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From bad to worse and from good to great

A year ago I noted that Apple could buy most of the mobile phone industry with cash on hand (excluding Samsung’s operations).

Since then Apple’s cash has grown significantly and the value of all phone vendors except Samsung has gone down significantly. The following chart shows the year ago and present day estimated market value of the industry participants.

Phone brands other than Samsung and iPhone have seen a reduction in market value of a combined 47%. That’s actually being quite generous since I’m valuing Motorola and Sony’s businesses at their acquisition prices. The operations of both those companies have continued to stagnate.

Based on the same multiple of estimated earnings Samsung grew its value by 157% and iPhone by 114% (note this excludes iPad).

In absolute terms the iPhone franchise created $244 billion in value while Samsung created $83 billion. The others destroyed $37 billion.

The good news is that the industry has had net value creation–always a healthy sign that innovation is being valued and absorbed.

The bad news is that there is vast income inequality. The rich are getting richer and the poor are getting destitute. This is an unhealthy sign. The concentration of power and wealth may indicate a peaking of experimentation and discovery of new opportunities.

Also noteworthy is that almost all the value from the Android ecosystem is concentrated in Samsung. I did not include Google in this analysis since its mobile is so small as to be not visible in its accounting. A separate analysis of Android economics shows that Google’s benefit from the platform is modest. In contrast, Samsung, and Samsung alone, is benefitting greatly. It could even be said that today Samsung is the only Android profit engine.

  • http://twitter.com/jonmilani Jon Milani

    “The concentration of power and wealth may indicate a peaking of experimentation and discovery of new opportunities.”

    I’m not sure I agree with this, Horace. Apple has always shown a willingness to disrupt its own products. The iPod is perhaps the best example of this: Apple was willing not only to shift from HDDs to SSDs, but to undermine the product category altogether with the iPhone in 2007.

    While healthy competition might push things along at a faster pace, there is no reason to assume that smartphone innovation will outright stagnate, assuming that was your implied premise. Besides, the other (failing) players in the space have shown little if any propensity to innovate.

    • Bruce

      I agree with much of what you say. But if Apple introduces a larger iPhone as rumored, I think we will have Samsung and other competitors to thank for that. And if they release an iPad Air as rumored, again thanks will be due to their competitors, particularly Amazon and Samsung.

      • TheEternalEmperor

        Sorry. Don’t agree. First, Neither you nor I have access to Apple’s product roadmap, so we don’t what Apple was planning. Second, all you have to do is look at the sales of 7″ tablets to know that these devices haven’t made a dent in iPad sales. Apple sells *all* the tablets they make.
        Third, SJ made it clear in interviews that you go for profit then marketshare. I would say that you have Apple’s iPod strategy to think FAR more than the “off the cliff drop in sales” Fire and the Galaxy Tab which hasn’t even registered.

        By your logic, why hasn’t Apple gone to a multi-phone per year release strategy? Why not add sd slots or other ports? Why not allow for side-loading of apps? Do you see the problem? You can’t cherry pick. Either Apple is reacting to outward pressure or they are not. There are many more things that the competition is doing that Apple is not doing, It isn’t reasonable to pick a few favorites and say: “See? That’s competition at work!”.

      • Noah Berlove

        Yes, you can cherry pick. That is why we are more likely to see a smaller iPad than SD slots on iPhones.

        Apple (or any company for that matter) can react to all, some of none of the things others are doing. The smartest ones react before there is trouble which is why Apple may launch a smaller iPad before the existing 7″ tablets significantly impact current iPad sales.

      • Bruce

        “Yes, you can cherry pick.”

        Good! Then I pick the back camera on the iPad 2 as a reaction to back cameras on the Android tablets. While I”m at it, I also pick the pull down message area in the latest iOS release as a reaction to Android.

        “… why hasn’t Apple gone to a multi-phone per year release strategy? Why not add sd slots or other ports?”

        SD card slots? Come on, Apple hardware has been known for lack of expandability since the original Macintosh. Multi-phone per year would require a 180 degree change in strategy, and likely much higher prices. Common sense rules out those things. Apple cherry picks the competitors’ features they want to adopt.

      • TheEternalEmperor

        Common sense rules out that 7″ tablets being a reaction since 1)Apple sells all they make and 2)no 7″ tablet has been successful.

        Your “common sense” suggests that despite no tablet, 7″ other wise having any success, that Apple reacted by adding a camera. That’s not a definition of “common sense” that I agree with.

      • Noah Berlove

        There is a difference between reaction and anticipation.

      • TheEternalEmperor

        Sure. I eagerly anticipate Apple’s 5″ response to the Note.

      • TheEternalEmperor

        You can cherry pick if you wish to have debates without facts or even well supported opinion, I guess.

        I don’t. There has been no data that suggests that 7″ have had the *any* impact on iPad sales. By you logic, Apple should have included Flash before flash tablets significantly impact current iPad sales.

      • Noah Berlove

        No, that is not a reasonable extension of my argument because there is a difference between a single example and any example. My point that Apple need not wait until 7″ tablets, for example, impact iPad sales before introducing a smaller model. If you don’t agree with me, search for Jobs quoting Wayne Gretzky.

      • TheEternalEmperor

        We’ll just have to agree to disagree. There has been zero evidence that 7″ tablets for almost two years have had any impact. Therefore, to skate to where the puck is going, Apple has to counter it.

        And that seems reasonable to you? Apple is longer over due from a larger phone, which have sold millions, but they haven’t reacted to that.

        And this is why cherry picking doesn’t work. IMO, fitting facts to fit theory doesn’t make for good theories.

      • Noah Berlove

        My cherry picking comment was in regards to companies choosing which of their competitors features to copy/react to. Some of the changes in Apple’s products have been in reaction to the competition, while others have not.

        Also, you keep focusing on my example while ignoring the point. I am not saying Apple should launch a smaller iPad. I am just saying if they do, they need not wait until other 7″ tablets start hurting current iPad sales. Past failures of specific 7″ tablets does not automatically mean the form factor is bad.

      • TheEternalEmperor

        I understand your point perfectly. All I’m saying that if they do release a smaller iPad, I don’t think that is is a result of the actions of their competitors. I think it is the result of their internal strategy.

      • TheEternalEmperor

        I understand your point perfectly. All I’m saying that if they do release a smaller iPad, I don’t think that is is a result of the actions of their competitors. I think it is the result of their internal strategy.

