Asymco

Asymmetric Intelligence

iOS

  1. Personal Computer

    Research · 34 comments

    The history of the Personal Computer market (since 1981) is shown below:

    Screen Shot 2015-04-14 at 4-14-10.55.36 AM

    Note that I added a forecast for 2015.  Data from Gartner shows Windows PCs declining at a 6% rate in Q1 with a full-year forecast of -2.4% (including OS X). Assuming 20.7 million Macs, the Windows PC market will decline to 285.6 million units (from 295 million in 2014). My estimate is that iOS and OS X combined shipments will total about 302 million.

    If this rather conservative forecast is correct then in 2015 Apple will ship more iOS and OS X computers than all Windows PCs combined ((This excludes iPod touch, Apple TV and Apple Watch. PC data is from public Gartner press releases.)) .

     

     

  2. How many iOS devices did/will Apple ship?

    Research · 11 comments

    Last August I wrote:

    It’s therefore reasonable to assume that calendar 2014 will see at least 250 million iOS devices sold

    The actual figure was 259.5 million.

    Looking ahead, the capital spending pattern so far shows a distinct rise heading into Q1.

    Screen Shot 2015-02-08 at 7.33.14 PM

    This could be partly due to the new campus, the new Watch production ramp and perhaps new iPad models.

    Screen Shot 2015-02-08 at 7.33.27 PM

    Nevertheless, I think it's safe to predict that the company is on track to ship 310 to 320 million iOS devices in 2015.

    Screen Shot 2015-02-08 at 7.35.30 PM

     

  3. Bigger than Hollywood

    Research · 72 comments

    Apple paid $10 billion to developers in calendar 2014. Additional statistics for the App store are:

    • $500 million spent on iOS apps in first week of January 2015
    • Billings for apps increased 50% in 2014
    • Cumulative developer revenues were $25 billion (making 2014 revenues 40% of all app sales since store opened in 2008)
    • 627,000 jobs created in the US
    • 1.4 million iOS apps catalog is sold in 155 countries

    Putting these data points together with others from previous releases results in a fairly clear picture of the iTunes/Software/Services ((soon to be renamed Services and encompass everything under the heading of iTunes software and services today including content, apps, licensing and other services and beginning Q4 2014 it will also include Apple Pay.))

    Screen Shot 2015-01-22 at 1-22-10.38.39 AM

    The App ecosystem billings (what consumers actually pay) is shown in the red area above. 70% of those payments are transferred directly to developers and Apple reports the 30% remaining as part of its revenues. This view of the iTunes ecosystem shows the impact of Apps relative to the other media types. When we measure the payments to the content owners we can see that Apps also dominate: 

    Screen Shot 2015-01-22 at 1-22-10.44.16 AM

    The red area above adds up to the approximately $25 billion total paid to developers. This view of the payments to ecosystem contributors shows how apps are now a bigger digital content business than music (( Music payments due to iTunes Radio streams are not shown as part of Music cost of sales. Streaming revenues are included in the services/licensing income and payments come out that cost structure.)) and TV programs and Movie rentals and purchases put together.

    This is quite a story.

    Put another way, in 2014 iOS app developers earned more than Hollywood did from box office in the US.

     

    Although the totals for Domestic (US) Box Office are not the complete Hollywood revenues picture, Apple's App Store billings is not the complete App revenue picture either. The Apps economy includes Android and ads and service businesses and custom development.  Including all revenues, apps are still likely to be bigger than Hollywood.

    But there's more to the story. It's also likely that the App industry is healthier. On an individual level, some App developers earn more than Hollywood stars ((so do YouTube stars, but that's another story.)) and I would guess that the median income of app developers is higher than the median income of actors. ((A large majority of actors earn less than $1,000 a year from acting jobs)) The app economy sustains more jobs (627,000 iOS jobs in the US vs. 374,000 in Hollywood) and is easier to enter and has wider reach. As the graph below shows It's also growing far more rapidly.

    Screen Shot 2015-01-22 at 1-22-11.30.06 AM

    The curious thing is that even though the medium of apps is swamping other forms of entertainment in all measurable ways, comprehension of the phenomenon is lagging.

    Information asymmetry is a wonderful thing.

