Ronnie05's Blog

Is Apple reliving Nokia? (Part II)

Posted in Mobile Devices and Company Updates by Manas Ganguly on May 4, 2013

This is the second part of a two part blog on Apple reliving the mistakes that Nokia made 4-5 years back. Read Part I here.

Both Nokia (2007) and Apple (2012-13) were trying to time and control consumer preferences in terms of the features and the screen. Conversely, that was akin to letting the competition in thrugh the back door. Instead of creating the future by out-innovating on the feature roadmap – Both the companies were possibly trying to amass the cost benefits from standardized feature formats.

Tim Cook’s comment on this issue, “Our competitors have made some significant tradeoffs in many of these areas to ship a larger display. We would not ship a larger display iPhone while these tradeoffs exist. Some customers value large screen size. Others value other factors such as resolution, color quality, white balance, reflectivity, power consumption, compatibility of apps, and portability.”

The strongest parallel is how both companies started fighting the consumer preference for larger displays at the peak of their profitability… and then dug in as margins began eroding rapidly. Sample this: Phablets as a segment are already likely to make up more than 15% of smartphone market in 2013 – And Apple chooses to give this market a miss. At the peak of its prowess, Nokia executives talked about the performance trade-offs of big-screen phones: power consumption troubles plaguing big-screen phones; surveys showing that most consumers prefer smaller models. On and on and on, an endless stream of justifications and carefully constructed defenses, lecturing consumers about what they should want to buy. Do you see the pattern?

Apple already has a well learnt lesson – the iPad Mini which was sacrilegious in terms of Steve Jobs’ definition of a tablet is the one that is holding the fort for Apple against the medium/low cost Androids.

AppleHas Apple hit the peak or is it a seasonal variation?

Secondly, Apple’s smartphone market shares now seem to be on the wane with Androids from Samsung doing the pincer attack – both from the top end and the economy smartphones. As smartphone penetration moves from early adopters to mass-market and laggard consumer segments, the smartphone as a product will be less dependent on technical superiority, and more dependent on reliability and value – and it is Apple’s market to loose. (The gainers will mostly be the ZTE, Huawei and Alcatels of the world). As reported by Juniper, Samsung’s smartphone volumes are 2X that of Apple’s. AllianceBernstein predicts that Apple’s market share in smart phones will fall to about 12% this quarter, compared to 23% in the same quarter of 2012. Further, the firm predicts that Apple’s market share may fall into single digits next quarter. IDC’s Q1 market shares also show Apple slowing down on its growth trajectory (YoY).

Apple needs to look at the next evolution of iPhone – the mid level low cost iPhone. The iPhone 5S is already confirmed to be only an incremental over the iPhone5 – and is not going to incite mass hysteria as iPhones normally have done. A low cost iPhone could also be critical for Apple especially because ABI estimates the low cost smartphone market will more than triple, in devices sold, between now and 2018 whereas the mid-range will grow at only (roughly) 50%.

For the present, Apple and Tim Cook look to be in a denial state – which is further going to bleed Apple. The high margin strategy is a great things for share holders – but then market presence and numbers is quite another thing. For the love of Apple, I hope it doesn’t going the Nokia way.

Addendum: Just read that Apple may finally be looking at iPhone low cost model and saw a couple of photos as well. Will this turn the tide or is the initiative lost already

Addendum 2: A further validation of loss of Apple’s grip in the smartphones segment is Apple’s declining profit share of the global smartphone industry. Between Q1,2012 and Q1, 2013, Apple’s profit shares of the global smartphone industry declined from 74% to 57%.

Tagged with: , , , ,

Tablets – the continuing growth!

Posted in Industry updates by Manas Ganguly on September 20, 2012

Global tablet demand will continue to surge in the next 4 years inspite of all the ongoing economic concerns shrouding most regions in the world. IDC expects tablet shipments to grow at a CAGR 25% over the next 4 years to cap 261 million units by 2016.

