Apple Chiefs Discuss Strategy, Market Share, and the New iPhones | Hacker News Reader

Apple Chiefs Discuss Strategy, Market Share, and the New iPhones

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37 pointsolivercameron38 comments

The constant comparison of iPhone vs. Android to Mac vs. Windows is tiresome. Mac never had more than 15% market share. Microsoft won 95% market share not on its merits, but on the back of IBM's pre-existing mindshare dominance. So let's just put that idiotic comparison to rest. It's just as obviously not iPod vs. Zune, right?

(And despite never having had much market share, virtually every Windows program anyone uses started life as a Mac program and was ported to Windows, from Excel, Powerpoint, Photoshop, Illustrator, and Quark XPress, to the GUI version of Microsoft Word. Even Windows programs everyone hates, such as Flash, were developed on the Mac. Not DOOM though -- that was written on a NeXT Machine.)

As it is right now, Apple enjoys well over 10% of the cell phone market (depending on how you measure it, they are the dominant vendor in the US), having aimed initially for 1% of the smart phone market. They have something like 70% of the app market (in dollar terms). And they're doing it with a BMW strategy, not a GM strategy. You may recall GM recently went bankrupt while having the largest share of the US auto market. (Oh and how about Mac vs Amiga? Amiga vastly outsold Mac for several years and then Commodore went bankrupt.)

And most of this happened post-Jobs.

The Mac vs. Windows comparison is imperfect of course, but as quick comparisons go I believe it's an excellent one and highly relevant. It doesn't necessarily imply that Apple is going to become unprofitable again (stock price declines are another matter): it's more likely to find itself back in its year-2000 holding position than it is to crash in the short or medium term.

You're right about the influence of the Mac as an app platform. In fact, while people tend to think of Microsoft as an OS company thanks to MS-DOS in many ways MS is fundamentally a Macintosh ISV (a good Macintosh ISV, mind you) with delusions of grandeur. But then again, all these companies and pieces of software moved fairly happily to Windows-first when the platform and the market was there for them.

You're right that the Jobs issue is largely a red herring at this stage.

Apple was never the big loser to Microsoft. Commodore was the true loser if you are looking at market share. We get to talk about Apple because they survived and successfully transitioned to a new product line. Commodore couldn't do that with the Amiga.

Likely yes, but what of it? The argument from the Windows/Mac analogy is that iOS is probably headed for some level of niche status. It's not even that Apple is necessarily toast (though they certainly came near to it in '97). That Commodore got toasted even harder shouldn't invalidate that argument. (Commodore's trajectory was weird anyway. They were gone before Win95, and they were arguably killed as much by the XOR patent, the Atari-Commodore bloodletting, Sega and Nintendo or DOOM as by the IBM PC or Windows 3.1.) Maybe RIM is the new Commodore? ;)

I guess my argument is the Windows/Mac analogy was always false. The Mac was a machine that has kept trending upward in numbers sold for many, many years never starting with some dominant position to lose. The Mac never lost its market share to Windows because it didn't have it to lose. Beyond that, I really don't think any of the old thinking actually applies to the current cellphone market as the software exclusivity problems of the PC era are not really an issue these days. The whole environment has changed and the connections matter more. In other words, we are closer to cars than PCs since so much of what we do is actually standardized (text, call, web browse) like roads and gas.

I think there is a good comparison to be made with Mac vs Windows. Which personal computer manufacturer would you rather be, Apple or any of the Windows licensees? In terms of profits Apple goes to-to-toe with all the Windows licensees put together.

http://www.slate.com/blogs/moneybox/2013/04/16/mac_profits_a...

The difference is that in the Windows world it's Microsoft that makes all the money, but in the mobile world Microsoft and Google (willfully in the latter case) aren't profiting much either.

Edit - What interests me about this is a thought experiment. Suppose that back in 2007 Google had decided not to license out Android freely, but to produce their own phones and follow Apple's business model. They would have been the exclusive real competitor to Apple in the mobile space for the last 6 years. How much money would they have been able to make if the only Android phones were Nexus phones? They wouldn't have near Android's market share, but IMHO they'd have a very solid, profitable business on their hands.

