Technology in 2014: Part 6: The Final Scorecard

Technology development in 2014 focused on the move to cloud computing on the one hand and the Internet of Things (IoT) on the other. On the devices side, the distinction between consumer and enterprise receded further, with Apple (AAPL), Google (GOOGL), Microsoft (MSFT) and Intel (INTC) spurring the trend. Measurement and tracking of health information assumed greater importance and wearable devices to record this information (other than the new iPhones) started entering the market. Digital content of dashboards increased and home automation technology started making headlines with Apple and Google leading the way.

Intel nearly missed the mobile revolution, but started winning a few designs on Android and Windows devices this year. The subsidies it pays hardware makers for using its more expensive technology will likely continue next year, but the total amount will come down once its own integrated technology is available. Intel also tied with Rockchip to facilitate the development of integrated solutions suited to the Chinese market. On the IoT front, it announced a number of wearable devices in conjunction with fashion houses like Opening Ceremony and Luxottica, displaced ARM in Google Glass and announced a new IoT platform for the development of standards. Intel’s processor speeds remain industry-leading, but latency in memory solutions is likely a limiting factor, so next year could see some solutions to deal with this problem.

Google, Microsoft, Yahoo (YHOO), Amazon (AMZN) and Apple are at war. While each started out with its own area of expertise that did not encroach on the others’ (except Google and Yahoo in search), the need to defend market share, grow revenue and diversify the revenue source had most of these companies creating platforms to drive sales as seen in the table below. They also do all they can to ensure that consumers don’t defect to competing platforms.

Company	Search	OS	Browser	Devices	Personal Assistant/Voice Control	Comm. Platform	Social Network	ecommerce	Cloud Infrastructure Services
Google	Yes	Android	Chrome	Nexus, Chromebook, Chromecast through manufacturing partners	Google Now	Google Messenger	Yes	Yes	Yes
Microsoft	Yes	Windows	Internet Explorer	Surface, Lumia, Xbox	Delve	Skype	No	Yes	Yes
Yahoo	Yes	No	No	No	Aviate	Yahoo Messenger	No	No	No
Amazon	Yes, limited	No	No	Kindle, Fire	Echo	No	No	Yes	Yes
Apple	Limited, through Siri	iOS	Safari	Mac, iPad, iPhone, Beats	Siri	No	No	Yes	No
Facebook	Yes, limited	No	No	Rift, through Occulus	No	Facebook Messenger, WhatsApp	Yes	No	No, but created Wedge, FBOSS

Google is the one with the broadest spread. While continuing to enhance its search technology, the company has built powerful platforms in its Android OS, line of branded hardware, its Play Store and its cloud infrastructure offerings. While most of its revenue continues to come from search advertising, Google hopes to lure enterprises with the lower cost proposition of its Chromebooks and infrastructure services. Chromebooks are basically dependent on Google services that are available on the Chrome Web Store. Google fixes the price of the hardware, doesn’t charge for the OS and allows its hardware partners the profits from the devices. So with every Chromebook sold, Google essentially acquires a point of sale for its services. The strategy enabled Google to make significant inroads at companies and schools. The hope is that the shrinking desktop-related search revenue will thus be compensated for. Chromecast allowed the company to offer entertainment last year and this year, Google also entered the music streaming business with MusicKey.

But as soon as Google got deeper into devices, it started stepping on Apple’s toes. So Apple had to get aggressive about driving out Google from its platform, which comprises mainly its hugely popular hardware and iTunes store. So Apple started getting closer to Microsoft whose Bing search is already the default for Siri, which again competes with Google Now. Apple’s new iPhones sold as strong as ever and this year, the company made notable progress in China (two important agreements, the first with China Mobile, which is China’s largest carrier and the second with Union Pay, one of the world’s leading payment processing platforms behind Visa and Mastercard and dominant in China). To increase penetration at corporate customers that are able to pay more both for devices and services than consumers, Apple entered into an agreement with IBM. So Apple hopes to leverage the BYOD trend to increase penetration in the segment. It also has its own productivity tools.

Perhaps the bitterest rivals are Microsoft and Google. That’s because they have competing operating systems: Google’s hugely popular Android and Chrome that it gives away for free, making it hard for Microsoft to sell its expensive Windows operating system. Google is also extremely focused on developing its productivity suite, which is again Microsoft’s bread and butter. Microsoft fought back through an alliance with Yahoo, which however didn’t help it to take share from Google in its prized search market. Also, since Microsoft needed to make money from Windows, it had to come out with a premium device of its own that would include the cost, much the way Apple does with its iOS. So it had to pitch the product against Apple devices, which is what it did with Surface. But Microsoft has leverage at enterprise customers both in the data center and client PCs. The new CEO Satya Nadella is intent on making Microsoft products and services cloud-first mobile-first, and his strategy involves getting Microsoft software to as many people as possible irrespective of the device they prefer to use.

This year has truly been a turnaround year for Yahoo, which used a lot of cash to acquire companies and generated even more by selling the required number of shares at the Alibaba IPO. Shareholders will make some money as 50% of the proceeds will be distributed. But that’s not all: post Alibaba results indicate that core Yahoo is indeed making progress. Yahoo’s focus on mobile, video, ad tools and premium content seem to be doing the job for the company. A major development this year was with respect to its all-new Gemini platform, which allows app developers to advertise their apps (app install ads) across Yahoo’s mobile user base thus facilitating its monetization.

Amazon may be an online retailer, but it’s also becoming more of a technology company. The company announced its Fire phone this year, which was a flop, but went on to refresh its Kindle line and launch an interesting new device called Echo. It continued to lower charges for its cloud services this year in a tough fight with Google and Microsoft. This year, it even introduced a differential pricing scheme to encourage smaller players to use its services.

Facebook (FB) had the best year with its user base, ad revenue growth and pricey WhatsApp and Instagram acquisitions making it a favorite with investors (despite the fact that there were occasional tensions related to teens quitting the platform). The company made notable progress with video in 2014 and its video uploads and shares reached new highs. It even successfully tested video advertising. It was also seen that Facebook is an ideal publicity tool, so ad prospects and pricing may be expected to improve further. This year did see it getting on the wrong side of the transgender community, but Facebook dealt with the problem effectively and fast.

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E-commerce companies in the U.S. fetch an average of 2.5 times last year’s sales, while Internet services companies trade at over 6 times, data compiled by Bloomberg show.

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