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How many iOS devices will be sold in 2012?

There are several methods I turn to when estimating device sales.

Top-Down Demand analysis

The first is to look at so-called top-down views of the demand. This method takes a view of the overall phone market and assumes share for smart devices and, further, shares for individual platforms. There are several estimates out there. The most recent is Ericsson’s Traffic and Market Data Report, released November 7 2011.

It concludes that in five years’ time mobile subscriptions will reach 8.4 billion of which smart devices (incl. tablets) will total 6.2 billion. As iOS has approximately a 250 million install base at end of 2011 and as the total base from Ericsson’s estimate for 2011 is 1.44 billion then Apple’s share is approximately 17%. If we assume that Apple will be able to increase smart device share to 20% (3 percentage points in five years) then by 2016 Apple will need to have 1.24 billion iOS subscribers.

Assuming that half the installed base upgrades every year and Apple adds devices required to reach the install base necessary (1.24b or 20% share) leads to the following unit sales projection (I’ve added 2008 through 2010 actuals and 2011 estimates based on my own current Q4 projections).

 

This Approach yields an estimate of 225 million iOS devices to be sold in 2012. Note that the growth is linear which is not usually the case. Typically this growth is in the form of an S-curve which front-loads the volume in the more recent periods.

Production Estimates

The second approach is to look at supply. I use this method for Apple as I consider their devices to be supply constrained and thus look at historic performance to forecast their production ramps. Put another way, I try to answer the question of how quickly Apple can sustain growth in production given their yearly product cycles. I can also use capital expenditures (which the company releases in advance) to forecast device production as the two have been closely correlated in the past.

Using this method I currently estimate 260 million iOS units for 2012.

Customer behavior estimates

The third approach is to attempt to measure customers’ loyalties and competitiveness of vendors. If we know the probability of upgrades and the historic split between “new” and “existing” users then we can roll the forecast forward.

To start, we need a probability of upgrade which can be obtained from surveys which measure “loyalty” by asking the intention of sticking with the brand on the next purchase or a measure “satisfaction”. iOS product score in the high 80% to 90% range.

The following chart shows total iOS units sold and the ratio of upgrades (assuming 90% upgrades for 2 year old purchases). It also forecasts upgrades based on current installed base.

If 90% of iOS users upgrade two years after their device purchase then next year will result in 90 million iOS devices sold to existing users.

Given the ratio of new users to upgrades in the past, and if we assume some reduction in that ratio over time, we can obtain a measure of “new users” on top of the upgrades. (In other words we forecast forward the ratio between the dark blue and orange lines above).

The ratio of new to upgrades has varied significantly from 30x to 0.8x upgrades. I created a schedule where the next quarter will be 2.1x, then 1.44x, 1.36x, 1.28, 1.2x for the quarters of next year. The result is shown below:

This yields a forecast of 280 million iOS devices to be sold in 2012. The forecast is very sensitive to the ratios shown above so obviously this is not going to be very accurate but it’s interesting to note that the three methods yield growth rates of 46%, 69% and 82%. All three are far above the growth forecast for Apple (about 25%).

  • Anonymous

    Horace — would you be able to conjecture a breakdown per type of device (iPodTouch, iPhone or iPad). Specifically, what are your estimates for the iPad sales in this quarter? And what would be your estimate for iPad sales in the calendar year 2012? Apple’s reported sales of iPad up to this current quarter are c 41 million.

    • Gerry

      I would be interested in separate iPad projections too. It would be interesting to know what pattern iPad upgrades take as they are not typically sold with 2 year contracts. 

      • Anonymous

        Two year periodicity seems likely for iPads because the iPhones have that periodicity of contracts, and hardware advances are likely to be inherited by iPads.  I plan to upgrade to iPad3 if it has a “near retina” display.

      • Marcos El Malo

        You might be correct in your conclusion, but so far, which device gets which hardware advance has been somewhat mixed. The iPad 2 got the shiny new CPU/GPU before the iPhone 4S came out.

    • http://www.asymco.com Horace Dediu

      I publish my estimates every quarter but I have not done this quarter yet. My current (not final) estimate is 7 million iPod touch, 35 million iPhones and about 17 million iPads.

      iPad sales for 2012 I estimate at 87 million units.

      • Anonymous

        I know it’s premature to ask for a real estimate, but what do you anticipate will happen to iPad sales when the next generation is released sometime in the next several months?  Do you anticipate Apple using the n-1 model to penetrate a lower price point of the market?  If so, what will this mean for volume in calendar 2012?

      • Nathan Gallacher

        I think Apple’s decision on whether or not to use the “n-1″ model will be dependant on production capacity. If production for, say, screens for an n-1 model in any way reduces the number of newer iPads they can produce, they would be better served sticking with the one model.
        Would a double resolution display be made in the same factory as the older display, or would it require an entirely new facility?

      • Anonymous

        When the iPad 2 was announced, I SWAGed an estimate of 60 million iPads (1 and 2) for CY 2011…

        Missed on that one, but it was not based on any research.

        I would be interested to see the breakdown and analysis leading to your 87 million iPads for [CY] 2012.

        Specifically:

        1) Will Apple continue to sell iPad 2 models?

        2) Will Apple introduce other size (smaller or larger) screen sizes?

        3) What will be the effect of retina display on sales to enterprise, institutions (Medical, Education…), and Creatives?

        4) What will be the effect of  an enhanced Siri on iPads —  larger, more capable/flexible devices?

        5) What will be the of “networked” iPads [with other iPads and AppleTV] for business, gaming, personal TV, etc.

        6) Will Apple continue to “own” the tablet market?

        I suspect that in early 2012 a new Siri will come to the iPad (and any iDevice capable of running it) — and, that the new Siri will buy things for you from Apple’s iTunes Music store, iTunes App store, and Apple online store (rolled out in that order).

        To me, Siri and [especially] the iPad will begin to change the way people buy things — kind of an assisted “no-click shopping”… and that has some pretty amazing implications.

      • http://www.asymco.com Horace Dediu

        My forecast is solely based on what I think Apple can produce and that’s based on capital expenditure and the constraints of new product ramps. I touched on this process when looking at the iPhone here: http://www.asymco.com/2011/03/28/predicting-iphone-sales-for-dummies/

  • Domano

    The one year and two year upgrade projections are way too optimistic. Is there any data to use as basis for the claim?

    • Gerry

      There is no data about the future.

      • Anonymous

        Oh, but there will be ;)

    • http://www.asymco.com Horace Dediu

      Historically, the company has averaged far higher growth for the platform, but the only factor we have beside history is capex forecast from the company. You can read about that method here: http://www.asymco.com/2011/10/27/the-tipping-hand-of-production-how-apple-foreshadows-ios-volumes/

  • Peter Hanes

    Horace,
    It’s rare for me to read your posts soon enough to be able to send in an early comment, so I wanted to repeat a suggestion that I made in the comments on your posts on “Estimates for Apple’s fourth fiscal quarter: Entering the post-P/E era” in August and “How did I get the iPhone number so wrong (part II)” in October. A couple of people liked the comments but no-one replied because they were the very last comments to the two posts.I know that predictions of numbers is not your main goal, but there is a tool that might give you more insight into the accuracy of your predictions: expression of uncertainty in the input data, and level of confidence in the output data.I’ll use the example you discussed at length in those two posts: estimating Apple revenues etc based on numbers of iPhones etc to be sold. In your original forecast, you wrote: ”The first assumption would put the iPhone growth at 100%+ while the second would place it in the 60% to 80% range. I decided to dial in a figure somewhere in between at 90% but I’m not very confident in this until we see more evidence that a new pattern has emerged.”You knew that your confidence in the estimate was low, but you had to go with a single best estimate of the number of units. Why not put confidence limits (i.e. uncertainties) on each of the input quantities for your model? You could choose limits for levels of confidence of, for example, 68 % (which would mean that you would expect about two thirds of the eventual actual results to be within the confidence limits that you state) or of 95 % (which implies that you expect 19/20 of the actual results to be within the limits).For example, the last quarter prediction could have been:”I estimate iPhone units sold to be 26.8 M, +/- 4.2 M, at a level of confidence of 95 %.”or”I estimate iPhone units sold to be 26.8 M, +/- 2.1 M, at a level of confidence of 68 %.”Over time this would give a nice indication of how appropriate your confidence in your estimates is.For any individual forecast, you could also propagate the uncertainties in the input quantities through to your estimated results. Wouldn’t it be fun if every forecaster did this? The quality of their thinking, and the quality of their models, would be shown up pretty quickly.If you just give a single number in your forecasts, the actual result will show you how good your guessing is. If you give a confidence limit as well, the actual result will show you how good your thinking is.

