Hidden Value Plays in Mobile & Search

John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

As we know mobile apps have become the focus of consumers using mobile devices such as smartphones and tablets. Companies like Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL) have also made it their focus as they battle for control of the Mobile Internet. Now there is a big underdog making its way to the battlefield named Microsoft (NASDAQ: MSFT) which has partnered with small innovative mobile app search companies. Lets take a look at how this tectonic shift from the web to mobile apps is occurring among these and other technology companies opening up entirely new investment opportunities based on the following recommendations.

There's more than one way to chip away at Google's search share, according to Microsoft, whose Bing search engine now powers bothYahoo and Facebook search. "Mobile apps offer another avenue," said Brian MacDonald, the Corporate Vice President in charge of the Bing Application Experiences (AppEx) team. Microsoft believes that applications, rather than the browser, are now the predominant windows to the world's information. "A lot of things you would typically go to a search engine for -- now there's an app for that," quipped MacDonald. "We are still competing with Google in search head-on," MacDonald said. "But there are other methods, like apps, that we also can use."

It would be nice to see companies like Vringo (Amex: VRNG), Mimvi (OTC: MIMV.OB) or AVG Technologies (NYSE: AVG) shake things up in this new area of search and mobile. Meanwhile, other companies stand to benefit quite substantially by addressing the connection between consumers and mobile apps. Steve Newcomb, the CEO and founder of Famo.us, which develops a software framework for building high-performance apps, states, "today there are about 360 million websites and they're all basically not much more than linked documents, but in 10 years everything will be an app."

Brightcove (Nasdaq: BCOV), a leading global provider of cloud content services, is another company addressing this new area of the Mobile Internet. The company offers a family of products used to publish and distribute the worlds professional digital media, including Video Cloud, the market-leading online video platform, App Cloud, a pioneering content app platform, and Zencoder, a leading cloud-based media processing service and HTML5 video player technology provider.

The app economy has so far been a mostly entrepreneurial effort. The majority of app makers don't even break even on their efforts and the winners are few, but large. This has to do with inefficient discovery of apps, uneven quality of those apps and excess supply of certain types of apps. As apps become easier to build, it may become economical to make really useful apps for smaller audiences and improved machine intelligence will make it easier for relevant users to find those apps. The combination of increased demand and improved tools will lead to the professionalization of the app economy, and the promise of reliable incomes for the workers and companies that make apps.

If Brightcove can host a large slice of this multifaceted business of enabling high-performance apps, it will also add to their core VideoCloud hosting business, since video is an increasingly popular feature in apps, especially for businesses. "We believe that every institution on the planet-for profit, not for profit, etc.-will increasingly use the internet for media publishing and content marketing using video and apps. So we believe there is a massive horizontal market for media and app platform services," says Brightcove's CEO Jeremy Allaire. "We also believe that within 2 years, we'll have crossed that tipping point where the majority of internet usage is happening on touch and TV devices, and so specifically we're focused on bringing everyone's most valuable content to these new device and app platforms as quickly as possible.""

Other companies are benefiting from the mobile app revolution like DragonWave, Inc. (Nasdaq: DRWI) which extract value based on providing the bandwidth these mobile apps are consuming: "Over the last few years, mobile applications have grown from 0 to 200 million downloads per month and the average data consumption per user has increased by a factor of five. This surge in traffic has largely been driven by a single device - the smart phone, which incidentally has plenty of room to grow, given the current penetration rate of only 20%. The larger discontinuity however will be the transformation of mobile networks from single purpose utilities to more open platforms supporting a much broader range of devices and applications."

Also mentioned on Mimvi's website is a key initiative with Microsoft that involves working with the Windows Azure cloud platform division to serve Mimvi consumers and partners from the Azure platform: "Mimvi is working closely with the Microsoft Azure cloud services team to maintain an architectural foundation to serve consumers and partners, including Microsoft, with mobile app, search, discovery and recommendation services. In addition to search and recommendations, Mimvi is using Azure to build out a suite of products based on its technology, including MimviLink™, a mobile advertising network that matches relevant mobile apps to content of any format on any platform."

Mimvi's Windows Phone 8 mobile app for finding and discovering apps.

<img src="http://static.cdn-seekingalpha.com/uploads/2012/12/20/727709-1355985860870584-AppHead.png" />

Facebook (NASDAQ: FB) is also trying to do all it can to make it easier for its users to access mobile apps. Apple's API strengthens Facebook ads by letting you install App Store apps without leaving Facebook for iOS 6. Mobile app install ads in Facebook for iOS 6 now allow users to download apps from the App Store by pop-up instead of forcing them to leave Facebook.

As mentioned in a recent technical publication, IBM (NYSE: IBM) has also decided to enter the mobile app ranks in a way similar to Mimvi's approach: "The projections mark the very beginning of what will be a long journey toward cognitive computing. The first step in building machines able to behave, think and interact like humans is to give them the same sensory abilities. That way computers can understand their environment, learn from it and act upon it. For example, if a robot could hear a train's whistle and feel the vibration on the tracks, it might be able to figure out that a locomotive is coming and get out of the way."

According to a conversation I had with Mimvi executives, Microsoft is preparing to jointly market and provide additional PR services to Mimvi. Mimvi founder Kasian Franks stated "What people see today in terms of what Mimvi is offering is just the tip of the iceberg. We intend to communicate to the world and partners that our proprietary algorithms are the secret sauce behind much of what we do. We're happy to be working with Microsoft on extending the application and marketing of these." This is also in harmony with what is stated on Mimvi's website."Mimvi's core technology is based on personalization algorithms, proprietary mobile app search, and recommendations algorithms. Heady stuff. Simply put, no other search technology targets and delivers relevant mobile app, mobile content and mobile products in the same way." Mimvi's website goes on to state the company offers "Business Solutions - new and innovative ways of reaching and retaining customers, downloads and in-app transactions. Mimvi and Microsoft working together may be able to help with unique and powerful marketing efforts, including showcasing products at Microsoft Events, Social Media/PR blitz for app releases, individualized social media campaigns and more."

Along with securing the right kind of heavy-hitter partnerships, Mimvi is a clear leader in terms of being a gateway to the Mobile Internet just as Google became the gateway to the Web Internet. Mobile apps are determining the success and fate for companies of all kinds. Mimvi has established a firm position in the valuable area of Mobile, Search and Discovery. It can clearly be anticipated that the opportunities for revenue and growth for companies like Mimvi, Microsoft, Brightcove, Vringo, IBM, Google and Apple remains phenomenal and are just in the beginning stages of something akin to what websites experienced before they also changed the world we live in.



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