Odd things are happening in the world of tech. This week, in a surprise announcement, Yahoo, one of the most iconic of internet brands has just announced it plans to spin off its core internet business, including its 35% stake in Yahoo Japan. In a February piece for Forbes, Gordon Kelly makes the point that Google is becoming Microsoft and Microsoft is becoming Google. Meanwhile, in a piece for Verge just this Tuesday, Nick Statt called Apple out on bad design.
Brand identities shift quickly in the internet era, something which should be particularly worrisome for those who need to woo the millennials, both as customers and potential employees.
Inflection
Yahoo’s recent announcement reverses an initial plan to spin off Yahoo’s stake in Alibaba, which would have created a large tax bill. CNBC reports that Yahoo CEO Marissa Mayer explains that the hope is that this move will lead to a more rational valuation of Yahoo’s core business.
In fact, just in October of this year, CNBC’s Ari Levy pointed out that using Yahoo’s then market capital of USD29.5 billion, Yahoo’s investors were putting a negative value on Yahoo’s internet business – this in spite of the estimated USD 950 million expected earnings in 2015.
Maynard Webb, Yahoo chairman, pointed out that while a sale of Yahoo’s internet business is not the most likely outcome, the board has a fiduciary responsibility to entertain offers. In spite of owning a constellation of properties that together form the third most visited sites in the United States, Yahoo’s core online ad business has been eclipsed by Facebook and Google in recent years.
Clearly, part of Yahoo’s struggles have to do with its inability to grow its business against its more enterprising rivals.
Inversion
Google, on the other hand, has recently come under scrutiny not only by analysts but by the millennial generation that is closely comparing Microsoft and Google as places to work. In a discussion on Quora on which company is more exciting to work for, certain interesting points emerged. Google is known for moon shots, great big leaps into the unknown. Microsoft is known for iterations, incremental improvements in its products. Google’s revenue base is essentially a single monolithic – online ads. Microsoft has a wider base of revenue. Google recruits on brand prestige. An entire movie has now made people aware that Google looks for people who are “googly”. Microsoft, it was pointed out, recruits the same type of tech geeks, but they don’t have extraneous brand promises. Perhaps more importantly, recent interns point to radically different work cultures. Interestingly, Microsoft is lauded as a company that is changing in a way that provides more latitude for learning and experience.
Gordon Kelly eerily points to an almost similar juxtaposition in Google and Microsoft’s approach to the markets. Kelly calls out Google for deprioritizing mobile and for pursuing defensive strategies in efforts to protect their main revenue stream while Microsoft works on replacing its own systems and making its office platform more open. As Google Chrome slows down, Microsoft’s Project Spartan targets a cross-platform browser focused on speed – Chrome’s original selling point.
Microsoft has also ended its conflict with Samsung, one of Google’s most important partners, in order to pre-install Microsoft applications on the Galaxy s6, the most recent generation of Android’s best-selling series of mobile phones. To add salt to Google’s wounds, Kelly even points to Microsoft’s Holographic platform as the most exciting moon shot in current tech space.
Reversion
Elsewhere in tech, Apple seems to be faltering in what used to be the one thing it could never be faulted on – design. In a piece subtitled Unapologetically Bad, Nick Statt begins with the ugly casing on the newly introduced iphone 6 battery cases. Of course, Statt points out that many Apple products, such as the iPhone, continue to look gorgeous. But then he moves on to the unsightly bulge on Apple’s iPad Pro Smart Cover keyboard – while pointing out that Microsoft has had a slim and level version for years.
He points out the powerful stylus nicknamed the Pencil that works with the iPad Pro (reminiscent of the Samsung Note stylus which, again, has been out for years) and then explains the odd manner in which it needs to be charged. Unlike the Samsung Note stylus, which fits neatly into its home inside the body of the tablet, Apple’s Pencil sticks out awkwardly and somewhat dangerously from the body of the tablet. This reminded me of the unfortunately designed Apple chargers, which seem to be designed to fail.
Statt ends fittingly, with what is perhaps the most amazing of Apple’s design fails this year, the Magic Mouse 2. Now, look at your mouse. It looks like a large beetle, right? (I hadn’t really thought about this until Statt pointed it out) Now, flip your beetle – er, mouse – on its back. Now, stick a charger on the top. That’s how you charge the Magic Mouse 2. This is a design fail so epic in scale that I had to check to make sure this was not a gag article.
In an August piece for Forbes, Bert Dohmen summarizes some worrying trends about Apple stock. Most importantly, though, he points to some serious market indicators. In the last few years, Apple’s only significant market offering is a phone with a larger screen – something that has already been available in the market for years. The Apple watch seems to have flopped. iPad sales are done 34% with market share in table sales down to 25% from 65% in 2011. Even more worrisome, Apple’s iTUmes software has not seen a significant update in a market being flooded with significantly better apps.
Reflection
In the management classroom, we talk about leading indicators and lagging indicators. Stock price anticipates changes in net income. Yahoo is making money but investors are already discounting Yahoo’s reality. Culture presages performance. Google’s crumbling culture is a warning of potential problems. Customer satisfaction presages market performance. Apple needs to worry about its future.
Kelly points out that the changes in Google and Microsoft are motivated by the same thing: Fear. The difference, of course, is that Microsoft is dealing with its fear by creating new spaces. Google is digging in and creating barriers – effectively hindering its own growth.
Of course, reading the signs is important. But, it’s not just a matter of reading the signs. What you actually do with the knowledge matters.
Readers can email Maya at [email protected]. Or visit her site at http://integrations.tumblr.com.
