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January 12, 2015


Jouko Ahvenainen

I also wrote some thoughts about Samsung and Android "It anyway looks like the Android phone business starts to look very much like PC with Windows was many years: a dominating operating system, good hardware matters, but not the hardware brand, and hardware manufacturer’s additional OS or software components just annoy people."

I also feel it is too early to talk about a collapse of Apple, but Apple should improve with services. And Microsoft's mobile future depend on many other things than WP only, they must get solutions to all main systems.


You could take into account two things:
1.Facebook acquired Oculus Rift, which might be used to get foot into gaming/new ways of communication/augmented reality/virtual reality

2.Samsung with its different industry branches sees the convergence between them by approaching the Internet of Things, maybe creating ecosystem mashup of hardware appliances and software

Tomi T Ahonen

Hi KPOM and Jouko

KPOM - look at the time-frame. 15 years to 2030. Are you SERIOUSLY suggesting Apple can maintain its obscene profits in hardware 15 years out, while the world all make clones at ever lower prices? Or will Apple adjust to market realities? I have no doubt year 2015 will be another good year for Apple but year 2020? By then this gravy train is well past unless Apple finds an off-ramp from the hardware racket.

KPOM as to 'doubling in the US' haha. Thats from essentially zero base. It means nothing. Look at the world. Outside of the US nobody is rushing to deploy Apple Pay because they see the economic futility of the system because of its limited reach.

Jouko, very good article you wrote (as usual). And yeah the market has a very strong analogy now to the Windows-PC era where the OS provider will make the biggest profits and most hardware makers need to learn to live on thin margins. And your point that the branding loyalty in the PC wars diminished to nearly zero, if it ran the latest version of Windows, and it was a 'trusted' brand like a Top 10 brand, then it was essentially the same if you bought a Dell or HP or Compaq or IBM etc. That is the direction where Android handsets seem to be headed.

Apple collapse no, not saying collapse but they cannot sustain this business. That is math, Jouko, isn't it. The hardware side of Mac PCs or tablets or smartphones will not sustain a 120 Billion dollars-per-year sized Apple in 5 years or 10 years. Those businesses are going to shrink, the PC and Tablet industry in revenue terms already are (and the PC industry in unit sales as well haha) and the smartphone business will soon start to shrink in revenue terms. So Apple has to shift or shrink. It won't shrink.

But Microsoft? Seriously Xbox won't sustain the company's size. The Cloud is too immature still. They need Windows for the desktop and Office Suite or they collapse. And those businesses are now shrinking at an alarming speed.

Tomi Ahonen :-)


Cobol and Fortran? Well, yes. That is a secondary danger to Apple and Microsoft. C# and dot-net aren't really that big on Linux, and I doubt Android will add APIs supporting them (see Visual J++ and the Sun lawsuit against M$). Apple is less evil in that it at least is a UNIX clone, but Objective C might be Rejected C, along with their App Store rules banning porting.

Linux is a very live and healthy ecosystem. Sure, Android is Java, but underneath and on the server end, there are lots of languages still competing, expanding, contracting, appearing, becoming extinct.

One of Microsoft's errors was to port its desktop development to mobile. Even if you can shoehorn it into mobile, the existing ecosystem can't be integrated. It is as if it is not a carbon based lifeform.

One thing you didn't mention was the evolution of the web. HTML5. Yes you can have "apps" but part of the convergence might be to something more Chromebook like where everything is not so much a native app but a web-app. One ecosystem pushes toward an app, but depending on how things break, web-apps might be significant - they are on-demand downloaded apps.

Jouko Ahvenainen

Apple, it is of course math too, but then it is brand, loyalty and capability to innovate. And it is hard to forecast all of them. Nowadays I sometime also think my very personal behavior and don't even try to understand all meta-trends. And for me Apple is now 'the reliable' device for laptop, tablet and phones. I know they work, they have needed apps and they are easy to use. Android is like PC-era Windows, have always something to fix, updates can cause problems etc. But I agree that Apple's service and own apps (map, iWorks, cloud) are not so great.

MS. I think their key question is enterprise solutions and Office and keep them in all devices (I wrote about this already a year ago, but it is still relevant Apple offers its tools for free, but it is not really a threat for MS at the moment. But Google starts to be, and how people's behavior and use of tools have changed. And I mean they should get office and their business tools to all operating systems, Windows is not enough.

