Personal Computers and Mobile – Page 17

Non-game Apps Growth in the Google Play Store

In a previous post, I took a look at the recent report from App Annie, “Google Play’s Phenomenal Growth” and mentioned that the growth wasn’t actually as phenomenal as App Annie’s blog title suggests.

Here, I would like to draw attention to the fact that if you look at non-game app revenue, the situation is actually quite bad. That is to say, we are definitely seeing a leveling off.

App Annie tells us;

14Q1 Google Play app revenue was 2.4x year on year.
Game’s share of Google Play revenue grew from 80% to 90% year on year.

Putting this data into a simple table, we get the following (units are Indexed Revenue);

スクリーンショット 2014 06 27 8 33 28

Surprisingly, the growth of the non-Game category is only 20%.

Now that’s far from phenomenal.

Google I/O Keynote

Yesterday, before Google I/O kicked off, I wrote a piece about my worry that Google is winding down Android development. Well today, after reading people talk about the keynote (I haven’t yet taken time to watch the 3 hours), I’m still not sure.

True, Google previewed Android “L”, of which the most impressive part is the user interface (Material Design). This is a significant improvement over the previous UI theme “Holo” which was introduced in ICS (Android 4.0) back in 2011. Most significant are the animations and effects that are obviously powered by GPUs. The user interface concept using “depth” and animations is very similar to iOS 7. The problem is, what versions of Android will be able to run this user interface? To what extent will there be support libraries that enable older Android versions to use it? Given the reliance on GPUs, only a small subset of the animations may make it to older devices.

As always, this is in stark contrast to the situation in iOS. iOS7 supports iPhone 4 which was introduced in 2010, even before ICS was introduced. Although iPhone 4 struggles with some of the animations, it does work rather OK. It is highly unlikely that Material Design will go back that far.

Although Google has succeeded in nullifying the fragmentation issue in many respect through their Google Play Service strategy, and by also providing support libraries which help apps provide backwards compatibility, there are limits to what you can do without renewing the whole OS. Furthermore, solving the software fragmentation issue independently of hardware can actually make the hardware fragmentation issue worse. Also keep in mind that new OS releases can actually help cut off old devices and reduce hardware fragmentation.

In the case of Material Design, the question that developers will face is whether or not to update their apps to support the new look-and-feel. This depends largely on how many users will migrate to the new OS (KitKat is now on 13.6% of devices after being introduced about 8 months ago, iOS7 hit 87% after 7 months), and how difficult it will be to support users on older versions.

In the case of iOS7, supporting both iOS6 and iOS7 was not easy. At the same time, iOS7 adoption was very fast. Hence it made a lot of sense for developers to fully transition to iOS7 only.

For Material Design, the decision will be more complex. The option to fully transition to Material Design and to abandon the Holo UI will not be an option unless Google prepares support libraries that allow Material Design to work on old devices and old OSs. As I said, since Material Design probably makes full use of the GPU, this will be complicated. It could almost be Vista-like.

If Google’s support libraries do not work on a significant number of old devices, then developers will have to support both the Holo UI and the Material Design UI simultaneously. Instead, I expect most developers to simply stick with the Holo UI for a while.

In summary, I think Android has tried hard to move forward and that is confirmation that they are still eager to provide a user experience that is comparable to iOS. They are not slowing down in this regard. The problem is that Android “L” needs a lot of developer support for Material Design to succeed, and the fragmentation issue is likely to be a hinderance.

Personally, as an occasional Android Developer, I wholeheartedly welcome Material Design. I’ve only skimmed through the docs, but in addition to providing a better look, a lot of the nagging issues in the Holo UI have been addressed. I’m particularly happy that small things like overflow indicators have been added to scrollable tabs. Bottom sheets (much like action sheets in iOS) are also a very nice way of handling overflowing controls. I’d be happy if developers could get a support library that may not have fancy animations, but has the same widgets as Material Desgin.

As for the other announcements in the keynote, they actually confirms my concern that Google is trying a bit too hard to find success in other markets. It’s interesting how things like Android Auto have morphed into a CarPlay look-alike. This once again suggests that Google is better off quickly copying Apple rather then trying to pry open markets by themselves. As such, Android Wear is probably a waste of time.

