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.
My thanks to Eric Jackson for his thought-out questions on Apple. As published in Forbes, here is his Interview With Horace Dediu: What To Expect When Apples Expecting.
A few excerpts:
Q: Do you expect to see a sapphire cover on the new iPhone(s)? Is that material significant?
I expect Sapphire will become a signature feature across many products. I don’t know if they will have capacity to deploy on iPhone this year but on a watch it’s essential. Here’s a clue: if the screen has any curvature, especially around edges, it needs to be sapphire as glass can’t take strain in that shape. The scope of the plant they are building with GT implies that they will have massive volume potential with at least one major iPhone model using the material. It’s a significant material because it allows design freedom in new directions, especially curved (concave) touch surfaces that retain a jewel-like feel. This has Jony Ive all over it.
Q: Is it fair to conclude now based on the 5C and 5S that Apple will never launch a “cheap iPhone”?
Oscar Wilde said a cynic is someone who knows the price of everything and the value of nothing. When I see the word “cheap” I never know if it refers to price or value. And even when we talk about price, an iPhone is cheaper than buying all the things it replaces so it’s always been a low end disruptor in my mind. (I saw a tweet with an image of a Radio Shack ad from the 1980s and every single item available on that page is now a part of the iPhone. It would have cost thousands to buy all those things back then–and dollars were worth a lot more.) Furthermore, I think Apple holds a black belt in pricing. They seem to define their position in the market by anchoring certain prices and “owning” them. Given all that I would say that Apple is not going to move their price points much. They will expand the portfolio and offer some iPhones at $300 but they will be older models. The average selling price (ASP) I expect to remain constant on a year-long average.
Q: In the past, Apple critics were quick to dismiss the new iPad and 5C iPhone as failures upon their introduction. You never judge. You just report the facts and data. That said, is there anything about past new Apple products launches that we should look at as a predictor of how a new iWatch might be received by customers?
When the iPad was imminent the great debate was over whether it would run iOS or OS X. Many imagined a touch-based Mac rather than the “big screen iPod touch”. It was a tough call and one which Microsoft could not and still does not make. Therefore, the interesting question for me with respect to iWatch is: What OS it will run? I will be shocked to the core if it does not run iOS. It is my opinion that making iOS work on it is the entire reason Apple is sweating this segment. They are in it because they are trying to make a platform product with a novel user experience and all the power of an ecosystem run on a wrist. It’s as big a problem as getting a phone-sized device to run a touch UI was in 2007. That is the crucial contribution that Apple is making to this next generation of computing. Now you might ask what users are asking for in this segment. The answer is nothing. Nobody is asking for this. As nobody asked for the iPhone (or the Mac or the iPad). It’s a new computer form factor and how it will be used will be determined by the apps written for it. But it will work and be magical out of the box in version 1. This is in contrast to the single purpose or accessory model of wearables we see to date.
Q: As a student of disruption, where is Apple most vulnerable to being disrupted?
Apple is a new market disruptor but much of what is put forward as a threat to it is low-end disruption. I think Apple knows enough about how that happens that it can manage its way around it. The strategy they employ is one of attrition. If you wait long enough a low-end threat tends to wear itself out as it starves of profit and is constantly gnawed-at by alternatives. (You see, if the disruptor cannot manage a profit then they cannot climb up the trajectory to get on top of the incumbent. Being profitable is a key requirement for successful disruption in the long term.) The attrition strategy works as long as you have the fortitude to hold out and the deep pockets to keep improving your product as alternatives flame out. It is my belief that Jobs made sure that thinking is inculcated in the company. So if not low-end is the company vulnerable to new-market disruptors? This is more subtle and the threat here is what Google/FaceBook/Amazon and the other ecosystems are all about. It’s creating new usage models and shifting where consumers place brand value. I think this is more what keeps Apple’s management awake at night. They are not standing still however. iTunes and Software and Services (now with Beats on board) is the way they are staying on top of that threat.
Lots more here.