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How many Americans will be using an iPhone when the US smartphone market saturates?

As previously noted, the US smartphone market has followed an almost perfectly logistic growth. The measured data (via comScore, in green below) follows a predictive logistic function (thin blue whose formula is discussed here).

Screen Shot 2013-12-13 at 12-13-11.30.54 AM

The other notable market observation is how closely the iPhone follows the same pattern as the market. The red line representing the iPhone above is almost perfectly parallel to the green and blue lines which represent the overall market. The reason for this seems to be that consumers are absorbing the product in similar way to how they are absorbing the technology.[1] The “learning model” which underpins logistic models could offer clues as to the cause. It suggests that there is a direct communication that happens between the product and the consumer.

Incidentally, the reason other platforms do not follow this pattern is that they are not communicating value with the consumer but with manufacturers or distributors of the product. These alternative communications could create faster or slower growth than the overall market as they are not subject to the same large population imitation/learning models.

If we believe that the iPhone can be modeled behaviorally then it may be possible to forecast its growth. One can simply draw a line extending the existing red segment above and read the F/(1-F) figure at any point in time. Solving for F results in a measure of penetration and hence number of users (if population is known.)

An alternative is to use the following formula derived from the linear interpolation of the two measured market shares. iPhone market share is y/(1+y) where y=0.21x and x = F/(1-F) and F is the expected market penetration of smartphones.

Screen Shot 2013-12-13 at 12-13-11.29.59 AM

So if F = 91%, x = 10, y = 2.11 and therefore the iPhone market share =  68%.

We also know from the plot of the market that F = .91 is reached around February 2017. So we can suggest that at 90% penetration (approximately saturation) the iPhone will have 68% market share of users in the US. Forecasting the addressable market (US population aged older than 13) at about 266 million that implies 180 million US users of the iPhone by early 2017.

Notes:
  1. Note that this pattern of adoption has happened even though the product has been at least partially unavailable to the entire market until quite recently. []
  • http://twitter.com/LunaticSX Lun Esex

    “Incidentally, the reason other platforms do not follow this pattern is that they are not communicating value with the consumer but with manufacturers or distributors of the product.”

    Quite.

  • obarthelemy

    I’m puzzled by the logic:

    1- if your model is valid, how come that pattern is only observable in the US ? Several countries where the iPhone has been available for about as long show nowhere near that pattern, rather show the opposite. Something big is missing from the model.

    2- “the reason other platforms do not follow this pattern is that they are not communicating value with the consumer but with manufacturers or distributors of the product”. I think you got that in reverse, it should be: “the reason iOS follows this pattern in the US is because Apple is not communicating cost with the consumer but with carriers”. When cost is hidden, value is immaterial.

    I think prevalence of subsidies and contract costs are much better predictors of iOS share than a “learning process” which only seems to exist in the US. We may soon see what happens when subsidies wane, with T-mobile already an “uncarrier”, and AT&T making noises in that direction. Once costs become transparent (and lower), the market moves sharply towards the mid to low-end, where iOS is not present for now.

    • analysis

      “Several countries where the iPhone has been available for about as long show nowhere near that pattern, rather show the opposite.”

      Have you done this analysis somewhere?

      • analysis

        Do you retract this assertion, given you’re replying elsewhere without addressing this?

    • Frank Vaughn

      Don’t all smartphones have similar subsidies in a given area? The cost of the phone should be calculated over a two year period. The notion that the phone’s purchase price is the main factor is absurd if you actually use the functionality. Does the average consumer ignore that fact?

      • obarthelemy

        “Don’t all smartphones have similar subsidies in a given area? “. No. You often get $500 subsidy on high-end phones (ie, $200 instead of $700 retail), but you don’t get paid $150 when you choose a $350 (list) phone. Subsidies favor the high-end.

        “The cost of the phone should be calculated over a two year period. ” Indeed. Quick, on the top of your head, how much is yours costing over 2 yrs ? People never know that. They do know how much they paid for it at the beginning though.

        “The notion that the phone’s purchase price is the main factor is absurd if you actually use the functionality.”. The notion that price doesn’t matter when a $350 phone can do everything most people are using their $700 phones for is even more absurd. $350 phones have “functionnality”, too. People are willing to pay over the odds for the functionality they need because price is hidden.

      • sharrestom

        People shop price, but they also shop value and aspiration. You, based on previous posts, have never been able to get beyond comparisons of specifications vs price. Hence, you can’t accept that your decision making process is not predominate here in the U.S, or other regions of the world.

        The reality is that the premium for an iPhone is at most $0.50 per day over the carrier contract period. Financing is available in lieu of subsidies, and there will be a transition from subsidies, but not a difficult one for most buyers.

        For the most part, the Apple/Samsung duopoly continues, and Android OEM’s other than Google are really not positioned to continue at the pace that Apple and Samsung are driving the industry, relegating themselves to few premium sales and great numbers of low end sales, with ultimate failure, consumed by large Asian manufacturers and forks of Android.

      • obarthelemy

        “People shop price, but they also shop value and aspiration” in which country with price transparency is Apple strong ?

      • sharrestom

        Why don’t you show us, and show the causal link?

      • obarthelemy

        Why don’t you ?

      • sharrestom

        I don’t know, and I’m not inclined to look for the information. It seems to be your position; you defend it.

        Now, does that open the way for you to provide information that some of us here are asking?

      • obarthelemy

        same here, same here.

      • Space Gorilla

        @sharrestom, obarthelemy is a well known troll, best to ignore and not engage. There is no possibility of rational discussion with obarthelemy.

      • sharrestom

        I know better. I just thought for once I could goad him into providing some data that supports his assertions/opinions. Alas, not to be.

        But thanks for the timely intervention…

      • Space Gorilla

        I can sum up everything obarthelemy has ever said anywhere on the Internet in one sentence, “No matter how much Apple succeeds, Apple is not succeeding.”

      • simon

        I corrected obarthelemy on one crucial fact regarding a related topic, which was directly against his premise.

        Instead of revising his position, he refused to accept the evidence, and then just went away from the discussion, very much unlike his usual persistence.

        That was pretty disappointing since he showed that he doesn’t want engage in a true two way debate unless it fits his anti-Apple crusade.

      • Space Gorilla

        charly is just as bad, I don’t engage either of them, it’s a waste of time. The two of them should get together, make one account to rule the anti-Apple trolls, call it ‘charthelemy’ or maybe ‘obarly’.

      • simon

        At least we do not get a few other trolls here such as Charbax although he’s really more of a crazy conspiracy theorist.

        Hilariously in this thread obarthelemy still thinks t-mobile’s uncarrier initiative will untrack the iPhone sales somehow. Somebody tell him the expensive iPhone 5s is the best selling phone at t-mobile.

      • mjoecups

        It’s strong in the US. T-mobile in the US has the iPhone as #1 and the pricing is completely transparent.

      • Frank Vaughn

        So they only care about the price ‘at the beginning’…

        Here are some official prices of the high-end smartphones that iPhone actually competes with:

        -iPhone 5S – $99

        -Galaxy Note 3 – $199

        -LG G2 – $99

        -Galaxy S4 -$99

        -Moto X – $99

        All the high-end phones are priced equally to the customer. Do customers really care how much of the cost is being subsidized?

      • obarthelemy

        Indeed.

        1- Those prices imply subsidies. How stupid would you have to be to, say, get a $0 iPhone 4 or Chinese clunker when you can get a 5S for “$99″ ? Subsidies skew the whole market to the high end. And disproportionately benefit Apple if only because competitors just can’t sell mid- or low-end handsets to subsidized customers.

        2- Subsidies themselves are skewed towards Apple. Amazon.com in the US seems to offer iP5S for $900 and GN3 for $680 (unlocked, 32GB). Yet the subsidized prices you list don’t reflect that difference, actually they reverse it.

      • sharrestom

        Apple offers the 32 GB 5S unlocked for $749 through the online store. A $150 error on your part or an attempt to make the pricing less attractive?

      • obarthelemy

        indeed, sorry, I only checked on Amazon. Doesn’t change the argument though.

      • sharrestom

        iPhones 5 on all LTE, Current iPhones 5c and 5s support multi-band LTE.

        Almost certainly, the device you were quoting was through a third party, as grey market.

      • mjoecups

        They are all LTE.

      • Bananaj

        Subsidies are an opaque form of installment payment financing, not a self-sabotage conspiracy by carriers for the benefit of Apple.

      • obarthelemy

        Subsidies are a relic of when
        1- nobody had a smartphone
        2- any smartphone was $500+

        Carriers had to jump-start the installed base to sell contracts.

        That’s no longer the case, good smartphones can be had for $250, and most carriers’ customers already have one. There’s no longer much reason for hiding and financing the cost of phones.

      • Frank Vaughn

        Please send an example of a good smartphone that costs $250. Which Android OS does it run?

      • obarthelemy

        Only one ? Let’s stay US-centric: $180 Motorola Droid G. http://arstechnica.com/gadgets/2013/12/review-googles-179-moto-g-puts-every-single-cheap-android-phone-to-shame/

        I personally went for a $110 Lenovo A820, because I value SD slots.

        The G runs Android 4.3 (4.4 is promised), the A820 4.1, both with the PlayStore. Android versions only matter to Apple fans keeping score though, Android is not monolithic like iOS, so even older versions get almost all of the latest apps and tools, and you can swap them out for 3rd party stuff anyway if you want to.

