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« Modelling Nokia X Scenarios and the Level of Desperation it Reveals | Main | Q1 Apple Results: iPhone market share down to 15% - plus some other bloodbath news »

February 27, 2014

Comments

foo

@RottenApple

The irony is that instead of creating a mobile interface that could be scaled up to content creation, Microsoft bet on a PC interface that was optimized for content consumption.

Perhaps they expected that people would get used to the new interface in a couple of years. But they didn't.

The nightmare scenario for Microsoft is that in which people see Android, and not Windows, as the better interface to unify PCs and mobile.

And I can see that happening.

foo

This analyst uses the term "hybrid ultramobiles" to define devices that "marry the functionality of a PC and a tablet":

> One trend for this year — the analyst group said replacement buyers will start upgrading to new hybrid ultramobiles
> especially if they don't want to own multiple devices: "There is an opportunity here for hybrid ultramobiles to marry
> the functionality of a PC and a tablet, and they will also prove to be an attractive alternative replacement product
> among businesses," Cozza said.

https://www.zdnet.com/android-races-past-ios-to-tablet-number-one-but-theres-no-budging-apple-from-the-top-slot-7000026927/

2014 will be an interesting year. :)

chithanh

@R
Xbox a computer? There were experiments by Sony during PS2/PS3 era to let users install Linux on the console, but these were shut down with more recent PS3 firmware.

For Xbox, it is even worse. You have to pay for a Microsoft subscription before they even let you open a web browser (I kid you not!). Gamers pay for subscription anyway to get access to the online gaming service, but people who are after a normal computer certainly would find this unappealing.

Spawn

All eyes on Satya. A hard job to move Microsoft out of there lost ecosystem-wars and isolated os-lockin islands to a platform-independent services company. Mister win7 gone, Balmer gone, Satya replacing the old management-structures to turn tge company into "One Microsoft".

Microsoft has many good products, Office and Azure as prime examples for highly profitable segments, and binding them to Windows drags them down while Windows goes down. Decouple like happened with Azure, which includes Linux, and Office, which just saw its first releases for iOS and Android. Even with Mister win7 and Balmer gone the Windows department is strong, they will and do fight any power loose, any strategy where the Windows OS isn't the one and only option.

If Satya has the support to turn the company 180 degree around is, at this point, still an open question. The worst thing that can happen, the turning point when we know Microsoft is done, is when Satya gets gone in 2014. If he stays everything is open. Microsoft may succeed to pull an IBM. All eyes on Satya.

For Windows: it brings in money, it will stay a corner-strategy as long as it does. Its just not the only strategy any longer.
For Windows Phone: its not going away but will be hardly more then Microsoft's Tizen, plan B in case of.
For NokiaX: a huge mistake. Microsoft is going to do Android but not this way. Elop will be gone soon.

Looking forward how Microsoft is going to become a major platform-independent services-contributor. Will be interesting to watch close how Microsoft is going to defend itself from Google using there platform to lock out such competition. Roles swapped, Microsoft needs support, needs to move its public reception from evil to do-not-be-evil. Waiting for many charity, sponsoring, marketing and opensourcing to happen at Microsoft. The recent opening of .NET 4.5 is just the opener. So, who will be more not-evil? :-)

foo

@Baron95

> According to an IDC report that hit my desk today (or I should say my in-box)
> Last quarter Apple had 12.9% unit share, but 26% revenue share and an estimated
> 75% profit share in the smartphone market.

This is old news.

Apple can sell expensive products because they are perceived as better.

The problem is that -- I think I can say that with confidence -- Android is better than iOS.

Remember what happened to the car industry in the US. Detroit seemed invincible. But the Japanese came with cars that were not only cheaper, they were better! That's a combination that's very difficult to beat.

If Android starts to be perceived as "cheap" and "better", we can say that Apple will be in trouble.

Of course, the problem will not be felt looking at last year's results, but in the next few years.

RottenApple

@Baron95:

IDC also predicts - like every year - that Windows Phone will grow and that Android's growth will end. Neither has happened so far.

As for 'junk', here we enter territory that needs clarification. What is junk? I guess it's your own dismissive term for anything that needs to be badmouthed and in no way relevant to the market.

Spawn

@RottenApple

> IDC also predicts - like every year - that Windows Phone will grow

https://techrights.org/2008/09/06/idg-idc-microsoft-money/

foo

@RottenApple @Spawn

I think @Baron95 has a point -- Apple *still* makes more money than any other competitor.

What he doesn't seem to understand is that this is result of past successes.

If we look to the present, we'll see a different figure:

- Android smartphones are cheaper than iPhones.

- Android is better than iOS.

- Even the hardware is looking increasingly better on the Android side. (Bigger screens, etc.)

Put everything together, and we see that Apple's strategic position is under heavy attack, and far from secure.

RottenApple

@foo:

Agreed on everything. That's not the point I was trying to make, but what I find tiresome about Baron and others of his kind is how they cherry pick certain points of information and twist the overall picture with it while conveniently neglecting all points that don't suit their agenda.

