Last week, both Yahoo and Amazon reported quarterly earnings. Just like a golfer studying how a competitor tees off, their results can help other companies facing similar challenges make better decisions about their mobile businesses.
What these two companies had to say indicates very different mobile game plans. Yahoo has a clear-eyed and optimistic view of the mobile revolution and what it needs to do to capitalize on it. Amazon, on the other hand, gives the impression of a company adrift among competing, disconnected investments.
I’ll start with Yahoo (you can listen to or read a transcript of the earnings call here). The first thing you’ll notice is the call’s structure, almost certainly carefully rehearsed to communicate the company’s top priorities, its progress on those priorities, and where it plans to go in the future.
The key mobile takeaway: Yahoo and Tumblr, its blogging platform, have over 1 billion monthly active users, and Yahoo claims that about half, or 550 million, are mobile. That’s good for a company consumers still associate with being a traditional, web-based portal.
Yet Facebook shows that Yahoo still has a way to go. The social media network has over 1.3 billion monthly active users, of which over 1 billion are mobile. That translates to a 81 to 50 percent advantage of mobile-to-total monthly active users in favor of Facebook. Yahoo’s quarterly revenues of over $200 million represent about 17 percent of its total and still accounts for a much smaller portion than display and search ads. At Facebook, mobile accounts for 62 percent of total revenues.
While CEO Marissa Mayer continues to impress me with her focus on the right priorities, she has to improve how Yahoo acquires and monetizes more mobile users with better targeting that increases the relevance of the ads they consume and more engaging formats, such as video. I’d start by aggressively promoting Yahoo’s apps and sites to its portal customers; increased app usage would improve the company’s ability to gather richer data. That should result in better content and advertising opportunities.
Amazon’s quarterly earnings announcement offers a study in contrast. For one, CEO Jeff Bezos did not participate. He left that to his CFO, Tom Szkutak.
Amazon’s earnings release reads like a checklist rather than a well-planned update on top priorities and guidance on its direction. Based on this quarter’s report, I can’t understand Amazon’s view of its business.
Undeniably, Amazon has one of the best shopping platforms in the world. Finding and acquiring items from Amazon is easy and fast. The data our shopping behavior produces holds enormous value to advertisers, so much so that Google Chairman Eric Schmidt recently identified Amazon as his biggest competitor in search. You’d therefore expect Amazon’s earnings calls to emphasize its investments in its shopping platform for consumers, merchants, and advertisers.
Instead, the release’s first several items detail the company’s latest forays into hardware. Amazon had to take a $170 million write-down on its Fire smartphones, meaning that investors will come away from the call understandably thinking that Amazon has its focus on money-losing investments. Why start your company’s quarterly update with something that immediately creates concerns?
More importantly, with well-regarded Amazon and Kindle apps for virtually every device, does Amazon even need a hardware business? Amazon, Hulu, Netflix, eBay, and many others stream movies and TV shows and/or sell physical goods, but only Amazon also sells tablets and phones with which to do these things. If OEMs were struggling to make powerful, affordable devices, I could see why Amazon would want to build a hardware business. Exactly the opposite is true, though. Perhaps Amazon should be investing more in perfecting its software and letting other companies worry about the hardware.
Other companies can learn a lot from both firms, though I’d keep a more careful watch on Yahoo for how a company with a massive audience and compelling content can migrate those users to mobile.
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