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Segmenting the iPhone opportunity

We’ve been very, very focused on China. China, we’ve had incredible success with iPhone. Over the past few years, we’ve gone from a few hundred million dollars of revenue in greater China, to last year $13 billion. So we really’ve been focused on trying to understand the market there and then taking those learnings to other markets. As it turns out–and not very many people agree with me on this, probably–but what I see is that there’s a lot of commonality in what people around the world want.

Transcript: Apple CEO Tim Cook at Goldman Sachs – Apple 2.0 – Fortune Tech

People do want the same things globally, but due to various constraints they typically don’t get the same things at the same time.

One of the most important constraints on the purchase of iPhones is the state of 3G (or, more broadly, mobile broadband) networks. An iPhone is a mobile computer whose primary value is derived from high bandwidth data communication. Because this bandwidth is not universally available, the iPhone faces a restricted addressable market.

The good news is that 3G networks are being adopted very quickly. The International Telecommunications Union reports that 20% of mobile users have “active subscriptions to mobile broadband” (1.2 billion out of 6 billion). That’s encouraging but the subscription rate varies widely by country. Ideally we should look at the data on a country-by-country basis.

To start, I took a look at two countries which may form an interesting sample: the US and China. The following chart shows the subscriber structure in the two countries grouped by 2G/3G subscription and by operator.

The two left-most columns represent nominally addressable iPhone markets. The two right-most columns represent currently unaddressable markets. Note that

although China is a far bigger market, the lower 3G penetration means that the theoretically “addressable” market for the iPhone is smaller in China than in the US (136 million vs. 183 million respectively).

However, there are further restrictions. Apple does not have distribution agreements with many (most?) of the world’s operators. In these particular countries, China Mobile, T-Mobile and “Other” US operators do not distribute the iPhone. We should subtract those operator customer bases out of the addressable market. But those conditions are variable: operators may sign up for future versions of the phone and 3G subscription rates are increasing. That means we can segment the market as follows:

  1. Currently addressable operators and 3G subscribers
  2. Potentially near term addressable users if all operators agree to distribute the iPhone in these countries
  3. Potentially longer term addressable users if all users switch to 3G and all operators distribute the iPhone.

This segmentation leads to the following diagram.

I also added the current users given comScore data for the US (29 million) and an estimate of 8 million Chinese users. Here are some observations:

  1. 10% of China’s currently addressable market is penetrated while the US penetration is 18%.
  2. If all operators would agree to distribute the iPhone (i.e. including “Near Term” in the addressable total), the Chinese penetration would be 6% and the US 16%.
  3. If we include all users as addressable, China is about 0.8% and the US is at 8.5%.
  4. The penetration of the iPhone in the US and China combined therefore stands at about 3% today.

The question that comes next is what is a reasonable limit to total penetration? What can we reasonably expect or what could Apple reasonably target?

I’ve been using a global share of 20% as a reasonable target to test growth assumptions. Assuming no significant growth in user bases, 20% share in the long term (>5 years) yields a total of about 258 million users. That’s equivalent to a 7x increase. Put another way, a 5x increase yields a market share of 14%.

Note that these are “penetration” figures or share of available users. This is in contrast to share of units sold in a given quarter. Apple has maintained 20% share of smartphones fairly consistently. If share of units sold in any given time period remains at or above 20% and if smartphones and 3G networks become ubiquitous then reasonable men might consider these targets obtainable.

  • Mach_lim

    People do want to(the?) same things globally,…..

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

      Thanks. Fixed.

      • http://profile.yahoo.com/NNXM4MO3OHZ2NWVPRLPWY47NTM Vincent

        Horace,
        I love your graphs. How do you generate them? i.e. which software do you use? How do you get your data? Any special website?

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

        I generate the graphs using a spreadsheet program called Numbers. It’s made by Apple and sold on the Mac App store for $19.99. I get my data by reading free web sites on the Internet. I don’t pay for any data and won’t use any data that is for sale or non-public.

      • DavidN

        You’re a better user of Numbers than I am!

  • http://twitter.com/pedrocandrade Pedro Andrade

    Great post. I still wonder about the limitations of disposable income. I know, as you’ve so well shown, that the iPhone is pushing up prices and profits in the handset industry as a whole given people’s willingness to trade cash for value. I also notice that growth in post paid plans is now faster than growth in pre paid as more people value a subscription to go with their smartphone. But how far can the propensity to pay more for a handset be pushed upwards globally? 

