Week in a Nutshell #15


Project Fi: Google’s Wireless Service: What It Means for Consumers, Google and the Carriers

Google's Wireless Service, Project Fi was launched as an invite only program last week. Project Fi is a wireless network based on the use of Wi-Fi and LTE networks of Sprint and T-Mobile. Project Fi will continuously look for the highest quality of data connection available as you move around and it will automatically switch between Wi-Fi and LTE networks to provide a better and seamless experience. Project Fi customers will pay $20 per month for unlimited calling and texting and an addition of $10 for each gigabyte of data they use.

I believe there are a couple of differentiators of Project Fi compared to existing carriers such as AT&T and Verizon.

  1. Most of the existing carriers ask you to choose a plan and pay the full amount no matter what. For example, if you use only half of your data plan, you would still need to pay the full price of your monthly plan fee. Project Fi aims to change this. Basically, you will only pay what you have actually used. For example, if you purchase 2GB of data for $20 and you used only 1GB then Project Fi will deposit $10 back to your account at the end of the month.
  2. Google Hangouts is the backbone of Project Fi. Thus, Project Fi users can attach their mobile phone number to their Google Hangouts accounts and start receiving calls and text messages over their tablets and laptops. This feature provides users a better communication experience in a multi-screen world. This would not be possible if you are using other existing carriers. 
  3. There are no contracts that would tie you with the same carrier for years.

Project Fi only supports Nexus 6 devices for now because only Nexus 6 supports the hardware and software capabilities required for this service to work. However, I assume newer smartphones that will be launched in the near future will support this functionality.

I believe Project Fi will challenge the norms with the 'pay only what you use' approach and bring innovation to a very saturated wireless network market. Please have a look Project Fi's website if you would like to get more details.


Q1'2015 Earnings:

Facebook Has Mixed Q1 Earnings With Miss On $3.54B Revenue, Beat On $0.42 EPS, User Growth Up To Hit 1.44B

Facebook has been beating the earnings estimates for the last 10 straights quarters but it failed to do so in this quarter. Facebook stated the foreign exchange fluctuations, especially the changes around Euro and USD parity.

Q1'2015 Revenue: $3.54 billion (a bit short of the estimated $3.56 billion)
Q1'2015 Profit: $1.13 billion

Advertising revenue reached to $3.32 billion in Q1'2015 and the contribution of mobile advertising jumped to 73% from 69% last quarter.

Facebook also shared user numbers. As of the end of Q1'2015;

  • 1.44 billion monthly users (+3.6% vs. Q4'2014)
  • 1.25 billion mobile monthly users (+5% vs. Q4'2014)
  • 936 million daily active users (+5% vs. Q4'2014)
  • 798 million daily mobile users (+7.1% vs. Q4'2014)
  • 581 million mobile only users (+10% vs. Q4'2014).

Growth rate in the mobile only user space is impressive and it is a proof of Facebook's continuous growth in the developing countries where people are mainly (if not only) using their smartphones to connect to the internet. I believe Facebook is following the right strategy with www.internet.org initiative to bring internet to developing countries and it seems like the initiative is paying off really well.

 

Google Caps Costs as Growth Slows

Just like Facebook, Google was also affected by the exchange fluctuations as the USD strengthen against Euro but still managed to deliver a strong performance in this quarter.

Q1'2015 Revenue: $17.3 billion (+12% vs. $15.4 billion in Q1'2014)

Q1'2015 Profit: $3.6 billion(+3.9% vs. $3.5 billion in Q1'2014)

 

Microsoft Beats In Its FQ3 With Revenue Of $21.7B, EPS Of $0.61

Microsoft is using a different approach for their fiscal year definitions and this is the reason why the headline says fiscal quarter 3. But, I'll refer to it as Q1'2015 to keep it consistent across the blog post.

Q1'2015 Revenue: $21.7 billion

Q1'2015 Profit: $6.6 billion

 

Amazon breaks out cloud results for first time on Q1 earnings report

It was the first time for Amazon to share Amazon Web Services (AWS) specific financials in an earnings report and it showed that how strong Amazon is in the cloud computing business.

Q1'2015 Revenue: $22.72 billion

Q1'2015 AWS-specific Revenue: $1.5 billion

Q1'2015 Loss: $57 million 

Q1'2015 AWS-specific Profit: $265 million

Amazon CEO and founder Jeff Bezos stated that AWS is a $5 billion business based on the 2014 financial results. Let's compare it with Microsoft's commercial cloud financials to have a better understanding of how big AWS is. Microsoft reported its annual commercial cloud run rate as $6.3 billion. It will not be too long that AWS overtakes Microsoft in terms of annual run-rates.


We came to the end of the fifteenth episode of ‘Week in a Nutshell’ series. If you enjoyed this post, I'd be happy if you could comment, share, like and/or recommend it. 

Thanks,
Birkan