      • Frank Vaughn

        1) The estimated manufacturing cost of the Moto G is $123, so the subsidy is simply coming from Google in the form of low margins.

        2) Most companies can’t do low margins forever and stay in business. Google and Amazon are two exceptions since they have a very different business model from the typical hardware manufacturer.

        3) Apple 5c manufacturing cost is $173, by the way. Shame on Apple for making a profit.

        2) There is a huge difference between Android 2.3 and 4.x. I’ve tried them both.

      • obarthelemy

        0) I can’t help but notice you’re switching the argument from “show me a good $250 Android phone” to ” yeah, but not sustainable”. I’m guessing I’ve shown the goods ? Sorry, $180 only. Anyhoooo…

        1) a 50% markup isn’t bad though, many industries would be overjoyed to get that.

        2) 50% is not a low margin.

        3) Good for Apple. So what ?

        4) I run the same apps on 2.x I do on 4.x, so… I’m not seeing much difference, because once the app is launched the OS kinda disappears. I’m also not using the default launcher, keyboard, notifications, widgets… so the OS is really not front-facing (Im sure there are internal differences, but that’s the devs’ issue to deal with). Both phones are on 4.x anyway ?

      • mjoecups

        The OS “disappears” but it is the foundation the the software is built on. A program that runs on both either doesn’t take advantage of the newer OS or it’s a kludge.

      • obarthelemy

        Does that also apply to MacOS/iOS apps that also run on older versions, or did you make up that “rule” just for the present occasion ?

      • margin

        It doesn’t have a 50% margin, so, I don’t know what you’re talking about.

      • margin

        Just realised that you probably think that a 50% markup is a 50% margin, wow. There are also other costs.

      • margin

        To be specific, there are extra costs on top of your basic miscalculation. Even if there weren’t, though, that’s a big miscalculation. Cheers.

      • obarthelemy

        Any way you want to cut it, some pay $180 for a $120-to-make phone, others pay $550 (and I’m told there’s one of those born every minute ^^)

      • Kizedek

        I think the OS comes into it somewhere. A mature, cohesive, supported and updated OS, vs a free one that is immature, ad hoc, unsupported and unupdated, and created solely to track its users.

        That one doesn’t see the difference reminds me of an article I just read that stated that some people apparently can’t differentiate between Arial and Times Roman. I guess some things just can’t be explained to some people.

      • Kenton Douglas

        ” A mature, cohesive, supported and updated OS, vs a free one that is immature, ad hoc, unsupported and unupdated, and created solely to track its users.” …. would you care to expand on this? it makes no sense at all as written …

      • Kevin
      • Oletros

        Moto G, $179, Android 4.4

      • mjoecups

        Exactly so, and the consumer pays for it.

      • sharrestom

        Buyers of premium phones are skewed towards Apple.

        Customers that desired an iPhone brought their business to the carrier(s) that had the iPhone. Initially that was AT&T, then Verizon, Sprint and T-Mobile. Same thing happened in Japan.

        AT&T wants to wean their users off of subsidies, now that the market is maturing, and the FCC is working on a plan to create a standard transition to unlocked that the carriers must use as the customer comes off contract.

        In lieu of subsidies, the carriers are instituting finance plans at zero percent, but de-linked for the most part from the contracts which would show a small cost saving per month.

        For all practical purposes, six of one, half a dozen of another. People still ant their iPhones.

      • obarthelemy

        …in the US only … ?

      • sharrestom

        Horace is only speaking of the U.S., but it seems to be as true in Japan. There may be other areas where this is the case, but not a necessity for discussions in this thread.

      • obarthelemy

        I’m fairly sure people of many nationalities should/could show the same “learning process” as US customers. That they don’t kinda proves that a learning process is not the engine to Apple’s dominance in the US.

      • analysis

        As mentioned below, you don’t seem to have done this analysis for other countries, yet you keep asserting that it doesn’t hold.

      • obarthelemy

        It’s very basic really, any country where iPhone share is getting lower is contracdicting the model. No need for “analysis”.

      • analysis

        iPhone share of what, precisely?

      • obarthelemy

        take a wild guess. what’s this whole post about ?

      • analysis

        I don’t know to what extent you misunderstand the model, so it is hard to guess. e.g. Declining share of sales or share of smartphones in use wouldn’t contradict it directly, perhaps in conjunction with some other data.

        Perhaps you know of several countries where the penetration of iPhones is declining? I haven’t personally heard of any. Just helping you out by pointing out what the data models. Hope this helps. Or perhaps you’ve done a more in-depth analysis than your comments reveal?

      • Kizedek

        The “getting lower” is what needs to be examined. It has been discussed many times on this site, but you insist on a certain blinkered way of looking at things no matter how many times people discuss it with you.

        iPhone may be “getting lower” in terms of “smartphone” share, whatever that means. Almost every phone is called a “smartphone” these days — again, often simply because it runs Android, period. Since it hasn’t sunk in for you…

        1) Running Android apparently makes a phone a “smartphone” by definition, no matter the nature of the phone, or its use.

        2) Android is put on anything and everything these days as the default OS. Therefore, it is flooding the world, turning all mobile phones into “smartphones”. Of course “Android’s” market share will show increases.

        3) therefore, the iPhone will be seen to be “getting lower” in various sub-markets, when compared to all “smartphones” or all phones running Android (again, pretty much the same thing; and, again, not much of a surprise).

        But, iPhone shows gains in share of all mobile phones. The iPhone grows in sales, YOY (with the usual seasonal fluctuations). It enters new countries and is added by new carriers.

        So, if you factor in the fact that “Android” (not Samsung, not HTC, etc.) is flooding onto just about every non-iPhone phone on the planet (and therefore its marketshare is distorted), and if you take the world market as a whole… then, perhaps the iPhone may show a similar trend of reflecting the whole market (and therefore “learning”) as it does in the US data that Horace is highlighting.

      • obarthelemy

        Wrong target mate, it’s Horace focusing on market share not me, you know, in the article ? Because you know, iOS share is not important. Unless it’s high, then it is.

      • analysis

        Market share isn’t penetration. Can you stop making that mistake constantly?

      • obarthelemy

        The two are pretty much equivalent in the long run (market share -> installed base, and total installed base -> penetration)

      • analysis

        Again, definitely and trivially not true, e.g. if replacement cycles or recycling/handing down rates are different. Further, even if it was, this article is about the transient data, not the steady-state.

      • analysis

        This mistake is probably what’s leading you to make simple mistakes like asserting a declining smartphone market share in a country contradicts this analysis for that country. The iPhone market share declined in the US during various periods, yet this current trend is clearly visible there, so obviously it would be absurd to make that claim. A little fiddling with some logistic models would have shown you that.

      • Walt French

        I think that Stephenson’s comments bear watching as the market matures.

        Remember that Apple’s FIRST plan was to sell the iPhone standalone, but AT&T wanted a tighter lock to their services, so Apple assented with the subsidized arrangement making the deal appear more attractive to consumers. (And yes, it has worked out rather well for Apple, too.)

      • Kizedek

        Yes, they “reverse” it, if by that you mean the carriers are willing to subsidize the iPhone a lot more heavily than any other phone. I wonder why that is. Horace says they use it as a salesperson.

        You go on about total cost of contract when subsidies are employed, and talk about how crazy it is that users don’t seem to count the total cost of the two year contract when they happily grab their iPhone at 0 or 99.

        But, I understand (not living in USA) that contracts are more homogenous there — they are all expensive. Maybe the spread is 70 – 100 bucks per month on average, as opposed to 2 – 50 Euros.

        Carriers appear to be eating more of the cost of the iPhone. Now they are recently joined by China Mobile and Docomo. Why would carriers be willing to do that — unless there is less value in selling Androids, or there is less customer satisfaction and more churn away from the carrier when they don’t sell the iPhone?

        So, maybe someone can tell us if a typical two-year iPhone contract in the US really comes out 400+ dollars more than a typical Android premium phone? I seem to remember a lot of reports when the iPhone first came out that if you looked at the total two-year package, the iPhone contract was actually cheaper in many cases (despite everyone freaking out about its 600 price tag). But maybe things have changed more recently.

      • mjoecups

        Unless the consumer is paying attention. I bought the iPhone 5 for my wife at $750 (32G). This is a big winner when you consider the final price of two years of service (i.e. $50 per month on t-mobile).

        Subsidies are payed for by the consumer, just like everything else.

      • Kevin

        iPhone 5S is $199

    • normm

      I agree that the US is a highly subsidized market, and so you can get an iPhone for free on contract, and even the 5s very cheaply. If this changes, then growth trends may well change. But this isn’t changing overnight, and iPhone has a lot of momentum here at the moment. Clearly when cost isn’t a factor, a model explaining consumer choice is needed: subsidies explain only why cost isn’t a factor.

      I would also point out that plotting penetration/nonpenetration is not a model — it’s just raw data. The fact that exponential growth of this ratio is the only kind of exponential growth you can have in a market that saturates is the motivation for plotting this ratio, but the striking linearity of the data speaks for itself.

  • echotoall

    Over triple it’s current US base. Nice. But why wouldn’t the date correlate more to your other graph, which suggests 2015 the US saturation point? Is the increasing share giving it the longer time?

    • echotoall

      Take back the questions. I see where u made the updates.

  • AlanTeew

    I’d really like to see the Windows figures broken out to separate Windows Mobile from Windows Phone. It’s hard to project a trend when two very different products are lumped together. Data I’ve seen from other providers indicates (relative) rapid growth for Windows Phone, but I can’t analyze this in the framework above.