    Apple is being careful at lowering prices even in the unlocked 3GS, perhaps eager to protect its subsidized business model. But at what point will prices become a limitation to the iPhone’s expansion? 

    It might help to find data on the distribution of phones sold per price bracket (and how that’s evolving). Another way could be to check penetration not only in terms of 3G/2G subscribers but as 1) post-paid 3G subscribers in markets with strong subsidies (like US) and 2) weak subsidies or big taxes (like Brazil). 3) pre-paid 3G subscribers and 4) 2G subs. Potential penetration should be high in 1 and get dramatically lower as you move to 4. As Apple and high end Androids capture 1 markets they will get constrained to migrations from 2,3,4 to 1 – which could dramatically slow down growth from the current rates. 

    • graphex

      The problem of running out of customers with disposable income is easily solved with lower priced phones (smaller, less capable, lower performance or less margin.) Apple’s main limitation remains to be manufacturing to keep up with demand and will continue until they are available on all carriers.

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

      People will always find ways to pay for something they value. Consider how hard people work to find money to pay for tobacco, alcohol and narcotics. And these things aren’t even good for you.

      • http://twitter.com/pedrocandrade Pedro Andrade

        I agree partially. We should indeed expect people to stretch to buy something they value, but there are limits.

        For example, despite their utility, PC penetration in Brazil took a long time to ramp up and only accelerated to the broad population recently as the government lowered taxes, the BRL revalued and credit expanded to split the price into 10 or more installments. Still, by 2010 only the top income braket families (called A/B) which make up for 22% of the population had high penetration of PCs (76%+), while the penetration dropped dramatically as you moved down on the income pyramid (classes C/D/E), with penetration below 25%. (details: http://www.mzweb.com.br/positivo/web/conteudo_en.asp?idioma=1&tipo=3655&conta=44

        Of course people value PCs, but they value housing, food and a refrigerator first. 

        Brazil closed 2011 with 242 million mobile subs, pretty high penetration, but 80%+ are pre-paid and on very cheap devices as you surely know from your experience at Nokia.  I do think people will stretch to buy iPhones, same as they do to buy PCs or fancy Nike shoes. I’d just like to have a better estimate of how far they can reach, rather than having prices falling enough to fit their budgets (perhaps below what Apple desires to go). That in my view is key to understanding the potential growth in other big markets like China, India, Russia and Indonesia as well. 

        The point is that it might help us understand Apple’s growth potential with the iPhone if we knew how far it has gone in capturing the “easy” crowd, the ones who have the income to buy iPhones if they want. Because after that’s done, growth will have to decrease as the really “tough” crowd gets richer and/or iPhone average prices get lower to fit their budgets. 

        Even if Apple continues to have a universally desirable product, eventually its growth will saturate. Question is: how far are we from that point? 

      • http://wmilliken.livejournal.com/ Walter Milliken

        I think Horace already handled that somewhat implicitly by assuming Apple will only take 20% of the addressable market. From reading various websites that track and comment on this stuff, it appears that a good fraction of the Android uptake is exactly in the lower, price-sensitive, end of the market, especially in the emerging markets.

        Given the income distribution differences from the US, it’s entirely possible that Apple’s share of the market might be lower in those market. However, the 15M iPhones reported today on China Mobile (where they are not supported and presumably had to be bought unlocked) suggests that 20% isn’t unreachable — Apple seems to already have about 2.5% of China Mobile’s roughly 600M 2G users (the iPhone can’t make use of 3G there, so I assume they’re 2G subscribers).

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

        My guess is that 20% penetration is achievable.

      • http://www.appleoutsider.de/ AppleOutsider.de – Sebastian P

        Right. Because an iPhone is just like Crack Cocaine…

        I don’t really understand why you post these graphs this way.

        The way you just bunch up people who earn anything from 40 to 400$ a month is just weird.

        Not to menton you don’t factor in the limitations due to physics and economics. There is a certain amount if viable bandwith for wireless service. There are only a set number of frequencies that can penetrate walls..

        850 million people at 3G speeds is an anormous amount of bandwith needed. 7.2 Mbit is the current de-facto standard for 3G service for any user in the US when it comes to 3G speeds. Multiply 850 million people times 7.2 Mbit. That is 6.120.000.000Mbit or 6.120.000 GBit or 6120 TBit a second, 1530 times the current capacity of DE-CIX (!). There are currently 110 million mobile phone customers in Germany so if we devide that number by the facot or 8 that is still 191 times the current capacity for ALL the network traffic at the largest interconnection point in Germany. DE-CIX currently has a capacity of 4Tbit. Two years ago it was 1TBit. And that serves EVERY SINGLE DSL line, every 120mbit cable IP-connection, every 50mbit fibre optics connection, every Satellite connection everything ALL of it. Our 28 million smartphone users are IN THERE.

        If the argument here is that cellphone users don’t account for anything near as high as 7.2mbit per user with a subscription then the argument would be that people don’t really NEED 3G speeds all the time. Then why are the networks, the mobile phone companies already at the point where their networks are at the brink of collapsing? O2 here in Germany had _severe_ problems last year to the influx of new smartphone users. They are whining and lamenting that they need more spectrum – and there simply IS NONE.

        How are you supposed to get 850 million 2G users on a pretty much at the moment non-existing chinese mobile phone network with the limits of physics (e.g. lack of spectrum)?

        I just don’t get why you don’t factor in these things. I thought you worked at Nokia. How is it that you just put problems like this aside? Like simply transporting all that data from one end of that one country to another, let alone to the rest of the world with the need to get it through the big filter wall the Chinese Government put in place?

        Not to mention the hundreds of BILLIONS of dollars you need to actually BUILD that backbone and all the needed cell towers. I think it’s pretty clear why the chinese government build up the high speed rail network with government money but are you honestly thinking they are going to put the same efforts into getting their people a cell phone network? 

        What does the average 2G customer currently pay for his 2G service per month? How does that translate into revenue and how many years of revenue would the Chinese Telcos have to invest into their networks to get it 3G ready for all of the “long term” customers you put into your graphs?

        Just saying that an iPhone is like an addictive substance is weird to say the least. Ignoring economical and physical laws is negligent.

        And don’t get me started on that second graph’s layout. Again 891 pixels tall, only FOUR descriptors on the y-axis which makes it impossible to understand the actual numbers in the columns. I actually had to take out a ruler and measure the y-axis and then put a post-it horizontal to find out how high the right column actually is. I figured it’s around 1450 million but I honestly can’t be sure.

    • JohnDoey

      iPhones pay for themselves. They are tools, not toys. You don’t pay for them out of your disposable income, you pay for them out of your communications or computing budget.

    • http://wmilliken.livejournal.com/ Walter Milliken

      I think there are three good answers to the price-sensitive markets:

      1) Apple continues to make older models at ever-cheaper price points (limited at some point by component availability and production volume declines).

      2) Transfer of “hand-me-downs” of older, used, iPhones, which are generally perfectly serviceable if given a new battery (about $100 from Apple, probably much cheaper if done by a third party). While these don’t make any money for Apple, they can displace some potential competitor hardware and introduce people to Apple’s value proposition.

      3) Apple could, if they chose, sell iPhones with a loan rather than an up-front payment; they’ve already done this with Macs. Obviously there are logistics complexities and risks here, but it’s a possibility.

      And of course, as Horace points out, people may simply pay for it anyway — welcome to iPhone addiction….

      • http://twitter.com/c_mcmanus Christopher McManus

        Good ideas.  I wonder (to your Point #1) whether Apple would do some minor tweaks (processor speed bump, upgraded rear camera) to the 3GS and keep it in the lineup for another 2 years as THE low cost model in the lineup.  Perhaps lower the price (off contract) to $249.  Or even, $199 (same as the current iPod Touch 8GB).   

        Vs., trying to move the iPhone 4 down the cost ladder (with its much higher build cost) 

  • Graham /Finanstankar

    Wow! This post made my heart rate increase.. I’ll be surprised if this does not get picked up by a lot of financial blogs given the implications on Apple’s potential earnings and share price in a few years time.. Although the post only talks about no of users, one could infer that, given Apple’s historic pricing and product mix strategy for iPhone, the ASP for all these iPhones should stay fairly constant..

  • http://twitter.com/chrisferebee Chris Ferebee

    While the addressable market in the US may be limited to subscribers whose carriers distribute subsidized iPhones, that may not be true globally or for the longer term.

    In Germany I’m seeing a sizeable number of users who prefer to purchase their iPhone outright, and then select their carrier plan based on cost and network quality.