      • Joe_Winfield_IL

        So you’re suggesting that Apple should not and will not make a 7-8″ tablet unless market data shows success for other manufacturers in this form factor? Or are you suggesting that if they do, it will be of their own volition – completely separate from what is going on outside Cupertino.
        If your argument is the former, I point you simply to the iPod product map. The company gradually rolled out different products at different price points to serve different customers and snuff out competition. They chose not to leave a “price umbrella” for competitors to iPod, and Tim Cook has said they won’t allow one in iPad’s market either.
        If your argument is the latter, so what? We’ll never know definitively what factors lead Apple into the smaller tablet market if it does occur, so the debate is just a waste of energy. You and @google-cc95a06de0c527f21c8198299062e9cf:disqus can both dig in on your opinions, but neither will ever come away satisfied.

      • TheEternalEmperor

        No, I’m not suggesting that.It it is the second point. I don’t agree with you that it is “so what?” Why they do what they do is as interesting to me as what they do. That motivation makes me wonder, why don’t others? That motivation is, to me, the essence of Apple’s ability to disrupt that that’s why I’m here.

        If it isn’t a point of interest with you? Keep going and comment elsewhere.

      • Joe_Winfield_IL

        Sure it’s interesting, but it’s also impossible to ascertain. My point is that any debate of this nature is by definition worthless. And to be clear, I’m not talking about debates in which there is no clear winner. I’m not talking about debates in which the truth cannot be known. I’m talking about debates in which there IS a definitive version of the truth, but which neither party will ever know. This specific type of argument has no intellectual merit.

        And the HTML “shrug” tags are obnoxious, especially when paired with dismissive statements.

      • Davel

        Perhaps a good 7″ tablet has not Ben had. I know of people who think a 7″ is compelling. In fact a friend of mine just bought the Google one because he read the good reviews Android 4 had. In fact he just bought the Google phone even though it is old and he had been holding out for the next iPhone.

        My point is I have read a few opinion pieces that made a good case for the rumored Apple mini tablet. I haven’t held a 7″ one but it makes sense if it is easier to handle and the graphic elements don’t get distorted.

        It would also give a nice price point which follows how Apple presents its iPod line.

      • JohnDoey

        Apple doesn’t care about the giant Android phones. Apple has a 10-inch iOS device, remember? They have no need for BS phablets.

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

        This is a silly argument. Apple is not in the business of ideology; it’s in the business of satisfying people’s desires.

        It’s patently clear that there are people who want larger phones (especially obvious now that, unlike in 2007, we’re aware of just how much we can do on our phones); it’s also patently obvious that there are people who want smaller tablets, not least because the 7-8″ form factor works well as an ebook-reader format.

        Against this, we have that fact that iOS (as it exists TODAY) has developers expecting fixed size screens. But that doesn’t always have to be the case. Obviously the intro of iPad required developers to rethink their size assumptions, as, to some extent, did the intro of retina displays. Apple has provided transition mechanisms (the ability to use and scale up iPhone apps on iPads) in the past, and there is no reason they could not use such techniques in the future (the only problematic case being that it may not be feasible to scale down 10″ iPad apps to 7″, so what users will get instead for the first few weeks is, eg, the IMDB phone app scaled up to 7″, not the IMDB iPad app).

        Note also that as iOS has matured Apple has introduced more and more places in which the UI framework is handling layout issues, which makes such transitions even easier. A developer who has been following the rules can fairly rapidly get their iPhone app to run on a 4″ or 7″ screen fairly rapidly, same UI, just more content available, to be followed in time perhaps by a UI more tweaked to the available screen space. It’s really not asking that much of developers to support two sizes
        - phone (3.5″, 4″, 7″ — same UI, more content) and
        - pad (10″)
        while expecting that some developers (but not all) will in fact support three size- phone (3.5″, 7″ — same UI, more content) and
        - minipad (7″ — minipad UI) and
        - pad (10″ — full UI)
        or even
        - phone (3.5″, 4″ — same UI, more content) and – pad (7″, 10″ — same UI, more content on iPad)
        I wouldn’t even be surprised if Apple’s own apps adopt some mixture of all three of these. After all, today, some apps (mail) have dramatically different phone and iPad versions while others (Safari, Notes) keep the differences pretty minimal.
        There are also precedents. Consider eg Powerbooks, which were introduced first as 15″ only, then 12″ was added, then 17″, then eventually 12″ was retired and 11″ and 13″ introduced. (And maybe 17″ will be retired? Note yet clear.)
        Things change — what people want and how they use devices changes, based both on new technical capabilities AND on accumulated user experience.

    • Davel

      The iPod was dying when the phone was introduced. Other companies had already provided music on a phone. In fact Apple teamed with Motorola to do this and did not like the results.

      I agree that Apple seems willing to kill its products. The iPad is taking Mac sales. Apple is ok with this as net net they are doing well.

      • http://twitter.com/qazwart David Weintraub

        The iPod was still growing in business when the iPhone was introduced. The other pre-iPhone phones that played music were very much like the Rckr that Apple and Motorola teamed up to make: Limited amount of memory and limited amount of music. Back then, no one was buying a phone for music. You bought an iPod and a Motorola Razr if you were really cool.

        The iPhone changed all of that. Here was a phone that was a combination of an iPod/Web browser/Phone that worked. And, I still don’t buy that “iPod is going down the drain” meme. Sure, the iPod **CLASSIC** is getting weaker and weaker each year, but we have no idea what the iPod Touch sales are. Saying iPod sales are falling is like saying that the iMac sales are low because the newer “iMacs” aren’t’ globular shaped machines that come in five colors like the first iMac.

        Apple does take risks. It introduced the iPad even though it would hurt MacBook sales. It introduced the MacBook Air and that’s hurting MacBook Pro sales. Apple realizes from its debacle of 1995 that if you don’t innovate, someone else will.

        What’s interesting is seeing all of the stuff that Steve Jobs introduced with great fan fair and watch it slowly disappear. Remember iCard? Remember Sherlock? Remember iDisk? Remember Mobile Me? Remember Aqua — the interface so colorful and candy coated, you could (in Steve Jobs’ words) “lick it”?

        Apple has changed quite a bit in the last decade. Apple has long term plans. Apple doesn’t have a “Five Year Plan” or even a “Three Year Plan”. Apple merely works on a whole lot of stuff, and ships out what ever will work. They understand that some company could introduce a brand new product and destroy the best laid plans. After all, Apple itself has done that at least three times in the past decade.

      • http://www.facebook.com/james.scariati James Scariati

        iPod sales *are* falling – Horace has published the numbers here before. The iPod Touch is certainly the best-selling iPod, but in total, fewer and fewer iPods are selling every year. I think the peak was in 2009. iPod sales were still going up when the iPhone was introduced, but Apple knew that things were shifting to smartphones and got ahead of the curve by building their own.

    • kiran bhanushali

      Innovation as such has already stagnated on the iphone. Most of the features on it are rehashed from either windows phone 7 or android or some apps like dropbox and others. The ui hasn’t evolved in the last 5 years essentially and whatever tweaks have been done have been forced by other platforms as stated above. If apple were to follow their previous pattern of disrupting the ipod with the iphone and the hdd with sdd etc then the next release of the iphone has to be revolutionary rather than evolutionary cos frankly the other platforms offer a much better feature set in comparison

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

        You’re describing sustaining improvements in a product. It’s what makes the strong stronger and it’s what made Microsoft a giant. Disruption is not about making something better or revolutions. It’s about making something worse and different.

      • kiran bhanushali

        Yup. That’s exactly what I was thinking of. The iphone has matured a lot as a product in terms of features over the last 5 years. So in terms of the core functions to be performed by a “portable computer” it is already over performing. But when seen from the perspective of the iphone being a competitor to laptops/portable computing devices there is still a huge market available to be captured.

        So if we apply the theory of disruption then there is an opening for some other vendor to come up with another device to perform some of the simpler tasks that the iphone performs at a lower price point perhaps while compromising on some specific feature to keep the price low(perhaps use a different method of interacting with the device than touch, voice maybe?). I’d love to hear your thoughts on this Horace.

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

        I don’t think smartphones are they are defined today are good enough. They are more than good enough as phones but they are not nearly good enough as computers. Users are becoming more demanding overall and they will not be satisfied easily. When the iPhone launched, users were happy with small screens and plastic keyboards. They did not ask for big screens and touch keyboards were thought to be a poor choice. Now these are minimum requirements in a phone and expectations are rising for better input and output methods. Satisfaction is, of course, a distribution not fixed, so it can vary widely but the median is moving up.

      • kiran bhanushali

        Hmm, good points Horace. So apple has upped the basic expectations off of a portable computing device for the average customer’s and this has led to a spurt in innovation across the table (or copying, depends on your perspective). Do you see any innovations happening across the industry which are maybe not as popular mainstream but have the potential to change the input methods like apple did 5 years back with capacitive screens?

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

        Yes, voice input is not good enough but it will get better.

      • kiran bhanushali

        Thanks for replying.

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  • http://twitter.com/designker designker

    Is there any evidence yet of companies like ZTE and Huawei eroding Samsung’s ability to profit on Android? Devices like the Ascend G300 http://www.t3.com/reviews/huawei-ascend-g300-review seem to suggest that todays premium Android phone is tomorrows entry level device.

  • Bruce

    “A separate analysis of Android economics shows that Google’s benefit from the platform is modest.”

    I look at Android as a defensive maneuver from Google rather than an offensive one. I think their goal is to protect sources of “natural resources” rather than to increase their profits. The natural resource being attention paid by computer users to Google ads. So Android is a win for Google if people view Google ads on the platform, as opposed to not viewing Google ads on another platform.

    • FalKirk

      “So Android is a win for Google if people view Google ads on the platform, as opposed to not viewing Google ads on another platform.”-Bruce

      Say what? That’s like saying that it’s better for Coca-Cola to sell Coke in their own stores rather than in supermarkets, restaurants and vending machines. That might be true if Coca-Cola made more from their proprietary stores, but that’s not what’s happening with Android at all.

      Two-thirds of all of Google’s profits are coming from iOS. Coca-Cola’s goal should be to sell Coke and make a profit. Google’s goal should be to get exposure so they can sell ads for a profit. If their proprietary stores are less profitable than their other distributors, then they are HURTING sales and profits, not helping them.

      “I look at Android as a defensive maneuver from Google rather than an offensive one.”-Bruce

      Really? How’s that working our for them? Who exactly are they “defending” against and exactly how effective have those efforts been?

      • nsw

        “So Android is a win for Google if people view Google ads on the platform, as opposed to not viewing Google ads on another platform.”-Bruce

        Please note the “not”. I agree with Bruce’s statement. Google’s defense is against the eventuality that it gets at least partially pushed out of iOS. This is a long-term play, but with Siri first and iOS6 next it is already starting to happen.

        That said, this makes Android a pure strategic play for Google. It would never survive on the merits of its own P&L, which by any accounting would seem to be awful (especially when including the Moto acquisition).

      • Canucker

        Would Google have done better if it had cozied up with Apple rather than taking it on? Without Android, would Apple have pushed Siri and its own maps solution so aggressively? Perhaps, but the “desire” to do so would have been far less compelling. Jobs declared war on Google/Android as he saw it as a rip-off. The motivation for de-Googling itself was thrust into another orbit by Android. It could be argued that all the creation of Android has done for Google is create profit for Samsung at the expense of losing future revenue from iOS. Apple has severed as many links with Google as it can. It’s far closer to Microsoft than Google.

      • nsw

        “Would Google have done better if it had cozied up with Apple rather than taking it on? Without Android, would Apple have pushed Siri and its own maps solution so aggressively?”

        I have wondered about this, and don’t know. I think your analysis is on-target: Apple would still have had the desire to control its destiny better, but Android pushed them to work a lot harder on this a lot sooner.

      • Walt French

        Really hard to say what would’ve happened without Android. But given that Google bought it years before the iPhone was an item, I’d say the conflict was inevitable, and a sharp competition was bound to ensue. I think Google was naïve if they actually believed a ragtag band of 20 handset makers would chip away at Apple, though.

        Instead, we have what we have: Google’s project has merely switched Google’s reliance on Apple into a reliance on Samsung, with strengthened opposition in Cupertino. (Redmond has been a non-player.)

        My take is that net-net, Google has fanned an us-versus-them mentality directly at odds with its previous strategy, which was to be the lingua franca of the internet. Maybe mobile is Different enough that its current economics, which piggyback on large-screen pages replete with still-hopeful advertising, were destined to fragment this way. But I’m pretty confident that if ads are bad on desktops, they’re headed for disaster on mobile, meaning that Google is at a crossroads of their own construction, without any clear sign of how to choose.

        And to be sure, this issue with ads is a lot bigger than just Android or Google. An interesting opinion by a former AdWeek editor is using it to predict the implosion of the ad-based web.

      • http://twitter.com/jefsmk Jeff Smeker

        Maybe thats their problem — there is no good answer! Go against Apple via Andriod, or sit idle and wait to die.

      • Bruce

        “That said, this makes Android a pure strategic play for Google.”

        Yes, that is what I was trying to say.

        Questions for Horace: How much (if any) advertising money does Google lose when people choose an iPhone over an Android phone? In what direction is this number trending?

      • Canucker

        (Not Horace). Google currently loses nothing when an iPhone is bought over an Android device. In fact, they likely gain given that iPhone users use the Internet more than Android users. They do lose their Play commission (30%) but I doubt that represents much profit – ditto with the Apple AppStore).

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

        iOS devices create much more revenue for Google than Android does (according to the company). The ratio might decline after Apple expels Google maps, but it may not tip the balance overall.

      • Bruce

        “Really? How’s that working our for them? Who exactly are they “defending” against and exactly how effective have those efforts been?”
        Initially, Google was defending themselves against people using Microsoft phones and not seeing Google ads in apps written for Microsoft phones, and not seeing Google ads in bing used on Microsoft phones. It’s worked out pretty well for Google. They basically crushed Microsoft in the phone OS arena.

      • twilightmoon

        They crushed Microsoft, along with crippling RIM and Nokia, but they may have long term lost iOS in the process.

      • studuncan

        But in terms of ad revenue, iOS is a bigger win than Android for Google.

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

        There are two distinct issues going on.
        In the short term, sure, Google makes money from iOS. But in the long term, a different model is being born.

        Google makes money because it provides information to HUMAN BEINGS via screens, and ads can decorate those screens. But a possible future is somewhat different, with information providers providing information to COMPUTERS who reformat that information as they wish, and display it as they wish. A small peak at this future is apparent in the way Apple acquire weather, stocks (and in iOS6 sports) info from Yahoo and display it, with no ads, in an “Apple” way, not in a “Yahoo” way. Siri is another aspect of this evolution. iOS6 Maps (without Google ads on them) is another aspect.

        How does this play out?
        (a) Plenty of Americans seem to be OK with ads, if the result is free something. Lucky Google.
        (b) Apple has historically fought against this trend, reckoning that its users would be (mostly — iAd is the ugly stepchild here, but seems to be more a reaction to developer pressure than anything else) willing to pay a little more for no ads.
        (c) The fact of (b) provides an opening for companies that are willing to experiment with this new model (provide data to the mass market, at mass market prices, and make money because people pay for the data, rather than through ads).
        (d) I’ve suggested elsewhere that this provides a possible role for future Yahoo — give up on trying to compete with Google, and become the provider of mass-market information to companies like Apple which are willing to pay for an ad-free experience and the right to present data within their UI.
        (e) Alternative possible companies in this space are Bloomberg (but they are used to charging premium prices and may not be willing to give that up) and Wolfram Alpha (with magnificent technology, but run by Steve Jobs the second and perhaps unwilling to compromise with whatever Apple might require of them if they want to expand their current, small, partnership).

        Point is — right now Google is like MS and the desktop. And like in 2000, it seems that the world will always be theirs. But it’s possible, even today, to imagine a rather different world.
        Which in turn means that Android does still make sense. The point is not iOS revenue today, it’s that Google needs to maintain this model whereby they provide UNMEDIATED data (which can then be decorated with ads) to the user. iOS is giving them less of that model every year, and MS will probably follow (lagging behind by a few years as always, as they try to figure out exactly what Apple is doing and how to copy it).

    • Walt French

      “I look at Android as a defensive maneuver from Google rather than an offensive one.”
      Not to pile on with snark, but this really begs the question of how successful Google has been with this “defensive” move.

      If their existing tools are really that good, there shouldn’t be any problem in people—heck, Siri, even—continuing to use Search. Apple would be competing with Amazon to give a better access/interface to search, maybe a custom placement in Siri. (And Amazon & Samsung would be lined up to put Google Maps, media and all their other first-class services on the home screen for users to see first.

      Instead, the opposite is happening. I’ll cite Stein’s Law —when something can’t keep going, it will stop—to predict that Google will have to release a new layer atop Android, and all its energy will go there. That layer will provide expedited access to search, Google+ etc., and integration with 3rd-party apps who play by the Google First rules.

      Because otherwise, Android’s opportunity costs will soon exceed the profits that they are protecting.

  • FalKirk

    Three observations:

    1) Yeah, Apple is “losing” to Android. Right.

    2) Congratulations to Samsung. Stellar job. Some would attack them as copiers but I think that’s grossly unfair. They’ve clearly earned their position as the only other manufacturer in smartphones that matters.

    3) What he hey, Microsoft? You’ve put your time and your effort and your money and your prestige on the line with Windows Phone 7 and now you’ve abandoned it altogether in the hopes that the wholly incompatible Windows Phone 8 is the answer? What’s up with that?

    Is Windows 8 going to be the savior of Microsoft’s smartphone efforts? Or is Windows Phone 7 the dead canary that’s foreshadowing what’s going to happen to Windows 8 tablets come this Fall?

    • TheEternalEmperor

      I have to part with you here. I find their copying distasteful and their commercials insulting. I read once that someone asked Michael Jordan why he didn’t endorse any candidates? His answer: Republicans buy tennis too.

      I own two Samsung TVs. But as a iPhone user, when I see a commercial that is calling me an idiot for using an iPhone, I can’t really see myself buying another Samsung product anytime soon. IMO, they would be better served thinking “Apple customers buy TVs, fridges or washing machines too.”

      I’m not entirely convinced that this constant copying will work in the long term. Or put another way, can someone provide an example of where this strategy ultimately defeated the company perceived as the original? I cannot.

      • FalKirk

        Understood. I addressed the issue because I know that many feel as you do. However, I feel it’s only fair to give credit where I feel credit is due. You and others are certainly free to feel otherwise. :)

      • TheEternalEmperor

        True. But I do wonder, has this strategy every worked? I can’t think of one, but that means nothing. ;-)

      • Macyourday

        Having attempted to operate a samsung “smart” tv for 12 months and hating it more every week, I hope they do, as you say, fork android, as it certainly deserves forking. I also hope that many people accidentally buy these forked phones and experience the delights of Samsung software. Lets see what that does to their stolen profits. Hopefully apple will be able to find other suppliers soon.

      • studuncan

        The smartest way to operate it is to hook an Apple TV to it.

      • TheEternalEmperor

        Smile. That’s what I did.

      • http://beautyandthesoftware.blogspot.com/ Adrian Constantin

        “can someone provide an example of where this strategy ultimately defeated the company perceived as the original?”

        If we define victory as making tones of money over a couple of decades, while the original company had to flee and reinvent itself in a different market, then Microsoft Windows surely qualifies.

    • http://search.websonar.com:8080/ Duane Bemister

      “Microsoft has indicated that it intends to be bold with this new version of the suite, which will be called Office 2013″.
      I can almost hear Ballmer’s heart racing from here. It certainly looks like Apple is unstoppable.

    • kyler

      It’s clear Samsung’s got some momentum going, but I wonder how long it will last, given they haven’t invented anything here exactly. There’s no proof they are capable of creating its own OS, for example. People seem to assume a lot.

    • kyler

      It’s clear Samsung’s got some momentum going, but I wonder how long it will last, given they haven’t invented anything here exactly. There’s no proof they are capable of creating its own OS, for example. People seem to assume a lot.

      • Walt French

        I’m a big believer in the difference between quality and “good enough” software, but also believe that the challenge is having the will and commitment to write it. Samsung has already earned a lot of experience with Android OS, so I assume they will feel comfortable that they can bolt from the OHA any time they feel it would be helpful.

        So farther have not. What would be the pros and cons? The pros would obviously include better brand definition, and monetization of functions that Google now owns. Cons, it could isolate them; the appeal and likely success of the Nexus is a reminder that Google can intro new iterations that they would miss. Maybe more importantly, they are very important to Google right now; that should result in favorable terms for future efforts.

        On balance, I don’t see the driver for the fork that I have wondered about for some time.

    • twilightmoon

      Samsung certainly is doing a great job competing with Apple for profits. It’s the closest to iOS so it’s hard to give them full credit when they literally rip off icons and even use Apple icons in their advertising, copy UI as closely as possible, case design, packaging and even port design and the shape and size of their wall plug is nearly a millimeter by millimeter duplicate.

      That on top of their insulting ads I can’t see myself ever buying anything by Samsung, but I could buy stuff from other android manufacturers if they made something interesting that wasn’t related to Android.

  • Walt French

    “The concentration of power and wealth may indicate a peaking of experimentation and discovery of new opportunities.”

    While I first read this the way that econ theory suggests, and that Jon Milani did—that concentration causes stagnation—I suppose it’s possible to flip the causality: industries concentrate when new business or technical models fail to show up.

    Either way, it seems that Android didn’t provide that much in the way of new opportunities; it was Samsung. What can that say to the many Android fans, who want “stock Android” without all the geegaws from OEM skins, etc? Instead, it says that Samsung’s hardware expertise, brand, distribution deals with carriers and who-knows-what else (I can’t believe TouchWiz) are the real value-contributing parts that we’ve seen at play.

    Obviously, all of these but (perhaps) carrier deals are potential weapons in the tablet space. Hasn’t done them ALL that much good. And interesting to speculate what is the value stack that Google/Asus and Microsoft will bring to that product space.

    • Simon

      We cannot just brush TouchWiz aside. It was the most iOS-like skin of any major Android skins and I think that definitely affected the sales positively.

      On a related note I always thought one of WP7′s weaknesses is that it doesn’t look like iOS. Many online nerds loved the differentiation but customers sure didn’t. They wanted something like iPhone, a proven design.

      Speaking of WP7′s Metro design, that line of design has now graced some of most notable failures in recent history of Microsoft, starting with Zune, Kin, and now WP7. Why is Microsoft so adamant about keeping Metro? Do they believe XBox became popular because of the rectangular boxes with flat colors in the user panels?

      • kaelef

        I feel that Metro is the only real interface design that Microsoft has gotten positive feedback on in many years. So now they’re going “all Metro” even though it’s already several years old.

        Microsoft has a history of this. They’ve been a few years behind the curve interface-wise going back to the release of Windows XP – which, at least to my eyes, looked dated by at least a couple of years when it was released.

        I thought Metro looked nice on the Zune years ago, but it’s a good case of something that’s only good in small doses. I’m definitely not a fan of what’s coming up in the Metro-ized versions of Windows and Office applications.

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


        I feel that Metro is the only real interface design that Microsoft has gotten positive feedback on in many years.”

        If you’re going by the reaction of the blogosphere then definitely yes but if you’re referring to positive feedback in terms of success in sales then definitely not. Windows 8 will be the first true test for the Metro UI.

        If there’s one thing that MS seems to have gotten right with W8 / WP8 / Xbox / Skydrive is the tight integration of the ecosystem.

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

        What IS this tight integration of the system?
        Do they actually provide iCloud like APIs which take care of issues like resolving conflicts between different versions of data? Do they provide something iCloud’s three different models for storing data in the cloud (key-value pairs for small fragments of data, files, and something like a database)?
        (I’m not asking with snark. I am genuinely curious.)

        What I see them providing is a Dropbox clone (ie simple file storage in the cloud) along with some special case solutions (eg for IE bookmarks and open pages), but nothing nearly as comprehensive as what Apple is offering.

      • Jerome

        “We cannot just brush TouchWiz aside. It was the most iOS-like skin of any major Android skins and I think that definitely affected the sales positively.”

        I dare say, the success of Samsung is based on the iPhone. They even brag about this in an pathetic ad. Apple defined what a smartphone looks like, and the less similar a phone is to the iPhone, the less it is sought after by consumers. So you have, on one extreme, Samsung aping the Apple products as closely as possible, and Nokia’s Lumia on the other extreme, trying to be an anti-iphone in all possible aspects.

  • Sean Williams

    Stunning analysis as always, Horace. Is it possible to compare the current spread of Samsung’s mobile OS offerings compared to a year ago (Android, Windows, etc)? People in the comments seem to be forgetting that Samsung sells phones in all possible markets and doesn’t have all their eggs in one basket—though I’m sure that the Android share of their OS “pie” is the largest and is growing…

  • Sean Williams

    Stunning analysis as always, Horace. Is it possible to compare the current spread of Samsung’s mobile OS offerings compared to a year ago (Android, Windows, etc)? People in the comments seem to be forgetting that Samsung sells phones in all possible markets and doesn’t have all their eggs in one basket—though I’m sure that the Android share of their OS “pie” is the largest and is growing…

  • Sean Williams

    Stunning analysis as always, Horace. Is it possible to compare the current spread of Samsung’s mobile OS offerings compared to a year ago (Android, Windows, etc)? People in the comments seem to be forgetting that Samsung sells phones in all possible markets and doesn’t have all their eggs in one basket—though I’m sure that the Android share of their OS “pie” is the largest and is growing…

  • famousringo

    “In contrast, Samsung, and Samsung alone, is benefitting greatly. It could even be said that today Samsung is the only Android profit engine.”

    This is something I’ve noticed. And why should Samsung, second most profitable company in mobile, stay subject to the whims of Google’s software engineers? Why should Samsung tolerate Google competing with them in hardware and using the Nexus brand to bolster competitors?

    The next chapter in Android’s history is going to be the falling out of Samsung and Google. Samsung is going to use the threat of Tiezen and/or an Android fork to apply pressure to Google’s software development, and if Google doesn’t acquiesce, the two giants will battle for the hearts and wallets of millions upon millions of users.

    Samsung knows full well that the complete hardware/software/services package is what drives profit in mobile, and they’ve got plenty of funding to develop for themselves the other two poles of the tent.

    • TheEternalEmperor

      My thought: Within the next 8 months, Samsung will pull a “Kindle Fire” and fork away from Android and Google.

      • Bernhard Grabowski

        That would be a pretty good scenario for Apple – more fragmentation of the competition.

      • xynta_man

        Who knows – one of Apple’s key advantages it that they provide integrated solutions, since they do both the hardware and the software.

