This is what “Not getting the Cloud” looks like:
“Not getting the cloud” means that in the last 12 months Apple obtained:
- 800 million iTunes users and
- an estimated 450 million iCloud users spending
- $3 billion/yr for end-user services plus
- $4.7 billion/yr for licensing and other income which includes
- more than $1 billion/yr paid by Google for traffic through Apple devices and
- $13 billion/yr in app transactions of which
- $9 billion/yr was paid to developers and
- $3.9 billion/yr was retained as operating budget and profit for the App Store. In addition,
- $2.7 billion/yr in music download sales and
- more than $1 billion/yr in Apple TV (aka Apple’s Kindle) and video sales and
- $1 billion/yr in eBooks sold
In summary, iTunes, Software and Services has been growing between 30% and 40% for four years and is on its way to $30 billion/yr in transactions and sales for 2014.
This is what can be deduced from a reading of Apple’s financial statements of operations. If there are comparable details for companies which do get the cloud, I’ll be happy to tally the comparison so we can calibrate this failure.
Philip Elmer-DeWitt cited Piper Jaffray’s latest Teen Survey on Device Ownership where ~7,500 teens in the US are asked about their device ownership. This type of data is similar to the method comScore uses to measure penetration smartphones in the US making the two data sets comparable.
The combined data is shown the following graphs.
One graph is the penetration data and the other is the ratio of penetration to unpenetrated on a log scale. The PJC Teen Survey data is shown as dots on both graphs. In the spring of 2012 the difference between teen iPhone ownership and overall population iPhone ownership was 20 percentage points. In the fall 2012 it was 22 points. In spring 2013 it was 25 points. The spread increased to 30 points in the fall of 2013.
In 2013 there were 18.8 times more Windows PCs sold than Macs. This is a reduction in the Windows advantage from about 19.8x in 2012. This decline is mostly due to the more rapid decline in Windows PC shipments relative to the more modest decline in Mac unit shipments. Gartner estimates that about 309 million Windows PCs were shipped, down from 337 million in 2012 (which was down from 344 million in 2011, the year PCs peaked.) I estimate about 16.4 million Macs were shipped in 2013 down from 17 million in 2012.
The history of PC shipments relative to Mac shipments is shown in the following graph:
I chose to graph the Mac data as an area with additional areas for iOS devices layered on top.
As automobiles become smartphone accessories, they become an interesting industry to study. Here is a recent (since 1961) history of the US market.
Benedict Evans explains well the problem with measuring Android tablets. There are no reliable data collected because many of the devices are invisible through the regular, measurable channels:
- There are no firms which report their shipments
- They are not sold through retail chains which normally are sampled in the US and Europe (NPD and GfK respectively.)
- They don’t show up in browsing or ad transaction data
- Google Play statistics are missing most of the activations since they are not sold as bona fide Google-sanctioned Android.
The only measured statistic happens to be component shipments. Items such as screens, CPUs or perhaps memory might be visible to market analysts. It’s therefore tempting to add up tires manufactured to determine what’s getting sold in auto dealerships.
But it’s also hugely problematic.
During the first quarter of fiscal year 2014, we changed our organizational structure as part of our transformation to a devices and services company. As a result of these changes, information that our chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance changed. Therefore, beginning in fiscal year 2014, we are reporting our financial performance based on our new segments; Devices and Consumer (“D&C”) Licensing, D&C Hardware, D&C Other, Commercial Licensing, and Commercial Other.
The previous reporting segments were:
- Windows & Windows Live
- Server and Tools
- Online Services
- Microsoft Business
- Entertainment and Devices
- Unallocated and other
The new are:
- D&C Licensing: Windows OEM licensing, Consumer Windows, Consumer Office, Windows Phone (including related patent licensing)
- D&C Hardware: Xbox 360, second-party and third-party video games, and Xbox LIVE subscriptions; Surface; PC accessories
- D&C Other: Resale, including Windows Store, Xbox LIVE transactions, Windows Phone Marketplace; search advertising; display advertising; Subscriptions including Office 365 Home Premium; Studios including first-party video games; retail stores.
- Commercial Licensing: Windows Server, Microsoft SQL Server, Visual Studio, System Center; Windows Embedded; volume licensing of Windows; Microsoft Office for business (Office, Exchange, SharePoint, and Lync); Client Access Licenses; Dynamics, Skype.
- Commercial Other: Enterprise Services, including Premier product support services and Microsoft Consulting Services; Cloud Services, comprising O365, other Microsoft Office online offerings, Dynamics CRM Online, and Windows Azure.
From Microsoft’s FY14 Q1 10Q via Microsoft Investor Relations – Press Releases
The mapping between the old and new is not straight forward. There is overlap between D&C Licensing and the old Windows and perhaps between Entertainment and Devices and D&C Hardware but there are many gaps. There is also some overlap between the old “Business”/”Server” segments and the new “Commercial” but, again, they cannot be matched.
I show the difference between the two structures in the way revenues are allocated below, using color to try to show similarities.
Given the re-stated quarters it’s possible to compare one year’s historic performance at a segment level. For example,
I’ve never worked at Apple and know very few people who did. Nevertheless, I read Adam Lashinsky’s book and enough Folklore.org that I think I can get away with replying to the Meaning of Googliness with the following:
|Doing the right thing
||Doing the best thing
|Striving for excellence
||Striving for greatness
|Keeping an eye on the goals
||Keeping both eyes on your task
|Going the extra mile
||Going to the moon
|Doing something nice for others, with no strings attached
||Doing everything for the user
|Being friendly and approachable
||Keeping your mouth shut
|Valuing users and colleagues
||Valuing functions other than your own
|Rewarding great performance
|Being humble, and letting go of the ego
||Keeping your mouth shut
|Being transparent, honest, and fair
||Keeping your mouth shut
|Having a sense of humor
||Never writing a post on what Appleiness means
Today is the iPad’s third birthday. It’s also the mobile (cellular) phone’s 40th birthday.
Whereas the launch of the mobile phone was probably an obscure event, the launch of the iPad was greeted with derision.
It is perhaps with irony that we should greet this auspicious confluence of anniversaries.
During the last 12 months 31 million American phone users abandoned the use of feature phones. During the last 24 months over 60 million switched. Over 550k users are switching every week and this rate of switching has not changed much since late 2009.
Apple’s renaissance began with the iPod. This was not evident right away however. The product was unveiled on October 23, 2001 at a time when Apple’s share price had just fallen 70% from year-earlier levels. It was perhaps a good point from which one could expect a recovery to begin.
It was not to be. One year after the iPod’s launch the stock price had fallen another 20%. Indeed during 2001 the company was in the throes of a “bear market” in its shares. If we measure a time of persistent share price reduction as a bear market, then the one in 2001 was significant. For 154 days, between April 27 and September 28, 2001 the shares fell 38%. This represents the first bar in the following graph showing all the Apple bear markets since then.
I also illustrated these bear markets in terms of their duration and the average %drop/day.
Chronicling these periods: