Strategy Analytics: Apple maintains lead in Tablets. Android closes gap
Apple ranks number one in terms of the global tablet shipments for the fourth quarter of 2011. 27 million tablet units were shipped in the fourth quarter of 2011. While the Apple iPad occupied a majority of the global market share with 58 percent, Android tablets recorded a 39 percent global share. Android captured a record 39 percent share of global tablet shipments in Q4 2011, rising from 29 percent a year earlier. Global Android tablet shipments tripled annually to 10.5 million units. iSuppli estimates Amazon Kindle fire to be the second biggest tablet maker with 3.9 million units which establishes it as 14.55% of the global tablet shipments.
Demand for slates has increased by 150 percent all over the world as compared to the figures that were recorded in the fourth quarter of 2010. 15.4 million iPads were retailed in Q4 2011. Even while there are many companies manufacturing tablets running on the Android OS, Apple has shown that its iPad, which has somewhat been the inspiration behind the whole tablet revolution, still maintains the top position.
Another interesting finding that emerged from this Strategy Analytics study is that the amount of tablets shipped globally in 2011 was 66.9 million which is a 260 percent leap from the 18.6 million figure registered in 2010.
Apple’s super sweet success in Q4,2011
Apple is predicted to become the first $trillion global company in 2016 and going by the momentum they seem to gather, it does seem very possible unless Apple becomes a victim of its own success. Apple sold 37.04 million iPhones, its flagship product, (representing 128 percent unit growth over the year-ago quarter) and 15.43 million iPad tablets (a 111 percent unit increase over the year-ago quarter). Apple posted a record quarterly revenue of $46.33 billion and record quarterly net profit of $13.06 billion. These results compare to revenue of $26.74 billion (73% increase YOY) and net quarterly profit of $6 billion, an increase of 117% in the year-ago quarter. Gross margin was 44.7 percent compared to 38.5 percent in the year-ago quarter. International sales accounted for 58 percent of the quarter’s revenue. Apple sold 5.2 million Macs during the quarter, a 26 percent unit increase over the year-ago quarter. Apple sold 15.4 million iPods, a 21 percent unit decline from the year-ago quarter.Apple’s cash and securities swelled to almost $100 billion.
The stellar results only emphasise the point that 2012 is going to be a good year for Apple with the iPad 3 and iPhone 5, which are expected to add to the growth story. The growth momentum going into H1, 2012 should be driven by demand in China as well as the low channel inventories.
With 37 million smartphones sold, Apple dominated the smartphone market during the fourth quarter, even while for 2011 as a whole, Samsung managed to edge out Cupertino as the year’s top smartphone manufacturer. An interesting anecdotal statistic to Apple iPhones sale first broached by Luke Wroblewski is that with 37.04 million iPhones sold, Apple sold more iPhones in a day (402K) than babies born globally in a similar 98 day period(300K)
While Apple reveals in its huge success and possibly takes the lead and momentum through to 2012, one question that begs to be asked is how long can Apple better its already unmatched stellar performance? Q1,2012 will be Apple’s China takeover story but what about Q4,2012? What device/devices will power YOY growth over a blockbuster quarter such as Q4,2011. Will Apple feel the strain of heightened expectations? Will it miss its god, Steve Jobs?
The Three Platform paradigm in connected future of technology
The future belongs to connected experiences over a large range of devices starting from Smartphone, Tablet, Networks and not limiting only to TV, Vehicles, Home appliances and more. As a new era of convergence sweeps in, increasingly its evident that the Apple, Android and Windows will lead this march of convergence into the future.
Apple leads by the experience example on a relatively modest number of its own devices. The key will be the experience factor which will power Apple as a high margin and profitable enterprise. The key challenge for Apple will be to enable experiences seamlessly across platforms and devices. Apple will not be in the game of out-innovating Android. It will be more about how well it is able to merge exepreince, interface with technology services on various platforms and devices.
