5by5 | The Critical Path #7: Genericized Trademarks.
Episode #7 • September 21, 2011 at 12:00pm
Horace and Dan look at brand theory and decide it should not be left to the experts. Also, we ask what jobs products are hired to do and tie that to the meaning imparted in the brand and visual imagery associated with it.
Podcast #Industry #Theory · 128 comments
[Updated with Mac OS versions. See footnote 3.]
I'm glad Windows 8 is named the way it is. With Windows 7 Microsoft went to a numbering system which is much more rational than the mixed naming of the past. The number 8 actually corresponds to the actual sequential number of major versions of Windows released to date.
Windows proper actually did not start with what was called "Windows 1.0". Windows actually started in April 1992 when Windows 3.1 was released. It was the first Windows which was an operating environment onto itself, apart from DOS. It was followed by Windows 95 (which we can call "2"), Windows 98 ("3"), Windows 2000 ("4"), Windows XP ("5"), Windows Vista ("6"), Windows 7 and now Windows 8.
Given this nomenclature and the dates of general availability of said versions, we can derive a measure of the frequency of upgrades. For example Windows "2" followed about 41 months after "1" and "3" took 34 months after "2". If we continue this for all the versions, and assume "8" will launch by October next year, we can plot the cycle times of new Windows versions.
To make the story more interesting I added the same data for other OS platforms. OS X, iOS and Android have version numbers which correspond to the sequential order in which they were released. I am assuming that the numbering system (1.0, 2.0, 3.0 etc.) are meaningful and that major releases are given a new integer value.[1]
I also added Windows Mobile which suffered from the same confused numbering that Windows suffered until the current Windows Phone 7. To create a map to integer values I used the following: Pocket PC 2000 is "1", Pocket PC 2002 is "2", WinMo 2003 is "3", WinMo 2003 SE is "4", WinMo 5 is "5", WinMo 6 is "6" and Windows Phone 7 is "7". There is no clarity when and what Windows Phone 8 will be so that is left off the chart.
The chart above does give a clue that Windows is a bit slower (more months between releases) than alternatives. However, the point I want to convey is that this cycle time can be a strategic advantage. A faster upgrade cycle means more rapid adoption of improvements, not to mention more revenues. Rather than a line chart, the better way to visualize it is as a turning circle.
The analogy is from aerial combat where a plane that can "turn inside" an opponent can get into a firing position. The tightness of turning circles also means that a competitor can iterate more quickly and thus move up the trajectory of improvements necessary to remain competitive more rapidly. To that end, I re-plotted the data above with radial axes.
The chart clearly shows how among desktops, OS X has been tighter than Windows[3]. Furthermore, mobile OS's have been, typically, more agile than desktop OS's. The exception being Windows Mobile which had significant architectural and business model challenges. It will be interesting to watch the radius of Android. So far it seems to be tight, but as tablet functionality has been added, the speed of change has slowed slightly.
However, the big contrast is between mobile and desktop. Microsoft tries with Windows 8 to merge the two. But these are different ecosystems. Buyers, OEMs, users, all have different behavioral patterns (jobs-to-be-done) for mobile OS vs. desktop/portables. Will the cycle time for Windows 9 and Windows 10 tighten up? Can Microsoft operate its OS division at this new cycle time?
What is even more bad news is that the most important customers for Microsoft, enterprises, actually upgrade every other version. The Windows "radius" is nominally averaging about 35 months but large account adoption is closer to 60 months.
The contrast is then striking: Consumerized devices with over-the-air updates on a 12 month cycle are five times more agile than a traditional corporate Windows desktop. Another way to look at this is that for every change in a corporate desktop environment, the average user will change their device experience five times. Although Microsoft might find comfort in Enterprises' leisurely pace of change[2], those are the wrong customers to keep happy going forward.
The implications are left as an exercise to the reader, but I would argue that along with the asymmetry in business model around pricing that I highlighted in the last Critical Path podcast, Microsoft has a significant operational asymmetry with devices as a new class of computers.
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Notes:
Horace and Dan tackle corporate valuation and hypothesize whether amateur bloggers know more about Apple than professional analysts. We also look at the ancient economic history of Windows and how that still shapes it today.
via 5by5 | The Critical Path #6: Black Boxes.
On iTunes: iTunes Audio
Horace and Ryan discuss HP’s departure from the PC business, the end of the TouchPad, buying your way into innovation and what it takes to compete and survive in the Post PC era.
via The Critical Path #5: HP's Innovation Antibodies - 5by5.
This is a good one.
The Critical Path #4: Acquisitions - 5by5.
Ryan Irelan speaks with Horace Dediu about Google’s planned acquisition of Motorla Mobility and the potential ramifications for competitors.
Apple's cash and marketable securities increased to $76,156,000,000. The increase was 15% sequentially or $10.4 billion in three months. That's the equivalent of an increase of $11 per share (to a current $81.2/share.)
The composition and growth of liquid assets is shown in the following chart:
There is little I can think to say about this that hasn't already been said (see last Critical Path show.)
Except maybe that the amount is now nearly 16% higher than three months ago. And that the amount added last quarter is higher than the amount on hand 4.5 years ago. And that the cash added is higher than Google's overall revenues in the quarter.
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Footnote:
In Q1 2009 the company's share price briefly traded at $78. A buyer of shares at that price will have recovered their investment in retained earnings in nine quarters.
The Critical Path #3: It's Good to Be King - 5by5.
July 3, 2011 at 6:00pm
Horace Dediu and Dan Benjamin discuss the power of cash to control supply chains in the post-PC era and how Apple is challenging conventional wisdom about its value to shareholders.
RUNTIME: 57:19
The Critical Path is also available on iTunes. Don't miss a show, subscribe.
The Critical Path #2: Synchronized failure - 5by5.
Horace Dediu and Dan Benjamin discuss how smartphone pioneers Nokia and RIM falter while the market is booming.
Critical Path #1: The Five Year Plan - 5by5.
Critical Path is a talk show contemplating the causality of success and failure in mobile computing. Using Apple as a lens to look at both telecom and traditional computing markets, we try understand what it means to be great.
In this inaugural episode, Horace Dediu and Dan Benjamin try to weigh the strategic implications of Apple’s WWDC announcements. We take a look at the impact on RIM, operators, Google and Apple’s flirtation with Twitter.
My thanks to Dan Benjamin for taking the time to chat and for preparing this program:
Thanks to Nilay Patel at This is My Next for posting the complaint filed on April 15th against Samsung by Apple which revealed some potentially material data about its performance in the last quarter (which won't be public until the 20th).
On page 4:
"As of March 2011, more than 108 million iPhones had been sold worldwide"
"By March 2011, Apple had sold over 60 million (iPod touch) units."
On page 5:
"By March 2011, Apple sold over 19 million iPads".
These numbers are material because we know units sold prior to CQ1 and can derive the minimum units sold for these three product lines during Q1.
Namely:
The only outlier in terms of delta to my estimates is the iPad units which has always been the wildcard.
Apple published lower bound figures but it's a matter of speculation as to how far below actuals they are. Nevertheless, I would treat the iPad numbers with extreme caution.