January 2011
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Month January 2011

65% of Apple's sales came from iOS powered devices

The iPhone and iPad generated $15 billion of revenue last quarter. In addition, iPod touch generated about $2.3 billion, implying that iOS based devices were responsible for sales of $17.3 billion.

To put that in perspective I drew this chart which shows not only the sales by products but a rough representation of share of the two OS variants Apple uses to power its products.

Why Eric Schmidt had to go: Google's innovation dilemma

Charles Arthur provides a convincing back-story to the Google exec re-shuffle.

Google shuffle: why Eric Schmidt had to be pushed from the top | Technology | guardian.co.uk.

There is evidence of execution failure and indecision or muddled messages to stakeholders. Shared leadership arrangements never end well.

But in this forum I’ve been critical of their strategy. Though I’ll be the first to admit that such criticism is not founded on data but on intuition, strategy is always made in a vacuum of data. It is just an unfortunate fact of life that we don’t have data about the future.

But what data we do have is about the past and it shows the contrast between Apple and Google.

As a sample, let’s look at the performance in the last quarter:

Reminder: @asymco on Twitter

There are many thoughts which are not substantial enough to be posted as blog entries. There are also questions that need to be asked or answered which are not yet ‘baked’ enough to be cast into a permanently linked posting.

For these reasons and for the simple fact that it’s fun, I am using Twitter more frequently. Since I know not everyone has or wants an account, my twitter feed is now shown in the second (right-most) sidebar. It’s limited to the last eight tweets.

For those who would like to keep the discussion going in this new medium, my Twitter app (from the Mac apps store) is always running.

Apple's Growth Scorecard: 63% average earnings growth over 16 quarters

In the last quarter Apple’s top line grew by 70% and the bottom line by 75%.

For a historical perspective, the following table shows year-on-year growth for products[1] and sales/earnings color coded with an arbitrary scoring range.

A new era in financial analysis is dawning

The story of amateur out-performance has been getting more attention lately and that’s a good thing. Success emboldens more amateurs to try their hand at financial analysis. Transparency of methods and data demystifies a practice that is not as complex, and a skill that is not as hard to obtain, as it’s often assumed.

While, quarter after quarter, the gap between the two cohorts is calibrated, what we haven’t heard much of is a defense from the professionals.

That’s a bit strange given the negative impact some of the attention must be having on their reputations. This is why I was glad to see that Adam Satariano’s well-written piece finally got some reactions from the professionals.

Unforeseeable growth: Analyst failure on iPad as indicator of disruptive change

Professional analysts’ first year iPad unit forecasts (sourced from TMO Finance Board)

  • Brian Marshall, Broadpoint AmTech   7.0
  • David Bailey, Goldman Sachs           6.2
  • Kathryn Huberty, Morgan Stanley     6.0
  • Shaw Wu, Kauffman Bros.              5.0
  • Mike Abramsky, RBC Capital Markets   5.0
  • Gene Munster, Piper Jaffray           3.5
  • Ben Reitzes, Barclays Capital           2.9
  • Keith Bachman, BMO Capital         2.5

Having added $20 billion last year, Apple's cash growth suggests total could top $100 billion next year

The following chart shows the value of Apple’s cash and cash equivalents for end of 2010:

iOS users download about 5 apps every month

Thanks to a reader for asking this question: “Wouldn’t it be more telling to look at the monthly rate of downloads / device at any given time?”

Yes it would.

Here’s what can be derived based on download rates and installed base of devices.

The Cook Doctrine

We believe that we’re on the face of the Earth to make great products, and that’s not changing.

We’re constantly focusing on innovating.

We believe in the simple, not the complex.

We believe that we need to own and control the primary technologies behind the products we make, and participate only in markets where we can make a significant contribution.

We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us.

We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.

And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.

And I think, regardless of who is in what job, those values are so embedded in this company that Apple will do extremely well.

- Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings Call

See also: Apple vs. Exxon-Mobil

How long before apps overtake physical video game content sales?

After reviewing the payments to suppliers, we can look at the store’s revenue generation rate. With the same assumptions, we have the following chart:

We will have to wait for another report to see whether the recent burst of volume from apps is sustained[1], but the trend shows income from apps narrowing the gap to music.