Google overtook Apple

Slightly overlooked in last week’s news when Google overtook Apple to become the most valuable company in the world is the revenue of each of these giants.

Apple earned US$234bn in 2015, compared to Google’s modest $74bn. Compare that to other behemoths in their fields like Exxon Mobile and WalMart which both earned more than $300bn, and it doesn’t seem comparable that Google should have top dog status.

After all these years of Apple’s stratospheric share price increases, it’s easy to give up trying to predict (or understand) why the iDevice maker defies gravity on the stock market. Google’s sudden leapfrog of its competitor in the smartphone space is no different. As Apple has tried to extricate itself from a reliance on Google for its maps and other services (with the abortive Apple Maps saga), it emerged Google paid it $1bn in 2015 to remain the preferred search engine on iPhones and iPads.

It’s a remarkable thought that Apple is able to extract that kind of cash for a service that is already the world’s default search engine. But it is also a sign of just how important the iOS ecosystem is – including to Google, which itself has the other dominant mobile operating system in Android. Remember though, that Apple now has about 1bn iOS devices (iPhone and iPads) and its users tend to be more liberal when buying apps and other services. App developers will still tell you the characterisation of Apple versus Android is that the former are more likely to pay for apps (and in-app purchases) than the latter. If you want to make money, first code for iOS; while if you want mass market penetration, have an Android app.

Meanwhile, as Facebook announced its users had surged passed 1.59bn (and 1.44bn on mobile in December), there were two other services that reached the 1bn mark, it emerged last week: Facebook-owned WhatsApp and Google’s Gmail web-based email. Both are the market leaders – in size and functionality – of their respective fields.

I’m a big fan of both. Gmail is hands-down the best thing has ever happened to email. It has led the field of web-based mail begun by Hotmail, an Israeli company bought by in a rare prescient move by Microsoft when it became popular in the late 1990s.

Microsoft’s largest acquisition was another messaging giant, Skype, which it paid $8.5bn for in 2011, and has some 300m active users. The original app that allowed you to make calls through the internet – often called internet telephony or VoIP, for voice over IP, the internet protocol that underpins the web – has been downloaded 750m times on mobile devices, of which 500m are via Google’s Play Store. It has logged 2-trillion talks minutes to date, and some 3bn minutes a day are used, according to the DMR website. (expandedramblings.com).

Although the daily active users are a modest 4.9m, the percentage of global adults who use Skype is 17%. A one-minute call on a mobile device is abut 30MB, if you’re wondering; while the cost for mobile operators globally per day is estimated to be $100m, according to Craig Smith, who publishes DMR.

Facebook’s other big play, Instagram, has 400m active monthly users, it announced last week; and its Messenger app has over 800m users, of which about 250m joined in 2015.

It’s noteworthy that much of these rampant statistics for these social media, messaging, photo-sharing, and voice-calling are happening on mobile.

All of these astounding statistics are a timely reminder of how our communication patterns have shifted since the internet and mobile phones became the default way we all communicate.

Meanwhile, poor old Yahoo – the company that was an early leader in search and webmail, which once turned down a Microsoft acquisition – is looking precarious and looking for a new buyer. Google star Marissa Meyer’s three-year efforts to turn it around seem to be floundering. It’s a timely reminder of that great business adage: you snooze, you lose.

This column first appeared on Financial Mail