IDC upped its forecasts for 2012 from 107 mln units to 117 mln units and its forecasts for 2013 from 142mln units to 166 mln units.Apple iPad will continue to dominate where as Android and Windows will expand the markets. Apple’s lead will slip, but only slightly, from 60 percent of the market this year to 58 percent by 2016. Soon to be released Apple’s 7” iPad will wrestle the low cost Android’s at the economy end of the market. Android’s share will also decline, from 35 percent this year to 30.5 percent in another four years. Windows Tablets will turn out 11% of the market in 2016 as against the 4% in 2012. Cost is seen as a major stumbling block to Windows Tablets. However in times to come, Windows tablet will provide the requisite momentum to the tablet category as a whole especially in the enterprise segment.

On the same note, iHS iSuppli has provided an estimate of 126.6 million units tablet shipments in 2012. That is a robust 56 percent annual increase in shipments for the tablet market in 2012, from 82.1 million units in 2011. Even while 59% sales will be from the 9.7” form factor (Growth in 9.7” segment is forecast to rise 35 percent from 55.2 million units in 2011), the fastest-growing portion of the market will the 7” screens tablets. n the seven-inch segment, which Apple is expected to enter later this year, sales are expected to nearly double from 20.8 million units last year.

Tagged with: , , , ,

Q2, 2012 Tablet Market shares – Strategy Analytics

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on July 26, 2012

Strategy Analytics – Global tablet shipments reached 24.9 million units in the second quarter of 2012 up by 67% from 14.9 million in Q2 2011.. Apple rose to 68 percent global market share, having shipped a robust 17.0 million iPads worldwide, its highest level for almost two years.

Apple continued to shrug off the much-hyped threat from Android and the iPad’s global tablet share is at its highest level since Q3 2010.

Android captured 29 percent share of global tablet shipments in Q2 2012, remaining static from 29 percent a year earlier. Global Android tablet shipments grew by more than half to 7.3 million units. Despite high expectations for companies like Amazon, Samsung, Acer and Asus, the Android community has yet to make a serious dent in Apple’s dominance of the tablet market. Unspectacular hardware designs, limited uptake of cellular models and a modest number of tablet-optimized services have been among some of the main reasons for Android’s mixed performance so far.

Microsoft tablets remain niche, but attention is turning to the upcoming Windows 8 launches.

Others such as Blackberry and WebOS seemed to have been consigned to history as the race for Technology leadership narrows down to the triumverate.

 

Microsoft Surface means more than just a tablet – its Microsoft’s departure from the OS led business model

Posted in Mobile Devices and Company Updates by Manas Ganguly on June 19, 2012

XBox and now Surface – Microsoft’s device philosophy is changing. ironically, it is possibly Microsoft’s ode to Steve Jobs

Microsoft Surface is remarked departure from Microsoft’s  decades-old business model to sell OS licenses to companies like HP and Dell, and rely on them to make and sell the hardware. Yes,times have changed.The quintessential OS maker has now ventured into devices. More than anything this move is possibly Microsoft’s tribute to Steve Jobs.

 

Apple has proven that the best computers — which rely on tight software integration more than ever before — are made when one company is in charge of designing both the hardware and the software, so they’re built in harmony and just work. Microsoft seems to have figured this out, too, via the Xbox and now this Surface tablet. That’s why the Surface is able to ship with a cool cover with a built-in keyboard. Such integration couldnot have been left to any other ODM. Microsoft has also learned that the best business model in today’s mobile industry — tablets and smartphones — is to the sell the actual hardware to consumers, not just license an operating system. Given today’s economics, the only way to potentially earn a profit of more than $100 per tablet is to sell the actual tablet. There’s no way Microsoft could earn that just selling Windows licenses to HP. Especially as it’s primarily competing with Android, which is sort-of free.

Will this thing be a hit and make Microsoft a lot of money? Enough to compensate for any potential decline in the Windows-for-PC business? Who knows. Would people opt for a Windows Surface in the face of a higely popular iPad. Perhaps some will, especially if they think Office means something to them. But I expect the iPad to continue its dominance of the tablet industry. But it sure looks like a better strategy for Microsoft than only trusting the Samsungs of the world to design great Windows tablets, and only trying to generate mobile revenue from Windows sales.

