Amazing Fact of the Day: Just Apple's iPhone Alone is Now Bigger Than All of Microsoft
From Henry Blodget at Business Insider:
"Apple's iPhone business alone is now bigger than Microsoft. Not Windows. Not Office. Microsoft. Think about that. The iPhone did not exist five years ago. And now it's bigger than a company that, 15 years ago, was dragged into court and threatened with forcible break-up because it had amassed an unassailable and unthinkably profitable monopoly.
The iPhone also appears to be considerably more profitable than Microsoft. In the December quarter, Apple's iPhone business generated $24.4 billion of revenue. Microsoft's whole company, meanwhile, from Windows to Office to servers to XBox, generated $20.9 billion (see chart above).
If we assume that Apple generates the same operating profit margin on its iPhone business that it generates on its overall business--38%--the iPhone business generated about $9.3 billion of profit in the December quarter. All of Microsoft, meanwhile, generated only $8.2 billion."
MP: Let's hope that the Apple iPhone's phenomenal success doesn't trigger any government antitrust investigations, Congressional inquiries into "windfall profits," or legislation calling for a "Reasonable Profits Board" to control Apple's profits.
"Apple's iPhone business alone is now bigger than Microsoft. Not Windows. Not Office. Microsoft. Think about that. The iPhone did not exist five years ago. And now it's bigger than a company that, 15 years ago, was dragged into court and threatened with forcible break-up because it had amassed an unassailable and unthinkably profitable monopoly.
The iPhone also appears to be considerably more profitable than Microsoft. In the December quarter, Apple's iPhone business generated $24.4 billion of revenue. Microsoft's whole company, meanwhile, from Windows to Office to servers to XBox, generated $20.9 billion (see chart above).
If we assume that Apple generates the same operating profit margin on its iPhone business that it generates on its overall business--38%--the iPhone business generated about $9.3 billion of profit in the December quarter. All of Microsoft, meanwhile, generated only $8.2 billion."
MP: Let's hope that the Apple iPhone's phenomenal success doesn't trigger any government antitrust investigations, Congressional inquiries into "windfall profits," or legislation calling for a "Reasonable Profits Board" to control Apple's profits.
46 Comments:
Wow...that's amazing.
I guess it goes to show that even "monopolies" aren't safe from competition.
here's what's amazing to me.
we have, depending on who you talk to, a significant unemployment problem.
and yet.. Iphone and Android phones that sell for hundreds of dollars and require pricey monthly phone plans are going great guns.
interesting.....
here's what's amazing to me.
we have, depending on who you talk to, a significant unemployment problem.
and yet.. Iphone and Android phones that sell for hundreds of dollars and require pricey monthly phone plans are going great guns.
interesting.....
It is interesting, isn't it Larry? Really a testament to our economy when even things look bleak, unemployment is high and the economic recovery is slow, we can still afford toys like this. I mean, what does that say about the wealth of a society?
Although, I imagine the aforementioned numbers are global sales, the point still stands. We are so rich that even our beleaguered members have extra money to spend on luxuries.
Given that Apple is operating much like the company that they ridiculed in their 1984 commercial down to their own Purification Directive, I'd expect some form of antitrust action.
Once the company moves beyond Jobs to the openness of Sculley's era of Apple, there might be some redemption for the company.
"Once the company moves beyond Jobs to the openness of Sculley's era of Apple, there might be some redemption for the company."
Seth, under that scenario, redemption would be the redeeming APPL shares, by shareholders.
I think that Microsoft, and this is pure speculation, will divide itself into independant units by the end of 2012. I will further speculate that these units will consist of:
1. Windows PC, Mobile and Business Software.
2. Cloud and Server Sales and Services.
3. Web based Businesses and Gaming.
the company most ripe for anti trust is google.
they are doing all the things they railed at microsoft about a decade ago.
chrome is exactly what they howled about Microsoft doing - integrating the browser into the OS, only much, much more deeply and with advertising and massive data mining included.
they dominate ad word spending.
i'm not in favor of breaking up such things and stifling innovation (imagine how much better windows would be today had they been allowed to do this), but the rank hypocrisy and political nepotism around google galls me.
http://www.statista.com/statistics/12743/worldwide-apple-iphone-sales-since-3rd-quarter-2007/
Growth is led by China and India, which now account for over 30 percent of world subs,
http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats
These mind-blowing financials are why I've done a U-turn on Apple. I was an Apple fan in 2004-5, before they really took off. I got a Powerbook then, my first laptop, and it was great at first. However, I felt their shares became completely overvalued in '07, when the market top drove their share price to $90. I hate the closed model they've chosen since and became an Apple bear for the last five years, but they've proven my predictions wrong so far with their staggering recent success. I still think their patent-happy, closed model and complete inability to understand the burgeoning online content market will be their doom over the medium-term but over the short-term, the Android model is even dumber.
To wit, Google made $38 billion in revenues last year, while Apple made $33 billion in profits!! That's that many more billions that Apple'll be able to pour into iOS development which Google will never be able to match, let alone Microsoft at this point. All Google is doing is killing off the weaker competition like Palm and RIM and Windows Phone, salting the field for the competition before Apple goes downmarket and knocks off Android too, but Google can't continue subsidizing a free Android forever and will have to give it up at some point. Considering almost all Android development comes from Google, Android will then collapse, because they just used a stupid business model. So as flawed as Apple's model is in the medium-term, you can get away with it as long as your competition is even dumber. ;)
the company most ripe for anti trust is google.
Google was called to testify before Congress about anti-trust practices. Sergey Brin essentially said to Congress "We make a product that connects people to tons of data and information worldwide, for free, and we're the bad guys?"
jon-
oh, i know. they do masterful PR behind their "do no evil" mantra.
then they mine the hell out of your data. google is likely the biggest invader of privacy in all of history. when confronted on it, eric scmitt says outlandish things like "if you don't want people knowing about it, maybe you shouldn't be doing it" then tries to sue CNET to stop them from reporting on his divorce.
but the gall of working to ban microsoft from integrating explorer into windows and then turning around and building your own browser based OS is pretty horrendous.
the important thing to remember about google:
if you are not paying for a good or service, you are NOT the customer. you are the product.
google's customers are advertisers, not gmail account holders.
the newly pared down and unified terms of service are specifically to make it easier to cross sell and take your e-mail data and use it on android etc. this couples location based data with every other piece of data. they are finding new ways to monetize you, the product and sell you to their customers.
sure, they provide significant benefits in exchange and i'm not even saying it's a bad deal, but it's worth understanding what the actual proposition is.
i find their management to be pretty hypocritical and duplicitous about that. i have no issue with honest capitalism, but selling rock candy as a health food or saying "it's ok when i do it, but i'll get the feds to stop you" is another matter.
re: " biggest invader of privacy in all of history"
bigger than Facebook?
sprewell-
i think you are leaving some things out of your analysis, particularly google vs apple.
much of what apple spends is not on the iphone or ipad os.
it's on hardware, other products etc.
google is more focused.
but more important than that, they are not doing it alone.
motorola, samsung, ntc etc are all doing hardware development that all benefits android. that's why their handsets have so much more variety and are taking a technical lead.
also, the ap ecosystem for android is far more open and thus far more vibrant. sure, that means there is also a lot more crap, but the best of android already rivals the best of iphone and is pulling ahead and will keep doing so.
when open source gets its teeth into something they take it over. look at web servers (apache).
perhaps the seminal think piece on this is by eric raymond "the cathedral and the bazaar".
android has far more resources going into its development than iphone.
apple was a one man band. they had steve jobs, perhaps the greatest multimedia and product visionary or our age.
his genius kept them up with and ahead of the market. but that gap was already going away. compare how long it took other smart phones to launch things like the iphone with how quickly the other tablets were out.
now they will fall behind.
remember what happened that last time he left?
a walled garden tended by the greatest gardener that ever was may keep pace, but i think we have already seen "peak apple" in terms of share and dominance.
morganovich, I broadly agree with a lot of what you say, although there are a lot of techies at Google who would never do the things you're really scared of, but the real problem is just that they have the power to do those things. However, your point about IE is not correct because your history is a bit off: Microsoft settled with the DOJ in 2001, long before Google went public in 2004, so Google had nothing to do with that anti-trust lawsuit. In the end it doesn't matter because their browser-based OS, ChromeOS, is a dumb idea that has almost no adoption.
