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« Lets Discuss the iPhone 6 Models - Apple now in 'me-too' mode only following the leaders | Main | Notes from the Smartphone Wars - Panasonic, Blackberry, Jolla, Xiaomi, Tizen »

September 22, 2014

Comments

David Doherty

Thank you Tomi for your hard work, dedication and generosity.

One thing I think you've forgot is that the iPhone 6/6 plus with their larger screens have handed Apple record setting sales that topped 10 million in the first weekend:

http://recode.net/2014/09/22/apple-tops-10-million-in-first-weekend-iphone-sales/

In February you gave us "screen size trumps everything":

http://communities-dominate.blogs.com/brands/2014/02/lets-talk-handset-features-my-hypothesis-is-that-screen-size-trumps-everything.html

Tomi T Ahonen

Hi David

thanks! Haha yeah and true, i also did explain why currently screen size trumps everything. But even large screen size isn't propelling Apple to growth enough to keep up with the industry. First weekend record-setting 10M sales was yes nice, but its only 11% growth from last year first weekend sales. Meanwhile the market has grown by about 25% - once again showing that the iPhone growth is less than the industry.

Vikram, I removed your comment because you ignored facts in the article I just wrote (plus this was not about Nokia forecasts, that is a separate blog). I said clearly that Nokia grew smartphone sales more than Apple did in year 2010, so Elop destroyed a growing unit that was setting Nokia-record profits. If you ignore that point whatever you wrote to speculate what might have happened is not valid discussion. Deal with what I write then we can have a discussion.

Tomi Ahonen :-)

chithanh

We have the normal babbling of the notorious Apple apologists:

John Gruber:
"Android smartphones have grown enormously in order to accommodate LTE. Currently-available LTE chipsets are physically bigger (AnandTech made the case months ago that none of them would fit in the iPhone 4/4S case design), and because they’re so power-hungry, they require bigger batteries. Thicker phones aren’t going to fly. Thus: wider and taller phones with displays expanding to fill the surface."

Marco Arment:
"The Apple fans who had previously defended the 3.5-inch screen - myself included - got the new one, got used to it, and never wanted to go back to the smaller screens. It turned out that while the larger screen did make the phone slightly taller, technological progress also let Apple make the phone thinner and much lighter.

We had resisted the idea of bigger screens not because we hated screen space, but because we thought they'd bring major costs in size and weight."

And then we have Baron95:
"Apple will attract the aspirational buyer even more, the more that Android becomes the common alternative."

"It added larger screens when it could make the devices thin enough to have manageable volumes, single hand use AND enough processing power to do the scaling (standard view/zoom view)."

"And all along, the WHOLE POINT, was to leave a few things out for the NEXT iPhone."

Haha, you couldn't make that stuff up if you tried.

Ben

"Most people expected Nokia to implode." That's not true Vikram, and that statement shows how unaware you are. Every major analyst foretasted Nokia to remain the worlds largest handset maker for the foreseeable future pre the 2/2011 announcement. Even afterwards, many of them (except Tomi) foretasted the Nokia with Windows Phone to achieve well into double digit marketshare. That's not quite the implosion you speak of in your revisionist history.

AppleTurfer

I disagree with Baron on Apple leaving out features JUST to have something to add next year. Everything Apple can deliver with quality, ease and integration with the whole, Apple will deliver. I believe each year Apple puts out the absolute best product they can currently make. Apple didn't release a large screen phone years because they prioritized "one handed" use and they had other priorities they were working on (like 64 bit chip, finger scanning biometrics).

Gruber is right that large screen Android phones were a necessity due to the battery requirements of the 1st gen LTE. That's why there were no iphone sized Android phones with the premium innards of the top large screen Androids or the iPhone.

However, it doesn't matter WHY. The large screen phones found their market. It's not the first time Apple has been wrong about what people would prefer....the iPad mini is another example.

Apple could have made a large screen phone and chose not too. The Android makers did not have the option of creating a competing phone product the size of the iPhone. Fortunately for Android, there's a really nice market for larger sized phones.

For years now, Android phones have had the "large screen size" market to themselves. It's very nice when Apple leaves a profitable niche alone. But that window has closed. Apple will take half of the premium large screen phone market just like Apple has half of the premium phone market in general.

abdul muis

Just a side note, that Apple also DID 'feature' mistake UNDER steve jobs.

introducing:
http://www.macrumors.com/2011/10/12/send-real-greeting-cards-with-apples-new-cards-app/

going out of bussiness:
http://9to5mac.com/2013/09/10/apple-confirms-cards-app-for-ios-is-discontinued-recommends-iphoto/

on wikipedia:
http://en.wikipedia.org/wiki/Cards_%28iOS%29

Jussi7

Abdul, there were many more failures: iPod Hi-Fi, Ping, Motorola iTunes phone, every version of their internet services (pre-current?), buttonless iPod shuffle (3rd gen) and early Apple TV.

