With the iPad mini launch imminent, it’s time to think about the expanding iOS portfolio. We don’t know how much the “mini” will cost or what variants will be available but I took some rumors as a basis to form a hypothesis.
The idea is that there will be 24 variants which have three dimensions:
- 2 colors
- 4 capacities
- 3 radio chipsets
The starting point would be $250 for an 8 Gb WiFi only model and increases of $100 for each doubling of capacity and $130 for the addition of cellular chipsets.
The results would slot into an increasingly broad price spectrum. I included all the models of iPod touch, iPhone and iPad that we already have available and built the following graph.
During the iPhone 5 launch event, Apple announced 435 million iTunes accounts (with credit card numbers) with one click shopping.
The account total is updated occasionally by Apple and the history of these updates is shown below:
Measuring the growth in accounts shows steady acceleration.
At this year’s WWDC Apple offered an update on Game Center accounts. The data we have so far is shown in the following graph.
Before being acquired, another network, OpenFeint, announced 180 million iOS accounts in October 2011. Another figure to consider is the 40 million subscribers to Xbox Live (out of 66 million Xbox users). This subscriber base is paying for a service (about $1 billion per year) so it’s not the same as the free Game Center model.
Rather than being a revenue source, Game Center is designed to engage users and to capture usage information. It also lets us gauge gaming “consumption” on iOS devices. That itself allows us to contemplate it as a gaming platform vis-à-vis alternate platforms.
To consider the figure as a proxy of penetration and engagement, the graphic below shows cumulative sales of gaming devices.
In the 2011 Annual Report(10K) published October 26th Apple states:
The Company anticipates utilizing approximately $8.0 billion for capital expenditures during 2012, including approximately $900 million for retail store facilities and approximately $7.1 billion for product tooling and manufacturing process equipment, and corporate facilities and infrastructure, including information systems hardware, software and enhancements.
The history of these expenditures is shown below (the blue bars are statements from 10K reports including the one above shown as the right-most bar): Three 10Q reports so far this fiscal year have given us updates on asset values and the change in these values are shown as the right-most yellow bar. The asset value change suggests $3.9 billion has been spent so far of the $7.1 billion budgeted. Thus we can estimate that about $3.2 billion remains to be spent in the fourth fiscal quarter (thus bringing the yellow bar to parity with the blue bar in the chart above–a parity that was achieved or exceeded for five out of the last six years).
Assuming $200 million of the fourth fiscal quarter budget will be for land and buildings results in an estimated $3 billion remaining for product tooling and manufacturing process equipment and data centers.
The history of spending for various cost centers is shown below.
HD: Apps are like the sauce in a dish. They add flavor and distinguish the dish. Increasingly they also offer nourishment. Some would argue that we can live with plain cooking but spices drove people to do incredible things like risking life to discover new continents. Being the world’s best source for spices means the most innovative and brilliant minds will be attracted to innovate on top of Apple’s platforms.
Read more of the interview by Markin Abras here: MacDirectory: Exclusive | Apple’s iOS Market Analysis.
At the 2012 WWDC, Apple released new data concerning its App ecosystem. Namely:
- 30 billion apps downloaded to date (excluding updates)
- $5 billion paid to app developers
- 400 million iTunes accounts
These three data points allow us to update our picture of the app economy. First, the app download rate.
As would be expected from an expanding user base, the app download rate has been increasing. It is now at about 49.5 million apps downloaded every day. The history of this rate is shown in the chart below:
I added the same data for iTunes songs and book downloads for comparison. Note that although music and books are available to the same user base (actually higher due to Macs and iPods which do not run apps,) apps are being downloaded at a far faster rate–at least four times faster.
In terms of total, cumulative downloads, the comparison is even more stark:
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One of the more interesting numbers reported by Tim Cook during the last earnings conference call was the total payment to developers during the fourth quarter. This is the first time that Apple reported a quarterly payout to developers.
The figure was $700 million and it was mentioned in reference to the total payments to date of $4 billion. The $700 million is interesting at least because it gives an idea of what Apple obtained in total sales of Apps. As it retains 30% and pays 70% to developers then it follows that it retained $300 million and the total “gross” sales was $1 billion in Q4.
The $700 million is interesting for another reason. The $1 billion in gross income can be tested against another set of data. As the countdown has already started, sometime in February Apple will report 25 billion total apps downloaded. The last such milestone was October 4th when it reported 18 billion downloads. Assuming that they will cross 25 billion by February 25th, then we can obtain an estimate for the download rate per day: about 48.6 million apps/day.
That is a figure we can plot historically:
Tim Cook on the 55 million iPads sold to date:
This 55 is something no one would have guessed. Including us. To put it in context, it took us 22 years to sell 55 million Macs. It took us about 5 years to sell 22 million iPods, and it took us about 3 years to sell that many iPhones. And so, this thing is, as you said, it’s on a trajectory that’s off the charts.
via Transcript: Apple CEO Tim Cook at Goldman Sachs – Apple 2.0 – Fortune Tech.
That gave me an idea. Here is a plot of each major computing product Apple sold throughout its history shown as a cumulative total since product launch.
There are several methods I turn to when estimating device sales.
Top-Down Demand analysis
The first is to look at so-called top-down views of the demand. This method takes a view of the overall phone market and assumes share for smart devices and, further, shares for individual platforms. There are several estimates out there. The most recent is Ericsson’s Traffic and Market Data Report, released November 7 2011.
It concludes that in five years’ time mobile subscriptions will reach 8.4 billion of which smart devices (incl. tablets) will total 6.2 billion. As iOS has approximately a 250 million install base at end of 2011 and as the total base from Ericsson’s estimate for 2011 is 1.44 billion then Apple’s share is approximately 17%. If we assume that Apple will be able to increase smart device share to 20% (3 percentage points in five years) then by 2016 Apple will need to have 1.24 billion iOS subscribers.
Assuming that half the installed base upgrades every year and Apple adds devices required to reach the install base necessary (1.24b or 20% share) leads to the following unit sales projection (I’ve added 2008 through 2010 actuals and 2011 estimates based on my own current Q4 projections).
This Approach yields an estimate of