An interesting article from the guardian
The rise of smartphone and tablet apps means that fewer people are turning to their desktop computers to use search engines.
We're used to the idea of "peak oil" – that there's only a finite amount of that stuff in the ground. What's the equivalent in the computing field? Two of them seem to be happening at the same time: "peak desktop" and "peak search" – both of which raise serious questions for two titans of the business, Microsoft and Google, which reported their quarterly results on Thursday.
Peak desktop is a big threat for Microsoft. It saw its revenues and income dip year on year, by 8% and 26% respectively, as a slowdown in the PC business (ahead of next week's launch of Windows 8) took hold.
In the Windows division, revenues were down 33%, and profits by 50%, the latter to $1.6bn (£997m). Even though the mood music emanating from the company is positive, the reality is that the world is changing, and Windows 8 is Microsoft's only chance to keep up with it.
That's because the world is shifting to mobile formats: smartphones have been outselling PCs since the end of 2010, and tablet sales (of the iPad and dozens of Android tablets) are rocketing in scale, so that this quarter they could be at least a 25% share of the worldwide total for PCs.
And even though Google's Android mobile operating system is the most widely sold for smartphones, the search giant isn't immune from this shift either. The results announced prematurely through a slip of the finger at its printers showed that the shift to mobile is hitting Google hard too.
"Cost-per-click" – how much advertisers pay on average when someone clicks on an ad – has been dropping for the past four quarters, after rising for eight previous quarters. There's no reason to expect it to rise again.
Why? Google explained three months ago in its previous results: "The decrease in the average cost-per-click paid by our advertisers was driven by various factors, such as the general strengthening of the US dollar compared to certain foreign currencies (primarily the Euro), the changes in platform mix due to traffic growth in mobile devices, where the average cost-per-click is typically lower compared to desktop computers and tablets, and the changes in geographical mix due to traffic growth in emerging markets, where the average cost-per-click is typically lower compared to more mature markets."
Leave aside the currency issue (though Google's people played up the effect of currency fluctuations; less discussed is what sort of taxes should be paid on those foreign revenues), and you have the stark position: people aren't using desktops or laptops so much; they're using smartphones, and mobile isn't such a great advertising platform for search.
Plus, the places where people are now going online just don't pay as much. The mature economies are tapped out. After years where Google's revenue growth is slowing down; "Peak Google" might be in sight.
Certainly, some analysts think we've hit peak search – at least on the desktop. Ben Schachter from Macquarie Securities noted that in September, desktop search volume fell in the US for the first time ever.
A problem, that's what. We have definitely seen peak desktop – the number of desk-bound computers being shipped is gradually falling away. The number of laptops being made is still growing, but there's the hint of danger in this pause before Windows 8, allied to economic problems, and the fact that tablets are for the main part just cheaper, have longer battery life, do much of the same jobs (email, web browsing, spreadsheets, document composition and reading) and can include mobile broadband connections – something most laptops still don't.
If we stop buying desktops and laptops, and if Windows 8 on a tablet such as Microsoft's Surface (which has the same sort of British-designed ARM chip as a smartphone) is just as effective, will we need PCs?
It's as though we've been driving around in trucks, and suddenly someone discovered how to build cars, instead. But for Microsoft, which (if we extend the metaphor) has been making the fuel for those trucks, the change is a problem.
"A computer on every desktop and every home, running Microsoft software" was the original vision. Well, mission accomplished, Mr Gates. Now, though, Windows is less of a force than before: the Windows division brought in $3.2bn in revenues in the past quarter, which is dwarfed by the $9.2bn Apple got from iPads from April to June (we don't have the latest figures; they'll be announced next Thursday) or $16.2bn from iPhones.
True, that's not like-with-like: Apple's numbers include hardware, not just software. But Apple's model – sell hardware and software – begins to looks more robust in that light.
But does it? Is selling hardware really the way to adapt to the mobile world? Even there, it's not clear. Only Samsung and Apple are making serious money in the mobile handset world; HTC is keeping its head above water, just about, but even it is troubled.
Everywhere else, handset makers are bleeding money – notably including Nokia and RIM, which show that being there at the start of the shift to mobile doesn't necessarily help. Both had smartphones, or smartphone functionality, well before Apple, and years before the first Android phone. Yet both have been left in the dust by the rapid changes.
Is there an answer? A simple one? No – only that we have trouble wrapping our heads around the changes that are going on. Perhaps in five years, and certainly in 10, anyone who wants to buy a smartphone will be able to, even in the poorest countries. (Whether they'll be able to afford internet data is a different question.)
We might think Google and Microsoft have problems, but we – and our governments – haven't even begun to think about what such connectivity is going to do to our learning, communication, businesses, civilisation.
A printer's slip of the finger might have hurt Google's shares temporarily, but it's silicon that will have the biggest effect in the coming years.
http://www.guardian.co.uk/technology/20 ... phone-apps
