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Influencer Insights Podcast | Kea Company’s Influencer Insights

Over the last couple of years we have been witness to the rise (and fall) of new research initiatives. What defines them, and what drives them to take on the market as they do? Hosts Thom and Derk Erbé are joined by Phil Fersht, Michael Coté, William Tincup and Horace Dediu. The panel drills down on new types of industry analysts and how they will change the IT research landscape.This is the third and final part of this podcast.

Source: Influencer Insights Podcast | Kea Company’s Influencer Insights

The Critical Path #157

Horace discusses the recent market turmoil and takes listener questions on everything from Alphabet to SpaceX.

Source: The Critical Path #157

The Critical Path #156

Horace and Anders discuss Uber’s transportation business and discuss how software modularizes the world. In the second half of the show, they take listener questions posted to Twitter using the hashtag #CriticalQuestion.

Source: The Critical Path #156

(Much) Bigger than Hollywood

Eddy Cue seems like a nice guy. I can’t say that for sure as I’ve never met him, but he seems to be amiable enough. Maybe it’s because he has a seat on Ferrari’s board of directors. Maybe it’s because he enjoys dancing.

Or maybe it’s because he’s in charge of the only real “division” at Apple. All the other senior managers have functional roles. Eddy has a bona-fide business unit called Services.

Services is Apple’s division of many things. It has the iTunes stores (Music, Video, Apps and iBooks). It has Software with consumer bundles like iWork and iLife and Pro tools like Aperture, Final Cut Pro and Logic Pro. It still has OS X as a product, though revenues are pretty low as updates are now free. It also includes Services with iCloud, Apple Music and Applecare.

These things are not iPhones or iPads but they are many and all together they form a modest little unit. I say modest because not much is said about it. When seen in contrast to the other Apple product lines, it’s hard to be impressed. In the graph below it’s the purple area.

Screen Shot 2015-08-25 at 5.56.19 PM

Apple does not help much. Occasionally  Apple offers updates on iTunes/Services using various (rarely the same) metrics. For example, in early August, Eddy Cue offered an update during an interview with USA Today on Apple Music relating how many users there were one month after the service started (11 million).  It was worth a few headlines.

However he also noted in passing that the App store did $1.7 billion in transactions during July. If you convert that to a yearly run-rate it comes out to about $20 billion/yr. Digging through previous announcements, the equivalent figure for 2014 was about $13.7 billion. Nice growth.

But is $20 billion of “transactions” of any significance?

Impetus | Transcribing Asymcar

Due to some research and related writing I’ve been working on which revolve around the potential for disruption in the auto industry, I have wanted the ability to quickly search the Asymcar and The Critical Path podcasts to locate material I remember hearing. Naturally, this is difficult at best with the material in audio format only.  I know that an edited version of the first year of TCP was presented in a book format some time ago. But since Asymcar contains much of the content that I needed to referenc

Source: Impetus | Transcribing Asymcar

Podcast: The New Industry Analysts, Who Are They? (Part Two)

Over the last couple of years we have been witness to the rise (and fall) of new research initiatives. What defines them, and what drives them to take on the market as they do? Hosts Thom and Derk Erbé are joined by Phil Fersht, Michael Coté, William Tincup and Horace Dediu. The panel drills down on new types of industry analysts and how they will change the IT research landscape.

This is the second part of this podcast. The first part can be found here.

Source: Podcast: The New Industry Analysts, Who Are They? (Part Two)

Podcast: The New Industry Analysts, Who Are They? (Part One)

Over the last couple of years we have been witness to the rise (and fall) of new research initiatives. What defines them, and what drives them to take on the market as they do?

Hosts Thom and Derk Erbé are joined by Phil Fersht, Michael Coté, William Tincup and Horace Dediu. The panel drills down on new types of industry analysts and how they will change the IT research landscape.

Source: Podcast: The New Industry Analysts, Who Are They? (Part One)

The Alphabet of Google A and Google B

For the last few years, I’ve been proposing that the way to conceptualize Google is as two separate entities: Google A and Google B.

Roughly speaking Google A was the R&D[1] organization and Google B was SG&A[2]. You can find the operating expenses of running each of these organizations in the company’s income statement.  In the last quarter R&D was about $2.8 billion and SG&A was about $3.5 billion[3]. The two entities are further distinguished as follows:

  • Google A was led by Eric Schmidt and Larry Page and Google B was led by persons unknown, but mostly represented by the “Chief Business Officer” Omid Kordestani.
  • Google A spends money. Google B collects money.
  • Google B sends a check to Google A while Google A sends data to Google B (which then sells it on to advertisers and collects money).
  • Google A communicates frequently with optimism and enthusiasm about the future. Google B remains quiet.
  • Google A solves problems of humanity, Google B solves problems for advertisers.
  • Google A has users, Google B has customers (to whom it sells users.)

In summary, Google A is altruistic, Google B is pragmatic. Google A engages in research, Google B engages in commerce. Google A operates in a structure similar to a Bell Labs for the good of humanity[4],  Google B operates in a structure similar to AT&T and collects monopoly rents but without any government oversight.

This was an effective construct for analysis which explained to me much of how Google operated and how it made decisions. So what do we make of Google’s new Alphabet? Is this a dissolution of the Google B/Google A dichotomy?

My initial answer is no. We don’t have a change in this core structure. What we have instead is a split of Google A into Google A and Google A+.

A+ is the crème de la crème of the altruistic Google A. It’s the stuff that really does not make money. It’s the laboratory of Bell laboratories. It’s the moonshot manufacturer. It’s the incubator where hobbies are hatched. It’s the funder of ventures.

After A+ is carved out, Google A and Google B remain exactly as they were, now under a new CEO. The previous CEO no longer has any day-to-day input in the running of Google A and is no longer soiled by association with Google B.

Alphabet is therefore the “holding company” of Google A+, Google A and Google B. I can only suppose that the separation of A+ from A (and the previous A from B) allows the founders to distance themselves even further from the purchase decisions which, through pricing signals, determine where value lies and how resources should be allocated. That must be a great relief.

Notes:
  1. Research and Development []
  2. Sales, General and Administrative []
  3. Sales and marketing was $2.1 billion and General and Administrative was $1.5 billion []
  4. Using a definition of Good as established by the founder []

The new switchers

During the last quarterly earnings call, Tim Cook said that Apple has seen the highest switching rate from Android ever. That there is switching isn’t surprising. We’ve seen many surveys which show higher loyalty with iOS than with Android. But it’s been very hard to spot the evidence in the data which is visible publicly. Both iOS and Android are adding users and sales for both platforms are still increasing.

The switching effect is easier to discern when the market is not growing overall. In that situation one platform’s growth has to be at the expense of another. However, some markets do show evidence of “churn” in users.

Screen Shot 2015-08-10 at 8-10-12.52.52 PM

Consider the ComScore data on US platform users (above). If we look at the last six months’ data[1] we can count that there are about 8.2 million more Americans using iPhones than there were six months ago. At the same time, there are 1.6 million Android users. One million users left the BlackBerry platform and about 700,000 left Windows Mobile. The data also suggests that the total number of first-time smartphone users is about 8.3 million.

Notes:
  1. these data are actually three month averages []

The Critical Path #155: The New Production Method

Horace and Anders discuss car production methods, the BMW i3, tubular and composite frame construction and how Uber could change the landscape.

Source: The Critical Path #155