my digital nationalism

looking for Indonesia's significance on the web

Posts Tagged ‘internet

Why hasn’t Google+ crossed the chasm?

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After reading this excellent post on Mashable about Google+, I found myself wondering, why hasn’t google+ reached facebook level membership?

At the moment G+ has 170 million members, which is a huge number of users and remarkable achievement in its first year, but still that number is less than the number of users facebook grew in the last year, which is from 700 million to 900 million this year.

I attempted to create this simple graphic illustrating the situation:

This graphic captures the situation with google+, that while it is still very popular with a huge user base, but it appears that its appeal is still limited to a very select audience, mainly tech/social media enthusiasts. Facebook, on the other hand, has definitely crossed into mainstream the market, even into our daily lives and culture.

How can we explain this? Why is Facebook so successful, while g+, bearing the google name and unlimited resources, has not yet crossed the chasm?

EDIT:

I have to be honest, when writing this blog post I had not visited google+ in a while. This is what I realized. The mainstream kinda sucks, in terms of the quality of content. Just like how Reddit’s frontpage is so mainstreamified that in order to get to a quality post you have to sift through  a mountain pointless memes, I have just realized that my facebook stream is full of updates of people I know but to be honest not very interesting. My google+ stream, in contrast, is full interesting content, it could be because the people I follow, but it is also because there is a general air of intellectuality in google+ that is lost on facebook, well, lost or never did exist in the first place.

So maybe for google+, it’s best that they stay where they are.

What do you think? If you beg to differ, please feel free to comment.

Written by randomwalls

June 28, 2012 at 9:26 am

The 3 Tech Giants: Income Statements Compared

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You can tell a lot about a company by looking at its financials.

The purpose of this post is to look at income statements of Apple, Google, and Facebook. And we try to point out any interesting similarities or differences between these companies, based on the numbers. Of course these 3 companies work in different industries and the numbers are not comparable to each other, but what I’m trying to do here is to get some feel of what the margins and cost structure of these giants are.

(Apple and Google income statements are taken from the latest 10-k filing, and Facebook’s income statement is taken from their from S-1, with some formatting done by myself for comparison purposes.)

So here they are,

What can we learn from this?

1) Net Sales/Revenues, Apple currently makes way more money (net sales/revenues) than google and Facebook combined. With the popularity of its products it’s no wonder Apple is the most valuable tech company in the world. It’s net income (profits), though the lowest of the 3 in terms of percentage of revenues (24%), are the biggest in terms of real dollars, 25.9 billion dollars, almost 3 times as much as google’s profits and 25 times Facebook profits. Please note that the profits in terms of percentages of revenues between the companies are not far off with apple, google, and Facebook at 24%, 26%, and 27%

2) Gross Margins, In terms of gross margin however, Facebook is leading the pack with a 77% gross margin, while google is second at 65% and Apple at 40%. This is because the difference in industries, Facebook and Google are internet companies whose costs of revenue are mainly salaries, revenue share to publishers, and data center costs. It’s online presence allows it to deliver its services at a relatively cheap price and it shows in the gross margins. Apple, on the other hand, is a brick and mortar manufacturing and retail company. They have raw material costs, production and distribution costs, including the costs to staff, stock, and maintain the apple stores they have all over the world.

3) What about Research and Development? No surprise that Google leads the pack with an R&D budget of $5.1 billion dollars (14% of revenue). Apple on the other hand only allocates 2% of its total revenue (2.4 billion dollars) to R&D. Facebook allocates 388 million dollars to R&D, around 10% of its total revenue. Please note that even though Apple only contributes 2% of its sales, that amount is more than enough for apple to keep generating new products. I wonder what would happen if Apple allocated more than that to R&D, what kind of new products would we see in the future?

4) Selling, general and Administrative and Total Operating Expense, Apple’s selling, general and administrative (SGA) costs total 7% of total revenue (7.59 billion dollars), while and google and Facebook’s SGA costs are a higher percentage of revenue (21% and 20%) but lower in terms of dollar values (7.8 billion dollars and 707 million dollars). Whats amazing to me is that in terms of Total Operating Expense, Apple is the most efficient of three with a total operating expense of 9% of revenues (10 billion dollars), which is even lower than google’s total operating expense of 12.9 billion dollars, around 34% of google’s total revenues. Facebook’s total operating expense is 1 billion dollars, 30% of total revenues. This demonstrates that Apple is an incredibly efficient company, and no wonder its profits are so high. These high profits are also due to the fact that they can get away with selling items at ridiculously high prices.

So there we have it, the income statements of the 3 tech giants today compared side by side. What do you think, any ideas or comments?

Written by randomwalls

April 25, 2012 at 11:22 pm

Creating and monetizing

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Instagram was recently bought by facebook for 1 billion dollars in cash and stock. For a company thats been around for only 3 years with no revenue, that is crazy.