    A two-year contract with unlimited minutes to land and mobile networks and 500 MB 3G data (speed is reduced to 2G once you go over the cap) can be had for 30 €/month on a top-tier network through a discount service provider—or 40 €/month with unlimited SMS—while the same service on the same network costs 80 €/month plus a 210 € one-time payment as a retail product, direct from the carrier, with a bundled 16 GB iPhone 4S. (Both plans are with a 2-year contract.)

    A plan on a second-tier network with 100 minutes, 100 SMS and 500 MB data can be had for as little as 5 €/month.

    Savvy users are realizing that they pay for the iPhone in the end, anyway, and prefer to buy the phone outright, so they can shop around for the best deal on network service.

    • Rudolf Charel

      Like I did in the Netherlands. It works out much cheaper in the end.

  • http://twitter.com/e_orione Emilio Orione

    The questions on the high iPhone price reduce to this one:
    Is there a value for market share?
    Historically the value in phone market was in margins not in market share.
    It didn’t matter how many phones you sold, but how much did you earn from that sales, because users could buy new phones without problems of compatibility with the old one and app market didn’t exist.

    In smartphone era things seems a little different. Why?
    Because you don’t sell phone but ecosystems and the size of the ecosystem does matter and there is such a thing as “cost of switch between ecosystems”.
    Look at the social networks, their value is in their size, it is the size that is monetized with some business model.
    While the actual iPhone price is winning the earnings game, android is winning the ecosystem size game. For now the size is not monetized nor it results in app developing advantage nor the switching cost is high enough to make a difference, but in the following years things could and perhaps will change, the ecosystem will matter more than the hardware of the last appliance required to be in the ecosystem.

    I don’t know if this will be a problem that will be limiting the capacity earning from innovation of apple.
    I would like to ask Horace if there is a way to value the strategic implication of winning the size game.
    Let me put it in another way. Could the high price apple politic be “winning” in the immediate causing explosive earnings but “losing” in the future limiting the possible business models? Could strategically be an error to let android win the ecosystem size war not commercializing a reduced price iPhone?

    With the iPad apple uses a diffent policy, the have the best tablet with the smaller price too.
    With the macbook air apple uses the same policy, they have the best ultra book with the smaller price too, they win the numbers and the earnings.
    With the iPhone they are playing only for the earnings and leave the number to the others.

    Winning the high price phone segment “could” not be enough when the size of the installed base will begin to matter.

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

      The phone market is not homogeneous or transparent and cannot be addressed directly. It’s rooted in a regulatory environment. Strategy has to balance many factors. Generalizing around “volume” or “profit” is missing many of the constraints. Apple sells iPhones and iPads at nearly the same price but the iPhone has far higher margins and is still supply constrained.

    • steven75

      The problem in your ecosystem comparison is the Android phone market is highly fractured, both in software and hardware. The iPhone market is not nearly as fractured in either. This is why when you go to a store you see tons of iPhone accessories and only a few for Android–The ecosystem simply isn’t there for Android at this point in time.

  • Wmjcollins

    Thanks for all you excellent effort, I won’t be able to attend your conference but I’m sure everyone who attends will get great value that won’t translate 100% to further podcast.

    just wanted to nitpick the last paragraph, could you place a number on the potential phone sales described if they reach 20%. the use of the word “men” seems to specific.

    Thanks again.

  • Joe_Winfield_IL

    Horace, I think your current China estimate is very low.  I don’t think I can insert link, but here is a poorly Google Translate copy/paste from the newspaper Beijing Daily.  It quotes the chairman of China Mobile as saying that the operator hosts 15 million iPhones on its existing 2G network, similar to how T-Mobile USA has over a million on its EDGE network.  Begin quote:

    (Reporter Yang Xun) around the iPhone, China Unicom and China Telecom fierce competition, China Mobile (microblogging) and have not forgotten this market. Yesterday, China Mobile chairman Wang Jianzhou said China Mobile has been in cooperation with Apple, so far, China Mobile’s iPhone mobile phone users has reached 15 million.
      ”China Mobile has been with Apple for a wide range of cooperation.” Mr Wang said the Chinese move from 2G technology era has been working with the U.S. Apple to discuss cooperation, and now has entered the 4G era, bilateral cooperation in all aspects a step forward . ”
      ”With the emergence of new technologies, China Mobile and Apple mobile phone cooperation, technical barriers are gradually overcome.” Mr Wang said that far, China Mobile has reached 15 million online iPhone users to bring their own machine network. Since last year, the basic monthly increase of 1 million.
      Wang revealed that he will be submitted to further promote the depth of informatization and industrialization convergence “proposal, which including the construction of things after he has repeatedly concern. Of Things to promote the speed is too slow. “Wang said, norms, standards, planning of Things is indeed very important, but the use of existing technologies, such as mobile phone SIM cards, sensors, etc., can provide a lot of things networking applications, “These are technically no problem, but to promote the speed should be accelerated.”

