If you are interested in investing in the mobile internet then Morgan Stanley’s Internet Report is a must read. The chart below is one of my favorite slides from the presentation. As far as I am concerned, it’s the money slide. I believe that serious coin will be made by simply grasping its thesis.
The point is simple, but won’t be obvious until 2-3 years down the road. Some of our favorite technology companies will not be major players in mobile computing. I have taken some heat from Research in Motion fans by stating that it may not be a winner in the new cycle (RIM Rant). I know it sounds crazy, but I am beginning to wonder if Google will falter.
Google is not Facebook or Twitter with some top secret monetization plan. It is a public company with a $180B market cap. It has a responsibility to its share holders to disclose its plans for making money. Personally, I believe that Google is unsure of its mobile strategy.
Google receives no licensing fee for Android. Companies are free to change Google from the default search engine in Android and are doing so. Thus, their opportunity to leverage their ad network is diminished. Apple runs the most successful app store on the planet and their CFO says that it’s running a little over break-even. If Apple can’t make money from its app store, Google most likely won’t either – especially since their reins are not nearly as tight. Sales of Google’s branded phone, Nexus One, have been disappointing (Nexus One Sales lag Apple & Motorola).
Finally, last week Apple challenged the entire mobile advertising paradigm (Apple iPhone OS 4 Event – scroll to the 44 minute mark). It is far too early to declare Apple’s advertising approach a winner, but Google’s pay per click is definitely getting a little long in the tooth.
Blogs of this nature can be quite controversial, because people love their gadgets- whether its an Android, Blackberry, Nokia, iPhone, Kindle or whatever. The point of this blog is about making money. Stare at that slide again and internalize the message. Somebody ain’t gonna make it and you don’t want to be holding their stock.