This week Myke is joined by Horace Dediu. They discuss his work at Nokia and how that lead to starting his blog, Asymco. They also talk about the role and work of an analyst, his presentation series – Airshow – and graphs, naturally.
via 5by5 | CMD+Space #92: A New Lingua Franca, with Horace Dediu.
There are 7.1 billion people on Earth. Coincidentally there are also 7 billion mobile connections. Those connections are held by 3.45 billion unique mobile subscribers.1 Unsurprisingly, the largest national mobile markets (by number of subscriptions) correspond closely to the most populous nations.
Considering smartphones, last year 1 billion smartphones were sold and the number of smartphones in use is about 2 billion2
Given the rapid adoption of smartphones, it’s also safe to assume that smartphone penetration will follow population distribution. In the US, where comScore data is published monthly, penetration is following a predictable logistic curve.
Assuming similar patterns world-wide we can forecast regional smartphone penetration. 
This yields the following forecast for smartphone usage world-wide. Continue reading “Postmodern computing”
We talk about the major triumphs and minor failures of the Veronica Mars campaign on Kickstarter and kick off a series on The Capitalist’s Dilemma.
We talk about CarPlay, MWC2014, Microsoft and Nokia, “Tim Cook’s outburst”, per-user value, and re-evaluating how we analyze companies in tech.
When trying to assess the success of an ecosystem, the primary measure is the size of the user base or the “audience” for the product. Companies like FaceBook and WhatsApp and Twitter are measured first and foremost on this metric. Companies like Google, Amazon, Apple and Microsoft are less so. When revenues are firmly attached to products the focus shifts to “follow-the-money” rather than “follow-the-users” metrics.
That’s as it should be, but for the sake of understanding the competition between ecosystems, they should be compared on some similar basis. If the basis of competition in this day and age is ecosystems1 how does one evaluate Facebook’s vs. Microsoft’s? Or, more poignantly, how does one compare WhatsApp’s valuation with that of iMessage?
It’s common to value a company which aggregates audiences at a multiple of that audience size. The implication being that each member of the audience returns a certain cash flow to the aggregator and the discounting of those flows is the net present value. Which is why, for example, a newspaper is valued in terms of its subscribers. As is a TV network and as might be a social network. Using this metric, a WhatsApp (i.e. free messaging) user is worth $40 and the average social media user may be worth around $100.2
The implication is that users/subscribers/audience members are loyal and will stay with the programming for some time. There is also a second implication that businesses which are not measured by audience size don’t have this loyal and recurring revenue base. The absence of an “audience” implies transience and impermanence and results in deep discounting of long-term viability.
The orthodox vs. the unorthodox: Tata, Tesla and Toyota. Why might an asymmetric competitor lose and a symmetric competitor win?
We begin with Tesla and Apple. We continue with aluminum vehicles and re-visit information asymmetry as Horace exploits it to buy a Mercedes on eBay.
We talk about car APIs (Aux input jack and ODBII) and much, much more.
A brief discussion considers the perils of endless line extension up and down the market, perhaps fueled by financialization.
This is a good one.
One of the axioms of hardware business is that prices fall over time. The consumer price index for personal computers and peripheral equipment from 1998 to 2014 is shown below:
The price index suggests that prices for computers should be 54% of 2007 levels. Charles Arthur illustrated this on a global basis using a separate set of data.
The data shows that the weighted average selling price (ASP) of a PC has fallen from $614.60 in the first quarter of 2010 to just $544.30 in the third quarter of 2013, the most recent date for which data is available.
Prior to Apple’s earnings report I read at least one article suggesting that the most important indicator to watch was Apple’s margin. I suppose this was due to a recent decline in margins from a peak gross margin of 47.4% in Q1 2012 to 36.7%.
As the graph below shows, margins began to recover by Q3 2013 and are nearly on par with year-ago levels.
The guidance for the present quarter is a gross margin between 37% and 38%. This would imply a flat q/q GM line (blue line above.)
This is not quite catastrophic.
To better understand margins, it helps to compare them with other companies. When Apple reached that peak of near 50% gross margin I noted that such a level was higher than Microsoft’s and Google’s. The irony being that Apple was nominally an (implied) low-margin hardware company while Microsoft was an (implied) high-margin software company and Google was an (implied) high-margin internet services company.
Here is the picture with the last two years added: Continue reading “A margin of error”
Horace Dediu and Guy English discuss the future of TV, how we consume media, and the fate of console-style devices. From Apple to Nintendo and beyond, is there one box to rule them all, or can there be?
Interview segment: Cinematographer Barry Braverman talks about working with director Wes Anderson (uncut version to be posted as Screen Time #54)
Horace and Moisés discuss the excitement surrounding Microsoft’s hire of new CEO/poet Satya Nadella, Apple’s recent numbers announcement, and yet more on Google (and their sale of Motorola to Lenovo).
via 5by5 | The Critical Path #111: Man of Arts and Letters and Science.