Android will emerge as the mass vehicle. Being open and free will anchor a lot of innovation, some of it across some very new devices and interfaces. The key here is Android’s flexibility which will provide sound base for innovation across platform and devices. The challenge for Android will be in terms of providing a common user experience. There may not be any pure Android experience since innovation on various platforms will add to disintegration of the “pure” Android Interface and experience. This is both good and bad for Android (the Amazon example) because it would mean staying ahead of the curve at the cost of not having an interface as good as Apple.
Microsoft Windows will consolidate its Enterprise position and leverage its advantage across legacy platforms and security. Microsoft however has been loose in bringing innovation to markets. For every Kinect, there is a surface which is not yet commissioned. However, Microsoft’s niche has to be the enterprise and with its Windows8 it is trying to establish credibility across mobility experiences. Microsoft may still be lagging the “killer app” in enterprise mobility- and a Balckberry acquisition can give it just that edge in terms of the Blackberry infrastructure. There are some reports of a acquistion afoot. Interestingly enough Blackberry has put off its QNX platform till end of 2012. If one wishes to read between the lines … a struggling Blackberry puts off QNX almost indefintely, a Microsoft is fishing for “the killer enterprise app”, RIM is a prime sell off target, Microsoft had evinced interest…. is the acquisition a near reality?? We shall see
Yang departs: The choices before Yahoo! Now
The time has come for me to pursue other interests outside of Yahoo!- Jerry Yang
Yahoo! has not delved into details regarding Jerry Yang’s exit.. It didn’t really have to.
While Yahoo! remains one of the biggest draws on the web with about 600 million people visitors a month, but like AOL, that other dinosaur of the first era of the internet, Yahoo! has been left flat-footed as Google and Facebook emerged as the next generation of online leaders. Sales have fallen at Yahoo! since 2008 and Google and Facebook are taking an increasing share of its display ad business. The firm has cut costs and found ways to boost its profit margins and keep earnings up. But the pressure for change is on – and it shows.
In 2008, Microsoft’s Steve Ballmer launched a $44.6bn (£28.8bn) takeover bid for Yahoo! but it was resisted, especially by Yang, and eventually the deal collapsed. Yang was the man who fought hardest to reject Ballmer’s offer. Yahoo! is currently worth about $19bn but now that Yang has gone, it may require a more radical fix.
Yahoo! is still huge, but what is sort of company is it? They are not going to beat Google in search, or Facebook for the social network. They will continue to get ads because of their size, but if they are not seen as relevant – and they are not – the quality of those ads and the price paid will fall. In today’s environment, companies that are not seen as relevant are dead. Yahoo! is on its downward spiral. Yahoo! lost its way long ago. It’s big in news, sport, finance, email and it owns Flickr, the photo-sharing site. But somehow one of these sites add up to a whole. It will take a Steve Jobs to turn Yahoo! around. Someone needs strips it down to the core before building it back up again. Yahoo! recently appointed a new chief executive, Scott Thompson, former boss of eBay’s online payment company PayPal. He replaces Carol Bartz, acrimoniously ousted by a board she dismissed as doofuses. Given the firm’s shoddy record with bosses, she might have had a point. But so did they.
Bartz’s strategy – trim costs, sack people, sell stuff – did little for Yahoo!. According to comScore data, the number of minutes that US website visitors spent on Yahoo! sites during her two-and-a-half years as chief executive fell 33% while the stock price stayed flat.
The big question for Scott Thomson is what is he going to do that’s different. Thompson is likely to sell off Yahoo!’s Asian assets, a move many believe Yang was holding back.Yahoo! bought a 40% stake in China’s Alibaba in 2005 for $1bn. It was a great buy. Analysts calculate that the Alibaba holding, along with the company’s stake in Yahoo! Japan, is now worth $17bn.
But what happens after that? Yahoo! is undergoing a “strategic review” and competitors smell blood in the water. Microsoft is reportedly looking at Yahoo! again, albeit at a far lower price, and private equity firms have been sizing it up. Jack Ma, Alibaba’s founder, has also expressed an interest and is tipped as a likely buyer for Yahoo! Japan and maybe more. If Yahoo! were to be acquired by Alibaba that would be the biggest Chinese takeover of a US company in history.
