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Apple gave up at least $30 billion of revenue by not launching a CDMA iPhone in 2007-2008

26 Jan

We have heard rumors that Apple was in discussion with Verizon to launch the iPhone. However, it was only in 2011 that Verizon started offering the iPhone. It has come to my attention that Verizon’s insistence on having an icon or two offering its own services and its refusal to offer the subsidies that AT&T offered could have been the deal breaker.

I realize that AT&T had an exclusive on the iPhone as it helped with development of the first generation iPhone. However, Apple could have given some concessions to AT&T on the rebate and launched the iPhone on Verizon in 2008.

Apple has sold around 150 million phones since the launch of the iPhone. I believe the number could have been close to 200 million if Apple had started offering the iPhone on networks like Verizon that use the CDMA network.  I strongly believe that the following would have happened if Apple had launched a CDMA iPhone  in 2007 or early 2008:

  • Limited Android’s market share to less than 25%. Remember, the first Android phone, the T-Mobile G1 did not launch till October 2008. More than fifteen months after the first iPhone went on sale and three months after the iPhone 3G went on sale.
  • Apple’s cumulative revenues could have been $30 billion (50m X $600) higher. I am assuming the average selling price per phone of $600(conservative).
  • Apple’s stock would be higher than $500 as the $30 billion in lost revenue would have generated additional earnings of $6-$7 billion at the minimum.

The biggest hurdle to offering the phone for GSM and CDMA could have been getting versions of both phones produced  have plagued virtually every release of the iPhone.

To be clear this post is not meant to be a rant against Apple which has executed exceptionally in the last decade. It is a simple – What if?

 

Apple posts quarterly revenues of $46 billion. Record iPhone and IPad shipments

25 Jan

I am truly amazed by the results that Apple posted today. Here is a summary of unit shipments IPhone’s and IPad’s:

IPhone – 37.04 million units. A 117% increase over the previous quarter and 128% increase over the year ago quarter.

IPad – 15.43 million units. A 39% increase over the previous quarter and 111% increase over the year ago quarter.

Here is the revenue breakdown by product:

Mac Desktop:$1.94b

Mac Portables:$4.66b

iPod:$2.53b

iTunes:$2.03b

iPhone:$24.42b

iPad:$9.15b

Peripherals:$0.77b

Software, Service and other:$0.84b

It is noteworthy that 75% of Apple’s revenues come from the iPhone and the iPad. iPhone accounts for 53% of revenues and the iPad accounted for approx. 20% of revenues. The iPhone did not start shipping till June 2007 and the iPad started shipping in April 2010. Both these products account for 72% of revenues. I am not aware of any other company that is able to generate almost three-quarter’s of its revenue from products that did not exist five years ago.

Unless there is a major disruption, I can envision Apple hitting $200 billion in revenues in a couple of years. Many have opined which company would achieve a $1 trillion market capitalization. My bet is on Apple. My thesis on Apple is rather simple. In the next 3-5 years, the company will:

  • Achieve at least 10% market share in the mobile device (cell and smart phone) market. Currently, Apple’s share is about 5%.
  • Achieve 15%-20% market share in desktop and portable computing. Currently, the share is around 10%.
  • Maintain dominant share of over 75%  in tablets

It is truly impressive to note that a company that offers only five  product lines (MAC, iPhone, iPad, Ipod and Itunes) is able to generate over $46 billion in revenues. If the much rumored iTV is to be released do not be surprised if Apple’s revenues increase by another $1o-$15 billion in the first year of its launch.

To help you understand the magnitude of the revenue. The $46.3 billion in Apple’s December 2011 quarter is:

  • Higher than Google’s entire 2011 revenue of $37.9 billion
  • More than double than Microsoft’s December 2011 quarterly revenues of $20.89 billion
  • 20% more than GE’s December 2011 quarterly revenues of $37.97 billion

The formula for insanely great profits comes from insanely great products. I often wonder why other companies do not embrace Apple’s proven model of creating products that are elegant and simple.

Hat tip to the Apple team.

Qualcomm and Duracell to explore a collaboration for truly wireless charging

6 Jan

Qualcomm and Duracell today announced that the two companies are exploring to work together to bring wireless charging to consumer devices. Qualcomm’s WiPower technology uses radio frequencies to transfer energy over short distances between a charging pad with a transmitter and devices that have a built-in chipset. The two companies will try to achieve an industry-wide standard for wireless charging and help OEMs to incorporate it in their gadgets. Hit the break for the complete press release while we go look for our charging cable.

SOURCE: Press Release

IDC: Barely known Chinese handset vendor is the second largest in India; Android gaining steam

29 Dec

Market research outfit, IDC, today released its Indian handset market report for the third quarter, which claims that Chinese handset vendor, G’Five, has dethroned Samsung as the second largest handset vendor in terms of handsets shipped. Nokia, which remains to be the largest handset vendor in the country with a market share of 31.5 per cent this quarter, which saw 41.08 million handsets. IDC predicts that this year handset sales touched 155.9 million units.

The number of emerging vendors in India’s burgeoning mobile handsets market grew to 68 and they together garnered 41.2%* of total shipments (sales) for the first time during the July-Sep 2010 quarter. This represented a steady rise from only 5 new vendors representing a 0.9%* combined share of units shipped in the January-March 2008 quarter.

To be honest, we are surprised how g’Five could topple the likes of Samsung and Micromax to become the second largest player. Many industry pundits whom I interact with often, tell me that many market research reports rely on the number of handset units imported into the country rather than the number of units sold at retail level. So if G’Five imported more phones than normal in the third quarter, its market share according to some reports will increase significantly.

What is really encouraging, however, is the smartphone market in India, which according to this report will touch 6 million units this year.

3Q 2010 saw a strong quarter-on-quarter (3Q 2010 over 2Q 2010) growth in smartphone sales by 34.2%* and a year-on-year (3Q 2010 over 3Q 2009) increase by 294.9%*. This clearly underscores the trend that India mobile handset consumers have started showing higher inclination towards adopting smartphones.

Smartphone prices continued to drop through the year and as competition increased, devices were made available by vendors at successively lower price points. So, while 80%* of total India smartphone sales were below the ASV (Average Sales Value) of Rs. 18,000 in 2Q 2010, this proportion increased to 90%* in 3Q 2010.

While many people within the trade doubt when I tell them Android is doing just as well in India as in some other mature markets, this report suggests that 9.4 per cent of all smartphones shipped in the third quarter were running Android as opposed to just 2.9 per cent in the same quarter last year.

To sum up, I don’t think handset vendors like Samsung and Micromax should lose sleep over G’Five, which at the moment seems more like an aberration than a trend.

SOURCE: IDC

TRAI mulls regulation to block stolen handsets

3 Nov

The Telecom Regulatory Authority of India (TRAI) has issued a consultation paper to seek opinions from carriers about blocking handsets that have been reported stolen from their networks. The move will help curb theft of cellphones as they won’t be able to use the phone on any network in the country. At the moment, in case of cellphone theft, subscribers can only get their SIM cards blocked and the handset can be used by anyone. However, if TRAI goes ahead with the proposal, subscribers will be able to get the IMEI number of their phone blocked on all carriers. IMEI is a 16-digit identity number, which is unique to every handset.

 

TRAI had mulled a similar proposal in 2004 but it could not be enforced as carriers at that time did not have the means to track and block IMEI numbers. However, in 2008, all carriers were asked to have such infrastructure in place as cellphones with fake IMEI numbers were posing a security threat. Since carriers have the infrastructure in place, it should be relatively easier to make it mandatory to block stolen cellphones. You can check out the consultation paper here.

Micromax loses its 'Bling'

31 Oct

Micromax, India’s largest domestic handset vendor, can no longer use the word ‘bling’ to sell its Swarovski crystal studded Q55 phone. The model is quite popular, especially among the fairer sex, but its bling campaign has fallen foul of trademark regulations. Bling Telecom, another local player which sells its phones under Movil brand, had filed a complaint with the Delhi High Court to restrain Micromax from using ‘Bling’ to sell the product. The next hearing in the case is scheduled for February 8, 2011.

While there is no doubt that the Q55 had been a hot selling phone for Micromax, we believe that the order will have limited (if any) impact on the handset vendor considering that the product is already nearing its end of life and has anyway become so popular that it need not advertise it any more.

SOURCE: Economic Times

Mobile Number Portability finally kicking in from Nov 1

26 Oct

After multiple delays, Mobile Number Portability (MNP) a service that will allow subscribers to change carriers while retaining their number, is finally set to take off in India. Telecom Minister A Raja has said that MNP will be rolled out on November 1 starting from Harayana Haryana, The Hindu reports. It seems that the service will now be rolled out in phases rather than launching Pan-India simultaneously as previously thought.

 

SOURCE: The Hindu