Chris Brennan asked a few important questions regarding potential saturation of the iPhone market. Is the iPhone anywhere near saturation? Can Apple continue to shift iPhones in ever increasing numbers or is a sales plateau realistically on the horizon? The market for mobile phones is approximately 5.5 billion connections, perhaps 5 billion users. The iPhone has approximately 300 million installed base. I consider a base of 1 billion users to be a minimum for continuing participation in this market long term. Licensed platforms will reach this in no more than two years. I don’t know what Apple’s ambitions are but if they don’t ...

Kenney Ho, a staff reporter from Korean newspaper The Chosunilbo (The Chosun Daily) sent me a set of delightful questions. According to Kenney, The Chosunilbo “has a history of 90 years, has been the most dominant, and influential paper of all time in Korea. It is the No.1 newspaper company in Korea with more than 1.8 million circulation, firmly holding the largest market possession. The paper is recognized Asianwide, where there are many readers in Japan and China.” -You said “All mobile device vendors experiencing losses are not likely to really recover”. Even though, it wouldn’t mean that the employees, executives of Nokia ...

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In the iPhone cost structure analysis I showed how revenues and costs for iPhone are probably allocated. The revenue per iPhone was shown to include $29 for revenue items “above” the price of the phone to the channel. This total includes Apple’s own iPhone accessory sales plus revenue from licensing the “Made for iPhone” trademark to third party accessory makers. Apple also receives some revenues from cloud services. But, pertinent to our recent discussions on the Android business model, Apple also receives revenues from Google. Wouldn’t it be nice to know how much? Here’s a way we can estimate it. I’ve read an estimate ...

Dave Hurban, a New Jersey resident, attached his $129 iPod Nano to his body, and it's believed he is the first human to do so. Hurban, a professional body piercer, attached four metal pins in the skin of his left arm to ensure he will never forget his iPod. The pins secure it magnetically and allows him to carry it everywhere he goes. "I must have talked to like 400 people individually," Hurban said. "Every person I showed, they were like so amazed."

Horace and Dan wade into Android Economics expanding on the series of posts on Asymco. We also give an update on The Critical Path Kickstarter project. via 5by5 | The Critical Path #38: Seeking Enlightenment.

Yesterday I presented the estimated Android income statement vis-à-vis Apple’s income statement. In this post I’ll compare Android as a part of Google’s overall business. Recall that Google has already been compared in terms of overall revenue, growth and profitability to Apple and Microsoft here.  The argument can be made that mobility has not yet had a measurable impact on Google (certainly not noteworthy enough to be reported by management). The impact on Google of Android can be shown in the following diagram: I used color coding to identify non-Android (Green) and Android (Brown) segments of the business. Overall, Android ...

Welcome to MacDirectory’s iWards Spring 2012 update. If there’s a theme to this year’s update, it’s value for dollar. Times remain tough so here goes our update. iPad 3 What everyone knows as the iPad 3, Apple has whimsically decided to call plain ‘iPad’. The reason, Apple tells us, is to keep things simple. (By confusing everyone, right?) We wonder if that’s the best way today’s Apple can respond to the question ‘What would Steve do?’ On second thoughts, maybe that’s a bad question. ‘What would Walt do?’ was what they used to ask at Disney. The next thing anyone knew, Steve Jobs owned Disney. Steve never asked ...

One week into this project and the response has been phenomenal. We are at nearly 500% funded. There are 414 backers so far and the average pledge is nearly $34. This means that the vast majority of people (328 so far) opted for the $35 pledge. Many pledged even more than $35. Perhaps it’s only symbolic but the interest in the hard copy version was something I did not expect. It’s gratifying that people would prefer to have a physical representation of the work. It also means that I have to think carefully about the production of a good quality paper book. The abundance of support allows me to invest in design, editing and perhaps ...

Data is useful only when put in perspective. Yesterday’s post on the Android Income Statement showed how sales and revenues are captured and how costs are paid for that revenue. The data was shown for the entire calendar year 2011 and the maximum value in the vertical axis was $1.5 billion. Google has also reported that their revenue “run rate” is now in excess of $2.5 billion so there is significant growth, as would be expected from an exponentially increasing user base. However, it’s important to place this growth in perspective, both in absolute and in relative terms. Below is a diagram showing Apple’s revenues for the first ...

This is a continuation of the Android Economics series of posts. It deals with how revenues and costs are categorized for Android. The following diagram shows an approximate representation of what Android's Income Statement[1] would look like. I'll discuss the assumptions that are built into the model as I go along. I'll begin at the upper left and move toward the lower right in the discussion. The first thing to note is that sales from Google's (formerly known as Android Marketplace) Play are not registered as revenues. This is because Google, like Apple, treats itself as an agent. Agency means that the revenues don't belong to the ...

Android has had unprecedented growth. Based on activation announcements, it's possible to estimate that thus far, about 370 million Android devices have been activated. The total number of devices in use is a lower figure which depends on replacement rate and retirement rate. This total number of devices in use at year end is estimated in the following chart. I added the blue line which represents what Google had as an internal estimate in mid-2010.[1] The difference between the two lines shows that Android's growth is far higher than what the company expected. If the company itself did not expect this growth, it's unlikely anybody else ...

Horace and Dan talk about how the Critical Path (The First Year) ebook Kickstarter project began, and hint at an upcoming topic: how to analyze the Android market. 5by5 | The Critical Path #37: Pathfinder I.

The Critical Path has been an exceptionally well received podcast. It has an audience of hundreds of thousands of thoughtful listeners. Many of the concepts covered can and should be reviewed in a medium that can be referenced and annotated and shared. For this reason I would like to publish edited transcripts of the podcasts as an eBook. This will be an edited and tagged transcript of the first year of The Critical Path. via The Critical Path: The First Year by Horace Dediu — Kickstarter.

My talk from the 2012 Apple Investor Summit is available on Vimeo. The password is h42Rtz8HJ. Check out the cool iPad app used for presenting interactively and wirelessly–a foreshadowing of Asymconf.

I first noted a correlation between Apple’s share price and its balance sheet a year ago. In February, when I last checked, Apple’s share price was priced nearly at 4.6 times its cash value. The stock has had a brief rally but has returned to the trend line it’s had since late 2008. I should emphasize that this correlation between cash and price is abnormal. It should not be happening. Share prices for growing companies should be tracking its future potential, not its assets. I’m only presenting this data to highlight this abnormality. There is no fundamental basis for this happening. In fact, there is a basis for this not ...

Within five years after discount retailing pioneer Korvette's opened its first store in 1957, over a dozen copycat discounters had emerged. In contrast, the giant discount furniture retailer IKEA has never been copied. The company has been slowly rolling its stores out across the world for [close to 50] years; and yet nobody has copied IKEA. Why would this be? It's not trade secrets or patents. Any competitor can walk through its stores, reverse engineer its products and copy its catalog. It can't be that there is no money to be made: its owner Ingvar Kamprad is the third richest person in the world. And yet nobody has copied IKEA. Our ...