The way I see it is that in order to keep premium pricing alive - both Apple and Android - these phones need to be significantly better than the average fare for the less discriminating user. And I see that advantage gradually slip. Yes, they continue to add more gadgets - but these new gadgets are of decreasing interest for the common user. So, unless the market is so heavily skewed by subsidies as in the US, this segment will have a difficult time ahead.

I think it somewhat mirrors the PC market 10 years ago. From 1996 to 2004 development of hardware specs was so insanely fast that a year after purchase my expensive high end computer started to get slow, and after two years it had to be replaced because it became unusable. My last system, purchased in 2007 lasted 5 years and had to be replaced due to a hardware defect. It still was good enough after those 5 years. And when having to buy a new one I skipped most of the high end parts, so the new system, while still better than the old one, only cost me roughly 60% of the previous one. If the mobile market develops like that, an iPhone at its current price point (which, btw, is more tham my last desktop PC cost!) has no justification anymore, and it's good-bye, Apple profits.

foo

Hey guys,

Check out this great analysis of the tablet market:

https://www.zdnet.com/tablet-computers-an-overview-7000026297/

And some views about the future:

https://www.zdnet.com/foldable-swappable-invisible-12-visions-of-tomorrows-tablet-7000026610/

Winter

@Leebase
"In all this time and for all these years Apple has utterly dominated the economics in smartphones."

In all of industry, steel production, the construction industry, or cars, is there no one who makes profits like Apple.

Are all these industries failing because they do not make profits like Apple?

If not, then all other people making a living with non-Apple phones are doing what they want to: Making a living. And it works, as they make a lot of phones, probably a billion this year.

I think your problem is that you do not realize that the large profits of Apple will be lost from the smartphone industry when Apple would disappear. They are profits of Apple, paid by people who pay them to Apple. They would not pay them to anyone else, even if they would produce an identical product.

Per "wertigon" Ekström

Tomi, you've posted your take on Nokia, but what is your take on Apple? Now that smartphones become cheaper and cheaper, will Apple slowly fade into obscurity like it did with the Macintosh in the mid-nineties?

Spawn

@Winter

> They would not pay them to anyone else

Good point. Combine that with Apple's market share in US vs everywhere else. US in particular is a major driving force for that, Apple's, profit. Now it happens that the US mobile market is... well... limited, not open for competition. Insane rates, fully controlled and in the hand of 2-3 carriers, incredible limited, expensive and yes, technological outdated device choice.

Still, profit is profit and as long as its profit who cares where it comes from? Correct and yet that difference shows that the Apple vs Android markets are not exactly the same. Android won the profit race everywhere on the world except in US.

One more difference is that Android profit doesn't equal Google profit. The second biggest platform, AOSP without Google services, makes money too but whenever people compare Apple vs Android this large chunk of the cake is excluded. The error is in comparing Apple vs Android while whats compared is Apple vs Google Play. Such comparisions not even include network-effects, like more ads Google sells - ie its main income, but only compare sold apps or media. Hand picked statistics this are to make the point that Apple is still there. It is but its just plain wrong to turn that into a Apple vs Android comparision. Apple's vs Oranges.

foo

@LeeBase

> Thing is -- Android has been EVERYTHING that Android is for years and years now.
> Ever since the Motorola Droid there has been an Android phone as good as the iPhone.
> In every way that today's Samsung GS5 is as good (or better) than the iPhone 5s.
> There is NOTHING new to the story.

You have a valid point, but let's not forget that Apple had a *huge* advantage in terms of brand recognition.

People knew Apple. People knew iPhone. Android had to start from zero.

At least until iPhone 4, it was a balanced fight. Froyo was that much better than iOS, and the build quality of the iPhone was top-notch.

Things changed a lot in the last 4 years.

Android is much better than iOS, and even the hardware is starting to look puny in comparison to the Galaxy S5 or Galaxy Note 3.

Do you know that iPhone-envy that Blackberry users used to have? I'd say that many iPhone users are starting to feel Android-envy.

And that changes everything.

> So, as has been pointed out...profits can be a lagging indicator. But other than wet
> dreams of Apple's demise do you folks offer as to the LEADING indicators that really
> spell trouble for Apple that HAVEN'T BEEN THERE THIS WHOLE TIME?

Customer satisfaction.

iPhone users are starting to see that Android devices offer a much better experience.

As an anecdotal evidence, a friend of mine, the biggest Apple fanboy that I know, has just moved to Android.

Not only that, but he started to list the many benefits he was noticing in the new OS. When he mentioned simple things like being able to distribute icons around the screen I realized how iOS stood still, while Android advanced leaps and bounds.

Small things like that made the iOS experience not only inferior, but sometimes annoying.

And that spells big trouble for Apple.

foo

Correcting my previous post:

"At least until iPhone 4, it was a balanced fight. Froyo WASN'T that much better than iOS, and the build quality of the iPhone was top-notch."

