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Which size really matters? Market Share vs Profit Share

One of the most hotly debated subjects in the mobile phone business is the importance of market share. It’s also a topic of lore in the PC industry. Briefly the two arguments are:

  • Market share matters more because it drives network effects which ultimately drive competition out of the market, creating the opportunity for monopoly rents.
  • Profit share matters more because profit is the only fuel that can drive innovation. Any macro downturn or shift in strategy can cause a company to cease investing in unprofitable projects.

The old disruptor’s adage: “Be hungry for profits and patient for growth” is challenged by the equally disruptive: “Grow share with lower prices in exchange for new revenue sources.”

There are many rich anecdotes to support each strategy, but how about some data? Continue reading “Which size really matters? Market Share vs Profit Share”

And then there was one. Sony Ericsson to stop making Symbian phones

Sony Ericsson is to stop making smartphones featuring Nokia’s Symbian operating system.

The move means that the troubled Finnish mobile maker is likely to be the only significant user of Symbian.

Analysts said Sony Ericsson’s decision confirmed the “failure” of Symbian as an open source platform, given that it was supposed to be used by several large mobile makers.

via FT.com / Technology – Sony Ericsson to stop using Symbian system.

While Android and Windows Phone continue with a licensing model, the list of abandoned licensed mobile operating systems grows: Continue reading “And then there was one. Sony Ericsson to stop making Symbian phones”

Sony Ericsson vs. RIM

“Our third consecutive quarter of profitable results illustrates that Sony Ericsson’s overall performance is stabilizing. Our strategy to focus on the smartphone segment is succeeding and smartphones now comprise more than 50% of our total sales,” Chief Executive Bert Nordberg said in a statement.

via Sony Ericsson swings to third-quarter profit – MarketWatch.

As the world welcomes Sony Ericsson to the smartphone market, we compare its unit volumes to another vendor that’s been selling only smartphones.

Sony Ericsson took the Android life jacket and it saved them, for now. But think for a moment where they used to be. A very similar story to Motorola.

CDMA iPad and the 150 million iOS devices next year

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.

iPad: IT gets it

In the last article on the share of PCs highlighting the unwillingness of market analysts to categorize the disruptive iPad as a PC I imply that Gartner does not “get it”.

This is partly willful and partly instinctive. The willful ignorance is due to a belief that their customers (IT managers mostly) do not want to hear about the iPad as a viable technology. Certainly there is a lot of anecdotal evidence that the iPad is unworthy of consideration as a business tool.

However, there is also increasing evidence that IT does in fact get it. I have met several senior IT managers who are whispering that the iPad will change everything. For us to decide which way the wind blows, we need to think harder about the process by which technology gets adopted in large IT organizations. Understanding how the technology is hired by IT managers to improve their career prospects unveils who wins and who loses in IT. Continue reading “iPad: IT gets it”

Gartner: as a Media Tablet, iPad deserves to be ignored in PC rankings

“Media tablet hype around devices such as the iPad has also affected consumer notebook growth by delaying some PC purchases, especially in the U.S. consumer market. Media tablets don’t replace primary PCs, but they affect PC purchases in many ways,” Ms. Kitagawa said. “At this stage, hype around media tablets has led consumers and the channels to take a ‘wait and see’ approach to buying a new device.”

Gartner Says Worldwide PC Shipments Grew 7.6 Percent in Third Quarter of 2010.

Fascinating. I’d love to hear more about the non-iPad “media tablets” that delayed PC purchases last quarter. Maybe I don’t get out enough.

But more to the point, let’s combine the data from Gartner and the forecast for iPad.

I show below the impact of the iPad on PC vendor sales. I’m using my own estimates of world-wide PC sales (you can see other estimates here (Apple 2.0))

The world-wide PC units shipped without and with iPad:

Continue reading “Gartner: as a Media Tablet, iPad deserves to be ignored in PC rankings”

Taiwan phone makers balking at Windows Phone 7

Digitimes reports:

only a handful of companies may get into WP7 when it arrives, they added. HTC may end up controlling 70 to 80 percent of the market simply by being one of the initial partners

via Taiwan phone makers balking at Windows Phone 7? | Electronista.

Confirming my assumption that “Android is clearly the darling of “Others” who are being shunned by Microsoft”.

Apps attract more viewer attention than most TV shows

Social games on iPhone, iPad and iPod touch devices are competing for television viewers.  In fact, these apps, tracked on the Flurry network alone, comprise of a daily audience of more than 19 million who spend over 22 minutes per day using these apps.  Treated as a consumer audience, its size and reach rank somewhere between NBC’s Sunday Night Football and ABC’s Dancing with the Stars, and only 4 million viewers shy from beating the number one prime-time show on television, FOX’s American Idol.

via Flurry. Continue reading “Apps attract more viewer attention than most TV shows”

Escape from license-land: Measuring phone vendor commitment to licensed mobile platforms

Windows Phone had its day in the sun yesterday. After discarding its previous seven-year effort with Windows Mobile, Microsoft started with a clean sheet of paper. However, whereas the software has been re-built, the business model has not. WP is still a licensed operating system whose primary customers are mobile phone vendors. With Symbian mostly out of the picture, WP becomes only the second viable commercially licensed mobile OS, after Android.

So with two licensed platforms in the running, how do we measure success in the licensing business? Units sold to end users is one metric. But that data will have to include the performance of vendors and operators and other distributors. And it will take a year to do valid comparisons. The only indicative metric we have available today is how many devices have been committed by vendors.

As WP is out of the gate with device announcements, we can actually measure this. We can plot each vendor’s commitment to various platforms as an early indicator of strategic success. To that end, here’s the methodology: I took all smartphone vendors and tallied how many SKUs they have announced or leaked for either the WP or Android platforms (source: pdadb.net). I then plotted each vendor on two “commitment axes” (see notes below). Continue reading “Escape from license-land: Measuring phone vendor commitment to licensed mobile platforms”

What did Andy Rubin mean by saying WP7 was created for political reasons?

In an interview with PCMag, Rubin said,

“Look, the world doesn’t need another platform. Android is free and open; I think the only reason you create another platform is for political reasons. Why doesn’t the whole world run with [Android]? They don’t like the people who developed, or “not invented here [NIH]”

I note some irony Continue reading “What did Andy Rubin mean by saying WP7 was created for political reasons?”

Asymco

Asymmetric Competition

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