  4. How many iOS devices will be produced in 2015?

    Research · 1 comment

    12 months ago I asked How many iOS devices will be produced in the next 12 months?

    Based on the analysis of Capital Expenditures (as forecast by Apple in their annual 10K report) I concluded "iOS unit shipments should be between 250 million and 285 million."

    The answer turned out to be 247 million. ((Including an iPod touch estimate of 9.5 million)) Including Apple TV the total would probably be around 251 million.

    Since last year, I adjusted my model by observing corresponding iOS unit shipments for the calendar year corresponding to each fiscal year. Since the calendar year is offset by one quarter (FQ1 = CQ4) looking at calendar year means looking forward one quarter post-spending. I believe this is more accurate as spending generally happens in advance of production.

    The resulting pattern is shown below:

    Screen Shot 2014-10-28 at 2.39.35 PM

    The company is currently anticipating spending $12.4 billion on non-retail CapEx. The spending for last fiscal year was almost exactly what was anticipated in the previous 10K. If we calibrate production (with a 3 month shift) to the 2014 benchmark, then 2015 calendar year would see about 310 million iOS units.

    The big question is whether this will include Apple Watches. To answer this we have to make many guesses:

    Does the company have a deliberate production plan for Apple Watches? What is the lead time? How quickly can production be ramped given channel and demand?

    Do Apple Watches require significant capital expenditures? Do Apple Watches require capital intensity similar to iPhones and iPads? How unique are the watch cases, straps and computing cores? What are the demands of the digital crown, the sapphire crystal, the display?

    The capital budget of $10.5 billion in F2014 had to cover the ramping of the iPhone 6/6Plus as well as some of the new Macs, iPads and the Arizona sapphire plant ((Note that some of that would have been in 2013 and at about $0.5 billion, the plant was about 5% of CapEx)). It also had to cover some of the new campus ((The construction cost of $1billion/yr would amount to about 8% of the capital spending (non-retail) )). In previous years the capital budget also covered data center construction ((Including vast renewable energy infrastructure)) which may not be present in the future budget.

    The non-retail capital budget is anticipated to increase by 18%. There are more moving pieces next year than usual, but directionally at least, CapEx remains a strong indicator of future iOS growth. Especially as it's given to us a full year in advance.

     

  5. One billion sold

    Research · 12 comments

    In Q3 2014 Apple's revenues were 5.3% higher than the upper end of their guidance. This is the highest error in guidance since the new range-bound  reporting regime started two years ago.

    The following graph shows the guidances given since 2005 and the actual revenues. The error (as a percent of upper guidance) is given in the second graph.

    Screen Shot 2014-10-23 at 10-23-10.44.28 AM

    Note how since the newer, presumably more accurate method was introduced in 2012, the errors have decreased on average. As a result, for these two years, forecasting performance for Apple was no longer challenging. The only questions for the analyst were how to allocate the revenues among products and to guess how many shares would be retired.

    Is this about to change? Could forecasting make a comeback as sport and leisure?

    Assuming no error in Q4 yields the following shipment forecast:

    Screen Shot 2014-10-23 at 10-23-11.11.17 AM

    That's about 95.5 million iOS devices in the quarter. That also means that the one billionth iOS device will have been sold sometime in the next few weeks. ((McDonalds took 23 years to serve its first billion hamburgers)) ((Over 650 million iPhones, 115 million iPods touch, 265 million iPads))

  6. Going where the money is

    Podcast · 69 comments

    The bank robber Willie Sutton did not say, when asked why he robbed banks, "because that's where the money is." He did agree with the idea however saying "Go where the money is...and go there often".

    Regardless of it being apocryphal, this idea came to be called Sutton's Law and is often taught to medical students. It's similar to the notion of Occam's Razor: when an obvious or simple answer competes with an obscure or complicated answer, pick the obvious one first.

    These are sound analytical rules of thumb. When thinking about what products and services could arise in the immediate future, those most obvious and with fewest assumptions should be put forward first. The what part is relatively easy. The tough question is more about when will they emerge?

    We now know that Apple will announce new products on September 9th ((I'll be there and will report via Twitter and a special session of The Critical Path podcast)). This gives us an idea of when something will happen, answering the tougher question. It leaves the simpler question of what will emerge.