"bigger than Facebook?"
massively bigger.
google reads facebook. their spiders are all over it. facebook allows privacy controls.
facebook cannot read g-mail. they don't know what you search for or where you are physically from your android phone, who you call, and little about what you buy.
facebook knows very little about you compared to google.
I tend to agree with Morg.
When PCs first started.. it was Apple and PCs and Apple took the closed approach and PCs more open.
Apple still "thinks" closed and Android is going to, once again, relegate Apple to a niche part of the market.
I have to give Apple credit - they saw the SmartPhone and they saw the tablet... long before others did and the interesting thing is that Microsoft spent years diddling around with a tablet OS and it never went very far.
"long before Google went public in 2004, so Google had nothing to do with that anti-trust lawsuit."
and you need to be public to sue? is that a new law?
many of us in the valley were using google in 1999-2000.
i think you are confusing IPO with incorporation.
google was already very, very powerful before their IPO and politically active. consider facebook for another example.
" facebook knows very little about you compared to google."
have you seen this?
larry-
yes, i've seen that.
and what makes a picture on FB different from any other picture?
you do realize that firms like google search, parse, and follow the friendship links on your FB page, right? that they see all those tags too? that their database of pictures includes and exceeds that of FB?
think if it as a set theory problem:
set G contains but exceeds set F. so who has more inforamtion?
also note:
that article is a bit disingenuous.
it's not really anything that facebook is doing.
it's just that the pictures exist and others can see them.
the whole point of that article is than ANYONE can use that.
unlike google, at least facebook lets you hide things. you can make pictures private.
no such ability exists if you say, g-mail one to a friend or worse, send one to a friend who has g-mail as you may not even realize the privacy you just gave up and you have no agreement of any kind with google.
Morganovich, as for your points about google vs apple, I have not seen a cost breakdown but I bet Apple spends far more on in-house software than in-house hardware development, as they usually simply buy the same quickly commoditized hardware from outside suppliers. Google is "more focused" on software but they make very little money off that focus, chump change in search ads per install, much of which they'd likely have made anyway. And yes, "they are not doing it alone," but the combined profits of all those Android vendors is less than half of Apple's profits and the hardware vendors contribute almost nothing to Android software development. I agree that the Android app market has more potential because of its openness, but as long as Apple's app store makes more money and Google stupidly doesn't put in any sort of certification system to avoid malware, Apple apps still come out ahead at the moment.
Open source is a resounding failure almost everywhere it has been tried- Apache is the rare exception, like the linux kernel- no matter how many "think pieces" their apologists drum up to obscure the evidence. My point with the numbers I've cited is precisely that Android does not have "far more resources going into its development than iphone." As for the nonsense about Steve Jobs being Apple, I suggest that you read his biography to see how untrue that myth is, I already debunked it for you before. I agree that Apple's walled garden will crumble someday, but it won't as long as their competition is even dumber, ;) ie the free Android model or competitors like RIM who are trying to create their own walled garden. XD
As for Google going after Microsoft before the IPO, considering Google was losing money till 2002 on tiny revenues compared to Microsoft, I don't think they had the time or money to affect that lawsuit at all.
I'll buy an I phone when they cut their margins and trim the price.
"but as long as Apple's app store makes more money and Google stupidly doesn't put in any sort of certification system to avoid malware, Apple apps still come out ahead at the moment."
i disagree. aps are not developed by Google, but outside sources.
it's not about whether google or apple makes more money on aps, it's which place makes more money for developers.
the long cert process and closed nature of apple has driven dev talent to android.
this is why android had 44% share vs 31% iOS for downloads by last fall and why their share keeps going up.
andorid is already winning and pulling away.
"Open source is a resounding failure almost everywhere it has been tried- Apache is the rare exception, like the linux kernel- no matter how many "think pieces" their apologists drum up to obscure the evidence."
wow. you could not be more wrong about that. you clearly have very little understanding of the software business. you think only in terms of what YOU use. sure, few consumers use linux, but it's everywhere in commercial applications.
ask IBM about open source's value. ask anyone running a PKI system. ask sun how they got driven out of business. look at mozilla.
the issue with any software is than users want support, someone to call if it doesn't work. no question, red hat are not those guys. but IBM are. most of what they sell is based on OS. it's their whole business model. do you have any idea how much SAP runs on linux? how many shopping cart systems are OS? even twitter took its security open source.
your grasp of enterprise software looks pretty weak.