  • http://gravitationalpull.net/wp/ ampressman

    We would get a test of your hypothesis a lot sooner if you also included at what point in total saturation the iPhone crosses 50% in market share and becomes the most popular phone in the United States.

    • normm

      According to the first graph, just extending the straight red line, 50% penetration for Apple comes around the middle of 2015.

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

      You can also take the formula in the second graph and compute it directly. You want to solve for x when y=1. The answer is about x=4.8. That corresponds to total market penetration of 83% which the first graph shows to be around August/September 2015.

  • disqus786

    What happens when US carriers are free of their “agreements” with Apple which require the carriers to push iPhone sales? Will the carriers then be “pushing” US consumers onto iPhones? What happens when US consumers wake up and realize iPhones are way over-priced and that better Android smartphones are available for a LOT LESS money, e.g., Moto X, Nexus 5, Moto G? I am afraid your analysis is faulty. In this case, the “past” is no indicator for “future” markets.

    • imronburgundy

      Carriers push Android phones, not iPhones.

      • sharrestom

        Yes, but do the OEM’s make any money, do carriers make less on contracts, and do the carriers push them because they are cheaper for the customer, incentives, or just that they want more freedom of control over the customer?

        You are aware that there are other sales venues for the iPhone than carrier stores?

        Oh, and this:

        http://www.macrumors.com/2013/12/12/iphone-5s-top-selling-smartphone-at-all-u-s-carriers-iphone-5c-takes-third/

      • obarthelemy

        I’m not sure of that ?

        I know Apple insist on multi-year purchase volume commitments, so carriers have a strong incentive to meet that target. I don’t know if carriers or salespeople make more on Androids than on iPhones. If someone in the business could let us know… ?

    • sharrestom

      AT&T was the first with the iPhone and was able to carry it exclusively for 5 years, and it definitely benefitted them to do so resulting in many more subscribers and at higher priced contracts. Profit!

      Consumers drove the other carriers to sell iPhones, and that worked out pretty well. More profit!

      That said, I’m all for you price conscious buyers out there to accelerate Android downward in the race to the bottom. Your “suicide pact” will cause Apple no small amount of pain that can be easily soothed by that large rainy day fund that they have been keeping.

      Probably put Samsung on death’s bed though, what with the resulting ever higher marketing costs and margin compression.

    • Walt French

      Why the scare quotes on “agreements?” According to accounts, Apple approached Verizon before inking the deal with Cingular/AT&T, and the people at Verizon laughed at them before kindly advising to watch out that the door didn’t hit them in the butt on their way out.

      A couple of short years later, Verizon decided that maybe these smartphone thingies were going to be in demand, and put megabucks into Android, defining the specs and the marketing posture for the Droid. Alas, they’d waived their opportunity to lock in that excloo with Apple, but they made lemonade real quickly (and by reports, fired the half dozen or so who showed Jobs & Co the exit).

      Verizon has been in control over its relationships with phone manufacturers, as certainly AT&T was, too. And the pricing has, you will note, ALSO been determined by the carriers; they could go to LG tomorrow and spec a low-cost… oh wait, they DID that, too.

      Hard to take your future scenarios as having any insight when they so totally misrepresent the past. Come back to us when you study up a bit. I hear “Dogfight” is a good read, for instance.

      • Kenton Douglas

        Why the scare quotes on “agreements?” … perhaps the carriers might find dealing with the current Apple sales contract a scary proposition? http://www.theregister.co.uk/2013/11/29/revealed_the_secret_apple_deals_that_squeeze_rivals_and_tax_you/

      • Walt French

        The very knowledgeable and respected VC, Jean-Louis Gassée has pretty well demolished the bogus Register claims in his blog today at http://www.mondaynote.com/2013/12/15/shameless-carriers/.

        I would only add that the only carrier the Register actually cites by name, is of course the number one carrier in the US, both very powerful financially and and widely known to have exploited its boot on OEMs’ airhoses (or keeping the OEMs barefoot and pregnant) by keeping the relationship going but switching their affections to another manufacturer any time one looked to be getting a bit uppity or too powerful.

        It might very well be for that actual history, in fact, that Apple insisted upon a minimum sales number from them, since otherwise Verizon would’ve had a huge incentive to switch customers to the “Droid iPhone” that they totally had in their pocket, and Apple would have no other way to reach nearly a half of US customers. (As JLG notes, buying a phone—from Apple or anybody else—and bringing it to Verizon is an extremely expensive proposition; Verizon totally manages its customers.)

        PS: Perhaps you find The Register a good general purpose site, but the extreme use of claims unsupported by verifiable facts drove me away from them years ago. When you bring their sort of empty claims to a site devoted to this “show your research/data” site (and one where the analysts’ claims had already been debunked), you don’t show yourself to be particularly focused on unbiased analysis, either.

      • obarthelemy

        Does Verizon not mentioning a purchase commitment with Apple in their SEC filing mean there positively isn’t one ? I’m not sure of the legalities, but I’d assume some room is left to keep commercial agreements confidential.

        VZN do list $57b and $42b (2011 and 2013 resp.) of commercial commitments to purchase “handsets and peripherals, equipment, software, programming and network services, and marketing activities, which will be used or sold in the ordinary course of business. These amounts do not represent our entire anticipated purchases in the future, but represent only those items that are the subject of contractual obligations”. That’s not only handsets in general, and not only Apple in particular, but capex seems very stable at $16b, so that’s not mostly infrastructure either. Assuming such a commitment could be kept silent, the figures are not incompatible with TheReg’s claims. The phrase “ordinary course of business” sounds to me like a keyword meaning “hey, we don’t have to disclose details”.

      • misunderstood

        You have misunderstood or didn’t read the article. It doesn’t refute the existence of purchase commitments, and nobody is claiming that they don’t exist. The Register claim that it refutes is that Verizon is going to face a loss of $12-$14b due to falling short on their Apple purchase agreement, something that would be absurd and likely illegal not to disclose.

      • obarthelemy

        from the article: “Since then, no word whatsoever of any purchase commitment, whether for the iPhone or any other device”.

        from the 2012 10-K: (41 billions in ) “commitments to purchase “handsets and peripherals, equipment, software, programming and network services, and marketing activities”

        Who misunderstood what ?

        For the record: in 2012, ATT activated 4.3+3.7+4.7+8.6=21.3 million iphones. iPhones ASP is $600-ish, so that $12b worth of phones.

      • misunderstood

        Oh, you still misunderstand the article, even when directly explained to you. It’s obvious from context how to interpret those sentences, in light of the preceding MD&A mention and the following paragraph. Is english your first language? Not sure I can help any further here.

      • misunderstood

        There’s even a nice picture, to show you where exactly you would expect to find mention of an enormous shortfall on a purchase agreement in such a document.

      • Kenton Douglas

        Happy New Year to you. I think you might have missed the point I was trying to make: the ‘existence’ of this type of article itself might be and indicator carriers might find the negotiating process scary, not because the contents of the article are in anyway representative of the given situation. Clear? The Register (or your Mr Gassée) are largely irrelevant sources to me.

      • Walt French

        Oh, one more point. Your genius source somehow claims that customers will bear the cost of their carriers’ excessive optimism in agreeing on sales numbers. That, sir, is bunk. Raising prices beyond competitive levels kills your sales, so a carrier that finds its costs unexpectedly high will need to eat the costs out of its profits. Of course, they don’t bother to cite a single instance of actual carrier shortfalls, either, so their business cluelessness is buried underneath the fog of PR spin.

      • obarthelemy

        1- Unless all the carriers are in the same situation, and all rise prices to finance the Apple tax ? Carriers look quite cartel-ish ?

        2- I’m not sure there are that many alternative sources of iPhones beside Apple, and I’m sure Apple are hunting those energetically. I’m sure there’s a “non-resale” clause in their carrier agreement.

      • Walt French

        1—US carriers certainly act in an oligopolistic way. But your scenario requires all big carriers to have the same situation as to network capacity, over-optimism/need to raise prices, etc. It’s just a bit too fantastic. And in markets where the iPhone is a smaller share than in the US, it would take special rituals to cause this type of coordination. There’s neither evidence (always one of Horace’s demands) nor a plausible market condition for the Register’s wild claims, which appear in concert with a bunch of other BS, too.
        2—Sure enough, Amazon has ‘em. Not exactly a back-alley operation. People say you can get unlocked iPhones directly from Apple, too.

      • charly

        Overbuilding is cheap so expecting all the big carriers to behave the same is very likely to be correct

      • Kenton Douglas

        Please see below.

    • http://sharonsharalike.com/ Sharon Sharalike

      He looks at the data and comes up with a conclusion. You appear to start with a conclusion and then figure out how to justify it.

      • Kenton Douglas

        “He looks at the data and comes up with a conclusion” … perhaps ‘projection/estimate’ would be better than ‘conclusion’. It’s a very dynamic market.

      • http://sharonsharalike.com/ Sharon Sharalike

        OK, but that wasn’t the point.

      • disqus786

        No, the data is garbage when it comes to predicting future market share in smartphones — that is my point — and you and everyone else on this thread doesn’t understand that. I am not attacking your beloved iPhones! So get over it! Ever hear of BlackBerry? They “owned” the smartphone market — even more dominant than your precious Apple! Where are they today? That is where Apple could be in about 3-4 years — you cannot predict future market share in smartphones based on “recent trends” — the analysis and assumptions used by the author of this article is faulty. BlackBerry is my Exhibit #1 in that regard. Cheers!

    • GetReal

      You obviously haven’t shopped for a phone at Verizon . I go in there specifically wanting an iPhone, and they still try to steer me to Android.

      • disqus786

        Yeah, like when I go to http://www.att.com/shop/wireless/devices/smartphones.html
        and they are pushing almost nothing but iPhones — New and refurbished! Get real get real! LOL!

      • sharrestom

        “pushing” is something salespeople do to, you know, real people in a retail environment.

        Your link to the website is a passive page to browse; no “pushing’, just ranking. Apple gets top billing today for any of many reasons, but their isn’t any necessity for AT&T to do it other than it is generates revenue and profits.

        Now, it maybe on another day, Samsung has a substantial marketing effort that gains more profits for AT&T; Samsung’s phones get top billing, and maybe once in a blue moon, even Nokia gets top billing.

        Either way, a web page is hardly an environment that is “pushing” anything, for the simple reason that people browse without any sales interaction other than some mistimed and annoying popup.

        If you were browsing on a phone subsidized by avertising, that would considered a cost reduction feature.

      • disqus786

        boy are you naïve — pushing is exactly what AT&T is doing — having worked in the Telecom industry for many years, I know pushing when I see it — whether it is sales people, shelf placement, or web site placement!

      • autosorted

        It might be auto-sorted by popularity/what people click, so I don’t think you can say that it’s deliberately pushing for increased sales.

      • charly

        In a retail environment? Where there are different products sold for the same price but the cost of goods are very different?

        AT&T is putting an expensive $199 phone there (5s) instead of a cheap $199 Android phone. They are doing that for a reason. (probably a deal with Apple)

      • autosorted

        Asserting the same thing again doesn’t increase my belief in it. From what I recall, this list seemed to be in the approximate order of the other lists of most popular phones at AT&T. You are free to argue cause and effect there, though.

      • charly

        I have seen that more under Apple fanatics. But AT&T is a business not known for their saintliness so would they try to make extra money? I think you know the answer in your heart

      • autosorted

        Ordering things by popularity also increases sales, and leads to extra money.

      • charly

        So you would expect the list to be near approximate order of sales but with with some changes to improve profitability

      • autosorted

        I can’t tell if you’re agreeing with me or not here.

      • charly

        Not.

      • autosorted

        But you agreed that perhaps it could be in approximate order of sales or similar automatic measure, and that you don’t know what the specific tweaks are. That’s agreeing with me.

      • charly

        Sorry, but i’m disagreeing with you.

      • autosorted

        Oh, so you know what specific tweaks they’ve made to the listing then? And that they’re pushing iPhones disproportionately?

      • Sam

        AT&T does it for a little known business idea, Profit. Why sell a $200 phone for $200 when you can get a consumer to pay $200 for a $650, effectively lending the consumer $450. The consumer then pays back the $450 plus $600-$1000 back in fees (financing) over a two year period.

        Charly, you obviously don’t understand subsidies, or how businesses operate to make a profit.

        Please educate yourself.

      • charly

        Apple fan and business never mix.

        It is even better to get a consumer into a $500 phone, let him pay $200 and “lend” him the $450. That is an extra $150 profit

      • sharrestom

        I guess I am naive.

        I can’t believe the number of times that I’ve been in a restaurant and had to select items off of the top of the first page of the menu, even as I’m gazing at the opposed page with mesquite grilled porterhouse steaks.

        It really isn’t fair to me the customer.

      • charly

        Actual it is a way to push product and especially the top left position is gold as that is the product most people focus on. But any product on the first view is good as you don’t have to scroll

  • VisualCandyApps

    Apple has already solved the problem of carrier subsidies going away…it’s called their recycling program. Their recycling program will evolve (just started) and superficially won’t look much different than leasing a BMW. Steve Jobs did say “What’s wrong w/ being BMW?”

    The luxury car makers make lots of profit this way; Apple will too.

    • obarthelemy

      Indeed. Once subsidies go away, financing/leasing/upgrading will probably become a great sales tool, and a great lock-in tool. There’s really no reason why that financing part should be in the carriers’ camp and not the OEMs’.

      I think Apple have set that up in China.

      • charly

        Are there that many people who struggle with $300 in the first world? The price of a typical smart phone in a few years time.

        I doubt OEMs will do it.Carriers already have a monthly payment setup. OEM don’t so it is much more costly for them to set it up. Also handset financing isn’t the biggest part of a phone bill but what is (calls, internet, sms etc) have almost zero variable costs so a carrier is already making money within a year while an oem has to wait until almost the full contract is paid. You also did not see this behaviour with computers or TV. Products that cost until recently much more than the $600 of a smart phone.

      • obarthelemy

        1- today, high-end phones are $500-$1.000. Average discretionary income (after taxes, rent, insurance…) in the US is $21k/yr, so 4 phones ($3k) for all of the family are around 2 months of discretionary income. That’s a lot.

        2- In a few years’ time, most of the market will not be the first world, nor will it be new devices (either or both might be true already, in fact). The “cost” part of the equation becomes even more important, because money is scarcer and upgrades can be delayed more easily than 1st purchases.

        A similar industry I can think of (relatively ubiquitous, relatively high-price, mostly renewal) is cars. Automakers have been making a killing on financing, I seem to remember that at one time the only profitable part of the US auto industry was the financing part. Carriers might be at an advantage because they already have a relationship and monthly bills with the customers, but Apple and Google in particular also do via the App Stores.

      • CaterToTheWealthy

        That’s what’s beautiful about Apple. They do not sell to the average customer. They sell to the high-end customer, with twice the disposable income is Andrew

      • obarthelemy

        But do they ? They do in most of the world, hence their 12%-ish market share. In the US, with 40+% share, they also sell to mid- or even low-income households.

      • charly

        2. What you see happening is that the cheaper models become good enough so in a few years time the $300 smart phone will be the new $650 smart phone

        Cars are much higher priced and have a non zero value after even long use. Carriers have had the advantage that you not only paid for the phone but also for the network with its almost zero unit cost so they have a much smaller risk.

    • Dolce Vita ☀❤ 

      BMW does not own 68% of the US market, not even 40%. If it did, they would have a hard time finding second hand buyers for the cars traded in for new models. And this is why Apple’s recycling program can’t fully replace carrier subsidies.

      • reasoning

        I don’t understand your reasoning. Apple doesn’t solely sell to the US.

      • Dolce Vita ☀❤ 

        Dumping second hand iPhones abroad, if that is what you suggest, is not Apple’s style and will only hurt their image as a premium, luxury manufacturer.

      • reasoning

        Why is reselling phones in the US a smart “second hand buyer” scheme worthy of BMW, but reselling them overseas is “dumping” that will destroy their brand image?

      • Dolce Vita ☀❤ 

        It’s not. I don’t think the iPhone recycling program has the same value for Apple as it has the car trade-in/leasing for BMW. Actually, Steve Jobs made that comparison in 2004 to Mac’s 5% market share. I don’t think the iPhone’s market share in the US today can be compared to BMW’s market share anywhere, not even in Germany.

      • charly

        Because a new phone with the same tech is “cheaper”. 2 years and Moore’s law says that all the integrated circuits are much cheaper, the battery needs replacing and a plastic enclosure is better than a second hand metal one so were is the market for those second hand phones

      • reasoning

        Tell that to all successful recycling programs that already do this, e.g. Gazelle. They’ll be interested to know that their success isn’t possible.

      • charly

        That is something i wonder about to. How can they function? But you also have to realize that there is a big difference between small scale and large scale operations and small scale is the only reason why i think they can exist as they shouldn’t make sense.

        ps. They are not recycling but re-using iphones

  • EW Parris

    I think Horace is vying to become Hari Seldon.

  • Rodney McKay

    One fewer than otherwise, since I’ve just switched from iOS to Android. Really getting sick of Apple’s recent fuckups.

    • berult

      Open any self-proclaimed ‘N Y Times Best-Selling Author’ ‘s novel of recent memory, and be smitten by iPhone…the ancillary protagonist of choice. It has indeed made an evolutionary dent in the penmanship-readership’s psyche, and crept within touching distance on senseless novel-ty. On two out of three plots, iPhone rules or ruins the interplay…often with a vengeance…seldom without a sleight…

      iPhone coats a millennium texture, a culture of avant-garde after-thoughts, upon the gamut of sub-plotted happenstances. Be they otherworldly graphical in their statistical parallelism, or, …viva voce sententially attired, ensconced in orthogonal elegy…

      • charly

        Apple is very strong in the cultural fields so it is not surprising that writers use iphone and not Android phones as plot devices. It is what they know

    • jameskatt

      That is so funny. You are a comedian. Is it April Fool’s Day already? Android is fucking up every single day.

      Just yesterday, the EFF soundly criticized Google for removing vital privacy features from Android 4.4.2. Google explained – cough – that they accidentally put in those features in Android. This features controlled by App Ops allowed the user to withdraw permissions from each app to prevent it from collecting information about you and track your geolocation. Now App Ops is gone. So much for your privacy on Android.

      • Kenton Douglas

        how would a user have previously accessed App Ops?

      • macyourday

        The google/Scamsung boosters can’t stomach apple’s success so they continue the inane tirades and “I’ve used every apple product since 1972 but I’ve switched to (insert alternative)” stories. They never seem to get bored with their tedious little charade and/or don’t understand the numbers. Or they get paid per post like google ads.
        Please don’t bother responding to the morons – the scrolling past the fillers gets rather boring.