What we really need right now is some feedback from Android developers. Are they excited about Material Design, or are they concerned about the extra effort?

Update

I’ve skimmed through the Google I/O videos, and it looks like the vast majority of Material Design will be exclusive to “L”. Creating a UI that is optimized on both “L” and previous versions of Android does not look like it will be much of a problem as long as you aren’t using the new “L” UI controls.

Is this a good thing or a bad thing?

It’s hard to say. It looks like the transition to Material Design will be slow, primarily because it will take time till the majority of devices will be able to run it. Hence most developers will also be slow to adopt it. They may be especially slow to adopt the new UI controls because that would break compatibility with older devices.

For the high-end, this isn’t good.

For the low-end, this means that there will be minimal hardware fragmentation issues due to lack of GPU power for example. For this segment, it’s probably good.

Why Google I/O Worries Me

Google I/O 2014 is scheduled to start in a couple of days from today. The event schedule is available here and you can see what sessions are in store. Unlike Apple’s WWDC 2014 event, the session titles are clear and none are secretive like “Shhhh, Can’t Tell You Yet”.

Since I have not looked at previous Google I/O events in detail, I have not idea whether or not the session titles give any indication of Google’s strategy. Having said that, the list of Google I/O sessions seems to have little to do with new Android APIs (or Google Play Service APIs for that matter). What I notice is that there is stuff for web developers, cloud management, wearables and cross development. There are sections devoted to Android, but they seem to be about how to leverage the current APIs, not about new ones.

I am very concerned about this because I am sensing that Android development is being deemphasized within Google. I sense that Google is not interested anymore in expanding the technical horizon of Android smartphones, and is only interested in gaining access to developing nations by making Google smooth on low-powered devices.

The basis of my concern is that Google used the “Jelly Bean” codename for three iterations starting with 4.1 in July 2012 till the introduction of 4.4 in October 2013. More significantly, Android versions have been on 4.* since “Ice Cream Sandwich” in October 2011 till the current “KitKat”. Furthermore, the main improvement in “KitKat” was not new features or new APIs; it was the fact that the new Android OS was designed to run on low-end devices with as low as 512MB of RAM. Even with “Jelly Bean”, the main attraction was “project Butter”; an attempt to make the UI as smooth and responsive as iOS. You can almost say that Google has not added significant new features or design changes to Android since October 2011 (“Ice Cream Sandwich”). A rundown of Android version history is available from Wikipedia so you can verify for yourself whether or not Android has been making large improvements recently.

At first glance, the list of Google I/O sessions seem to confirm my worry that Android is not aggressively moving forward. It seems to me that in the mid-term, Google is more interested in Android as an OS for wearables, not for smartphone. It could well be that Google considers its work on Android to be already “good enough” and therefore Google is reallocating resources to wearables.

We will learn more about this as Google I/O unfolds so it’s rather meaningless to guess Google’s intentions until we at least hear the keynote speech.

I’ll end this article by saying that if Google is indeed deemphasizing the role of Android as a leading (in functionality) platform for smartphones, the profitability of hardware OEMs will look more precarious than ever because high-end devices will lose their appeal and the replacement cycle will lengthen. I’ll also link to a post by Benedict Evans that notes a similar concern on the future stability of the Android platform.

For me, this is by far the most important thing that I want to learn from Google I/O.

As a footnote, keep in mind that iOS 8 has introduced a huge number of APIs and is arguably the largest iOS update ever. Android advocates may comment that iOS 8 is simply copying features that Android has had for years, but that is totally irrelevant. The fact is that iOS 8 is evolving faster than ever and developers are tremendously excited. Whether Android (on smartphones) decides to keep running alongside iOS or rather decides to slow down will have large future consequences.

Google Play Revenue Growth

App Annie just released Google Play their download and revenue report. The title of their blog post that announced the availability of the report was “Google Play’s Phenomenal Growth”. Let’s check this.

Both App Annie and Distimo have regularly released reports in the past. I commented on the most recent report in this blog, and have also commented on previous reports.

First let’s look at a graph from an App Annie / IDC report dated Feb. 26, 2014. By comparing Google Play revenue (in this case limited to games) between 4Q12 (roughly 30) and 4Q13 (roughly 130), we see that annual growth was 430%. This is much much more than the 2.4x (240%) reported for 1Q13 vs. 1Q14. Hence we can say that on a ratio basis, Google Play growth has actually slowed down.

