Ding Dong the Fire Phone is Dead

As Apple demonstrated its brand new lineup of smartphones, it looks like Amazon was quietly killing off its own.

Amazon had been rumored to be working on a smartphone for years before the Fire Phone was unveiled. Just over a year ago we got our first look at the device, and all the predictions about Amazon’s phone being inexpensive were wrong; the high price tag and gimmicky features kept consumers away and the phone flopped. Now even Amazon has admitted defeat by ending sales of the device.

You would have to really dig for the Amazon Fire Phone now as most links to the phone in Amazon’s Fire device pages have been removed. When you do find them, both the AT&T and unlocked Fire Phone show up as unavailable and no more stock is expected. This isn’t just a question of running out, they just aren’t being offered for sale on Amazon’s website anymore.

Amazon’s move to stop producing the phone is no surprise. Despite all the buzz, it failed to become the success the company hoped. Only a few months after shipping, Amazon admitted last October that it took a $170 million charge mostly associated with the Fire phone and related supplier costs, and $83 million worth of phone inventory surplus.

While Amazon blamed the phone’s flop on badly pricing the device, some in the industry pinned the failure on the phone’s concept. Like Amazon’s other Fire devices, the Fire Phone ran a heavily customized version of Android without Google’s services. Amazon supplied the apps, music, video, and everything else. This was the Fire Phone’s greatest weakness as Amazon’s services lacked many of the features that make Android phones great. Fire OS is fine for a content consumption device like a tablet, but not a phone. The Fire Phone had a feature called “Dynamic Perspective” that used head tracking to adjust the UI, but it didn’t really make up for the missing features.

YouTube Gaming Launches Today


One year and one day after Google lost Twitch to Amazon, YouTube is taking gaming to the public. Launched today, users can head down Youtube’s gaming site to check out the new interface, see who’s streaming, or start a stream themselves. A slick interface, huge user base, and tons of content might have Twitch worried a bit.

YouTube calls YouTube Gaming the “go-to destination for anything and everything gaming.” It not only shows who is live streaming, but serves as a collection point for all gaming content on YouTube. YouTube Gaming automatically categorizes YouTube’s gaming content and sorts it by game and by the content of video.

The new dashboard makes streaming less of a scheduled event and more of a casual thing that streamers can do whenever they want. Streaming on YouTube Gaming is done on HTML5, and, unlike Twitch, streamers can enable a “DVR Mode” that buffers the last four hours of a stream and allows viewers to rewind.

YouTube Gaming will give Twitch the biggest competition in the live streaming space it has ever seen. Almost every Twitch streamer also uses YouTube for archival purposes and as an additional revenue stream, and now YouTube is a one-stop-shop for every kind of gaming video on the Web. It will be interesting to see how the battle of the game streaming service plays out.

Google Going Local?


The word on the street for quite some time has been that Google wants in to the home services racket. The marketplace represented by all the work done by people like plumbers and lawyers is simply too huge to ignore. At the moment, most folks in the space (like Search Initiatives) focus on helping local businesses and national businesses with lots of locations drive business to those storefronts. Some sell leads, some build websites that do well in search, and some help those businesses spend their ad dollars to maximum effect. A great many of those ad dollars are going to Google, where the click prices for local search terms like “Plumber San Diego” are insanely high — over $40 a click in the case of that particular query.

The announcement last week that Google is buying HomeJoy and rolling their team into the Google-opolis reinforces the suspicion that something is afoot. The HomeJoy guys were essentially an Uber for house cleaning. They had raised a good chunk of funding, but were struggling with their latest round. They’re also getting into hot water in places like California, where the issue of their cleaners actually being employees rather than contractors was getting nasty.

Google now owns HomeJoy and a business reviews and profiles platform called Thumbtack. They represent different angles on the same space, and it’s likely that eventually, Google will pick a path and jump in.  The smart money says that Google will follow initiatives they have been announcing recently, where they become a vendor rather than only being the marketplace where all vendors compete. In local services, this means that a local plumber signs up and agrees to cut Google not how many clicks it costs to get a potential customer, but a piece of the actual value of the work involved. Amazon is trying something similar.