"I don't think they had the time or money to affect that lawsuit at all."
they testified. it was the government bringing the suit. doing so cost little. if you think google had little influence in technology in 2001, then you were not in the industry. they were THE rising star in the valley during the period of the dotbust.
and your "debunking" is just nonsense. it was his vision. sure, he got help with details, but the grand ideas were his. NO ONE else could have done what he did. i have a dozen friends who have worked at apple. every single one egress with this. steve was an epic visionary and a prolific micromanager. there is a reason there is such a cult of steve. he was not a deity as some seem apt to gush, but the man had a unique and profound vision. apple is going to have real problems without him.
sure, RIMM is an epic fail, but they were another closed system. assuming android is dumb because rimm was is absurd. android knows EXACTLY where apple's weak points are.
and they don't NEED to make money on the OS. it's a loss leader for them to sell ads. remember how well browsers you had to buy stood up to free ones? still have your netscape stock? watch it happen again with phone OS. selling what others are willing to give away is a very difficult business model.
you also ignore the notions of sufficiency. let's say you can spend $10 billion on and OS and i can spend $2 billion. do you really think it makes that big a difference? what does that extra $8 billion get you?
both apple and google could easily up their R+D spend. they don't because the returns to it aren't there.
android is already reving faster than iOS.
all your talk of "someday" is just flat out missing what has already happened.
someday is now. android phones are outselling iphones. android aps are getting downlaoded over 1/3 more frequently than apple and rising.
it's already happening spre. this is not some fuzzy prognostication, it's already happened.
sure, they provide significant benefits in exchange and i'm not even saying it's a bad deal, but it's worth understanding what the actual proposition is.
=================================
Pretty much exactly my view of the varous competing energy sources: you cannot comare them unless you kno exactly what the propeosition is.
"My point with the numbers I've cited is precisely that Android does not have "far more resources going into its development than iphone."
then the people using them must be much, much better at using them.
how many new iphones last year? 1? 2?
how many new android phones? 30? 50?
iOS in on rev 5.
android on rev 4.
android does more .revs.
it's evolving much faster than iOS.
the aps are expanding more rapidly and getting downloaded more.
if apple is bringing some many more resourced to bear, well, they sure are not getting their money's worth.
you are also using a bad metric for resources.
apple R+D was 2.4bn. google, 1.3bn.
but apple got no outside help and spend a great deal on hardware, contrary to your ill informed opinion. they spend huge money on look and feel and on HI.
google was helped there by big folks like samsung, motorola, htc etc.
apple is losing ground by the day.
morganovich, no shit apps "are not developed by Google, but outside sources," my whole point was that third-party developers make a lot more money on Apple's platform. You're right that "the long cert process and closed nature of apple" keeps the Apple app store lead down, but it's still far ahead because that's where all the money is. As for Android OS share, it's been going down recently as the iPhone 4S blasted off. Your numbers are out of date.
As for open source, considering I use largely open source software myself, you're wrong again. :) Yes, there's a little open source dispersed here and there on the internet, but it's far outweighed by all the closed source software that's used much more often. IBM is a consultant, those are the only ones who occasionally get some use out of open source, as a free platform they can customize for their clients. As for Sun, they got driven out of business precisely because they open sourced so much of their stack. Mozilla never had half the market share of closed-source IE and now they're headed downhill also.
Not only is Red Hat not that successful, but IBM is not going to support end users either, only the enterprise. And their stack is decidedly mixed, with entirely closed-source software like AIX and hardware like POWER, unlike Sun who open-sourced even Sparc. Who cares how much SAP runs on linux when their entire stack is closed source? You confuse some use of open source here and there with some kind of victory, when the vast majority of usage is comprised of closed source software. Trust me, if this is your analysis of the enterprise, even though I'm not an enterprise guy, I'm aware of a lot more than you are. :)
I highly doubt Google testified against Microsoft as they were very small at the time. I haven't seen any evidence that they did, please present some if you have it. Yes, Google had little influence in 2001 as they were still losing money at the time. As silly as the valley is, it's still driven by money and losing money doesn't get you much influence.
