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Missing the boat in music

When Spotify and Pandora were starting their streaming services many were quick to point out that Apple was about to be disrupted. The future, they said, was streaming because (young) people could not be bothered with ownership of music and the limitations of a personal collection. Who would want to pay for a few hundred songs when they could listen to millions for free?

This perception continued and became more vocal over the years. Seven years in fact. Spotify collected 20 million paying subscribers while Apple did nothing. Pandora grabbed 80 million active listeners and possibly 4 million paying subscribers while Apple did nothing. The boat had sailed and Apple was not only not on it but oblivious that there was a boat in the first place.

At first Apple launched a half-hearted streaming service and then a paid service finally showed up with Apple Music in mid 2015. Since then the company managed to add 15 million subscribers. A tiny number compared to the 900 million iTunes accounts it had reported a year earlier. Pathetic. The number of music subscriptions relative to iCloud accounts, iTunes accounts and active devices is shown the the graph below.

Screen Shot 2016-06-20 at 3.30.38 PM

It may be paltry compared to the count of users Apple may have in total, but how does a 15 million user base in 1 year compare with the growth rate for the incumbents Spotify and Pandora?

The following graph shows the ramps for Spotify, Pandora and Apple Music since their moments of market entry. The accumulation of users by Apple looks to be the fastest yet.

Screen Shot 2016-06-20 at 3.31.02 PM

This is, of course, due to a maturing use case. Apple did not have to educate people to the notion of music as a subscription. It could just announce it and users would discover it and just sign up, especially if they were already iCloud subscribers and had a credit card attached to their iTunes account.

But that’s the whole point. Apple did not have to move first in music subscriptions. It did not even have to move second or third. When it did move it could just skim the market and add to its already healthy Services revenue (orange line in the first graph above.) Missing the boat in music in this case meant capturing all the value quickly and with minimal expense.

Fundamentally, Apple’s entry into music subscriptions was a sustaining effort. Streaming sustained Apple rather than disrupting it. The difference may seem merely one of semantics, but it is also the difference between life and death for a challenger. Meaning matters.

This is a cautionary tale for those who would pronounce every new idea as “disruptive” to Apple or anyone else on the basis of novelty alone. The tests for disruptiveness are easy enough and it behooves the analyst to apply them before dropping the d-bomb.

Listen to “Is the shine off (the) Apple?” – Podcast

Apple is among the biggest companies in the world. But what has it done for us lately? We break down where the company is headed with help from two of the best Apple analysts in the game — Horace Dediu and Neil Cybart. How does Apple compete going forward? Will they introduce a car? Or are they doomed to a slow decline?

Source: Listen to Is the shine off (the) Apple? – Omny personal radio

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State of the Ecosystem

At WWDC 2016 Apple offered a set of new data points to illustrate its ecosystem’s robustness.

First, the number of registered developers increased by 2 million in the last year to a total of 13 million. That is a growth rate of 18%. To compare this total consider that Oracle claimed in 2014 9 million Java developers and IDC claimed in 2014 there were 18.5 million software developers in the world, of which 11 million were professional software developers and 7.5 million were hobbyist developers. It’s therefore possible that Apple’s “market share” among developers is close to 70%.

Second, App installs have now reached 130 billion. The cumulative growth is shown in the graph below:

Screen Shot 2016-06-16 at 12.25.11 PM

The rate of growth is also shown in the following graph:

Screen Shot 2016-06-16 at 12.33.35 PM

Note that the rate of growth continues to increase and is now above 30 billion/yr. It turns out that apps continue to be a popular download item. The size of the audience continues to grow (see graph below) and it’s therefore understandable that activity in the store continues to grow.

The Critical Path #178: The Luxurious Internet Experience

Horace and special co-host Farshad Nayeri discuss Log Log Scale, the iPhone SE and Artificial Intelligence.

Source: The Critical Path #178

The Critical Path #176 The Over-Under Service Dichotomy

Horace talks about developments in Disruption theory. A fairly long and deep discourse on the state-of-the-art in innovation theory development.

Source: The Critical Path #176

Asymcar #33 Concept, Outcome and Pivot

 

Sam Abuelsamid reflects on the origins of BMW’s i program, today’s economics and the application of lessons learned.

We veer into supply chain details and consider the path that the legacy automakers have chosen.

The show closes with a discussion of Apple’s entry assets, supply chain power and business model evolution.

Source: Asymcar #33

Asymcar 32: Tesla: the Numbers

Anton Wahlman joins us as we dive into numbers, production curves and the clash between reality, vision and hubris over autonomous carsTesla’s “financial equation” merits much discussion interspersed with reflections on an EV landscape littered with government subsidies.We close with accounting, including a dissertation on variable costs and the burden of “dealerless” car sales.

Source: 5by5 | Asymcar #32: Asymcar 32: Running the Numbers

The Critical Path #175: There Is No Such Thing As A Free Service

We pause briefly from talking about cars to talk Apple’s quarterly. The China slowdown, the Watch as the future of computing, services and trusting an advising automaton.

Source: The Critical Path #175

Announcing Airshow 2.0

We are ready to roll out Airshow 2.0, a redesigned curriculum for motion-based data presentations.

Three years ago, we created the Airshow concept as a study of how stories come alive using data. We drew inspiration from cinematography and combined with the work of Welles, Tufte and Rosling to build a new theory of presentations. We offered explanations of: 

  • How and why are presentations different from one-on-one interactions?
  • Will new user interface metaphors such as touch help tell stories better than the slide advance clicker?
  • Are motion and interaction an effective ways to present? If so, how are they to be choreographed and directed?
  • How does “camera position” affect a data story?

Since that initial concept, we have learned far more.

Airshow 2.0 moves beyond executing a story in pixels to the writing and directing process. As before, we teach using the process itself: through stories presented as data. 

A full-day presentation of Airshow 2.0 will debut on May 28 in Boston. We will also hold a special performance in San Francisco on Saturday June 11 (weekend before WWDC) to commemorate Airshow’s third anniversary.

To register, or for more information, see http://airshow.io/ .  A 30% discount is available to early registrants.