Sure, Microsoft may now alienate some of its Windows partners by competing with them. But as those partners have gone into the mobile industry, they’ve already strayed from Windows to Android, anyway. Windows8 is already a great option for Android ODMs given the Google-Moto acquisition. Plus, competition or not, as long as Dell wants to make PCs, it’s not like it has any real OS alternatives to Windows.

Microsoft is unquestionably late to this market, though it didn’t intend to be. But the interesting thing is that Microsoft is evolving with the times, both in terms of product design and business model. It may fail, but it’s at least learning to play the right game.

Does Apple need a 7″ iPad?

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on May 16, 2012

iPad has been the the force-majuere in the Tablet segment and has held strong against the multiple Androids and a one -off RIM Playbook as well. However in Q4, 2011, it was Amazon Kindle Fire Tablet launched the most credible counter offensive to Apple iPad monopoly. Not only did Amazon Kindle Fire impact Android numbers positively by selling 4.8 million units in the holiday season, but it has caused a pause and re-think in Apple on the feasibility of low cost 7″ Tablets. There are rumours about a 7″ iPad from Apple now.

The impact of Amazon: After taking 17% of the shipments in Q4,2011, Amazon’s Kindle Fire slumped to 3.7% market share in Q1, 2012

Now then, does Apple really require a 7″ iPad?

Reasons in favour

1. Apple may have burnt its hands and gone on the path of bankruptcy by not choosing to go with the cheaper computer in the early 80s. So there is meat in the arguement that no segment be left out. A stripped down iPad could fire up sales at low margins for Apple.

2. Apple could also block Android more effectively in Tablets – one of the hottest device domains in the future.

3. Apple could also increase its user base and graduate more users too its unmatched content eco-system and hope to make more gross money out of it.

But on the other hand

1. Does Apple needs volumes? Its exclusivity has been its USP and its profit/revenue/earnings per unit has been the stand out even as Google/Android have generally failed in terms of moentizing their services effectively.

Apple has also historically avoided playing the volume game, preferring instead to have a niche market following while cornering most of the industry profits. Even in the mobile phone business, where its iPhones are selling like hotcakes, its global market share is in single digits but it takes up more than three-fourths of the industry’s profits because of its high margins.

2. The Tablet market is far from mature and a carefully positioned mid end ($300?) 9.7″ earlier generation iPad2 could possibly be a better solution not only in terms of bocking Amazon and Android but also gathering volumes. Carriers would give their left arm, right arm and more for a data machine like the iPad on reduced prices in their network.

This strategy could meet the demand for the low-cost tablets to a good extent without having to develop a smaller tablet.

3. A cheaper 7-inch tablet appeals to a different segment of population that includes mostly price-conscious consumers. The entry of the Kindle Fire has lowered the cost barrier and will pave the way for new consumers entering the tablet market. This will serve to whet consumer appetite for tablets and may even make customers shift to a costlier tablet such as the iPad for their future purchases.

4. Finally then, the iPad with its 9.7″ screen defined the Media tablet space – a tablet which is broadly based on media usage which is in concurrence with Apple’s long term strategy around media – photos, songs, videos, books. Its widespread adoption led to trends such as BYOD enterprise use.

Essentially, the iPad was first a media machine and secondly a mobility device. That is the way Steve Jobs defined the tablets: he ranted the 7″ tabs were dead on arrival.

This size is useless unless you include sandpaper so users can sand their fingers down to a quarter of their size. Users have no need for a pocket sized tablet when they already have a smartphone. – Jobs

Considering the 7 factors listed above, i do think that a 7″ iPad doesnot cut ice for Apple . A low cost 9.7″ iPad (still at a premium from the market) is better. But for the record, i will go wth the late Steve Jobs – Mobility is for smartphones. Tablets are a different breed….

Interestingly a tweet that caught my eye even while i was publishing this post, needs a mention here… Amazon prepping a 10″ iPad equivalent. Interesting but, largely predictable

 

Will Apple be a victim of its own success?

Posted in Mobile Devices and Company Updates by Manas Ganguly on March 19, 2012


Indexing Apple’s share price on the basis of its history

In June 1984, Apple share price was a piddly $1.84. That was when Apple was under attack from Microsoft and Apple machines were being given a miss by the consumer community at large. Today Apple trades at $601.10. Apple’s stock price has appreciated at a CAGR of 23% ever since. Frankly now, that statistic isn’t wowing. So here’s something to wow … post the announcement/launch of the iconic iPhone 5 years back, Apple’s share price has registered 48% CAGR. Ever since the iPad was announced in January 2010, the share price of Apple has zoomed 71% Y-o-Y. And for the nay-sayers, the share price of Apple has gone from $351 to $601 since the death of Steve Jobs.In an earlier post, i had written about Apple’s valuation being higher than the combined valuation of Google and Microsoft combined. In response to Michael Dell’s comment of selling Apple and paying its shareholders back, Apple could buy Dell thrice over with its loose change.


Up, up and away -Apple’s soaring share price

Apple could well be on its way to become a $trillion company (as predicted by MSNBC). If that were to be anytime soon, Apple would be the 16th largest economy in the world (If it were a country). Currently it is ranked 19th at par with Switzerland (IMF estimates) as the 19th biggest economy in the world (If it were a country). If I were to tally Apple revenue’s against the GDP of all the countries in the world, Apple would be equal to GDP of the bottom 105 countries put together. Try this with the CIA factbook data of GDP of world nations. Not withstanding the $100bn cash reserves that Apple holds.


Blockbuster products: The Sales tracker

Selling it as fast as they come: Five years ago, it took Apple 74 days to build — and sell — the first 1 million iPhones. Last year, for the launch of the iPhone 4S, the company was able to supply 4 million units for the first weekend and build more than 24 million within the first three months. Last Friday, at least 3 million new iPads were ready for sale in 10 countries, with more on their way to 25 additional countries this coming Friday. Meanwhile, Apple is still building iPhones and iPods by the millions.

Apple is on such a winning course because it’s encapsulated all of its different big products in the famed/infamous “walled garden”. Apple devices work together so well because of the tight integration of the devices, services and experiences across a variety of use cases. However, the question that begs to be asked is how will Apple replicate its success year on year, product after product. Steve Jobs had been immensely successful at building a robust platform (iTunes, Apps Store, iCloud) and then creating device led experiences that were unparalleled amongst the contemporary others.

Currently, the biggest challenge for Tim Cook remains to sustain this momentum. Currently it was iPhone4S and iPad which have been instrumental in pushing the Apple share price by 50% in less than 6 months. Sustaining the craziness and momentum is a formidable challenge and Apple will need to out innovate and out-do the customer experience. Currently the only major new innovation due from Apple is the ITV. The iTV has some formidable base with Apple’s support services. One can expect Apple to perfect the device experience yet again. However, I have this feeling that Apple could be a victim of its own heady success. Apple has set the bar too high and outdoing itself year on year comprehensively is a feat that will be quite impossible. Then again, we speak of Apple here….

Tagged with: , , , ,

Amazon Kindle “fires” up the tablet market!

Posted in Mobile Devices and Company Updates, Value added services and applications by Manas Ganguly on September 29, 2011

Amazon Kindle Fire: Playing to a niche, it re-draws rules in the Tablet segment

The $199 pricing from Amazon, is one of the best examples of penetrative pricing- where by Amazon can make more money later by selling books, movies, music, apps through its app store. The reason Amazon can do it is because it has an offering very similar to Apple where it’s controlling the device, platform (it has a modified version of Android) and app store. Hence, it’s looking at a long term revenue by following a penetration pricing strategy. In doing so, it’s also utilizing its existing capacity of billions of gigabytes of cloud storage combined with Amazon Silk interface for faster loading of webpages to provide a better user experience.The reason other tablet players in the market such as Samsung, HTC, Motorola among others can’t follow this strategy, with the exception of apple, is because they only control the device part and have very little control over Android platform (controlled by Google) or app store (again influenced by Google).

