Thursday, August 28, 2014

Microsoft, Apple, and Google: How three tech giants have evolved in the 21st Century (ZDNet)

Summary: Apple's a hardware company, Microsoft's a software company, and Google makes almost all of its income from advertising. All three companies have been trying for years to diversify their revenue streams. How's that working out?

Over the past week, I’ve been blowing the virtual dust off more than a decade’s worth of annual reports from Microsoft, Apple, and Google.
My goal was to follow the money and figure out how each company's business has changed over the past decade. Consider this a follow-up to my February post, "Apple, Google, Microsoft: Where does the money come from?"
My tally starts with financial results for 2002, the year after Microsoft signed a historic consent decree that settled the U.S. v. Microsoft antitrust lawsuit. It was also the first full year after the introduction of the iPod, which was the first step on Apple's transformation from a PC company to one that revolutionized mobile computing and communication. The earliest annual report I could find for Google was from 2003, the year before its big IPO.
In Microsoft's case, the question I was most interested in was "How dependent is the company on Windows?" The Windows monopoly began crumbling as soon as the settlement was signed (although it's debatable how much influence that lawsuit had on the market).
Over the past 10 years, Microsoft has shifted its reporting structures a few times, making it hard to draw perfect comparisons over time. But the chart below, which shows revenue from the desktop versions of Windows and related products, is close enough.

In 2002, the Desktop Platforms division accounted for 33 percent of Microsoft's total revenue. That percentage has been steadily dropping, and in fiscal 2013, the corresponding division (which now includes Microsoft's Surface hardware) was responsible for only 25 percent of the company's steadily rising total revenue. Server products, Office and other desktop applications, and cloud services increased steadily during that time.
Looking at operating income (what's left of revenue after you subtract expenses) tells a more interesting story.
From 2002 through 2004, Windows was the dominant contributor to Microsoft's profits, accounting for as much as 89 percent of total operating income. But that began changing in 2005 as those investments in enterprise software and cloud services began to pay off. 
(The big dip in 2012? That's the $6.2 billion writedown of the aQuantive purchase, which was part of a failed attempt for Microsoft to go big in advertising.)
The company's no longer as dependent on Windows as it once was, but that division still makes a substantial contribution to the bottom line. If the PC industry declines sharply in the next few years, the impact will still be painful in Redmond.
Apple, which in 2002 had been slowly recovering from a near-death experience that brought Steve Jobs back as CEO, was still mostly driven by its Mac product line in those early days. In 2002 and 2003, 79 and 72 percent of the company's revenues, respectively, came from the sale of Macs.
The percentage dropped to 59 percent in 2004 and slipped to 45 percent the next year.
In 2007, Apple Computer changed its name to Apple Inc., in a perfectly accurately reflection of how its business had evolved. Today, Macs account for only 13 percent of revenue.
What's astonishing about that Apple chart is that if you took away everything else and only left the Mac division behind, it would still be a business with more than $20 billion in annual revenue and solid profits. The Mac group hasn't declined so much as it's been left behind by the astonishingly fast-growing iPhone and iPad divisions, as well as their accompanying app stores.
Finally, there's Google, which has been spectacularly successful at growing revenues year after year, almost exclusively from its advertising business. In this chart, the dark green is revenue from advertising. The slim section in light green indicates other revenues. (I've backed out revenues from Google's brief ownership of Motorola Mobility for 2012 and 2013, before it agreed to sell that division to Lenovo.)
Unlike Microsoft and Apple, Google hasn't yet succeeded in establishing a significant alternative source of revenue to the one that made it successful. But it's clearly trying.
I found this explanation of the "Other revenues" line from the company's 2013 annual report extremely interesting. In 2011, that line had been negligible. But it jumped sharply the next two years:
Other revenues in our Google segment increased $2,619 million from 2012 to 2013 and also increased as a percentage of the  segment revenues. The increase was primarily due to growth of our digital content products, such as apps, music and movies. Additionally, we experienced an increase in our hardware revenues due to Chromecast, directly-sold Nexus products and Chrome OS devices.
The Google Play store brings in a significant amount of revenue on the strength of its massive installed base, with additional revenue coming from Google's dabbling in hardware.
But there's no mention of Google Apps, the paid, business-focused version of the free Gmail and Google Docs services, nor do Google's infrastructure and cloud services contribute a significant portion of that thin slice of non-advertising revenue.
When Google files its 2014 annual report early next year, I'll be looking carefully to see if either of those product lines have broken out of the "too small to be counted" category.

Wednesday, August 27, 2014

The Seven Wonders of the World Wide Web (

By Wendy Boswell, Web Search Expert

The phrase "seven wonders of the world" refers to historical, man made, or natural locations that are notable for one reason or the other. The World Wide Web is considered one of the most fantastic inventions of all time, and has changed daily life for billions of people across the globe in the short time that it's been around. In this article, we're going to look at seven wonders of the World Wide Web; seven innovations that have literally changed the world in some way. 
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1. Cloud Services

 You might not know exactly whatcloud computing is, but the chances are very high that you've used it or are using it right now. From's Wireless and Networking Expert:
"Cloud computing consists of hardware and software resources made available on the Internet as managed third-party services. These services typically provide access to advanced software applications and high-end networks of server computers."
Cloud computing makes it possible for us to use all sorts of revolutionary services; from online file sharing to free online storage services like Dropbox and Google Docs


2. Social Media

Social media is a relatively new phenomenon that makes it possible for people all over the world to connect via a wide variety of communication platforms, from Facebook to Twitter, to LinkedIn toPinterest. These sites have fundamentally changed the way we use the Web, are integrated in with nearly every website you might visit online, and for a growing number of people are the primary reason they access anything online.   

3. Infrastructure of the Internet

Right now, you’re viewing the information in this article using a Web browser. You accessed the Internet via a technology called TCP/IP. You are browsing the Web via a series of hyperlinks and URLs, the structure on which the Web was initially visualized by Sir Tim Berners Lee, and you’re able to see all of this via HTML and other markup languages. 


4. Instant communication services

Do you remember life before email? "Snail mail", while still used by billions of people all around the world, took a back seat to instant communication made possible by email, instant messaging, and video calling. How many emails do we send in a day, all free? Think about how your life would be different if you didn't have this amazing invention at your fingertips every time you log on. 

5. Educational and learning tools

From free college classes to free textbooks to a huge variety ofeducation for free on the Web, the online education movement is growing exponentially. Globally, people from around the world log on to the Internet daily to take classes, learn something new, and improve their skills. The amount of knowledge available - for free! - is mind-boggling. 


6. Search engines

Search engines encompass some of the most complicated programming on the planet, yet most of us take advantage of these amazing creations nearly every day. From Google toBaidu to Wolfram Alpha, think about how amazing it is to simply type a query into a search box and get back an answer that is relevant, makes sense, and helps you solve a problem. 

7. Information databases

How would we ever get along without massive information databases to fuel our insatiable quest for knowledge? Even if you spent 24 hours a day consuming the information that is constantly added to these wonderful resources online, you wouldn't even make a dent. From Wikipedia to Project Gutenberg to Google Books to IMDb, we have an amazing variety and depth of knowledge available at our fingertips. Remember the days when you had to look something up in an encyclopedia? Now those books are becoming collector's items. And let's not forget the amazing Invisible Web, a vast network of databases that is estimated to be more than 500 times larger than the Web we can easily access with just a simple query. True seekers of knowledge know that the Web is a dream come true.

8. Wait - there's more! Let's not forget these amazing Web innovations:

 How about translation services (like Google Translate orBabelFish) that make it possible to decipher something in another language in mere seconds? Or interactive maps, such as Google MapsBing Maps, and MapQuest, that you can use to create a road map, find directions, and even plan a walking route? Financial services: the gamut runs from PayPal to Bitcoin and other cryptocurrencies to even accessing your bank accounts via a Web browser rather than driving to a bank and standing in line. How about massive online stores like eBay and Amazonthat changed the shopping landscape – but let’s not forget the “mom and pop” stores that have found it possible to thrive via a wide variety of online marketplaces, including CraigslistEtsy, and other storefronts.
All in all, the Web has brought a truly staggering array of innovations our way that have changed our lives for the better. What would you add to this list? 

Tuesday, August 26, 2014

Quelle Horreur: The French May Be Told to Eat Less Chocolate (BusinessWeek)

French health authorities, alarmed by rising obesity rates, are considering a nutrition-labeling plan that would classify chocolate as a food to be avoided. In a country where the day often starts with a pain au chocolat and ends with a mousse au chocolat, you can guess how that’s going down.
The national association of chocolatiers has condemned the proposal, saying it would undermine French traditions and values. “What’s next? A tax on people who love to eat?” the group says on its Facebook (FB) page, which has drawn a flood of comments from indignant chocolate lovers. More than 2,000 people have already signed a petition opposing the plan, even though the association didn’t start circulating it until late July, when most French were heading off for long summer vacations.
Social Affairs and Health Minister Marisol Touraine touched off the protest in June when she said the government might require color-coded labels on food packaging to encourage healthier eating. Consumers would be urged to eat more foods labeled “green,” such as fruits and vegetables, while avoiding those labeled “red,” including items high in fat, salt, sugar—and chocolate. A spokeswoman for Touraine tellsBloomberg Businessweek that the plan is still “under review” and that no date has been set for a decision.
France has experienced a sharp rise in obesity over the past two decades, with 14.5 percent of adults now classified as obese, up from about 7 percent in 1992. The chocolatiers’ association, though, contends that chocolate “doesn’t make people gain weight” and may even prevent weight gain because it contains polyphenols, metabolites that help suppress the formation of fat cells. “Obese people don’t eat more chocolate than people of normal weight,” the group says in a news release.
Indeed, it’s hard to see a statistical correlation between obesity and chocoholism. Switzerland has the world’s highest per-capita chocolate consumption, about 5.8 kilograms (13 pounds) per person per year, according to data collected by London’s International Cocoa Organization. Yet only 11 percent of Swiss adults are obese. Americans eat far less, about 5.4 pounds per person per year, but roughly one-third of U.S. adults are obese. And while obesity in France has been rising, the country’s per-capita chocolate consumption now is slightly lower than it was a decade ago.
Some in France contend the government should be encouraging people to eat more chocolate, not less. Comments on the chocolatiers’ Facebook page promote chocolate as a muscle relaxer, a facial mask, and an aphrodisiac. “The recipe for well-being is 20 grams of chocolate [about seven-tenths of an ounce] per day,” reads one such posting. Twenty grams daily would yield about twice the average consumption in France, now about 8 pounds a year.
France’s chocolatiers—makers of chocolate pastries and confectionery—contend that discouraging people from eating chocolate would have an economic impact, too, endangering the jobs of some 4,500 “artisan chocolatiers” who employ roughly 15,000 people in their bakeries and shops.
And that’s only part of France’s chocolate industry. Importers, wholesalers, manufacturers, and other industry players hold the world’s largest chocolate trade show, the Salon du Chocolat, in Paris each autumn, as well as smaller gatherings in Lyon and Cannes. More than 30 professional schools around the country offer degrees in chocolate confectionery-making.

Matlack is a Paris correspondent for Bloomberg Businessweek.

Monday, August 25, 2014

Apartment Construction Ominously Nears 25-Year High (BusinessWeek)

A condominium under construction in Brooklyn, N.Y.
A condominium under construction in Brooklyn, N.Y.

If you live in a major U.S. city and look out over the skyline, chances are good you’ll see construction cranes. Lots of them. Only twice in the past 25 years have new apartment buildings been going up as fast as they are right now. That’s not necessarily a good omen. The first time, in February 2000, was right before the dot-com bubble burst. The second time, January 2006, came right before the housing bubble burst. Now we learn that builders broke ground on 423,000 new multifamily units in July, right before … who knows what?
Monthly building data released earlier this week by the Census Bureau and the Department of Housing and Urban Development showed that new home construction overall posted strong gains in July, with the highest number of new home starts in eight months. The comeback largely manifested in an uptick in apartment buildings with five or more units, which saw an almost 50 percent increase in new starts in July over a year earlier. By comparison, starts on single-family homes were up only about 10 percent over the same period.
That’s part of the reason that the Northeast, with its large, dense cities, saw the biggest monthly increase, up 44 percent from June. That matches the analysis by Trulia (TRLA) Chief Economist Jed Kolko, who found that among metro areas, Boston and New York are building more than in the past.
In the 25 years since 1989, the U.S. has started building at an average annual rate of about 248,000 new multifamily units. By that measure, our current 423,000 is a veritable boom. Still, construction in the the U.S. has come at a far faster pace in the past. During the 25 years leading up to 1989, builders broke ground on 467,000 units each year, on average. In the early 1970s, the rate briefly hit 1 million new units a year.
The recent building spree is a response to the current urban housing crunch. For a good part of the last quarter-century, the suburbs absorbed the growing population. They ran out of steam in the early 2000s, and cities—with mass transit and cultural cachet—have made a comeback. As these new apartments come online, rents may ease. Just how much depends on just what kind of omen the figures for July 2014 turn out to be.

Weise is a reporter for Bloomberg Businessweek in New York