The Standard for Professional Investors and Financial Institutions
If you are new to investing, asset management, or finance, you may have heard about the Bloomberg terminal, or Bloomberg machine, as it is often known. What is a Bloomberg terminal? And why are so many traders, investors, journalists, and specialists addicted to them?
When someone talks about "their" Bloomberg, it is not so much a piece of computer hardware as it is a subscription that has multiple levels of add-ons. A bare minimum installation subscription costs around $1,750 per month, or $21,000 per year. When the Bloomberg subscription is combined with proprietary matching hardware, certain convenience and security features are available. For example, you can unlock the machine with a built-in biometric device that reads your thumbprint.
Why Use a Bloomberg Machine?
Using a Bloomberg terminal, investors can access, crunch, analyze, and store information on their favorite companies going back generations. They can do this while teleconferencing with a colleague and monitoring the relationship between the United States dollar and the Japanese Yen. The user can pull up the balance sheet and income statement of a firm that was acquired in a merger, review a dividend record, or screen for investments that fit specific criteria or financial ratios. There are other benefits, too. Stories released by Bloomberg news are often available on the Bloomberg terminal before being published to the general public, allowing those with a subscription the chance to read and act on the information first.
Many people who work for mutual funds, hedge funds, private partnerships, insurance companies, bank trust departments, and other financial institutions consider a Bloomberg terminal to be essential. It's a tool that is every bit as necessary to conducting business in modern times as typewriters and telephones were in the 1960s.
Billionaire Michael Bloomberg, former mayor of New York City, controls the company that offers the Bloomberg Professional Service. It's the source of his substantial wealth.
Bloomberg Terminal Competitors
In recent years, multiple upstart competitors have attempted to take Bloomberg's market share by offering similar services at substantially lower prices. These Bloomberg competitors face a significant challenge in the so-called network effect. Since Bloomberg terminals were adopted beginning in the 1980s, almost everyone came to use one. Now, if someone wanted to give up their machine and go to a rival, they wouldn't be able to use the Bloomberg user network to contact someone. It's a bit like someone who shuts down their Facebook account and doesn't have any other contact information for their Facebook friends.
Here are a few of Bloomberg's competitors:
- Thomas Reuters: Easily the biggest competitor to the Bloomberg terminal, Thompson Reuters is considerably cheaper and offers a wide range of services and add-ons. Some might argue that its financial analysis platform, Eikon, is in some ways more advanced.
- Symphony: Backed by Goldman Sachs and other major investment banks in late 2015, the so-called "Bloomberg killer" allows businesses with 50 or more employees to sign up for $15 per employee, per month.
- Money.net: Established by a former Bloomberg executive, this service looks very similar to Bloomberg, offers a free 14-day trial, and costs only $95 per month for the base package. Furthermore, it runs on any device—Windows, Mac, Apple iOS, and Android.
- Markit: A niche Bloomberg competitor that only strives to do certain things, this firm offers a range of services from front-end portfolio modeling to third-party risk assessment.
- FactSet: Another niche Bloomberg competitor, FactSet specializes in financial information on businesses and the market as a whole.