On the flip side, Kindle Fire isn’t proper Android tablet. It is a forked version which means, whatever updates Google does will not make it to the Fire. It will Amazon’s prerogative to get the updates. Even the Android Market is out of bounds on the Kindle Fire. What really is unexplainable is the absence of HSPA capabilities on the tablet. Is it cost? For a mobile device which is heavily dependent on anytime available cloud service, not having a innate mobile connection capability is befuddling. And then there is the lack of Camera? Surely That wasn’t a huge investment that Amazon opted out of. It was hygiene.

Kindle Fire has shown us that a successful tablet launch isn’t all about the greatest hardware. It’s the apps and the ecosystem. Without which the brightest of the tablets are destined to fail. And don’t make the mistake of considering this a success for Android tablets. Because it is not. This is a tablet which only an Amazon could have pulled of. In fact Kindle Fire would be a nemesis of Android tablets. Now they have to compete with both iPad and Kindle Fire – one at the top end and one and the lower end of the spectrum.

Amazon has done a brilliant job of picking its niche and playing to its strength – content: gaming, video, music or eBooks and build an ecosystem around it and then start selling. That in essence is the purpose and motto of tablets- Tablet happens to be a conduit to digital consumption. And Amazon has seems to have hit the nail quite on its head.

Tagged with: , , , ,

Tablets: Is it a two horse race? Or there are three horses?

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on September 22, 2011

Gartner estimates that tablets were a 17.6 million market in 2010 and are expected to be 63.6 million units strong in 2011.That is an incredible 261.4% growth. The growth figure is expected to touch 326.6 million units by 2015 according to Gartner.ISuppli puts the 2015 number at 275 million units. Gartner had reduced its forecast for growth in computers sales from 9.3 per cent to 3.2 percent in 2011 and from 12.8 per cent to 10.9 per cent in 2012. This dominance and takeover of the computing world by tablets has so long been good news only to Apple even as Android struggles to get better at the tablet game. iPad 2 single handedly outselling all competing tablets combined and is expected to account for 73.4 per cent of worldwide tablet sales in 2011, down from 83 per cent share in 2010. Gartner expects Apple to maintain 50% of the global tablet marketshare in 2015.. Android tablets are on pace to ship 11 million units in 2011, accounting for 17.3 per cent share in the market up from 14.3 percent market share in 2010. Gartner’s forecast for the Android has been lowered by 28 per cent from last quarter’s projection. The reduction would have been greater had it not been for the success of budget tablets in Asia, and the expectations around the launch of Amazon’s tablet. To many, the third front would be the Microsoft Windows tablets which aren’t yet there on the horizon (not yet!).And yet, late arrival might limit its appeal, especially to consumers, as Apple and Android will be well established in the market by then. The current buzz around Windows 8 driven by the demonstrations seen at the BUILD conference might be short-lived if Microsoft’s push to use the new OS across devices comes at a compromise in usability. Also, the late arrival might limit its appeal, especially to consumers, as Apple and Android will be well established in the market by then.

The Tablet growth rush

Posted in Industry updates, Mobile Computing, Mobile Devices and Company Updates by Manas Ganguly on September 15, 2011

Media tablet shipments grew at a solid pace in the second quarter, led by continued strong demand for Apple products. The growth in tablet shipments through Q2, 2011 continues unabated as shipments rose by 88.9 percent between the first and second quarters, or 303.8 percent year-over-year. Apple continued its stranglehold of the global tablet shipments by uping its market share from 65.7% in Q1, 2011 to 68.3% in Q2, 2011.RIM which entered the market during the second quarter with the BB Playbook cornered 4.9% of the market share and most of this gain was at the cost of Android tablets. Android tablets, which previously held 34 percent of the market during the first quarter of the year, fell to 26.8 percent in the second quarter.

The Tablet Growth rush story

The Tablet Growth rush story

Android which is ruling the smartphone charts is expected to loose a little more in Q3, 2011 due to the $99 HP Touchpad numbers. HP in the mean time is expected to do a 4.7% cameo in Tablet market shares in Q3,2011 before going out of the tablet markets altogether. Even if a recovery for Android’s is sighted in Q4,2011, Apple will hold on to a 40% delta/differential share between itself and Android.

