Five for Friday | 五日(星期五) | 금요일에 다섯 가지

Things that made my day this week.

Catching up with my old boss Cathy Pittham and putting the marketing world to right over an expresso. We talked about agency dynamics, influencer marketing and the perils of marketing automation.

We have moved further away from the processes that make products around us in everyday life. Prior to modern electronics the most complex things in the average home was a clock, watch or sewing machine. Up until relatively recently you would have been able to see a sewing machine mechanic or a watch maker work in most major towns.  I grew up with a Dad who did major work on our car, which gave me a little insight. With electronics now the vast majority of car servicing is out of scope for most people. Even if you have seen a computer disassembled, you are still a level of abstraction away from the manufacture of the product. This factor made this simple mechanical watch service captured on video more special.

Prior to the watch or the alarm clock, the industrial revolution relied on people who went around and manually woke up workers for their shift. This trade only died out in Northern England during the late 1960s.

This week I have mostly been listening to Shadow Child’s sets on Rinse.fm

Renzo Rosso, on why his company did the ‘real’ fake Diesel pop-up store.

App constellations 2018 research

I initially looked at app constellations back in 2014, when Fred Wilson put a name to the the phenomena. And every two years or so I have gone back and looked at a number of major internet companies to see how many different types of apps that they had in play.

I originally selected the companies back in 2014 because I felt that they represented the largest and best of their ilk. It skews Asian because the west can be viewed as one eco-system represented by Google, Facebook and Microsoft.

China is an enclosed eco-system; though Microsoft is actively engaged in the app eco-system there. I chose Tencent and NetEase as being my Chinese bellwethers. DaumKakao and Naver were representative of the Korean eco-system which blends highly-used domestic services with western platforms. Finally LINE of Japan (a subsidiary of Korean company Naver) provided a similar bellwether of the hybrid Japanese eco-system which mirrors Korea.

App constellations survey methodology

For the sake of convenience I have compared the contents of Apple’s mobile app store for each of the companies. While most of the internet companies have some Android-only or iOS-only apps; the iOS app store is still a good indicator of their app activity.

I stayed true to the definition of app constellations in terms of deciding what kind of app should go in.

App constellation definition

I manually assessed each app, rather than relying on the category that the app had been submitted into. Tencent and Netease, had a number of mobile utilities that aided discussion and kept players updated on their favourite game. These didn’t fit within the definition.

Changes in the environment

Since 2016, a couple of things have changed:

  • Apple had a purge of apps that didn’t support 64 bit processing
  • They moved away from supporting the app store within iTunes application and on the web; to within the app store on the device

2018 marks over a decade of mobile apps in the Apple store. Many of the major players have delisted almost as many Android and iOS apps as they currently have in the store. This happens for a number of reasons:

  • The app was serving a purpose for a fixed time
  • It is an application that has fallen so far out of favour that it is no longer worth maintaining
  • The code base no longer meets Apple’s or Google’s minimum standards
Data analysis

I started off by looking at the number of apps. In terms of app constellations:  Tencent, Microsoft and Google were clear winners.

Number of apps

Both Microsoft and Google’s growth has been driven by ‘experimental’ apps that they have put out in the public for their own reasons and enterprise focused apps.

compound annual growth in app number

But it was quickly apparent to me that the number of apps developed were only part of the story. What about the rate of change in numbers of apps developed? This would be indicative of the rate of change in moving to mobile. Here both Facebook and Microsoft’s pivot became immediately apparent. The Asian companies looked less impressive as they had been able to keep steady in their focus on mobile.

All of this growth in the number of apps developed by major internet companies is all the more remarkable when you consider the following:

  • In mature markets consumers are not really downloading new apps
  • They are sticking with a few in terms of regular usage. Many of the apps on their phones don’t get used
Notes on a few of the companies in terms of their app constellations
  • Daum Kakao – notable for being the only company who I looked at who had a decline in the number of applications versus 2016. A lot of this seems to be in service consolidation of both Daum and Kakao to remove duplications or non-core services. It is the Daum brand that has taken the biggest impact. This is understandable, since Daum struggled on the move to smartphones and Kakao is a mobile-first brand.
  • Dropbox – the growth in apps has been down to the larger business acquisition strategy at Dropbox. I don’t expect further growth like what we have seen with  Facebook’s pivot to mobile
  • Facebook – Facebook’s pivot to mobile was one of the reason why I decided to look at compound annual growth rate as well as the size of app constellation in terms of app numbers. In terms of raw app ‘SKUs’ Facebook is dwarfed by most of the other companies that I have looked at. It is only by looking at the growth in apps developed where one can really see their move to mobile
  • Netease – was interesting for its focus in a couple of areas. Like other Asian internet companies, education was a big target area, but Netease went into it with major commitment. Both NetEase and Tencent were big in magazine and book apps as well. I think this is down to the fact that ‘traditional’ web surfing is harder to do with (at the moment) when URLs are written in western script and numbers.
  • Tencent – the raw app numbers beggars belief. There are a number of reasons for this. Like NetEase, Tencent has a lot of apps solely optimised for the iPad and a separate iPhone app. There are free and paid-for product variants. Lastly Tencent will have four or five apps competing in a given category like streaming music which seems insane. Only time will tell if Tencent is spreading itself too thin; like when Yahoo! was described Brad Garlinghouse’s Peanut Butter Manifesto
More information