RottenApple

@Leebase:

"Apple always tops the customer satisfactions lists. Always."

Which doesn't tell us much considering the large quantity of quasi-Apple-cultists who wouldn't even dare thinking about a competitor. That's also one of Apple's strange properties.

"Time will tell about everyone else. We could well see the end of BB and HTC this year. Sony is jettisoning businesses trying to find a way back to profitability. Motorola was a money loser when Google bought them, stayed a money loser under Google's ownership....will Lenovo turn things around?"

They didn't lose money because they sold mobile phones. They were losing money due to mismanagement. And yet you try to perpetuate that idiotic fairy tale that selling Android will make any company lose money.

"And it's not just Apple making the money. Google makes more of it's mobile advertising revenue from Apple's customers than Android. Everyone does. App developers..."

Not correct. Depends largely on the type of app. My employer by now makes twice as much money from Android than from iPhone and I guess that's true for many stuff that's marketed outside of America.

The fun stuff here is that most statistics I have seen only have US numbers and try to do skewed extrapolations from them.

But yeah, continue living in your Apple dreamworld. The real fact is that Apple is slowly losing ground in most metrics where there's money to be made.

AndThisWillBeToo

@Baron95
"For example, want a Beatles song - only available legally and conveniently on iTunes. No-where else."

Seriously. How come Nokia Music (the previous Ovi Music) has 20 albums and 3 singles from The Beatles available?
Illegally or inconveniently?

Bar-Mobi-on

(repost from other thread)

Ballmer’s relations with the board hit a low when he shouted at a June meeting that if he didn’t get his way he couldn’t be CEO, people briefed on the meeting said. The flare-up was over his proposed purchase of most of Nokia Oyj (NOK1V), and part of an ongoing debate: Should Microsoft be a software company or a hardware company too?

Several directors and co-founder and then-Chairman Bill Gates -- Ballmer’s longtime friend and advocate -- initially balked at the move into making smartphones, according to people familiar with the situation. So, at first, did Nadella, signaling his position in a straw poll to gauge executives’ reaction to the deal. Nadella later changed his mind.

Ballmer was so loud that day in June his shouts could be heard outside the conference room, people with knowledge of the matter said. He’d just been told the board didn’t back his plan to acquire two Nokia units, according to people with knowledge of the meeting. He later got most of what he wanted, with the board signing off on a $7.2 billion purchase of Nokia’s mobile-phone business, but by then the damage was done.

from: https://www.businessweek.com/news/2014-03-05/microsoft-ceo-nadella-inherits-legacy-of-ballmer-board-division#p1

---
Balmer shout "If Microsoft didn't buy nokia, I will be the clown of the century. I will be named as the CEO who can't be trusted. I would not allowed Microsoft to do that while I'm a CEO. I already sacrificed too much when sending my gay partner to ruin Nokia."

Spawn

@RottenApple

> The fun stuff here is that most statistics I have seen only have US numbers and try to do skewed extrapolations from them.

Correct. If you only look at the US things are different. Outside of US the Apple brand, but also the Google brand in form of devices running Google services vs AOSP, is very different. Interpretation depends therefore much on context and becomes subjective depending on what you count, include and exclude in your statistics.

What we can say for sure is that Apple does well, Google does well, Samsung does well, Android does well (4 independent parties) while Nokia is gone and done after Elop-effect hit them in full.

@LeeBase

> Android AOSP as google spends money to create Android AOSP but doesn't make any money from it.

Thats the kind of simplification I was talking about. Think this way: Android is a door-opener for Google services. Devices not running WP with bing preinstalled is good for Google. Remember that even AOSP-devices have browsers like Firefox, Chrome and Opera. All of them with Google startpage. None of them has IE with Bing. This is good for Google.

Thats the kind of network-effects. Even AOSP-devices are door-openers for Google to get users into there services and only then Google's investment pays out. This is very different from Apple where investment starts to turn back thw moment you buy a iOS device. With Android thats completely skipped and its Samsungs and others profit. Google Play even with its 30% margin is still not it unlike Apple's Appstore. Google Play is mostly an opener for the other bundled services and only once you start to use them Google sees return of investment.

AOSP, Google Android, not much difference up to the point and central question if you start to use the Google services or not. Not every Google Android users uses Google services, not every AOSP user doesn't use Google services. Thats the point and why any such try to quantify success, usefulness, reason, return of investment by looking at devices sold, doesn't make much sense for Android, for Google.

@AndThisWillBeToo

> The Beatles

Its a showcase of baron95 being caught in his small US-town thinking ever since then. Most people on this planet not know who or what The Beatles and would never buy something from them. So, what about localized content like latest and greatest movies coming out of China? US only? Fail.

Bar-Mobi-on

@LeeBase

Google pay Apple to make Google the default search engine.

https://www.cultofmac.com/215255/google-pays-apple-1-billion-a-year-to-be-default-search-provider-on-ios-report/

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