It’s likely that when they roll this out, the top results on search won’t be the people willing to pay the most for the click, but rather the people willing to cut the largest check out of the job value. The math runs something like this: it varies wildly, but many businesses will spend up to 10% of the value of a job on marketing. For example, an air conditioning repair guy will have to pay about $15 a click to have any chance of getting found on Google, actually closer to $30 to guarantee top spot, but $15 should get you some visibility. We know it takes around 5 to 10 clicks to get a solid lead, and most businesses close about 25% of all jobs they quote. That means a local business has to buy something between 20 and 40 clicks to get that billed job. That’s roughly $300-$600 of marketing cost per billed job in this case. As you can easily see, it’s tough to make money in the local search market where amateurs bidding on search terms are causing huge price spikes.

Given that Google is already earning a ton of money from this area, it will be interesting to see how they pivot into competing in the space. Convincing local businesses to buy search has been hard. I can’t imagine convincing them to sign over part of the contract value will be much easier. There will be questions like: how do they check on what got billed and paid? Is the job booked and collected by Google? What if the contract goes bad, and someone gets injured? Is Google essentially becoming the prime contractor and back office for local business?

It’s a massive opportunity, but also a huge potential pain in the neck. Local is hard, really hard. It’s the “Russian Winter” of the online space. It will be fascinating to see if Google has the stomach for the fight.

Is Google Treading Water? Or Drowning?


I’m not really a stock market betting guy. It’s a game I’ve never been good at and frankly doesn’t interest me. I do keep an eye on several stocks, though, and one of them is Google. It’s been a tough year for them, and I’m sure their larger investors are letting them have it at their current shareholders meeting. The problem is that they have been more or less flat, showing a 1% decline in a period where the S&P 500 has hit nearly 10% growth.

I have extensively documented the factors driving these doldrums. The rapid move to mobile by users when advertisers have been slower to follow has hurt them. They have swapped desktop dollars for mobile pennies in many categories. The irony of that transition will not be lost on newspapers, who suffered a similar calamity a decade or so ago when print dollars became online pennies.

Having conquered search, they went on to miss out on social media. They missed Facebook, Twitter, Snapchat, and a bunch of other upstarts that have been pulling users away from Google properties. They also have a penchant for super expensive, “revenue-free” projects like Google Glass, Fiber, Nest, Driverless cars and Loon. That’s fine and dandy when you are king of the hill and leading the pack, but it’s less cool when you are just another online ad platform. Add to those woes the growth of markets over which they don’t have any sway, like Amazon and eBay. It’s tougher to be a Googler than it was a few years back.

At its core, Google is an advertising platform based around an auction system. The explosion of mobile inventory and the slower rate of adoption by advertisers has driven their click prices down month over month. That will likely improve as the ad world catches up, but it won’t be soon.

They need some game-changing, revenue-rich ideas. To that end, they are moving towards being the marketplace and selling goods and services direct, as opposed to being the forum where advertisers pay to reach the audience. It’s a good idea if they can make it work, but it’s also dangerous as they may end up in competition with their own advertisers.

There is talk of them moving into our local space. The idea is that Google becomes the platform which a local business uses to get jobs, then shares the profit on that job with Google (as opposed to merely buying ads to get customers). It’s huge and potentially game changing. It’s also fraught with friction and would require a fundamental change in how the local economy works.

It’s possible that in spite of having a massive war chest of cash and market leadership in something as fundamental as search, the glory days of Google growth are behind us. If they are, Google stands the risk of being discounted in the same way that newspapers were a decade or so ago. Maybe it is already far too far out, and not waving but drowning.

The right to search?

It’s a weird thing, how we have come to think of search as some kind of inalienable human right…like life liberty and the pursuit of happiness. It’s not.  There is no God given right for anything to be indexed or made search-able and there is no right or requirement to put any result anywhere. This issue has been a recurring theme throughout this year. Although the authorities in the US have consistently ruled on the side of Google against those calling foul over monopoly various European bodies have continued to attempt to fine Google or force them to return results differently. Perhaps the highest profile of these spats was the “right to be forgotten” and only this week Google unceremoniously booted all Spanish news content from its news index (although much of it can still be found in the main Spanish search).