    I put forward my predictions as follows:

    • Regarding iPhone, a tweet on product mix and pricing.
    • Regarding an "iWatch", an answer to a question from Eric Jackson.
    • Regarding the potential for wearables, a post on the subject.

    One more item has surfaced on the potential of payments processing which I want to address now.

    Handling payments, to me, is a perfectly plausible activity for Apple mostly because the company has made quite a few comments on the value of their "customers with credit cards" and the effort that went into Touch ID (which seems to be extravagant relative to the value of rapid unlocking).

    But one word of caution: if Apple does enable payments it's important to realize that being a (payment) bit pipe is not a particularly profitable business. It will undoubtedly bind value to the iOS devices which make it possible, but I don't think there will be a direct capture of profit from the transactions themselves.

    Profit needs to be in proportion to the value delivered. When that value is marginal convenience it is worth something but it's not a huge something. It is a marginal something.

    You might disagree pointing out that payments are big business and banking bigger still. But those businesses are not hired to simply funnel low friction payments around. They are proxies for trust and complex risk management. ((Nota bene: this trust could be commoditized with crypto currencies and blockchain technology making these giant businesses perilously smaller.))

    So for a company that facilitates the payment clearing system, the margins are likely to be very thin and with costs being non-zero it may be nearly a wash. The real impact of the decision to support payments will be in the aura surrounding the iOS ecosystem. An aura which will glow intensely.

    The idea of untold riches coming from "being in the payments business" is rather like the bank robber's dream of being where the money is. It is tempting to think that handling lots of money must result in wealth. However consider the value of Brink's. Net income of $57 million on $4 billion revenues and $1.3 billion market cap.

    Reality is that wealth comes from the creation of value not from its transport.

  7. Interview With Horace Dediu: What To Expect When Apple's Expecting

    Research · 24 comments

    My thanks to Eric Jackson for his thought-out questions on Apple. As published in Forbes, here is his Interview With Horace Dediu: What To Expect When Apples Expecting.

    A few excerpts:

    Q: Do you expect to see a sapphire cover on the new iPhone(s)? Is that material significant?

    I expect Sapphire will become a signature feature across many products. I don’t know if they will have capacity to deploy on iPhone this year but on a watch it’s essential. Here’s a clue: if the screen has any curvature, especially around edges, it needs to be sapphire as glass can’t take strain in that shape. The scope of the plant they are building with GT implies that they will have massive volume potential with at least one major iPhone model using the material. It’s a significant material because it allows design freedom in new directions, especially curved (concave) touch surfaces that retain a jewel-like feel. This has Jony Ive all over it.

    Q: Is it fair to conclude now based on the 5C and 5S that Apple will never launch a “cheap iPhone”?

    Oscar Wilde said a cynic is someone who knows the price of everything and the value of nothing. When I see the word “cheap” I never know if it refers to price or value. And even when we talk about price, an iPhone is cheaper than buying all the things it replaces so it’s always been a low end disruptor in my mind. (I saw a tweet with an image of a Radio Shack ad from the 1980s and every single item available on that page is now a part of the iPhone. It would have cost thousands to buy all those things back then–and dollars were worth a lot more.) Furthermore, I think Apple holds a black belt in pricing. They seem to define their position in the market by anchoring certain prices and “owning” them. Given all that I would say that Apple is not going to move their price points much. They will expand the portfolio and offer some iPhones at $300 but they will be older models. The average selling price (ASP) I expect to remain constant on a year-long average.

    Q: In the past, Apple critics were quick to dismiss the new iPad and 5C iPhone as failures upon their introduction.  You never judge. You just report the facts and data.  That said, is there anything about past new Apple products launches that we should look at as a predictor of how a new iWatch might be received by customers?

    When the iPad was imminent the great debate was over whether it would run iOS or OS X. Many imagined a touch-based Mac rather than the “big screen iPod touch”. It was a tough call and one which Microsoft could not and still does not make. Therefore, the interesting question for me with respect to iWatch is: What OS it will run? I will be shocked to the core if it does not run iOS. It is my opinion that making iOS work on it is the entire reason Apple is sweating this segment. They are in it because they are trying to make a platform product with a novel user experience and all the power of an ecosystem run on a wrist. It’s as big a problem as getting a phone-sized device to run a touch UI was in 2007. That is the crucial contribution that Apple is making to this next generation of computing. Now you might ask what users are asking for in this segment. The answer is nothing. Nobody is asking for this. As nobody asked for the iPhone (or the Mac or the iPad). It’s a new computer form factor and how it will be used will be determined by the apps written for it. But it will work and be magical out of the box in version 1. This is in contrast to the single purpose or accessory model of wearables we see to date.