Jobs certainly had a "vision," but it was a fairly distorted one, which demanded complete control of the stack. That's why he didn't want to bring iTunes to Windows or allow third-party apps on the iPhone or started so many lawsuits over such silly trivialities as the visual design of Android. He had to be forced into doing the first two, decisions which, if he had been allowed to have his way, would have sunk the ship. So we can all laud him for his good decisions, but let's not forget that there was an executive team there that had force him not to make some blatantly stupid decisions, that would have sunk the ship if he had gotten his way.
As for Android as a loss leader, you have to make enough money elsewhere for that to work. Currently, mobile revenue comes nowhere close, it's being redirected from desktop search. As Apple keeps dumping billions into iOS, is Google going to be able to keep dumping billions to match? No way, they just have a lot less ammo and shareholder pressures, after events like their recent quarterly miss, will force them out.
As for your notion that the smaller amounts Google puts in are sufficient, that belies the entire history of software development. There are always new features you can pour money into. For example, Google is trying to repurpose Android as Google TV and failing. Apple will be able to pour billions more into Apple TV and repurpose iOS for TV much more effectively once they decide to really make their TV push. Those are the kinds of things the extra $50 billion gets you, the ability to get into entirely new platforms first, best, and biggest. I will grant that it's a bit of an open question of whether Google's billions will suffice, but the entire history of software suggests it won't. I'm not talking about R&D spend, I'm talking about basic software development. And you don't measure it by number of phones or OS revisions, all that matters is dollars and Apple's profits are almost as much as Google's revenues. Think about that, that's the only stat that matters.
You keep talking about Android usage, but a majority of those Android apps are also free and free usage doesn't count for much. Apple spends plenty on buying hardware components that every other vendor has access to, but like I said, I bet they spend a lot more on internal software development. I doubt internal hardware spend pushes the needle at any of the mobile vendors, and buying outsourced components doesn't matter because you can't differentiate on commoditized hardware. I point to the billions Apple makes, you point to the millions of Android devices with little profit to show. I know how that story ends and it won't look good for Android.
"apple is losing ground by the day."
Haha, for you to say this today, in the face of Apple's staggering financials, shows you are completely out of touch. :) I hate the fact that Apple is winning with their closed model, so I'd love for someone to come along and knock them off, but trust me, it won't be the dumdums behind Android or BB 10 or any of the current "contenders," as their models are even dumber.
sprewell-
now you are just making stuff up.
android aps are getting downloaded more than iphone. the ecosystem is more vibrant.
it happened in q2 2011.
http://www.abiresearch.com/press/3799-Android+Overtakes+Apple+with+44%25+Worldwide+Share+of+Mobile+App+Downloads
android's base of phones is more than twice the size of apples already.
android's share of the smartphone market in q4 was 47% vs 36% for apple, and that was with apples "hot" new launch. android will be back over 50% by mid 2012, as it already was in q3. apple has no new launches for a while.
most of ABI's data is behind their paywall, so i can't link it for you, but those are the numbers. andorid is 11% ahead on share in an awesome q for apple, and more like 15-18% without an apple launch.
yet you speak of apple like they are the leader.
not on this planet spre.
and this "As for Sun, they got driven out of business precisely because they open sourced so much of their stack" is just fantasy.
solaris dies because it could not compete with open source. they opened it to try and save it, but it was too late, especially on custom hardware.
IE only has any market share due to bundling. if it didn't some on your pc, it could not compete with firefox.
you profess to be knowledgeable on OS, but everyhting you say proves otherwise.
you are literally just making stuff up and horrifically mischaracterizing business like IBM.
i've started and been a c level officer at 4 software companies. i have sat on the boards of maybe 4 more and been a hands on angel at maybe another 5-6. i ran the tech investing group for 2 funds and founded vc groups. trust me, you do NOT know more about enterprise software than i do.
you are as deluded about that as you seem to be about the ap ecosystem.
and this:
". I doubt internal hardware spend pushes the needle at any of the mobile vendors, and buying outsourced components doesn't matter because you can't differentiate on commoditized hardware."
is pure idiocy. there are loads of differentiators from the baseband to the screen. processor choice matters, as does architecture and firmware. you clearly have no idea what goes into designing a high end phone.
