Early Adopters Still Spend More Time With Microsoft Than Google, Facebook, or Skype. But For How Long?
When early adopters sit at their computers, what applications and websites do they use the most? The answer: Microsoft Outlook, Microsoft Office, and MSN Messenger—just like most everyone else. At least according to data from RescueTime, the productivity app that monitors the amount of time a user spends on every application on his desktop. The Y Combinator-funded startup has given us an exclusive look at the usage data they’ve compiled from over 30,000 users (most of whom are early adopters). This data represents real-life usage on a huge scale, totaling 475,190 man-hours.
Gmail, Facebook, and Skype make strong showings, but still lag behind Microsoft’s desktop apps. Microsoft Websites, however, are nowhere to be seen. All of this suggests that among early adopters, desktop apps still rule, but Webtop apps are gaining ground in terms of what they use every day. After Outlook and Word, Gmail is the third most-used application, Facebook is No. 6, Google search is No. 10, iTunes is No. 11, and Skype is No. 16.
If you add up all of Google’s apps and sites, they take up 17 percent of the time this group spends on their computers. But Microsoft’s apps collectively take up 41 percent of their time, so Google still has some catching up to do.
Here’s the disclaimer: This data is by no means scientific. It represents mostly early adopters, but these are the people who are supposed to figure out what’s useful before the rest of us do. They are the canary in the coal mine. The data also has an international slant, with only 40% of users in the US (a total of 60% are English-speaking). About 35% of the users are on Macs, a rate over three times higher than the international estimate of 10% Mac market-share.
Here’s a breakdown of the top 20 applications and Websites, ranked by the overall time spent in each.
The Top 3
The top of the list is dull. Outlook stands tall with 12.4% of all the time spent on a computer, with MS Word(9.4%) and Gmail(6.6%) rounding out the top three. No surprises here.
Chat
In the battle for chat-client supremacy, MSN Messenger comes away with a whopping 4.14%, more than twice as much as the next leading client. Adium’s high performance is indicative of the high proportion of Mac users (it is easily the best client on the Mac).
Websites
Facebook holds a surprisingly strong lead over other websites, with nearly three times as much usage as Wikipedia’s English site. Also notable is Twitter.com’s usage (this is the site itself, not the API, which reportedly sees ten times more action). Digg is more popular among this group than the NYTimes.com, and gaming site Kongregate makes a strong showing as well. TechCrunch comes up right beneath YouPorn (NSFW), which isn’t such a bad place to be in.
In all, RescueTime users spent 44.6% of their time using communication services, beating out work-related apps by a large margin. The trend is probably much worse for the typical user, as RescueTime users are more likely to try to stay on task (in theory, at least).
We’ve included the full spreadsheet below, and would love to see further analysis in the comments.
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Why Google Invested in Clearwire
Google wants to usher in the world of wireless broadband so much that it is willing to spend vast sums to make it happen. It bid more than $4.6 billion in the recent FCC spectrum auctions (which it ended up not having to pay because it lost to Verizon), is backing the WiFi 2.0 initiative, and today it announced that it plunked down $500 million to shore up the new Clearwire-Sprint WiMax business.
Google is very clear about why it invested—to ensure that the resulting broadband network is as open as possible and accepts Android handsets and devices. It also sounds like Google may also be the default search engine on devices connected to the network.
This morning, it explains all of this on the Official Google Blog:
In addition to our $500 million contribution as part of the investment group, we will provide search and applications to the network’s users, and will work with Clearwire to offer additional services and applications. This will include jointly creating an open Internet protocol to work with mobile broadband devices (including Android-powered devices) and implementing other open network practices and policies.
We believe that the new network will provide wireless consumers with real choices for the software applications, content and handsets that they desire. Such freedom will mirror the openness principles underlying the Internet and enable users to get the most out of their wireless broadband experience. As we’ve supported open standards for spectrum and wireless handsets, we’re especially excited that Clearwire intends to build and maintain a network that will embrace important openness features. In particular, the network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.
Google desperately wants access to future wireless broadband networks of all stripes and sizes,but it wants to avoid having to build and operate its own. Deals like this show that it is willing to pay to play. If Clearwire should ever go bust, though, that’s $500 million down the drain.
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Microsoft’s Corporate Development Strategy Changing Daily
Microsoft Chairman Bill Gates told the press in Tokyo yesterday that the company “isn’t pursuing other deals following the withdrawal of its $47.5 billion takeover bid for Yahoo.” Their experience dealing with Yahoo, apparently, has put them off acquisitions altogether.