    • Peter Hanes

      Apologies for the long paragraph. The formatting I put in disappeared when posted.

    • http://www.asymco.com Horace Dediu

      Thanks for the suggestion. I will try to remember to do this.

    • Anonymous

      That sounds like a very good idea to me!

  • Kan

    1) Have you verified Ericsson estimates if not then any estimation based on them are fraught with errors.

    2)Incorrect assumpion. There are 250m ios devices but only about 160m itunes accounts and users. Many people own both an Ipad and Iphone and if you assume more and more people will own both 0devices then it stands to reason the rate of growith of itunes subscribers will be less than that of the devices.

    3) The forecast for new users is way too optimistic in relation to upgrades. As the market increases in size and as the competitor eco-systems improve the advantages that Apple had over them will decrease. Developing gadgets and phones is a strength of apple but delivering cloud based services requires a different mindset and skills – its not about user experience as reliability throughput etc.

    • http://www.asymco.com Horace Dediu

      There are various other estimates for subscribers globally. Ericsson’s is the latest. The others who publish are the ITU http://www.itu.int/ITU-D/ict/statistics/ . The mobile subscriber numbers are not particularly controversial.
      Regarding iTunes, Apple reported 225 million iTunes accounts in June though they qualified them as accounts with credit cards attached and I assume there are quite a few more since then. But the analysis does not depend on that as there are many iOS users without iTunes accounts. Most Chinese buyers for example do not have credit cards and iPhones can now be activated and updated over the air. The total devices sold was 250 million in October so my assumption for 250 million by end of 2011 is close enough given expected 315 million total units sold by then.

    • jawbroken

      Was this supposed to be a reply to another comment? I don’t know what the numbers are supposed to line up with and I particularly don’t understand what 2) is supposed to be saying. Why does it matter how many iTunes accounts there are or what the rate of growth is there? Are you trying to say, in a really convoluted way, that you believe the upgrade schedule will be materially different for people that own both an iPhone and an iPad?

    • Anonymous

      Apple has the best cloud services of any PC or mobile vendor. iTunes Store is a cloud service, and so is App Store. They are key reasons that iPod and iPhone were so successful. The more cloud, the better things get for Apple.

      Do HP and Dell and Lenovo have great cloud stuff that sells devices? Do Samsung and HTC and RIM?

      Also, you imply that Apple is the entrenched vendor and young blood is going to finally start competing against them someday. No. Apple is the young blood. All of their competitors in mobile are the entrenched players.

      • Kan

        Google bought Motorola and they have a better cloud service than Apple. Well now we are labelling anything server based as cloud I think yout comments lacking both fact and now is bordering on fiction.

        So the cloud now sells devices? So people are after the cloud service before they want the device? You really are confused.

        So Apple will be the best forever and forever and that’s it. Yes I think the hubris has set in. 

      • kevin

        What does Motorola have to do with this?  Is Google going to provide a better cloud service for Motorola than it will for its other Android “partners”?

        For a small percentage of consumers, the cloud may have been a strong influence in the choice of ecosystem, as I’ve heard it said many times that someone bought an Android device because it better integrates Google Mail, Google Docs, etc (and soon Google+).  I highly doubt the majority cared in the past. As Apple ramps up advertising for iCloud, they could start influencing consumers and this could begin to change.

      • Anonymous

        “So the cloud now sells devices? So people are after the cloud service before they want the device?”  

        I think that, in a nutshell, is exactly Amazon’s go to market strategy for its hardware portfolio.  And while I fundamentally disagree with the $0 profit model, I have no issue with the decision to use the cloud platform as a primary selling point.  

        While this is a valid sales pitch, Apple will use iCloud more as a lock-in than a selling point for new users.  It is a private cloud that works much better on iProducts, which will compel many users to diversify their Apple gadgetry.  Conversely, Google’s cloud services are very open.  Many work equally well on PCs, Android devices, iOS devices, and any other connected screen available to users.  This is great for users, but doesn’t lock buyers into any hardware decision.  The cloud offerings of Apple, Amazon, and Google fit perfectly within each company’s respective business model:

        Amazon – sell hardware at a breakeven as a means of selling content at a profit
        Apple – sell content at a breakeven as a means of selling hardware at a profit
        Google – give away software at a loss as a means of selling user info at a profit

    • Anonymous

      Why do you assume that there are fewer iTunes accounts than iOS devices?  It seems to me you’re forgetting the iPod.  There have been a total of 300million iPods sold, most of which did not run iOS.  

    • kevin

      On 2) it’s not clear what relevance this has to the 2012 estimate of iOS devices. The correlation between iTunes accounts and iOS devices isn’t one-to-one. I can create an iTunes account from an iPod nano/shuffle/classic, or a Mac, or a PC, none of which are iOS devices. I can also create multiple iTunes accounts from one device (such as in a family with multiple users sharing a computer). I can also buy an iOS device without creating an iTunes account. Whatever, I bet Apple will soon tell us how many iCloud accounts have been created.

      On 3) You assume that Apple is standing still, but it’s not. While its competitors are trying to expand their ecosystems to include what Apple already has, Apple is busy expanding and deepening its ecosystem in other ways. So Google Music, Zune Marketplace, and Samsung whatever will someday catch up to iTunes, and Android Marketplace, Amazon AppStore for Android, and Blackberry AppWorld will inevitably catch up to the App Store. Well, maybe not inevitably… 

      And some might think Google and Microsoft have the lead in cloud services – but surprise, here’s a Windows fanatic saying that iCloud is in the lead – http://www.winsupersite.com/article/apple/apple-icloud-141424   And why would cloud based services not also be about user experience?  I think Apple just upped the ante.

      By the way, iCloud currently doesn’t allow for quick and easy sharing among different users, but having already seen Facetime, iMessage, Find My Friends and some of Apple’s patent applications, I’ve no doubt it’s coming very soon. 

      • Kan

        You can only sync one ios device with one itunes account If i try to sync an iphone with someones elses itunes account I will lose my apps and music.

        Apple is not standing still but neither are competitors. As to that link – he failed to even mention Google and their offering in detail. 

        UI is important but in the cloud you want rock solid reliability and scale – lets see how that pans out -so far the start of itunes match didnt go gown to well.

      • kevin

        An iOS device can only be synced with one iTunes account but it’s still not a one-to-one mapping. As I said, you can sync multiple iOS devices with one iTunes account, and you can sync non-iOS devices with an iTunes account.

        I didn’t say the competitors were standing still – all I said was Apple could maintain an advantage. You implied Apple was standing still when you said the competitors would decrease Apple’s advantage. That’s not a given.

        Since the initial rush for iTunes Match, there hasn’t been much of an issue. Parts of iCloud have gone down from time to time, but that happens to Gmail as well.

      • Marcos El Malo

        That’s not true. I have two iTunes accounts, one for the U.S.A. and one for Mexico. I access both through a single iOS device. I don’t lose either my apps or music.

        Think about what you wrote: you want to SYNC your iPhone with one account, but the are unhappy that you’ve lost things from the other account on the device. Do you know what sync means? I think maybe your problem is not with the device but with a lack of comprehension of some basic concepts. Maybe you should just start using iCloud?

  • Noah Berlove

    For some perspective, Gartner is estimating about 400 million PC sales world wide in 2012 (this does not include tablets).  Windows 7 has been averaging around 60 million per quarter and I would be surprised if 250 million licenses are sold in 2012.  It will be interesting to see when iOS surpasses Windows.

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  • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

    280 million iOS devices in 2012? Given that there are many companies vying for the tablet / mobile device market, is there that much available manufacturing capability / capacity available to Apple for them to be able to make that many devices?

