The new Mary Meeker’s Presentation On The State Of The Web contains a slide that’s basically a snapshot of a gigantic landslide.
It took Microsoft 10 years to go from zero to 80% of the market and it will take even fewer years to go from 95% to 15% or less.
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Posted by Oleg Kokorin
This is the chart from IDC with the recent predictions about iPad market share, which everyone has been talking about. Many dismiss it as a total crap, because it assumes that the tablet market (which includes sub-tablets like Kindle Fire) will only double in 4 years. To put it into perspective, take a look into the growth from 2010 to 2011.
However, another big reason this forecast is wrong is the impact Wintel. First, Intel will introduce their 22nm Atom chips this year, and they will start appearing in smartphones and tablets. Remember Motorola 68000 family? PowerPC G family? Probably not. That’s because Apple stopped using them and replaced with Intel chips. Cell processor? Say good buy to it, because new Sony PlayStation will use an x86 chip. That’s pretty much what’s going to happen with ARM eventually. Second, Microsoft is going to have its Windows 8 ready and start pushing it to the new phones and tablets. While anyone can theoretically take Intel chips and create new tablets for any OS, it’s been always Windows that Intel favored.
So, Intel will provide a hardware platform, Microsoft will provide a tablet-optimized OS, is there going to be anybody willing to buy Wintel tablets? Enterprises. They respected RIM for secure devices, but it’s a given that it has no future. They don’t like iPads because it’s an environment totally controlled by Apple. They hate Android because it is completely uncontrolled and unmanaged. Everyone is used to having a Microsoft-based infrastructure. “You can’t get fired for buying from Microsoft” is the enterprise mantra our days.
Leave a Comment » | iPad and other tablets, Metrics | Tagged: Apple, Intel, Microsoft | Permalink
Posted by Oleg Kokorin
The release of educational platform is a strong move by Apple. Not only it’s a market that hasn’t seen any significant innovations for years. Getting young people hooked on the iOS platform early is a great way to ensure they’ll be willing to buy Apple stuff when they grow up. However, it might be a bit too soon for Apple to celebrate. I expect the same move by Amazon in a few months. Eventually they will ship a better tablet than their current Kindle Fire is, and with the clout they have among traditional publishers, they’ll be able to grab the lead in tablet-based educational market.
Amazon is becoming a super-monster company of the new age. Their cloud services were basically the first large-scale commercial cloud available, and it seemed to be a bit weird for them to move into it. These days, after their strong tablet debut, it won’t surprise me if Amazon releases a personal cloud platform (think gmail and Google Docs), a browser (take Chromium), a search engine (becoming a commodity too), ad platform (hello AdWord). This all can happen thanks to their deep penetration into consumer market and democratic (think cheap) pricing. Now this is a threat that Google might not survive.
Leave a Comment » | AppStore, iPad and other tablets, Marketing | Tagged: Amazon, Apple, Google | Permalink
Posted by Oleg Kokorin
App stores have been around for a while, and our company has been selling MobileNoter through all major ones: Apple Appstore, Google Android Market, and Amazon Android Market. We know a thing or two about app stores, and the most important thing we know is that they are totally unfriendly to the business software vendors. I will use “business software” in a loose sense here – basically, everything that is not entertainment and doesn’t cost a buck or two apiece is considered as a business software in this post.
1. App stores hide buyers from vendors. While staying anonymous is cool when one buys iFart app or perhaps another countless “3-in-a-row” clone, this is not the case for the business software. First and foremost, it is going to be harder to provide support to the customers. It is harder to identify whether they are your customers at all, what software they bought, what version they are using, and so on. It is also harder to do cross-selling and up-selling. You can’t send an email to the customers saying “You have our software for iPhone, we have a new version for iThing too”. What app stores should do: they should allow for opt-in email sharing by the customers. If a customer wants to share her email with the vendor, she should be able to just do that without any hassle.
