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Author Horace Dediu

Asymcar 17: 27 Quadrillion BTUs

Part I is a review of the “automotive stack” and note how there is no singular event that seems to affect disruptive change. From changing jobs to be done, modular design and manufacturing processes, powertrain evolution, urbanization, environmental interests, regulation and taxation.

Part II is a review of a framework of analysis based on sources and uses of energy.  Inputs, efficiency/losses, network effects and inertia, what can change and what can’t change.

For a shot of theory, Horace reflects on the dichotomy of efficiency vs. efficacy when it comes to predicting change in the sector.

via Asymcar 17: 27 Quadrillion BTUs | Asymcar.

The Critical Path #119: Creativity and Engineering

Predictions of the iPhone Portfolio, big screen phones and what they are good for, and a tentative review of Ed Catmull’s “Creativity, Inc”

5by5 | The Critical Path #119: Creativity and Engineering.

Cash exceptionalism

Prior to implementing a dividend and share buyback plan, Apple had accumulated about $120 billion in cash and marketable securities. In the eight quarters since implementing the cash return plan, Apple has paid about $21.5 billion in dividends and spent another $53 billion of its shareholder’s money buying its own shares and retiring them. That’s $74.5 billion in cash that’s been removed from its balance sheet.

To avoid some repatriation taxes it also borrowed about $29 billion.

Of course, in the meantime, it also generated cash from operations.

Before the plan’s implementation, eyeing the cash allowed for easy tracking of the accumulation of retained earnings. After the plan it’s become a bit more complicated. The following graph shows all the quantities involved:

Screen Shot 2014-08-18 at 8-18-2.09.00 PM

The graph lets us answer the question “What would have happened if Apple had not paid any dividends, bought back shares and taken on debt?”[1]

The answer is in the blue line. It would be about $210 billion today. There are about a dozen companies other than Apple worth more than that amount.

As the company is not growing as quickly as it used to, the slope of the blue line is constant (i.e. it’s nearly linear.) Though that might be seen as evidence of failure, it’s more useful to treat this vast quantity as a recognition of past successes. The company’s beleaguered status needs to be carefully preserved.

Notes:
  1. The grey and black area of the last column is the total “cash returned to shareholders” and sums up to the $74.5 billion mentioned earlier. The grey area is only theoretically valuable as it depends on the outstanding (i.e. not retired) shares retaining their value. In this case, the value of the shares grew, making this an actual gain for shareholders []

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Beleaguered

Amazon’s recent disputes with publishers (Hachette and Disney) shows a degree of market power that is closer to monopsony than to monopoly but this power is nevertheless real. It may not not be something that requires intervention, regulation or even scrutiny but market power is evident in both how companies operate and in how they are valued.

If you look at the following graph, it’s easy to spot those with “monopoly” power. The graph shows a short history of revenues/operating income and P/E ratios. Modest or no growth in earnings coupled with extraordinary high P/E ratios indicate that the market understands the business is not threatened by competition.

Screen Shot 2014-08-14 at 8-14-1.40.47 PM

A Dollar a Day

There are 80 million Mac users. The last 12 months saw sales of 18 million Macs.

As of the end of June there were 886,580,000 iOS devices sold. As of today the total is well over 900 million. One billion sold will happen well before this year is out. Estimates of current iOS users vary but they are probably at least 500 million and could be 600 million.

Screen Shot 2014-07-25 at 7-25-2.44.06 PM

Apple claims 800 million iTunes accounts.

Therefore, in terms of revenues:

  • Mac User = $289/yr
  • iOS User = $262/yr
  • iTunes User = $25/yr[1]

Adding iTunes usage to either Mac or iOS yields

Notes:
  1. Measured from billings []

Is the PC back?

Gartner’s own press release has an interesting spin:

“After Two Years of Decline, Worldwide PC Shipments Experienced Flat Growth in Second Quarter of 2014, According to Gartner”

Gartner’s actual figure is 0.1% growth. Gartner and IDC measure slightly different quantities as “PC” but they don’t disagree much. IDC still shows declining PC sales at about -1.7%. However both also include the Mac in their accounting of PC. If we were to remove the Mac and measure “Windows PC”[1] Gartner’s figures would show -0.8% drop in PC ex-Mac shipments.

The difference in growth between the Mac and non-Mac PCs is shown in the following graph.

Screen Shot 2014-07-23 at 7-23-5.23.08 PM

As Apple puts it, the Mac grew faster (and hence gained share) for 31 out of the last 32 quarters.  It missed on this perfect record during the fourth quarter of 2012 when the then fresh new iMac was impossible to buy due to production issues.

So as far as the Mac is concerned the slowing of the decline in PC unit shipments isn’t at its expense.

Notes:
  1. In quotes because this total includes Linux and Chromebook []

Airshow is coming to Tokyo

I will be conducting our 10th Airshow event in Tokyo on Thursday, 17 July 2014.

Airshow

The purpose of Airshow is to:

  • Understand how data can be used to persuade through an appeal to logic as well as through empathy.
  • Understand the basics of “data cinematicism” including the techniques analogous to cinematography and direction.
  • Understand story development techniques including how to facilitate the audience’s entry into the story.
  • Learn how to build a cinematic presentation.

The method we devised borrows heavily from the techniques of cinematography and screenwriting to impart meaning to the audience beyond the literal words spoken or images shown on screen. These techniques are demonstrated with “feature presentations” and then deconstructed in interactive lectures. Throughout we also weave Aristotelian rhetorical tips and present from the Asymco repertoire of stories.

See Airshow Tokyo event page for more information. Registrations are available. Students may register for academic discounts.

The Critical Path #118: The Cook Doctrine

We reflect on why the narrative on Apple has changed post-WWDC and analyze both the evolution and consistency of Apple’s culture. Furthermore, what elements of that culture/process/priority setting can be copied? In other words, what does it take to be great?

via 5by5 | The Critical Path #118: The Cook Doctrine.

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