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.
We will only make products that we’re proud of, that are the best in the world, and if we can do that and the price is lower then we’re great with that.
iPhone international
Apple discloses iPhone unit sales, and both AT&T and Verizon Wireless disclose iPhone activations on their networks. So it’s pretty elementary to work out that since AT&T and VZW between them sold 5.9m iPhones in the June quarter, 71% of iPhone unit sales in the June quarter were outside the USA (14.4m units out of 20.3m in total). Indeed, this is where most of the growth is coming from, in large part simply by expanding distribution (most obviously into China).
That means that the iPhone 5 is not going to have features that are only relevant in the USA, especially if they’re expensive and have effects on size or battery life. So, no LTE.
It also points strongly against too-clever-by-half things like soft SIMs, since these would only work on networks with which Apple has spent time and effort doing a special deal and most mobile operators hate the idea anyway. Soft SIM equals less distribution, and Apple is all about more distribution.
64m iPod Touches
In June 2011 Apple revealed it has sold a cumulative 222m iOS devices and ‘more than 33m’ in the quarter. In September 2010 it gave a figure of 125m. Since Apple discloses iPhone and iPad unit sales, we can therefore calculate it has sold around 64m iPod Touches since it launched in 2007, around 20m in the last 9 months and slightly less than 4m in the June quarter.
Quite how much revenue this equals is a little hazy, since the entry price of the Touch has varied between $229 and $300 and of course we don’t know the mix of more expensive models. But minimum iPod Touch revenue in the last 9 months was $4.7bn, and total revenue since launch is probably between $15bn and $17.5bn.
Just for (slightly unfair) comparison, Nintendo has sold about 148m DSs since 2005, and 87m Wiis since 2007. In the last 9 months (the period in which Apple sold 20.5m Touches), it sold 17m DSs and 12m Wiis. So the Touch is now comfortably outselling Nintendo.
The iPod Touch has little meaningful competition. There are several Android based devices with notionally similar features, but they often lack an integrated music store and Android in general has a far weaker games selection than iOS, so I would expect these devices to have limited appeal for the time being.
If nothing else, that is not a positive sign for the prospects of non-Apple tablets.
Meanwhile, the Touch gives Apple a unique lever for the broader iOS platform. It is a gateway to the iOS platform for users who are not addressable by the iPhone, whether because they are children, prefer another device such as a Blackberry or prefer a mobile network that doesn’t offer the iPhone (though this latter category is fast shrinking). It also makes a cheaper test device available for developers.
However, Apple consistently states that the iPod Touch is 50% of iPod sales, and these are in sustained decline as the space is cannibalised by phones – not least iPhones.
Of course, Airplay mirroring of apps will be launched next month. If Apple extends that to the Touch (almost certain) and licenses Airplay to TV makers, then the Touch will get a whole new lease of life disrupting the console business.
This is an extract from a longer report produced for Enders Analysis: “The Mobile Platform Wars”
Apple kills off the optical disk, 13 years after the original iMac killed off the floppy.
Source: apple.com
Overtaking speeds
This chart shows iOS and Android cumulative device sales. The installed base is slightly different (Apple only just passed 200m) but the installed base figure for Android is almost exactly the same, since almost all Android devices have been sold so recently that few will have been abandoned.
Google numbers were out yesterday - Apple numbers for the June quarter are out on Tuesday. Amusingly, Google doesn’t disclose hard tablet numbers (since they’re tiny), while Apple is now talking about iOS users (which include 80m or so iPod Touches) to distract attention from the fact that the iPhone has now almost certainly been overtaken by Android. This is driven mainly by the fact that Android phones sell for half to a third the price of the iPhone.
Of course, any new pricing structure for the iPhone (i.e. competing at the $200 price point) would change everything. Let’s see.
Apple, Android and tablet market share
This afternoon I published a report for Enders Analysis on table market share., The report itself is for subscribers, but the summary bullets give a flavour of my thinking:
- Apple has now sold 25m iPads since launch, worth $15bn, and will probably sell 40-50m in 2011. Competing tablets have sold perhaps 2-3m in total so far and will not be competitive with the iPad until 2012 at the earliest
- Android phones are now far outselling iPhones, but benefit from a narrower user experience gap and from selling at a half of the price. Android tablets must compete with the iPad at the same or higher price points, a far harder task. We believe it is possible the iPad will retain a 50%+ share
- Media companies have veered from euphoria to outrage when contemplating the iPad and its autocratic creator. Android offers them little chance of either in the near future
Opening every single app on a new iMac with SSD. Staggeringly fast. This, of course, is what is driving the iPad - computers are now so fast that you really can’t tell the difference anymore. Innovation shifts to changing the form factor instead of increasing the speed.
(Video via Mac Rumors)
Operators’ reaction to iMessage
(Cross-posted from Quora for reference)
iMessage is a new app from Apple for iOS - it layers an IP messaging system similar to BBM into the SMS client. Where both sender and receiver have iOS 5, it will use Apple’s system- otherwise it reverts to SMS, transparent to the user. How will operators react to this?
Well, first of all, iMessage is an irritating acceleration of the inevitable. BBM already does this, which has driven very strong adoption amongst teenaged girls in Europe, and others such as WhatsApp are doing it as well.
Second, outside the USA no-one pays to receive SMS and most contract customers don’t pay to send them either - they’re just rolled into a monthly subscription. I pay Vodafone UK £20/month for a plan that includes 3000 SMS messages. For customers like me iMessage is utterly irrelevant. The same applies to prepay users - it’s all about how clever or stupid the operator is with pricing. Vodafone UK gives data to prepay users as part of a bundle of SMS and data - £10 for 300 SMS and 500 meg of data. Again, that customer is unaffected by iMessage.
More broadly, this is a tariff rebalancing problem, just like the evolution of long-distance pricing a decade ago. It used to be that long-distance calls were expensive and local calls and line rental were cheap. Today all calls are much cheaper but line rental has gone up to match. This isn’t unreasonable - the actual cost base of the operators hasn’t changed. For historical reasons US operators have tended to break SMS out of the core bundle - now they’ll have to put it back in.
More concisely: this is a pricing arbitrage hack, not a change in the economics of the network, and so, after a brief period, and price advantage will be squeezed out of existence by adjusted tariffs.
Finally, the argument on the ‘price per bit’ of SMS. I want to be polite, but this is asinine. When I go to a BMW dealer to buy a new BMW, I don’t argue that the price of steel is $100/ton, and a 7-Series uses 2 tons of steel, and therefore the price of the car should be $200 or $250. Nor do I claim that the price of an Adsense spot should be calculated based on Google’s fully adjusted cost of electricity and server capex to serve that ad. Nor should your cable bill be a function of Comcast’s local power bill. Access to services provided using a hugely expensive global infrastructure system are not calculated on the basis of the marginal operating cost.