What can we learn from this?

Instagram is an outlier.

Creating a product and hoping for it to get bought at an absurd value is not a business plan. It almost never happens.

Creating a product that solves a specific problem and brings value to users, that always has to be the key.

In this industry the focus should be your customers, your users. Know your market and what problems they are facing. Create products that address these problems.

Only if you manage to create something that attracts million of users can you think of monetizing. If by then you haven’t figured out how yet, don’t worry, this is a good problem to have.

What you don’t want to is to ruin the user experience for the sake of monetizing and ruining your product in the process. If this is the case, you have lost the battle even before it has begun.

If your product is great somebody will eventually pay for it. It might be from the millions of users you have, or in other forms, like a 1 billion dollar payout from a huge company. Who knows right?

Written by randomwalls

April 20, 2012 at 9:05 pm

45 million users

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There are 45 million registered facebook users in Indonesia.

What does this even mean?

I guess you can use this figure to demonstrate that Indonesian youth are tech savvy, connected, and sophisticated.

I dont know what the precise number is but the 45 million figure must be close to the internet penetration number in Indonesia.

Meaning almost every Indonesian that uses the internet has a facebook account.

What I’d like to see are metrics showing how the internet has improved the quality of life in Indonesia.

After all thats what the internet should be, right? A tool to improve life.

Such metrics, for example, would be number of wikipedia articles created and viewed in bahasa. The number of online businesses created and transactions done. How much easier it is to find things and connect with people and create new value.

I wonder of there are such metrics and if there even is a way to measure such things.

Saying Indonesia has the most facebook users is nice, but so what?

It still means we are just users.

Written by randomwalls

April 4, 2012 at 11:46 am

The case for (and against) ad funded downloads

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Ad funded downloads is the holy grail of digital music. Well, not really, iTunes is the holy grail of digital music, and Apple is making tons of cash off of it.

Ad funded downloads is the idea that people can download music for free and artists still get paid. How do the artists still get paid? Because brands and businesses will want to pay to put advertising on the download pages, and that payment will become revenue for the artist.

Simple enough. An artist puts up their music to download for free. Millions of people will download the music. Brands will pay for these millions of impressions, which becomes revenue for the artist.

People want music. Artist want money. Brands want people to sell their stuff to.

In theory this looks like a no-brainer.

But this is why I think it won’t work.

It’s like having a band play a show for free, people won’t have to buy tickets for the show. The only catch is, there will be brands there, that could manifest in the form of: the stage will be full of advertisements, or you would have to like a brand on Facebook or tweet something for the brand to watch the show, or you would have an ad running in the backdrop of the band, whatever.

The key is you would have to suffer intrusion from a brand. I can’t imagine that would be an enjoyable show. Also it would be hard to find a decent band willing to compromise their artistic integrity in exchange for cash. Or maybe I think too highly of artists.

At its current form, people have a choice of:

  • buying music they like from the available outlets in whatever form they want, for digital they can go to itunes or amazon or google music or whatever.
  • or if they know how to do it just go to thepiratebay and torrent it for free, no hassle

So there are these 2 extremes. Pay or pirate. Ad funded downloads would appear to appeal to the middle ground, people who dont have money to pay, but don’t want to (or don’t know how to) pirate.

I wonder how big this middle ground is, is it even worth the effort.

The only way I could see this working is if the brand experience is non-intrusive, meaning, the most you could do is sell impressions. Requiring users to click, like, tweet would be a hassle. Just have the brand banner above the link, or you could go the way of filesharing sites where the download link takes 60 seconds to load and in that time display some banner ads. That maybe could work.

Let’s just imagine what it would need to make an ad-funded download site work:

  • The site would require a vast sales and marketing department to get brands and businesses on board. They would need an A&R department to get artists on board.
  • They would need to be able to match brands to bands so the impressions would hit the brands targeted demographic (not that hard actually).
  • The downloads would have to massive enough in order to cover the costs of such an operation while being able to pay the bands a fair share, at least what the current market price is which is $1 per song. Any revenue offer to bands lower than that would be a hard sell to artists.

You could argue that this way we could still monetize traffic that otherwise would be lost by pirating, which justifies paying artists lower than the market price of $1 per download. How low could we go?

Let’s say we are starting an ad funded downloads website. The operating costs are $10,000 a month (to maintain sales and A&R teams as well as servers and bandwidth and maintenance and whatever). We are selling the impressions to brands at $10 CPM which is roughly what the current market rate is. Let’s say from all the music we have on the site we have managed to generate 10 million downloads. 10 million downloads at $10 CPM equals 10,000,000*(10/1000) = $100,000 revenue from brands. Now we take out the operating costs of $10,000 because bills have to be paid right? leaving about $90,000 to share to the artists. At $90,000 that means that we are valuing each download $0.009 cents, less than a penny. Good luck selling that to artists.