Arguably also G4 Cube and iTunes LP were duds. And likely many more that I have forgotten. Also on his first run at Apple and at NeXT, almost everything he touched (after apple 2) was a financial failure.

Spawn

Nice summary, Tomi. What impresses me most is not how accurate your predictions are but how far off some of the "other analysts" are. Not a fair comparision with such competition. Clone yourself so we get a second source who isn't totaly off :-)

For Apple vs Android:, ie the only two left with Android rolling over Apple:
If we assume Apple is gonna hunt for market share to keep there ecosystem relevant and hence keep profits, then what steps do they need to do?

A cheaper variant, yes. But I doubt that alone is gonna make an impact. I think Apple would need to open app, partner with e.g. 1-2 chinese companies to address market share by outsourcing that segment to a partner. Similar like they did with IBM, similar like Blackberry tried (and failed). It means open up iOS, the API's, the restrictions. That in turn means trading control and shortterm profits for share & reach, longterm profits.

I think Cook realized that in parts. The push for a need to open up is his. I doubt its going that far but certainly the IBM-deal is one huge step to expand the ecosystem into places Apple does not cover. I would expect them, even more so after the 5c fail, to realize that there are companies, partners, who could apply that strategy better.

Unfortunately I doubt we gonna see anything like that before very late, before the ecosystem suffers already cause of heavy market share drops. Still, if Cook is gonna survive the watch-case and the struggling ahead then I think that, a partnership to address the low/mid segment, is on the table. I hope they make it happen since choice is good.

RottenApple

@Spawn:

" I think Apple would need to open app, partner with e.g. 1-2 chinese companies to address market share by outsourcing that segment to a partner. Similar like they did with IBM, similar like Blackberry tried (and failed). It means open up iOS, the API's, the restrictions. That in turn means trading control and shortterm profits for share & reach, longterm profits."

I'd have to agree. What bothers me most about Apple is how control-freakish they are about what their users are allowed and what not allowed to do. Since they control everything it just needs one shift in priorities to generate lots of angry or disappointed customers.

True, they keep their current customer base, but this leaves a lot of affluent and intelligent people out of their fold, because they won't accept some guard dog forced by their side.

Tomi T Ahonen

Spawn - don't bother to respond to him. He's (she's) trying desperately to drive traffic to his trolling site. He's been blocked from this blog for years now. He/she must be quite bitter and the only justificiation for that level of hatered I can think of, is tha the/she must accuse me for losing his/her job at Nokia, why else the stamina to continue that silly blog but yeah, it takes all kinds. I tried to tolerate him/her when he/she was here but those who remember him/her the comments were regularly vile and abusive. So he/she is one of the few that are permanently blocked from this blog and of course I delete all links to his trolling website and I never read what he writes there. All his comments are automatically deleted here.

Tomi :-)

Spawn

@RottenApple

> True, they keep their current customer base

I doubt it. For now yes but the market still heavy grows and Android picks it all up. Bullish to think Apple is still in 2007 on an island and Android is no threat. Customers have choice, competition, Apple is not in 2007 just like Microsoft is nit in 2002 any longer and both are now on ~14% personal computer devices while Android eats everything else and grows and grows...

Thermonuclear war? Allright.
Or how Larry Page put it: "how does it work out for them?" where them can refer to both, Apple and Microsoft. Sure, they will not fade away but things changed, they got competition and the competition grows rapid unlike them.

abdul muis

@Tomi

You said that iphone 4 grip of death problem won't affect their current (at that time) customer, but will have an affect on their new customer. I want to know what do you think of the:
1. iOS 7 & iOS 8 upgrade problem. At the time that iOS7 were out, there were several problem/bug that need to be addressed quickly, and with each new update, apple got another bug/problem. What the impact on this one. and now, words on the web that iOS 8 is also rough.
2. The nude picture of many celebrities. The iCloud problem. Is it big. Or this not a really big problem.

Thank you.
BTW. GREAT ARTICLE!!!!!!

RottenApple

@Spawn

"I doubt it. For now yes but the market still heavy grows and Android picks it all up. "

... which doesn't contradict my statement that they'll keep their current customer base - which to a large extent are blissfully unaware of the competition's qualities.

The problem, of course, is precisely what you said: There's not much room to grow anymore unless they change their attitude.

Tomi T Ahonen

Gonzo - if I've deleted your comment there is no point in reposting the same thing, it will always be deleted. You seem not to have read the blog. I never said Apple is not growing iPhone sales, I said market share is declining and I said EXPLICITLY that inspite of that, because the overall smartphone market grows, Apple is also growing unit sales. Market share down, unit sales up. Now, if you read what I wrote, and comment sensibly, I will of course let your comment stand. But if you repost the same comment that I already deleted, it will of course be deleted again. It takes me one click to remove your comment so its no hassle to me but I think it takes you a bit more effort to post the comment and go through the verification process? This blog will not waste the time of my readers in the comments. Pointless comments are always removed and that starts with those where my response would start 'if you had read the blog'. That is a waste of the time of my readers.