2. App stores have terrible pricing structure. They don’t have discounts or coupons issued by the vendor, they don’t have volume discounts, they can’t sell upgrades to the applications, and they don’t allow packaging your goods and services, for example offering a premium support plan for extra money. All these things have been used by the business software vendors for a long time. One would wonder why major app stores can’t implement these things. The only thought that comes to mind is that they are only interested in selling entertainment stuff. What app stores should do: they should implement flexible pricing structures similar to those of Plimus and other eCommerce infrastructure providers.
3. App stores don’t let a free trial (with the exception for Google Android Market, where developers can use in-app purchases for that). Business software costs anything from $10 to 4-digit figures and few people are going to just cough up this kind of money without seeing what they are getting first. What app stores should do: pretty obvious.
4.The 30% cut is not justified. App stores shouldn’t be THAT greedy. It’s OK to take 30% off $0.99 purchases because the transaction costs are high and because the impulse buyers are the main drivers of sales. It is a totally different story for elaborate and expensive software. These apps require out-of-the-app-store marketing, because they are rarely going to be in the app store top lists and the app stores’ search capabilities are dismal. The 30% cut is a good deal when compared to the brick and mortar stores, when you sell software in a box with a disk and a printed manual, and it is sitting on a real shelf. Ain’t these times gone forever? What app stores should do: they should implement a straightforward structure where the cut is reduced the higher the price of the software is.
5. Lack of payment options. App stores only know the credit cards. The other 10 ways of paying are unknown for them. An enterprise buyer is likely to demand an invoice, to pay with a purchase order, and so on. Again, this is not going to be a problem for a cheap one-time-run app. What app stores should do: again, pretty obvious.
What the business software vendors should do: the only way currently available is to move your software into SaaS territory. If you claim that you provide a service, then you are free to sell it on your website, gather customers’ emails, provide flexible prices, offer a free trial and don’t give a leg and an arm to the greedy app stores. A lot of companies are doing this at the moment. However, it would be more convenient for the users if the vendors didn’t force them to their websites. Sometimes the app is not very suitable for the SaaS model, and strange things can happen along this route. Second, the app stores still can change the way they are treating SaaS. When the Apple Appstore introduced subscriptions a few months ago, it scared shit out of many SaaS providers, because for a moment they thought they would be forced to part with 30% of their money.
Is there any hope? Actually, I think there is, at least for Android. With the two major app stores and smaller (carrier operated) rising, it creates a place for competition and this will push the pressure on the app stores to improve. At least, that’s what the theory says.
Leave a Comment » | AppStore, Marketing | Tagged: Amazon, Apple, AppStore, Google | Permalink
Posted by Oleg Kokorin
An entire episode of the most brutal humor dedicated to Apple. That’s not surprising considering its dominant position in one of the most competitive markets of all times – consumer electronics.
Brilliant, nasty, definitely not safe for work.
Leave a Comment » | iPad and other tablets | Tagged: Apple, South Park | Permalink
Posted by Oleg Kokorin
From the unbelievable department today: researchers discovered that every iPhone with iOS4 and every iPad 3G is continuously recording the location of the device. The file with locations and timestamps is hidden among device backup files. That means that every time you backup your device via iTunes, the location file is copied into your Mac or PC. There is even software available that will decode the data and put the dots to the map. Right now, there is no evidence that Apple is accessing that information. However, even without Apple’s access it’s a huge security risk: anyone with temporary access to your computer can download your movement info across months and eventually years. Moreover, you cannot turn this “feature” off, and it doesn’t rely on GPS – the coordinates are calculated using cell tower triangulation method. While it’s unprecise, it’s better than GPS in some aspects: it consumes a lot less battery energy and it works inside buildings and cars. Just wow.
This is how a typical map looks like after routes are decoded and visualized:
2 Comments | Travel | Tagged: Apple, geolocation, iPhone, iSpy | Permalink
Posted by Oleg Kokorin
Not that I have anything against optical disks. It’s just that I haven’t used any of the hundreds of DVDs that I have in home for like 2-3 last years. Even if I buy a gadget that comes with an installation CD, most of the time Windows 7 doesn’t need the disc to work with the device. It downloads drivers via internet.
