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Author: Horace Dediu

Building and dismantling the Windows advantage

When the Macintosh was launched in 1984, computers running the MS-DOS operating system were nearing a dominant position in the market. Having launched in 1981 as the IBM PC, they were quickly cloned and four years later “PCs” were selling at the rate of 2 million/yr.  The Mac only managed 372k units in its first year.

In other words, PC was outselling the Mac by a factor of nearly 6. It turned out to be a high point. The ratio by which the PC outsold the Mac only increased from there.

When Windows 95 launched in 1995 it negated most of the advantages of the ease of use of the Macintosh and the PC market took off. The ratio reached 56 in 2004 when 182.5 million PCs were sold vs. 3.25 million Macs.

During the second half of the 90s it was already clear that Windows won the PC platform war. Windows had an  advantage that seemed unsurmountable.

I should point out that this ratio between platforms is not just an exercise in arithmetic. It’s a measure of leverage. The advantage of dominance is realized in an ecosystem which creates lock-in and additional economies in marketing. Ecosystems become self-perpetuating and there is a tendency toward monopoly. The stronger you are, the stronger you get.

At 50% penetration the US smartphone market is not showing signs of saturation

According to comScore, as of end of May,  the ratio of consumer phone users in the US (aged more than 13) who use smartphones as their primary phone has reached 47%.

The question is whether this is reaching saturation. My guess has been that saturation will be at levels well above 80%. The data shows that during May the rate of smartphone adoption (first time users) was 630k/week. This number is a good recovery to above the historic mean indicative that saturation is not yet in effect.

50% penetration will happen this summer. A year ago the predicted “tipping point” date was also the same: August 2012.

The platform shares data is also returning to a historic consistency. A month ago I asked if there was “trouble with the robot”  because Android net adds dropped to a level unseen for two years and the decline in net adds had been going on for four months.

This last report shows a recovery in Android net adds to about 1.5 million new users.

[Note here too that there is no sign of saturation: The net user gains are far above net user losses. Even BlackBerry showed a gain. In a market where there is saturation, net gains and losses among platforms would balance each other out.]

In terms of share, Android shows two months of no growth. Continue reading “At 50% penetration the US smartphone market is not showing signs of saturation”

RIM's tailspin

The number of BlackBerry phones sold fell 41% year-on-year in the last RIM fiscal quarter. Sequentially the fall was 30%. Though surprisingly poor, I note that Nokia’s smartphone business fell even more dramatically last quarter (down 50% y/y and 39% sequentially). LG also saw a 44% decline in unit shipments in Q1.

The history of smartphone shipments for the largest vendors is shown in the following chart:

From forecasts made by Huawei it’s probable that they overtook RIM in the last quarter, dropping RIM to 5th or 6th ranked vendor in smartphone units.

RIM’s 7.8 million units is the same level of sales as it had in early 2009. The total market was only about 250 million units per quarter then. It’s around 400 million today. A quick calculation shows that RIM’s smartphone market share has fallen from a peak of 22% to about 6%.

RIM’s stock performance reflects this performance relative to the market. Continue reading “RIM's tailspin”

Activating 5.6 million units per day

Google reported a new activation rate milestone: 1 million/day.

The rate of activations has been increasing steadily which leads to a question: how high can it go?

The answer is easy to determine. It can go no higher than the sales rate of phones and tablets and PCs. So what’s that sales rate? The answer is to take sales (shipments actually) per category and cast the data as “activations”.

The result is shown in the chart below:

Defined as “activations” device and computers are being adopted at the rate of about 5.6 million units per day.

Continue reading “Activating 5.6 million units per day”

5by5 | The Critical Path #44: White Knights and White Nights

Dan and Horace reflect on the Osbourne effect of Windows Phone 8 on Nokia and how to value a company in distress. In particular, we talk about the potential of a Microsoft acquisition and the conditions needed to make it happen. Horace takes two reader questions: How did Samsung succeed while other vendors failed with Android and what are the pitfalls that could cause Apple to stumble.

via 5by5 | The Critical Path #44: White Knights and White Nights.

Horace Dediu on HTML5 vs. native apps « uniform zulu zero zero

This week Mr. Dediu was a guest on The Web Ahead (another 5by5 show hosted by Jen Simmons) where he discussed how the forces of disruption apply to the web. It was an interesting discussion as usual, but if you’re pressed for time you should turn your attention to the bit after the sixty-five minute mark, when Horace volunteers some of his thoughts on the web vs. native application platforms.

via Horace Dediu on HTML5 vs. native apps « uniform zulu zero zero.

A fair summary of what I said and rebuttals by @falameufilho

5by5 | The Web Ahead #24: Jobs the Web Does with Horace Dediu

Today I was a guest on Jen Simmons’ The Web Ahead. It was a chance to discuss some of the big questions facing the Web in general especially vis-à-vis apps and mobile in general.

How can we understand the business of the web? Horace Dediu joins Jen to talk about the web through the lens of disruption theory, discussing innovation and jobs to be done. Along the way we get into advertisement on the web, and the old website vs native app debate.

via 5by5 | The Web Ahead #24: Jobs the Web Does with Horace Dediu.

What will happen to Nokia?

There is no shortage of information about what happens to companies in distress. The cause of distress varies widely and is often not well understood but the actions and symptoms of distress are very consistent. We can look at examples in each industry, even in each product category for a rich set of distressed company data.

For over a year I’ve been chronicling the decline of incumbents in the mobile phone industry. However, decline cannot continue indefinitely. At some point a company “exits” the industry. Either through a sale or divestiture or, rarely bankruptcy. The list of exits is already long. The length and the correlation between exit and the lack of recovery implies that Nokia will also exit.

But how, exactly?

Will Nokia be acquired? If so, then by whom? What other options exist? How can we analyze this?

Continue reading “What will happen to Nokia?”

The face and the brand

In the five years since the iPhone launched, Apple created a total of 35,852 retail jobs.

Some of those jobs came from new store openings. The total store count went from 172 to 361, more than doubling. But the growth in employment was faster: from about 6400 to 42,200, more than quintupling. This is reflected in the total number of employees per store which increased from 37 in Q1 2007 to 117 in Q1 2012.

Which brings up an obvious question:  Why did Apple triple employment at each store? Continue reading “The face and the brand”

MacDirectory: Exclusive | Apple's iOS Market Analysis

HD: Apps are like the sauce in a dish. They add flavor and distinguish the dish. Increasingly they also offer nourishment. Some would argue that we can live with plain cooking but spices drove people to do incredible things like risking life to discover new continents. Being the world’s best source for spices means the most innovative and brilliant minds will be attracted to innovate on top of Apple’s platforms.

Read more of the interview by Markin Abras here: MacDirectory: Exclusive | Apple’s iOS Market Analysis.