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« Obviously my forecast was totally wrong on US Midterms. What happened to Democrats?GOTV sy | Main | So What Do We Learn From the Nokia N1 Tablet on Android? »

November 07, 2014

Comments

KPOM

@Timo, Office is one of Microsoft's 2 most important products. They released a version for iPad in March, and one for iPhone last week. The Android version isn't scheduled for release until next year. That's telling. It needed to be completely re-written for iOS 7, so although there was some base code from earlier projects, it can't entirely be explained away by Microsoft's previous exploratory work on Office for iPad. Apparently Microsoft prioritized getting a shipping version of Office for iPhone before getting a shipping version of Office for Android.

Phil W

Here we go again, same old arguments repeated over and over again. I have been following this blog for quite a few years because I am interested in what Tomi has to say, but in the last year all of the comments streams descend into the same arguments. This stream was about all of the players in the mobile world, but it gets hijacked by the Apple discussion again.....Yawn!

RottenApple

@KPOM:

That older exploratory version is all the difference. Be it 50% of the underlying code or 20%, that could be salvaged, what really counts here is the experience with working on the platform.

It makes absolutely no economic sense to put all that to rest and start on another platformm, unless the first platform is a certified dud. This is Office, after all, so iPad is going to be very, very important.

Going from there to iPhone is certainly a lot less work than going to Android, so it hardly comes as a surprise that the Android version will take longer, even if development had started right at the same point in time. With a lot of work already done, iOS had a significant head start.

But what's impossible here is to draw some conclusion about absolute platform priority here, the decisions were made, after all, with already a lot of work being invested in an iPad version.

chithanh

Microsoft probably recognized the importance of the iPad and started development early on. It's hard to explain otherwise why there exists no touch enabled Office for Windows/RT yet, but one for the iPad.

OTOH, Microsoft tried to ignore Android as long as they could, which is why they are late with Office for Android. But finally they had to admit to themselves that being not present on Android would condemn them to irrelevance.

On a semi-related note, several high-profile Windows Phone apps have not seen updates in months (ebay etc.) or even been removed from the WP store entirely (American Airlines). Could it be that Microsoft funding for bringing third party apps to WP is drying up?

RottenApple

@chithanh:

"Microsoft probably recognized the importance of the iPad and started development early on. It's hard to explain otherwise why there exists no touch enabled Office for Windows/RT yet, but one for the iPad."


I think this proves to be the ultimate failure of RT as a programming environment. It's so horrendously limited that it's nearly impossible to write good apps to it - quite unlike iOS or Android. And to add insult to injury, the entire thing was designed from the ground up to be completely incompatible with old C code - nearly everything that needs to be ported has to be rewritten in some parts. (The most horrible part is that you HAVE to use asynchronous file I/O for user files which renders all existing file read/write code a complete loss and probably killed half of all porting attempts right at the start because this is impossible to overcome in larger code bases.)
Microsoft was so obsessed with locking it down that they couldn't even produce something good themselves with it.

I had my share of fun doing a port to RT and nearly everything that concerned system UI programming was utterly clunky and always required some effort to get it working as intended. I never had this on the other mobile platforms, or MacOSX or even plain and simple Win32...

"OTOH, Microsoft tried to ignore Android as long as they could"

Now that you say it, that's probably true, it might have been perceived as the ultimate sign of failure by the old management under Steve Ballmer.

"On a semi-related note, several high-profile Windows Phone apps have not seen updates in months (ebay etc.) or even been removed from the WP store entirely (American Airlines). Could it be that Microsoft funding for bringing third party apps to WP is drying up?"

... or it's simply not worth the effort. Even with all the money Microsoft gave my employer to promote one of our games on Windows Phone it never made our investment back. Others are very likely in the same position - the platform is agonizing with no sign of recovery, and any money thrown at it is wasted. Smart people stop supporting it, be it that the app gets abandoned or removed, depending on whether it still has some use or not...

KPOM

@RottenApple, something to consider is that Office 365 subscriptions rocketed to the top of Apple's paid app list (in unit sales and revenue). Now that it's going to Android, they are enabling basic edit functionality for free (and offering partial refunds to iOS customers who bought Office 365 subscriptions). My guess is that it means that they knew it wouldn't get as much traction on Android if activating it required a $70 subscription, but that the average iOS buyer (who is buying a more expensive device to begin with) would be more likely to do so.

charlieham

@Tomi:

I started reading your blog in 2012 during the Elop era and became an avid visitor ever since. Hadn't contributed much in the way of comments but now I felt compelled to ask you a question.

I understand that you focus a lot on the cold hard figures. However, it seems that you are failing to recognize and credit the growth of the OS underdogs, namely BlackBerry and WP.

