Alphabet: what does it all mean?

Social media went into overdrive on Monday evening UK time when Google announced a formal restructure of all its businesses, creating a new company called Alphabet. For the man on the street, Google means Search, YouTube, Drive (including Docs, Sheets etc.), email and Android. For the average marketer you can throw various advertising products and Google Analytics into the mix. For business IT managers, it is everything from productivity, software-as-a-service and possibly as a supplier of a search appliance for its internal servers.
Google Logo in Building43

Three different customer types exist and a product set that grows layer-by-layer like an onion. The bulk of Google’s revenue currently comes from advertising due to the clever technology behind it. One can see from Microsoft’s move to the cloud that there is less revenue in cloud computing than in Google’s current business, so when advertising reaches a natural ceiling for growth, services will provide an incremental benefit at best.

Android was designed as a conduit to Google services and for advertising to venture out into the mobile space. But the world’s most popular mobile operating system is not without its own issues. Despite all phones essentially looking the same, there is a massive amount of fragmentation in the Android marketplace, which makes life harder for developers. Google is also a developer, so building applications that it can build loyalty through and make money from becomes more difficult.

Secondly, an appreciable amount of Android devices (those sold in China) and many sold in Russia don’t use Google services and provide little to no opportunity for Google advertising.

This means that Google is forced to make big bets in very different sectors. Sergey Brin and Larry Page, partly because of their entrepreneurial nature to explore new opportunities, built in an ability to scale Google beyond the business lines that I have outlined above. This was apparent from their original IPO share prospectus and accompanying letter. Xerox is famous in Silicon Valley lore for fumbling the future, by inventing lots of products that would be recognisable to us today in the late 1960s and early 1970s, only to see a corporate head office miss the boat. Brin and Page would have had some awareness of this. Microsoft’s inability to leapfrog beyond its core business successfully is probably also a factor for consideration.

Alphabet formalises the framework that Page and Brin had been working to for a number of years.

So what does this mean to Google?

For the foreseeable future it will be more of the same for Google. We’ve the seen the business scale back services; by September last year Google had closed down 30 services. It has cut back the functionality of Google Adplanner as a reference tool, to just focus on sales. Google has continued to prune back services such as Google+ (a challenging task given the tentacles + has across Google’s services). The changes inside Google for staffers also reflect similar moves towards profit optimisation, move away from experimentation and being a ‘mensch’.

The biggest move was to get rid of the 20% of time engineers could devote to projects that interested them. The truth is since at least 2009, the Google myth of people working there to change the world rather than delivering profit hasn’t held sway for a great deal of their staff.

On the outside Google will still likely have playful swag and cool offices, but the reality is that it will be more of a ‘normal’ business. That means that we won’t see the next Facebook coming from within Google and that whilst the speed of evolution will continue to run along at the same pace, substantial innovation probably won’t. This kind of business requires a different kind of leader to Page, and by appointing Sundar Pichai, will create a cultural break from the past. Pichai is likely to be able to get more revenue out of the Google ‘cash cow’ to help drive innovation in these other areas.

Page and Brin are freer to bring their energy to the other businesses in Alphabet. For instance, keeping Nest out of Google allows it to work easier with Google competitors like Apple and Microsoft as part of a wider eco-system.

Lastly, it could be an effort to ring fence Google’s anti-trust woes within the existing business and prevent restrictions being imposed against its newer businesses because of the past sins of the core business.

So what does this mean for marketers?

Google is likely to pursue a steady as she goes approach. The focus will be to optimise revenue, so there will be tension with agencies on advertising practices. We’ve already seen this, with Google restricting methods of buying YouTube advertising. These changes will impact the advertising technology business around programmatic advertising.

The picture with SEO is more about slow and steady change; Google has evolved its Panda index changes to a rolling change rather than the massive shake-ups of old.

More information

Android Fragmentation Report August 2015 – OpenSignal
2004 Founders’ IPO Letter – Investor Relations – Google
Fumbling the Future: How Xerox Invented, then Ignored, the First Personal Computer
What’s eating Google’s brand | renaissance chambara
Why Google Employees Quit? | TechCrunch
Google Tightens How Advertisers Buy YouTube Ads | AdWeek
Google’s $6 billion miscalculation on the EU | Bloomberg Businessweek

The rise of the life OS

If you read the Telegraph online last Wednesday 25th or the Financial Times on Thursday 26th June,   you would have seen some great coverage about Google’s developer conference and the rise of the Android economy in the UK. Like iOS and web development, software and services are now a major part of the creative economy.
Samsung Galaxy Gear smartwatch

Google announced developments to move Android to being a ‘life’ OS rather than just a mobile OS.

Android expanded to:

  • Run wearable devices
  • Run applications within Google’s lightweight desktop OS chrome
  • Be a games console platform
  • In-car entertainment
  • Take another run at the smart TV market
  • Lowering the price-point of smartphones even further with AndroidOne

 

All of which presents a range of interesting choices for the UK’s Android platform developers.

 

What does this mean for app-enabled brands?

Google has created more choice and there will be the inevitable surge of experimentation to figure out what works.

The expansion of Android presents a more challenging time for marketers. There will be more platforms to develop for; since iOS cannot be ignored as a platform. There will be a corresponding complexity in the development of Android applications:

  • Increased application testing time
  • Increased application development
  • Increased application maintenance time to cater for new devices and firmware updates
  • Increased requirement for application marketing support to encourage app downloads and usage across platforms
  • Increased budgets will be required to support new platforms where consumers will start to expect to find brands they use

 

There will be a corresponding increase in new risks that these applications bring which will require careful communications planning and preparation:

  • Software rendering hardware useless – ‘bricking’
  • New versions of applications no longer supporting older versions of Android / Android devices – particularly as different manufacturers update their hardware at different rates. Some cheap smartphones may not have any upgrade path. Now imagine this on televisions or car dashboards…
  • Hacking attacks | cybercrime
  • The withdrawal of a well-loved app
  • The poor reception of a newly-designed application

 

Who will lose out?

The most obvious casualty of this move is not Apple or Microsoft but the Java language that Android’s application language is very similar to. Java was touted in the mid-1990s as a write-once, run-anywhere development language and pops up in surprising places. A variant of Java ran most of the pre-iOS smartphone games. It provided a development environment for early web applications including those used in the enterprise. Java had developed a strong footprint in consumer electronics that Android is now looking to usurp.

Microsoft would be more threatened by Google’s integration of its internet services into Android. Gmail has become a development platform in its own right and Google is providing enterprise users with unlimited storage for $10 a month. Whilst Microsoft has failed to build a serious mobile platform, its web services business has been growing rapidly to challenge Amazon. Every part of that business, from Azure cloud computing to hosted Exchange server functions, is threatened by Google’s recent announcements. Neither Microsoft nor Sony will be particularly worried by Google’s plans for an Android-powered games console, at least for now.

Companies in the wearables sector are likely to face rapid commoditisation in hardware as Android makes it easier to design wearable hardware. The challenge will be if they can differentiate on superior industrial design and maintain a premium price, or move into providing web services that support compatible devices – a direction where Nike seems to be moving with its Nike+ Fuel Lab.

The closer integration of Samsung and Google’s development efforts including the integration of KNOX, puts other Android handset manufacturers like LG, Sony and HTC at a further disadvantage.

 

The integration of KNOX will also affect the core enterprise business of BlackBerry, providing yet another reason for not purchasing BlackBerry devices or server software.

Who will benefit?

With such a wide range of devices that Android could develop for, software testing will become an even more daunting prospect than it is already when developing for Android smartphones and tablets. The question is whether the current range of testing tools will cover this new product set adequately or if there is an opportunity, particularly in the enterprise environment for new players?

Designers are going to be tremendously important, as new versions of the Android software and new use cases pose a number of user experience challenges:

  • Redesigning current apps to match the new flat design of Android
  • Understanding user behaviour and designing compelling smart TV applications
  • Understanding in-car entertainment and designing intuitive, unobtrusive in-car experiences
  • Understanding wearable use cases and designing device experiences that consumers don’t want to put down

 

A wider range of Android devices will mean a greater potential market opportunity for ARM-powered chips where they may be going into embedded systems previously powered by lower power X86 processors, PowerPC or MIPS RISC processors.

Google is a technology company that makes most of its money from customer data and selling advertising space. The expansion of the Android ecosystem will present more advertising formats, inventory and more contextual data. This will be a boon for media buying agencies and potentially for the platforms that support programmatic advertising like DataXu, as the data will help support targeting in real-time bidding.

More information
‘Powerhouse’ UK leads Europe app development, says research | FT (paywall)
Android TV hands-on: Google makes a new play for the living room | The Verge
Google announces Drive for Work with unlimited storage at $10 a month | The Verge
Google Opens Gmail, Making It More of a Platform for Developers | WSJ
Google previews Android apps running on Chromebooks | TNW
Razer’s making a gaming ‘micro-console’ with Android TV, available this fall | Engadget
Google Introduces Android TV, Its New Platform For Smart TV Apps And Navigation | TechCrunch
Google Unveils Ambitious Android Expansion at Conference | New York Times
Nike+ Developer Portal

What The Times’ new paywall update means for PRs

It’s emerged this week The Times newspaper is backtracking ever so slightly on its paywall policy. It really is ‘ever so slightly’, two sentences at a time.

the times paywall

When The Times’ paywall shot up in May 2010 it was unique. Unique because it completely closed off all access to the site’s editorial content for non-subscribers. This contrasted harshly with other paywalls that allowed readers to view a select number of articles or at least read the headline and first paragraph, notably the FT but other trade and specialist titles too.

Now the News Corp owned paper has backtracked. Google, Bing and any other search engine’s crawlers will be able to grab the first two sentences the paper’s editorial articles and index them alongside freely accessible sites. The update should happen next month, says The Telegraph.

Paid Content rightly suggests this is an effort to market the paper to new customers, having reached over 130,000 paying subscribers since the paywall went up. Ignoring the “drive by traffic” has been at the heart of The Times’ strategy, and it’s nice to know the paper’s digital team are willing to reassess their position a few years in.

But what does this mean for PRs?

When the paywall first went up I had a few questions over the value of the paper for PRs, effectively weighing the worth of reaching a fledgling but well targeted audience with a wider, more causal readership. There were also questions of exclusive stories with a site paywalled up to the eyeballs, and generally how monitoring would be tougher for PRs.

The latest update means it is work revisiting these topics:

  • Exclusives: well it seems you can have your cake and eat it too. Or other clichés. From a PR perspective, The Times is much more appealing for an exclusive story with a few bricks knocked out of the paywall. Your story will now get to the national broadsheet readers who are arguably far more engaged than the legions of causal readers hitting guardian.co.uk and telegraph.co.uk everyday. If you’re looking after a brand whose name won’t grab attention in headlines, this is even more appealing.
  • Monitoring: this will get a whole lot easier, especially for anyone scanning nationals for client and industry coverage to compile a morning news scan. If there’s a big story picked up by other nationals, I’ll bet my Gorkana log-in few PRs have included a Times article in news scans over the last two years. You’re just so much more likely to find it somewhere else first. Presumably the update means Times content will be included in Google Alerts too, but Paid Content confirmed monitoring services such as Meltwater are still off the cards. The downside is any client without a sub won’t be able to read the entire article in their scan, but at least The Times will be back on the radar. Which leads us to…
  • Influence vs exposure: this makes me wonder if Times writers have become less influential than their counterparts at other papers, whose stories are freely viewable by PRs, analysts, clients and…everyone. Does lack of exposure mean less influence? It’s not impossible, but if it’s the case the new paywall could reverse this process. Of course the majority of Times’ writers can be followed on Twitter, and the editorial team haven’t been hidden away in a cupboard since 2010. Some of them started a Tumblr.

@simonhill

A Very Social Media Olympics

There’s a fairly important international sporting event coming up, and as its 2012 some are predicting this will be the first “social media games”. In other words, the Olympics organisers are looking to social media to make the events engaging for everyone not holding a ticket.

The International Olympic Committee (IOC) didn’t get off to a brilliant start. Their Social Media Guidelines issued in advance of the games caused something of a stir, with regulations banning ticket holders from posting or uploading their own images, video and other digital recordings to social media or the Internet. So no burly Instagram shots of sprinters as they whizz past.

In contrast, the IOC and other sponsors have gone a bit social media bonkers in the final few days before the games. A whole host of sites and interactive content around the athletes, Olympic venues and London generally has popped up. Here’s a quick snapshot of what we have to look forward to:

Athletes Hub, Facebook, FourSquare, Google+ Twitter, Tumblr and more

Paid Content has published a handy rundown of the IOC’s official social media channels, which includes all the big names you’d expect.

Some highlights:

Twitter photos from the Athletes Village

Even the athletes themselves are getting in on the social media fun, with a bit of cajoling from the IOC. The Guardian published a collection of photos posted on Twitter from the athletes as they arrived in the Athletes Village, their digs for the summer. The women’s football team seem to be having the most fun.

London Eye

Olympics London Eye EDF
The colours of the London Eye’s nightly light show vary depending on Twitter sentiment. A clever sounding ‘intuitive algorithm’ developed by British professor Mike Thelwall from MIT, and his students, will monitor the sentiment of tweets during the games. Depending on how happy or sad the great British public is, the riverside ring will change colour. It’s yellow for happy, green for sad and purple for ‘meh’. The algorithm’s development is being sponsored by EDF Energy, which is also an official Olympics sponsor. The nightly show will also be live streamed of light show on EDF’s website.
Quite a nice idea that last one. Although if Team GB aren’t winning gold and the weather sticks to British summer tradition we’re gona be seeing alotta green on the South Bank in the coming weeks. Lets pray for yellow.

@simonhill

Telegraph vs Guardian on Yahoo!’s Mayer

So Yahoo! has a new chief executive. Or another new chief executive if you prefer. The fifth inside a year is Marissa Mayer who, you may have heard, an ex-Google employee – as of Monday.

Can Mayer breathe new life into Yahoo!’s increasingly bleak future? To be blunt with you, I have no idea. I guess if there is a person in the world who could do it, it would be one of the three people who invented Google AdWords (yeah, she’s one of those). On the other hand, you can’t polish a…failing dot.com darling.

Forget the arguments on Yahoo!’s future for a second, because there’s an interesting point on media coverage of this appointment to end all appointments. After an initial storm of news stories late Monday / early Tuesday, a few ‘think pieces’ have been appeared with the more considered viewpoints of tech writers.

Specifically, The Guardian and The Telegraph took opposing views on the appointment and Mayer’s future.

The Guardian was full of chipper enthusiasm, calling Mayer “a Savvy boss” who is “one of the few executives able to turn Yahoo around”. Much of the write up focus on her past, with quotes from former colleagues and details of her working practises. At Google she went to 70 meetings a week, don’t you know. Even Schmidty waxed lyrical about her – to Glamour magazine of all things.

Comparatively, The Telegraph took a more forward looking view – and quite a dim one at that. Digital Media Editor Emma Barnett reports Mayer has “has taken on mission impossible” and deduces her “relatively easy” choice to depart Google was due to being pushed out of the power circle that, The Guardian would have you believe, loved her to pieces. The article also chronicles Yahoo!’s poor record on pretty much every business decision since 1999, concluding “Mayer, despite her huge following in Silicon Valley and brilliant reputation in consumer technology, has just gleefully accepted one of the Internet’s most high profile poisoned chalices.”

The poisoned chalice lined is also replicated in a second Telegraph article by media, telecoms and tech editor by Katherine Rushton. A strange term to use, given that even a poisoned chalice is meant to at least appear to be good at first – not something many would call Yahoo! right now.

So the media is uncertain of her future, and Yahoo!’s for that matter. If nothing else, in a few months we can all discuss [the brilliant job she has done turning the company around / who on earth is brave enough to be chief exec number 6] – delete as appropriate.

@simonhill