Commodore went bankrupt unrelated to a low margin strategy, they were actually bankrupted by a patent troll during a risky attempt at entering the console market. The CEO and other executives mismanaged the company, but the story of Commodore's bankruptcy because a patent on the XOR Cursor (!) is one of the reasons I've had a lifelong hatred of software patents.

I tell this tale often, but the Amiga was in every way, a better machine than the Mac, so much better it's not even funny. The Amiga 1000 was half the price of the Mac it competed against went it sold, it had higher resolution, color, more RAM, multitasking operating system, expansion slot, hardware accelerated co-processing for display lists, blitting, and a good sound chip. In fact, the Amiga custom chips were better than every other consume PC graphics display at it's time, and it was that way for several years. The Mac128k was a ridiculously overpriced and gimped machine, and for someone who was a kid or teen, migrating from something like a Commodore 64, totally boring. If you were a young kid learning to do graphics or sound programming, the Amiga was inspiring. I probably would not have gotten into computers the way I did had I not be influenced to learn 6502/68000 assembly programming to write demos on the C64 and Amiga due to the multimedia capabilities of those machines, not to mention the excellent games.

BTW, while it is true that most productivity software originated on the Mac, most games originated on the PC, very very few games originated on the Mac and ported to the PC. iD games developed on NeXTs and SGI workstations were the exception, but again, still not a Mac, because until recently, Macs sucked for gaming, and have so since the era of the Amiga.

I don't think Android is going to kill Apple, but I think the writing is on the wall for it to become a niche. Most of the advantages Apple had have now been commoditized as the market matured. If you look at how open source Linux has devastated the server-side market as well as the embedded market, there's no reason the same thing isn't going to happen in mobile in the long term. It was a nice run, but I don't think Apple's dominance is going to last forever. And the BMW analogy is apt, because while BMW survives, they are just one brand out of many, and do not control or dominate the market unduly.

> iD games developed on NeXTs and SGI workstations were the exception, but again, still not a Mac,

The point there was that Jobs was responsible for NeXT as well.

True, but I don't think it's really relevant, just a nice anecdote. ID was one company, many many amazing, award winning games were developed on other platforms, yet we don't impart any kind of magical powers of productivity to them. When I was going to college, many labs had NeXTs, SGI workstations, or another Unix variant. It's very likely people who were of the same generation would gravitate towards those development environments when they left. The NeXT's strengths, like Interface Builder and Objective-C didn't really apply to DOOM for example.

I assume that Tim Berners-Lee's original Web client http://en.wikipedia.org/wiki/WorldWideWeb is a better poster-child for the NeXT environment and tools. (Not that any of this matters anyway, since no-one is denying that Apple and Jobs were both capable of impressive and influential work.)

If you think Apple fans can be rabid, check out Amiga fans :-) -- I frequently got flamed by fellow Amiga users for having a realistic view of the Amiga's limitations (such as not having a single usable word-processor -- and do not say ProWrite or Excellence -- neither could handle a 10-page document without choking).

Commodore did not turn an operating profit during any year in which they were selling the Amiga. The idea that it was just a patent troll is ridiculous.

The Amiga was ridiculously superior to the Mac as a piece of hardware (ignoring the lack of a good graphics mode for doing office work on -- you could pick between flickering display and rectangular graphics). It's OS was absolutely awful (AmigaDOS 1.3 or 1.4 -- don't remember which -- was actually created by Commodore licensing the ARP from hobbyists who'd rewritten most of the OS to suck less.)

If you want to talk about exactly what triggered the entering in Bankruptcy, it was the injunction caused by the XOR patent preventing the CD32 from shipping. (http://en.wikipedia.org/wiki/Amiga_CD32) Commodore stupidly went "all in" on the console market, no one knows if it would have been another Pippin, Dreamcast, etc failure. But it is not ridiculous, Commodore had moved manufacturing to the Phillipines and if there was no injunction, it is likely CD32 shipments (demand exceeded supply) would have repaid the short term debt they racked up allowing the company to continue as a going concern.

