The Battle to Turn Mobile Into Cash

I have been a major advocate of Google, having fallen in love with their line of products, and been very bullish on the stock which I have been long since $490 a share. Now, my friends and readers, I need your help- I want to start a discussion, whether the heart of my portfolio, and the other web successes of the last two decades will be around five years from now, and in what form.
Am I moving away from my bullish stance? Not yet, but any good investor must play devil’s advocate at times and try to anticipate competitive challenges. I do ask that you feel free to contribute your thoughts, and nullify or add to my crazy theories in the comment section below. The winner for most insightful comment gets an all-expense paid trip, and I swear I’ll follow through on this promise, to the Olympics! *

What I’m Worried About
These two thugs, Moe + Bill (pronounced “mo-bill”), are threatening to slaughter my beloved Google’s cash cow, nicknamed “Search,” which accounts for 90% + of Google’s profits.  
Google came out with stellar results last quarter and really the only blemish was declining cost per click for search, which decreased 12% over the first quarter of 2011 and 6% over the fourth quarter of 2011. The decline was immediately attributed to Moe + Bill search, as queries done on a smart phone are less likely to result in a sale, Google must differentiate and charge the advertiser lower amounts than they do for desktop search.
There are several pundits that I have read who have made bold predictions, including Eric Jackson of Forbes who believes that as the world turns to smart phones, Google and Facebook will become the Yahoo of today, a shell of their former selves with rapidly dropping market valuations. He specifically faults Facebook’s and Zuckerberg’s lack of attention to mobile, as they have concentrated on the social desktop experience. He believes that humanity, as has been proven by company after company, has a hard time planning on making a dollar tomorrow by killing the cash cow of today. (think Kodak, Blockbuster, etc.)

Video: Will Mobile trend Continue? Discuss!

I therefore pose three questions—
1.  Will Google become an old Yahoo like fuddy-duddy, wheezing while it counts its cash? 
2. How much will search move to mobile, and will this be the primary way users access the internet?
3. If we do move to mobile phones, how then will Google, Facebook, Microsoft, Apple, and Yahoo monetize as each of these companies will be dealing with the same game changing shifts.

Google- The Shrinking Violet?
It should be noted that in Yahoo’s heyday, it was insanely overpriced, while Google, today, has a much lower valuation, so the notion of a massive .com bubble style contraction, even if Jackson was correct in his assumptions, wouldn’t be nearly as severe.
Google continues to invest more in research and development than just about any company on the face of the earth, continually hiring new engineers, and creating products via Google X labs that were just the imagination of Sci-Fi writers twenty years ago. I would also bet my life on an upcoming line of Google robotics.
That being said, with search accounting for such a huge percentage of their profits, I still don’t want to lose 40% of my investment, so let’s dig in further.

Will Search Be Moe+Billized?
Quoting The Wall Street Journal: “As more people gravitate to smartphones and tablets, they’re increasingly forgoing the desktop to the access the Web. Between 2008 and 2011, the percentage of U.S. adults who accessed the Internet from PCs daily grew to 62% from 54%. In the same period, the percentage of daily mobile Internet users rocketed to 26% from 4%, according to Forrester Research.”

My interpretation: People are spending more and more time on the internet overall, with smart phones largely acting as supplementary way to access the net to desktop/laptop use.
Here’s my thinking. I believe that at present, mobile search adds more overall searches to the pie, rather than purely cannibalizing desktop search, as The Journal seems to suggest. It allows us to find something on the run, get a phone number, settle a bet, etc. While hiking today in the Santa Monica Mountains I fired up my Android to be able to identify poison oak. This isn’t a search I would likely do after the fact, and as much as I love my Galaxy Nexus, the moment I come home, I still fire my laptop up, where I continue to continue to do a majority of my search/work/ ECommerce.
I greatly prefer the experience of my laptop. I can write far more easily, allows for superior video playback, which is how I consume YouTube having completely “cut the cord.” I know my Goddaughter and her elementary school classmates do their homework on PC‘s, and that she prefers a bigger screen than her cell phone to play all but the simplest video games.
But just because this is how I see the world, doesn’t mean that cell phones and tablets rather than being “supplemental” as they might be now, won't become the primary source of internet access.  While I don’t think the laptop will die in the next ten years, Apple has sold a heck of a lot of IPads lately, which undoubtedly displace a lot of PC purchases ...

Have I Joined The Dinosaurs?
I recently wrote a column about streaming video, and that Microsoft’s decision not to include DVD decoder software in Windows 8 basically was the opening note of the DVD’s funeral procession, which received a lot of very positive responses, with ‘idiot” being the warmest term directed at yours truly, as dinosaurs emphatically stated that I’d have to pry their DVD’s from their cold, lifeless hands the next time a giant meteor hits the earth. Using all the power of their raisinette sized brains, they reasoned “the DVD experience is better than streaming, plus bandwidth surcharges coming from Comcast, etc.” and while I am convinced that this meteor crash kill 95% of DVD life within five years, the T-Rexes at least put a couple dents against my theory, in same the way children disrupt a tank steamrolling over them by throwing a couple of rocks.
Have I joined this group of dinosaurs with my theory that cell phones largely supplement internet access by PC? Am I failing to comprehend the trend towards mobile because I am stuck in an egoic position, with Google representing a big chunk of my portfolio?
We’ll be speaking in depth tomorrow about whether these major web/tech companies will be able to monetize Moe + Bill tomorrow, that's a separate subject. For now I really want to get YOUR take on:

1) What percentage of PC Online usage do you believe will mobile displace? And why.
2) Will people, and what percentage if so, get rid of broadband access, and live exclusively off of their mobile access to the net? Is there a need to pay for two connections?

I really want to know your opinions, and to re-iterate, the most insightful commentator will win an all expense paid trip to the Olympics, courtesy of yours truly.*  So feel free to chime in below and win your prize.

* Olympic grand prize will be given away for the year 2500.

** To those of you rolling your eyes, yes, 2500 is an Olympic year! I swear!


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