Monday, September 13, 2010

Innovation vs Commoditisation of the technology Market

"Commoditysation" only occurs if there is lack of innovation. And by innovation I don't mean introducing a faster or smaller processor that that does the same thing but entirely new set of technologies that destroy the current market balance.

The Netbook was a product of extreme commoditisation. Nothing new, just the old stuff produced at extremely low cost and smaller size. A smaller and cheaper computer, not a better computer.

Now consider the iPad. While its component cost is similar to that of a netbook, the mix is entirely different as are the technologies used. The result, a dramatic new level of functionality rendering the netbook obsolete in many respects.

Most companies on the market today benefit from commoditisation. The reason is that they do not produce a complete product but rather compete for the parts of somebody else's product. Those that offer complete solutions however benefit from innovation more. The reason here is that profits are greater when your product offer something new, rather than counting on your suppliers to provide you with the same but cheaper components.

The question comes down to which force on the market will dominate? Well, evolution did not result in humans by making the DNA a commodity. It constantly experimented with a new variations and it constantly introduced new strains and mutations.

Between 1985 and 2005 there was a force in the technology market that choked innovation by constantly searching for it and destroying it using its market power. That was Microsoft. For 20 years the only thing that changed in the computer market was the speed of the components. The PC remained the same. Thing only looked prettier. Only only need to remember that they even tried to make the phones work and look like a PC!

However, even Microsoft could not be everywhere. One of the things they missed to swash in time was very small but very important "organism". It was called the iPod. It eventually grew to dominate the market not by destroying it but by out-inovating it, trough a new "DNA mix" every year. Sometimes one of the new iPod species did not have a successful "DNA mix" (iPod with 4 buttons, iPod Video, iPod Shuffle 3rd gen). However, its creator Apple kept trying harder and harder even when there was no other competition in the entire "food chain" left. The iPod now only competes with itself, but it has not stopped to try a new "DNA mix" every fall.

Unless the technology reaches a fundamental "bottleneck" or a higher power demands the stop of this constant innovation arguing that ever increasing GDP is unsustainable, the world will not plunge into another era of technological commodisaton.

Until that day, the creator that is Apple is likely to mirror the "evolution" success of its "species" in every market niche, as long as everybody refuses to build a complete solutions and rely on commoditisation.

Saturday, September 11, 2010

Gartner make another laughable prediction

Apple is projected to sell 130 million iOS-based mobile devices per year by 2014, but both Google Android and Nokia Symbian are expected to each double that amount, according to Gartner.
This is such bullshit. The only way you can make prediction about sales of devices is to know what devices will be selling.

Can anyone actually guess how many iOS devices will be on the Market in 2014?

BTW, the iPhone sells at 4 million a month now, the iPad is a 2million and the iPod touch at 3 million. That 103 million units per year right about now. And apple is working on constantly increasing that. In fact Apple has been more than doubling its production capacity every year so far.

So - shipping rates per year so far:
2007 - >9 million (iPhone + iPod touch)
2008 - >20 million (iPhone 3G + iPod touch)
2009 - >45 million (iPhone 3GS + iPhone 3G + iPod touch)
2010 - >100 million (iPad + iPhone 4 + iPhone 3GS + iPod touch)
2011 - ?
2012 - ?
2013 - ?

And Gartner predicts this:
2014 - =130 million . I mean, WTF Gartner !?!

So, how about I make my own prediction: Apple will be shipping a iOS devices at a rate of 130 million a year before the end of 2010

Friday, September 3, 2010

The "no iPod touch clones" mystery

Has any one noticed how all the iPod models got lower case identifier names now. The iPod Touch is now iPod touch, the Nano is nano and so on. Is Alppe trying the emphasize the iPod part?

Also, up until now Apple was selling a 2nd Gen iPod touch model at $199. Now for $30 more you get a 4th gen device.

Back to the mystery after this though detour...

So Apple makes the iPhone in 2007 and changes the whole phone industry. Everybody wants to have an iPhone clone in its line up. 3 years later there are countless iPhone wannabes

Apple also makes another device that they call the iPod touch. It is the phones without the phone and even less (no GPS, camera and all) and represent 1/3 of all iOS devices sold. The incredible thing is that there are 0 - zero iPod clones that challenge in any way the touch. The Zune does not count as it was clone of the iPod touch from 2007 but in 2009 (2 generations behind)

For some reason the only thing companies are successfully cloning from Apple are 3G enabled devices. There is no clone yet, coming for the iPad Wifi. Alldevices have 3G antennas build. No only that, they all preserve the phone functionally. At best the only thing they are cloning is the iPad 3G. There is no contract free iPad clone that is available widely.

If I had to make a guess as to why this is the case, it would be that a 3G device is a lot more profitable and/or a lot more sellable.

If I had a second guess as to why is that, it would be that only carriers have retail locations and store partnership. Only a Carrier can potentially market and sell a device since no one else but Apple has 300 stores and retail network that has nothing to do with phones. Only Apple has the complete product distribution solution.

If I had to make a third guess, it would be that Carriers are only interested int 3G (phone) enabled deices as only trough them can they make a profit. Consequently, no Android device would be sold if it does not have a 3G phone feature.

If HTC were to market and sell the devices it sells all by itself, it would have had to incorporate the cost of the retails store and advertising into the price of its products. People constantly complain about the Apple tax on products, yet no one even tries to measure the cost of ex. renting a super huge palace like the 300th Apple store in the middle of London and making it profitable. Most of the 40,000 Apple employees work in retail. They are support personal and they earn good salaries.

If my analysis is correct then we would never see a 3G less iPod Touch clone.
Same for the iPad.

The only company big enough to replicate the Apple complete product matrix and distribution solution would likely chose its own operating system too.

Seams like the Android platform has shot its one leg off right from the start. Even if there are eventually more Android Phones and Tablets than iPhone and iPad 3Gs, there will be just as many if not more iPod touches and iPads.