Now attentive readers might have noticed that the current report is for all app categories, while the older report was for games. However App Annie has also mentioned that games represent 80-90% of Google Play revenue. Therefore using all category revenue and game category revenue interchangeably does not significantly change the numbers.

NewImage

However, given Google Play’s rapid growth, it is rather unfair to compare the ratios early in the game to later ratios. We should also look at absolute growth. Since App Annie hides the raw data behind an arbitrarily indexed revenue score, we have to again resort to reverse-engineering their charts.

Looking at the above chart, we can see that 1Q13 was roughly 60 on the Y-axis. Multiplying that by 2.4, we get 144. If we were to extend the above graph and plot 144 for 1Q14, we would see growth in absolute terms actually slowing down. 4Q13 (roughly 130) – 3Q13 (roughly 100) = 30. 1Q14 (roughly 144) – 4Q13 (roughly 130) = 14. What we see is a huge slowdown on a sequential absolute growth basis (30 vs. 14).

Now since these numbers have been reverse-engineered and they also contain ambiguity due to all categories vs. games, I do not intend to conclude that there was a huge slowdown. I simply want to bring attention to the possibility that a slowdown may have happened.

To further understand the character of Google Play growth, you have register your email with App Annie, but you can download the full report for free. Inside this report, you will see that Google Play growth is still completely reliant on Japan, US and South Korea. Even large wealthy economies like Germany which also has a high Android marketshare have minuscule Google Play revenue compared even to South Korea.

The problem is, the lopsidedness of Google Play revenue is likely to limit future growth. Android market share itself is growing in the less-wealthy nations and is flat or decreasing in markets like Japan or the US. If Google Play revenue continues to rely on these countries, growth may soon trail that of the iOS App Store, the figures for which are likely to be released from App Annie quite soon.

Effectiveness of Online Ads

Jordan Weissmann an article that is very much in alignment with my views and experiences with online advertising.

“We Have No Idea If Online Ads Work: The Internet has given us an ocean of data. Turns out, most of it is pretty useless.”

Some excerpts;

Last year, a group of economists working with eBay’s internal research lab issued a massive experimental study with a simple, startling conclusion: For a large, well-known brand, search ads are probably worthless.

For instance, companies like to run large ad campaigns during major shopping seasons, like Christmas. But if sales double come December, it’s hard to say whether the ad or the holiday was responsible. Companies also understandably like to target audiences they think will like what they’re selling. But that always leads to the nagging question of whether the customer would have gone and purchased the product regardless. Economists call this issue “endogeneity.” Derek Thompson at the Atlantic dubs it the “I-was-gonna-buy-it-anyway problem.”

In the end, it all comes down to the evergreen challenge of distinguishing correlation (e.g., a Facebook user saw an ad and then bought some shoes) from causation (e.g., a Facebook user bought some shoes because he saw an ad).

This is exactly the reason why we stopped using AdWords for our antibody search service. Visitor numbers dropped, but our profits didn’t.

Maybe brands that are just starting out need to use AdWords. Maybe if they never gain brand recognition or loyalty, these brands might have to use AdWords forever. However, if your brand has managed to get some recognition, or if your product offerings are unique and listed high in organic search, it is very likely that AdWords is reducing your profit rather than increasing it.

Google and other internet advertising companies are telling advertisers how much data they have and how effectively they can target customers. However, as a recipient of these advertisements, I’m seldom amused when they blatantly show ads from websites that just I visited the day before. If this is all that big data can do, then Internet advertising companies have a big problem.

Credit Where Credit Due

Following WWDC 2014, there has been a lot of positive commentary about how Apple seems to have opened up and was listening to the requests from developers. There was also a lot of discussion on how wonderful the new “Continuity” focus was as compared to efforts from Microsoft and Google.

Given that Craig Federighi was on stage most of the time to explain these new features, Craig and his personality is getting a lot of attention. However, we have to remind ourselves how and when Craig was promoted to his current position.

It was on the occasion when Scott Forstall was ejected from the head of iOS development. Craig was given control of both OS X and iOS development, and was given the task of improving collaboration. And there is no doubt now that he has done a wonderful job.

