Mobile Stock Watchlist, March 2015

source: themetapicture.com

A stock broker exercising his MOM options.  source: themetapicture.com

I’ve decided to start a watch list for companies that are using mobile technology to generate revenue.  This is not investment advice so don’t be a wiseass and blame me if you loose money on these stocks.  This list is just here to give you a sense of how much revenue companies are making through mobile phones.

There’s only one stock on the list to start with.  I’ll add more later.

Watchlist

I extract the estimates for mobile app revenue from the company’s annual and quarterly reports.

Starbucks

Symbol: SBUX
Yearly Cash From Operations, 2014: $607 million
Yearly Cash From Mobile Web Apps: unknown/not counted
Yearly Cash From Native Mobile Apps: 14% of sales, estimated, $84 million
First mobile app release date: January 11, 2011
Stock price on release date: $32.26
Stock price 3/15/2015: $98.55

Should Facebook Transfer Money?

Facebook just announced that it is allowing people to send money to each other:

Facebook’s Post

News Article

I’m wondering if this is a good idea or not.  Well, I don’t mean I’m wondering if a company should transfer money between people.  I’m just wondering if it’s a good idea that Facebook does it.

Facebook Messenger’s money transfer feature is another reason to uninstall the Facebook App from your phone.  Here’s why.

The Spy Who Facebooked Me

If a phone is programmed to call people without your knowledge or consent, it’s because somebody added the code to do that.  It’s not an accident the phone was programmed to make phone calls and listen to your room without your knowledge.

Well, that’s what Facebook did.  Facebook can call it a “bug” all it wants, but the fact that the feature was added in the first place is a admission prima-facie by Facebook that the company was intent on turning your phone into a surreptitious listening device.  There’s no other conclusion you can come to.

An obsession with protecting people’s privacy is baked into my DNA somehow.  Working in healthcare helped cement the belief that third party data is inherently risky.  And companies have uncommon responsibility to protect private information.

Facebook trying to use your phone without your knowledge is simply reprehensible.   I feel bad for unsuspecting users and wish that adding secret phone calling as a “feature” would be outlawed, honestly.

My Facebook Interview

Prior to Facebook’s Spy-Phone-Gate, I had interviewed at Facebook.

In preparation of my interview, I wrote a blog article about one of Facebook’s slip-ups in the privacy department, and how I would advocate for changes to prevent that kind of thing from happening.

Long story short, I showed up for an interview.  Got a tour .. the place looked like it did in The Social Network and everything.  I was excited.  And it was obvious that they knew how I felt about privacy, cause I was there after posting my blog on privacy.

The white boarding portion went awesome, and things seemed fine.  The guy interviewing me seemed excited I was there.  Then it came my turn to ask questions.  This one seemed to stun the interviewer:

Q. So, who owns the product specification and standards?  Who signs off on the mobile software before release?

And I got a surprising answer (paraphrased):

A. Nobody “owns” them.  The developers just work on something they think is ‘cool’, and if the group likes it that feature is released.

I took that to mean that the only oversight of mobile applications were the engineers. Executive oversight, in particular, didn’t seem to be that important to Facebook employees.    I took that also to mean there were no independent code audits of Facebook’s mobile applications.

Judging by the phone calling issue that popped up in 2014, I can’t say I was wrong in thinking Facebook had a massive problem.

And it seems to have gotten worse.  Everything Facebook has to say about its money transfer feature lacks any sense of security for financial transactions. That’s bad.

Facebook’s Code Release Oversight …

You can also read about how Facebook describes it’s process, which is only about half the work that should be done to ensure a mobile app even functions, let alone respect user privacy:

How Facebook Ships Code

Facebook’s Ryan McElroy on Code Reviews

More Questions Than Answers

I’m left to wonder:

Who reviewed the code for the payment feature? Well – nobody except the developer apparently and that’s not good enough for a public company to release a public app.

