May 2010
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Month May 2010

Sony would say No to Walkman today

Sony is “not convinced there is a large enough market to justify bringing out a tablet,”

via Sony Considering Developing Tablet Computer to Compete With Apple’s IPad – Bloomberg.

I wonder what current Sony management would have said when the Walkman would have been presented to them in 1978 by audio-division engineer Nobutoshi Kihara.

The Walkman TPS-L2 from 1979:

The original Sony Walkman

The Walkman introduced a change in music listening habits by allowing people to carry music with them.

There was a tiny market for such implements in 1978, promoted to professional journalists.  Sony even had a product called the Pressman and marketed it exclusively to reporters. These recorders lacked stereo sound and were very expensive. They also used (typically) microcassettes, which had no support from record companies.

With the limited choices presented to consumers, the most popular cassette tape players were either home stereos or car players.

I’m sure Sony’s current management  would also have been unconvinced that there was a large enough market to justify bringing out a consumer-grade portable cassette player.

Apple's product trajectories

In a well written and reasoned essay, John Gruber observes how Apple evolves their products after starting with a perfectly narrow new product definition.

Toward the end he brings us to the iPad saying:

That brings us to the iPad. Initial reaction to it has been polarized, as is so often the case with Apple products. Some say it’s a big iPod touch. Others say it’s the beginning of a revolution in personal computing. As a pundit, I’m supposed to explain how the truth lies somewhere between these two extremes. But I can’t. The iPad really is The Big One: Apple’s reconception of personal computing.

Absolutely right.  The iPad is as big as it gets.

But in my way of thinking, the iPad itself is but a “rolling” of the original iPhone which itself was a “rolling” of the gesture-based UI that they gestated in Apple’s labs for more than five years.  That UI itself was made possible by the modular nature of OS X and the frameworks on top that have their roots in Next Step. Next Step itself owes a lot to Unix which was born in 1968.

via This is how Apple rolls | Tablets | Macworld.

David Hockney on the iPad

“The iPad is far more subtle, in fact it really is like a drawing pad. They will sell by the million. It will change the way we look at everything from reading newspapers to the drawing pad.

“It can be anything you want it to be. This is the nearest we have got to seeing what I would call a universal machine.

via David Hockney swaps a sketch pad for an iPad | News.

In-car iPad mounting


Plus ça change, plus c'est la même chose

And so this morning, the handset maker announced another sweeping overhaul of its management structure, its second reorganization in less than a year.

via Nokia Reorgs Evidently Biannual | John Paczkowski | Digital Daily | AllThingsD.

Apple's Valuation Struggle

I don’t know how many times I can re-write this story but here goes another try.

In the graph below I show Apple’s historic share price overlaid Apple’s P/E (with and without cash).

The share price is the line in green with the scale on the right and the P/E (trailing twelve months ex-cash) is shown in blue with the scale on the left.  The P/E including cash (which is what is usually cited) is shown in yellow.

As the graph shows, while the stock has risen, the P/E has fallen.  This is due to earnings accelerating faster than the stock price. As valuation is usually correlated with growth, it stands to reason that Apple continues to be discounted as a growth stock.

Visualizing iPhone vs Android Shares

Following up on my last post on how misleading US-only share comparisons can be, I decided to draw charts to visualize the comparison.

As Android and iPhone compete in various ways, it’s hard to see which is the preferred choice given a direct comparison.  In other words, iPhone and Android devices rarely are placed next to each other with similar terms.

Take the US market for example.  The overall data from NPD suggests that last quarter Android reached 28% share vs. 21% for iPhone.  Many of those Android devices were new to market or at least newer than the iPhone which in Q1 was coming to the end of its product cycle.  Second, pricing for Android devices seems to have been quite aggressive with buy one get one free sales.  But I won’t dwell on tactics now; what I do want to note are the differences in share between AT&T users and non-AT&T.

Note that within AT&T, iPhone outsells Android over 4 to 1.  iPhone also outsells “others” (mainly RIM) more than 3 to 1.  However, outside AT&T, where the iPhone is not available, Android does not outsell “others”.

If we exclude the US altogether, we also see that Android does not have a great distribution.

Outside the US, the iPhone also outsells Android nearly 4 to 1, but it has a way to go before challenging Symbian which makes up the bulk of “Others”.

So in markets where Android is head-to-head with the iPhone (AT&T and non-US markets), iPhone’s lead is quite high (still).  The possibility still exists that Android will overtake iPhone given the broad licensing and distribution, but it’s not necessarily a given.  And in any case, iPhone is not the market share leader today and that leadership does not seem to be their objective (note the pricing).

The bigger question is what will happen to RIM and Symbian as Android grows.

Apple P/E Briefly Drops to 20

Apple’s Price/Earnings ratio (trailing twelve months) based on restated (non-subscription) accounts.

Grey line is P/E ex-cash.

NPD: iPhone is 65 percent of AT&T's smartphone volume

Much ink is being spilled over Android outselling the iPhone in the US in Q1.  Here’s what NPD survey data shows:

  • Q1 units for Android reached 28% vs. iPhone at 21%.
  • AT&T stated that they activated 2.7 million iPhones.  That is 31% of all iPhones sold by Apple.  Assuming NPD data is accurate, we can conclude that Android shipped 3.6 million units in the US or 65% of their total.
  • In a previous posting (Global smart phone OS shares « Asymco) I estimated, based on Canalys estimates, that global Android share reached 10% last quarter or about 5.5 million.
  • We can compute that Android captured only 4% of smartphone share outside the US while Apple obtained 14% share.
  • You can also observe that iPhone’s US share increased y/y while every other platform except Android dropped (implying that Android took share from everybody but Apple.)
  • NPD claims AT&T accounted for 32% of the smartphone market, and even though AT&T carried both Android and WinMo and Blackberry devices, 21 out of every 32 phones or 65% of AT&T’s volume were iPhones.
  • We can conclude that Android captured 34% of the non-AT&T US smartphone market.

The table below combines the NPD, AT&T, and Canalys data to show units for iPhone and Android in the US, Global and non-US regions.

One can only wonder what would happen if iPhone would be available non-exclusively.  Would iPhone achieve greater than 60% share as it did on AT&T?  Certainly that’s what happened in France.

Survey: Consumers are replacing other computers with iPad

According to a new survey, 44% of iPad purchasers say they won’t be buying a notebook because of the device.

via Survey: Consumers are replacing other computers with iPad.

Count me in with those 44%.