    And that’s assuming they’re still going to charge the same price.  Amazon just released the Kindle Fire @ $199 and the popularity of this device is fairly high.  

    • http://www.asymco.com Horace Dediu

      The market for phones alone is 1.5 billion units in 2011. That does not include tablets or music players or smart TVs. This is expected to increase. Capacity may be an issue but Apple has budgeted about $8 billion in capital equipment to help in that regard.

      • Phil Swenson

        The market may be 1.5 billion units.  But apple only addresses a fraction of the market in that there are many carriers/countries that don’t offer the iPhone. 

        Do you have any data on what this fraction is?

      • http://www.asymco.com Horace Dediu

        Apple will probably have 6% share in terms of all phones sold in calendar 2011.

    • Anonymous

      Kindle Fire competes with iPod touch, another $199 media player that runs phone apps. iPad competes with other $500 PC’s. Kindle Fire sales are not lost iPad sales.

      Just because 2 devices have touch, that doesn’t mean they are the same device or that they can do the same job or that they compete. There are touch phones, touch media players and readers, touch tablet PC’s, touch desktop PC’s, and so on.

      • Anonymous

        The iPads primary uses are: Web browsing, running apps, consuming media.

        The Kindle fires primary uses are: Web Browsing, Running Apps, consuming media.

        Kindle Fire sales are most definitley eating into ipad sales. Especially gift purchases. This year it will only affect US iPad sales (the kindle fire doesnt sell internationally AFAIK) but next year with improved distribution & with the 2nd generation models at 10″ etc, the kindle Fire and iPad will be duking it out globally.

      • Tatil

        What are the primary uses of iPod touch? 

        What makes you think those gifts would have been iPads if not for Fire? I’d say those gifts would have been another gadget, if not a necklace, at a similar price bracket instead. It is far more likely for Fire to eat into iPod touch. People usually start out with a budget for Christmas shopping and I am pretty sure many will decide that at the same price it makes more sense to buy a Fire with the larger screen than an iPod Touch despite better hardware, software and ecosystem of downloadable media. I don’t expect many will be cross shopping iPad and Fire. 

      • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

        Do not underestimate the popularity of the Fire.  Those on a $199 budget will more than likely buy a Kindle Fire over the iPod Touch.  I know I would.  But of those people who have a $499 (or more) budget, many will still look at the Kindle Fire for the simple reason is that they will ask themselves what more can the iPad 2 for them, for an extra $300, that Kindle Fire cannot.  Yes there are apps but the apps will come.  They both have web browsing, email and a very extensive media ecosystem.

      • Anonymous

        Good question about the ipod touch.

        Do people buy it due to its price or portability? or both?

        You cant take your kindle fire to the gym with you in an armband on in your pocket while mountain biking. Kids/Teenagers cant the kindle fire into their pockets to play games, take photos/video or listen to music.

      • http://www.facebook.com/people/Viviana-Wong/1143684734 Viviana Wong

        Kindle Fire cannot do what Apple touch devices can do and that is to make phone calls or video phone calls via wi-fi which is handled by all devices equipped with a double camera. Apple Face Time software is extremely well implemented and I used it mostly to talk with family members who are already on the system. In addition, the iPod Touch comes with 16, 32 and 64 GB hard drive and is even easier to transport than the Kindle Fire. I think we are comparing Apple and Oranges here again.

      • Anonymous

        I wouldn’t call skype like video & messaging a primary use of the ipad – but thats just based on how I use it and how I see apple advertising it.

        I could be wrong of course – maybe everyone else but me uses it.

      • Davel

        But the Fire can view the web and play games and various apps.

        It is also half the price. I have read where kids are increasingly demanding Apple products for the holidays.

        If you are considering getting one for your kids and know they can destroy them, which would you get, a $500 device or a $200 one?

        Not everyone needs the substandard camera in the iPad. Most of the top apps for iOS is available for Android. Also for those who do not have a lot of money half price is a powerful incentive.