  • jameskatt

    180 Million US iPhone users.
    300 Million Chinese iPhone users.
    75 Million Japanese iPhone users.
    Hundreds of millions of other iPhone users in other countries.

    Beside the profit from buying a new iPhone every 2 years, each iOS user is worth an extra $50 a year to Apple from ecosystem sales. This means by 2017, Apple makes an EXTRA $35+ billion a year in sales from apps, movies, books, movies, etc. from just the iPhone users – not including iPad, iPod, AppleTV, and Mac users. Compare this to Google’s $50 Billion in revenue for 2012.

    Apple is doing quite well.

    • obarthelemy

      yep. It’s always interesting to compare imaginary revenues in 3 years to someone else’s current revenues.

    • charly

      1 in 5 Chinese would use iphone in your prediction while Non-Google Android is “home-grown” in China. It would also be one of the highest Apple market share in a not subsidized markets. My prediction is that your prediction wont come true

      • jameskatt

        The 300 Million Chinese iPhone users I mentioned are about 70 % of the Affluent Chinese. The Affluent Chinese are 3% of the World’s Population. Yet they buy over 30% of the World’s Luxury Goods – cars, Rolexes, etc. One I know has a secret $800 Million car collection stored in the United States.

        They LOVE THE IPHONE IN GOLD. They would not be caught with an Android Phone – which represents being poor.

        Apple is marketing to the Chinese Affluent. Not the poor.

        My prediction stands easily. If anything, Apple achieves even higher penetration in the Chinese market since anyone wanting to look rich would buy an IPhone.

      • charly

        That is easily solved for Android by making a phone that is more expensive than an iphone in in obvious “useful” way. Which i claim is all that bent screen all about.

        ps. If the people who are earn one tenth of you have the same phone than it is not a sign of affluence for you

  • charly

    Doesn’t Iphone have only a 40% market share in smart phone sales? So how do they get to 68% of users because iphones maybe used longer than Android and WP but not 3 times longer.

  • John Kneeland

    Predicting smartphone market share 4 years out, eh?

    If we went back to 2009 and guessed what platform market share would look like in 2013, where would BlackBerry be? Where would Symbian be?
    I treat Horace’s analysis of past, present, and near future (as in 1-2 quarters out *at most*) as holy writ. Beyond that, my faith in Deidu (and any other mortal predicting the future of mobile tech) drops off considerably).

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

      The difference between 2009 and today is that in 2009 we did not have data on penetration from 2% to 65%, updated on a monthly basis, for one particular market, with all participant shares identified. The forecast comes with assumptions clearly stated.

    • Space Gorilla

      Many did predict the decline of Blackberry and Symbian, as far back as 2007. But to do that you had to realize what the disruption actually was, an affordable computer in your pocket.

  • http://aaplmodel.blogspot.com/ Daniel Tello

    “An alternative is to use the following formula derived from the linear interpolation of the two measured market shares. iPhone market share is y/(1+y) where y=0.21x and x = F/(1-F) and F is the expected market penetration of smartphones.”

    From the previous post F (there you called it P) is 1/(1+e^(-(t-93)/22.5)) where I’ve used t instead of the original x to avoid confusion with the x in this article. From that we get log(x) = log(F/(1-F)) = (t-93)/22.5, which is linear over time. If log(x) is linear then x is exponential over time.

    Now the assumption is that iPhone penetration, which you here refer to as “market share” (let’s call it p), is logistic, which would similarly mean log(p/(1-p)) = log(y) is also linear over time and thus y is also assumed exponential. And finally you construct a linear regression of y against x to find a relationship between them.

    But this is a problem, as you shouldn’t try to find a linear relationship between two variables which are exponential unless the rate of growth is the same for both, and even then you must use a zero-intercept regression, otherwise you get some nonsensical results such as negative penetration for Apple at some early point in time as in this specific case with a negative intercept or a hypothetical Apple penetration higher than the whole market if the regression were to return a positive intercept.

    What you can do with two exponentials is to relate their logs linearly, that is, regress log(y) against log(x) instead of y against x. Doing that you have the regression assumption: log(y) = a*log(x)+b, and from above we know that log(x) = log(F/(1-F)) = (t-93)/22.5 so substituting we get log(y) = a*(t-93)/22.5 + b which is linear in time as required. The slope a should be near 1 if Apple’s adoption is in fact parallel to the whole market.

    However, all this seems overly complicated and circuitous. What I would’ve done is, simply find the best fit logistic model for iPhone penetration and chart this line along with the market. Still, perhaps it would be interesting to compare the two approaches and show if, and the extent by which, an assumption that p follows F (which I believe is the intention of this article) pushes the adoption curve compared to the simple, direct model.

  • grawlix

    I wish I had the data behind this, because I’d love to see the graph above represented as just two lines – the Apple line, and a ‘sum of the rest’ line. I am curious to establish the extent to which the ‘others’ are just cannibalising one-another as Apple steadily grows.

  • Rider_X

    A sigmoidal function such as a logistic curve is a natural consequence in any system where the measurement saturates – regardless of mechanism such as your “learning model”.

    That said, the fact the iPhone curve so strongly follows the market penetration is really telling!

  • jimrin

    Interesting reading but in order for there to be 180 million users in US within 4 years, doesn’t that mean there have to be more iPhones sold in the US than Android? Per Kantar, the number of iPhones sold compared to Android has been relatively flat from November 2011 to June 2013. Of course, if you look at % of cell phone owners owning iPhones, it has increased significantly over that period… But so has Android… Both at the expense of Windows and Blackberry and feature phones. Now that Blackberry is 4% of all cellphone users, there’s less and less of that market to tap. Assuming Windows is able to keep its share of users, I would assume that the number of affluent consumers who have a Blackberry or a feature phone are getting relatively low by now. I’m very curious how 68% of US users will end up with iPhones. I have the feeling this prediction has the same basis for its conclusion as Karl Rove had with his analysis when he concluded Romney would win the election, even on election night.

    http://www.tech-thoughts.net/2013/08/smartphone-market-share-trends-by-country-q2-2013.html#.Uq-3LtJDtWS
    http://www.idownloadblog.com/2013/09/09/1-out-of-each-4-us-smartphones-users-has-an-iphone/

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

      The basis for the prediction is the pattern of the data as shown in the graph. I don’t know who Karl Rove is or what was the basis of analysis in his prediction. If you have a feeling that the basis is the same, can you share what you know about his basis?

      • Space Gorilla

        Karl Rove is a Republican political strategist, a key figure in George W. Bush’s campaigns. The basis for Rove’s analysis on election night was a lie, and he knew it. Comparing your analysis to Karl Rove’s analysis is quite ridiculous.

      • Atroll?

        Horace Dediu is i-Product booster, and possibly share-holder.

        Karl Rove is a Republican political strategist.

        The basis for Rove’s predictions was likely based on a formula whose variables were skewed to best meet his personal beliefs.

        Is the statement you replied to entirely without possibility?

        To dabble in anything scientific, and intend to be good at it, one has to constantly attempt to ensure they are proving hypotheses, and not confirming their beliefs.

      • belief

        Then why do you have to constantly resort to attacking the person and their motives? Why not make a convincing argument that the analysis is flawed in whatever way you believe it to be.

      • Atroll?

        Why attack the person and their motives? Because they are seemingly transparent. When presented with any information I always question the source. It’s what should be done. The source in this case is someone intimately tied to Apple, and it’s products.

        This is more like a sports fan rooting for his home team by creating a chart showing us how superior his team is. This is how it strikes me.

        Maybe when you were a kid and your mother asked you if you’d jump off a bridge if your friends did you answered, “Yes.” I don’t know. Maybe you’re the type of person who reads the National Enquirer and takes it’s valuable info to heart. Or maybe you just like what you see here, and don’t really care about whether the statement is correct, or the data is correct, or the method is correct.

        The fact that you are questioning me instead of Horace (the person who published this article) is odd. I made no forecast on the market. I questioned the person who is interpreting the data (yes, Horace this is an interpretation of data). The value in that should, I thought, speak for itself.

        I’ve also said that us underlings are only privy to the graphs he has provided but not all the data behind them. This really kills the possibility for peer review.

        Things like this “forecast” remind me of the early 90′s when there would be a different report on the news about what may cause cancer. It was everything from apples to zucchini, and not one of those reports shared with us how they came about that conclusion pointed us to sources, and made us question whether it was to be viewed as valid or possible.

        All of these points are completely valid. They do not make Horace wrong by any means, but they make his projection questionable at best by default.

        Also consider that Horace does not believe that a projected market share pattern is an interpretation of data. He also does not believe that this projection is one big assumption.

        Also consider Horace attempted to use an argument from authority. See his comment about an MIT physics professor.

        Also consider that in none of his articles has Horace given us the raw data he has used for his charts. We get x=10, and y=whatever based on F= ASSUMED smartphone penetration (keep in mind I’ve already questioned the possibility of a situation in where a greater than 85% of Americans even own a smartphone, and his projection is based on 91% smartphone adoption and the current cellphone penetration is 91%). Keep in mind there are no assumptions here according to Horace.

        So, instead of attacking me for questioning the source, why don’t you peer review Horace’s work here, and show me I’m wrong in questioning him and his motives.

        I’d do the same for any piece of possibly flawed information. However, I’ll never doubt his math as incorrect. I’m sure if F=.91% then y=2.11.

      • belief

        “I’ve also said that us underlings are only privy to the graphs he has provided but not all the data behind them. This really kills the possibility for peer review.”