I use all the time Windows, Android and Apple phones. I must say as a user, WP 8.1 was an improvement and I like it now much more (I used to hate it), but I still hate tiles and lack of apps. But Samsung Android has gone to another direction, I like it less and less, when I have issues with updates, apps that suck battery, stupid Samsung solutions, etc. I feel MS is improving in mobile, but this its own OS game is not enough for it.


I'm asking this because I'm curious. Why are you disallowing comments regarding the app stores and the profitability of apps even while you comment about that on this blog post. Or have I misunderstood and commenting on apps is allowed on the comments of this blog post.


Tomi disallows comments that disagree with his app stores blog post as that app store post is a source reference of this blog post. You are supposed to do comments like that to the app stores blog post.

That's how I understood it.

Tomi T Ahonen


I don't think I've expressly forbidden discussion about app stores related to this blog posting (I did at another blog posting where it was not related to the topic of the blog). I have written a blog expressly about the economics of app stores and have a link to that article in this blog posting, I would prefer if you have issues to contribute about apps store economics you bring the discussion to that blog posting - as its not in any way relevant to the Grand Convergence - but I just double-checked and I do believe I have not forbidden anyone from commenting on any topic in this particular blog posting and its comments thread. In fact, this blog has wider topic range than usual because I also discussed profits in the posting (profit LEVEL debates and related stock market speculation debates are usually banned on this blog).

I sometimes step in to a given discussion thread if the comments become unproductive like recently someone started a debate with me about the book industry economics where that blog made no specific issues about books except as a group of hits businesses overall. At that point I ended that discussion, you may have seen that. But no, on this blog there is no prohibition at this article to discuss app stores - but I prefer you don't open that can of worms here because there is a specific blog about it. Mind you, if you do talk about apps stores, then your comment must reflect the fact that you've read THIS article before you argue against my views, ie you must illustrate you read what I said and what evidence or arguments you might want to post against my points - ie Apps are only 1% of the telecoms industry - lost in the rounding-off error - and thus a tiny fraction of a percent of this Grand Convergence and nobody suggests they will be a Trillion-dollar industry, app stores, in the next 10-15 years haha. So yeah be aware of what you write if you decide to attempt a contribution about the barren desert of app stores and their contribution to this grand battle

More generally, the overall philosophy is that whatever i raise in the blog article is always open to debate in that comments thread and i try to welcome open and wide discussion so I allow quite a lot of latitude, as long as you stick to the point, are not rude, illustrate that you've read the full article. in other words as long as your comment is sensible and adds value to the readers of my blog. You don't have to agree with me, i learn not from those who agree with me but from those who disagree with me.

Tomi Ahonen :-)


"In ten years Windows is as relevant to high tech as Cobol and Fortran are today."

In other words: Windows will become a niche where competent developers are a highly sought-after resource because there's so few that can still handle it? Good prospects for me... :D

Well, anyway...

You need platforms that can create content for your mobile paradise. And so far the mobile platforms themselves show no sign whatsoever to become that themselves, locked down and restricted as they are.

So that leaves the 3 major desktop OSs.
MacOSX, due to Apple's nature will forever remain a niche, Linux, as being handled today will never be able to leave the geek corner, so what else, if not Windows? Unless Microsoft produces another major goof of a size larger than Vista and Windows 8 combined I doubt that it will become extinct. As won't desktop computers. There's far too many tasks where the internet is simply insufficient for and will remain so for a long time. Not everybody has high speed broadband access and seeing how much needs to be invested here this won't get solved in 10 years.

Otto Mäkelä

I notice you haven't talked much about how (mobile) computing will effect other market sectors. An example is how Tesla sells their vehicles directly via internet, pretty much cutting out the middle men, and how their after-market support and maintenance is heavily tied to mobile networking. What will happen once we have smart cars which are also network-connected mobile computing platforms?


Quoted from blog post: "Sweden is on plans to abolish cash"

That's the first I've heard about this, and I live in Sweden. Do you have a source so I can read up on this?




"The App Stores are not it and the App Store will never be it. (All app stores combined across all smartphones, were only worth about 1% of the total telecoms revenues last year. That is yes, not 1% of the Grand Convergence diagram, its 1% only of the Telecoms arrow. That is not nothing. Its less than nothing."