    Q: As a student of disruption, where is Apple most vulnerable to being disrupted?

    Apple is a new market disruptor but much of what is put forward as a threat to it is low-end disruption. I think Apple knows enough about how that happens that it can manage its way around it. The strategy they employ is one of attrition. If you wait long enough a low-end threat tends to wear itself out as it starves of profit and is constantly gnawed-at by alternatives. (You see, if the disruptor cannot manage a profit then they cannot climb up the trajectory to get on top of the incumbent. Being profitable is a key requirement for successful disruption in the long term.) The attrition strategy works as long as you have the fortitude to hold out and the deep pockets to keep improving your product as alternatives flame out. It is my belief that Jobs made sure that thinking is inculcated in the company. So if not low-end is the company vulnerable to new-market disruptors? This is more subtle and the threat here is what Google/FaceBook/Amazon and the other ecosystems are all about. It’s creating new usage models and shifting where consumers place brand value. I think this is more what keeps Apple’s management awake at night. They are not standing still however. iTunes and Software and Services (now with Beats on board) is the way they are staying on top of that threat.

    Lots more here.

  8. Best guess for how many iOS devices will ship in 2014

    Research · 19 comments

    In October 2013, at the end of its last fiscal quarter, Apple stated:

    The Company’s capital expenditures were $7.0 billion during 2013, consisting of $499 million for retail store facilities and $6.5 billion for other capital expenditures, including product tooling and manufacturing process equipment, and other corporate facilities and infrastructure. The Company’s actual cash payments for capital expenditures during 2013 were $8.2 billion.

    The Company anticipates utilizing approximately $11.0 billion for capital expenditures during 2014, including approximately $550 million for retail store facilities and approximately $10.5 billion for other capital expenditures, including product tooling and manufacturing process equipment, and corporate facilities and infrastructure, including information systems hardware, software and enhancements.

    These 10K (fiscal year annual) forecast figures for capital expenditures are shown in the following graph. Note that they also include the fiscal years from 2006 to 2012. Note also that the graph includes the actual expenditures (in green).

    Screen Shot 2014-08-12 at 5.37.57 PM

    From 2006 through 2013 the sum of the forecasts was $23.445 billion while the sum of the expenditures were $24.662 billion. With the exception of a carry-forward in 2012, the forecasts are broadly in-line with expenditures, with about 5% more spent than forecast.

    This pattern of accuracy in spending makes a $10.5 billion expenditure during the current fiscal year believable. In other words, taking the forecast at face value, and given that three quarters of the fiscal year have already passed, what does it imply for the current and last quarter? The following graph shows what Q3 spending should be relative to previous quarters (and 2011, 2012 and 2013).

    Screen Shot 2014-08-12 at 5.38.27 PM

    The FQ4 (CQ3) "budget" for PP&E should therefore be $5.255 billion. This would be the most Apple has ever spent on PP&E in a single quarter.

    Shown another way, each fiscal year's spending from 2008 to present looks like this:

    Screen Shot 2014-08-12 at 5.46.27 PM

    2014 is shaping up to be a bigger "ramp" in spending than any previous year. We have also noted how iOS device shipments correspond to these CapEx figure.

    The relationship is shown in the first graph. I super-imposed iOS unit shipments for the calendar years because capital expenditures tend to result in production in the following quarter and Apple's fiscal year is shifted one quarter earlier than the calendar year. The iOS units shown for 2014 is based on shipments to date and a forecast of shipments for Q3 that is in-line with company guidance ((37.2 million iPhones, 14 million iPads, 1.9 million iPods touch which result in net sales of $40.18 billion and corresponds to the top of the guidance range of $37 to $40 billion)) and a modest forecast for Q4.