Tomi Ahonen :-)

Gregi

Where does this leave the plastic iPhones? Last year Apple introduced 2 phones that were basically the same except one was a plastic (i.e., lower quality) model. This year, Apple also introduces 2 phones except both are now high end phones and the perception is they are not the same. Does this imply that Apple might be releasing a lower cost plastic iPhone 6 and 6 plus sometime mid-year?

AppleTurfer

Apple sales don't "grow because the market is growing". Nonsense. Apple sales grow because more and more customers are buying them. The marketshare goes down because even MORE customers are buying other smartphones.

You can't pay your kids' education on marketshare. Actual sales are what matter. Nokia ruled the world on a MUCH smaller sales base than Apple currently has.

Companies can be doing great or terrible completely independent of their marketshare. Plus one can draw lines of what makes a market completely arbitrary.

Apple's share of the PC market is miniscule. Apple's share of the $1000 and up laptop market is massive. Neither metric tells you anything all by itself. Apple could be losing money on each laptop it sells, so by itself, even unit sales isn't the tell all.

That Apple hasn't come out with a much cheaper phone, or greatly expanded it's product set alone should let you know Apple doesn't even intend to go after the mass market, low margin business.

We know that Apple has the strongest business in mobile. Apple is the most stable company with the most secure future. It's not even close. Nobody is taking Apple's share of the market Apple is targeting. Down market is the only growth opportunity that exists for the other companies. Apple meanwhile can put out a "me too" phone and take share away in a heart beat because Apple doesn't sell a commodity product. When you are selling a device with the same OS as every competitor, then all you have are hardware specs to differentiate. It's a TERRIBLE business. The champion of that business, Samsung, is doing everything in they power to get OUT of the trap they are in.

Apple, meanwhile, has a desirable product that nobody but Apple can sell. Apple controls all the important technology (software, hardware, services) that make it's products desirable and differentiated. Nobody else is even close.

The specs have never mattered before and they aren't going forward either. Apple is about the complete package from retail, to software, to manufacturing, to ecosystem. Apple owns Japan and dominates in the US. Apple is growing well in China taking 50% of the 4G/LTE business.

Who knows what will happen 3 to 5 years from now. What we have for sure, is another banner year coming up for Apple and a year of struggle for Samsung. A year of waiting to see if BB, HTC and Sony survive and whether Msft finally throws in the towel.

chithanh

@AppleTurfer
Many Apple fans fail to understand this: It doesn't matter one iota whether Samsung, Sony or any other Android manufacturer goes bankrupt. Other manufacturers would quickly capture their market share, and the total size of the Android ecosystem would not change.

The pressure to constantly innovate on the top manufacturers and the ability of low-cost competitors to scoop up any new idea in 90 days (the length of the Android development cycle) will continue to provide best value and highly innovative technology to consumers, and that of course benefits the owner of Android.

I disagree that Apple has the strongest business in Mobile. Google has it.

No doubt

"Other manufacturers would quickly capture their market share, and the total size of the Android ecosystem would not change."

A good question is if it was ever possible to stop Android. No matter what Apple, Nokia or anyone else did. Android was cheap enough, launching at the right time and had good enough features.

It's actually The question everyone has been asking. Would it have been possible to stop Android from taking the market if Apple had done something differently, if Nokia had gone with MeeGo or if Samsung or someone else had been really pushing the OS of their choice. It's the best question of the decade and even Tomi hasn't (yet) been able to fully speculate with this.

AppleTurfer

@ chithanh - Android is the new Windows (with caveats), no doubt. I have no problem whatsoever understanding that iOS will never challenge Android for the mass market.

Google is definitely a leader in mobile via Android. Google, Samsung, Apple, Qualcom are the new Microsoft/Intel. But it is not at all certain that Google is currently reaping ANY profits from Android. Google won't say. Many analysts have put forward that Google actually makes more money from it's services running on iOS than on Android. Microsoft and Samsung are making the most money from Android at this point. Yes, Microsoft via it's patent licensing. You also need to understand that almost half of Android is non-Google at this point. AOSP is given away by Google and about 40% of the market take Android and put their own services on it.

I also think Samsung will remain the dominant single player. The future is rougher for them on the profit front, but nobody is positioned to challenge them in the Android sphere as a TOTAL market play. Chinese companies will take share in China, Indian companies in India etc. We have no indication that Xiaomi can become a global brand just yet.

AppleTurfer

@NoDoubt - it was not possible to stop Android. Apple was never going to be a mass market platform, was never going to license it's OS for others to use. BB had it's chance to be the champion iPhone killer but they failed with their BB Storm. Then it was Google's turn who by then had the Motorola Razor and Android was off to the races.

At the time, Apple was constrained to exclusive contracts on also-ran carriers. The iPhone did a terrific job of pulling away high value customers from the competition so there was a hunt on for an "iPhone killer" and thus Android got a terrific boost as none of the existing platforms could compare.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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