sure, to build a low end unfeatured gsm phone, you can get a ref design, but not for a galaxy or an iphone. does NOT work that way.
and you clearly have not grasped the argument here.
pointing to apple profits and saying "andorid doesn't make money" is like pointing to netscape profits and saying "microsoft is giving explorer away" how can they keep up? andorid's job is not to make money, its to drive advertising and gather information to allow for cross selling with google's other platforms.
the fact that you cannot seem to see this makes me question if you understand the google business model at all.
you seem to think they want to be like apple. they don't. android is a loss leader. that's its job. create inventory for ad sales and gather personal and geo data for better targeting.
apple has been a massive success, no question. they have broken a phenomenal amount of trail and gotten paid for that.
but that's the past.
in phones, android is winning. their user base will soon be 3x apple's.
spend some time at CES and that would be obvious to you.
>>> threatened with forcible break-up because it had amassed an unassailable and unthinkably profitable monopoly.
M$ WAS a monopoly. That is my own opinion as a programmer and system developer of 30+ years experience.
They had far too much control over/through the OS, and what they did to Netscape in the browser market more than amply showed it.
NS went from the defacto king of the browsers to a bankrupt company in a matter of a couple years, and not because IE was in **ANY WAY** a better browser.
I could go on but it's somewhat OT.
====
Apple, via the iphone, however, is NOT a monopoly thanks to Google, who created Android, a very effective alternative to the iP in all its forms.
>>> imagine how much better windows would be today had they been allowed to do this
Imagine how much better windows would be today if they had to actually worry about anyone else stealing their lunch and shoving them out of the market. They did not, and treated the customer like an obedient "You'll take what we give you and like it" peon.
Microsoft is now running scared, they know everyone hates their guts and they're about to lose out this time on the whole market that they almost lost to Netscape. Tech sidestepped around them, and they missed it happening because they really aren't all that competent on pretty much any level.
Apple created a market for smartphones that somewhat supplant computers, then Android took the other "half" of it open to people who weren't fans of Apples goosestepping policies.
Then Apple took the pad market and made it The Next Big Thing in computing, and Android jumped on that one right away.
And so now Windows is in danger of becoming the Digital Equipment Corporation of the 201x's, as their core market gets eaten out from under them by a thousand small upstarts with a big standard.
MSoft is now pushing the Windows brand smart phone, but it's too little too late. They will tank on both windows phone and pad sales, because anyone who likes Apple will buy Apple, and no one likes Windows, esp. the tech dweebs.
P.S., Apple is doomed, too, btw.
Without jobs to come up with the next "insanely great" thing, they will do with the phone and pad markets what they did with the PC/Macintosh market... go for lower volume and high prices/profits while losing market share slowly but surely to a thousand little competitors with a big umbrella standard. Apple sells far and away more units than any other company, but their own sales if iPs are dwarfed by the total sales of Android compatible phones. Eventually, that will make all the difference in the world.
>>> Apple will be able to pour billions more into Apple TV and repurpose iOS for TV much more effectively once they decide to really make their TV push.
BWAAAAhahahahahaa....
Apple will point the way to the features people want, then some bright boy small developer/company will make an app that does just as well with an Android phone.
Apple needs to stop controlling the hardware, and become a design firm for other companies, getting a percentage point or two off the sale of every device for their front end design.
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Apple needs to stop controlling the hardware, and become a design firm for other companies, getting a percentage point or two off the sale of every device for their front end design.
As long as they operate like the company parodied in the 1984 commercial, that's not going to happen.
They already express a disconnect from the totalitarian folks that make their products, like the PRC's Foxconn "company", the slave-drivers at Foxconn excepted.
>>> I hate the closed model they've chosen since and became an Apple bear for the last five years, but they've proven my predictions wrong so far with their staggering recent success. I still think their patent-happy, closed model and complete inability to understand the burgeoning online content market will be their doom over the medium-term but over the short-term, the Android model is even dumber.
Sprewell, you really, really have no clue whatsoever about this market.
This is hardly the first time Apple has pursued this kind of bad naziesque design model, it's inherent in their business genes -- they are a truly libtard company from the ground up. They want absolute control over everything, and can't understand how it is that they can be doing so well by the official metrics but eventually will lose, and lose badly.