    The metric of Capital Expenditures (excluding retail) is a good "rule-of-thumb" for predicting iOS growth, but it's not perfect. Obviously we've seen issues between forecasts and actual spending on a quarterly basis, but there is an overall relationship which makes sense: Apple spends on tooling and infrastructure in terms of data centers to support iOS growth. So far, a growth in CapEx has resulted in a growth in iOS.

    It's therefore reasonable to assume that calendar 2014 will see at least 250 million iOS devices sold. How much that figure will vary will depend to some degree on the confluence and substance of product announcements this fall. ((My best guess is now 255.8 million.))

     

  9. A Dollar a Day

    Research · 137 comments

    There are 80 million Mac users. The last 12 months saw sales of 18 million Macs.

    As of the end of June there were 886,580,000 iOS devices sold. As of today the total is well over 900 million. One billion sold will happen well before this year is out. Estimates of current iOS users vary but they are probably at least 500 million and could be 600 million.

    Screen Shot 2014-07-25 at 7-25-2.44.06 PM

    Apple claims 800 million iTunes accounts.

    Therefore, in terms of revenues:

    • Mac User = $289/yr
    • iOS User = $262/yr
    • iTunes User = $25/yr (( Measured from billings ))

    Adding iTunes usage to either Mac or iOS yields

    • One Mac owner = $323/yr or 89c/day
    • One iOS device owner = $287/yr or 79c/day (( This conforms well to the rule of thumb that, after taxes and accessories/services, one Apple device is worth about $1/day ))

    This should make valuing Apple easy.

    80 million Mac Users and 500 million iOS users add up to about $169.3 billion in sales per year. If we assume that the number of Mac users grows to 90 million  and 600 million for iOS then next year Apple should get another $200 billion from its population of users.

    So over the next 30 months Apple sales should easily be higher than its current enterprise value. (( Enterprise Value = Market Capitalization - Cash + Debt = $585 billion - $164.5 billion + $29 billion = $449.5 billion ))

    This would be the forward price to sales ratio of about 2.5. Each sale yields a certain net profit, which for Apple is on average 21%. Multiplying 2.5 by (1/.21) gives 12 which is about the P/E ex cash.

    This exercise summarizes Apple's valuation nicely: Apple is expected to keep its current customers for about a decade and then disappear.

  10. Twenty Questions from Catalin Stelian Andrei

    Research · 17 comments

    Catalin Stelian Andrei, Editor of The Day, INTERNET PROTV asked me twenty questions:

    1. What phone do you have in your pocket right now? Why that model?

    I carry the iPhone 5. The last iPhone I bought was an iPhone 5C which I gave to a family member.

    2. Apple is going to launch, form all we know, an iPhone with a bigger screen, long after their market rivals. Is Apple one step behind, being forced to take this road in the fight with Android and Windows Phone devices? Because many smartphone users were hoping that an big screen iPhone, a redesigned model, will be lauched long time ago, and that didn’t happen.

    Making bigger phones is easier than making smaller phones. First because miniaturization has always been the most difficult engineering challenge, and second, because a smaller phone has a smaller battery making efficiency much more important. The larger the phone, the simpler it is. The third reason smaller is more valuable is that it’s easier to carry and use. The largest phones cannot be put in pockets and cannot be used with one hand. In the history of consumer, electronics size reduction has been the most consistent measure of performance, and the most rewarding. Usually the most exceptional reductions in dimensions create the highest price and profit bands. There have been niches for larger portable devices but they are consistently a small part of the overall market. If Apple were to introduce a larger device I hope they will be able to solve usability problems and make the category attractive to a larger audience.

    3. What do you expect from the new iPhone 6?

    I expect it to run the latest version of iOS and, with the new apps developers will ship, that should make the most impact in people’s lives. I imagine health maintenance and home automation will become valuable new franchises. Of course iOS 8 will also run on older iPhones, but I suspect the newest iPhone will somehow run the new software better and have smoother integration with services.

    4. What’s the “not to do” lesson that Apple needs to learn for the now iPhone from it’s own past experience or their competitors?

    The biggest challenge is to move rapidly with scale. The company has managed to grow from zero phones a year to hundreds of millions. That’s great but it’s still frustrating to wait one year for major improvements. The “cycle time” of innovation for Apple remains one year. I wish it could be faster but perhaps this is also too fast for some. In some services like maps and iCloud and iWork, which are independent of hardware (mostly,) speed is of the essence.