You may argue they would have been doomed eventually, but remember, Apple itself was almost bankrupt at one point.

Also, you claim about operating profits is false. One Google search was all it took to debunk, http://articles.philly.com/1989-02-01/business/26154229_1_ir... in 1989, EPS was $1.2 and the Amiga was selling well.

AmigaDOS was awful? Compared to what? The MacOS at the time was extremely primitive and ugly. Amiga had a real shell, it had ARexx, vastly superior to AppleScript, it had the equivalent of FUSE filesystems for tons of stuff, compression, networking (DNet), I regularly multitasked between my terminal/dialup and my programming environment. "Workbench", the drag-and-drop "Finder" equivalent was ugly and shitty, but Amiga users didn't use it for much anyway.

Yes, the Amiga was not a good "office" computer, it was a home computer, and in that regard, for the market it was targeting -- grown up 8-bitters, it blew away the Mac hard. I had a MacSE, it sat in a closet and in fact, running a MacOS emulator on my Amiga was a better experience than running the real Mac, and I only ran the Mac when I needed to run something required for college that was not available for the Amiga, and that was rare.

Nobody I knew in my age range when the Amiga came out gave a hoot about Word Perfect or Excel. The Amiga had perfectly usable, "Google Docs"-like simple word processors that were perfectly fine for most work. I did a lot of my college work with an awesome text editor and LaTeX on the Amiga.

There is nothing the Mac really had over the Amiga in it's day, except for AppleTalk, and some high end DTP software, at huge expense. For the home user, especially the creative person interested in art, music, or coding, the Amiga was far better. Compare MacPaint vs DigiPaint for example.

Commodore lost their lead by the time the MacII color and PC SVGA rolled out, because they did not put priority into new custom chipsets until it was too late. AGA/AAA arrived way after it had been surpassed by commodity SVGA cards, and the radical designs Dave Hayne/Jay Miner and others were working on for next-generation 3D graphics chips for the Amiga never got the resources.

Ultimately, they failed by mismanagement, but the fact that it took the industry 5-7 years to catch up with Amiga Hardware is a testament to how far ahead, how much of a step-function change, the Amiga was. It was the iPhone of 1985 IMHO, but too much ahead of it's time.

(BTW, the flickering issue in hires for people who needed it, was fixed by Flicker Fixers http://en.wikipedia.org/wiki/Flicker_fixer)

What triggered the bankruptcy is pretty irrelevant. Commodore had been losing money for the entire time the Amiga was on sale and circling the drain.

As someone who was both an ardent Amiga and Mac user, yes AmigaDOS was awful. Yes, it was a multi-tasking DOS -- awesome. The utility of the multi-tasking in AmigaDOS (given the way applications split screen real estate -- i.e. into horizontal bands) was in practice far inferior to what Apple kludged with desk accessories, switcher, and eventually multifinder. AmigaDOS also used weird and inconsistent command-line conventions (that ARP made both better and more consistent).

In any event, there's no point having multitasking if there are no decent applications. Amiga had, basically, DeluxePaint, games, and lots of cool software for facilitating piracy. (The Mac ports of DeluxePaint -- Studio/32 and Studio/8 -- were among my favorite all time applications.)

> BTW, the flickering issue in hires for people who needed it

Yes, having a third party hardware solution so you can display halfway decent office software is great. When I needed this, it wasn't available.

You could have multiple applications running on a single Amiga "screen". I remember running several windowed apps right on the Workbench.

AmigaDOS was pretty damn weird though. No arguments there.

“One thing that clearly surprised Apple and everyone else was how quickly Android took off,” says analyst Horace Dediu of Asymco, a research firm in Helsinki.

Maybe they spent too much time reading Asymco, who predicted Android would never attain more than 15% of the market and would have less than Windows.

