Local’s Sleeping Giants; A Tale of Two Keynotes
We’re at the height of keynote season. Three of the four horsemen of tech held events in the past month, culminating in launch-filled Keynotes. Apple, Amazon and Google, in that order, carted out their wares.
Local was understated at each, but below the surface were huge implications. This further solidified Apple and Amazon as sleeping giants in local. Google is already there, having been on a rampage since 2005.
Apple’s local announcement at WWDC was an OSX feature that lets you launch an iPhone call from your desktop whenever a phone number appears in the browser. This essentially hyperlinks desktop phone numbers the same way smartphones do.
This could have huge ramifications for the pay-per-call market already jumpstarted by the iPhone and mobile search. The physical separation of PC and phone has long been a gating factor in desktop pay-per-call ad models. This creates new locally relevant ad inventory throughout company websites, social presence and local search. It’s reminiscent of what Skype did in 2009, but an easier handoff from the click to the call.
As for Amazon, the Fire Phone is the big story, but few industry watchers have gotten it right. Despite face tracking and other bells, it’s not about the gadgetry or hardware revenue. It’s about growing Amazon’s core revenue stream: eCommerce.
Most moves made by tech giants are to grow and protect the areas where their margins lie. For Apple, it’s hardware (very healthy margins at that). For Google, it’s search. Most everything else is a loss leader to grow those core revenue streams.
On that measure, the Fire furthers Amazon’s platform play. It was previously beholden to other operating systems like iOS, where increasing levels of commerce are happening. Hardware puts Amazon more directly in the hands of users, literally.
It’s the same reason Android exists. Though it creates some direct revenue for Google, it’s nothing compared to gaining a usertouch point — in its case the OS layer — to drive search volume. That’s critical in the app-centric smartphone environment.
For Amazon, the Fire will house an ecosystem of media and shopping — two prevalent and highly lucrative mobile use cases. The media is just to sweeten the bundle. Once there, the goal is to get you to order more. Free 2-day Prime shipping helps. Hence the “Firefly” button on the Fire to scan any item and order it on Amazon. Utilizing the technology it acquired by Flow, this will turn the entire physical world into an amazon catalog. Forget showrooming. This is showrooming on steroids.
So what’s the local angle? This gets Amazon closer to becoming the anti-local (notwithstanding local services). Amazon wants to crack the 7 percent barrier that has confined e-commerce as a share of U.S. retail. The rest is all offline, all local.
So Amazon’s competitors aren’t other eCommerce players (it just buys them), it’s that offline 93 percent. Almost everything it does is towards getting that larger pie piece. That means making eCommerce faster, easier and more immediately gratifying.
The latter has been its biggest issue. For high margin items like apparel and autos, users want to see items in person, and avoid time consuming and costly shipping. Enter massive investments in same day shipping, fulfillment centers, and yes… drones.
That takes care of the speed factor but not so much the “seeing in person” factor. Firefly is one step in that direction — turning the physical world into a showroom. The next step could be something cooler… perhaps an Oculus Rift-style VR acquisition
That’s said partly in crystal ball-style jest, but it would let you immersively peek inside that new car, or check out the black levels on that new LED flat screen. Then all Amazon will have to do is figure out how to strap a 60-inch flat screen to a drone.
Michael Boland is senior analyst and VP of content at BIA/Kelsey. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0, and other outlets.