    5. The iPhone is the most expensive smartphone on the market right now. In Romania, it certainly is. But where does Apple gains it’s most money from, selling products to users or selling services, like iTunes, App Store? And having that in mind, what will be their next step: better – breakthrough products or bigger, more complete services?

    The answer to where a company “gets its profits” is best answered by asking where a buyer “gets his value” from the product. For instance you might answer the question of where a car company gets its value by saying that it’s from making people be in more than one place in a day. So the “differentiation” of a car is in answering the question slightly differently. If it’s hard to see a difference to this answer between cars then it’s hard for any one company to make a profit. For a company like Apple, we need to ask what its users value about the experience and why they are willing to pay for that. My hypothesis is that the brand's value is in making life a little bit easier. That’s what Apple competes on. Of course, some people are not willing to pay to have an easier life and some even want to make their lives more complicated so Apple’s proposal to make life easier, for a price, is not accepted by everybody—which is ok by them. But for many, paying for comfort, productivity and ease of mind is worth quite a bit. The reason Apple is able to gain a premium over the competition is that this value proposal (of paying for simplification) is either weak or non-existent for competitors. Indeed, many competitors compete on the basis of making life more complicated.

    6. What does innovation means for Apple right now? What are their options for assuring a next decade of success? A new Steve Jobs person or a Steve Jobs tipe of group thinking. How hard is that to achieve?

    Innovation is meaningful invention—bringing useful creations to a large number of people who then make use of that creation. The interesting aspect of making money from innovation is that it’s a rare phenomenon, requiring many disciplines to work together. It’s like a big movie that somehow works and becomes widely popular but costs little to make. Many movies are made, few are successful and very few of those which are successful are built at low cost. What we know about technology innovation is that it’s a combination that comes together under strong leadership but that leadership alone is not sufficient. The myth of Steve Jobs is that he was both necessary and sufficient to success. The truth is that he was necessary but not sufficient. To make successful innovations requires strong leadership and teamwork and a process of incentives and passion that is hard to create a formula for. How this works at Apple is its biggest secret.

    7. Who are the key Apple employees right now? Do they need another Jobs or do they already have him?

    All Apple employees are key. I would say that’s the magic formula. There is no chief magical officer (and there never was.)

    8. What will be the next best thing for Apple? […]

    I don’t know. It’s probably not knowable.

    … Are they capable of another breakthrough in the market?

    Yes. This is almost certainly knowable.

    9. Is the smart-home project something that will really happen in the next, let’s say, two decades?

    If the project requires replacement of existing infrastructure, it will not happen. If the project allows adding new items to existing infrastructure, it will almost certainly happen.

    10. Growth comes from the middle and low-end smartphones, according to IDC. Would or would not be a good idea for Apple to release a handset cheaper than the 5c?

    If Apple were concerned with growth then they should. But we have to ask why they avoided doing this six years ago. Not only was it obvious to do so but a portfolio strategy was the modus operandi for every competitor and had been for decades. The question isn’t why Apple does not broaden its line-up but why do the others diffuse their efforts and have such poor focus.

    11. What feature or software you think would be the main battleground in the future, in the smartphone market? Apps? Battery? Camera?

    Integration of all the above. When new experiences and services emerge those who are able to make them usable succeed. Usability requires integration.

    12. Who puts more pressure on Apple: Apple itself, Samsung, LG, HTC, Microsoft and Nokia? And how.

    I suspect competition is part of motivation but it’s not the entire story. Let’s not forget that Apple is considered to suffer from competitor pressure from software companies, services companies, media companies, hardware companies and everything in between. For instance, Apple is in competition with Microsoft, Amazon, Google and Samsung but the competition is not transitive. In other words Amazon is not perceived as being in competition with Samsung and neither is Google competing with Nokia. So somehow Apple should be sensitive to every perceived alternative to every aspect of its products. This quickly becomes an absurd idea. Apple is a system of things and systems can’t be compared with components.

    13. What is Apple’s sensitive spot today. What do you believe Apple fears the most?

    Losing people. The problem of retaining talented people is the most difficult challenge, especially when they become very wealthy due to the success of the firm.

