Shulou(Shulou.com)11/24 Report--

According to the news on the morning of September 29, Beijing time, it is reported that Meta Platforms will spend at least $70 billion on metamosmos. Will this become the most money-burning capital pit in the history of the technology industry?

It's really possible. Although Meta CEO Mark Zuckerberg (Mark Zuckerberg) has repeatedly declared that meta-universe will open a "new chapter" of the Internet, looking back at history, it is not difficult to find that there is a rare precedent for betting on an entirely new technology platform with such a huge investment. According to Zuckerberg, the bet will not be paid off until "the end of the decade"-in other words, the Facebook parent company will have to wait at least another eight years before it is likely to make a profit. This raises the question: is Meta's return sufficient to justify the investment?

The best way to judge is to compare Meta's bets with other technology companies' investments in the new platform. Surprisingly, although Apple and Google have developed groundbreaking new technologies like iPhone and Android before, their investment is much lower than that of Meta. But for Apple and Google, these investments have been hugely successful. The two companies are still investing in new technologies, but most of the investments are added after the product is officially released and the return is clearer.

The closest bets to Meta's meta-universe are driverless cars and ride-hailing. The former attracted giants such as Google's parent company Alphabet and General Motors, while the latter was pioneered by companies such as Uber and Lyft. It is worth noting that the amount of investment in these projects is still smaller than that of Meta's meta-universe investment, and is jointly completed by a number of companies. Their returns are still unclear.

Of course, this comparison is not accurate. None of the companies involved has disclosed overall investment data, but Meta may have disclosed the most of them. To be fair, we should only compare the pre-commercial investment of the product in order to better judge whether Meta's meta-universe project is cost-effective. Although Meta has already started selling virtual reality (VR) headsets, the meta-universe concept is still in its infancy. Zuckerberg believes the technology will create a "digital world" where people can feel the presence of others wherever they are, with potential applications involving social networking, work and sales of digital products.

Since the focus is on the amount of investment before the product launch, ride-hailing cannot be counted, although the industry is expensive by any standard-participants such as Uber are only now slowly starting to turn a profit.

Meta's investment also raises an important question: can an established company create a new market through huge investment? In the past, this new market was usually created by aspiring startups. Margaret O'Mara, a professor of American history at the University of Washington, said: "Meta's approach is novel because they are doing things that were difficult for big companies to do in the past."

Mr Omara says it is often difficult for large companies to create new markets because their huge resources not only fail to help, but can become a stumbling block. "it is because they are rich in resources that they are not flexible enough." "companies will become too disciplined," she said. "

However, Omara also pointed out that "from a long-term point of view affecting the economy, investing a lot of money to explore the future and build exciting new markets is better than share buybacks."

Here's how the tech industry has invested in the most interesting new technologies over the past 15 years. Note, however, that these figures are not adjusted for inflation.

Total potential investment in metasmos by Meta: $70 billion

Result: unknown

The data is based on Zuckerberg's disclosed time frame for investments and returns, as well as recent investments by Meta's Reality Labs division, which develops augmented reality and virtual reality devices for metaspace. Meta disclosed that Reality Labs suffered an operating loss of $21 billion from 2019 to 2021, with an annual loss of $10 billion. In the first half of 2022, Reality Labs lost $5.76 billion. This suggests that the department will lose more this year. In recent months, however, Meta has begun to limit spending by departments.

"We have invested and lost a lot of money in the next three to five years," Zuckerberg said at this year's Meta annual shareholders' meeting. " Assuming that Meta invests at least $10 billion a year in the next five years, investment in hardware and software and other projects will reach $70 billion by 2026. But that's just a conservative figure. In fact, their investment by the early 1930s was easily close to $100 billion.

Meta's investment can also be measured by R & D spending, which accounted for 30% of the company's total revenue in the second quarter, far higher than most tech giants.

Total investment in Apple's iPhone: up to $3.4 billion

Return: $1.6 trillion in iPhone sales, and still growing

According to an interview with the late Apple co-founder Steve Jobs in 2010, Apple first started developing the iPhone in the early 2000s. Apple engineers originally designed a touch screen for a tablet, but according to Jobs' recollection, he thought it was promising to apply the screen to the phone, so he reoriented the project.

In the years before the iPhone, Apple spent a total of $3.4 billion on R & D from 2002 to 2007. These years accounted for up to 8% of apple's total revenue, but as apple's revenue increased, that percentage began to decline. Although this figure also includes projects other than iPhone, it gives us an overview of the scale of investment in iPhone-- it is reported that the first-generation iPhone may invest more than $150 million.

The amount of money Apple invested in subsequent versions after the release of the first iPhone is not counted here. If you take this into account, it must be much more than $3.4 billion. But the iPhone sales since then are enough to feed the follow-up research and development. In fact, apple's R & D spending as a percentage of revenue fell to 2.7% in 2010. It reached 3% in 2016, but now it's twice as much as it was then.

Google Android estimates total investment: up to hundreds of millions of dollars

Return: contribute at least tens of billions of dollars in revenue

Google has also invested relatively little money in Android development. They probably decided to develop this mobile operating system in order to catch up with Apple. At least in Jobs' view, according to the Biography of Jobs, he claimed that Android was a "stolen product."

Google bought Android, a startup, to start the project, but it didn't cost much. Google made 15 acquisitions in 2005, the year it bought Android, with cash and stock expenses totaling $130 million, but they were not listed separately because they were small, according to regulatory filings.

Google's total R & D spending in the year of Android's launch from 2005 to 2008 was $6.7 billion, accounting for 10 to 13 per cent of revenue. But Android may only be a small part of it. When the first Android phone was released, Google's internal Android team was less than 100 people, according to a former manager.

Like Apple, Google continues to invest in Android, adding new features to the system every year, but Android has already contributed a lot of advertising revenue to the company.

In 2016, Oracle estimated Android revenue at $31 billion, contributing $22 billion to Google's profits, mainly through advertising on Android devices and digital transaction commissions from the Google App Store. Oracle released the figures because it sued Android for infringement in using Java software, but how they calculate Android financial data is unknown, which may include revenue from Google's search engine and YouTube advertising services from Android devices.

It is estimated that Google will pay at least $10 billion a year to become the default search engine for Apple's Safari browser. There is no doubt that Google would have paid more to Apple and other mobile operating system developers had it not been for Android.

Estimated total investment in driverless cars: more than $27 billion

Return: negligible revenue

At present, the cost of self-driving seems to be closest to that of meta-universe. But even if these investments are shared among as many as 30 companies, the total is still much lower than that of Meta, a company that invests in meta-universe.

In early 2020, it was reported that 30 companies had invested at least $16 billion in self-driving car projects in the past few years. Since then, that figure has grown to $27 billion. Among the six key companies, Waymo, owned by Google's parent company Alphabet, Cruise owned by General Motors, Zoox, Argo AI, Motional and Apple of Amazon, currently invest at least $4 billion a year. Tesla is not counted because the company requires drivers to still be responsible for handling the car when using the Autopilot semi-autopilot software. )

Alphabet has the largest investment in Waymo. In early 2020, it was reported that Waymo had received a total investment of at least $3.5 billion by the end of 2019. It is now estimated to have reached at least $5.5 billion, but after 13 years of development, the company has little revenue. Meanwhile, Cruise, which is controlled by GM, has spent at least $5.5 billion since it was founded in 2013 and is generating negligible revenue from self-driving services in San Francisco.

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