Mobile and cloud computing become the new engine for profit growth in the technology industry

According to the Wall Street Journal, the latest round of quarterly earnings reports in the high-tech industry show that the two major technology trends of mobile and cloud computing have taken root and brought huge profits to companies that have bet on them.

Last week, Facebook and Google's parent company, Alphabet, reported a year-on-year increase in their second-quarter profit, mainly benefiting from users spending more time on their smartphones, prompting advertisers to invest more in mobile advertising.

At the same time, due to the strong performance of the cloud business, Amazon and Microsoft's latest quarter results exceeded Wall Street expectations. Cloud business refers to hosting data from other companies on a computer server.

BenSchachter, an analyst at market research firm Macquarie Capital, said: "Big companies are getting bigger. People are using the Internet more and more, and smartphones allow people to go online anytime, anywhere. At the same time, the speed of the network is getting faster and faster... Anyway, this information must come from somewhere, and they generally come from cloud computing."

The power of these technologies is intertwined. Mobile devices are increasingly becoming the primary computer for everyday use, driving the need for cloud computing. On a personal computer (PC), data is often stored in the device itself, but the smartphone has less memory and data consumption increases dramatically, requiring more information to be stored on the cloud.

cloud computing

This trend has been going on for more than a decade, but it has accelerated dramatically in recent years. The initial surge in traffic consumption was to download songs—from Apple's iTunes service to the iPod—and has now been replaced by explosive mobile apps, streaming services, and other mobile products that require cloud computing.

Ben Stanton, an analyst at market research firm Canalys, said: "We are seeing mobile devices and cloud infrastructures moving together. Cloud infrastructure is making mobile devices more powerful." Canalys predicts that mobile demand Driven by the second quarter, corporate spending on cloud services increased by 52% year-on-year.

At the same time, the current state of the hardware company can be described as mixed.

Consumers have migrated from PCs to smartphones for years, which has brought huge profits to Apple, which launched its first iPhone nine years ago. However, the sales of smartphones in many countries have stabilized, which makes Apple feel the pressure. The world's most market-worthy company announced last week that after eight consecutive years of growth, its iPhone sales fell for the second consecutive quarter, causing its profits to fall 27% year-on-year.

However, there are still some mobile phone manufacturers that announced second-quarter sales growth, including Samsung Electronics and Huawei. Chip maker Qualcomm announced that its net profit increased 22% year-on-year in the third quarter ended June 27, largely benefiting from strong sales of its smartphone chips in the Chinese market.

In general, the mobile era is entering a phase where profits are increasingly flowing to Internet and software companies that can take advantage of the business opportunities that people are increasingly using.

The two biggest winners in this area are Google and Facebook, which have a large number of mobile users that attract advertisers, which makes them profitable.

Facebook announced that the latest quarter's advertising revenue reached $6.2 billion, 84% of which came from mobile advertising, compared with 11% in 2012; the company's net profit reached a record $2.1 billion, almost the same period last year. three times.

Driven by the growth of mobile business, Google’s revenue in the second quarter also increased by 21% year-on-year. The company said that advertisers are now increasingly willing to advertise on their phones, in part because their mobile platforms have improved, and because high-tech companies such as Google are offering better mobile ad formats. To attract advertisers, Google also shows them the effects of smartphone ads, such as tracking user locations and seeing if users are moving to their stores after watching some of the store’s mobile ads.

Although Apple’s mobile phone sales are shrinking, its smartphone service revenue reached $6 billion in the second quarter, up 19% year-on-year. This revenue includes app sales, Apple Music subscriptions for Apple Music, and Apple Pay for Apple Pay. Apple CEO Timm Cook said he expects the business to grow rapidly in the coming year, and if it is an independent account, it will become a Fortune 100 company.

In the second quarter, Amazon's cloud business revenue reached 2.89 billion US dollars, an increase of 58%. This helped Amazon's second-quarter net profit reach a record $857 million, nearly double the company's highest record in history. Previously, Amazon CEO Jeff Bezos hoped that cloud business revenue would reach $10 billion this year, which is expected to be exceeded at current growth rates.

Microsoft is widely regarded as the second largest cloud service provider after Amazon, and the company is making its cloud business the core of transformation beyond software sales. In the latest quarter, the company's smart cloud division revenue, including Azure cloud services, was $6.71 billion, up 6.6% year-on-year, while personal computing, including Windows software, revenue was $8.9 billion, down 3.7% year-on-year. . If calculated separately, Microsoft Azure cloud computing services revenue has almost doubled year-on-year.

Google is also actively promoting its cloud services, and recently hired Silicon Valley's famous entrepreneur Diane Greene to run the division. In the second quarter, Google’s “other business” revenues, including cloud business, reached US$2.17 billion, a 33% year-on-year increase, surpassing the growth of advertising business in the past few quarters.

Some of the latest rounds of unsatisfactory financial reports highlight the fact that smartphones and cloud computing are replacing PCs and becoming the main growth driver for technology companies. Intel has played a major role in the field of personal computer chips, but failed to gain a foothold in the smart phone field. The company reported a net profit decline of 51% in the second quarter, mainly because the company is reducing its dependence on PCs. This strategic transformation has brought about related restructuring costs.

Other companies closely related to personal computers are rapidly turning to mobile devices. One example is PC peripherals manufacturer Logitech InternaTIonal SA, which recently added a range of devices connected to mobile phones, such as home video cameras and wireless headsets.

Logitech announced better-than-expected first-quarter results as of the end of June, with revenues up 7% year-on-year. Logitech CEO Bracken Darrell said in an interview: "Everything we do is moving around."

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