The Verizon distribution for iPad is an unexpected development. Coupled with distribution through AT&T stores, and rapidly expanding retail points of purchase, it seems that the iPad is destined to be the most widely distributed product Apple sells. The iPod never reached operator points of purchase and the Mac is orders of magnitude more constrained.
What seems to be happening is that Apple is pulling out all the stops and going for unrestricted iPad distribution. This may also foreshadow unrestricted iPhone distribution next year. It may also portend a CDMA iPad (or at least an LTE version) next year.
If it happens all estimates for next year need to be revised sharply. I had been expecting 100% growth for the iPad and 50% growth for the iPhone. These might need to be increased to 150% and 100%.
The consequence could be that total iOS devices sold could top 150 million for calendar 2011.
Of all the public statistics about platform share, Share of web use must be the most important measure for Google. The more browsing people do, the more searching they do and if Google search is most likely for a platform then the more income Google derives from that platform.
NetMarketshare.com has offered an insight into the split between Android and iOS as search platforms and it shows how iOS is still five times more likely to yield search revenue than Android. That multiple is likely to shrink as the gap narrows, but it still demonstrates the power of iOS to drive Google’s bottom line. It’s no wonder then why Google has renewed their default placement of Google search in mobile Safari (a guarantee they don’t seem to share with all Android licensees.)
But Android launched later than iPhone, so everyone should be asking how rapidly the share of
Thirty days after the launch of the iTunes App Store, Apple announced that 60 million apps were downloaded in the first month of operations generating sales of $30 million. “This thing’s going to crest a half a billion, soon,” Jobs said adding that it may be a “$1 billion marketplace at some point in time.”
Mr. Jobs was being modest.
To see how modest we have the following data:
If the current download rate is maintained (17 million apps/day) and if the pricing of $0.29/app is preserved, then $1.8 billion will have been spent on iOS apps this year.
With the rate of downloads increasing as steeply as it is, $2 billion in sales is not unlikely in the third year of the store. Twice what Jobs was predicting for “some point in time”.
The other line in the graph is the iTunes music download rate. I’ve written about it before and pointed out that the point of inflection in the download rate coincided with the increase in price for songs from $0.99 to $1.29. Not much more to say here except that the trend continues and music downloads continue to slow.
As far as Apple is concerned, the slowdown in iTMS is more than offset by the increase in iTAS. As far as the music industry is concerned, I don’t think CD sales are increasing. Does anyone know?
At the September 1st music event, Apple announced that 6.5 billion apps were downloaded and that there had been 120 million iOS devices sold.
This works out to 54 apps per iOS device.
On June 7 Apple reported 5 billion apps over 100 million iOS devices or an average of 50 apps for iOS device.
On April 8th, I computed that the app attach rate was 47.
Is this rate noteworthy?
Let’s rewind to two years ago. August 27th, 2008, soon after the App store launched.
Nokia had just declared that its users had downloaded over 90 million applications over the past 2 years. An analyst estimated that over 100 million users globally use Nokia smartphones/converged devices, implying an attach rate of less than 1 app/smartphone.
My, how expectations have changed.
On September 1st, Apple announced that 120 million iOS devices were sold to date.
We know that there were 59.6 million iPhones sold through June (from SEC filings)
We also know that 3.2 million iPads were sold.
If we assume about 8 million iPhones and 4 million iPads were sold during August and July, the total number of iPod touch sold is 45.2 million.
That is 37.7% of total units.
In April I wrote that 41% of all iOS units sold were iPod touch to date.
The expansion of iPhone distribution plus the addition of iPad as reduced the platform footprint for the iPod, but it’s still a sizable chunk. More than one in three iOS units in use are non-cellular devices. As the iPad rolls that number could move toward 50%.
On June 7th, 2010, at WWDC, Apple announced that they will have sold 100 million iOS devices some time during June 2010. Today, September 1st, Apple announced that 120 million iOS devices have been sold.
Assuming that 100 million was crossed half-way through June, then the additional 20 million units must have been sold during half of June, and all of July and August. That’s approximately 20 million over 75 days or 267k units per day.
Apple also announced that there are 230k new iOS activations per day which seems consistent given that they classify these as “new” activations.
There is one huge implication of this figure: Forecasts for iPhone, iPad and iPods may be too low. I had forecast 20 million units for the entire quarter (12.1 million iPhones, 4 million iPads and about 4 million iPod touch). The iPhone figure assumed 65% y/y growth at that looks way too low. There is still another month in the quarter meaning that the total could be 30% too low.
I will be updating the forecast accordingly.
Brian Marshall, an analyst with investment firm Gleacher & Co., predicts that Apple will have sold 200 million iOS devices by this time next year. He expects the iPhone and iPad to represent 68 percent of gross margins for 2010.
via Apple’s mobile OS could move to more devices.
My expectations for the next 100 million were made in June:
My expectation is that well over 100 million iOS devices will sell during 2011, but even during the next 12 months (2H ’10 and 1H ’11) the total may well reach 100 million, making 200 million installed by June 2011 very likely.
The next 100 million iOS devices
My current expectation is that iPhone and iPad will account for 70 million additional iOS units for the twelve months following this June quarter. This excludes any Apple TV units moving to iOS.
As iOS moves to more of the iPod line-up it’s quite possible that another 30 million iPads with iOS will ship in the same time frame making Marshall’s forecast sound reasonable.
As iOS crosses 100 million units sold 3 years after the platform launched, it’s time to look forward to the next 100 million. My expectation is that well over 100 million iOS devices will sell during 2011, but even during the next 12 months (2H ’10 and 1H ’11) the total may well reach 100 million, making 200 million installed by June 2011 very likely.
Here is where the numbers will come from:
iPhone: Assuming only 50% growth (half of the average growth seen so far) gives 50 million units in the next 12 months.
iPad: 15 million base assumption
iPod: This is the most difficult to predict, but 46 million iPods will sell with a growth rate of -8% to -9%. If we consider the iPod touch part of the mix to be 40%, we get 19 million.
The total with these assumptions would be 84 million. A slightly higher growth rate for the iPhone would easily push the total to 100 million.
200 million devices in four years is quite a feat. Compare it to the growth of television which reached 50 million Americans in the first decade after commercial launch. Or consider the Netscape browser which only reached 50 million in its first four years or AOL which just crossed 20 million or in Japan where i-Mode reached 40 million users in the same time frame.
At 200 million, the iOS platform will be 18% the size of the world-wide television audience.
Amazon’s recent disputes with publishers (Hachette and Disney) shows a degree of market power that is closer to monopsony than to monopoly but this power is nevertheless real. It may not not be something that requires intervention, regulation or even scrutiny but market power is evident in both how companies operate and in how they are valued.
If you look at the following graph, it’s easy to spot those with “monopoly” power. The graph shows a short history of revenues/operating income and P/E ratios. Modest or no growth in earnings coupled with extraordinary high P/E ratios indicate that the market understands the business is not threatened by competition.