However, what looks increasingly possible is the emergence of a third competitor to iPad dominance and its is expected that Windows 8 powered devices could take this position to themselves. The case for QNX powered Playbooks doesnt look strong and HP Touchpad will exit in Q4, 2011 giving Microsoft an opening of 10% market share if the WP OEMs are able to leverage Microsoft’s superior platform, robust OS, enterprise back-integration and the MS eco-system to market their devices best.

The tablet markets are still on their ascendance and the size of the pie is growing. Apple seems to have taken a pole position in terms of its exclusivity, unmatched user experience and its ability to connect through the alll other Apple devices. Android’s look increasingly like they would own up the consumer segment and would keep penetrating lower in terms of reach and pricing and thus the massification of the Android tablet. The WP tablet could take the enterprise leverage which Windows anyways has and would backward integrate with the legacy systems which thus could be a very strong position.

By March 2013, Deloitte expects that worldwide, 35% of the overall tablet PC base of around 100 million units will be delivered by iPhones, 40% by Android-based tablets, 15% by Windows-based tablets and the remaining by other technologies.

The Tablet Growth story

Posted in Industry updates by Manas Ganguly on February 5, 2011

Tablets sold a total of 19.7 million units in 2010.iSuppli expects this number to be 242.3 million units in 2015.Thats a factor multiple of 12 and a CAGR of 65%.

iSuppli expects that this remarkable expansion of the tablet market from 2010 to 2015 will be driven by three successive waves of growth.The first wave, which is hitting in 2010 and 2011, was created by the arrival of the iPad and the ensuing tsunami of demand for the device. The second wave, arriving in 2011 and 2012, will be propelled by a deluge of iPad competitors, particularly Android-based models. The third wave, which will turn up in 2013, will consist of a flood of models based on the Windows operating system that will expand the reach of tablets into traditional computer markets.While the iPad will lead annual tablet shipments through 2012, the increasing strength of media-tablet rivals combined with the advent of PC-type platforms will cause Apple to lose its majority of total unit shipments starting in 2013.

Prior to the introduction of the iPad in 2010, the tablet market represented a sleepy niche of the mobile PC market, with small volumes, negligible growth, and sales limited to small group of users in professional markets. Shipments of these PC-type tablets amounted to less than 2 million units in 2009. The arrival of the iPad changed all that, helping tablet sales surge by a factor of 10 in 2010.The iPad’s huge head start both in unit share and ecosystem development will allow it to maintain its market dominance in 2011 and throughout most of 2012 despite the influx of competitors.

New model introductions in 2011 and 2012 will continue to boost iPad volumes and allow Apple to maintain a premium for its newest models. However, Apple will face increasing price competition from competing media tablets, many of them incorporating the Android operating system. Some of those tablets will enter the market with features more comparable—or in some cases, superior—to the current version of the iPad. Furthermore, Google is spearheading an effort to speed development of tablet-oriented content for Android-based devices.

The year 2013 will mark a critical juncture, as the tablet market turns into a battleground between media tablets using mobile operating systems, and PC-type tablets employing the Windows operating system.Microsoft likely will introduce a tablet-oriented version of its Windows operating system in late 2012 or in 2013 that not only will be better suited to touch-screen applications, but also will allow for content-creation tasks. The expected expansion of the current consumption-oriented media tablets to incorporate more creation applications is placing growing pressure on traditional low-end mobile PCs, and the existing Windows solutions are struggling to gain traction in the tablet market. Microsoft and the PC makers will engage in a vicious battle to fight off the ongoing share grab from media tablets, even as many of these vendors offer media tablet solutions of their own. One could expect to see a blend of slates, convertibles and dual- and potentially tri-screen solutions as alternatives to the media tablet onslaught. The wide variety of solutions—and intense battle among operating systems and types of platforms—will continue to fuel the expansion of the tablet market in 2014 and 2015.

Tagged with: , , ,
%d bloggers like this: