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I’ve long said that we wanted to focus on investing in app companies that owned and were creating entire platforms within the broader App Revolution — meaning Apple and Google with their de facto and respective iOS and Android operating systems and Facebook with its dominance as a social, messaging and media platform.
Long-time readers of mine remember when I blitzed the world with my proclamations starting back in 2009 when I was anchoring Fox Business’ Happy Hour, explaining that we all needed to get in front of the App Revolution which would become the greatest marketplace in the history of the planet.
Google, Apple and Facebook are all up several hundred percent or more since I made them my largest three personal positions when I started investing and launched TradingWithCody in 2011. And guess what — these three companies completely dominate the charts as the Most Successful Apps of all-time.
The Facebook iPhone and iPad app was the most downloaded app between July 2010 and July 2015 from the Apple AAPL iTunes store. The second, fourth and sixth most downloaded apps, Facebook Messenger, Instagram and WhatsApp, are also owned by Facebook. And by far, Facebook was the most-used app for the same period in the world. Google and Apple also dominated the Top 10 list, with Google-owned YouTube and Google Maps ranking third and eighth, and Apple-owned Find My iPhone and iTunes U taking the seventh and 10th spots. Twitter and Microsoft-owned Skype rounded out the list.
Google and Apple, as a result of having a duopoly on the billion unit smartphone and tablet marketplace own app stores that take 30% of every dollar that gets generated in them. Taking a cut from other people’s transactions is a very high margin business as Visa and Paypal will tell you. But only Google and Apple can take the 30% kind of cut while the others take about 1/10th that much in the transactions they facilitate. And guess what — Apple reported that developers had earned a cumulative $25 billion from app downloads since the launch of the iTunes app store in July 2008.
What’s the next place to find the best App Revolution kind of secularly-exploding growth marketplace? Wearables, of course, which are in some sense just the next phase of the App Revolution. I’ve got some ideas of and investments in who will be some of the biggest winners in the Wearables marketplace in the next five or ten years. Twitter and its Periscope live streaming video app is probably the clearest winner of the Wearables platforms as people will be streaming their lives from miniature wearable cams in their hats and lapels in coming years (Find me on Periscope where I do market video streaming). What operating system will most of those wearables be using? Android? Where will those wearable-recorded streams and other pictures and videos be shared? Facebook and its platforms.
As you guys know, I have been slowly finding some WearableRevolution investments in my own personal portfolio. I’ve also found a few wearables stocks that I can’t get comfortable with because they lack the platform and/or marketplace dominance required in this few-winners-take-all industry.
And there will be other smaller companies that you haven’t heard of yet some of which are already public and others that will be coming public in the burgeoning Wearables Revolution so stay tuned (streamed?) for more.