    • Micromeme

      yes I second this question, saw the story on http://www.engadget.com/2012/03/05/china-mobile-iphone-sales-subscribers-unlocked/
      how many “smartphones” are on 2G?   even if apple is not selling directly, how many of the large android sales are on 2G?  As a side point I traveled up in Maine last summer and over wide areas ATT had only 2G coverage for my iphone– it was still useful for web, gps, mail, and most standard tasks (though the wifi use case was pretty handy)

      perhaps you shouldn’t discard the 2G potential market, as far as I know all the 3G buildouts must be partial anyway in the developing world.

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  • guest

    there are 6 billion smartphone users out there?
    really?

  • SamLowry

    excuse my nitpicking, but a factor 7 means 600% growth, not 800%…

    • Kizedek

      If you multiply what you have now by 7 you get an additional 600% (the increase)  — making 700% in total. “Growth” is the change. From 100% (no growth, nor decrease), to 700%. That’s “growth of 700%”, you now have 7 times what you started with.

      Therefore, if Horace is talking about a 700% increase to be added to the current total, you d0 indeed have 800% growth total. Now (100%) + 7x now (700%) = 800%

      • SamLowry

        nonsense.

        when wallstreet analysts or, more importantly, any sane person speaks of “50% growth”, then this means that something has grown from 1 to 1.5.
        In your reading, “50% growth” would mean a factor 0.5, i.e., it would actually mean shrinkage. 

      • Kizedek

        Actually, I largely agree with you. Certainly we always speak of growth being positive. Perhaps I overworked my explanation.

        In any case, if we can agree on “growth”, most sane people still have to agree that a lot of confusion can still remain in one simple statement, and qualifiers are usually required.

        This is because, as simple as they appear, prepositions can be very confusing given their arbritrary nature. You would have to agree that these two statements give two very different meanings:

        Our “sales increased BY [or, we had GROWTH OF]” 700% [therefore we now show a figure that is 8x one year ago].
        –vs–
        Our sales “grew TO” 700% [of one year ago; in which case, the increase is indeed 600%].

        Not many would choose the phrasing of the latter, but that seems to be what you portrayed in your “nitpick”, in which you wrote: “a factor 7 means 600% growth, not 800%”. Apparently you agree with the first statement, given your response above.

        For your original nitpick to be correct, you would have to dismiss the two words “increased by” [a factor of...]. (Horace appears to have edited the article in the meantime.) Otherwise you would have to entertain some shenanigans like mine — ie, ask “a factor 7″ of what ? Are we using last year as some kind of baseline? Why am I defining this year’s total in terms of last year’s?

        There need be no issue surrounding the phrase “factor of”; certainly, all sane persons agree that “a factor 7″ = 7x or 700%, and “a factor 6″ = 6x or 600%. The issue was whether there was an “increase of” factor 7, or “a total of” factor 7 [signifying an increase of factor 6]. 

        Now, it’s up to Horace to clarify whether the “7x increase” he writes is the new total (ie., “increased to 700%”); or, whether he indeed meant “increase OF 700%” (in which case, his original assessment of 800% total was correct). I took him at face value as meaning the latter.

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  • http://wmilliken.livejournal.com/ Walter Milliken

    Horace, do you have data on whether the replacement period is the same in pre-paid and postpaid markets? It seems like this might have a fairly substantial effect on Apple’s long-term sales rates as they pass 50% saturation in a market.

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

      I think the post-paid replacement standard of 2 years is designed to fit the expected lifetime of a product. There is wear and tear of mobile phones to take into account but also the upgrade cycle of software. Because of these, I think pre-paid should follow a similar cycle.