But it is also true that this was Tim Cook’s vision all along. Tim Cook valued collaboration over the genius of Scott Forstall. He was the one that made the decision between choosing Craig and Scott. And his wisdom has paid dividends.

As much as WWDC2014 was about the new Apple, it also showed that Tim Cook was spot on in his strategy for the company as a whole. We can expect more fruits as the second half of 2014 unfolds.

Thoughts from WWDC 2014

Some of my random thoughts from the WWDC2014 announcements.

Spotlight search moving away from Google

There has been quite a bit of discussion that Apple may be gradually moving away from Google, even on Search. This is evidenced by Spotlight using Bing for searches instead of Google.

I actually take a different view. I am starting to think that Google search has overshot mainstream demands and is actually vulnerable to low-end disruption. What I mean is that for most of the time, when people are doing Google searches, they don’t really require the full power of Google. Instead, what they want to do is to find the meaning of a word from Wikipedia, a location from Maps, something in the news, restaurant information or information about a song or an application. They don’t really need a search engine that knows everything that is on the net, including random blogs. What they need is information from a handful of distinct services.

Google itself acknowledges this. Search for “sushi” on Google and they will give you a map of sushi restaurants nearby and an entry from Wikipedia. Search for “Masahiro Tanaka” and Google will give you an entry from Wikipedia and a link to news searches. Google realizes that people are not looking for random sushi information, no matter how relevant it may be to the “sushi” keyword. Instead the majority of users are using Google as a gateway to Wikipedia, maps and news.

For these users, a search engine that simply listed Wikipedia entries or directly looked up maps would be more convenient than using the full Google search engine.

Hence my position is that Spotlight is less about replacing Google with Bing, and is much more about directly showing Wikipedia entries, etc. Google is facing the possibility of low-end disruption on search.

iCloud Drive

It is becoming increasingly obvious that some elements of the Cloud are starting to be commoditized. iCloud Drive is a prime example of this. We have DropBox, Box, Google Drive, Microsoft One Drive. We even have open-sourced clones like ownDrive. DropBox, which used to be a prime example of how the cloud is becoming so convenient and important, is now almost completely commoditized. It will be very difficult for even DropBox to differentiate itself from the rest.

Windows compatibility

iCloud Drive will be available for Windows but not for Android. This clearly show what Apple thinks of Android. Apple views Windows as a necessary evil. They realize they cannot ignore Windows because it is so dominant in both the consumer and corporate spaces.

On the other hand, Apple considers Android users as people who made the wrong choice by mistake. Apple thinks that if Android users regain their sanity, they will move towards iPhone.

Seriously, if you consider the few most likely multi-OS situations and think through how Apple would like each consumer to behave in the future, you can see the rationale behind Apple’s decision.

For example, Windows PC and iPhone/iPad users are completely covered by Apple’s commitment to iTunes on Windows and iCloud Drive. There is clear multi-device support there, although limited because Apple can not directly modify Windows.

Also, you won’t find many Mac users who decided to use Android smartphones, so it’s meaningless to cater to these users.

There will be many Windows PC users who also have Android phones. Apple isn’t able to target these users with iCloud until they buy at least one Apple device, but that’s another strategy.

Now the main issue is with Windows PC users who own an iPad and an Android phone. Given the market share of each device category, there are quite a lot of users in this segment. Now iPad and Windows will work well together, at least as well as how Windows and Android will work. Given the rapid replacement cycle of smartphones and the dominance of Windows, it makes sense for Apple to try to convert the Android phone to iPhone rather than to convert the Windows PC to a Mac. To achieve this, Apple should work on getting the iPad to work better with Windows, at least better how Android. They should try to make Android the odd-man-out. This isn’t a difficult task given how Google doesn’t like collaborating with Microsoft.

So my view is that Apple is being very sensible in supporting Windows in their multi-device strategy and not supporting Android.

Slow Progress is Killing Firefox OS’s Small Opportunity

About a year ago, I discussed (mostly in Japanese) the possibility that Firefox could succeed if they successfully targeted the opening in the Smartphone market at the low-end.

At that time, Android did not have a solution for low-end smartphones. As a results, vendors were not using the latest OS but using Android 2.3 in the products instead. I stated that if Firefox OS worked smoothly on low-spec devices, it might be able to successfully enter the market.

