5
Feb

Investors buy up shares of prominent social media ISVs despite slowing user growth

2-Color-Design-Hi-Res-100px-widthPerhaps investors are changing their taste in prominent social media ISVs. Could the search for a telltale sign of promise have shifted from substantial growth in users to what may be a meaningful increase in revenue? From the after hours trading experience of LinkedIn and Twitter on February 5, 2015, it would appear to be the case.

Twitter and LinkedIn both reported solid revenue growth in the quarter ending December 31, 2014. But in the case of Twitter this plus was offset by anemic growth in the number of active users. Tiernan Ray wrote in Barrons: “[Twitter] said its monthly average users (MAUs) rose 20%, year over year, to 288 million from 284 million in the prior quarter. That was down from a rate of 23% growth in Q3. Of those MAUs, 80% were on mobile devices, about the same as the prior quarter.”

Hannah Kuchler of the Financial Times also remarked on management’s forward-looking guidance, “that was above the average analyst forecasts”.

Investors looked like they liked what they were hearing and reading. Twitter’s share price was up over 10% after hours.

LinkedIn shares were also up substantially, approximately 6% above the close. The quarterly earnings report included very similar highlights: substantial growth in revenue. But I found a different nugget: Maria Armental wrote in the Wall Street Journal:“The professional social network, which this month launched a localized version in simplified Chinese and traditional Chinese that has nearly doubled its Chinese member base to more than 8 million, said nearly 70% of total members come from outside the U.S.” Eight million users is certainly not a very big number for the country with the biggest population in the world. But LinkedIn is succeeding (as Apple is also succeeding, though in a much bigger way) in a market that continues to elude Microsoft and curiously enough Google (Android).

As a user I must attest to a much more promising experience from my efforts with Twitter than has been the case for how I have worked on my LinkedIn profile. I make a lot of use of Twitter’s Analytics. As my tweets have magnetized more impressions there has been, over time, a substantial increase in the page views of this blog. But perhaps the best result of all has been a growth in our following on Facebook. But I will write more on this point in a later post.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

4
Feb

End users benefit from in-context access to tech training content when new computing platforms are implemented

2-Color-Design-Hi-Res-100px-widthAdoption initiatives accompany almost any type of platform change for enterprise computing consumers. These projects are so common a whole industry developed around them. Back in the 1990s the business was referred to as “business process re-engineering”. Today the same type of work is rolled up and into something called “change management”.

The core objective of almost all of these efforts is to convince a specific group of computing users within an organization — usually “end users” — to adopt the new platform. The strategy powering the project is to provide end users with the technical support and methods they need to successfully transition from one way of doing the computer tasks they face on a daily basis, to another. The tactics include technical support teams, training intensives, and management testimonials on why the platform change was required in the first place.

Readers should not consider cloud systems to be somehow miraculously free of this burden. The adoption challenge big, mature ISVs like IBM, Microsoft, and even Google face when they partner with customers to help end users transition from on-premises computing systems to SaaS and/or PaaS offers in the cloud are the same ones faced just 20 years ago when IBM was seeding enterprise computing markets with Lotus Notes. Adoption is adoption is adoption . . . Or so the saying should go.

One of our clients, Rehmani Consulting, Inc. has brought to market a solution capable of making the whole adoption process easier. VisualSP is a help system built for Microsoft’s SharePoint computing platform. The “one-two punch” of the product amounts to a combination of:

  1. a unique method of exposing, in-context, the kind of technical training content for which enterprise end users have demonstrated an appetite, meaning short, right to the point presentations of computing procedures. The process by which end users absorb the content is referred to as “on-demand training”
  2. and lots and lots of video content

We have marketed the solution since July, 2012. In this space of time we have worked with some very large, prominent, multi-national corporation to help them accelerate their adoption effort with this product. Perhaps as many as 500K SharePoint users are now benefiting from the VisualSP system.

There is no reason why a solution like VisualSP cannot deliver comparable benefits to ISVs in need of a method of stimulating adoption of a computing platform. Our solution is built with modern software tools — HTML 5, JavaScript and CSS. If you would like to learn more about how our solution may help your efforts, please let us know.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

3
Feb

People buy iOS devices for more than their impact as status symbols

2-Color-Design-Hi-Res-100px-widthMuch has been written about the journey Apple’s promotional efforts for iOS devices have taken from functional feature presentations to depictions of a luxurious life style. “Luxury tech” may be Apple’s market message of the moment, but let us not forget the rationale for consumers buying these devices in the first place — for many people they simply work better.