But wait. Just Monday Gates said “I wouldn’t rule out some partnerships but we don’t have anything imminent there” following a meeting and dinner with South Korean President Lee Myung-bak. In corporate-speak, that’s a pretty strong statement that Microsoft wants to buy some companies.
Did Microsoft change corporate development strategies from one day to the next? It appears they did. On Monday he says he wouldn’t rule out partnerships. Tuesday, no partnerships and a go it alone strategy.
What’s the real strategy? I can’t help but wonder if their key goal is to convince the market that they really don’t want Yahoo in order to drive their stock price down as far as possible. It’s clear that the markets still anticipate a deal with Microsoft, or possibly Google. It is currently trading at just under $26; analysts think its share price should be closer to $22.
If Gates is out telling the world, as he did on Monday, that they need to acquire other companies to fix their Internet strategy, it doesn’t take very long to figure out that there isn’t another Yahoo out there on the market. Microsoft has a long term problem on its hands, and Yahoo may be the only remedy. So when Gates says Microsoft isn’t pursuing deals, what I tranlate that to is “We really, really want to buy Yahoo.”
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$3.2 Billion WiMax Deal Goes Through. Take Cover.
The deal to combine Sprint Nextel’s and Clearwire’s fledgling WiMax businesses that was rumored last March is finally expected to go through. Comcast and Intel are supposed to put in $1 billion each; Time Warner, $550 million; Google, $500 million; and regional cable provider Bright House Networks, $100 million. The new company, which will be valued at $12 billion, will be run by Clearwire and take its name.
As I said before, this is a disaster waiting to happen. Sprint and Clearwire need the deal to try to salvage the billions they’ve already sunk into their money-losing WiMax networks. But putting more cooks into the kitchen with different WiMax aspirations is not going to help. Google wants more wireless broadband alternatives for its planned mobile apps and advertising. Whereas the cable companies want a way to compete against mobile phone operators encroaching on their turf. As I wrote last March:
WiMax is a promising technology and these are early days. But even an extra $3 billion won’t be enough. Building out a nationwide WiMax network could cost as much as $8 billion to $12 billion. And there could be more technical hiccups.
I can see why Google might throw its hat into the ring here—anything to promote more broadband wireless networks. But Comcast and Time Warner Cable should stay away. The logic behind the investment seems to be that the cable companies could use the WiMax network to counter the moves by Verizon and AT&T into their turf (with TV service over phone lines). It is being suggested that the cable companies would be able to launch their own white-label mobile phone and high-speed Internet services over WiMax.
Here’s where that logic breaks down: Verizon and AT&T have a huge head start and customer lock-in when it comes to cell phone service. WiMax mobile phones would take decades to chip away at that even if they do offer faster data speeds. Today, Clearwire is only offering at-home phone service, not mobile. As for broadband Internet and home phone services, Comcast and Time Warner already compete effectively against the phone companies today with their alternative services over cable.
I hope that I’m wrong and that this new consortium will bring cheap WiMax to us all. Because the technology is very promising. Unfortunately, the business is not.
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Zuckerberg Hires Another VP From Google: Elliot Schrage
Mark Zuckerberg loves to hire folks from Google. His poaching started in earnest last year, and includes Facebook COO Sheryl Sandberg, CFO Gideon Yu, and others. The latest is Elliot Schrage, Google’s vice president of global communications and public affairs. He will join Facebook on May 14 under the same role. Zuckerberg’s letter to the troops leaked to us:
Hey Everyone –
I’m writing from India to share with you the good news that Elliot Schrage will be joining our management team as VP Communications and Public Policy. In this role, he will be responsible for developing the key messages we want people to understand about our products, our business and the growing global importance of social networking and what we do. The goal here is to help people understand how the internet can strengthen people’s relationships. Elliot will direct our efforts to work with users, media, governments and other entities around the world to ensure that Facebook’s policies are transparent, responsive, effective and are recognized as being those things.
Elliot is joining us from Google where he has been their VP Global Communications and Public Affairs since 2005. At Google, he broadened the company’s messaging from a focus on only product PR to include all aspects of corporate, financial, policy, philanthropic and internal communications. Before that, he served as a Senior Fellow at the Council on Foreign Relations, a public policy think tank, as a professor at Columbia Business School and as SVP at Gap. Early on, he began his career as a Harvard-trained lawyer.
This is a really important role for us and one that we’ve been trying to find the right person for a while. Elliot’s role will be critical to helping us scale based on our culture that values transparency, openness, and honest internal communications.
