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Will Android 3.0/Honeycomb beat the Apple/iOS?

Posted in Computing and Operating Systems, Mobile Devices and Company Updates by Manas Ganguly on January 7, 2011

This is a mundane question, but its one question that will be asked aplenty after the Honeycomb made its appearance at CES 2011.

My answer is No.

Android is increasingly disposed towards scale. The Honeycomb Android 3.0 version is a great alternative to iOS/iPad, but in terms of serving a “connected” experience across a range of devices, the Androids are behind. iOS allows you to seamless connect thru and across your devices. The Android’s with their lack of standardization and fragmentation across different versions will not be able to produce an “integrated experience”. Somewhere, the strategic teams at Google would also realize that expostulating the virtues of “openness” has cost them in terms of common experience across. (That was what the Nexus was designed… for the pristine device experience). Sample this:

1.Google has been ill-able to integrate experiences across the smartphone category with multiple versions of its Android.
2.Android 3.0/Gingerbread will have “difficulty” talking to smartphones unless dual core processor smartphones hit mainstream. (Expect that to happen by end of 2011, at the earliest)
3.Google has not been able to perfect its Google TV experience, and are back at the drawing boards redefining TV strategy.

Given that its free to all OEMs, Androids will achieve numbers, but they will lack the finesse of the iOS across the domain of “connected home appliances”.

Net, Apple still has stronger fundamentals and should do better in terms of making money.

User Loyalty for Operating Systems: Advantage iOS

Posted in Computing and Operating Systems by Manas Ganguly on November 29, 2010

Loyalty in the smartphone market is a hard thing to command and come by for handset manufacturers unless you are a certain somebody called Apple. Apple iPhone commands more than twice the fidelity of Android devices or smartphones in general. 59% of iPhone users would like to stay loyal to the iOS as against 25% of other smartphone users with their respective Operating systems.Apple 59% stacks up very favourably against 35% for RIM Blackberry, 28% for Android, 24% for Symbian and 21% for WinMo. The WinMo figure at 21% is a reflection of the WinMo 6.x operating system and as and when WinMo 7.0 gains steam, the loyalty numbers is expected to head northwards.

As smartphone manufacturers scramble to innovate their handsets, offering the best high-resolution cameras, super clear displays and support for the next generation mobile networks, smartphone owners are leaving their options open, especially now that manufacturers are moving towards open-sourced operating systems like Google’s Android software. The differentiator is now starting to move beyond just the OS and the hardware to a host of eco-system factors such as Applications, Developers and Ecosystem, Extendibility across multiple home devices. Finally, the Operating expenses in terms of data plans and data is also a large determining factor for user stickiness around the devices

Apple versus the Collective Enterprise a.k.a The Open Source

Posted in Mobile Devices and Company Updates by Manas Ganguly on October 23, 2010

In the early 1980s, the Macintosh faced an onslaught of competition from an army of PC makers whose products ran Microsoft software. The fight did not end well for Apple. In a few years, Microsoft all but sidelined Apple, and the company almost went out of business. Can Apple, which insists on tight control of its devices, win in an intensely competitive market against rivals that are openly licensing their software to scores of companies? It faces that challenge not only in phones, but also in the market for tablet computers, where the iPad is about to take on a similar set of rivals.

For Apple which has lived the part of the bitter PC history, the stakes are huge, as the mobile computing market could prove to be larger than the PC market ever was. Having a tightly controlled ecosystem, which is what Apple has, is a large short-term advantage and a large long-term disadvantage. The competition this time is more formidable: Android, Windows Mobile, Blackberry and (even) Nokia. For now, the smart phone market is growing so rapidly that the rise of Android has not necessarily been at the expense of the iPhone. That will change as the market matures.

Apple’s stock has soared nearly 50 percent this year, and touched all-time high of $314.74. But the rise of Android has been both sudden and unexpected, and its ascent highlights some of the advantages of an open approach. There is much more rapid innovation taking place in an open environment. For every new version of the iPhone, Android has 20 odd smartphones ready to challenge Apple’s leadership mantle. That leaves little room for error at Apple. The company must continue to create hit products, as a single misstep could give Android and other rivals an opportunity to make inroads and steal market share.

Also, as the number of people with Android phones grows, Android will grow more attractive for app developers. For now, Apple’s App Store, with more than 250,000 applications, enjoys a large advantage over the Android Market, which has about 80,000. And those numbers don’t tell the whole story. Apps made for the iPhone tend to be of better quality, are more frequently downloaded and on average are more profitable for developers. But that edge may not last, especially as many developers fret about Apple’s tight control over the App Store.

While the naysayers stack up, the view isn’t as dooming as it seems for Apple. For starters, Apple is the richest company in the technology industry. With $45.8 billion in cash, it can afford to invest heavily in research and development. Apple’s large early lead in devices and developers puts it in a much stronger position than it ever had in the PC market. And because it is one of the largest purchasers of Flash memory, which is one of the most expensive components of a smart phone, it has enormous economies of scale,

What’s more, the iPhone isn’t really fighting alone. The two other devices that run Apple’s iOS mobile software, the iPad and the iPod Touch, further strengthen the iPhone, because consumers like being able to access the content and applications they bought on iTunes and the App Store on multiple devices. Apple has sold more than 120 million iOS devices.

And while Apple’s personal computers were by and large technically superior to Microsoft-based PCs, they were also far more expensive. In the smart phone market, carriers, who play a vital role in distribution, have been willing to subsidize the iPhone so that its cost to consumers is roughly the same as that of comparable Android phones.

Bottomline: Apple may lose its overall leadership, but maintain a share of the market that could easily be in the 25 percent to 30 percent range at a very profitable level. Even that is enough to sustain a very large and very profitable business.

Apple and the Superman act!

Posted in Mobile Devices and Company Updates by Manas Ganguly on October 21, 2010

Apple reported a profit jump of 70% from last year, driven by strong sales of Macintosh computers, iPhones and iPad multimedia devices. This has taken the analysts by surprise who had underpitched on the numbers. The reported net income for the fourth quarter of $4.31 billion or $4.64 per share, compared to $2.53 billion or $2.77 per share for the year-ago quarter. Gross margin for the fourth quarter fell to 36.9% from 41.8% in the prior year quarter, while operating margin for the quarter decreased to 26.8% from 30.1% a year earlier.Net sales for the quarter rose 67% to a record $20.34 billion from $12.21 billion in the same quarter last year. International sales accounted for 57% of the quarter’s revenue. iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones RIM sold in their most recent quarter. Apple sold 3.89 million Macintosh computers during the fourth quarter, up 27% from the year-ago quarter. Apple sold 4.19 million iPads during the fourth quarter, which however, trailed estimates of some analysts who were expecting the company to sell about 4.8 million iPads during the quarter.

The striking thing about Apple’s numbers are that they are consistent northbound. This is perhaps also mirrored by the share prices. Analysts feel that Apple is not out of steam yet and the rise will continue through a good part of 2011. The factors that would aid the growth of Apple in the future 1 year horizon are the following:

1. Apple is looking to increase its distribution and tieing up with operators such as Verizon will only increase momentum of its iPhone sales. Already the iPhone is eating into a disproportionate share of the global smartphone profits.
2. Apple is building huge economies of scale across its iPhone, iPad and iPod and this helps keeping its costs low.
3. Apple is also able to drive consumer usage across various products. However they have kept the platform constant and its 120 million iOS users are a definite lot who keep coming back for more.
4. iPhone drives data traffic and that is sweet music to carriers who are willing to subsidize Apple products so that the user cost is roughly comparable to Android devices.
5. While Apple TV is taking its first steps, the Apple TV along with the iPhone (for smart computing), iPad (The cross between Laptops and Smartphones),iTunes, Music Streaming, Application Store, iOS, iPods (Multimedia devices), Mac Computers are beginning to forge a media network eco-system which fortifies the Apple Media, Web and Mobile proposition in a unique manner. Come to think of it no other competitor comes close to matching Apple’s scale across these range of devices and solutions.

