To anyone who has visited the current “campus”, it’s obvious that Apple has outgrown it some time ago. It’s also obvious given the increase in headcount and operational expenses over time as can be seen below:
(I added Q1 2013 estimate based on company guidance.)
One can understand why, from a practical point of view, they want to consolidate what amounts to at least twice as many people back into one place.
But there is also a more subtle reason and it has to do to a fundamental distinction:
On Mar 18, 2013, Rafael Barbosa Barifouse – Redacao Epoca – Editora Globo asked (and I answered):
Q: Why is Samsung creating Tizen?
A: I believe they are collaborating on Tizen development because they want an alternative to Android and because Bada was not good enough to meet that goal. Tizen’s roots include contributions from Intel, Nokia and several Japanese companies so it’s not Samsung’s OS per se. Historically it was the “open” alternative operating system for embedded and mobile systems. See https://github.com/kumadasu/tizen-history/blob/master/tizen-history.pdf for a historic perspective.
In some ways Tizen seems to be a blend of several pieces of code including proprietary Samsung user interfaces. Samsung is presumably interested in having a unique, differentiated experience. This is something every device maker seeks. Put another way, if they did not seek this then it’s unlikely that they would be profitable which would also imply that they would not invest in marketing and development of products. As Samsung invests both in marketing and development it can be concluded that they seek to offer a unique value proposition and, in today’s market, that means a unique experience.
Does it make sense to create a new mobile OS when it has had so much success with Android?
The comScore mobiLens survey for the US ending February 2013 shows continuing rapid expansion of smartphone usage in the US. Even though the 50% penetration threshold was passed seven months earlier, the rate of new smartphone users was second highest ever recorded with over 1 million new-to-smartphones users every week during February.
Overall penetration increased to 57% with nearly 2% of the population switching in one month. Using the average growth rate for the last six periods, the US could see 80% penetration in another 19 months or by Q3/Q4 2014.
The following is another excerpt from a report titled “iTunes Business Review” which will soon be available for purchase through the Asymco Store. If you are interested in the product please get in touch.
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iTunes store will be 10 years old next month. From its inception Apple has stated that it aims to run the store “at break-even”. The business has grown so rapidly however that its profit-free nature has come under severe pressure.
The reasoning goes that as more media types have been added costs have increased but revenues have increased even faster. Consider the estimated gross revenue base as shown below:
What is known as iTunes today has quintupled in seven years. Although cost of content sales are likely to have been preserved as a ratio (about 30%) the vastness of transaction volume (estimated at 23 billion item transactions in 2012 alone) implies that there are some significant economies of scale.
This implies that the operating costs are spread more evenly and that therefore the possibility exists for some operating margin.
Competition is continuing to heat up for mobile apps. With over 1.5 million apps available in the Apple App Store and Google play, you’ve really only got one chance to make a good impression.
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