Scott has the choice of turning Yahoo! around. However, that’s not really his skill set. The rumour in Silicon Valley is that he was far from the company’s first choice. Like Bartz, who came from a design software firm, Thompson does not have a media or advertising background. But if that doesn’t work, at least he’s a finance guy. He’ll know how to package this company for sale.
With Yang gone, a sale of all or part of the business looks more likely. It’s what comes after this that worries. Yahoo! is one of the top sites in the world. That’s a lot of opportunity. But if it can’t redefine itself, it could be scattered to the winds.
Suggested Reading: http://www.delawareonline.com/article/20120122/BUSINESS09/201220327/Yahoo-fighting-remain-relevant
2012: Make or Break for Yahoo!, Blackberry and Nokia
2012 promises to be a very tough year for Yahoo!, Blackberry and Nokia who having ruled their respective domains for a decade, suddenly risk redundancy due to lack of innovation. In the technology domain, historically, once an incumbent looses a pole position to challengers riding a new wave of technology, the incumbent no matter how large and dominant finds it difficult to come ahead and regain the leadership position. This has been the story with Yahoo!, Blackberry and Nokia.
• Blackberry and Nokia have eroded 81% and 50% of their m-cap in the last year and are 90% off from their historical highs. Same goes with Yahoo! which is 85% off from its historical highs in the heydays of dot com bubble.
• All three have leadership changes in recent/one year and have made a few hard choices and a few other risky ones to get back into reckoning. Can Stephen Elop turn around Nokia, Can Scott Thompson revive Yahoo and Who replaces Lazardis/Basilie at RIM (and more importantly how fast)
Value erosion* is the m-cap loss in last 1 year
• The Market position of Yahoo!, Nokia and Microsoft is vastly altered from 2 years back. Yahoo! is gradually loosing its No.2 spot to Microsoft and the search relevance in the overall picture. Nokia lost its Smartphone leadership to Samsung and Apple in 2011 and as per reports, Samsung forecasts walking off with the Mobile Phone manufacturer crown in 2012. Blackberry has lost out to Android and Apple in good measure and its Playbook has been drubbed. There isn’t much that is expected from future releases of BB OSs and Devices.
• Blackberry appears to me as the worst in the lot and is a prime acquisition target. Same goes with Yahoo!. The Nokia Lumia series of Windows phone has seen some limited success and also been able to secure partnerships with T-Mobile and AT&T. However there is talk of Microsoft acquiring Nokia Smartphones which leads one to think how would Nokia compete without Smartphones?
2012 will need to be the turnaround year for these three and if not then there is a possibility that there could be partial or full acquisition and buy outs very soon.
How Android stormed India! (The dynamics and insights behind the growth of Android)
How the Red Worm (Android) came from nowhere to demolish the Black Worm (Symbian)
1. Introduced in 2Q,2009, it has taken Android 10 quarters to come from a zero base to the best selling Mobile OS in India.
2. Android has an installed base of 3 million users in India.
3. The very first Android phone in India was launched in Q2, 2009 by HTC Dopod
4. Android beat Windows to become the no.3 OS in Q2,2010
5. Android became the no.2 OS in India in Q4,2010 beating Blackberry
6. 10 quarters after the launch of Android,in Q3, 2011, Android became the No.1 Smartphone OS in India beating a rapidly declining Symbian.
Prior to Android, Indian Smartphone OS was polarized by Symbian which ran across smartphones from Nokia, Samsung, Sony Ericsson and LG. Barring Blackberry, other OSs such as Windows, Linux had never been market favourites really. Android provided the much needed variety and option for Smartphone OSs in India.
7. Only a meager 2% of total Android activations in India have been CDMA devices. 79% of CDMA Android devices are Samsung devices.