It’s a real bummer that you can’t buy a decent notebook without an optical drive built-in. The only models without optical drive are netbooks and subnotebooks, all under 13.3″ screen. It’s time to start offering some good models without optical drives and see how customers react. That’s what Apple started doing at least a year ago with their Air series.
Leave a Comment » | Uncategorized | Tagged: Apple, notebook | Permalink
Posted by Oleg Kokorin
You never know where they hit. Once Apple admitted their iPhone 4 had the antenna problem, they had to either make a major recall (3 million units sold already) or provide everyone with a free iPhone case. Of course, it’s a no-brainer. So they went with the free cases and accidentally wiped out the market for iPhone case manufacturers. While it may seem that the smartphone case manufacturing is not an important business, still there are companies that make their money by making and selling the cases. I guess they could never imagine that Apple would start giving cases for free.
There is another point of view, that Apple has actually significantly expanded the iPhone case market, now that everyone is going to need one. Since Apple cannot create that many cases in a limited time, they will go and buy them from third-parties. However, Apple is a hard bargainer, so they will probably be buying a hundred for a dime, destroying the margins.
Market destruction with a free offer is a fascinating theme. The most famous example is Microsoft’s offering of IE and IIS for free, bundling it with Windows, and eventually wiping out Netscape Communications, once a $13B company. A lot of startups offer their services and products for free these days, in the hope of hitting it big via ads or some magic freemium model. This is basically a market destruction from the very beginning. When this happens, they don’t even need Apple or Microsoft to drop a nuke. The startups are destroying the market themselves.
Leave a Comment » | Competition | Tagged: Apple, free, iPhone, Microsoft, Netscape | Permalink
Posted by Oleg Kokorin
A good business is a company that generates profits. A good investment is the investment that grows significantly better than the market on average. If a company (Apple) exceeds another company (Microsoft) in market capitalization (i.e. it’s a better investment), but their profits don’t catch up, that means that the investment growth is based on faith. The faith that Apple will eventually generate better profits than Microsoft. That might happen or might not. And if that doesn’t happen soon enough, the investors will be disappointed and they will punish Apple’s capitalization. Simple as that.
Despite all the criticism, Microsoft is a very innovative company. They created tablet PCs, ebook readers, and Windows Mobile ten years ago. Too bad these things were too early for that time.
They created this 5 years before iPad:
3 Comments | Uncategorized | Tagged: Apple, iPad, Microsoft, Surface | Permalink
Posted by Oleg Kokorin
While nobody likes Microsoft, and Apple has recently topped their market capitalization, Microsoft remains to be a very strong business. There is a good post Microsoft by the numbers that shows it.
A few of my favorites:
$8.2 Billion
Apple Net income for fiscal year ending Sep 2009. [source]
$6.5 Billion
Google Net income for fiscal year ending Dec 2009. [source]
$14.5 Billion
Microsoft Net Income for fiscal year ending June 2009. [source]
What? Microsoft makes the same amount of money as Apple and Google COMBINED?
24%
Linux Server market share in 2005. [source]
33%
Predicted Linux Server market share for 2007 (made in 2005). [source]
21.2%
Actual Linux Server market share, Q4 2009. [source]
The Linux Servers were predicated to make Windows Server irrelevant one day. Looks like Linux is the loser now.
150,000,000
Number of Windows 7 licenses sold, making Windows 7 by far the fastest growing operating system in history.[source]
<10
Percentage of US netbooks running Windows in 2008. [source]
96
Percentage of US netbooks running Windows in 2009. [source]
Android, Chrome OS, anyone?
1 Comment | Competition | Tagged: Android, Apple, Google, Microsoft | Permalink
Posted by Oleg Kokorin
