It was a quiet week for big tech, confirming Google’s (GOOG) domination of the digital ad market and PC market pressures.
Can Facebook Dethrone Google?
Not in the foreseeable future, is what the numbers say. Last week, eMarketer offered mobile ad revenue projections for the next few years. Google’s share in the U.S. is expected to drop below 50% this year, while Facebook (FB) jumps to over 15% for the first time. However, while most companies will see their share declining over the next two years, Google’s will inch back up to over 50%. Google is the clear leader worldwide too, with over 53% share.
Google is also expected to maintain its leading share (41.1%) of net U.S. digital ad revenue (both desktop and mobile) with Yahoo (YHOO) a very distant second, picking up 7.7% and Facebook close on its heels at 7.1%. The equation will not change much in the next two years although Facebook will nose ahead of Yahoo.
When you consider that the mobile ad market is practically doubling this year with Google transitioning to Enhanced Campaigns, Google’s slight share loss seems even less of a concern because market growth will ensure growth at Google. Its solid position in the U.S. (which generates stronger revenues) and even stronger position in emerging markets (which generates very high volumes) are good for growth.
Google has made some headway in social, but it’s nowhere near as successful as Facebook. At the same time, Facebook can’t hold a candle to Google when it comes to search. So although these companies appear to be competitors they will probably be limited to their own niches over time.
Don’t Bet on the PC Market
Last week, IDC refreshed its PC shipment projections, lowering estimates for the second time this year. The firm now expects shipments to decline 9.7% in 2013, down from the 7.8% decline estimated in May and 1.3% decline estimated in February.
What’s worse, emerging markets, especially China are expected to drive the decline, with the channel remaining stuffed. Demand for tablets, phablets and such things on the other hand continues to escalate with Apple (AAPL), Samsung and others getting ready to launch new versions as we speak.
IDC says that power efficiencies in x86 hardware could be a positive, but businesses are unlikely to venture beyond Windows 7 for at least another year. So basically, the installed base of PCs is shrinking and upgrades to new PCs continue to be put off, especially at the low end. All this looks pretty bleak for both Intel (INTC) and Microsoft (MSFT), longstanding partners that practically created the PC as we know it.
Although the numbers are disappointing, it’s unlikely that the PC market will disappear altogether. Serious work is significantly easier on a PC, so higher-end versions are unlikely to lose ground to mobile devices. This means that the slump is temporary although growth rates will probably never return to what they used to be.
Growth will be back however when PCs need to be replaced. Also, China’s slump is partly on account of its growth issues and growing emerging economies will also continue to consume.
Google Loses Android VP
Android VP Hugo Barra is leaving Google for a small (growing), privately-held Chinese company called Xiamoi. The company’s phones are based on Android and it’s sales have been picking up in recent times. In fact, market research firm Analysys International places it at number four in China with a 2.5% share, behind Samsung, Lenovo and Apple, which have shares of 18.6%, 12.4% and 4.6%, respectively.
What also made the headlines was that Google co-founder Brin was involved with Barra’s ex, which probably created “an actual or apparent conflict of interest” that Google’s code of conduct says can lead to re-assignment or termination. The woman involved was removed from Brin’s direct supervision.
Brin’s marriage was also part of the conversation, but since a prenup agreement with his wife ensures that he retains voting rights to all his shares in the event of a divorce, there’s no risk to Google shareholders.
|
Company |
Last Week |
Last 6 Months |
|
AAPL |
-3.37% |
+13.18% |
|
FB |
+1.57% |
+48.63% |
|
YHOO |
-3.07% |
+23.61% |
|
GOOG |
-2.47% |
+5.05% |
|
MSFT |
-2.62% |
+19.50% |
|
INTC |
-1.26% |
+4.52% |
|
CSCO |
-2.22% |
+11.91% |
This week-
Yahoo gets its new logo on Sep 4 after a month of trials.
Samsung is set to launch Galaxy Gear, a wristwatch-like device with features of a smartphone, also on Sep 4.
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