This was written before the Apple renaissance led by Jobs and starting with the iPod:
They Coulda Been A Contender
It details how Apples' arrogance and business incompetence took them from being The Boss of Computing's Future to an also-ran.
This is the exact same playbook being used today, and the same result will happen after the Jobs pipeline dries up in 5-7 years.
The Android market, however, isn't all that profitable... but it owns the market. In very short order, total Android sales have surpassed Apple's IPhone sales -- no one company sells as many as Apple does iP, but the aggregate is greater... exactly like the IBM PC market vs. the Macintosh in the 1980s.
The exact same scenario will play out in the Pad market over the next couple years, with the market not shrinking, but Apple's share of the pad market shrinking nonetheless.
Because, you see, the important, driving factor is not the device, but what you can do with it, and the app market for the iP is now smaller in terms of what it offers the user than that for Android. Moreover, the Android market will be faster to react to innovation, and will also have any number of "borderline" apps which won't make it on Apple, that is, anything with a vaguely sexual component to it.
And, like it or not, sex has been at the forefront of just about every technological development of the last 50+ years.
Android may not be making as much profit for Google as iPs make for Apple, but they ARE taking over the market, slowly but surely. Eventually, Apple's share will drop below critical mass, and it will become the same niche market that the Mac became.
Apple may have one last gasp in the iTV market -- this remains to be seen.
seth, as I note, obliquely, Apple has been operating like their parody pretty much since the year 1984.
The Mac was a very closed system all along, with Apple's imprimatur stamped onto and into every box.
Don't get me wrong, it was a great system, and the reason it was so successful initially is in the very fact of its closure... but Apple didn't "let go", which they HAD to do about a year after its introduction... and therein lay their death knell in the market.
>> You keep talking about Android usage, but a majority of those Android apps are also free and free usage doesn't count for much.
BWAaaaahahhahahhaaaa....
I repeat myself: You don't grasp this market AT ALL.
Those "free apps" are a huge part of WHY PEOPLE BUY THE PHONE.
Even besides that, though... "But Wait! There's more!":
1) They represent a core developer crew that is much larger than that of Apple's, not a one of whom is paid by Google to create stuff for them.
2) That core developer crew is either going to
--a) hit it big by producing something people want, and making money, allowing them to do more popular stuff, cementing the Android market
--b) Use that experience and "look what I did!" to get a job with another company to make something they want to make... now, given even roughly equal markets of Androids-vs-iPs, which one do you think they're going to produce their app for first -- the one the tech geek has experience with, or the other one?
3) That core developer market... suppose you were considering writing an app of some sort. You can, as noted above, produce for either market first (likely you don't have the money to do dual-track development). So -- you have to choose between two possible markets to go after first -- both about the same size. Which one do you want to develop for, first -- the one which has an openly accessible marketplace where anyone can put something up for sale, or the one where, on a whim, the execs at one lone, single company can tell you you are NOT ALLOWED to market your product to their customers?
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2a, btw, is the "Angry Bird Effect".
And no, that AB came from the iP market is irrelevant. When it came out, Android was in its infancy, and iP was the Thing To Develop For. Now, that is the Android position of the market.
Creative Destruction
"Sprint Nextel (S.N) posted a wider quarterly loss because of the higher costs of selling Apple Inc's (AAPL.O) iPhone and the popular device delivered a smaller-than-expected boost to subscriber numbers, sending the company's shares down 2 percent."
Reuters
OBH, you probably won't read my response with your usual drive-by style, but here it is anyway.
"Apple will point the way to the features people want, then some bright boy small developer/company will make an app that does just as well with an Android phone."
So you think an Android phone will replace the Apple set-top box? Not going to happen, as you'll never have enough disk space and proper hardware on your phone. If you meant to say that Google will clone such features on Google TV, then I go back to my argument above that they just don't have the money to follow Apple onto all these platforms, particularly when Google is essentially giving the result away for free.
"Apple needs to stop controlling the hardware, and become a design firm for other companies, getting a percentage point or two off the sale of every device for their front end design."
So Apple would become like Microsoft, though I'm not sure if you mean Mac OS X by the "front end" or just the Mac GUI stack or apps. Jobs would've never done this, as he believed in controlling the entire stack for a better user experience, and I doubt anyone at Apple would ever gainsay that decision now.
