Linked by Thom Holwerda on Wed 19th Dec 2012 21:23 UTC
Talk, Rumors, X Versus Y Derek Powazek exposes the meaninglessness of the already overused tripe 'If you're not paying for the product, you are the product'. "But we should not assume that, just because we pay a company they'll treat us better, or that if we're not paying that the company is allowed to treat us like shit. Reality is just more complicated than that. What matters is how companies demonstrate their respect for their customers. We should hold their feet to the fire when they demonstrate a lack of respect. And we should all stop saying, 'if you're not paying for the product, you are the product', because it doesn't really mean anything, it excuses the behavior of bad companies, and it makes you sound kind of like a stoner looking at their hand for the first time." Nailed it.
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Tony Swash
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The mobile device revolution is now well under way, at some point soon there will be more than a billion Android and iOS devices being used and Android will sometime this year pass the installed base of Windows, and so we can I think begin to see some patterns emerging which will probably shape the fortunes and fates of the big tech players.

This is what I can see:

Services, advertising and software are not a big revenue generator in the mobile space. The most successful app store, Apple's, has paid only about $7 billion dollars in revenue to developers in the four years of it's existence, Android apps have paid a fraction of that. Non-app sales (digital content such as music, films, TV etc) do not seem to generate any significant profits, less even than apps do.

Advertising revenue is also very low on mobile devices compared to desktop PCs. Google made around $2.5 billion on ads in the US in the last year and only about $315 came from mobile and over half of that came from iOS so that means total Google earnings from mobile ads runs to only about 6% of it's total revenues. And that's in a market where smart phones have already reached 50% of the market. It's looks like the best Google can manage in any market, assuming optimum conditions of 100% smart phone penetration, is around 13% of the revenues it earns from the traditional desktop/browser.

Microsoft has, so far, gained zero advantage in the mobile markets from it's dominance on the desktop. It has almost zero presence in phones or tablets. Windows 8 and Surface could change that but there is no evidence it is and the mobile software market, which is now the dominant software market, has led to a very big reduction in the price (and hence the margins) of software.

In general almost nobody is actually making any substantial profits in the new mobile device markets, which is very surprising given it's size and growth rates.

The only two companies making any substantial profits are Samsung and Apple with the latter substantially out performing the former in terms of commercial performance.

Both are making those profits selling hardware.

All the above could change but there is not evidence of any change happening so far.

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