Elliot will be starting on May 14, although you may see him around the office before then.
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Google Reader Gets More Social: Now With Notes
Google has added support for Notes to Google Reader, allowing users to share notes or add notes to shared stories.
The add a note feature is located in the “Your Stuff” menu at the top of the Google Reader sidebar. Tumblr style, the feature allows users to share with friends “whatever pops into your head (for better or for worse) by typing anything into the text box at the top of the Notes page,” according to Google.
The share items with a note gives users the ability to add a note with any shared Reader item. Google explains:
If you are like me, you might want to share something in Reader, but think your friends might not “get” why you are sharing it. Use the “Share with note” button on the item toolbar to create a copy of that item with your own note attached to it. Now your friends won’t have to wonder if the B-movie about an evil floor lamp you shared was intended to be funny, sarcastic, ironic or the real motivation behind your next movie night.
Users can also add notes from the browser with a Reader Notes bookmarklet. Minor changes include the choice of new styles from the shared items page, and the Google Reader list view will now highlight when an item is being shared by a friend.
The new additions will provide additional appeal to Google Reader’s sharing feature, which has slowly grown in popularity over the last 12 months (least I see more and more friends sharing this way). The ability to have a discussion around shared feeds is still missing, but as we noted back in September is being developed by Google.
thanks to Bowrd for the tip
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Jammed Shut: Google Is Worried What Verizon Might Have For Future Customers Behind Door No. 2
During the FCC’s recent auctions of the 700MHz wireless spectrum, Google risked owing the government slightly more than $4.6 billion simply to ensure that the open access rules it fought for would be imposed on whoever won. Verizon won, and now it must allow allow any device and any application to run on the future wireless broadband network it will build on that spectrum. Or does it?
Google is so worried that Verizon wlll try to find a loophole in the rule that it filed a petition with the FCC on Friday asking it to preemptively enforce the rule on Verizon. Excerpt (full text embedded below):
The Commission’s open access rule is clear that C Block licensees “shall not deny, limit, or restrict the ability of their customers to use the devices and applications of their choice….†The rule also is explicit that C Block licensees may not “disable features on handsets it provides to customers.†The rule thus plainly proscribes a C Block licensee from selling handsets to customers that hinder a customer’s ability to use applications of their choice, and applies to all customers of a C Block licensee.
Notwithstanding the clarity of the rule, Verizon has taken the public position that it may exclude its handsets from the open access condition. Verizon believes it may force customers who want to access the open platform using a device not purchased from Verizon to go through “Door No. 1,†while allowing customers who obtain their device from Verizon access through “Door No. 2.â€
Is Google just paranoid? Not exactly. There is a huge, gaping loophole in the rules. Namely, Verizon can block any device or application it deems to have a negative impact on the performance of its network. And while Verizon hasn’t explicitly said one way or the other how it will abide by the open access rules since winning the auction, it’s actions in the past do not inspire confidence. It tried to sue to stop the rules, and when it announced that it would “open up” its current network last fall, what it meant was that it would create a two-tier system. Verizon phones and apps will continue to get preferential treatment, and everyone else’s will be relegated to a separate part of the network.
The justification was—guess what?—to make sure that those pesky unapproved apps and devices don’t mess up the network. It should not surprise anybody if Verizon tries to use the same reasoning to de-fang the open access rules whenever it decides to build its 700MhZ network. Google can petition all it wants. It might not do any good.
(Photo by Jurek Durczak).
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Citi’s Mahaney Says Microsoft/Yahoo Merger Still 15% Likely
Citigroup Internet Analyst Mark Mahaney (our interview from last week is here) updated his Yahoo guidance today based on the Microsoft bid withdrawal over the weekend.
He sees Yahoo’s stock going to $22 if they continue with “business as usual” and don’t find a partner. This is 45% likely, he says. He gives a 40% chance that Yahoo pursues a major strategic alternative such as a Google outsourcing, partnership with AOL or MySpace, stock buyback, sale of Asian assets, etc. A Google outsourcing deal brings $1 billion of more in increased cash flow and adds $6 to Yahoo’s stock, he says.
He’s also saying that an eventual combination with Microsoft is still 15% likely. Microsoft may come back to the table, he says, because “there is No Plan B to succeed on the Internet” (I agree). The weighted average is a $26 stock price. Yahoo is currently (noon PST) trading at $24, down about 15% from Friday. It started the day down 20%.
Mahaney’s full chart is below. I’ve also added his top level analysis of a Google outsourcing deal. Search revenue would grow from $1.6 billion to $2.7 billion (moving from 4 cents a click to 7 cents).