Based on this model, if we tweak the numbers, there could be a way we could tweak the CPM cost and artist revenue share so the numbers would be more fair for all parties, but in order for it to work the CPM would have to be an absurd number. The CPM would have to be $1000 for us to be able to pay artist $1 per download which is an impossible sell to brands.

So ad funded downloads to me is something that seems like a great idea, but when put in practice it seems like its impossible to make it work. Or am I taking the wrong approach on this?

I guess I ‘ll just think about it some more.

Written by randomwalls

March 30, 2012 at 8:40 am

Why don’t we have better retail websites?

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In the states there are amazon and ebay, zappos and newegg. I can find detailed information on whatever I’m looking for, read user reviews, and find the best price fast.

People might argue that in Indonesia the problems as to why online retail hasnt really picked up is:

1. The internet here is really slow
2. Indonesia is a logistics nightmare
3. Indonesians don’t use credit cards
4. People just don’t trust websites to make big purchases

These are problems that, if one could solve, could become the king of online retail in Indonesia. I cant say how big the market is, but I do know it is big, or is gonna be big in the next 5 years.

The current online retail websites we have still suck. Ugly websites to begin with, Not much choice, no way to compare prices, payment is really a hassle.

These are problems waiting to be solved.

Written by randomwalls

March 21, 2012 at 11:53 pm

The early days of Reddit

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Reddit.com , I think, is one of the most interesting communities on the internet.

I can’t remember when I first discovered reddit, maybe around 2005-2006, but I do remember that it changed how I browse the internet. When I got online that means that I would be browsing reddit.

Now I work in digital media and I am interested in how online communities grow and evolve.

While browsing today I found a comment from reddit user nostradaemons that gives insight on how the reddit community started and evolved into what it is today:

Showed up the day Reddit opened (Jul 2005), thought it was kinda interesting but not interesting enough to keep coming back, figured it’d never catch on. Came back for real a couple months later (Oct 2005), and stayed.

At the very beginning, there were no comments or self-posts: it was only links, with voting. And the only people posting those links were spez, kn0thing, PG, and spez’s girlfriend.

The initial userbase was very tech-heavy. The initial announcement went out to comp.lang.lisp, so the initial user population consisted largely of techie geeks that were into obscure programming languages. At the time, Reddit was written in Lisp, which was its main claim to fame.

When I came back in October, comments had been added, which was the “killer feature” that made me decide to stay. The userbase at the time was perhaps in the low hundreds – a popular submission was one that had about 10ish votes, like this one does now. It was small enough that you’d see the same names posting over and over again; you could get a sense of people’s personalities over time from their posts.

Comments were longer, more intellectual, and more in-depth. The culture was actually a lot like Hacker News is now, which makes sense, since a lot of the early Reddit users migrated over to there when it started (I was a first-day user of Hacker News as well).

The founders were very responsive. There used to be a “feedback” link right at the top that would go straight to their GMail accounts. I remember sending kn0thing a couple bug reports; he got back to me within a half hour with “hey, could you give us more details? we’re working on it”, and then a couple hours later was like “It’s fixed. Try now.” Then I’d send him back another e-mail saying “It’s better, but you still don’t handle this case correctly”, and he was like “Oops. Try now.” Back then, spez would edit the live site directly, so changes were immediately available to all users.

For the first couple years, the submission process would try to auto-detect the title of submissions by going out and crawling the page. Presumably they got rid of that when they moved to multiple servers, as it’s hard to manage a stateful interaction like that.

I started seeing pun threads in I think mid-2006; actually, I recall creating some of the first ones I saw. That actually was when the culture of the site started changing, going much more mainstream and much less techie. The userbase was growing by leaps and bounds, and we started getting more funny cat pics on the front page. I think this was right around the time of the Conde Nast acquisition.

There were also plenty of in-jokes, eg. the “Paul Graham Ate Breakfast” meme. That happened because people were complaining that anything written by or relating to Paul Graham got upvoted far beyond what should be fair, and so somebody decided to create a link to prove that point.

The first subreddit was programming.reddit.com. It was created basically out of user revolt. A core group of early users complained loudly and vocally about how the front page was taken over by lolcatz and funny animated gifs and thought-provoking submissions would get buried, and so a couple subreddits (programming and I think science) were created for the intellectual stuff.

Subreddits at the time were admin-created only. IMHO, user-created subreddits saved Reddit; the community was getting far too unwieldy by 2007, and so the only way for it to survive was to fragment. I remember seeing the first user-created subreddits and thinking “finally!”.

I’ve got a bunch of memories of specific Reddit users or events as well, but I think that’s enough for now…

The original post on reddit can be viewed here.

So what then? What lessons can be learned from this? Now that will be the topic of my next post!

 

Written by randomwalls

March 21, 2012 at 3:54 am