Month: November 2012

The cost of selling Galaxies

In the post “Google vs. Samsung” I compared the profits of Google and Samsung Electronics’ mobile (aka Telecoms) division. It showed how Samsung has grown its mobile business to such a degree that, if sustained, could conceivably influence the way Android is controlled.

However, we should not analyze Samsung’s mobile group in isolation of the entire company. Samsung relies on internal transfer of technology and capacities of production which are quite unique for device vendors today. In other words, Samsung is a relatively integrated enterprise. Understanding the whole is necessary before understanding the part.

The following graph shows the sales and operating profit for  Samsung Electronics as a composite of its divisions since early 2008.

As one would expect, the mobile group (Telecom) is the source of both top and bottom line growth. The group has also been leading in terms of margins and increasing those margins steadily.  Continue reading “The cost of selling Galaxies”

5by5 | The Critical Path #65: The Shoe Seller's Dilemma

An update on Asymconf California, a discussion of engagement and why Android does not get enough of it, why Amazon likes giving away Fires and the causal hypothesis of Samsung’s success in smartphones. That plus announcing a new 5by5 show: High Density.

via 5by5 | The Critical Path #65: The Shoe Seller’s Dilemma.

Validating the Android engagement paradox

Following yesterday’s IBM data, Monetate released a new study showing similar data related to retail browsing but covering a period of dates from Q3 2011 to Q3 2012.

This data also shows an acceleration of mobile shopping, from 7.7% of online in Q3 2011 to 18.8% in Q3 2012.

It also shows tablets growing to take about half of mobile traffic in a very short time frame.

The data also shows the iPad taking the vast bulk of traffic among tablets (88.9% vs. 88.3% from IBM). Continue reading “Validating the Android engagement paradox”

The Android engagement paradox

IBM’s Digital Analytics Benchmark reported US Black Friday sales and the news is reasonably good. Overall online sales grew by 17.4% while mobile grew to make up 24% of traffic.

The data goes further to show the split between device types. I illustrate this split with the following graphs:

Of the 24% of traffic made up by mobile devices, phones contributed 13% and tablets 11% (or 54% and 46% of mobile respectively). Of the phone traffic, iOS devices were about two thirds of traffic and Android one third. Of tablet traffic, iPad was 88%, Kindle and Nook were 5.5% Galaxy Tab was 1.8% and other tablets were 4.4%.

Overall, iOS was 77% generated mobile traffic and Android (excl. Kindle, Nook) was 23%.

That’s an interesting snapshot of the consumption of mobile devices, but is there a pattern here? Continue reading “The Android engagement paradox”

5by5 | The Critical Path #64: Mano a Mano

A dialogue with Benedict Evans, mobile analyst. Benedict has observed not only the technology and telecommunications industries as an equities analyst but also worked for an operator and a major media company. We take a look at mobile strategy and what the media industry will evolve into.

via 5by5 | The Critical Path #64: Mano a Mano.

The iPhone Addressable Market

The iPhone is a severely constrained product. We’re used to thinking that it’s production constrained—and it is, but it’s also distribution constrained. It has a business model that is almost completely dependent on operator subsidy. Few end users pay the $650 average price that Apple obtains and that price point has held for a remarkably long time. This price point is largely invisible to the user.

In this regard it’s very different from all the other products Apple sells. Historically, the company has preferred having its customers to also be its users and maintained a direct relationship with them, strengthening that relationship through its own retail channel for the last decade. Pricing is used by Apple as a signal to clearly illustrate value to the user and pricing is part of the communication about the product that Apple makes very explicit. This has been true for the iPod and Mac and is still true of the iPad. But this is not so for the iPhone. The entire marketing strategy for the iPhone (and hence the entire product concept itself) is “off message”.

Why is this?

Continue reading “The iPhone Addressable Market”

The cost of mobile clicks

Google’s operating margins fell to 23.7% last quarter. This level is the lowest I’m aware of. From 2007 to late 2009 margin went from about 31% to about 37%.  Then from early 2010 until present they fell. The history is shown the the following graph.

[I included Microsoft and Apple operating margins for comparison.]

Some of the recent decline is due to the inclusion of Motorola into consolidated earnings. Motorola gross margins were therefore 18%. Excluding Motorola, Google gross margins (Revenues-Cost of Revenues) were 61.5% of revenues.  However, even excluding Motorola, Google’s core margins dropped. Continue reading “The cost of mobile clicks”

5by5 | The Critical Path #63: In Orbit

Horace and Moisés talk about the consequences of Samsung’s absorption of all Android profits, the limits of iPhone’s addressable market, Apple bear markets and, like an object in orbit, how Apple seems to always be falling but never hits Earth. Finally, Horace introduces Asymconf California.

via 5by5 | The Critical Path #63: In Orbit.

Asymconf California

Asymconf California is the second[1] in the series and will expand in scope and intensity relative to the first event in Amsterdam. Attendees will be treated to an engaging, participatory experience. Using the case method to teach (and learn), we will look at the state, history and future of innovation as seen from a Californian perspective.

There will be four themes:

  • Being Back. How California came to disrupt and be disrupted.
  • It’s always sunny. Californians invented the concept of lifestyle. Did they also invent the concept of business style?
  • Going West. The role of frontiers (geographic, conceptual and societal) in the creation of wealth. Escaping the zero-sum trap.
  • North vs. South (California.) A modern civil war.

Distinguished guests will be invited to act as presenters and panel members.

Asymconf California will take place January 30, 2013[2] at the IBM Almaden Research Center near San Jose, California.

Two workshops are also planned. Read more and register at asymconf.com.

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  1. You can purchase the proceedings from Asymconf Amsterdam.
  2. The day before Macworld/iWorld in San Francisco. Transportation will be arranged from SF.