In Mobile World, Tech Giants Scramble to Get Up to Speed
By CLAIRE CAIN MILLER and SOMINI SENGUPTA
Published: October 22, 2012
I believe the internet world is a fabulous laboratory to understand how changing market forces can impact well established companies. True, your markets may not change as quickly, BUT, THEY ARE CHANGING. It is critical to keep the feelers out and have a responsive organization to those changes. There cannot be a more critical role for leadership.
Intel made its fortune on the chips that power personal computers, and Microsoft on the software that goes inside.Google’s secret sauce is that it finds what you are looking for on the Internet. But the ground is shifting beneath these tech titans because of a major force: the rise of mobile devices.
These and other tech companies are scrambling to reinvent their business models now that the old model — a stationary customer sitting at a stationary desk — no longer applies. These companies once disrupted traditional businesses, from selling books and music to booking hotels. Now they are being upended by the widespread adoption of smartphones and tablets.
“Companies are having to retool their thinking, saying, ‘What is it that our customers are doing through the mobile channel that is quite distinct from what we are delivering them through our traditional Web channel?’…
…The industry giants remain highly profitable drivers of the economy. Yet the world’s shift to computing on mobile devices is taking a toll, including disappointing earnings reports last week from Google, Microsoft and Intel, in large measure related to revenue from mobile devices. Investors are in suspense over Facebook’s earnings to be disclosed Tuesday, for much the same reason. Yahoo’s new chief, Marissa Mayer, said on Monday that Yahoo had failed to capitalize on mobile and must become a predominantly mobile company.
Demand for Intel chips inside computers — which are much more profitable than those inside smartphones — is plummeting. At Microsoft, sales of software for PCs are sharply declining. At Google, the price that advertisers pay when people click on ads has fallen for a year. This is partly because, while mobile ads are exploding, they cost less than Internet ads; advertisers are still figuring out how to make them most effective.
Since its initial public offering, Facebook has lost half its value on Wall Street under pressure to make more money from mobile devices, now that six of 10 Facebook users log in on their phones.