Google is not touting a “buy it now” feature on its shopping search to retailers to allow end users the kind of one click ordering straight from the search results page which would be similar to what we have come to know and love from Amazon. Google has also been layering other kinds of offers around and above the inevitable Amazon result for almost any shipping search you care to carryout. No sooner has this feature come to light then the usual suspects are once again are yelling monopoly.

I have nothing against Amazon, I’m a constant Prime user, but I wouldn’t be offended if the Amazon result was pushed down in the search result…because I know I can always go straight to Amazon. Search is notoriously tough to do well and love them or hate them Google does it very well. Having said that it’s also voluntary…if various world governments want to force Google to publish their algorithms or force them to pay for news snippets I expect Google to respond as they did this week by simply shutting down that part of the service in that part of the world.

Google is too big to be stopped and on the whole does an amazing job. Are they an evil monopoly…maybe…but they are very good at being that. This year coming I expect to see either a bunch of potential trade disputes over search to gently fade away or a bunch of countries loosing access to the best search out there. It will be interesting to see who blinks first.

Google’s Book Report up for Review

Google-book-reviews There are some blog post items which I look at, think long about and still wonder if I should even comment on. Not because it’s not an interesting topic but because I’m simply afraid to get the story wrong. These tend to be the more arcane and legally fraught areas of search and today’s missive is on just such a topic… OK deep breath.

Way back in the mid 2000s, Google started a project to scan and make readily available some (many… most?) of the printed books currently out of copyright. They started out by taking on the obvious targets like Peter Pan or Grim Fairy Tales and have relentlessly ground on through the years ingesting more and more material, by some estimates over 20 million books and counting. Having read the small print, it appears that Google is honoring the copyright notice on books still under that protection. However, in many cases the authors (especially for books still under copyright but currently out of print) have given permission so it’s possible to print and read a huge range of books which might otherwise only be find on the shelves of libraries at your leisure. On the face of it, it’s pretty close to a victimless crime; the books involved are either public domain or are being rendered immortal with the permission of their authors.

No good deed goes unpunished and pretty much as soon as Google announced the project they were assailed by the slings and arrows of outrageous fortune in the form of the Authors Guild. A protracted court case ensued, it’s been dragging its lawyerly feet through multiple courts ever since. I don’t pretend to understand the complicated machinations of the case… nor do most I’m sure. The legal case is a nightmare, indeed the parties tried to settle it a while back, and the judge who wanted to settle the crucial “fair use” component of the case threw out that attempt.

The case is back in front of the judge next month and many blood shot eyes will be peering at it to see if this time it gets decided. Some of the arguments seem themselves out of fiction. One is that Google scanning and indexing of the books is essentially “transformative” in the same way that rappers sampling other music does not breech copyright. Another is the argument that because Amazon samples books as part of its marketing process, it’s OK for Google to do the same… no I didn’t get that one either.  Greater minds than ours will no doubt be brought to bear. Who knows, maybe a really useful way to extend and spread many kinds knowledge will be kept for us all… or maybe it will go the way of most other libraries nowadays… and become shuttered and empty.

Bezos Buys Washington Post (No Really!)

Permit me if you will, to divert from my usual inane ramblings about all things search to comment on today’s startling announcement. Jeff Bezos the brilliant founder of Amazon has just bought the mighty Washington Post for $250MM of his own money.  Back before I went dot com in 1999, I did a decade working very closely with major newspapers all over the world. As I recall, The Post was never a client of ours so I never got to spend quality time there, but the NY Times, Boston Globe, Star Tribune (the list goes on and on) were and I spent many happy years working with the amazing people which pull off the daily miracle; which is the News Paper business. I decided to get out, not because I didn’t have a great job or didn’t enjoy it, but despite the booming ad revenues and circulation it seemed to me that the writing was on the wall… and it didn’t look great. So I quit my nice job and joined a Internet Search Engine start up… the rest is history. Throughout my time in search I have kept several friends in the news business, and if you cut me I still bleed ink… but man, it is tough to see how the mighty are fallen. To fully understand the level of apocalypse this industry has experienced, you need look no further than this striking… indeed terrifying graphic which shows news paper revenues adjusted for inflation.