        All the data used on this blog is public. Your whole comment is just more sniping without presenting an analysis of your own or finding fault. This is how peer review occurs. I find no fault with the analysis given the data and assumptions stated. Even if the extrapolation doesn’t turn out to match reality in the future, that has no bearing on the accuracy of the analysis at this point in time, as stated.

      • Atroll?

        The actual basis for the way the data is interpreted is bias.

        Things we know about the author of the article:
        He owns an iPhone.
        He owns an iPad
        He owns an Apple computer (I have to guess about the model, but I’d say Macbook Air).

        Things we can assume from the fact that this data was interpreted using a biased mind, and the title of the article include:
        He does not have many close friends. This can be evidenced by how many people he feels will choose the same things he has chosen for himself. Sort of a grasp for friendship and belonging via proxy.
        Most likely unmarried.
        Probably drives a Toyota (maybe avalon?) or a BMW.

        He is probably not very successful.
        Most likely in a middle management or lower position. Barely middle class. He ties his level of success with the things he owns. Probably owns many expensive things.

        The author of this article clearly failed to interpret and present the data in a scientific manner. He did so with fairly simple mathematics, and possibly discarded data that would not fit his prediction.

      • riled

        You got pretty riled up by this simple model and decided to be rude in the comments, I guess.

      • Atroll?

        Is it rude? I am interpreting the data I was presented by the person presenting the data.

        It’s no different then questioning studies presented by a tobacco company on the safety of cigarettes.

        The person in charge of presenting and interpreting the data in this case is. whether knowingly or not, using it to represent how many people do and will think like him. Further, he is also using this data reinforce his choices.

        In that respect, and information, and any insight we MAY have gained from this set of data is lost. What we get in it’s stead is a glimpse into the author’s mind.

        Rule #1 when looking at study, chart or graph is to consider the source. A biased source is not a credible source. Mania is not an acceptable scientific tool.

      • riled

        The source of the data, perhaps, but the data here is from another party entirely and this is a seemingly-objective analysis showing an interesting feature.

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

        There is no interpretation. The data is complete and comes from comScore (and is public). It’s a set of measurements and a correlation. It’s also a part of a series of articles. You’re making assumptions about me but I make no assumptions about the data.

      • Atroll?

        It seems more like we are looking at a slab of marble, and saying there’s an image of the Virgin Mary…

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

        It *seems*? How does it seem? I did correlations between all the platforms and the market the only one which is logistic is the iPhone. I was reluctant to publish this but I had a physicist at MIT look over the data and he encouraged me that this is an extraordinary pattern. I discussed the data and premises and assumptions over a series of articles over a few years and received hundreds of comments and observations. Your accusations are not backed by any evidence and you identify yourself as an anonymous troll. This forum is reserved for polite conversation but you are being border-line disrespectful.

      • Atroll?

        But you didn’t use a double logistic function which would be more appropriate in this instance IMO.

      • Atroll?

        I’ll expand a little now that I am bored.

        1) There is evidence that suggests that 15% of people in the US will not even use the Internet. Meaning there is evidence that at least 15% of Americans will not own a smartphone which is a gateway to the Internet. Therefore your forecast that 91% will be the saturation rate of smartphones (the current rate of saturation of cellphones is around 91%) requires further analysis.

        2) There is evidence that suggests iPhone sales will actually be flat in Q1 2014, and probably remain flat until another launch.

        3) In this instance this data should interpreted with a double logistic function.

        As far as it “seems” like we are staring at a slab of marble and seeing an image of the Virgin Mary…you failed to grasp that you ‘saw’ a trend, and ‘perceived’ a pattern. It’s the same thing one’s eyes do in the instance of the situation described above. You see a pattern in a slab of marble that could be anything, and your mind does the rest. It’s a great way to affirm your own faith.

        I attempted to reverse engineer your data and apply it to a double logistic function myself, but it’s unsurprisingly lacking enough detail (even after reading your previous posts). I don’t feel I have access to everything you used to come to this conclusion

        In my mind you’ve absolutely failed to make a prediction that could be called accurate to within a few percentile points. From what I see you’ve constructed an affirmation of faith. It’s known as confirmation bias, FYI.

        Thanks.

      • convincing

        1) They won’t have a choice, as only smartphones will be sold. From there you can start arguing about usage.

        2) What evidence, particularly? And in what way would it refute the analysis given that iPhones sales have always been launch heavy throughout the entire time the analysis has held?

        3) What process would cause a double logistic be present? I think you’re going to need to actually do the analysis to have any chance at being convincing.

      • http://www.asymco.com Horace Dediu
      • http://aaplmodel.blogspot.com/ Daniel Tello

        Horace, many thanks for sharing the data but didn’t you know you should never feed Atroll?

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

        As you are anonymous, how are we supposed to interpret your analysis. By your methodology, anonymous contributions cannot be assessed for their quality or value.

  • saltyzip

    68% of Americans don’t drive the same car, or wear the same clothes so I doubt they would be boring enough to all have an iPhone.

    • conclude

      Did you come to the same conclusion about the iPod at the time?

      • saltyzip

        About 40% of Americans own an ipod, so your point is?

      • conclude

        What about as a % of the addressable market for mp3 players?

      • saltyzip

        Surely that is more than people who use mobile phones?

      • conclude

        Not at all, no. I don’t know how you made that mistake. The iPod share of the mp3 player market was/is over 70%.

      • charly

        It is a legacy product and it is cheaper to buy a cheap smart phone to use as an mp3 player than an ipod so market share doesn’t say that much

      • conclude

        It had that share before the era of smartphones, so I don’t see your point.

      • charly

        It was always a legacy product. Anybody could predict that the hard disk based music players would be dead when flash was cheap enough and flash based players would be dead when flash was cheap enough to be included with mobile phones.

      • conclude

        I still don’t see your point. Do you think nobody else tried to make mp3 players because it was “always a legacy product”?

  • HR Puff n stuff

    iPhones are okay, but represent many of the issues I had with many feature phones for instance…

    1. Proprietary connectors

    It cannot just be USB. It has to be something with a snazzy nickname. Something that makes it seem less important that those iPod/iPhone accessories you invested your money in won’t work with the new generation unless you find an adapter somewhere.

    2. Proprietary software

    iTunes….ugh. Does iTunes ever work right? Has anyone actually figured out how to use it.

    3. You can only do what THEY let you do.

    This is perhaps the biggest issue I have with iPhones/pods/pads.

    The state of video playback may have changed since I owned an iPhone (it hopefully has), but it’s state was pretty sad. I could drop any video format on a droid, and play it without issue…the iPhone, or rather itunes, wanted it in a specific format. It drove me nuts. Why did things have to be this way?

    The state of file management is a serious issue to me as well. I’ve used my droid phones to mule files here and there, just by copying to an SD card, or directly to my phone’s storage. I don’t think this feature exists at all on an iPhone. In fact, from what I know, there’s no actual way for a user to save a file on the phone without iTunes… iCloud may make this complaint invalid, but I don’t think IOS allows for local user storage even with iCloud.

    The iPhone also introduced, or borrowed from mp3 players, and manufacturers bandwagoned this one: limited storage space with extra space at a premium. I’ve gotta have an SD card, or removable storage. I’m sorry. Plus a crazy huge fee for slightly more storage disgusts me (I’m looking at you too Google).

    So, here are as many iPhone gripes FROM MY EXPERIENCE as I can think of all in one place:

    iTunes

    Lightning charger and whatever that 30 pin charger was called.

    Lack of user storage space

    No access to network shares

    No SD card on any model

    Toy like appearance

    Shatter prone screens (I replaced the damn screen twice…it isn’t easy)

    Force Closes without notice. (now a feature of android as well)

    And here are as many droid complaints.

    Lack of updates available to user. (doesn’t matter now, but 2.3 to 4.0 was a huge leap many phones never made).

    Many low quality apps in the Play Store.

    Ads (buy your apps and you won’t have this problem, if you had an iPhone you’d have to buy anyway so just do it.)

    There are some things iPhones do well. People will repeatedly cite the beauty of the iPhone screen, the ease of use, and the smooth IOS interface. Plus they get all the best apps first.

    However, personally, I feel iPhone, or perhaps IOS more than the phone, is the weaker offering.

    The real reason why I think android is better is because I’m the kind if guy who would sit in the greasy spoon and think “Gee, should I have the T-bone steak or the big rack of Barbecued spare ribs with the side order of gravy fries?” I *want* high cholesterol. I want to eat bacon, butter and buckets of cheese alright? I want to smoke a Cuban cigar the size of Cincinatti in a non-smoking section. I wanna run around naked with green jell-o all over my body reading a Playboy magazine. Why? Because maybe I feel the need to okay pal?

    What really sickens me is that people are identifying themselves with their phones. Holy crap it’s crazy. ‘Apple has more money, therefore I feel I have more money’. ”iPhones are more expensive, therefore I feel they are better.’ ‘iPhones is the first real smart phone, therefore sticking with them make me a pioneer.’ How gross is that?

    The fact is, iPhone, whether it’s better or not, has a premium reputation to the non-technophiles. The premium reputation is what sells iPhones, it’s honestly not the function, nor the apps, nor the specs, it’s feeling like you have something that you believe other people envy. Which is why many iPhone people defend a phone they paid too much for (see Apple’s “cash stash”), and does less than the competition…even if they don’t realize it.