8. Samsung having sold 1.2mn Android devices is the largest Android seeder in the Indian Market. HTC follows with .93 mn 9. Android handsets sold. Sony Ericsson is a distant third with .43mn Android devices sold.
10.Both Samsung and HTC contribute 70% of the total Android sales in India.
11.Samsung, HTC, Sony Ericsson, LG and Moto contribute to 90% of the total Android sales in India. While a number of local manufacturers have tried to ride the Android wave, success has so far been limited.
12.Sub-brands such as Galaxy, Wildfire, Xperia, Desire, Optimus and Milestone have contributed to 75% of the total Android sales.
Decline of Smartphone ASP and Android ASP in India
13.As against the ASP of smartphone devices, Android ASP drop has been more aggressive. Android OEMs have been aggressively trying to position to newer categories of users, thereby increasing the audience, appeal and the numbers. Between Q1,2009 and Q3,2011, Android ASPs came down by 43% while the overall smartphone ASPs came down by 19%.
14.In the 7 quarter period, Q1,2010 to Q3,2011, Android multiplied sales by a factor of 41x. Corresponding ASP drops was 36%.
15. Mid end Androids have been the most successful in Indian markets with 56% of total Android sold belonging to the $100-$299 category.
With Samsung testing the sub-10K price segment for Youth categories for Android, this category will accelerate in time sto come.
16. Interestingly enough a lot of local Indian brands tried riding on the wave of Android in lower segment but as stated earlier Android’s have been more successful when launched and marketed by the larger brands.
Data sourced from Import numbers for mobile phones in India
Can Facebook unseat Apple/Android at their own game, within their own ecosystem?
Facebook’s genesis was in terms of being a web destination and while Facebook is the no.1 mobile app globally across diverse platforms, Facebook was loosing traction to Android and Apple which harbored a collaborative eco-system approach. With 350 million users accessing facebook from Mobiles on a monthly basis that was too big an opportunity to hand it over to iOS and Android platforms.
Thus came into being Facebook’s recent push into HTML5 with Project Spartan,which features apps built for Facebook’s platform that can run on top of the Facebook Messenger app, instead of requiring the user to launch the iOS app equivalent. This poses a disintermediation challenge to Apple. Facebook is trying to beef up its payments system, Facebook Credits, to handle application payments and cut out the iTunes model ingrained into the iOS ecosystem.Facebook is demonstrating that it can leverage its hold over consumers at the software level, through the power of the social network, across multiple platforms.
So now, here’s an interesting question: Can Facebook unseat Apple/Android at its own game, within its own ecosystem?
App Usage powering Mobile Internet growth
The era of mobile computing, catalyzed by Apple and Google, is driving among the largest shifts in consumer behavior over the last forty years. Impressively, its rate of adoption is outpacing both the PC revolution of the 1980s and the Internet Boom of the 1990s. Since 2007, more than 500 million iOS and Android smartphones and tablets have been activated. By the end of 2012, Flurry estimates that the cumulative number of iOS and Android devices activated will surge past 1 billion. According to IDC, over 800 million PCs were sold between 1981 and 2000, making the rate of iOS and Android smart device adoption more than four times faster than that of personal computers. While the Internet began its commercial ramp in 1996, iOS and Android devices have seen double the number of device activations during its first five years compared to the number of Internet users reached during its first five years (Internet 1996 – 2001 vs. Smart devices 2007 – 2012).
On top of this massively growing iOS and Android device installed base, roughly 40 billion applications have already been downloaded from the App Store and Android Market. The average smartphone user, is beginning to spend more time in mobile applications than they do browsing the web.
This chart by Flurry compares how daily interactive consumption has changed over the last 18 months between the web (both desktop and mobile web) and mobile native apps. Ever since June 2011, time spent in mobile applications has grown. Smartphone and tablet users now spend over an hour and half of their day using applications. Meanwhile, average time spent on the web has shrunk, from 74 minutes to 72 minutes. Users seem to be substituting websites for applications, which may be more convenient to access throughout the day. People are now spending less time on the traditional web than they did during an year ago. This drop appears to be driven largely by a decrease in time spent on Facebook from the traditional web. In June 2011, the average Facebook user spent over 33 minutes on average per day on the website. Now, that number is below 24 minutes. Time spent on the web without Facebook has grown at a modest rate of 2% between June 2011 and December 2011.
