The Apple TV product is doing actually very well. In last fiscal year that ended in September, we sold a bit above 2.8 million units. And just in the past quarter, the December quarter, we set a new quarterly record for Apple TV at over 1.4 million. But in the scheme of things, if you dollarize this in revenue that — we still classify this as a hobby. However, we continue to add things to it and if you’re using the latest one, I don’t know about you, but I couldn’t live without it. And so I think it’s a fantastic product. And we continue to pull the string to see where it takes us. But other than that, I don’t have any comments.
Airplay is one of those unsung Apple features that makes the lock-in that much more compelling. No reasons this isn’t an open industry standard, except that Apple just did it.
Source: beoplay.com
Android, Nokia and iPhone in the UK, as seen in Google Trends. Local charts are more informative for this sort of thing. The long, slow, steady collapse of Nokia is very clear, as is the distance that Android remains behind Apple. It’s also pretty easy to spot new Apple product releases on these charts - and clear that Nokia’s relaunch has not had a comparable impact on public consciousness, at least not yet.
I am slightly suspicious of the drop in Nokia search volume at the beginning of 2011, though - looks like an artefact in the Google system rather than a real-world change.
Source: google.com
Apple and China
How many iPhones is Apple selling in China? There’s a little algebra that gets us some of the way to a decent answer.
Apple said that Q4 (i.e. the September quarter) revenue from China was $4.5bn, and reported total Apac (ex Japan) revenue of $6.5bn. So, China was 15.9% of total quarterly revenue and about 70% of the Apac segment.
Apac Mac units were reported as 14.9% of total Mac sales. If the average selling price for Macs applied in Apac, that would mean Apac Mac revenue was $940m (and probably less since one would expect a lower ASP) - 14.3% of total Apac revenue.
If we apply that proportion to China’s $4.5bn, we get to non-Mac China revenue of $3.8bn.
So what is that $3.8bn? It isn’t the iPod: Apple iPod revenue in total was only $1.1bn, so China iPod sales can’t be more than a couple of hundred million at most. It must be iPhone and iPad.
Apple’s ASP for both iPad and iPhone hovers between $600 and $650. If we assume $600, then $3.8bn in the September quarter equals 6.4m units. If the 3GS is having an impact (with a $400 ASP) it could be rather more.
For comparison, Apple sold a total of 28m iPhones and iPads in the September quarter, which means China is about 20-25% of volume for these two products. And it is entirely possible that if iPad sales are a smaller part of the mix, Apple could have sold more iPhones in China in that quarter than the 4.7m iPhones it sold in the US.
These are not ideal figures: there’s no way to get at the mix between iPhone and iPad, and of course the September quarter was not a normal one for iPhone sales (people stopped buying iPhones in the USA but not in China). Interesting, though.
iPhone, App Store and Google mobile revenue
Apple revenue from selling 4m of the iPhone 4S in 3 days: about $2.6bn (ASP is about $650).
Annual run rate gross revenue on the App Store: about $2.8bn
Google’s annual run rate mobile revenue: $2.5bn
Unexceptional video. Except that it’s shot on an iPhone 4S.
As ever, Nokia phones could probably have done this a few years ago, but (like everything else they invented), no-one never used it.
iPhone 3GS algebra
How many of the iPhone 3GS did Apple sell at discounted prices in parallel to the iPhone 4? In other words, how pressing is the need for a genuinely new cheaper model - an iPhone Nano, so to speak?
Well, the fact that the iPhone ASP is $650 should give us a hint, but we can go deeper. During the 4S launch event last week, Tim Cook said that ‘over half’ of iPhones sold have been the iPhone 4.
The iPhone 4 went on sale in the last week of the June 2010 quarter. Sales from the September 2010 quarter to the June 2011 quarter were 69.33m. If we assume that 1m of the 8.4m iPhone sales in the June 2010 quarter were after the iPhone 4 launched, that gets us to total iPhone sales after the iPhone 4 launched of 70.33m.
