Due to some research and related writing I’ve been working on which revolve around the potential for disruption in the auto industry, I have wanted the ability to quickly search the Asymcar and The Critical Path podcasts to locate material I remember hearing. Naturally, this is difficult at best with the material in audio format only. I know that an edited version of the first year of TCP was presented in a book format some time ago. But since Asymcar contains much of the content that I needed to referenc
Source: Impetus | Transcribing Asymcar
Over the last couple of years we have been witness to the rise (and fall) of new research initiatives. What defines them, and what drives them to take on the market as they do? Hosts Thom and Derk Erbé are joined by Phil Fersht, Michael Coté, William Tincup and Horace Dediu. The panel drills down on new types of industry analysts and how they will change the IT research landscape.
This is the second part of this podcast. The first part can be found here.
Source: Podcast: The New Industry Analysts, Who Are They? (Part Two)
Over the last couple of years we have been witness to the rise (and fall) of new research initiatives. What defines them, and what drives them to take on the market as they do?
Hosts Thom and Derk Erbé are joined by Phil Fersht, Michael Coté, William Tincup and Horace Dediu. The panel drills down on new types of industry analysts and how they will change the IT research landscape.
Source: Podcast: The New Industry Analysts, Who Are They? (Part One)
For the last few years, I’ve been proposing that the way to conceptualize Google is as two separate entities: Google A and Google B.
Roughly speaking Google A was the R&D organization and Google B was SG&A. You can find the operating expenses of running each of these organizations in the company’s income statement. In the last quarter R&D was about $2.8 billion and SG&A was about $3.5 billion. The two entities are further distinguished as follows:
- Google A was led by Eric Schmidt and Larry Page and Google B was led by persons unknown, but mostly represented by the “Chief Business Officer” Omid Kordestani.
- Google A spends money. Google B collects money.
- Google B sends a check to Google A while Google A sends data to Google B (which then sells it on to advertisers and collects money).
- Google A communicates frequently with optimism and enthusiasm about the future. Google B remains quiet.
- Google A solves problems of humanity, Google B solves problems for advertisers.
- Google A has users, Google B has customers (to whom it sells users.)
In summary, Google A is altruistic, Google B is pragmatic. Google A engages in research, Google B engages in commerce. Google A operates in a structure similar to a Bell Labs for the good of humanity, Google B operates in a structure similar to AT&T and collects monopoly rents but without any government oversight.
This was an effective construct for analysis which explained to me much of how Google operated and how it made decisions. So what do we make of Google’s new Alphabet? Is this a dissolution of the Google B/Google A dichotomy?
My initial answer is no. We don’t have a change in this core structure. What we have instead is a split of Google A into Google A and Google A+.
A+ is the crème de la crème of the altruistic Google A. It’s the stuff that really does not make money. It’s the laboratory of Bell laboratories. It’s the moonshot manufacturer. It’s the incubator where hobbies are hatched. It’s the funder of ventures.
After A+ is carved out, Google A and Google B remain exactly as they were, now under a new CEO. The previous CEO no longer has any day-to-day input in the running of Google A and is no longer soiled by association with Google B.
Alphabet is therefore the “holding company” of Google A+, Google A and Google B. I can only suppose that the separation of A+ from A (and the previous A from B) allows the founders to distance themselves even further from the purchase decisions which, through pricing signals, determine where value lies and how resources should be allocated. That must be a great relief.
During the last quarterly earnings call, Tim Cook said that Apple has seen the highest switching rate from Android ever. That there is switching isn’t surprising. We’ve seen many surveys which show higher loyalty with iOS than with Android. But it’s been very hard to spot the evidence in the data which is visible publicly. Both iOS and Android are adding users and sales for both platforms are still increasing.
The switching effect is easier to discern when the market is not growing overall. In that situation one platform’s growth has to be at the expense of another. However, some markets do show evidence of “churn” in users.
Consider the ComScore data on US platform users (above). If we look at the last six months’ data we can count that there are about 8.2 million more Americans using iPhones than there were six months ago. At the same time, there are 1.6 million Android users. One million users left the BlackBerry platform and about 700,000 left Windows Mobile. The data also suggests that the total number of first-time smartphone users is about 8.3 million.
Horace and Anders discuss car production methods, the BMW i3, tubular and composite frame construction and how Uber could change the landscape.
Source: The Critical Path #155
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Will there come a time when Samsung will earn more profits from the iPhone franchise than from its own Galaxy product line?
The problem for Samsung is that although it still sells the most phones, and the most smartphones, the price and margins for these products are collapsing. The pattern is shown in the graphs below:
Let’s say I offered you the option to invest in a monopoly or in a hit-driven company whose survival depends on always finding the next big thing? Which would you invest in?
Before you answer, let’s say I offered you the option to invest in a person who has a large inheritance or a person who is poor but is hustling for any opportunity. Whom would you invest in?
Before you answer, let’s say I offered you the option to invest in real estate of a city which depends on a stable, capital-intensive manufacturing base or one where they make nothing but movies. Where would you buy land?
Each of these reflect the same choice: stability vs. instability, the known vs. the unknown.
Historically, capital has always gone toward the stable and away from the unstable. Wealth has gone the other way.
The fact that the iPhone is contributing over 90% of the operating profits in mobile phone sales has penetrated even as far as the Wall Street Journal. However, it’s not yet commonly known that the Mac captures a majority of personal computer operating profits, at least when considering the sale of hardware.
My calculations suggest at least 60% of operating margin in personal computing hardware is captured by Apple. This is mainly due to the fact that the average Mac sells for more than $1200 while the average PC sells for less than $450.That is equivalent to $1.5 billion per quarter for Apple vs. $930 million for all the other PC makers combined.
If we are to consider the iPad as a “PC equivalent” computer then another $billion/quarter is contributed to the profit pool. It increases Apple’s share of profits to 73%. As a result, Apple absolutely dominates computing profits.