    When you ask people who want an iPhone, but don’t have one, why they want an iPhone, and they will say, because it’s the best phone on the market. If you ask why…there’s no real reason, they heard it was the best. In the end, it’s the same reason there’s a crazy amount of Honda Civics, and Toyota Camry’s on the street: IMAGE.

    That being said, iPhone’s market share cannot get much higher if something perceived as even more trendy, and premium comes along….which it probably will, and it won’t be android. Droid isn’t perceived as a Camry or Civic, or a Mercedes (awful cars BTW) droid is perceived as something you get when you can’t afford an iPhone.

    Sad really.

    • relevant

      Is any of this rant particularly relevant to the article?

      • HR Puff n stuff

        Just the last part ;)

      • Space Gorilla

        None of it is relevant, or intelligent, it’s just a lot of crying and Apple bashing. Please take it elsewhere.

    • Wouter Schut

      Lets answer all your points:

      1) The lightning connector is the BEST connector out there. And that’s the reason they made it. Apple is not going to constrain itself to micro usb. And they should not have to. Have you actually tried it? Do you actually think I want a sharp micro usb ANYWHERE near my iPhone? Do you think I want to carefully look at what I’m doing before I want to charge my phone? Its literally saving me 4 seconds a day.

      And I don’t buy accessories. Why would you want to use anything else than Airplay and bluetooth?

      And how expensive is a lightning to micro usb anyway?

      2) The iPhone can run any software if they are legal. Even open source.

      And what does iTunes have to do with proprietary software?

      And iTunes still gives you the easiest way to buy music/movies/apps. Maybe the Windows version of iTunes wasn’t so smooth as the OSX version, that might be possible. A bit bloated. But nowadays you don’t need to use it. You can do everything with your iPhone without iTunes.

      3) There are almost an infinite amount of things you can do with your iPhone. And webapps can do more and more nowadays (apple expands the things web apps can do). So you are really very free to do many things Steve Jobs would frown upon.

      And jailbreaking is legal. But apple doesn’t need to make it easy. They don’t need to support it. Because actually that would create a support hell. Can you imagine the support calls if something doesn’t work.

      Quality and control are very much connected to each other. Its something Apple understands very well.

      4) Video playback. Converting video is not so hard. And there is always VLC for the iPhone.

      5) File storage. You want your OLD way of working with files to be available for iPhones. But because it doesn’t work the way you want it to doesn’t mean your use cases are impossible.

      Its very easy: Applications are responsible for their data. They OWN certain types of data. VLC can have video’s. Keynote has presentations. And Garageband has music. Etc. Its actually the way most computer noobs already used computers, open Microsoft Word to open a document etc.

      And another point: iTunes can indeed be used to PUSH content to the iPhone. But mostly the iPhone PULLS data.

      If you don’t understand something doesn’t mean its faulty.

      6) Extra storage. This actually creates lots of usability issues. Which you actually also see on android. Its about easy of use, simplification, reliability etc. And we are going to cloud storage more and more.

      So yes, you lose control and the iPhone gains control. Deal with it. Or not. Most people clearly don’t care about this point.

      7) Access to network shares. Theres an app for that.

      8) Toy like appearance. Don’t know what you mean by that. Maybe because its simple.

      9) Breakable screen. You might want to be more careful. And i don’t think other phones have unbreakable screens. And personally i have seen more broken android screens than iPhone screens.

      10) Force closes without notice. Well thats a very good feature. It saves battery life and you don’t need to close an app ever. Saves time.

      You seem to be stuck in the old pc way of doing things. Just let go.

      And yes, some people listen to friends/family and other people research what phone is the best. And people have different demands and opinions.

      • charly

        1)The next version of the usb micro plug has no up/down too but it is a lot cheaper than the very expensive Apple connector

        2)I believe that Apple have rules that are anti gnu and it is absolutely not true that ios can run any software that is legal

        4) video conversion is hard and time consuming. VLC is also not really VLC

        6) It also solves a lot of usability problems

        10) it is not a bug but a feature blah, blah

      • Wouter Schut

        1) Sounds nice. But a little to late. And does it contain the same features?

        2) I think its the other way around, GPL is anti app store. And apple doesn’t even enforce the GPL licence. Apple does act on copyright infringements when its notified of them. (that’s what actually happened with VLC).

        3) iOS was the first operating system which had the best video experience hands down. It just works. And if you want to destroy your battery you should use flash or silverlight. I don’t know, I think less is more in this case again.

        And yeah, that VLC is absent is not apple’s fault. (see point 2)

        6) Yes, with more storage you get less storage warnings. But I also think that iOS handles a shortage of storage pretty well. By automatically cleaning temporary files etc.

        Personally I would like some kind of infinite memory where the least used data (which is also on iCloud) is deleted automatically. I can dream.

        10) Yes, its has most definitely been designed that way. No doubt about that. Less is more again ;)

      • charly

        1) Apple changed its plug a year ago but this is inherently much cheaper and free-er

        2) Apple wants/needs expensive software

        3) It doesn’t just work. It works after conversion and conversion is inherently bad

        It is not Apple’s fault? You mean Santa Claus did it.

        6) The problem with the cloud is that i don’t want the NSA to have my photo’s. (and the NSA doesn’t want to see them)

        10) Typical Apple fan. Apple can’t do wrong.

      • Wouter Schut

        1) Would think apple began designing the lightning connector way earlier. And apple doesn’t seem to be anti-standard-connector, they use plenty of standard connectors everywhere. But apple seems to be more ‘it has to do what we want and need’.

        See wikipedia for more information as to why apple can’t even use micro usb even if they wanted to. Its a big list.

        2) Its seems apple itself is moving in another direction and making more and more of their own applications free.

        And the app store is filled with free apps. So I don’t know what you are actually saying.

        3) Well I would think offloading conversion and the ability to use a dedicated co-processor is actually a very nice feature. But you can believe that is bad.

        I think the proliferation of multiple video formats doesn’t really help anybody. It only adds needless confusion and errors.

        And you should read about the whole VLC thing. If you think that was Apple’s wrongdoing you are simply mistaken. Look it up.

        6) There is this thing called encryption. Its perfectly possible to make it impossible for the NSA to look into anything you upload to the cloud. Like apple also does:

        http://support.apple.com/kb/ht4865

        10) Yes they can, and they do wrong in my eyes. I really don’t like them removing bitcoin apps from the app-store.

      • charly

        1) Apple likes Sony style connectors.

        Sony style == paying Sony or in this case Apple for making those connectors

        2) Not free. Bundled with purchase.

        GNU makes collective development possible which is a competitor for Apple

        6) I don’t trust with my keys, which they have. So the NSA has them to. But it is often more the meta data than the data itself that are a privacy issue.

        10) Bitcoin is bad for so many reasons that i for ones agree with Apple

      • HR Puff n stuff

        1) Yes, it supports audio over Bluetooth :)

        Seriously though, yes. It, along with the current generation of micro USB supports 2 amp charging (it’s up to the phone manufacturer to add that though most newer phones use it), and in droid 2.3 and up (or for more than 2 years) usb peripherals are supported. If someone wanted to make a cheesy droid stereo dock, it would work with almost all droids.

        So yes, those features are supported.

        2) GPL is a copyright license. It’s a cheesy one size fits all copyright for free apps. It is not really anti app store. It is in the case that it’s only valid when apps are free. A store would seem to suggest one were spending money.

        3) Windows was actually the first OS with the best video experience. Playback was easy, and every type of file was supported. It actually just worked more than any other alternative actually just worked.

        Flash is created by an inept bunch of programmers from Adobe. The same people who think it should take 4 gigs of ram to view a PDF file. It is tough on the battery, is no longer released for android. My battery is easily replaceable though. So I don’t have to worry about that.

        6) To my knowledge, windows is the only OS which likes to hoard it’s temp files. I’ve never really had a storage issue with my 32gb of sotrage + my 64gb sdcard on droid so I can’t speak to it’s ability to clear temp files.

        Infinite storage would be nice. However, to make that a reality, mobile internet speeds would have to be much faster. I can’t really send a 4gb file to the cloud. It may seem like something that a lot of people don’t need, and I can agree that it’s not, but when I need it, I want it.

        I guess I’m spoiled.

        10) Proof less is not more:

        less

        les/

        determiner & pronoun

        1.

        a smaller amount of; not as much.

        “the less time spent there, the better”

        synonyms:not so much, smaller, slighter, shorter, reduced; More

        adjective

        archaic

        1.

        of lower rank or importance.

        “James the Less”

        adverb

        1.

        to a smaller extent; not so much.

        “he listened less to the answer than to Kate’s voice”

        synonyms:to a lesser degree, to a smaller extent, not so/as much More

        preposition

        1.

        before subtracting (something); minus.

        “$900,000 less tax”

        synonyms:minus, subtracting, excepting, without More

      • Wouter Schut

        1) You should read the wikipedia article about the Lightning connector. It list a lot more features than that.

        2) Don’t know what you are saying. The GPL has this redistribution clause which is not compatible with the app-store.

        3) Windows never had (build in) support for all filetypes. Why did we need to use realplayer for so long? Why is VLC and XMBC still a godsend on windows?

        Less is more brother ;)

        6) Yes its nice if an OS takes full responsibility for certain issues. But that does remove some control from individual applications.

        6b) The only need which I see to upload large files is video. But it would seem its not really an issue if you can only do that via wifi. And if its online you can instantly ‘send’ it anywhere.

        Most other big files are actually already from the internet. So why would you ever need to send those back?

        10) Haha, you are taking the less == more a bit too serious.

