Bloomberg Is 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 it, why are they everywhere, 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 depending upon your specific needs.
In recent years, a bare minimum installation subscription if you want a Bloomberg terminal of your own probably ran you somewhere around $1,750 per month, or $21,000 per year (in some cases, it might be as high as $25,000 per year before adding bells and whistles). When coupled with the matching hardware, certain convenience and security features are available, such as unlocking the machine with a built-in biometric device that reads your thumbprint.
Using a Bloomberg terminal, investors can access, crunch, analyze, and store information on their favorite companies going back generations while, from the very same screen, teleconferencing with a colleague and monitoring the relationship between the United States dollar and the Japanese Yen. The user can pull up everything from the balance sheet and income statement of a firm that was acquired in a merger years ago; review the dividend record; screen for investments that fit certain 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 potentially act upon, the information first.
Although not a point of universal agreement, many who work for mutual funds, hedge funds, private partnerships, insurance companies, bank trust departments, and other financial institutions consider a Bloomberg terminal an absolute requisite; a tool that is every bit as necessary to conducting business in modern times as typewriters and telephones were in the 1960's.
In some circles, it has been considered a prestige symbol; the sign of someone who is to be taken seriously as it indicates the firm employing them thinks the person important enough to shell out the money required for platform access.
The company that offers the Bloomberg Professional Service, as the subscription is known, is controlled by billionaire Michael Bloomberg, former mayor of New York City. It is 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. A major challenge these Bloomberg competitors face is the so-called network effect. (With Bloomberg terminals receiving early adoption in the 1980's, most everyone came to use one. Now, if someone wanted to give up their machine and go to a rival, he or she wouldn't be able to use the user network to contact a person, much akin to someone who shut down his or her Facebook account not being able to reach an old "friend" through the Google Plus platform.)
Here are a few, but not all, 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 that a rival machine can. 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 tools.
- FactSet - Another niche Bloomberg competitor, FactSet specializes in financial information on businesses and the market as a whole; pure data and analytics that can make for more informed capital allocation decisions.
Whether or not Bloomberg can hang on to the market, it helped singlehandedly create in the face of increased competition is an open-ended question that has not, yet, been answered. Only time will tell.