As for your claim that the current Apple is a complete retread of what happened in the '80s, there are important differences that you're missing. First off, Jobs shows up almost nowhere in your linked narrative, as they kicked him out back then, but he and his new team were the main players this time around. Second, that is not "the exact same playbook being used today," there are some similarities in the closed model Apple still uses, but Jobs was smart enough to do some things differently. If you read my above link, you'll see that the Apple app store still "owns the market," not Android. Total Android phone sales don't matter when there's a lot more money being made on iOS apps, either because an Apple customer is more easily separated from his money ;) or Android users just don't care about apps.
You try to compare Android to the IBM PC, but there is an important distinction that you're missing: the PC-compatible market was not free (free as in price, I'm not talking about open source). Ubiquity matters but not if it's free, because then you're not getting any money back to put into your product, like the PC vendors did but Google largely isn't. Of course, the hardware vendors are making some money off Android, but my other link showed their profits were still less than half of Apple and they still don't contribute much to Android, perhaps because Google doesn't let them. By missing these important distinctions and only focusing on ubiquity, you are going way off on your predictions.
If somebody actually did what you suggest, undercut Apple somewhat on price but go for ubiquity, I'd agree with you, but that's not what Google is doing with Android. I agree that apps will be more important as time goes on, but the crucial question is going to be whether it will be easier for Apple to go downmarket from the pricey end of the market or for Google to upsell its customers, getting Android users who're used to a free OS and mostly free apps to pay something. History suggests Apple will find that transition down a lot easier than the Android vendors will find the transition up, not to mention Apple will just have billions more to roll into their market at that point. You're probably right that Android will have some niches in its more open market that Apple will never have, but I doubt that will be much of a factor when compared to the more important factors I've discussed.
Android is taking over the low and mid-end of the market, as you say, but the question is how long they'll be able to maintain even that beachhead given that Google won't be able to keep dumping billions into Android with the meager mobile revenues they get back. To this day, people complain about Android being "sluggish and choppy", that's a problem.
Share doesn't matter, profits do. If Apple has only 25% unit share but has the almost 70% profit share that my previous link showed, that's all that matters.
As for your claim that free apps are why Android phones sell, that doesn't matter if app developers aren't making much money on Android, as my above link shows, so they move to where they can make money, iOS. As for your other points,
"1) They represent a core developer crew that is much larger than that of Apple's, not a one of whom is paid by Google to create stuff for them."
You have no evidence for this claim whatsoever and given that there's a lot more money to be made on Apple's app store, it's probably Apple that has most of the third-party developers that matter.
"2) That core developer crew is either going to
--a) hit it big by producing something people want, and making money, allowing them to do more popular stuff, cementing the Android market"
You assume that Android users want to pay for stuff and that simply being open means that Android apps will make more money. Both are contradicted by the evidence so far.
"b) Use that experience and "look what I did!" to get a job with another company to make something they want to make... now, given even roughly equal markets of Androids-vs-iPs, which one do you think they're going to produce their app for first -- the one the tech geek has experience with, or the other one?"
The one where there is the most money, the Apple app store. :) No company that matters bases their strategic decisions on what "the tech geek has experience with." If that were the case, we'd all be running Unix on our desktops by now. ;)
"3) That core developer market... Which one do you want to develop for, first -- the one which has an openly accessible marketplace where anyone can put something up for sale, or the one where, on a whim, the execs at one lone, single company can tell you you are NOT ALLOWED to market your product to their customers?"
Of course the former, unless there's a lot more money in the latter. We agree that an open market is better, as I've said many times already, but money is much more important and Apple is blowing everyone else away on that crucial metric. And if you're going to use Angry Birds as an example of a hit, of course it matters that it was a hit on iOS first. :)
From IBTimes dated January 18, 2012 3:49 PM EST: A new Nielsen report says 45 percent of new smartphone buyers went with Apple, up from 25 percent in October. Not coincidentally, October is when the iPhone 4S went on sale, and holiday sales no doubt helped perk up Apple sales. Nielsen reports that of the new iPhone buyers, nearly 60 percent bought the new iPhone 4S over the 4 or 3GS....
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