Compare Mahaney’s $26 price guess to the Fred Wilson’s informal crowdsourcing approach, which came in at $22. If the markets stay steady, the real price is nearly exactly the mid point between the two.
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Yahoo’s Yang Speaks, Notes That Glass Remains Half Full
The most notable news this Sunday is what didn’t happen - no Yahoo/Google search deal was announced, meaning there is literally nothing standing between Yahoo and the unholy beating it is going to take when the markets open tomorrow morning.
Yahoo CEO did write a blog post on Yodel Anecdotal today that added to yesterday’s brief response to the Microsoft bid withdrawal. Upbeat in tone, it points to the many product announcements that Yahoo has made recently (Buzz, OneSearch 2.0, voice-activated mobile search, video on Flickr, Shine), product previews (AMP!, SearchMonkey) and the acquisition of Maven Networks.
He also suggested that Microsoft’s version of the negotiation timeline was “nonsense and misinformation,” countering that the Yahoo board “took its mission very seriously.” At this point, that’s really up for the lawyers to work out, as the shareholder lawsuits start to roll in.
Yang says that moving forward they’ll focus their energy on “growing our industry leadership and maximizing value for stockholders.” In many people’s opinion (including mine), they would have maximized shareholder value by simply accepting Microsoft’s offer back in February. Before all the costly severance arrangements, layoffs and high profile employee defections.
One thing Yang gets unambiguously right in his post is when he says “we know the spotlight will probably stay on us for a while.” that’s a certainty. All eyes are on Yahoo. If they stay independent, I certainly hope they nail execution and show that they made the right decision for their users and shareholders by declining Microsoft’s offer.
We’ll check back in tomorrow morning as the markets open to see whether the stockholders agree that Yahoo has “emerged a stronger, more focused company with an even greater sense of purpose” after this ordeal, or if they’re left a skeleton of their former selves, with shell shocked employees who don’t know up from down.
Yahoo’s glass may indeed remain half full. But the markets were expecting to see a Yahoo glass overflowing with Microsoft dollars tomorrow morning. A half full glass gets a half full stock price.
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Yahoo Prepares For A Black Monday
As everyone digests yesterday’s extraordinary news around Microsoft’s withdrawal of their Yahoo bid, the big rumor around the valley is the Yahoo is frantically trying to negotiate a deal with Google to outsource search advertising and get it announced before the markets open tomorrow.
Yahoo-Google?
It’s not clear that Google still wants to do such a deal now that the immediate threat of a Microsoft/Yahoo deal is gone. The reason - the almost certain regulatory review (even Congress has taken note) And even if they are still willing to talk, Yahoo has lost the lions share of negotiating leverage. That means a lower revenue share, a shorter term deal, etc.
If Yahoo and Google reach a deal, it’s possible they could at least argue for a case that Yahoo’s value should increase to $37/share (but the markets won’t buy it): based on analyst projections, Yahoo could increase cash flow by $1 billion or more by outsourcing, and increase revenue per thousand search queries to as high as $90 from the current $40 or so. Combine that with massive headcount reductions (Yahoo won’t need their search marketing employees any more, possibly 2,000 employees), and Yahoo could have short term bottom line gains of well $1.2 billion or more/year.
With a trailing P/E of almost 40, That extra cash could, theoretically, boost their market cap by more than enough to reach their goal of $37/share.
That’s the theory anyway.
In reality, even if a deal is announced, the markets will factor in the risk of regulatory veto, as well as the long term negative effects of giving away the search marketing business to their biggest competitor.
And Yahoo’s true market value today remains in the $19/share range, or about $26 billion, now that the Microsoft crutch has ben removed. A good chunk of that - $10 billion or so - is actually from their Alibaba and Yahoo Japan holdings.
So Yahoo and Google may do a deal or they may not - but either way it isn’t going to help Yahoo’s share price as much as they hope.
Angry Shareholders
We also expect Yahoo to announce their delayed annual shareholder meeting early this week, and actually hold it as early as late June. When it’s announced, shareholders have ten days to propose an alternate slate of board members. Microsoft says they are sitting on the sidelines, but a group of angry stockholders may now emboldened enough to make their own effort to change company management.
To say that shareholders are angry is an understatement. They made it clear to anyone who’d talk to them that they would be more than happy with Microsoft’s $33/share final offer. Legg Mason, Capital Research, T. Rowe Price and others all reportedly strongly wanted the Microsoft deal to happen.
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