Security standards used? Like ones that credit card processors rely on? None, apparently. That’s bad. Very bad.

Is Facebook security good enough to handle financial transactions through messenger?  The magic eight-ball says no.

No other conclusion can be possible because these questions are ignored in Facebook’s press release.

Perhaps if you’re lucky, when the money transfer feature screws up, the Facebook app will dial Zuckerberg so he can listen in.  Not that you’d know the phone dialed of course.

References

I’ll let you read these links to decide whether or not you want to trust Facebook with your credit card data:

Facebook data exposed.

Facebook app blacklisted.

Some issues with Facebook’s app.

Seven Annoying Attacks Facebook Misses

Facebook Phone-Gate

Will Swatch Corner the Wearables Market?

Bacon Watch.

Bacon Watch (heart monitor not included). Source: walkyou.com

Up until February 5, 2015 it seemed like all companies who could make a wearable computer “put their cards on the wearables table” except Swatch Group.  Swatch had everything needed to do it, but it chose not to until it’s 5 Feb announcement: a watch with an NFC chip that can make payments.

And now Swatch’s competitors may be screwed.

The amount of money spent by other companies on wearables to design, market and produce smart watches runs into the many millions … perhaps billions of dollars.  Apple, Microsoft, Samsung, Motorola, and Nike, etc are at risk: they won’t get their money back if they can’t sell enough  product.

Those companies’  sales plans can be destroyed by a competitor who finds a way to sell a cheaper watch that does enough of what people want.

And that might easily happen with a company like Swatch Group doing the disrupting; this company has already mastered market penetration for all demographics in wearable devices.

While other companies have to ramp up production lines and find shelf space, Swatch’s changes to watches will be incremental to its existing product line.  Much easier and potentially less costly by comparison.

And now finally after all those other companies committed vast treasures bringing smart watches to market, they have to compete a space that is new to them, and old hat to Swatch.  And I think last month’s announcement will do the trick for Swatch.

Are you a watch snob who thinks Swatch Groups’ watches will fail because they’re inferior to Apple’s?  It doesn’t matter.  It’s not about what you value.  It’s about how many watches a company can sell.  Swatch’s success will be Apple’s torment.  Simple.

Swatch is in such a sweet position market wise it’s not even funny.

It’s choosing to limit it’s wearable tech to a few core functions.  The other companies didn’t seem to understand the importance of that.   Swatch Group seems to want watches to remain watches, but add some basic functions that make sense – like payments, NFC and bluetooth.  Nike took a similar approach with its Fuel Band, which is a basic smart watch.  But Nike Fuel Band lacks NFC capability so far, and I’m guessing that Nike wants to focus on licensing Nike Fuel to other companies … as opposed to helping people buy Big Macs.

Swatch Group’s idea is simple.  Turn watches into payment machines.  Literally cash generating devices.  And that’s all.  Simple.  Genius.

People are going to ask themselves,

Should I spend $400 on an Apple watch, or ..

$150 on a Swatch and put $250 on the payment chip so I can buy stuff?

At the end of the day, any wristband device is limited by what it can do.  It doesn’t make sense to add bulky batteries or huge screens.  Add too much functionality, and you risk making the user feel like they’re doing surgery on their wrist just to pull up stock quotes.

The more complicated watches like Apple’s watch and Microsoft’s band pose that risk.

But it’s also helpful to see other technologies that have been successful with the minimalist approach.  Take Disney’s Magic Band for example.

Disney Band

Disney Magic Band. Source: disney.com

Disney Magic Band. Source: disney.com. Image copyright not by me.

Disney’s Magic Band is an incredible device.  It’s a proven incredible device, that lets consumers get what they want … an easy, less involved shopping experience.  It cuts down on waiting in lines and talking to cashiers.

And it helps Disney transfer money from consumer to Disney.  So, it’s a win-win for everyone.

And now with Swatch entering the arena, we could see something like the Disney experience expand throughout the planet.