  • Cyrocco

    Horace, the estimate of 8 million current Chinese iPhone users seems way too low. Recently I’ve seen reports on China Mobile’s head Wang Jianzhou, who revealed the number of iPhones used on China Mobile’s 2G network is already 15 million, and it has been increasing at a steady 1m per month rate. Keep in mind that China Mobile does not even officially sell the iPhone in China yet.

    Adding the number from official partner China Unicom ( and very soon China Telecom will be on the boat) , I think 20 million of current Chinese iPhone user would still be very conservative. A jump from 8 to 20 would be quite significant, so maybe u should alter the “China and US iPhone opportunity” diagram a little bit?

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

      The 15 million figure was published after I posted and I’ll adjust China penetration accordingly. One has to bear in mind that there is a significant grey market for phones especially coming through Hong Kong and US into China. Grey markets are always difficult to estimate.

      • http://financial-alchemist.blogspot.com Turley Muller

        From what I gather, these aren’t even grey market sales. Apple said it had over 7,000 POS in China back in Sep, including 200 mono-branded stores. I believe Apple is selling unlocked phones to authorized resellers, and from what I understand, many also sell China Mobile service plans. China Mobile even advertises the iPhone on its website with instructions on how to get a mini-SIM for it. Essentially, CM is a quasi-prepaid iPhone carrier at the moment. However, becoming an official carrier along with subsidized iPhone pricing, the potential expands immensely. 

        I think the grey market sales from smuggling imports mostly occurs when a particular product isn’t available for sale yet in the region. 

  • NORCALTOO

    It might be very helpful to understand the trends in the upcoming markets ( and specifically China, India, Brasil and Russia) of increase in income. It is obvious that these markets has the greatest potential for Apple. Of the 20% future phone–how fast are they moving toward this income. Is, the just anounced slowdown of China’s economy, temporary? Will, new, significant lower taxes rates in Brasil will allow many more to purchse Iproducts?
    The other issue is perhaps political and cultural. These societies are coming from hibranetion into a thirst for knowledge and news/information which is not controled or dictate by a central ruling mechanizm. How fast (and acceptable) are these trends to allow the freedom of Iphone (or Ipad) with opposing and chalanging information to spread?  

  • http://twitter.com/handleym99 Maynard Handley

    I’m not sure I understand the essential logic behind this post. There’s a large scale conceptual issue, and then specific technical issues.
    The conceptual issue is ultimately – why do we believe that presence of 3G is a particularly useful marker for how well Apple can do? iPhone is obviously a nicer device with a faster network connection, but it’s still a nice device with a 2G connection, along with WiFi. It seems that there is an implicit assumption here along the lines of: 
    3G adds to the cost of iPhone sufficiently that it makes it non-price-competitive with what would otherwise be a feature-competitive Android (or other) device. 
    Is that at all true? That is, is the additional cost of 3G high enough that it is the deciding variable between choosing an iPhone and choosing something else? My guess would be that the market really segments into low-end (crappy battery, crappy screen, crappy speaker, etc etc, but affordable to a Chinese laborer) and high-end (iPhone and iPhone wanna-be’s) and if you’re in the market for iPhone (because you want the screen, the UI, the apps, whatever) the additional 5% in cost for the 3G chipset is noise — especially since it’s an option — you may not have 3G in your city today, but maybe next year you will.

    The technical issue is: I’m not sure that talking about 3G as though it is some monolithic thing is really helpful here. 3G does not give you NEW features of any sort, what it gives you is higher peak speeds. But whether you actually see higher peak speeds depends on cell loading, which is not addressed here. How overloaded are the 3G cells in Chinese cities, so what are the real throughputs people see?

    In addition, 2G has not stood still. EDGE Evolved (which uses the same radio interface as EDGE but relies on smarter digital processing in the tower and in the phone) is capable of impressive performance, to the extent that EDGE Evolved can give higher peaks speeds than “simple” 3G (ie WCDMA, as opposed to the newer HSPA). I’ve no idea of the extent to which either EDGE Evolved has taken off in China, or the extent to which it’s supported in iPhones. But I do think that any projections based on the idea that WCDMA (ie peak speeds of 384kbps ie baseline 3G) is “good enough” needs to realize that EDGE Evolved (ie peak speeds of 1Mbps) is out there and needs to take this into account. 
    What I have found on the internet is that there were trials of EDGE Evolved in both India and China in 2009. If these have moved to widespread status, the distinction between 2G and “basic” 3G (ie WCDMA) is meaningless. The distinction that matters is between the ~1Mbps tech (EDGE Evolved, WCDMA) and the ~multiMbps tech (HSPA and LTE).