That hasn’t been what has happened.

Just yesterday, Mozilla announce they are accepting preorders for Firefox Flame, a mid-tier reference Firefox OS device. It has a 1.2 GHz dual-core processor and a 4.5-inch screen. This is not a low-end device. In this market tier, it will be extremely difficult to compete with Androids.

I am pretty disappointed with the progress that Firefox OS has made. In a year, instead of focusing on the low-end, they seem to have moved up-market. Maybe Firefox OS didn’t work well on low-end devices. If so, then it would be an engineering problem.

The way I see it, Firefox OS has lost the ability to compete in the market where it could have been relevant. As Moore’s law progresses, the low-end smartphone market will be filled with higher spec phones which can run the latest version of Android. This will effectively close the small opening that existed temporarily.

There’s Still Time Left for Microsoft Tablets

Nine months ago, back when the flattening of iPad sales had not yet become obvious and when the majority of analysts were predicting tablets to soon imminently replace notebooks, I wrote quite a bit about Microsoft (in Japanese).

In summary, I wrote;

破壊的イノベーションが成功するかしないかの最大のポイントは、既存のトップ企業が、まだ間に合ううちに反撃に出るかどうかです。間に合うかどうかというのは、新興の企業･製品が十分に既存製品を代替できるところまで進化しているかどうかにかかっています。つまりスマートフォンとTabletが十分にパソコンを代替できるかどうかです。十分に代替できるところまで来ていれば、Microsoftは反撃のしようが無くなります。しかしそうでなければ反撃が効きます。

The largest factor determining whether a disruption succeeds or not is whether the incumbents respond in time. “In time” is defined by whether the entrant product has evolved to the point where it can fully replace the incumbent. In the context of Microsoft, it is defined by whether the combination of a smartphone and a tablet can replace a PC. If the answer is yes, then Microsoft cannot retaliate. Otherwise, a counterattack will still be effective.

Tabletについては、まだまだパソコンを代替できていません。特にAndroidは7インチに偏っていて、娯楽に完全にフォーカスしています。Tablet市場がパソコンを使って仕事をする方向に向かっていません。これではなかなかパソコンは代替しないでしょう。

Tablet still cannot replace PCs. In particular, Android tablets are skewing towards 7-inches and are focusing on entertainment. The tablet market is not moving towards doing work. Hence, tablets are unlikely to replace PCs.

反撃にいったん出れば、既存のトップ企業はそうそう負けるものではありません。Microsoftの場合、まだ間に合う気がします。

Because of the vast resources they can deploy, incumbents rarely lose once they retaliate in time. In the case of Microsoft, I think they still have time.

Apple has released their sales figures for 1Q2014 and the sales of the iPad have clearly flattened. Although iPad sales volumes (~ 20 million units) are still very impressive, at this level, it does not look like they are on a trajectory to replacing PCs.

So Microsoft still has time.

In fact, the new Surface Pro 3 clearly shows that Microsoft understands this. Instead of launching a hastened response to the iPad which was the original Surface RT, they have launched a product that attacks from their dominant strength in PCs and office productivity software. They have realized that laptops are not going to be replaced by tablets any time soon, and that sales of Windows laptops will continue to surpass the sales of iPad-like productivity tablets. Hence their dominant power, although weakened, will still be a formidable asset for the foreseeable future.

So instead of starting afresh, they are playing their strengths and using their resources wisely. Instead of attacking tablets head on, their plan seems to be to embrace and to internalize tablets into their laptop products.

This clearly makes sense.

Of course, it will take time. But Microsoft has realized that it has time.

Peak Netbook vs. Current Chromebook

I thought it would be interesting to note the peak sales of Netbooks compared to the current sales of Chromebooks.

I don’t have a very good source for peak sales of Netbooks but I think it is 35 million units in 2010. And that was achieved in a mere three years after the first Netbook was introduced (late 2007).

As for Chromebooks, IDC estimates that 2.5 million Chromebook units were sold in 2013. Chromebooks were introduced in June 2011. They have also been with us for nearly three years.

So the real question is not whether Chromebooks will follow the same fate as Netbooks. It is whether Chromebooks will ever be as successful as Netbooks.