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In my last podcast (Impatient for Growth) I mentioned my frustration at Apple’s slow entry into emerging markets outside of China. I cited Tim Cook’s comments that he did not see an opportunity there in the short term. He mentioned the multi-level distribution challenge which I took to mean the difficulty in setting up Apple stores (in itself due to restrictions on foreign owned retail chains) and the absence of device/service bundling.
This requires more analysis and the best place to start is to look at the data available.
The market potential is enormous. Globally, there are 6 billion mobile cellular subscriptions (end of 2011, ITU) and 86% penetration, but only 1 billion have mobile broadband subscriptions (which make ownership of a smartphone worthwhile). In India there are 893 million subs (vs 986 million in China).
In 2011 142 million mobile cellular subscriptions were added in India, more than in the Arab States, CIS and Europe put together.
So the potential and growth are spectacular. But that is just 2G. Mobile broadband (i.e. 3G) is rare. Globally, developing countries have only 8% mobile broadband penetration vs. 51% in the developed world. Mobile broadband is a proxy for mass adoption of the iPhone (though perhaps not for Android inasmuch as it’s employed as a feature phone).
The situation for 3G in India is even worse than the overall developing world.
This episode is recorded on the day after Apple’s second quarter earnings release. We go through all the income statement updates and discuss what went wrong (almost everything) and what went right (precious little). We use statements by management about India to answer the question of where the emerging market potential is for iPhone. Putting aside some of the missed opportunities or bad timings, the quarter is reviewed as less than the stellar performance we’ve become accustomed to but not bad all things considered.
via 5by5 | The Critical Path #47: Impatient for Growth.
In anticipation of the earnings release tomorrow, I prepared a iPad-enabled audio-visual chart-based discussion of my expectation for product-level performance.
I discuss six topics in a historic context and the reasoning behind my expectations for the just-ended June quarter:
- Units by product line
- Unit growth
- Gross Margin percent (profitability) by product
- Pricing power in terms of revenue per unit sold
- Contribution to revenues for each product
- Contribution to margin for each product (i.e. profitability)
The discussion is packaged as a “padcast” which means you need to have an iPad and the Perspective App available on the iTunes App store in order to view the content.
It’s available for $0.99 here.
My thanks to Adam Lashinsky of Fortune for inviting me to Fortune Brainstorm Tech in Aspen this week. I was asked to participate in a panel session with Gene Munster of Piper Jaffray to discuss “The Future of Apple”. The session was moderated by Adam.
Here is a full video of our conversation: FORA.tv – Future of Apple.