Redmond went from 2.5 to 3.2% share (a 28% increase) and the Canadian maker soared from 0.1 to 0.2 (a staggering 100% increase, a doubling of market share).

The total numbers may be small compared to the market, but the growth RATE is substantial. Why aren't these numbers not good enough? What would be an ideal growth rate in your opinion?

Thanks for your insights.

adi purbakala

@charlieham

WP ecosystem not sustainable in long run.
BB ecosystem not sustainable for mass market.
BB ecosystem only sustainable for niece market.

@leebase

Yawnnn. I bored with you post.
Same answer.
If apple keep robbing the customer, they ecosystem will became not sustainable.

charlieham

@Adi:

Those numbers sound perfectly sustainable. Growth rates of 100% are spectacular in any industry. Microsoft's 28% shouldn't be bad either.

Borrowing a usual line from Tomi's writings, Pepsi would love a quarterly growth rate of 28% and Volkswagen would kill for a quarterly doubling of market share against Toyota and Hyundai.

Assuming they keep growing at the same pace:

WP: 3.2 --> 4.1 --> 5.2 --> 6.7 --> 8.6
By Q3 2015 Microsoft would be at 8.6% market share.

BB: 0.2 --> 0.4 --> 0.8 --> 1.6 --> 3.2
By Q3 2015 BlackBerry would have a 3.2% market share.

Aren't 8.6% and 3.2% sustainable in the long run?

abdul muis

@charlieham

Microsoft/Nokia gain the market share by discounting the lumia phone to the price bellow $100. Clearance sale. Selling at lost. Microsoft can't keep doing that forever. Furthermore, as @RottenApple said, Microsoft need to bribe the apps maker.

As for BB, it's also the same. The new leader saw a gigantic inventory of unsold phone, announce a massive write off, I believe it was 3 bilion lost. and then do the clearance sale of the phone in the next quarter and put it as a profit, so he could buy time to hide the truth on how broken BB were. It's a financial trick that public company did.

adi purbakala

@charloe

Where you get bb number? Bb share colapsing, not gaining. In UK, canada, Indonesia last year lots bb. This year not really lots.

KPOM

@adi, how is Apple robbing the customer? No one is forced to buy an Apple phone. If people see value in Apple phones that they don't see in a single company's Android phones, that's the decision of the market. It's a sign of strength. Right now, two companies are making big profits from mobile phones - Apple and Google. Apple directly, and Google through sales of advertising and data. No small wonder that those are the two companies who are investing the most in actual development of mobile technology. Samsung blew $14 billion on advertising in 2013, more than what Apple spent on marketing and R&D together.

Let's face it. Apple pushed the rest of the market to adopt AArch64 at least one, and probably two more years than would have happened otherwise. Apple is getting the US to finally embrace NFC payments. Heck, Apple introduced the US market to smartphones, and got Google to shift away from making a Blackberry clone to making an iOS clone. They also created a viable tablet market where others had failed before.

Winter

@Leebase
"Samsung's mobile profits fell by 74% yoy. That is hugely dramatic."

No, that has been entirely predictable. And as far as I know that has been predicted from the start. In a competitive market, profits are low. Android is becoming a fiercely competitive market, so profits are going down.

There are only two ways to get very high margins for a long time: Be a monopolist like MS, or go into the luxury brand market, like LVMH Moët Hennessy. Apple is in the latter. Samsung is in neither.

The fact that Samsung's profits are falling is just as irrelevant to the future of Android phones as the profits of Toyota are irrelevant to the future of the passenger car.

Pekka

>>Pekka - 8g 4S...have you tried upgrading the low end 2011 Galaxy SII to the latest Android 5.0? FWIW, my 16 and 32g 4S's upgraded to iOS 8 just fine. And iOS7 is more secure than any Android version.

You should not compare Galaxy S2 to iPhone 4s. iPhone 4s 8GB was released in fall 2013. It is just over one year old. it was one member of the official iPhone line up to september 2014 and price was 399€. Galaxy S4 price was lowered to 399€ level after S5 came out. If you compare iPhone against Galaxy Sx series, you must select products from the closest price category.
iOS 7 was also released fall 2013, it is a year old operating system. Safari of the iOS 7 has a serious security problem. There is no alternative browser or update to fix that problem. This is not a good support. Both the current and one generation old OS should be properly supported.

Huber

@charlieham: >>Those numbers sound perfectly sustainable. Growth rates of 100% are spectacular in any industry. Microsoft's 28% shouldn't be bad either.<<

This is wrong:

It is not too hard to gain 1% or 2% market share when you are prepared to lose money and can afford it.

To do so, you just need some advertising and cheap products - in MS' case, even selling below cost.