        In apple’s case its more specifically: Limitations can be liberating. It also means apple takes more control and thus responsibility, but that also means they can create a better user experience.

        In the Appstore less freedom equals more safety.

        Imagine an iOS ecosystem where you can install any application you want. Where an application can do/change anything of the os it wants.

        What would you get?

        I bet apple would have lost complete control of their platform. You would have adobe flash as a platform on top of iOS, and probably java also.

        I think security, battery life and usability would suffer tremendously.

        So yeah I do sacrifice my freedom (to install software on my phone) for something I value more. But that’s just how I personally weigh those things.

      • HR Puff n stuff

        1) I never claimed that lightning was not a great connector. It should actually, as far as currently available connectors go, be the standard connector for everything. The reason I frown upon it is because it is not universal it’s not standard. If I need a cable for something else, I can’t pull it out of a box, and expect it to do anything but charge an iPhone/pad/pod. If I lose it I’m screwed if I’m in a pinch.

        Call it selfish, but I don’t like the idea at all.

        2) I wasn’t really saying anything to be honest.

        3) Never had built in support? Since Windows ME Windows Media Player was included… I’m not sure why that isn’t considered built in. WMP has it’s faults, and would not play everything, but it played almost everything.

        VLC is still great because it’s VLC, and VLC will play everything.

        Really, Real Player attempted to be the Apple of media players before QuickTime which was really the Apple of media players. It didn’t work. I hate real with a passion. I haven’t used it in a decade or even longer. I’m not a huge fan of Flash either, but it’s a number of times better than Real Player ever was.

        6) Like I said, dealing with large files is not something everyone needs. I doubt most people factor something like that into their phone purchase. I sill occasionally mule an ISO from one place to another, or a video, or other huge file that can currently be handled efficiently in no other way other than local storage.

        The biggest point I can make here is that I want the world. I want it all. I want to do everything I can possibly do.
        Right now my droid is my greatest multi-tool
        flashlight, camera, GPS, web browser, tv remote, camcorder, voice recorder, flash drive, phone, calendar, alarm clock, mp3 player, PMP, calculator, and it probably handles a couple more things I can’t think of right now. I guess it’s also my OBD-II reader…er… I’m sure there’s more.

        I don’t like limits especially artificial ones. I refuse to compromise, and that is why I don’t iOS. When iOS can do everything I want to do, which is everything, I’ll switch. If something better than droid comes along which can do even more I’ll move on.

        When I think of iPhones I think of all the restrictions my previous feature phones had. Those devices had so much more potential than they let their users easily access.They had proprietary chargers that were impossible to find, and expensive once found. Proprietary software for transfering files.

        Which leads us back to:

        10) Less is always less. You can think that having less is liberating, but whether I’m being too literal or not, less is always less.

        In my mind restrictions are negative, whether they are well-meaning or not. If iOS let users install whatever they want it would be like desktop Windows…the #1 operating system in the world (by installs everything else is debatable).

      • disinterested

        Could you two take this discussion off the comment section here? It’s highly irrelevant, long-winded and disinteresting.

      • charly

        3. Patent issues make video playback a problem which can only be solved easily on open platforms

      • Frank Vaughn

        When I pull out my box of connectors, I see multiple variants of the mini/micro usb connector… I hate that, but it wouldn’t be a reason to choose one phone over another.

        I bought the original iPhone, and haven’t found any reason to switch away from the product line.

      • is4u2p

        It’s USB 3 so yeah, it’s pretty much the best charger / data cable on a smartphone at this time.

      • HR Puff n stuff

        1) Sharp micro USB? Cut yourself with a lot of spoons now do ya?
        4 seconds?
        As far as the cost…somewhere around $30 in retail stores. Probably cheaper online.

        2) Itunes is the proprietary software for accessing the memory of the iPhone to load and unload music,photos, etc. It’s the battering ram to open the gates. Why should I have to use such a poorly designed software? Where is the alternative?
        Why should I have to circumvent the manufacturer’s software to gain the functionality I want?

        3) If there’s infinity things which can be done with an iPhone, you can do infinity^2 with a droid… <—playground response.

        4) Converting video is so 1994. It's an exercise which should also be avoided at all costs. Maybe the 4 seconds a day you save plugging in the lightning connect gives you the extra few hours to convert videos, but my phone uses micro USB. I just don't have the time. The idea behind "It just works" is completely smashed here. "It just works (if you do it the way we say you have to)."

        5) If I feel I need to port a large file from one place to another, you're darn right I want my old way of working with files.

        So…each app is in charge of it's own files? That's actually crazy. I mean, if something better comes along to handle that type of file, then not only do I have to get the new app, but I need to get the files again too? I'm hoping that's not true. That sounds insane.

        6) Haha, there's too much space to be usable on droid. Haha. It creates a problem! LOL! Ive never seen the 'You have too much space warning'. Haha.

        7) I'm not so sure there is. There wasn't, and there was. This may have changed. I'm not sure. The method I had to use was a jailbreak, and software which was not very good quality.

        8) It looks like a toy. It looks like something a child would play with. It does not have a regal-looking premium design. It did, but it's stayed so much the same, it's boring, old, and literally looks like something a child would play with.

        9) Yes, iPhone screens break. They break easily. Actually I'm not sure about the iPhone 5, but previous generations seems to use regular glass, whereas most droids during the same period were using gorilla glass. I hope they updated to the more durable gorilla glass…

        10) You completely misunderstood. The term "Force Close" refers to when an app crashes. When an IOS, and now a droid app, FCs You get dumped back to the home screen without explanation. The operating system does not notify you that there was an issue with the app.

        You were thinking more of memory management, I guess. I mean, you couldn't possibly be telling me that app crashes are good battery life. I mean. they probably are, but…seriously.

        There is possibly a reason that I'm stuck in the "old PC way". It allows me control, it's easy, and it's the norm across most platforms. Yes it gives me control. It promotes freedom. It fights fascism. I will not let go of the features I need and use.

        You can though.

      • Space Gorilla

        Something interesting to note, you’ve said “The premium reputation is what sells iPhones” and you’ve also said ” It looks like a toy. It looks like something a child would play with.” Those two statements don’t square up, you gotta pick just one. Either the iPhone has a premium reputation OR it looks like something a child would play with. Which is it? It can’t be both.

      • HR Puff n stuff

        I can easily still have a premium reputation. Just as a Mercedes can have a premium reputation despite being one of the most failure-prone brand of vehicles. Premium reputation often does not speak to actual quality.

      • Space Gorilla

        Who said anything about quality? You said the iPhone has a premium reputation AND that it looks like a toy. Mercedes very well may have quality issues, but it has a premium reputation and it looks premium, not like a toy that a child would play with. It looks high end, premium, expensive. So you’ve still got to pick one. Premium reputation OR child’s toy. Personally I’d go with premium reputation, that probably fits your anti-Apple narrative better in the long run.

      • HR Puff n stuff

        I’m not sure why it has to be one or the other. ‘A reputation’ is a phrase that literally describes the way something is perceived. Thus a ‘premium reputation’ gives no actual insight on anything other than the way it is perceived.

        For instance, “Haven’t you heard about Johnny’s reputation?” Johnny may or may not live up to his reputation, but that’s how people see Johnny when they are thinking of him.

        If I were to say, “The iPhone looks like a banana.” It would still not have anything to do with how people perceive the iPhone. It would not change it’s reputation.

        The statements do not conflict with each other. They are however entirely debatable. To me the iPhone looks like a toy.

        http://www.amazon.com/Playskool-A1557-Sesame-Street-Smartphone/dp/B00A671NOE/ref=br_lf_m_1001000311_1_5_ttl/182-2731480-1720416?_encoding=UTF8&s=toys-and-games&pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-4&pf_rd_r=1CG9T3876SXYM7A0RM76&pf_rd_t=1401&pf_rd_p=1636471102&pf_rd_i=1001000311

        Now take a literature class, or something.

    • Space Gorilla

      So to sum up, Apple’s success makes you cry.

      • HR Puff n stuff

        No, it really doesn’t. What saddens me is actually that people are identifying themselves with Apple’s success. For instance, if I were to lament that fact (that people identify themselves with Apple’s success), someone may say that the success of a company makes me emotional.

        It’s a very awkward situation. When it’s perceived that someone is saying, ‘I think you made the wrong choice, here’s why…’ They will violently defend that choice to keep it correct in their minds.

        I actually liked the iPhone…until I found something I THOUGHT was better. There is no doubt that when the iPhone was released, and for a good time after, it was the best phone on the market. It still is considered the best on the market by many. It does not fit my needs though, so I stay away from it.

        I attempted to explain that.

      • why

        Why did you attempt to explain it in the comments of this article?

      • Space Gorilla

        Explained. Then edited. Then explained again. Thanks for confirming my original statement.

  • Ferenc Huszar

    How about pre-2010 data? Around the 50% penetration mark the logistic curve is almost linear growth, which is not very interesting. To me the most interesting things happen in the modelling of early adoption (and this is where the theory and it’s practical conclusions matter the most).

    Would it be hard to get data about early adoption?

    I work on social media data and I have done some analysis of memes, such as Harlem shake which have reached very high penetration overall (I assumed you have adopted harlem shake when you first tweeted about it).

    The adoption curve in twitter memes was similar in shape to a logistic, but with a substantial positive skew, meaning that adoption amongst late majority and laggards was slower than predicted from the speed of adoption by early adopters, etc. The curve would look a bit like that for Android on your figure.