INSIGHT: Amazon, Apple, Facebook or Google - who will win?
- 17 March, 2015 03:00
Here, Scott Calloway spends 15 minutes talking at a break-neck pace, sharing his insights and predictions on the rise and fall of four massive brands; Amazon, Apple, Facebook and Google.
Galloway is a Clinical Professor of Marketing at NYU Stern School of Business.
There they built an algorithm in 2010 that uses 850 data points spanning digital, marketing, social and mobile - across 11 geographies and 1,227 brands.
Based on this data, Galloway predicts what is going to happen in the digital landscape.
“Pure-play retail is going away - e-commerce companies are going to open stores or go out of business.
Retailers need to be excellent at digital or they will go out of business. Even Amazon cannot survive as a pure play retailer.”
Based on his disclaimer at the start about "dead" not being really dead, possibly a gradual decline of a giant, this could be right.
Sure, sometimes I want to purchase online - but sometimes I want to touch and feel what I'm buying, or just pick it up urgently. If local retailers invest in digital and offer a complete multi-channel experience, I'd be tempted to turn to them before Amazon.
Added to this are his comments about what Amazon have done by forcing free shipping into the market, the impact of their rising shipping costs and lack of stores - which he calls "incredibly flexible, robust warehouses".
The "bricks and clicks" concept definitely has legs; more effective use of stores as distribution hubs as well as showrooms. That's a great re-use of existing assets and can only enhance the customer experience.
I think he might be missing the breadth of services that Amazon have built; but in retail alone it looks like they need to include physical stores to effectively compete in the future - even as soon as this year. I wonder if they will open one as far from home as New Zealand?
One final point; I think the idea of an Uber-like delivery service is unlikely. I think of drones and self-drive vehicles as a more likely future scenario; which could change the delivery costs significantly and spawn a whole new set of predictions.
”People are constantly talking about young people not liking Facebook - that is total hogwash.
Facebook continues to pull away in power; social media has become Facebook and the seven dwarves. Two thirds of all time on social media is spent on Facebook.”
This to me makes sense. While many other social media apps like Instagram, WhatsApp, Twitter and Snapchat are very popular with young people I know, they are quite transient in nature.
Facebook offers an online record of your digital life, as well as convenient features like event bookings, private groups and the messenger app.
The transient social media services are more easily adopted - but also easier to leave, because you don't build up the same level of history. I don't think there's room for too many online digital record services, so Facebook has a difficult position to disrupt.
However, Facebook does need to continue to invest in new apps and services to stay relevant. If preferences do change en-masse, they could become the next AOL.
“Google Glass is not a wearable, it’s a prophylactic ensuring you will not conceive a child because no one will get near you.”
Unfortunately this looks accurate - just too cumbersome and unnatural to be widely accepted or trusted. Even if they were the size of normal glasses, I think there would be significant trust issues - and anyone who catches you wearing them would be unlikely to want to date you.
But this is just one of many innovations that Google has been pouring money into; and they only really need one big success out of 10 of these kinds of ventures.
Galloway also paints some grim pictures about Google's current direction; losing search revenue and profit by not being as compelling a platform when a mobile app experience can perform that function.
It's pretty clear that Google had some great foresight to create Android and stake a claim for the mobility market - but it is going to be interesting to see how they continue to compete as the market changes.
Google recently announced at Mobile World Congress that they are looking to become a mobile operator.
They look likely to be just dipping a toe in the water at this stage; but it complements what they are already doing with Google Fibre and Project Loon (hot air balloons to spread internet connectivity in remote areas).
”There are only 3 things we do in business. Appeal to the consumers need to survive (food, housing, warmth, clothing), the need to feel love (if you love your family you will buy this) and the need to procreate (luxury items help you attract a mate).”
Ok - I paraphrased that last quote quite a bit - it's worth listening to the whole thing as it's quite funny. But the point is that "Apple has moved from the best computer with the Apple Mac, then sang to your heart with songs, now it's the ultimate self-expressive brand (show you are worth mating with).”
Apple's profit margins have increased over time rather than decreased, because they have created sought after, luxury product. The desire for rich people to express themselves with luxury items opens up a global market.
While I agree with that - and hadn't thought about it in that way before - I'm still a little concerned that Apple might need to re-invent itself again soon.
I'm not sold on the idea that smart watches are going to be the next big thing - I think they need a killer app, which is still missing.
I also think there is an ecosystem play that Google is going for with Android; customer numbers matter as well as profit. Their market share has been steadily growing to the detriment of all of the other providers - including Apple.
If Google keep gaining the majority of end users, then they will get the app developers, the marketing potential and long-stream revenue from the masses.
As Android is so pervasive on the entry and mid tier devices, this makes it likely that first time phone buyers will start with an Android device.
Once you have been on one eco-system for a period of time, it can be quite hard to change.
Every time you purchase an application, for example, adds more cost (and frustration) that might prevent you from moving. It would be a much simpler prospect to upgrade to a luxury phone based on Android.
Of course, the build quality of the iPhones has been so good that the second hand market of the Apple devices makes them a viable first phone. This maintains their luxury appeal and lets them retain their high margins; but they are losing market share.
I've only touched on a few points Galloway raises - there is plenty more thought provoking stuff in there, so if you have the time I suggest you play the clip above.