The Four Horsemen of the Mobility Revolution

(Sep 27 2011) Mobile Internet , Smartphones

1. By Carl Howe, director of research, Yankee Group

   During the dot-com boom of the late 1990s, four companies--Cisco, EMC, Oracle and Sun--became benchmarks of the new Internet economy because they sold the infrastructure for that boom. Their market capitalizations soared because, unlike dot-com companies, these firms had momentum, revenue and profits. For the Internet gold rush, these were the companies selling the picks and axes to the miners.

   Today, a new revolution is brewing, driven by mobility and customer experience. In the process, Yankee Group sees four different companies--Amazon, Apple, Facebook and Google--now occupying the four horsemen positions in the mobility revolution currently sweeping the globe. And this time, these companies aren't just selling tools; they are mining the gold of mobility by:

   • Creating some of the most popular Internet and mobile content. For example, Facebook and Google are easily the two most popular destinations on the Internet at large and with mobile users, and both Amazon and Apple can boast being in Google's top 25 desktop destinations.
   • Boasting some of the highest consumer brand ratings of young consumers. According to Yankee Group's 2011 US Consumer Survey, July, respondents aged 35 and younger rank Google and Apple No. 1 and 2 in brand satisfaction; while Amazon and Facebook score somewhat lower, they still rank No. 6 and 7.
   • Representing more than two-thirds of a trillion dollars in market capitalization. As of Aug. 29, 2011, these four companies had combined market capitalizations of U.S.$697 billion. With combined annual revenue totaling U.S.$130 billion in 2010, these four companies are each economic forces to be reckoned with. 

   Each of the four horsemen--Amazon, Apple, Facebook and Google--comes to the market with a different heritage: Amazon from retail, Apple from hardware, Facebook from social and Google from search. As a result, they all have staked out different locations in the mobility landscape. We categorize these four companies according to two strategic business questions: How committed is the business to mobility, and where does the revenue come from? We then include market capitalization and revenue to gain more insight. We find:

   • Transactions drive more revenue than advertising. While the advertising models employed by Google and Facebook generate billions of dollars, they are limited by the relatively weak connection between advertising dollars spent and consumer eyeballs delivered. 
   • Mobility companies look bigger than Web-centric businesses. The two mobility-centric companies, Google and Apple, comprise more than U.S.$530 billion dollars in market capitalization, whereas Amazon and Facebook only represent about U.S.$160 billion. 

   All four horsemen today are "frenemies"; that is, they work together in some parts of their businesses but compete in others. However, as all these companies become bigger and each dominates more of the U.S.$2 trillion global mobility ecosystem, we should expect each to increasingly attempt to invade each other's domains. Today, examples include:

   • Apple launching iAd to grab ad revenue currently dominated by Google and Facebook. 
   • Google launching Google+ to steal social users from Facebook. 
   • Apple and Amazon attacking each other's media businesses. Amazon launched its MP3 music and digital movie stores to give customers an alternative to Apple's iTunes, while Apple launched its iBookstore to attract e-book readers away from Amazon's Kindle store. 
   • Amazon and Facebook preparing mobile devices.

   While all four companies are threatening to move into each other's territories in the future, today, this simple landscape of the four horsemen provides a strategic outline for all firms looking to become major players in the mobility revolution. 

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