iPhone sales growth up and iPad plummet

To me this is a surprise. We've read much about uninspiring iPhone 5 and iOS7 design that Apple adopted from Microsoft. However in the Q2 sales have grown by 20% YOY, but overall growth trend is downward.
iPad YOY sales growth is minus 15% in the same quarter. To me this is surprising as in tablet segment, especially 10 inch form factor, Apple position has been stronger than the competition. Unlike smartphone segment there is no clear number two device emerged as of yet.

Tim Cook: Surface is "a fairly compromised, confusing product"

In April of 2007 Microsoft CEO Steve Ballmer when Apple first announced the iPhone said the following: "There's no chance that the iPhone is going to get any significant market share. No chance."

This week Tim Cook called Surface "a fairly compromised, confusing product". Adding "When people look at the iPad versus competitive offerings, I think they'll continue to want an iPad."

We live in incredibly interesting times of mobile technology and business. We are not going to wait long to see if Mr. Cook is right.

iPhone 5 disappoints

Today Apple has announced update to the iPhone, device that has changed the mobile world. Updates to the device, as I predicted, are disappointing. The phone is lighter and thinner, has faster chip– not that previous devices were too heavy, slow or thick. New iPhone 5 has 4G LTE, long overdue catch up to the competition. There are few other updates that I consider minor: 3 mics instead of 2, HD front facing camera, +1 hour of wi-fi browsing. The iOS also gets an update: Facebook integration (catch-up to Windows Phone), Siri updates (more languages, launches and integrates with apps). There is no NFC chip, which is probably due to lack of demand.

 

The main drawback of the iPhone has been its screen size, which I do not think Apple has fully addressed with the new device. Previous versions of iPhones had 3.5 inch screen; iPhone 5 extends to 4 inch. However, screen resolution of 1135 X 640 does not make the display feel bigger but rather disproportionately long. In other sense, it is same old phone, just taller. Users interact with phones mostly via screens (sorry Siri) and they want bigger screens. iPod Nano gets bigger display, iPhone 5 gets taller display.

This is what users say on the web:

I'm a little underwhelmed. This is the first Apple press event where I haven't thought, "Wow, all the other companies will be scrambling to catch up"

95% of same old crap, UI change in calendar and contact apps, and RAM upgrade...

I'm surprised by the lack of change with this new model. It's underwhelming when you consider the screen is still smaller than most smartphones by large margins, the display resolution is smaller than the 16:9 Lumia 920 screen. What happened to the innovation

I'll keep my S3. Thank you. Not surprised though. I mean, it's Apple we're talking about. Moving on

Nothing to be impressed with, even with the A6 Quad core and LTE support.

Not a break away from the crowding smart phone market, no trend setting design changes,no must have this phone kind of features..its more of an update to 4S then a new generation iphone

Not long time ago BlackBerry was the invincible and arogant mobile king with dedicated users world-wide. Sounds familiar?

Apple iPhone 5 form factor will disappoint. Not sure about the OS

iPhone 5 is about to be announced. Fans must be excited. You may still see lines to buy the shiny object. As I mentioned before it will looks almost exactly like iPhone 4. Latest leaks confirm slightly longer phone form factor but basic same look and feel. I do not expect much change in the OS either. While consumer trend continues to move towards larger screen phones, Apple continues to defy the it with under 4 inch screen size phones. For how long? This bland update may not carry immediate substantial impact to sales, however, the late considerate sales slowdown is either due to

1.       Wait for iPhone 5 – many experts say (who wants to buy discounted iPhone 4 when you can wait few months for newer phone)

2.       Less appealing product – who needs a phone that looked the same for 6+ years?

I am in the #2 camp. Time will tell and we don’t need to wait long.

Apple is screwed if iPhone 5 looks like iPhone 4

Apple’s shine has tarnished with the last quarterly report coming short of analysts’ revenue and profit expectations. I think the bigger story is considerable slowing in iPhone shipments. Apple shipped 35.1 million in Q2 and only 26 million in Q3, large drop. Many say that in anticipation of iPhone 5 buyers postpone purchases of iPhone 4S. Perhaps.

I think in addition to that the iPhone has started to lose its appeal and I am not alone. There have been number of articles recently saying that iPhone is thick and too small. Apple with iPhone has been setting trends, however it is not following current consumer trend. Thin bigger screen phones are now popular and sell well.

iPhone 5 photos leaked and the phone form factor is disappointingly looks like iPhone 4.

60% of new Windows Phone buyers are former iPhone and Android users

I have written previously that based on the trend setup by t-mobile's Lumia 710 sales the most likely buyers of Windows Phone will be segment new to smart phones, former feature phone owners.

However, recent poll shows that only 15% of buyers are former feature phones owners. Most of the new buyers of Windows Phone are past iPhone and Android users, 30% each. People are leaving iPhone and Android for Windows phone

Nokia and AT&T will attempt to defy iPhone’s paradigm

Carriers who sell iPhone have love/hate relationship with Apple. Revenue per user (ARPU) from iPhone customers is higher than other phones, but device subsidies and other costs are also higher. Apple dictatorial ‘my way or highway’ of doing business gets under their skin. Apple has gutted mobile value chain disproportionally shifting profits. While number of iPhones sold increases - carriers margins keep dropping.