So with 2.5% market share and enough money, you can easily buy another 1%. And with such a ridiculously low market share, this can be sold to clueless people as actual growth.

But this does not change the fact that MS lost money with WP since release in 2010. So what MS is trying since then is simply buying market share with the money earned by Windows and MS Office, thereby cross-subsidizing WP.

MS went even so far to pay developers for porting apps to WP.

So no, this strategy is not sustainable in the long run. In theory MS can afford this infinitely as long as they make enough money on other products.
But then the question is if this money couldn't be spent wiser, e.g. on a product where you actually have a chance to become profitable. Or why not just give the money to the shareholders instead of wasting it on a lost cause?

Huber

@Pekka: >>You should not compare Galaxy S2 to iPhone 4s. iPhone 4s 8GB was released in fall 2013.<<

Usually smartphones receive software updates about 18month after the production has stopped (at least high-end devices, cheap devices sometimes get no serious update at all).

Apple just sells the product longer - the iPhone 4S was released in 2011, but is still sold. So of course Apple couldn't sell it with iOS5 now.

Compare this to the original iPad, which is not sold anymore and didn't even get iOS7.

The SGS2 was also released in 2011 (with Android 2.3), but received 'only' Android 4.1 from Samsung as OTA update.

But this does not matter to SGS2-users, since you can easily install Android 4.4.4 with OMNI or CM. Of course these are no OTA updates, you actually have to install them manually.

CM is already working on CM12, which is Android 5.0-based. The release is expected in Dezember or January. Then it will be ported to the SGS2 and you will be able to install it.

This is actually an advantage of the open nature of Android. As I already have stated, my original Samsung Galaxy Tab from 2010 runs with Android 4.4 and probably will even get Android 5.0, why the original iPads of 2010 cannot be upgraded beyound iOS6.

chithanh

@charlieham
> Assuming they keep growing at the same pace:

> WP: 3.2 --> 4.1 --> 5.2 --> 6.7 --> 8.6
> By Q3 2015 Microsoft would be at 8.6% market share.

Wow, that is even more outrageous than IDC's 6.4% forecast for 2018[1]. How long until WP reaches >100% of the market?

Don't forget that WP sales are up from 2.5% in Q2 because that was an exceptionally bad quarter even by WP standards. Compared with the same quarter last year (3.6%) or even with the full year 2013 (3.3%) they are down.

[1] http://www.idc.com/getdoc.jsp?containerId=prUS24857114

Phil W

I agree with Winter, the fall in profits and ASP for Samsung was inevitable. To sustain the volumes of phones selling at the premium prices you have to continually add value by adding functionality and features and the last couple of upgrades from Samsung have not done that. As the existing functionality from the premium end bleeds down into the mid and lower price offerings, consumers see less reason to choose the more expensive phones. That's just the way it is. Samsung will stabilise its performance at this new lower level, it will rationalise its portfolio to better target its market and it will use its economies of scale to fend off the Chinese competition. But the days of high ASPs have probably gone for good.

Samsung was also hit, of course, by Apples foray into the large screen phone market, that was also inevitable as going from zero and having a strong offering Apple was always going to carve a sector out for itself. Samsung will retain a share of this market, Apple won't take it all away.

Apple will have the same problems as Samsung next year as it is likely (I don't have a crystal ball, so don't know for certain) that having made the jump to large screens, there is little inovation to be added. That means people will start to see less value in upgrading as often and any new customers will be more likely to settle fo last years model. This all means that Apple's current ASP is unsustainable at its current market share. I suspect Apple won't be phased by this as it will probably maintain the ASP and accept a lower market share, aimimg to be thought of as a luxury/quality brand. But that will make Apple a niche player and the profits will inevitably fall. By how much I have no idea, they will still be very viable.

With this lower market share it is also inevitable that Apps will target Android first and IOS second and any suggestion otherwise is just wishful thinking. Personally I think it would make more sense for most companies that want a mobile presence to write a decent mobile web page once that is then available for all platforms, but that's just me.

From the point of view of most companies trying to reach the widest number of customers, then market share is the most important measure and I fully understand why Tomi focusses on this, given is vocation.

Phil W

Well they were being silly. You can't ultimately avoid commoditization, you can keep it away as long as possible, which is what I guess they were trying to do. To a certain extent both Apple and Samsung have been trying to behave like a niche and a mass market player at the same time, but I think the crunch time has arrived and now you have to be one or the other. Apples DNA is as a niche player and Samsungs is as a mass market one. Both are sustainable, but you can't do both.

Phil W

And just to be clear I mean you can either be high margin, low volume or low margin, high volume, but you can't be high margin, high volume once commoditization takes hold.

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