70.33m is 54.5% of 128.96m total iPhone sales.
In other words, 54.5% of iPhone sales have been made since the iPhone 4 launched and the 3GS price cut began, ‘over half’ of iPhone sales were the iPhone 4 - and therefore 3GS cut-price sales were somewhere between 0% and 4.5% of the total.
4.5% of the total would be 5.85m units, or 8% of iPhone unit sales since the 4 went on sale. In the same period, somewhere around 110m Android phones were sold at an average of perhaps $350.
Of course, Tim Cook might have been using the (not yet released) September sales figures. We’ll see. But either way, selling old models at a lower price seems to be an incomplete approach to the issue.
iPhone release cycles
Note: I produced a proper piece of analysis of the iPhone 4S (and lots of other things) for Enders Analysis - contact me for details
A little uninformed observation: Apple isn’t running one release cycle around the iPhone - they’re having to manage five.
First, there is the semiconductor side of things. I don’t play close attention to this anymore: Dean Bubley has some interesting thoughts on the process of migration from third party chipsets to the A4 and A5, the incorporation of the Qualcomm combined CDMA/GSM platform and future plans for LTE. But I think the interesting thing is that a lot of this is driven by timetables and roadmaps that don’t necessarily map well to annual phone launches. Most obviously, LTE chipsets are clearly not mature enough to go into a phone with decent battery life (setting aside the fact that there are almost no networks to connect to outside the USA and 70% of iPhone sales are outside the USA). Additional funnies like Soft SIMs (regardless of how much credence you put on that rumour) only add to the complexity of this.
Second, there is the physical design of the phone. This is always tough, as you get smaller and more worried about battery life, but with the iPhone 4 Apple set a new bar for complex and technically difficult-to-manufacture packaging that stands in obvious contrast to the black plastic that comes from China and Korea. Only Nokia has a similar interest in materials. And both the iPhone 4 and N9 make decisions about ‘the pretty box around the chips’ that affect the underlying platform - by putting the antenna around the outside of the phone Apple gained more space for, amongst other things, battery, and made the whole thing physically stronger (and then made the rest of it in glass to add back breakability in time for the new handset ;). Doing this takes much more time than designing a new piece of injection-moulded plastic - the white version of the iPhone 4 was nine months late for heaven’s sake.
Third, of course, there’s iOS. Apple isn’t going to ship a new phone two months before the release of a major new version of the OS - apart from anything else the device replacement cycle is an important tool for keeping the base up to date. iOS 5 wasn’t ready until now (I’ve been using the betas). That ALONE might have been reason to delay the new phone, whatever it looked like.
The thing is, each of these has its own rhythm and each reaches points where there’s something to ship at different times. Apple has to try to synchronise these so that two or preferably three of them hit the ‘we can ship something’ point at roughly the same time.
Meanwhile, you have to think about upgrade cycles. Almost all iPhone users are on 12m contracts and a high proportion are on 18m or 24m contracts. In other words, people can upgrade their phone every two years, but Apple releases a new phone every year. That means that the people who bought a 4 had a 3 but not a 3GS, the people who will buy a 4S will have a 3GS but not a 4 - and down the road, the people who have a 4 now will only be in the market for a new phone when the 5 is released. (Horace Dediu puts this very elegantly)
(Of course, all of these issues apply to everyone, but when you’re Samsung and you’re spraying two dozen phones into the market each year they manifest themselves in different ways. If you’re only doing one phone they get… amplified.)
In other words, Apple is actually running two overlapping phone release schedules, both of which have to synchronise with the chipsets, the hardware design and the OS, for a total of FIVE development cycles. Nice problem to have to manage.
Siri: great concepts versus shipping product
There’s a big difference between making a great concept, free from the constraints of what’s actually possible given technology, economics and industry structure, and shipping a product that’s stepped through a door from the future. Compare Microsoft Office with Apple’s Siri.