However the question that nags is while the “Walled garden” approach has yielded great results for Apple, will it be enough to fight the “Open Source” juggernaut. Will Individual brilliance continue to overshine the Collective Enterprise-Open Source (Read Google). Sooner or later Apple will be at crossroads to question its Strategic imperatives and Organization philosophy.

Android Rules Global Smart-phone Forecasts

Posted in Industry updates by Manas Ganguly on September 11, 2010

A day after my initial post of Android’s takeover of Smartphone markets with anecdotal references from Piper Jaffray, Gartner has come up with what they think the OS markets would look like in 2014, which is well… quite close to what many of us possibly know already. I call it massification of the Android and Android’s challenge to the Symbian.

Gartner expects manufacturers such as Samsung to launch many new budget Android devices in 2H10 that will drive Android into mass market segments. Other players, such as Sony Ericsson, LG and Motorola, will follow a similar strategy. This trend should help Android become the top OS in North America by the end of 2010. Might I add to this, that the white label manufacturers from China will be the ones who will take Android to the masses in the Asian and African context.
CSPs/Telcos and mobile device manufacturers alike will need to revisit their platform strategies and balance the need to pursue platforms with the highest current demand against the need to maintain differentiation with unique devices. CSPs/Telcos will likely reduce the number of platforms they offer, to reduce their support costs and clarify their propositions to market.

Gartner predicts that by 2014, open-source platforms will continue to dominate more than 60 percent of the market for smartphones. Single-source platforms, such as Apple’s iOS and Research In Motion’s OS, will increase in unit terms, but their growth rate will be below market average and not enough to sustain share increase. Windows Phone will be relegated to sixth place behind MeeGo in Gartner’s worldwide OS ranking by 2014.

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iOS versus Android: All in way of massifying Mobile Internet!

Posted in Industry updates by Manas Ganguly on September 8, 2010

The Inevitable has started to happen, or so it seems if Quantcast is to be believed. Quantcast, a web metrics firm has in its August data laid bare the fact that while Apple’s iOS remains the leading mobile operating system in the United States for accessing the web, but Google’s Android OS is catching up fast.As of the end of August, iOS, which powers the iPhone, iPad and iPod Touch, accounted for 56% of mobile web activity, while Android phones accounted for 26% and Research In Motion’s BlackBerry OS was a distant third and accounted for 9%.

Apple’s iPhone has seen a solid reversal of its downward trend since the introduction of the iPhone 4, however, this is offset for iOS share by the decline of the iPod Touch. The latest Android smartphones are hot – three models, the HTC Incredible, Sprint Evo 4G (also by HTC) and most recently the Motorola Droid X have all gained rapid adoption. The chart below summarizes these recent models along with the benchmark for Android handsets, the original Motorola Droid.


Whats moving up as a trend is that the iOS has been losing ground to Android steadily over the last year.Over the last year, iOS use for accessing the web has fallen 11%, while Android has risen 17%. RIM’s BlackBerry OS saw a 10% drop.

Another report by Nielsen estimates that Smartphone use was up 23% from the first quarter of 2010, to 25% of the U.S. mobile phone population. This is compared with 16% penetration in the second quarter of 2009 and by the end of 2011, the firm is projecting, smartphones will overtake feature phones. Mobile internet usage will increase at a compound annual growth rate (CAGR) of 15.7%, much faster than the CAGR of 2.1% expected in mobile subscribers over the same period

The numbers are important because as more mobile phone users head to the web, so will the opportunity for advertisers. In addition, retailers and other businesses will benefit in being able to offer services based on the location of the mobile phone users. An increasing number of mobile phones are shipping with GPS capabilities, leading the way to a proliferation in location-based services.

Apple: Pink of Health (Part I)

Posted in Mobile Devices and Company Updates by Manas Ganguly on August 23, 2010

In an earlier post,i had posted about how the wealth distribution in the smartphone markets is increasingly getting skewed towards Apple with its iPhone.Apple Takes 48% of the Earnings from Smartphone sales globally with only a 3% market share of the smartphones. That compares starkly against Nokia which has 40%+ smartphone share and only 22% of its earnings share.

This post examines the reason why Apple is able to command that kind of margin from the carriers and mass emotional appeal from its consumers, which thus make it one of the most profitable companies.

1. Connecting with the consumer in terms of Tangible emotional experience (Thru Hardware)

An Apple iPhone has a BoM (Bill of Materials cost, production cost) of less than $200. However, it sells at $645 to customers (Carriers) who subsidize it. Very clearly, Apple is able to dip into the service revenues generated by the carriers from higher data usage. By front ending the realization upfront with a $645 price tag (which is 3X the production cost), Apple is able to cover its costs and future risks.

To make this happen, Apple surely has the best hardware which compels people to move to a higher ARPU and do so enthusiastically. (Call that Branding at an emotional level, something Apple does best). There are very few and far between instances when the proposition has been strong enough for consumers to move to higher price points.There are several devices which have data capabilities and yet they are not competing with iPhone on the subliminal emotional levels. That possibly is Apple’s biggest connect with the consumer “want”.

2. Apple earns both ways

Why is Apple more profitable than Microsoft or HP? Why does Apple command one of the highest Market Caps globally?2. The main reason Apple is more profitable than their competitors is Apple makes highly-profitable software and services, not just low-profit hardware. Apple is more profitable than HP and Microsoft because … Apple takes both the HP part of the profit on a PC/Device/Hardware and the Microsoft part of the profit on a PC on the software/OS/Browser, and in some cases, the retail part of the profit. The iOS, iTunes and the Safari browser make up for great experience on the device through stunning software. The mastery over Software precedes Apple’s competence with great devices. Remember it was Apple who made the first Mac OS before Microsoft took it mass.Apple is close on the 250,000 milestone in terms of numbers of apps in its Apps store.

The user walks in with a problem, and Apple provides a solution made up of a combination of hardware, software, online services, support services, training, accessories, and even culture. Apple users pay for that entire package. Apple has its own SOC (system on a chip), battery technology, unibody construction, etc. which give it an edge in portability, battery life and speed.

Contd…

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Froyo seeks to level ground with iOS: Here’s how

Posted in Computing and Operating Systems by Manas Ganguly on July 17, 2010

Antennagate: Thats what the folks at Apple termed the failure Antenna glitch in their iPhone 4G which is now assuming the status of a colossal mistake. Steve Jobs and his team have come clean on the mistake and are working double time to provide solutions to the Antennagate. A few analysts are of the view that Apple should pull the plugs on iPhone 4G, which to me looks to be an over reaction and a less prudent move.However it does put a half stop to the Apple Juggernaut which was rolling full steam. That to me is not the biggest of Apple’s worries.

To me its the rapidly maturing Android platform, that has the greatest potential to give Apple and Steve Jobs a headache. While Android is still a few blocks behind iOS4, Google has been accelerating fast and sure to catch up with the iPhone OS. The Android 2.2 Froyo will almost level the playing filed with iOS4 on the smartphone space. The Gingerbread edition of Android is expected to level the differences with iOS on the Tablet space.

On the Froyo versus iOS4 bit, Froyo would be coming good over the iOS4 lead on the following accounts:
1. Faster Speed with the native apps. Closes space with iOS4
2. Ability to run Flash. Complete Differentiator
3. Support for Microsoft Exchange. Closes space with iOS4
4. Better Service rates through the Tethering feature. Cost differentiation for high speed internet tariffs.
5. An Android market which keeps getting better. Closing the gap with iOS4.
6. Getting better on the browser and leaving iOS behind.
7. The sheer numbers of OEMs supporting the platform
8. Pitching for the Enterprise bit

Detailing the Froyo versus iOS further:

It is time for Apple to be concerned about Android, its chief competitor. The Froyo release will be the most significant Android release as it delivers functionality which could rival Apple’s iOS4. The real battle between Android and iOS has now begun and the Antenagate has already ruined iPhone 4’s debut.

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