Jargon watch: app constellation – back in 2014 when I wrote this post, it still took me the best part of a week to research and describe each of the apps in the main eco-systems. It would take me much longer today due to the growth in apps

Peanut Buttergate – analysis of Garlinghouse’s original memo about Yahoo! from back in 2006

ICYMI | 万一你错过了| 당신이 그것을 놓친 경우

ARM Mac: Piece of Cake Or Gas Refinery? – Monday Note – assumes that there will be a transition, which I am not convinced about

Smartphone shipments fall again in Q1 | Shanghai Daily – China looks saturated in terms of smartphones

China’s Didi Chuxing prepares to launch Mexico operations | HKEJ Insights – China going global

SK-II finds success in selling to younger Chinese: P&G | Advertising | Campaign Asia – luxury brand with an on ramp for college students

Headline from China: Purchase Restriction and Red Streetwear | Jing Daily – interesting how streetwear brands are being cleared out of the way by the Chinese government to support Chinese originated brands

Jargon watch: Eroom’s Law

Eroom’s Law is a metaphor that compares other business processes to the virtuous circle of Moore’s Law. It is literally Moore’s Law in reverse. Industries have developed processes that are getting ever more expensive.  Once could consider that is inversely proportional to the way semiconductor manufacture  reduced the relative cost of computing power over time.

Some see this as a potential opportunity for the use of computing in a sector to reduce costs. As with most circumstances, what seems like a great idea inside an Excel spreadsheet doesn’t work out in the real world. But that doesn’t stop the management consultants, investment bankers or venture capitalists from trying.

Eroom’s Law and the pharmaceutical industry

The poster child for Eroom’s Law cited would be the biotechnology and pharmaceutical industry developing new drugs.

Here’s how Nature Reviews Drug Discovery put it:

Eroom’s Law indicates that powerful forces have outweighed scientific, technical and managerial improvements over the past 60 years, and/or that some of the improvements have been less ‘improving’ than commonly thought. The more positive anyone is about the past several decades of progress, the more negative they should be about the strength of countervailing forces. If someone is optimistic about the prospects for R&D today, they presumably believe the countervailing forces — whatever they are — are starting to abate, or that there has been a sudden and unprecedented acceleration in scientific, technological or managerial progress that will soon become visible in new drug approvals.

You could argue that the defence industry would also fall into this, despite the benefits of technology. (The origins of the semiconductor industry lie in the development of missiles during the cold war. Integrated circuit technology is more robust and lighter than discrete transistors or vacuum tube based systems).

More information

Diagnosing the decline in pharmaceutical R&D efficiency | Nature Reviews Drug Discovery (paywall)
Eroom’s Law | In the Pipeline | Science magazine
EROOM’s Law of Pharma R & D | buildingpharmabrands
More posts on the pharmaceutical industry on this blog.

ICYMI | 万一你错过了| 당신이 그것을 놓친 경우

RSS is undead | Techcrunch – no RSS is alive, but Techcrunch haven’t worked out issues the RSS users have already. Much of the issues are solved by using NewsBlur and finding sources is organic rather than an instant end state

How Americans Self-Sort Themselves by Age and Class – CityLab

China Bans Online Bible Sales as It Tightens Religious Controls – The New York Times – I am concerned about Vatican appeasement of China. It looks like Neville Chamberlain

Molly Ringwald Revisits “The Breakfast Club” in the Age of #MeToo | The New Yorker – good read, what I remember is how those films nailed emotion

The Overwhelming Emotion of Hearing Toto’s “Africa” Remixed to Sound Like It’s Playing in an Empty Mall | The New Yorker

Cell Spotting: Studying the Role of Cellular Networks in the Internet by Rula, Bustamante and Steiner – (PDF)

Japan to place accident liability on self-driving car owners – Nikkei Asian Review – makers liable only in case of a system flaw

Google’s First Voice Activated Coupon – WPPGoogle distributed its first voice-activated coupon offering customers $15 off Target purchases placed on Google Express through Google Assistant –through desktop, mobile or Google Assistant enabled devices

Could Cambridge Analytica boss be probed for Philippine meddling? | SCMP  – This could get interesting. Putting aside arguments about whether Cambridge Analytica’s technology actually works as promised, Philippines law would still have been broken. It forbids all outside parties from participating in its election process.It is alleged that they were supporting Duterte, which would make the foreign reaction to it interesting as well.

API and Other Platform Product Changes – Facebook for Developers – reduces information that can be taken out to beef up privacy