"What do you have to believe for an Android dominated future?":

http://www.asymco.com/2010/11/03/what-do-you-have-to-believe...

if you read his piece, back in 2010, it still was believed that RIM and Nokia could hold their marketshare through BB and Windows Mobile.

what mr. dediu did not foresee was the complete ineptitude of two major players to accomplish anything. billions of dollars were wasted by these companies, it is quite amazing. therein lies the reason for nokia being gone in 2013 and blackberry laying off 40% of its staff.

the technology world is quite remarkable in its speed of change and unbelievablly massive changes of output quality. a market-defining leader can turn to a pile of steaming shit within a couple of years. imagine BMW producing Lada-style cars within the next product cycle.

and this closes the circle to the BW piece and Mr.Cook's statement - innovate or die.

So, I read the article and your summary is very poor - quite intellectually dishonest, really. He clearly lays out the conditions which would have to hold for Android to grow significantly, and it turned out that they were met (Nokia collapsed, Windows proved unable to compete with free, and Samsung was able to establish a viable Android business)

Well, that interpretation of the article ignores how Deidu was constantly saying it is unlikely these conditions would come to be (he says "unlikely" that Android licensing will beat Windows Phone's licensing, Android dominating is "wishful thinking"). Seems like your view is Deidu couldn't be wrong. If Android didn't become very successful, Deidu predicted it. If Android did, Deidu predicted it merely by saying there was a small possibility of it happening.

My view is that it's a fine article, that correctly identifies the issues that you need to address to make a prediction about the market. That's a good piece of analysis.

His actual prediction is beside the point - he laid it out in enough detail for the reader to intelligently disagree, if they had better information on the drivers he identified.

edit: tl;dr: "I expect iPhone and Android to get 20% share each." -- Horace Dediu

I quite clearly read his comments in square brackets as his predictions.

"The addressable market for modular solutions will have to grow much faster than that of inter-dependent vendors. [The chart shows in-line growth--again due to the overall growth of the market. The green guys above won't just roll over.]"

"The split of licenses between Android and Windows Phone within the addressable market must favor Android. [Again, this is unlikely]"

And his conclusion:

"In the end, the real limitation is that the brown area itself is not going to get disproportionately large. Android is limited by its addressable market and that market is a lot smaller than the whole market."

That's a clear, and clearly wrong, prediction. He lists a whole bunch of specific things that could go either way and predicts one consistent direction for all of them and they all came down the other way. That's a comprehensive failure.

He calls Android dominance "wishful thinking" and links that phrase to another of his pieces in which he says this:

"That simply means that no single platform can win a disproportionate share because it would threaten the balance of control the operators require. So talk of “dominance” of one platform or another is hyperbole. The most likely scenario is an even distribution of share between 4 or 5 competitors, so I expect iPhone and Android to get 20% share each."

So he was right about the iPhone (though they seem to have peaked), and wrong about the other 3/4 competitors in the market.

I suffer from mobile device analysis fatigue. Further who are all these analysts that get quoted in these articles? Is that their job to take stock of the mobile space and say things like “One thing that clearly surprised Apple and everyone else was how quickly Android took off,” says analyst Horace Dediu of Asymco, a research firm in Helsinki.

Did he talk to Apple? did they call him and say "Horace, this really surprised us." This is just pure speculation and a ridiculous statement.

I'm sick of people talking about iPhone's market share only to follow it up with "Android, meanwhile, continues to increase its market share". You're comparing an OS with a product, that's like comparing the market share of a Hyundai sedan with the market share of Shell fuel (if the Hyundai sedan could only work with a given brand of fuel). It doesn't make sense and it doesn't serve any purpose.

It does if you're thinking what OS/market to code your app for.

If Apple doesn't license it's OS to other manufacturers, that's their business decision, but they are (also) an OS maker nonetheless.

Well I seem to remember there was a time beating iOS as a whole was hard to believe, and some still think that's true for tablets, even though Android already has more market share in tablets (each quarter, not yet in total userbase), and it's only a matter of time until it more or less replicates the success in smartphones. This would've happened sooner, if Google's employees weren't so dense to think that they don't have to do anything to push Android tablets, and thinking that devs only need to let their phone apps scale to tablets, which in hindsight I'm sure they also realize what a stupid statement that was at the time.

When? iOS never had the dominant share (globally) - that passed from Symbian to Android.