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

      The assumption is that 3G subscribers are a proxy market for the total addressable market for the iPhone. There are exceptions, as with any proxy. However broadband has always been a decent indicator of personal computing adoption (fixed or mobile).

    • Davel

      You make some interesting points. I will assume your claims of 2G are true.

      My understanding is Apple on 2g is an unsatisfying experience due to data throuput. If what you say about enhanced 2g is true than that seems to solve the data issue. Blackberry works fine on 2g due to its messaging and general efficiency. Apple is a hog. You bring up a good point about India. If 2g is all you say it is and that version is rolled out in India it creates a huge potential market for Apple. The other issue is political. Will India allow Apple stores? I have read where large companies have problems opening stores without a partnership.

      Apple does not share. They don’t want someone telling them what to do. They can of course sell in chain stores, but it seems they like to lead with their stores so they can tell their story. There is a reason India is not big for Apple and that is because of 2g.

  • Matt Cutts

    It amazes me all the press Apple gets when Android not only broke new grounds, but is steps ahead of the competition. Add the marvelously simple (it just works!) Google Play, Key Lime Pie and you got a winner.

    • Matt Cutts

      Andy has assured us that at least Googlers and Scoble will get the new Android upgrade so we can talk to each other on Google+ about it. I love Google+ too by the way, even more AHA! moments than Google Music.

      Now that Sergey has a beard (Wozniak has a beard too, btw) we have Motorola, use Apple’s language I don’t see why we can’t make their tens of billions from wireless too. It just works.

      (I can tell you that Search is getting tired of having to provide all the revenue, there is only so much we can manipulate with being too obvious. I don’t like penalizing Google competitors like ShopLocal, travel sites, financial affiliates, daily deal sites, video sites, local search etc, but as a Google employee and shareholder I have to do it. “Thin content!”

      • Davel

        Google is not Apple.

        They throw something out there that they think is interesting. If it works they continue if not they do something else. They have many great products. They also make crap.

        Look at Android. It was blackberry before it was ios. It is slow and inefficient. It stutters. It is good enough and has some useful features, but you have to tweak it. This is different from Apple and symptomatic of what is different.

        If Google makes Motorola better their partners will leave which diminishes Android.

        They know this. This is a dilemma.

      • Matt Cutts

        Don’t say that, we geeks grew up adoring Steve Jobs, until we had to hate him. Now we want to be like him.

        Everyone I talk to, likes Android, especially SEOs like Ryan Jones and a guy named Bill Slawski.They, and others agree with me when I let them know of how beautifully simple Android is and how I’m saving a bundle with $0.10 cent Apps. I think Android will copy iPhone perfectly, now Andi Rubin and others have a real iPhone to test and work from, before they had to go by what Eric Schmidt remembered from Apple’s board meetings. Do you like the Windows and Mac killer, Chrome?

      • Davel

        I don’t know the ppl you refer to. Many ppl I talk to who love Microsoft hate Apple and everything it stands for. Others who are less religious appreciate it. Apple allows limited change in iOS. Android allows many changes especially if you root it which does not void your warranty.

        There are many Apps in both markets and Google reserves it’s best for its platform.

        Apple is fighting Android in the courts. They learned a harsh lesson from Microsoft. I am not sure Google will be able to copy iOS perfectly when all is said and done. Also the OEMs and telcos get in the way. Most users do not upgrade so the OS is not uniform. As Horace has pointed out there is huge fragmentation with Android both in hardware and software.

        I have never used chrome both the browser and OS.

  • http://twitter.com/handleym99 Maynard Handley

    Asymco’s goal is to understand how tech companies operate and can thrive by studying Apple as an especially interesting and successful exemplar.
    Strange as it may seem, this goal is best achieved by STUDYING APPLE.

    You are welcome to create your own tech blog that is based on the serious study of the Android eco-system, driven by as much care, as much data, and as much insight as this blog. Many of the readers of asymco would welcome such a blog.

    What you are NOT welcome to do is arrive here ignorant of the goal of the blog, make a childish complaint about how no-one loves your favorite OS, and generally try to attract attention by behaving like a spoiled teenager. 
    There are plenty of other websites that cater to the juvenile element in the OS wars — go make your complaints there and leave the adults in the room to continue their conversation unmolested.

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