We recently purchased an iPad 2. Our reasons for purchasing this tablet amounted to a need to fill in some functionality not available with either of our other tablets:

  1. a Microsoft Surface 2 RT
  2. and a Samsung Galaxy Note 2.1 10.1 running Android JellyBean

We continue to be impressed with the performance of the iPad2. Three features of mobile computing on a tablet device:

  1. Battery life
  2. Display
  3. and, finally, a high quality tablet experience without recourse to an external keyboard

meet our requirements. We routinely experience two day operation between charges. The display, while bright, is not shiny (unfortunately this is the case with our Surface 2 tablet). The virtual keyboard works very well, in particular the text highlighting feature works great.

So why all the talk about “luxury tech”? Perhaps the driver for this new promotional theme is an effort to convince consumers already outfitted with an iPad to purchase a new one. Repeat-buy customers are rarely motivated to purchase new product based on the compelling features driving the initial purchase. There has to be something new. Better yet, there should be a feature consumers always consider “new”. There is no better example of this category of feature than device as status symbol.

But the bad news is the indication this strategy reveals of market saturation. There are simply no more new consumers to whom Apple can look to further increase device sales volume. The only recourse is to cannibalize its current customer base. By opting for the “luxury tech” moniker, Apple, I would argue, has achieved a graceful method of achieving its objective.

In contrast, manufacturers on the lower end of the product spectrum (I include Samsung in this group), out of necessity need to implement comparatively more risky methods of motivating consumers to step up and buy new product. For these unfortunate companies, the only option is to abandon any effort to support their customers when something like Google’s decision to walk away from supporting Android Jelly Bean and earlier versions of the Android O/S arise. Nobody likes to hear a vendor tell them to take a hike when a product with some financial heft to it is no longer usable. But for Samsung, et al, this is the only recourse. Ugh.

The result of all of these efforts is the present hierarchy of mobile device manufacturers, with Apple at the top. Because the iPad 2 is actually a market-leading product, it is unfortunate to see “luxury tech” as the primary product promotional theme. But one can understand why this is the case, given the extent to which the available market for these products has already reached saturation levels.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

2
Feb

Consumers pass on smaller tablets to take advantage of offers for smartphones with bigger screens

2-Color-Design-Hi-Res-100px-widthOn Monday, February 2, 2015, Tiernan Ray of Barrons reported on a research note published by Canalys. Ray’s article is titled Tablets Fall 12% in Q4, First-Ever Decline, Says Canalys; 7-Inch Models Cannibalized. Ray mentions this note claims “that shipments of tablet computers fell in Q4 by 12%”.

Anyone with an interest in consumer preferences for small, smart devices for computing on the go will likely look at the Canalys claim, especially if other published research affirms the numbers, as an indication of how Apple’s product marketing has successfully convinced buyers in mature markets, and even China, to value the iPhone as a status symbol. When this product magnetism is combined with carrier incentives, consumers apparently passed up opportunities to buy tablets to obtain an iPhone 6 or 6S.

Apple does not appear to be suffering much pain from these changing consumer tastes. According to Apple’s most recent quarterly earnings report, the surge in iPhone buying more than offset the 18% drop in tablet sales Canalys notes. But will the same scenario play out next year, when Apple debut a new iPhone? Would it not make sense for analysts to discount future earnings estimates based on an understanding of just how consumers of luxury electronics might behave, over time?

Unfortunately there is not any mention of this type of skepticism in Ray’s article. When buyer sentiment can turn quickly negative when products “[fail] to wow” it is reasonable to call a market top, of sorts, for this category of products. Regardless of the size of Apple’s operations, and its deep pockets, it is not likely we will continue to see widely popular new product releases time after time after time when the only real incentive for buyers is to announce to their peers they can still afford to buy the newest pricey gadget.

The Canalys report also mentions a serious drop in sales for Samsung tablets. In my opinion there are legitimate reasons for this, not the least of which is a combination of Google’s decision to no longer support “early” versions of Android, and Samsung’s own poorly timed introduction of new tablets, too often to the detriment of customers unfortunate enough to buy a product about to be obsoleted. But I argue the luxury market condition also weigh heavily on Samsung’s results. By crafting product promotion around a “competition to be the best” assumption, Samsung rendered its own small form hardware devices fair game for buyers to cannibalize in their frenzy to consume an iPhone 6 or 6S.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved