Horace Dediu

As you know, as we crossed into 2001, the great crash occurred.

Ben Thompson • 25:05
Yep. And suddenly a job offer from a big phone company sounds pretty great.

Horace Dediu • 25:09
Yeah, but the crash occurred and it impacted my startup because I couldn't raise money anymore. And that's why I'm throwing in the towel. I'll take this idea to Nokia and build it inside of this company. So for the first year, I worked out of the U.S. and then they invited me to come to Finland. And I fell in love with it, not to mention finding someone to fall in love with. Yeah, I'm still here.

So we created an internal venture called media distribution. And it struggled for a couple of years. We partnered with a publishing company here in Finland that is the biggest newspaper and magazine company. And we worked with them. 9-11 happened. We worked with them throughout that period to test this idea of distributing content on phones. That's how I met my wife. She was working for the publishing firm. Remember when Apple News launched? I forget how many years ago it was already. It was five, six years ago. [My wife] texted me during the keynote. She goes, "you realize that's what we were working on together in 2001?"

It was called Project Melissa. Project Melissa was this idea of Apple News today. And that was [our project] 20 years earlier. That just goes to show you the story of my life. I was doing search 10 years before Google existed. I was doing e-books 10 years before Amazon launched the Kindle. I was doing smartphones and media distribution on smartphones 20 years before Apple showed how it's done.

So my problem has been that I see things happening or see where things are going, but way too early. And that's why one of the theses I have over time is the idea that the difference between a futurist and a billionaire is knowing when one thing happens. So it's not about knowing what's going to happen. A lot of people are very good at that.

Ben Thompson • 27:31
Including Nokia, to your point.

Horace Dediu • 27:33
Nokia, science fiction writers, Elon Musk, a lot of people predict this. But getting the timing right is where the money is made. And so that was one of those lessons I learned.

Ben Thompson • 27:45
Well, when you talk about the publishing and Nokia and the reading and all those sorts of things, what it makes me think of is when the iPhone comes along in 2007, And I'm very curious to get your perspective on what that was like inside Nokia when the iPhone launches.

Horace Dediu • 27:59
I'll tell you exactly.

Ben Thompson • 28:00
But before I get there, but to this publishing point specifically, the key bit was the Internet was permissionless in terms of producing content. Like, it's great that you met your wife, but the fact that you needed to be in a situation where you could meet your wife was actually the reason why it wasn't going to happen. Because if you have to make a deal to do everything, it's just never going to get there. Whereas if you can just surf the Internet, the real Internet, and no one needs to do anything to adapt to it, suddenly you get it all for free. And then you get the virtual cycle going where they're making stuff for you. And that was sort of the, that's the timing bit is like the, the external structure around what you're doing.

Horace Dediu • 28:41
Yeah, it's, it's, it's complex and it's multi-causal and you're right. It's multiple, the reasons why things happen the way they are. And it's just not foreseeable. The internet was, and by the way, the thing that really caused the project to fail and be abandoned--this media distribution side note-- it was the fixation on DRM.

DRM actually killed a lot of great businesses with content ideas back in the day, whether it was music or video or textual. It was people just obsessed about protecting it before they obsessed about distributing it and making it great. And this is why when iTunes came along, even though there were some circumstances there with being on a Mac and not on the PC, that the publishers finally said, why don't we go ahead with this?

So long story there. But as far as what Nokia was doing, after four years of doing this startup inside of Nokia that did not work out, I got into the job of strategy analysis and competitive analysis. So they asked me to do Microsoft.

Microsoft was the biggest worry for everyone because they had intentions of being in the phone business. They made no secret about it. They had prototypes. They were working with competitors to Nokia. [Intending to] give them the operating system so that [for instance] Samsung running Microsoft [Mobile]. That was the effort.

They were pushing on all fronts. Nokia was holding out and saying "we've got our own operating system" and so on. So they gave me this job because every other competitor was hardware. All the analysts were covering hardware. I was the only guy who was covering a software company.

And in doing that, I was also sort of nibbling at Apple a little bit because the iPod had come out. The iPod was doing amazing, but it wasn't a phone product. And I was kind of looking at it a little bit.

Now Christensen comes back in the picture, because his book had taken off. He had already written the second book, which is The Innovator Solution. And I was like, hang on a second, a lot of stuff that I read in the book, and I remember back from my days at school, applies to Apple here because they're doing a lot of interesting things with being disruptive as the case may be.

Nokia itself had been disruptive in its early years. But I'm focused on Microsoft. And my point was that we can fight this battle and win, but we got to be very careful. And there's a lot of twists and turns there, but I took it upon myself also to understand what's going to happen with this media product from Apple.

And then I began to write a few internal notes because nobody was covering Apple. This is interesting and important. Imagine you have a team of a dozen analysts, you could put them on multiple jobs, assign people to multiple problems. No one thought that Apple was a problem to be looked at, even part time. No, there was nothing interesting about it.

And part of that had to do with the fact that [Nokia perceived that Apple had been] one foot in the grave already in the 90s. And now they were this little toy media company. They didn't really have scale. Phones were on the orders of billions of users already. And this iPod was in the tens of millions, maybe a hundred million. So it was orders of magnitude. There was no real worry there.

But I was really annoyed at this thing. And I started building a model. I remember distinctly opening a spreadsheet, looking at research reports and thinking to myself, let's look at the history of the iPod, how it's growing. And I started to match that to the Razr, which was the most viral product at the time, the Motorola Razr.

Even Nokia was jealous about this thing. At that time, [Motorola] had cumulative sales of 50 million, which was considered way too scary. (And BlackBerry was another one, by the way.) So I'm doing this and I'm like, hang on a second, what if they do a phone and it's a combination of the Razr and the iPod, could that resonate? And I just put it out there. I said, it's possible. And there was a rumor of the iPhone coming out.

Ben Thompson • 33:31
So Apple did do a Motorola Razr with iTunes functionality. Did that actually end up, because that was a flop. And did that actually make people not as like more relaxed?

Horace Dediu • 33:46
Because we knew that it didn't run an operating system. It didn't have a developer API, there was nothing, no hooks in it. It was just an appliance. And as such, it was like a feature phone. And that was not interesting. We had been talking and pounding the table on smartphones already since 2001. Remember, when I joined, we had a communicator. We had Symbian, Series 60. We had the interfaces. We had all picture phones, music, etc.

Ben Thompson • 34:20
I was a user as well.

Horace Dediu • 34:22
And I had done the numbers, and by 2005, people were burned out on smartphones. Because the projection was like this, but it was more like this. It wasn't growing as much as you thought it would. And so a lot of people said, especially the top management was like, "you guys are very enthusiastic about the software stuff, but it's just not working out. We're going to double down on hardware."

So there was a lot of burnout. So, but I kept looking at the phone at Apple and I suggested, hey, what if this thing scaled anyway? Like I said "what if they could sell as many as 50 million?" That was my provocation. And people were like, dude... I was essentially taken aside and told, tone it down. First of all, you're not doing yourself any favors by being so provocative. You're just going to lose credibility. My boss, who's a great guy he just took me aside and said, just don't do that. You know, it's bad for you.

Ben Thompson • 35:22
And this is like 2005, 2006, around then?

Horace Dediu • 35:25
Well, already 2006, because the iPhone was rumored. It wasn't out, but it was like, if you're going to have iPod success and you're going to do this crap phone with Motorola, you're probably thinking, maybe they're going to do something interesting beyond that, because we knew they could, in theory, do something.

We didn't see the touch interface, but we saw maybe like a scroll wheel or something. You know, Tony Fadell was running the thing. So, bottom line is, when it finally came out, it was January 2007. It came out and was not for sale, but it was on stage. And I was so excited. And I said, this is unbelievable.

I remember running into the office the next day. Usually you socialize at lunch hour, sitting in the cafeteria, talking to your friends and asking them what do they think about this? And most people just said, oh, it doesn't look that interesting. aspects of it were copied. There were copies from here and there. There are other people that do touch. You know, a stylus has been around for a long time with BlackBerry also doing amazing things with keyboard and so on and so on.

So there was a lot of cynicism and sort of not really interesting. I said, man, it's running OS X, it was running a full operating system. And I said, this is going to get developers working on it. But again, the other thing, the other head fake from Apple was that Steve Jobs said they're not going to put any apps on this thing unless Apple write them. I was anticipating far more than even was being talked about. And for that reason, it was just super frustrating. Anyway, I left in 2009. But by then, Nokia were still not following Apple.

Ben Thompson • 37:13
How is that possible? Like even two years on, this device is out there.

Horace Dediu • 37:19
Because it still didn't have distribution. And this is the thing that consumed everyone following the iPhone in the beginning. It's like they had one launch partner. It was initially Cingular, became AT&T. Don't forget that the old AT&T had nothing to do with this AT&T. It was just a rebrand of Cingular, which was a crappy, small, not very small, it was maybe second tier [operator.]

Ben Thompson • 37:47
Verizon didn't want to do it. Apple did this again and again. Verizon was number one.

Horace Dediu • 37:50
Verizon was number one. Absolutely. But Verizon was in CDMA. But the thing is that it was a crappy network and they didn't have a lot of points to sale. They didn't have distribution. and everybody said this, you need 500 network operators to saturate the global market, right?

And how fast are you going to be able to obtain distribution was the question. And so they're so cantankerous. You know, Apple is known as being "my way or the highway."

Verizon said no for years. Nokia was like, this is not going to fly. These guys are, if anything, they're naive. Don't forget, by the way, there's a separate story on how BlackBerry dealt with the iPhone. There's a movie about it, by the way. Everybody should watch it. But basically, everyone had the similar responses: that this is not kosher.

This is not the way things are done in this business. It's all about relationships with operators. It's about getting shelf space. It's about getting salesmen in the store who are bribed effectively with a commission to tell you what to buy, effectively yank the phone out of your hands and give you another one. So this was a very dirty business at the street level.

Ben Thompson • 39:19
So do you know what was the first what was the first article of mine that I think you ever linked to? It was about precisely. No, no, you don't need to know. I know because it was very formative to me. That's what I'm going to tell you. It was basically about talking about this was how distribution worked.

And what Apple changed about the whole thing was that customers actually switched networks for the iPhone. And it was doing just sort of a traditional sort of business school analysis of and pointing out the power shifted to instead of distribution to the buyers. Basically, what I ended up writing about for 13 years now is demand mattering more than sort of the supply bit. But it was the exact same thing. That's why you linked to it. You are you are already on board with it.

Horace Dediu • 40:04
But it was also the thing that resonated for me personally. Not that I knew something about the phone. Mostly I knew how big it could get. I knew that there were billions of people, many more billions than used PCs, which was by far the most dominant influence in technology.

Most people oriented themselves, like even Gruber and others who were Mac first and then all these accessories. But I knew the phone would be a couple of zeros more. That was number one.

Number two, there was this problem of the incumbency, which were all the phone makers, who were so far from understanding what the software dynamics of platforms were. By the way, platform theory was developed by Microsoft. They pretty much invented the whole idea.

Asymco Bulletin is a digest of all the work we have published for the week ending Apr 12, 2026.

Research

Can a company outlive its founder? Microsoft at 51, Apple at 50 and The Auteur Theory of Business

Much more was said of Jobs’ departure signaling the end of Apple than of Gates’ departure signaling the end of Microsoft. And much more was celebrated of Apple 50 than Microsoft 50. Why is that?

If you were to structure an experiment to determine the influence of processes and personalities on the outcomes of a company, you would be hard pressed to find a better pair to study. Apple and Microsoft were founded almost at the same time, due to the same enabling technologies (microprocessors) and led by two iconoclastic founders of the same age acting out of similar impulses.

The divergences were that one concentrated on software while the other on hardware. But rather than pairing up in a match made in heaven, both tried to outmaneuver the other in order to avoid dependency. →

Valuation in a time of AI

Cash flow is a fact, earnings are an opinion and share price is a dream.

A company’s total worth is the number of outstanding shares multiplied by their value. This product is called the market capitalization or Market Cap.

That’s a simplification. If you want to be more accurate, you should take the Market Cap and net out cash and debt–these are not part of the future flows of cash that can benefit shareholders.

More precisely, there is another measure called the Enterprise Value (EV) which is the total price tag of a company, representing what it would cost to buy the entire business and pay off its debts. EV = Market Cap + Total Debt + Preferred Stock + Minority Interest – Cash and Cash Equivalents.

This is the precise and complete measure of the firm’s value but we use the shortcut of Market Cap since In most cases the Preferred stock and minority interest are negligible and if cash equals debt then the result is EV =~ Market Cap. it’s easier to calculate anyways as the shares outstanding and share price are easily available. Not so for EV. →

What are the odds of Apple surviving?

A tale of two Apples

What are the odds of it surviving another year, ten years, 50 years?

Companies don’t last long. A recent study that analyzed thousands of European firms yielded a corporate life expectancy figure of 12.5 years. The Boston Consulting Group analyzed the entry, growth, and exit dates of 35,000 publicly listed companies and determined that one in ten of all public companies fail each year, a fourfold increase since 1965.

As I illustrated many years ago in a talk titled “The Unfortunate 500” most companies die not long after adolescence. Of the Fortune 500 1955-1960 cohort, the 81 companies which joined the index in those years, only 7 remain there today. One third of the corporations on the 1970 Fortune 500 list were no longer in existence thirteen years later. Broadly speaking, as a population, large companies that make it to the Fortune 500 listing have life expectancy within that group of 17 years. →

iPad at 16

Redundant or Post-PC?

Today marks the 16th anniversary of when Apple released the first-generation iPad.

To many, including Alan Kay, the tablet form factor makes much more sense than the PC form factor. It’s more approachable, more intuitive and certainly smaller and more portable. As the graph shows, quickly after launch, the iPad overtook sales of the Mac.

The problem arose that whereas the iPad was smaller, the iPhone what smaller still–so much so that users would take phones with them everywhere. At the same time, the “PC” shrank as well so that many notebook (laptop) computers became thin, light and had day-long battery life. The Mac at least became no bigger a burden to carry than an iPad.

So the iPad was stuck in the middle between an iPhone, that did more and more, and a Mac that was very portable. At this point many said that the iPad was a dead end form factor. →

AI as Infrastructure

ON September 3, 1821, 37 years after James Watt invented the concept of horsepower and started charging £5/horsepower/year for the use of his steam engine, the first demonstration of the production of a mechanical force by the interaction of an electric current and a magnetic field was given by Michael Faraday in the basement of the Royal Institution in London.

1820 is, in many chronicles, noted as beginning of the industrial revolution. It marked the end of 50 years of war, whose conclusion unleashed pent-up demand. That demand was served by relatively free trade, guaranteed by British naval power, coupled with property rights and financial instruments which allowed inventions of the previous century to finally be harnessed for commercial gain. The steam engine is the canonical invention of the era and its implementation as a source of power for factories, shipping, rail and machinery is legend.

Not usually noted as coincidental to this period is the electric motor. Yet not long after Faraday’s 1821 demonstration in London, the first DC electric motor capable of turning machinery was invented by William Sturgeon. In 1832 he built on Faraday’s electromagnet by incorporating a commutator which oscillated the direction of current to ensure continuous rotation.

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Nota Bene.

The Motley Fool asks: Where Will Apple Stock Be in 5 Years? → Not reading this article is probably a wise decision. Shares could perform in line with the S&P 500’s long-term average Investors can follow a straightforward exercise to try and figure out where Apple’s stock price will be in late March 2031. It’s important to consider both the valuation and profit gains. We just released a […] →

Apple’s services continue to see increased engagement, spending → The survey of 3,500 smartphone users reveals a significant rise in average monthly spend on Apple services to $13, driven by increased adoption of premium offerings like AppleCare/One, Apple TV+, and Apple Music, with notable shifts towards AI features despite muted upgrade intent, though potential US bias may affect overall accuracy. →

KeyBanc maintains a lack of clarity of thought → The analyst's note on Apple is overly cryptic and lacks clarity, making it difficult to assess its validity or relevance. →

iPhone sales continue to surge into February – Bernstein → February saw robust iPhone sales driven by the iPhone 17 line, with global unit sales up 26% and ASP climbing 6.9%, yet January-February revenue estimates oddly lag behind projections, sparking confusion. →

Morgan Stanley has a stark message for investors in Apple → Morgan Stanley's survey indicates strong potential for Apple stock, highlighting record iPhone upgrade intentions, especially in China, improved switching rates, and significant interest in a future foldable iPhone. These factors support robust FY26 shipment forecasts and suggest a possible revenue boost from new products. Despite some concerns about declining willingness to pay for AI features, Morgan Stanley maintains an optimistic outlook with a $315 price target. The article criticizes TheStreet's editorial approach for misrepresenting the positive survey findings as negative news about Apple. →

Mac mini and Mac Studio orders booming → Apple's Mac sales are surging due to the M5 chips' enhanced AI capabilities, outpacing other platforms and driving demand despite current shipping delays. →

Gartner adds their Mac Q1 estimate to the pile → In Q1 2026, Apple's Mac sales surged impressively by 10.7% to 12.7% year-over-year, driven by the MacBook Neo's appeal, securing a 10.6% global market share and maintaining fourth place among PC vendors, amidst a 4% rise in overall PC shipments. →

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Office Hours

Asymco Office Hours Live Q&A with Horace Dediu & Gene Munster took place on April 8, 2026 → Topic dicsussed: Apple Topics discussed: 

• Geopolitics: China concentration; Taiwan tail risk

• Financials: Solid near-term growth

• AI: Critical narrative shift; not yet proven

• Growth Strategy: User expansion

• Business Model Evolution
  hardware → services → Personal AI

• Moat: Privacy + integration; trust;

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Build it and they will come?

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ON September 3, 1821, 37 years after James Watt invented the concept of horsepower and started charging £5/horsepower/year for the use of his steam engine, the first demonstration of the production of a mechanical force by the interaction of an electric current and a magnetic field was given by Michael Faraday in the basement of the Royal Institution in London.

1820 is, in many chronicles1, noted as beginning of the industrial revolution. It marked the end of 50 years of war2, whose conclusion unleashed pent-up demand. That demand was served by relatively free trade, guaranteed by British naval power, coupled with property rights and financial instruments which allowed inventions of the previous century to finally be harnessed for commercial gain. The steam engine is the canonical invention of the era and its implementation as a source of power for factories, shipping, rail and machinery is legend.

Not usually noted as coincidental to this period is the electric motor. Yet not long after Faraday's 1821 demonstration in London, the first DC electric motor capable of turning machinery was invented by William Sturgeon. In 1832 he built on Faraday's electromagnet by incorporating a commutator which oscillated the direction of current to ensure continuous rotation.

However, for 30 years after its invention, no practical uses could be found for the electric motor. It wasn't because there was no demand. The steam engine was in use and, as Watt's £5/horsepower/year business model demonstrated, very lucratively so. The electric motor was not in use because there was no electricity distribution system. There were no power plants, there was no grid. The motor could not stand alone.

In contrast, the equivalent distribution system for steam was the coal industry. Coal as fuel pre-existed the steam engine. Used not just for heating, it was the fuel of foundries that made iron and other metals. More energy dense than wood, coal had been mined for thousands of years. From mining concessions to barges for transport on newly dug canals to bunkering for storage, sourcing coal was a well-developed, stable and profitable industry.

Finding coal to power a steam engine in the 19th century was not a problem. Finding electricity to power your electric motor was. You could not store it, you could not ship it, you could not meter or price it. It required a completely new value network and infrastructure.

For this reason, even though the electric motor was available through most of the 19th century, the period was still known as the age of steam. The electric grid—an infrastructure—was only possible by the late 1800s as generators, capacitors and AC power were perfected. It wasn't until the early 20th century that the age of electric power began.

This illustrates perhaps better than any other example that the device precedes the infrastructure. That is, that the instrument of utility precedes the network that enables it. the boat precedes the port, the locomotive precedes the railroad, the automobile precedes the motorway, the telegraph precedes the telegraph network, the radio precedes the radio network, the phone precedes the phone network, the cell phone precedes the wireless network and the smartphone precedes the social media. The device induces the supply of its own power.

The implications are profound. It puts to the test the idea that we need to build infrastructures before we know how they will be used. The inventors of electric motors or lights relied on batteries. Investors had to imagine a grid to power more than one. The inventors of the radio had to demonstrate a single transmitter/receiver pair. Investors had to imagine broadcasting. The inventors of the car had to find fuel in pharmacies. Investors had to imagine a gas station. Steve Jobs demonstrated the iPhone without an App store. Investors had to imagine a Services business.

As AI has emerged as a technology, we are in a strange position where the interface, born as a chatbot, suggested an infrastructure that is massive in scale. The magic sauce of GenAI isn't so much the algorithm, which is quite a simple idea. It's the scale of the data and computation that permits the illusion of intelligence.

In developing the commercial idea, investors are imagining the device while investing in the infrastructure. In other words, the investors are poised to put trillions of dollars to work on what amounts to "the grid" without knowing exactly what the motor will be.

The cash flows associated with infrastructures are very different from those of devices. Devices are iterated rapidly and evolve to changing tastes and discoveries of behavior. Infrastructures are built once, maintained and perhaps re-built but only after decades. Therefore financing for infrastructures is more likely through bonds (debt) rather than shares (equity). Returns are also much more subdued as the risk for infrastructures is lower. Regulation and relations with labor are also dramatically different.

Moreover, few businesses implement both the device and the infrastructure. Indeed, the capital structures, financing, longevity and valuations of the two types of businesses are dramatically different. In cases where they are merged, regulators typically intervene to separate them.

Watching from afar, it would seem that if AI is indeed infrastructure then it will not provide a brilliant business model. Like all network business models, you either iterate constantly at great expense to deliver the next generation or you harvest the built environment to pay back the investment, hoping that a parallel network does not steal users. But the cruelty of the model is that if you have a monopoly of any kind, your margins are beaten to zero by regulation and cost of parasitic maintenance.3

We can see this with all current "grids". From electric to hydrocarbon distribution, to communications and even food distribution. The struggles to avoid commoditization, corruption and corrosion of trust and a lack of innovation are endemic.

The device however, is another story.

1. I recommend "The Birth of Plenty: How the Prosperity of the Modern World Was Created" by William J. Bernstein. Bernstein argues that in order to prosper, a country must possess four main attributes: property rights, the scientific rationalism, capital markets and an effective means of transportation and communications.
2. Reverse chronology: French Revolution, 1803-1815, (including the War of 1812 in US & Canada), which followed a decade of the French Revolution 1789-1799 which followed the American Revolution 1765-1783. This global war, involving most world powers, lasted 50 years.
3. In a research note published April 7, Goldman Sachs strategists led by Chief Global Equity Strategist Peter Oppenheimer acknowledged the historical basis for those concerns. "The history of technology breakthroughs, from the steam engine to railways, PCs and the internet, is littered with examples of new technologies that attracted large sums of capital to build out underlying infrastructure which have led, ultimately, to low returns," he said. "The gains are then enjoyed by other companies, many of which piggyback off the original investment," he added.