      • http://www.asymco.com Horace Dediu

        The iPhone, Android phones and iPod touch devices have the same primary use cases as well. Does that mean they all compete equally? Competition is deeply misunderstood. I’ve discussed this in a podcast, but briefly, if your business has a competitor, you’re doing it wrong. I can think of no good business that has any competition other than non-consumption.

      • Kan

        BP, Texaco, Chevron etc all supply oil. They all doing it wrong?

        Mercedes, BMW, Audi etc The list of competitors doing it wrong is large…

      • http://www.asymco.com Horace Dediu

        Yes.

      • Kan

        I want to clarify this. Android Phones are not substitutes for Iphones – they have zero cross elasticity of demand.

      • Davel

        This is not true. Smart phones are all substitutes.

        When people choose their next phone they decide on features and battery life. If the feature list is robust enough then it is a smartphone. They look around and have 2 classes in which to look. Android and Apple. Some look at the Windows Phones and RIMM.

        There are many considerations, ecosystem, expandability, screen size, flash, etc.

        They weigh their wants and discuss with friends and family. Cost is also an issue.

        Some like Apple, some do not. You cannot state that there is not an elasticity of demand for these phones. Anecdotally this is not true and empirically it is not true.

        When Verizon did not have Apple they built the droid name. They were a major driver in creating demand for Android phones. They sold a lot of them. I know of several people who bought android because Apple was not available. That is a substitute of one product for another.

      • Anonymous

        I think that my take on “primary uses” might need developing.

        I would think there is some overlap in the Kindle Fire/iPad markets, where a purchase of either device is likely to mean a very low likelyhood of a purchase of the competing device. Whereas the overlap of markets for tablets (Kindle Fire/iPad) vs the market for smartphones (iphone or Android) is likely to be near zero – a purchase of either a tablet or a smartphone will have only a minor effect on the purchase decision of whether or not to also purchase the other device.

        I think obviously the primary use of  iphones & Android phones are as portable communication devices (voice & messaging), along with app use, web browsing & media consumption (audio in particular).

        However the iPad & Kindle fire dont have voice & messaging as a primary use (although it can be done with selcted apps). I would think the larger screened devices are preferred options over the smartphones for Web browsing & media consumption (book reading in particular.)  The experience (in my opinion at least) is much better than on the more portable but smaller screened smartphones.

        So portable smartphones I think are a different primary use proposition to larger screened, less portable tablets (which is probably why most ipad buyers also own a smartphone – rather than owning one instead of a smartphone).

        The ipod touch is in a seperate market again – most of the primary use propositions of the smaller screened smartphone market – but with the large ommission of normal voice communication. Its primary market is those who want a portable solution for running non web-apps & consuming media when outside of wifi range, and for those who can not or choose not to have a smartphone contract (children & teenagers, prepay users not willing to pay large upfront handset price, those who have their employer choose their phone).

      • http://www.asymco.com Horace Dediu

        People buy products because they have a job they want to hire products to do. A jobs-based analysis demolishes all pricing or feature or demographic segmentation or categorization. I believe a company succeeds only when it identifies the job it’s hired to do, positions its products directly on the job and in so doing excludes any competitor.
        I’ll give an example from a completely different sector. Consider social networking. It’s convenient to suggest that Facebook, Twitter and LinkedIn compete. But in practice they are hired for completely different jobs. Some people will use only one network, others may use all three. That’s because some will have only the one job and some will have many.
        You can consider the same behavior with respect to devices. Many people will own different but similar devices for separate jobs. Some will own only one because they have less demanding needs. Some will own none. The decision of ownership is rarely made only as a function of the available product or price points.
        Traditionally “Finding the job” is what marketers did in order to position the product but increasingly that’s become the task and responsibility of designers who think of what the product should be.

  • Johnqp

    So there should be no suprise, that compared to the Streets expectations, Apple will suprise!