        Samsung forking Android would give Apple’s biggest competitor the same freedom, that Apple has. It would be a disaster for Google, but more of a win for Samsung.

      • Bernhard Grabowski

        If they’d fork Android, it adds another layer of complexity for app developers.

        I kind of slightly disagree with you that it would be a disaster for Google.
        So far the only mobile strategy of Google seems to be: sell ads.
        If I’m not mistaken most of Googles mobile ad revenue still comes from iOS devices. Their hardware offerings seem to be a bit thin on margins, so they still go for advertising.

        In this regard Google might care less about Samsung forking Android as long the app developers continue to use their advertising network.

        But what do I know.

        I always thought Google gives away everything for free to kill the competition and then starts to charge for their services – hard to switch once you’ve made your platform decision.

      • xynta_man

        If Google did not care for forking of Android, than they wouldn’t be so butthurt over the Kindle Fire that they made the Nexus 7.

        A successful fork of Android lessens Google’s control over their platform, the platform in which they sunk billions of dollars (Motorola purchase, anyone?). Losing control over Android will result in Google’s mobile strategy failing.

        Remember how Google got butthurt because of Shyhook? Same thing.

        If Samsung forks Android today, than who says that tomorrow they won’t make an “S-Ads” ad network? It’s Samsung – their inner corporate rule is “to be like Apple”, so it’s only a matter of time when Google’s services start being replaced.

        Or better yet, Samsung can make it’s own Samsung Apps app store a more viable marketplace for buying and selling apps, sidestepping a big part of ad-revenue. Google’s sloppy work with the market for paid apps is a clear indication that they aren’t interested in them – they want apps to be ad-driven, hence all the problems with Google Play.

      • Bernhard Grabowski

        I probably wouldn’t be so off with my assumptions if I’d knew one thing – Google’s mobile strategy?

      • xynta_man

        Sometimes I think that Google itself doesn’t know its mobile strategy

      • kiran bhanushali

        Horace shares the same opinion about Google’s overall strategy. He spoke about it quite extensively on one of his 5×5 podcasts.

      • kiran bhanushali

        The release of Nexus 7 has more to do with wanting an industry standard android tablet to boost the tablet ecosystem so developers would start building custom apps for jelly bean and the tablet form factor.
        Also to push along other manufacturers to meet the
        quality and price point of the device to overall boost the numbers of android tablets.

      • xynta_man

        I really doubt that this was Google’s true reason because of two things:

        1) They didn’t need to make a “Google” branded device to boost the ecosystem – those devices could well be made and branded by Asus, Acer, Samsung, etc. Try to remember the smartphone side of things: it was Motorola’s (or rather Verizon’s) Droid that seriously boosted the Android ecosystem in the early days, not the Nexus One. Google’s Nexus One was an attempt to change the business model in mobile, which failed and Google made it just a developer device.

        2) The form factor of the Nexus 7 with a smaller wide-screen display is clearly far more forgivable to use of “smartphone” apps instead of “tablet” apps than a bigger tablet. Even Google itself chose to use a more of “smartphone” UI for the Nexus 7, e.g. the bottom bar with software buttons. This reason alone should decrease the interest of developers to develop “tablet” apps.

        I’m more than convinced that Google was butthurt of Amazon’s Kindle Fire and its relative (to other Android tablets) success on the market, hence it reacted by releasing a similar (same form-factor, same price point) device with better specs.

      • febsee

        Why should they do that? They can get all the development of Android done for free from Google.

      • TheEternalEmperor

        Now, why would Samsung not want to have to be beholden to Google? To pass Google’s compliance testing, to be held to Google’s schedule, to compete with Google’s new Motorola arm?

        The heavy lifting is done. This is the perfect time to fork.

      • febsee

        Writing software is not the same as say a manufacturing plant. You need go talent and sophisticated engineering to do it. Arguably Samsung can fork the code and put a development team behind it, but it is likely that they cannot match the speed, agility and development talent at Google. It thus seems worth while to just milk the cashcow as much as possible.

      • JohnDoey

        Samsung can simply hire engineers away from Google with the promise that what they make will actually get used. The last 2 years of Android development was hardly put in front of users.

      • TheEternalEmperor

        I am a professional software developer of more than 17 years. I understand software development. Samsung can hire talent.

        Also, maintaining and enhancing doesn’t require the talent that writing from scratch does. With what is in place, lesser talent can keep it going through sheer inertia. They don’t even have to match Google for Google will release the code and they can grab that too.

      • http://www.noisetech-software.com/Home.html Steven Noyes

        The hardest part is already done. OS maturity is pretty high so now is the time to fork and make more money. Samsung started making the whole Galaxy brand and Touch Wiz to allow people to transition to the non-Android Android at some point in the future.

      • Tatil_S

        There are tons of little annoying things in mobile OS, making it good enough, but not great yet. After even one year, if Samsung cannot match Google’s advances, its OS will feel stagnant. Natural voice based interaction is still going through its infancy. Siri or Wolfram Alpha style, “I need an answer, not a list of websites that may or may not have the answer” type of search algorithms will be even more important in the next few years. I doubt Samsung can keep up with giants of the industry: Google, Apple and MS.

      • JohnDoey

        Android is not mature when measured against OS X or NT — that is who it has to match going forward.

    • nsw

      As Brian S. Hall has noted, Samsung does not mention Android or Google in any of its advertising, with the possible exception of the Galaxy Nexus, which is a special case of sorts. Touchwiz on everything (again, except G-Nex). They could certainly swap in their own Android fork underneath (or one of their home-grown) and hardly miss a beat.

    • atimoshenko

      I’m not sure that’s right. If the hardware is sufficiently commoditised (is Samsung’s SIII really that different from One X or Optimus 4x or RAZR Maxx, or whatever?), and the OS is the same, Sammy’s fall might be as fast as its rise. Look at what happened to HTC.

      I think that a large number of Android customers, or at least a large number of people responsible for steering their friends and relatives towards Android, are much more loyal to Google than to Samsung. If this were not the case, the launch WP7/Lumia combo (and the expensive marketing push behind it) would not have been as anaemic as it was.

      • simon

        Huawei and ZTE might make things more challenging to Samsung but Samsung still has the best product pipeline with two well known high end products – Galaxy S3 and Notes – and have proven history of supplying millions of phones with customization in time. Nokia could have been it if they moved faster but now they are probably too late. Who has more competent production than Samsung?

      • TheEternalEmperor
      • atimoshenko

        Is the issue production competency though? All the big name Android players have their hero devices come in at $199 ($249, on occasion). Despite this, the main-problem for everyone-not-Samsung seems to be that their competing phones are not selling, not that their margins on those phones are too low.

        The Galaxy S and SII (and Nexus) phones were miles and miles and miles ahead of their competitors in terms of product design. And by design, I do not be how they looked, but how Samsung made all of the (otherwise similar-to-competitors components) fit and work together, and which parts of the phone to pay the most attention too. The SIII still leads the pack, but is neck-and-neck with some, and would likely have had less success were it not for the “Galaxy == Android flagship” association that it formed over the past two years. But if Google were to pass the Nexus crown for handsets to someone other than Sammy and/or if another competitor pushed to outright regain the “Android hero phone” crown, I still think that Samsung could see a shockingly quick decline in fortunes. Samsung is much more at the mercy of Google than a profitability analysis of the mobile market reveals.

      • atimoshenko

        Is the issue production competency though? All the big name Android players have their hero devices come in at $199 ($249, on occasion). Despite this, the main-problem for everyone-not-Samsung seems to be that their competing phones are not selling, not that their margins on those phones are too low.

        The Galaxy S and SII (and Nexus) phones were miles and miles and miles ahead of their competitors in terms of product design. And by design, I do not be how they looked, but how Samsung made all of the (otherwise similar-to-competitors components) fit and work together, and which parts of the phone to pay the most attention too. The SIII still leads the pack, but is neck-and-neck with some, and would likely have had less success were it not for the “Galaxy == Android flagship” association that it formed over the past two years. But if Google were to pass the Nexus crown for handsets to someone other than Sammy and/or if another competitor pushed to outright regain the “Android hero phone” crown, I still think that Samsung could see a shockingly quick decline in fortunes. Samsung is much more at the mercy of Google than a profitability analysis of the mobile market reveals.

      • mieswall

        Good point. Much has been said of a future Apple fall, because of Samsung, but little about Samsung exposure, by android itself. As someone else said, it seems its time to collect for Apple…

    • Tim F.

      Samsung has already introduced S Voice (Siri, Google Voice Actions competitor) Samsung ChatON (BBM, iMessage competitor), and I believe there are a few other services that I can’t recall (I think they’ve gone after carrier billing themselves, etc.).

      The only problem is they all universally suck. Having money does not necessarily make you a quality software developer and integrator.

    • Fatty Bunter

      Who cares? Any of the scenarios will benefit the consumer so long as there’s shuffling of power.

  • Relentlessfocus

    1) I guess open doesn’t always win
    2) Regarding Google and Samsung’s relationship, which is the dog and which is the tail?
    3) At what point does Android become a Samsung liability in its attempt to recreate the Apple strategy?

  • Bernhard Grabowski

    That is a very scary chart.

    As much as I appreciate the growth of Apple as a small but long time shareholder, the question is when will Apple have outgrown the industry to such an extent that too much of the weakening competition throws the towel.

    People used to say Intel can’t afford AMD to go bankrupt, otherwise they’d get declared a monopoly and subsequently broken up.

    Now here comes the wild idea – even if you’d break up Apple into Tablet – Phone – Media Players – Services – Laptop – Desktop – Accessories, they’d still be considered a quasi monopoly in two, if not three areas.

    Too much money and too much power leads to too much public / official scrutiny. We already see too many fishbowl effects like:
    - ONLY Apple is getting publicly criticized for presumably weak working conditions in their price sensitive manufacturing process albeit NO company is trying to be more transparent about it.

    I would love to see Microsoft evolving as a worthy contender for the third crown in this race to ensure ongoing innovation (not necessarily by Microsoft) and further evolution, eventually revolution of the way we compute in the future.

    • TheEternalEmperor

      Here’s your problem. In no way is Apple a monopoly. They don’t dominate PCs. They don’t dominate music. They don’t dominate phones.

      If MS, at the height of its egregious IE bundling/integration, Windows OEM charging, pre-annoucing height didn’t get broken when it held over 95% of the market, what can anyone say about Apple? You’re too successful?
      IMO, won’t happen.

      • Bernhard Grabowski

        Dear Eternal Emperor,
        thanks for your thoughts, yet I do not have any problems.

        I am saying IF Apple continues to suck the air (money) out of the room, a significant part of the competition MAY suffocate away.

        And you do not need to dominate PCs to hold a quasi monopoly in tablets, this, unless tablets will get collapsed into PCs.

        Furthermore I am saying QUASI monopoly.

        A monopoly is not necessarily a static constant, it may be what the authorities feel like a monopolized market.

        MS didn’t get broken, also thanks to an investment into Apple to keep it alive as a contender in the OS market – this item may be interpreted differently from viewpoint to viewpoint. Also they paid notable fines to get their head out of the hanging rope.

        By no means I state Apple is already a monopoly, but they might be involuntarily on the way – it’s a possible outcome of prolonged over proportional success. Think 10+ years down the road.

        Nowadays indeed authorities can say “you’re too successful” – the world is an ever changing place in which the financial crisis has changed more than one valuable constant into a variable value. China may snap in 5 years and cut off Apple from all rare earths, North Korea may snap and unleash pure craziness, Iran already snaps frequently and god knows what Germany will come up with to save or un-save the Euro by saving or collecting the savings of the German population.

        Like I said – It was just a wild idea, not a set in stone prediction for everyone to obey.

      • TheEternalEmperor

        “Here’s your problem” doesn’t mean that you literally have problems. It’s just a expression. In this case, I’m expressing a different opinion on the matter. That’s why we’re all here, right?

        No, you didn’t say that Apple was a monopoly, but you did say “otherwise they’d get declared a monopoly” so since you brought up the term and that term is a necessary component to your point, it seemed like a reasonable thing to address.

        That being said, even if “quasi” monopoly is not a real one. I think that it would take a real monopoly and abuses of it to even bring up an serious “breaking up” talk. And what do we have? Apple owns no content, so how can they have even a “quasi” media monopoly? Will Apple, even in 10 yrs have 50%, let alone 80% of the PC market(even including tablets), enough to bring up talk of monopolies. Maybe, but I don’t think it will happen.

        Phones? Android lose enough share so that Apple will get again, 80% share? Again, possible, but is it likely? Again, I don’t think so.

        Yes, anything can happen, all of the stuff you mentioned, but to me, if we consider every conceivable possible, it complicates the discussion(for me, anyway). I’d rather keep it simple.

        I did not mean to imply that you were making a set in stone prediction. I’ve considered your point myself, but ultimately, I think that this is not likely, but again, I said “IMO”. Of course, that opinion could change with new data.

      • Bernhard Grabowski

        I understand what you mean, point taken.

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

      Monopolies are not illegal. Abusing a monopoly is. In some countries 40% market share exposes you to increased regulatory scrutiny so that M&A activity etc, needs specific approval.

      • Bernhard Grabowski

        Horace, the issue is the lack of a definition for the word “abuse”.
        For many (online press) persons Apples walled garden approach
        is already abuse, for others the old IE vs Netscape debate merely qualifies as a Darwinistic and therefore justified business selection process.
        Apple is a big company today and the way it goes it will be an even bigger company tomorrow.

        The point where I start to see subjective “abuse” of power to come in play is the supply chain – Apple, at some point, will eventually absorb much of what is available in terms of rare raw materials. And as we know Tim Cook he’ll plan this scenario long time ahead to secure his share, leaving competitors complaining about the lack of raw materials. It’s a matter of time before national companies in the sourcing countries will get some protection.

        In a capitalist world no one would even think of such a scenario, but, if I’m not mistaken, most of Apple component materials are (currently) getting mined in China, a country which can change the rules top down quickly.
        I am aware Vietnam and Japan are currently working on the exploration of rare earth sites which supposedly are as rich as the ones in China (estimated 1/3 of worlds rare earth resources). This should give some relief.

        However, I perhaps stretch the trend line too far ahead.

      • Walt French

        “ the issue is the lack of a definition for the word “abuse”.”

        Your, my or Horace’s definitions of “abuse” don’t matter very much in the context stated, which was whether a company will be reined in by a competent Competition Commission (Anti-Trust) bureaucracy. I haven’t actually seen “abuse” in the statutes that these commissions are responsible for enforcing; “abuse” is just a catch-all term for what illegal behavior they will challenge.

        Apple’s involvement in the startup of iBooks pricing is under investigation / prosecution, but all the phone complaints about abuse of monopoly power have gone against Apple’s competitors, the ones that the bloggers are most likely to favor over Apple when they whine about Apple’s “walled garden.”

      • vastaman

        It doesn’t matter what the definition of “abuse” is if you are not a monopoly. Apple is not a monopoly at this time. There are viable alternatives to Apple’s walled garden. Consumers have real choice.

  • Henry

    Based on your chart, it’s also interesting and somewhat shocking to note that the valuation of Samsung’s phone business is about the same as Google’s entire business, if the same P/E is applied. What does that say about Google’s decision to defend its search business by creating a free viral platform.

    Also, maybe this gets to the heart of Google’s decision to acquire Motorola. There’s money in hardware that’s done right.

    • twilightmoon

      Samsung makes most of the expensive pieces such as the screen and the memory in house. No one who does not do this has profits anywhere near Samsung. I honestly cannot see Google making a profit off their Motorolla hardware let alone payback the acquisition cost.

      It’s telling that they did not use Motorolla to produce the Nexus 7 tablet.

      • Walt French

        Yes, but we can well imagine that had Google used Moto for the Nexus, the entire OHA would’ve exploded.

      • Klasse

        The screen and memory are just components, it has little to do with the profitability of Samsung’s smartphone business. Revenues for these components are as far as i know captured by another division at Samsung, and highly doubt that Samsung can purchase these components (from itsself) so cheaply that it would explain any significant part of the smartphone division’s profits.

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  • suddy

    Horace,

    Maybe your next article will be titled “Stagnating in Incremental Innovation”, that is what I expect (but not hope) will happen to Apple. They have too much staked in their iOS devices that, say, an augmented reality virtual assistant will not be in their best interests. However, they would have enough $ to kill any such initiative. I am beginning to think that Apple does not truly cannibalize their own technologies. What they do is leverage what they’ve learned in one to leap frog to another. iPod to iPhone to iPad.

    Just check out the articles that review Siri (beta) with Google’s voice assistant which is held to be presumably better. More likely Siri’s weakness is search integration (as opposed to voice recognition) stemming from Apple’s reluctance to do deals with Google.

    Suddy

    • Sacto_Joe

      So maybe Apple should buy Yahoo….

  • http://twitter.com/echotoall echotoall

    Curious to see how the Nexus line develops now that android 4.1 is very competitive to ios user experience, and where Motorola fits in.

    • twilightmoon

      Where is there evidence that 4.1 is competitive with iOS? It may be the most polished Android, but it’s still Android. iOS has evolved since the first iPhone and now includes Siri and a level of polish and refinement that not only goes all the way through the OS, but you see show up in many of the 3rd party software.

      And one critical area that Android will never catch up: fragmentation, and access to easy updates 1-2 years after purchase. Most Android phones sold do not have current Android and most can never be updated. Rooting does not count, very few non hardcore geeks root, or even know what it is.

  • Mayson

    iPhone valuation + Apple’s cash + securities => Macintosh and iPad are free? Somehow Apple seems more undervalued than ever.

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  • joey d.

    stick a fork in r.i.m and nokia.

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  • oases

    What can HTC, LG and Sony do to get a bigger part of the Android pie?

    • http://beautyandthesoftware.blogspot.com/ Adrian Constantin

      Mathematically, getting out of the Android business would give LG and Sony a bigger share of the Android profits, because 0 is bigger than negative numbers.

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

      What can Motorola do to get a bigger part of the Android pie?

  • http://stormcontrol.tumblr.com Pablo Carlier

    Hi Horace.

    I argued (http://stormcontrol.tumblr.com/post/22410029348/there-is-no-apple-vs-android-war) a couple of months ago that Android could well not exist, and the picture would not change much. It served as a strong brand for Samsung’s recognition, but now that the market sees the value in Samsung itself, its hardware, its ecosystem, Android is a second rate player. Actually, people don’t buy and Android phone from Samsung, they buy a Samsung phone that runs Android Apps, interacts with Samsung TVs, looks good and is cheaper than an iPhone.

    That is why Google builds its own hardware now. And Microsoft. Vertically integrated has won.

  • RichLo

    If Samsung is becoming the largest provider of the Android system, this could be indirectly what Google needs to focus their mobile OS framentation if Samsung can lay the groundwork and provide OS uniformity across their devices.

  • http://www.techstarvation.wordpress.com/ Sumit Gupta

    Is this global data or specifically for US?

  • http://www.techstarvation.wordpress.com/ Sumit Gupta

    Is this global data or specifically for US?

    • http://www.techstarvation.wordpress.com/ Sumit Gupta

      I am sorry this should be global data. Apple at 450 billion dollar, it cant be from US all alone.

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  • RGB

    Horace, where do you get the 14x multiple from when valuing the Samsung and Apple phones? Are you multiplying the trailing 12-mo EBIT by the EV/EBIT multiple?

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

      The value of 14 is arbitrary. I begin by using the S&P 500 P/E and discount it on the basis of tax rates. It’s difficult to do this rigorously with company divisions. Case in point is that Apple as a whole has a P/E around 14 (after tax) though perhaps the iPhone division is priced higher. Conversely, HTC used to have a P/E of 14 but it now has a P/E of 4. The point is to get a ballpark figure.

      • RGB

        Thanks!

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  • albertkinng

    I just love that we have options. Either you love Apple or not you will get a gadget that fits. And that’s great!