Even while, the growth in time spent in mobile applications is slowing – from above 23% between December 2010 and June 2011 this year to a little over 15% from June 2011 to December 2011. The growth is predominately being driven by an increase in the number of sessions, as opposed to longer session lengths. Consumers are using their apps more frequently.
Facebook is the most used app on Android among 14 – 44 year olds, surpassing usage of Google’s own native, pre-installed apps. Additionally, Facebook Messenger became the top downloaded app, at least one time during 2011, across more than 100 different App Store countries. In the U.S., the largest App Store market, Facebook Messenger ranked as the top overall app across all other apps across all categories.
The evolution of the Tablet PC Market: From Consumer to Enterprise
Tablet industry will need mass enterprise adoption for powering growth in 2012. Device makers/eco-system masters will have to customize to enterprise use cases. (Cue Android/Blackberry/Microsoft)
The Tablet PC was designed first by Microsoft and targeted at the enterprise segment mainly.
However, it was Apple and iPad with its unparalled experience which turned the Tablet PC into a consumer segment product mainly (That’s been the niche of Apple). Apple established the Tablet as a media consumption device as against smartphone(communication device) and laptops(computing devices). Apple made iPad the centre piece of its eco-system and still continues to add various other dimensions breaking one frontier after the other.The success of Apple spawned many others notably Android, Blackberry and even HP’s WebOS.
However, it was Amazon with its scale and expertise in media distribution that has now taken the pole position in low end tablet category.The Amazon USP is the media based services.Amazon Kindle Fire is exerting pressure on all tablet makers to reduce prices. Furthermore, with the introduction of iPad3,one could see iPad2 price down to at $300 levels. Android is an example of a strong competitor which has failed to create any impact in the consumer segment. The “Apeing Apple” strategy has not worked for Android (see image below). This is perhaps clear with the “missing in action” response that Ice-cream Sandwich has garnered post luanch.(A .6% presence inspite of Samsung, HTC, Sony and LG device makers pushing it). With the consumer segment taken by Apple and Amazon, there is little left for others. There are options of deep penetrative pricing as practiced by HP and Blackberry, but that doesnot translate in profits and viable business cases.
In 2012, tablet makers will have to go the “enterprise route” to find a foothold in a market which is fast polarizing towards Apple and Amazon.Again this will include a eco-system approach which will include application makers, cloud, telecom operators, MVNOs, value added service providers and other linkages with industries, Operators, functions and solutions which might always not strictly be from within the industry.
Device makers will need to decide which enterprise purposes can be supported by their tablets. The key drivers of successes in enterprises will be Optimization for specific use cases. I am listing out a 7 point use case optimization-
1. The stylus will emerge as an important input method which would enable consumers to annotate, make handwritten notes,
2. Similarly, voice enabled input could be a critical feature for creating compelling user experience
3. Tablet makers will need to drive development of apps and services optimized and uniquely well-suited for enterprise uses
4. Tablet makers will need to enable cross-platform interorperability between phones(smartphones), PCs, back-end legacy systems. Prima Facie, Microsoft has an edge in this.
5. Tablet makers will need to heed to security and piracy as key concern areas when addressing enterprise requirements
6. Device makers will need to Promote peripherals and ancillary services such as keyboard, cloud based services, pairing between office peripherals such as photo-copiers, scanners, servers etc in form of partnerships, shared GTM programs etc.
7. Device makers will have to evolve a new device lifecyle revenue model which balances the CAPEX, OPEX and service costs for optimum margins and sustained profitabilities.
2012 will see a lot of tablet device makers explore the enterprise segment as a viable and sustainable business case. The sooner the better.
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