  • Anonymous

    Horace.
    Your answers to some of the more redundant questions, prompted me to print out all the articles you reference and all the others which fill in the overall picture with regard to market movement over the last 2 years. Being able to cross reference between posts and sort into themes is just easier given my laptop’s or iPad’s screen size :-) and enables one to read the ‘story’
    Correct me if I’m premature but the emerging message seems to be that Apple is almost in the position of gaining unheard-of market power, in that they will be able to dictate the level at which the rest of the market (non IOS), is able to operate. They could well control materials supply, production capacity and the profit levels of their competitors

    • Anonymous

      [...darn Disqus, its misbehaving badly with ios 5... I don't seem to be able to edit my posts]
      Meant to say -…production capacity and ultimately, the profit level their competitors can hope to achieve. They would not even need to be the biggest player in all areas – since they take the majority share of profits, for this to happen
      It begs the question ‘Could Apple buy the phone industry?’ Owning it not by acquisition but by financial clout. I’m sure that will soon be used by some competitors as an anti-competitive argument even though really, it is operational excellence on a grand scale.

      • Kizedek

        I’ve had the same problem… I’ve had success reactivating the cursor if I close the keyboard, click solidly a couple of times in some text somewhere else on the page (someone else’s comment) then click back into my open comment pane.

    • http://www.asymco.com Horace Dediu

      Apple is in a good position but as far as the impact on competitors or market power, I can’t make any predictions. A lot depends on competitor reactions and that’s a lot of moving parts. See http://en.wikipedia.org/wiki/N-body_problem “For n ≥ 3 very little is known about the n-body problem”

      • Anonymous

        Lol…though Apple seems to have the ‘mass’ side of the equation, solved.

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  • Sidknowles

    This is off topic. Horace, recently there were articles on the tablet share of non-iPad tablets. I would be interested in seeing a study that compares 2011 sales of all tablets. 

    • http://www.asymco.com Horace Dediu

      Recently published data is US only for 10 months. I don’t think there is any global data out yet.

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  • Tim F.

    Horace, what is the basis for the 3% share growth to 20% of the market in the top-down demand view? Past growth? Continued erosion in share from RIMM, NOK, Microsoft, and Palm? Tablet market growth? Weakness in Android growth or individual OEM(s) of Android?

    I understand that it’s an “arbitrary” bound to create a hypothetical picture that may be optimistic, or even an upper bound, but I wonder if you would still elaborate on an argument to support near-term future share growth.

    • Adamthompson3232

      How about the fact that RIMM’s BB is currently on nearly 3x the carriers as iPhone. As iPhone ramps carriers iPhone will undoubtedly gain share. Then consider possible intra carrier share gains due to iPhone’s continued innovation and Apple’s continued brand strength gains and halo effect benefits resulting from iPad and MBA.

    • http://www.asymco.com Horace Dediu

      An increase from 17% to 20% share is in deference to the strength of the ecosystem, meaning the number of apps, developers, media supply and potentially increased distribution.
      The bigger question is which platforms will occupy the 5 billion or so other devices? The simple answer today is that it will be a variety of Android-like OSs but that they may not make a cohesive platform. The cohesion (or lack thereof) will determine the churn in users to and from iOS.

  • Skeptic Teej

    Is Ericsson suggesting that at a bare minimum, each man, woman and child will have 1.2 active phone(s) by 2016? That is extremely far fetched.

    • jawbroken

      No, it says mobile subscriptions so it includes tablets and likely those mobile wireless internet dongles and laptops that connect to mobile networks.

    • Tim F.

      In many nations, it’s higher. In most cases, there is never true 100% penetration (even in the most developed markets, most people know an older relative or someone without a mobile), but many users have 2, 3, or more devices. In other cases, “penetration” is difficult to measure: whole families or even whole tribes may “use” the same device. 

      http://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_useWorldwide we are near 100% “penetration”, but there are countries with sub-40% “true penetration” arriving at 100% mobile device penetration per capita. So, yes, 1.2 active mobile devices by every man, woman, and child on Earth, and no, it is not extremely far-fetched.

    • Tim F.
    • http://www.asymco.com Horace Dediu

      These are not just phones. These are smart devices which may include browser-based tablets, media players and televisions. The number of mobile cellular connections is above 1 per person in over 100 countries already (it was 97 at end of 2010). See http://www.itu.int/ITU-D/ict/statistics/ (Mobile cellular subscriptions downloadable spreadsheet). You can also see http://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_use

  • Tatil

    I normally like and respect the analysis done here at asymco, but this one is bringing down the average. It is fine to calculate the likely number of upgrading customers, based on two year upgrade cycles and installed base. However, there is no logical or even empirical link between the number of upgraders and new customers. What is the point of using randomly picked ratios to go from upgrade sales to total sales? You might as well offer random numbers for the possible growth rates of total sales and be done with it. 

    • http://www.asymco.com Horace Dediu

      The “logical link” is that every user (or purchase) influences non-users. It’s a proxy for network effects http://en.wikipedia.org/wiki/Network_effects. There is no direct measure of this effect so I try to project the trend of this ratio into the near future. It’s one of three forecasting methods presented and the only one which uses consumer behavior assumptions–i.e. demand. Being an alternative approach it helps bound or sanity check the other methods.

      • Anonymous

        I agree. Anecdotally, I have influenced many people to buy Apple products. That effect is very real. Couple that with the “stickiness” of the products once purchased, and you have a snowballing effect outside the realm of simple advertising. Also, there has been so much anti-Apple propaganda that when people get a chance to experience the reality they are, well, blown away, to use a modern euphemism.

        Apple stores also play a huge part in this synergy, in that they provide a place for guided hands-on experience in advance of making a purchase, as well as an introduction to the whole Apple ecosystem at work.

        I’d rather have an attempt to quantify the nature of this effect than to rely on the half-baked opinions of so-called analysts, which is what we are otherwise left with. Besides, as time goes by, the accuracy of these forecasts can be tested.

      • Tatil

        If that is a ratio that has varied between 30x to 0.8x in the past, I don’t see it serving as a good sanity check. It is about as reliable as assuming a growth rate for total or new sales in each quarter. The thought process in either approach is similar (i.e. guesstimating demand), so they re not independent methods. In other words, if one method turns out inaccurate, the second will be as well. 

      • http://www.asymco.com Horace Dediu

        There has been quite a bit of variance but I’ve also tested the method with Android data (assuming a different stickyness ratio) and noticed a similar trend. It’s still early to call this method useful but it’s not too early to put forward some hypothesis. As data comes in we can see if the method works.

    • Alan

      I believe there is an underlying link – the number of carriers which have the iPhone and the number of subscribers which are able to afford it. Both have expanded in the past year (by adding new carriers and by lowering the price of the 3GS/4). Since handset sales are correlated tightly with distribution channel I think this is logical. That said, I have not seen a comprehensive analysis of which carriers have the iPhone available vs. other handsets.

      • Kristian

        Carrier expansion will be huge in 2012 when biggest mobile operator in China gets the iPhone. I don’t recall the current operator amount, but Apple is somewhere in the half way with this.

      • Kristian

        Carrier expansion potential should be also included in to that forecast. :)

      • Kan

        You know that as a fact? China Mobile and Apple have been in talks for ages and won’t be offering much of a subsidy as they already have 10m Iphones on their network without offering a subsidy. Also Apple will have to create an Iphone that runs on China Mobiles TD-LTE standard.

        Personally the operators are running scared of Apple. If Apple products have 90% loyalty then they might as well reduce the subsidy. I don’t see any point in offering huge subsidies on a product that is selling well. It would be interesting to see the profit the operators make per Iphone contract vis a vis an Android phone. It seems the operators are in a death spiral where they want to keep and increase their customer base so are offering big subsidies on the Iphone to attract customers when in fact tge logical thing to do would be not offer the phone let the customers buy it offline and then offer sim only contracts. 

      • Tatil

        That does not constitute a link between upgraders and new customers, as the new carriers do not have many existing iOS customers to upgrade. They are fairly independent variables. 

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  • Katch

    I am not concerned about the long term growth and investment opportunity that we all have with AAPL.  I think that even though other smartphones and tablets are available, people generally want the iphone or ipad.  They generally want the market leader and the one that all other smartphones and tablets are measured against.  This has psychology has created the “moat” that Apple has.My concern for this quarter, if history teaches us anything, is that those wanting ipads will wait until the NEXT release. That is what “killed” the stock last quarter. This could be the new concern going forward. This does not change the investment opportunity that we all have but could be a concern. What do you guys think about this?

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