With this rate App Stores are going to be 1,5 % of the telecoms industry or closer to 1,5% than 1%. People may not expect the apps to grow into a Trillion dollar industry in the next 15 years but I expect that to happen in 25-30 years. It's only logical really. Once the emerging markets start reaching the income level the old industrialized countries have today, they will have the money to purchase apps and with apps anything is possible. The apps industry is expected to grow close to 50% rate this year and the projections we have seen rarely extend that far.

The growth rate is really independent of the number of the developers as long as there are enough quality apps available. The number of the developers may be declining but as long as the rich companies can produce content people want to purchase and pay for, the app economy is going to generate more revenue. We may have seen the peak app but that is independent of the peak app revenues.



"With this rate App Stores are going to be 1,5 % of the telecoms industry or closer to 1,5% than 1%. People may not expect the apps to grow into a Trillion dollar industry in the next 15 years but I expect that to happen in 25-30 years. It's only logical really."

That's pure nonsense. It not even remotely logical.
For apps other than games to become a profitable business there first must be some profound motivation to buy this stuff. And that - plain and simply - DOES NOT EXIST! And it never will.
You may be able to sell some specialty software at high prices - but you'll need the high prices to refinance the operation with low sales.
But for the average run-of-the-mill app will always find a free alternative.


AFAIK it's this:

Which I presume originates from this:

Connect the dots yourself. You're a Swede.

Wayne Borean

Interesting post.

About five years ago I was reading Microsoft's SEC filings, and when I added everything up, it showed a serious weakness in the company, specifically that the largest profit center was Office. I played with projections, and came to the conclusion that Microsoft's position was untenable because there were a lot of options to using Office, which were less expensive, and nearly as capable (disruptive technologies).

I had no knowledge of mobile at the time, and didn't know how it impact things.

I also suggested around the same time, that ereaders would soon be inexpensive enough to be included as a gift in cereal boxes. Turned out is was wrong on that, as ereaders became tablets instead, and you can now buy a fifty dollar tablet which can be used for far more than just reading, but 7" tablets may soon be selling for $10.00 along with smartphones.

It's going to be one hell of a ride as this plays out. I think we are going to see at least one major new innovation which shakes up things even more (besides wearables and/or tech built into the body).

What? I have no idea. But there are a huge number of talented people playing with millions of ideas. Someone is going to build the next Google or Facebook in a garage, and scare the wits out of all the big firms.

And yes, I was wrong about how quickly the disruptives would tear up Office. It is happening, just slower than I expected.



Great prospects...

get your smartphone stolen, lose all access to money.

Am I the only one who sees the insanity of such ideas?
There will always be need for an emergency backup system, and so far none has been found that is not actual cash.

So here's my prediction: The country which abolishes cash first will be in for some major trouble.


From the blog:
"Sweden is on plans to abolish cash as is Kenya, Somalia and Turkey."

I'm sure Tomi can hand out links to public press from all four countries where they explain their strategy to get there. He wouldn't write something like that unless it was true, right?



Don't confuse apps with games. It's all lumped together in one big number.

Games can and will make profit. How much remains to be seen. Just don't expect some super-growth here. I'd expect growth of the same magnitude as the market grows. But don't forget: That money will just be shuffled around from other means of gaming like PC and consoles. So no magic well of riches for the games developers.

Non-games - sorry - but that won't happen. Just like on PCs for most things some free alternative will be available and the vast majority of paid apps will be scams. But I wouldn't consider fraud a sound business. Unlike PCs it's much harder in mobile app stores to miss user ratings.



Thanks for the links. No support for claiming Sweden is on a plan to go cashless though.

The banks are introducing mobile payments, and we have adopted an australian NFC card system on public transport in three major cities, but that's about it. Nothing mandated by the government.

So painting Sweden as some kind of a poster boy for planning a cashless economy seems to be way off from the truth, at least from where I stand.

I really appreciate the links, so thanks again.




Apple's 0.15% is do-able in a market like the US were even Wallmart pays 1.5%. It is not so do-able in the UK where the EU has set a limit of 0.35% for debit cards (i assume Tesco would pay even less) or the Netherlands where the average cost for a pin transaction is €0.21.

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