unknown. This looks to be a huge issue moving forward – what is a person’s right to ‘dignity’? In the US, it’s not much. In the EU, far more. But at what price to free speech?

    Transparency Reports Database – Silk A roundup of the ever increasing number of transparency reports from digital companies subpoenaed by the US government. This promises to be one fat file a year from now.

    Do You Have a Mission or…Are You *On* A Mission? On Being a NewCo - Searchblog NewCo is now accepting Host Company applications for Fall 2014 festivals. Please be a part of it!

    The Mystery of Go, the Ancient Game That Computers Still Can’t Win | Enterprise | WIRED At least there’s one game computers can’t win. Yet. A Peek Inside

    Alibaba’s Ad Business, Courtesy Of Its IPO Filing - AdExchanger China’s knocking at the US’s door. Will the two cultures meld in the wild west of programmatic advertising? Should be interesting to watch develop.

    How Tech Took a Bite Out of the Ad Industry – Advertising Age Remember the big speech by P&G’s CEO, warning what was about to happen to marketing? Ad Age does.

    Google’s Game Of Moneyball In The Age Of Artificial Intelligence – ReadWrite If you want to corner the market on machine intelligence, hire all the AI researchers.

    This is what comes after search – Quartz An overview of context based search, ruler of the mobile realm.

    An ‘unstoppable,’ cataclysmic glacier meltdown is already underway – The Verge  And we thought we had more time. Yikes.

    FBI Director says Chinese govt blatantly uses cyber-espionage to obtain economic advantages – NBC This should surprise no one. Come to think of it, neither should the glacier’s demise.

    The post Else 5.19.14: I Too, Shall Be Forgotten (At Least By Europe) appeared first on John Battelle's Search Blog.

     
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