"The latest market share data shows that Facebook has captured 20% of the smartphone market, other companies hold another 20%, and we currently hold 60%. We're still in a strong position."
With the new year, Micfo held its annual shareholder meeting as usual.
As a publicly listed company, Micfo is required to report its financial performance regularly — it's a basic responsibility to its investors.
Although Myron Case has full control of the company, he still has to consider the feelings of the big money backers.
"Myron, this isn't a good sign. At the beginning of last year, we held nearly 70% of the market share. But by the end of the year, we lost 10% of that. Why are Facebook's products so popular? Have you and your team done a proper analysis?"
Myron Case replied, "No need to worry. This is only a temporary situation. The smartphone market is still rapidly expanding, and fluctuations in market share are inevitable in such a phase. We're focusing on general users, while Facebook is targeting more core users. Our approaches differ, but once the market stabilizes, we'll retain our advantage."
One of Myron's deputies added, "Gentlemen, Mr. Case is right. Just look at our financial report — our annual revenue grew by over 70% last year. Facebook hasn't released full figures yet, but based on their last quarterly report, their revenue growth in smartphones is actually lower than ours."
"Is that so?"
The shareholder looked more closely at the report and saw that the revenue growth was indeed strong, which put him slightly at ease.
But he quickly added, "Still, Facebook poses a real threat. Why have they been growing so fast? You owe us some explanation."
Myron's deputy replied, "Actually, Facebook isn't working alone. Behind them is another strong company collaborating with them — a Japanese company called Gamestar Electronic Entertainment. Perhaps you've heard of them?"
"Gamestar Electronic Entertainment? The game company? Of course I know them. They're a big name on Wall Street these days. I've even kept some money aside just in case I can invest in them. But the problem is they're extremely protective. So far, no one's been able to buy into them."
When it comes to revenue ratios, Gamestar is practically a monster.
Though the company isn't publicly listed and their detailed financials aren't visible, Wall Street has its ways. Precise numbers may be hidden, but rough figures are still trackable.
For example, in a report from the Nikkei on external investment gains, there was a bolded line stating that one investor made $500 million from entertainment sector revenue that year.
Half of that came from an early investment in Gamestar Electronic Entertainment.
Over $100 million in profit — all from a small shareholding.
And yet Gamestar has no interest in accepting new investments.
They're rich. They don't need outside money.
Seeing the envious look on the shareholder's face, Myron Case felt a twinge of irritation.
The guy was basically saying investing in Micfo was a second-choice move.
If Gamestar ever opened up, this whole group would probably throw money at them without hesitation.
It was infuriating — Myron had to jump through hoops to squeeze funding from these people, while Gamestar didn't even have to lift a finger.
"What's so special about video games?" Myron muttered internally. "Without solid hardware, great games wouldn't even exist."
Myron's deputy continued, "Gamestar's involvement is why Facebook has made major strides in both OS functionality and software diversity. That's where we're a bit weak. We're a hardware-focused company. We rely on third parties for software, and we don't have our own development teams for games or apps."
The shareholder said, "But video games really are a money-making industry. Just look at Gamestar — a single game can sell a million copies and rake in tens of millions in revenue. And some titles hit ten million. That's hundreds of millions of dollars. How long would it take you to earn that with phone sales?"
"It won't take long," Myron shot back almost instantly.
"Believe me, the potential of smartphones is massive. Video games aren't the only money-makers. Right now, the market is still expanding. But once it matures, our profit will be in the hundreds of millions — maybe even billions."
Myron still held a lot of sway in the company. And he did have a good track record — the smart device line had maintained growth under his leadership.
The shareholders, after some discussion, didn't press further.
As long as Myron could keep the company profitable, they were willing to let him continue.
But the moment things changed, they'd be the first ones to bail.
After the meeting, Myron was feeling seriously frustrated.
Half the session had been spent talking about Gamestar Electronic Entertainment and video games.
It was clear the shareholders believed gaming had enormous future potential.
That stung.
But whether he liked it or not, Gamestar's reputation and revenue were real.
They had the goods to back it up.
Even Myron had been forced to start building a game development team from scratch.
Watching Facebook make mountains of cash from something as simple as Candy Crush made him green with envy.
The problem was, his team just wasn't good enough.
Why couldn't he find someone at the level of Takayuki?