I don't remember such a thing. If it was, it was brief. For the longest time, smartphones ran Symbian, PalmOS, Blackberry, or Windows Mobile (order varied by year).

Android phones largely took marketshare from the above. The original 2006 prototype looked largely like one of the devices above (mainly the blackberry) [1]. It was only after the iPhone that Android pivoted hard towards away from embedded keyboards.

[1] http://www.pcworld.com/article/254539/original_android_proto...

iPhone isn't a product, it's a product family, like Samsung Galaxy.

iPhone 5c, or iPad 3 or iPod Touch 5th Gen are products, and they all happen to run iOS, which is an OS, like Android.

Pure damage control.

Steve Jobs had a brain and a backbone to go with it. Not sure the current crop do. I hope they find someone with vision and an expiry date to inoculate Apple against the stupidity of business people.

I always find it so hilarious watching people go down this "if Steve Jobs was alive he would never do this" path. Because as was documented in his biography Apple's current strategy was at minimum signed off by Steve. And more than likely he was fully involved in crafting it.

But hey I am sure you're much smarter than the same management and design teams that has been in places during the invention of the iPod, iPad and iPhone.

Sounds like the management has installed Gruber and MG as their sources for getting talking points! Hopefully just talking points and not strategy.

Case in point - “For us, it matters that people use our products. We really want to enrich people’s lives, and you can’t enrich somebody’s life if the product is in the drawer.” That's bull. Apple doesn't really benefit from people using web on their iOS devices. They benefit from selling hardware. Let aside the validity of such "surveys" ( do they count Chinese and Indian web traffic and how? Because thats where growth is.) - even if they were valid it isn't anything for Apple to bank on.

> Apple doesn't really benefit from people using web on their iOS devices.

Not directly. But if you buy a tablet and it sits in the drawer, you probably won't buy the next one.

>> Not directly. But if you buy a tablet and it sits in the drawer, you probably won't buy the next one.

Yes.

Most of what I did on my iPad 1 was surf. Upgrading to iOS 5 killed my iPad (Safari crashes constantly) and it basically went into the drawer. iOS4 killed my iPhone 3G in an even more dramatic fashion.

While those OS upgrades happened in the age of Forstall, it is no longer a foregone conclusion that I would upgrade to an iPhone or iPad.

It used to be an easy decision, but now that there is more parity among platforms (compared to say, 2010), it's that much more important for Apple to ensure that people can continue using their device.

Hopefully with OS upgrades in the age of Federighi, we won't see as many performance crippling major releases as we have in the past.

So you switched to Android which is known for getting timely releases of software updates?

The Nexus devices are known to get timely updates.

I've only had my Nexus 7 since spring this year. There have been two updates, and both of them made my device faster, which was a refreshing change after having three iOS devices where OS upgrades made the devices slower, and in two of the cases, unusable.

While I'm more curious about WP8 to replace my iPhone 4, I have no issue with upgrading to an Android Nexus phone, given my experience with a Nexus tablet.

Well, if people don't actively use the Apple products they've bought then by definition they won't be having a good experience with them. If they're not having a good experience with Apple products then not only have the engineers and designers at Apple failed, but there will be no excitement or "buzz" that will inspire the owners of Apple products to buy new Apple products (for themselves or others) or recommend existing Apple products to others.

So, I don't think that the talking point is "bull". I think it was a grossly oversimplification of their business/design strategy.

It is "bull". The tablets are being bought and used mostly outside the US, primarily in Asia. If you compare global sales with US web usage you've got a mystery to explain because the figures don't match, which leads to theories like all Android tablets get bought and put in drawers.

If you look at web usage segmented by region it's clear that they're getting used roughly in line with installed base, which is higher for iOS tablets in the US than elsewhere:

http://www.tech-thoughts.net/2013/08/reality-android-tablet-...

Actually, it's Jeff Bezos's talking point from the Kindle launch. He was basically saying, Amazon only benefits when people use their devices, so Amazon doesn't care about margins on hardware. This was a dig at Apple, for whom, once the device is sold, the majority of revenue is made (App Store doesn't really contribute hugely)

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