AT&T, the iPhone beachhead, is trying to shake things up by partnering with Nokia on the launch of flagship Lumia 900. Nokia is desperate to retake US market after being irrelevant for the last 7 years and has excellent product to show at low price. Nokia has gotten its foot in the door already with more affordable Lumia 710 on T-Mobile network. The device, which has been free with contract has attracted a lot of new smart phone buyers and sold better than Samsung Galaxy S II.

Nokia and AT&T will throw extraordinary resources to ensure the success of Lumia 900. First, Nokia ensured their Lumia 900 was the most talked about product during the CES in Las Vegas. Now AT&T is going to follow the suit. Cnet quoted AT&T device head Jeff Bradley “At all levels, this is a notch above anything we've ever done" , noting that includes the launch of the iPhone.

RIM loses home ground. The end is near

Bloomberg is reporting that Apple iPhone for the first time is outselling RIM's Blackberry, where it was number one. Losing on home turf is another loss to the pile. RIM leadership thinks the problems are a bump on the road, new products and updates will right the ship. The road is self-denial is long and painful. The obvious trend of market share and mind share loss and inability to reverse or at least slow it down will continue putting pressure on the share price.

RIM shareholders are unfortunatelly stuck. I have written before that looking for a buyer now is the only choice, but the company leaders think otherwise.
Before November 2012 RIM will be acquired for its patents and global network, not for the hardware and operating system with app store.

Is Windows Phone really going to outsell iPhone in China?

With huge fanfare, coverage in media and blogs Microsoft has officially launched Windows Phone in People’s Republic of China market. Windows Phone ‘Mango’ update was localized in Chinese language and earlier in 2012 Microsoft has launched Windows Phone Marketplace in Chinese. Windows Phone even comes with localized features. Windows Phone People hub instead of Facebook and Twitter integration (blocked in China social networks) connects users to Sina Weibo (Twitter knockoff) and Renren (Facebook adaptation). But it was moot point having no Windows Phone devices on the Chinese market until this week. Today list of OEMs is impressive: HTC, ZTE and Samsung. Arguable the most important of all, Nokia also will be selling Lumia end of March.

Windows Phones are priced rather aggressively around 1000 yuan, which about $150. iPhones are sold at prices at least 5 times higher. Price should definitely help gaining market share. In fact, Bloomberg article reports that Simon Leung, Microsoft China boss, expects Windows Phone to eclipse iPhone and Android in market share, but did not give specific timeline.

Is it reasonable to expect Windows Phone sales to be higher than iPhone after all you read is how people mug each other in front of Apple stores to buy an iPhone in China and how scalpers are making quick bucks brining devices from other countries?

Nicole Peng from Canalys expects Windows Phone to have 6% market share year 2012, and about 12% in 2013. According to Strategy Analytics today Android enjoys 65% market share in China and iPhone is at 13%. Symbian market share was around 18% in 2011 expected to shrink to 12% in 2012. In China today Apple is third in market share behind Symbian. Windows Phone should be taking share from Symbian, considering Nokia is sunsetting Symbian and investing heavily in Windows Phone. Also, I expect Windows Phone to start taking share from Android. Strategy Analytics expects Android to lose 2% share and iPhone to gain 1% each of the next 5 years. However next 5 years Strategy Analytics does not expect Windows Phone to catch iPhone’s market share.

I think it is reasonable to expect Windows Phone to retake most of today’s 18% Symbian market share next two years and take 2% from Android each year as well. In such case Windows Phone market share can be between 14%-18%, which is well in the striking distance of eclipsing iPhone.

China to become Apple biggest market

When I was in Shanghai in fall of 2010 as Apple first launched iPhone in China the reception was lukewarm. First few weeks Apple has sold only a few hundreds of iPhones, that time market had plenty of HiPhones. In just over a year there were riots and not enough iPhones 4G S in China.

Apple sold 37 million iPhones in Q4 worldwide. Morgan Stanley predicts this year Apple will sell more than that figure in China: 40 million in the year 2012.

Mobile apps downloads to hit new high: 30 billion in 2011

Depending what you read projected apps downloads will be around 30 billion end of year 2011. previous year the apps downloads accounted to 9 billion across all mobile platforms. Mobile apps and the scale offers lucrative business for mobile apps developers. Apple iPhone users are more likely to pay for the app and downloads per user are twice as high as Android. Both apps stores have over 350k apps, with Windows Phone distant second with over 30k.

iCloud most valuable feature: keeps customers iLocked

A year ago or so a survey revealed that around 20% of current BlackBerry users want an iPhone next. Switch from such to an iPhone is easy. Apple's iCloud will make it hard to switch from iPhone to a competing platform. Very few iPhone users want to leave, but imagine some would. Will you be able to access your data and files in the iCloud using Android or Windows Phone after leaving Apple galaxy? Keep dreaming. Just like music purchased on iTunes can be only be played on Apple hardware and software, the iCloud will tighten the rope around user's neck even more making sideways moves painful.

Android continues gaining market share

comScore recently reports that since January to April 2011 Android has picked up in the USA 5.2% market share and Apple 1.3. Android continues to gobble up the market and RIM continues to lose market share (minus 4.7). I expect that trend to continue with Android reaching 40% and growth decelerating. RIM loss of market share will continue and Microsoft platform will start taking the share from RIM in the year 2012. Expectations for Windows Phone, 6 month young operating system to compete for market share today is unrealistic.