Newspaper-Ad-Sales-Decline-610x420This decline is even clearer when you take into account the relatively modest $250MM paid by Bezos for one of the nations great publishing institutions. Back in 1933 when the current owners purchased the title out of bankruptcy they paid $825,000. If that value had kept up with inflation it would have cost Bezos nearly $15BN big ones. That he only paid 6% of the inflation adjusted price gives you some idea of the straits the industry is now in. I’ve admired Mr. Bezos for many years. He’s clearly a genius and I love, his products. Anyone that can take on our space and conquer it as he has, has to be a force to be reckoned with. He’s a visionary who thinks big, indeed he’s working on his own space program complete with a Texas based launch facility and mission control.
Forbes says he’s worth over $25Bn, so for him to put down what amounts to 1% of his net worth on the project, is similar to a regular Joe buying an ATV. We have a grand old tradition in the US of rich and powerful men owning huge chunks of media, at least in part as a political mouth piece. Murdoch has been the poster child for this on the right, but News Corp owns much more than just the print titles, so it going to be tougher for Bezos to make an empire out of The Post print titles alone.  If I had to rank the challenge of getting a man into orbit or making the grand old institution of The Post successful again, or getting a man into low earth orbit, I’d be hard pushed to pick the easier option… but he certainly deserves credit for taking the project on.

Why Everyone Hates Google

Why Everybody Hates Google

If you were Google, you might be forgiven for wondering what’s in the water that is prompting the world to hate you quite as much as they are this week. The answer is easy… a goal of owning and managing the worlds data to your own advantage is getting folks a little jumpy. In a crowded week for Google haters, the launch of the very cool Google Glass product is getting push back from state legislators who are already pushing to make them illegal for driving to casino operators who are already banning them from the gaming floor. Civil rights groups and privacy activists are forming strange bedfellows with bar operators and strip club proprietors against these devices. None of this stops me wanting to buy a pair (as long as they come in my prescription).

At the same time, a ground swell against Glass is getting underway. Monopoly regulators in Europe are calling foul on Google’s aggressive use of patents it purchases from Motorola against arch nemesis Apple in Germany. In a double EU whammy, the tax regulators are clearly coming after Google for their creative financial planning.  Just in case you thought Google was in fact a warm, fuzzy Silicone Valley Company it’s not… it’s really based in Bermuda. It’s EU operations are ostensibly transacted through Ireland with a pass through to Bermuda… minimizing EU tax exposure. Unfortunately recently they recruited a bunch of folk for “sales” roles in UK, France, and Germany… and by doing that, they inadvertently qualified themselves to be more aggressively taxed in those countries.  Clearly the EU has it in for big G, and is determined to get them any way they can.

The problem Google faces is that they make a great target for anyone with a beef against corporate America, technology in general, and information in particular. They are also incredibly secretive and harder to get a straightforward answer from than Ben Bernanke on Quaaludes. Apple gives us cool toys and Amazon let’s us buy pretty much anything we want to any time anywhere, Google seems to be infiltrating pretty much a very place where we touch information.  If they didn’t invent, it they “borrow it” (witness Android and AdWords both critical products they “borrowed” from Apple and Yahoo respectively).  Add to that their enthusiasm for minimizing their tax burden which enrages legislators, their willingness to use patents to hobble competitors, and their absolute power over how we navigate the Internet; and it’s not hard to see why they are getting increasingly rough treatment… and it doesn’t seem to bother them very much.

Still Destroying Major Markets; Internet Turns 30

The Internet was more or less officially born Jan 1st 1983. Back then I was just out of college selling advertising for a major London magazine using a rotary dial phone and paper index cards. It feels like a million years ago. Back then we enjoyed creative content through, commercial soaked radio stations, dead tree products like newspapers, network TV, vinyl records or tapes and VHS all of which we paid through the nose for through commercials or fairly large stacks of dollar bills. The networks could deliver vast prime time audiences, record companies, newspapers and movie makers were rich and powerful media giants and if you wanted to find something you had to go look it up at the library. A year or so later as a wet behind the ears sales guy if I wanted to send a sales letter I dictated it to a secretary and send it by snail mail.

As we start 2013 we are looking at a radically different landscape. Mobile will probably surpass desktops in terms of users and search, music has devolved to a medieval state where the only way for minstrels to make money is to play live for a line audience and movies are headed that way too. Newspapers are barely worth the paper they are printed on, the yellow book industry is almost gone, content piracy continues to impact multiple markets and as always the web mediates these processes. In spite of the fact that Google removed over 50 million URLs from their results last year (mostly in response to appeals from RIAA) it’s results continue to be chock full of pirated content and the sites promoting “sharing” through torrenting continue to feature ads served by the major search engines and ad networks.

An interesting side effect of this slow rolling revolution is the impact of the web on advertising as a whole. For example; I recently purchased roughly 75 episodes of Big Bang Theory on iTunes to watch on long flights. Each episode costs about $1 and buying them saved me watching or zapping through roughly 15 hours of ads. I have seen believable data which puts my value as an ad viewer at about 5c per 30 second commercial. That mean that by spending $75 to own the content the network lost about $18 of advertising, a pretty good deal for the network even factoring in fees to iTunes etc. This equation of trading dollars for interruption through platforms like iTunes, Netflix and Amazon Prime will likely continue to drive the advertising world half insane in 2013. Add to that that the pervasive but confounding social media it’s clear that the Internet will continue to confuse advertisers who traditionally move at a glacial pace.

At the same time the web has obliterated music, yellow books and newspapers it has given birth to massive new markets, freed us from the sway of media giants who often don’t have our best interests at heart, facilitated real social and political change and as a bonus allows us to live pretty much commercial free if we choose to. It has put the information of a large chunk of humanity at our finger tips and allows us to be much more connected with family and friends if we choose to be. I experienced this myself just last week in London. By some oversight I didn’t have the UK added to my data roam program, so I found myself in London unable to call, search, navigate or email for as long as it took me to resolve with Verizon….about 6 hours. Those were 6 of the most uncomfortable and confounding hours I have experienced recently. After 30 years the Internet married to mobility has truly addicted many of us to the point where being without it is just about unthinkable. Hi, I’m Tim and I’m and Internataholic….Hi Tim!  Here’s to the next 30 years

Christmas Comes a Little Early for Google

Last month I reported that the FTC would sometime soon be giving a ruling on Google’s alleged Monopolistic practices. At the time I said that legislating for a monopoly in a market as fluid as the current search space and

“I suggest the FTC strike a deal to the effect that Google will clearly label all advertising from any source and will undertake not to unfairly promote their own products above others….then let the market vote with its feet.”

From the reports getting leaked from the closing discussions it looks like I pretty much nailed it. The FTC won’t be ruling that Google is or isn’t a monopoly and in return Google will improve their labeling of other people content and make it easier to switch ad campaigns from Google to other competitors. That last component is a late addition which makes little real difference, anyone seriously involved in CPC marketing is already managing campaigns across multiple engines. There will also be some patent provisions in which they will not attempt to block mobile commerce with some of the patents they have recently acquired.

The one remaining fly in the festive punch bowl is (as always) the EU. The European equivalents of The FTC have a long track record of beating up on US companies which they regard as monopolistic and have been at war with Google for most of the last few years. They seriously impacted Microsoft (back when they were top dog). There is a serious possibility that Google will lose and may get some pretty Draconian limits imposed. Of course once the appeals process is all said and done even those sanctions may be out dated by the dash to mobile, the continued growth of search beyond the desktop Apple and Amazon and the next three trends which emerge at the speed of technology rather than the speed of the EU legal process.

Either way I feel reasonably smug.