    14. In 2012, you described the fall of Nokia in competition with Samsung at the Guardian Mobile Business Summit due to the disruption theory: the launch of the smartphone. Is Apple in danger of becoming a victim of the same story in the near future? What technology could replace the smartphone and when?

    Yes, every company is vulnerable to disruption. The defense is not to protect against it but to self-disrupt or enable self-destruction. Self-preservation is an instinct in humans so this is psychologically very difficult. The crisis comes not from a technology change but a business model change and that implies a cultural change. Companies embrace any and all technologies which sustain their business models and reject, resist and ignore any and all technologies which disrupt their business models. Changing business models is like a brain transplant; it happens so rarely that we can count it on one hand. By the way, because it’s so rare is why companies who attempt it are discounted by the market.

    15. You've been a Nokia executive. From this perspective, how do you see the deal with Microsoft and the future of Windows Phone and the Lumia brand?

    This is a long story. I can’t really do it justice now but I will say that it seems that Microsoft understands that they need to become an integrated systems company and not a component supplier. The same became evident to Nokia so they needed to merge.

    16. You've also worked with people from RIM. Do the have the capacity to innovate?

    Perhaps but scale also matters. RIM and HTC may not have the time to grow.

    17. Let’s imagine that no big company owns my personal information. If I wanted to sell that to someone, what would be the right price to ask? How valuable are individuals in the war for gaining personal information?

    The price of your personal information will be set by auction. It’s up to you to decide if you want to create a reserve price or to let the highest bidder win. As of today most people would trade all their personal information for almost zero price. This will not last and consumers will find out their value over time. I can’t predict how it will change but it will be a combination of offers being made and personal data catastrophes which will act as warnings.

    18. Do you believe in phoneblocks project from Motorola?

    Only people who want more complicated lives will want to build their own products. There are some such people (for example children) but they are not willing to spend a lot for that complication so the overall market for increasing complexity is small.

    19. The last question. What could trigger an Apple fall and when?

    The most common trigger for failure is success. To continue succeeding is very hard because motivation disappears. What can cause a crisis of motivation would be that there is a loss of belief that there are problems left to solve.

  11. Questions for Eddy Cue and Craig Federighi

    Research · 65 comments

    The Re/Code conference begins this week, and Apple executives Eddy Cue and Craig Federighi will be answering questions from Kara Swisher and Walt Mossberg.

    Here are some questions I hope they ask:

    For Eddy Cue:

    1. Why is there no app store for Apple TV? Even though the product is running essentially the same hardware and software as the iPhone and iPad and iPod touch and even though it connects to the iTunes stores, there is no option for developers to build apps for it or for consumers to use their TVs to run iOS apps. I might add that it’s been seven years since the platform launched and that’s a long time to wait.
    2. As Amazon has been granted a monopoly on the distribution of ebooks by the US federal government, why not compete by selling ebooks as apps? Apps were used as ebook containers well before the iBookstore launched and there were tens of thousands of “book apps”. Why not encourage authors and publishers to build apps by offering tools which make it easy to do so? I might add that if you do this for authors, why not do it for musicians and video producers? Why have separate stores for different media when they are all just content?
    3. YouTube is becoming the TV of choice for millions. Before it becomes that choice for billions, what are you doing to encourage user-generated video content distribution through your ecosystem?
    4. Apple’s Services revenues are growing remarkably quickly. The number of users is over 800 million. Do you see an opportunity for services to become a more independent business at Apple? In other words, why not bring iTunes to Android?

    For Craig Federighi:

    1. Marc Andreessen uses the phrase “Software is Eating the World” to describe the disruption that software-enabled businesses are having on those who don’t depend on software. You are the head of software at Apple; what’s on your plate? In other words, what do you see the opportunity for software at Apple beyond enabling device sales? I might add that although you are leading Software Engineering at Apple, Software and Services are part of Eddy’s organization. Does this separation make sense?
    2. It’s likely that iOS will be used by more people than Windows in the near future. What do you see as the obstacles to iOS replacing Windows for what most business users use daily?
    3. If you believe that iOS can replace Windows (at least in some tasks), do you think the iPad will ever replace the Mac?

    This was originally posted on LinkedIn on May 28th.