Mobile

In mobile, everything is still wide open

The mobile platform horse race is very entertaining, and a very reliable way to get page views. But it’s also, increasingly, a second-order question. So far, Apple and Google are both winning, in different ways. That may change over time - Apple may make a substantially cheaper phone or developers may shift to making Android apps first. But that’s really not a very interesting topic anymore - everything that can be said has been said, and it wouldn't even necessarily change very much unless you're an Apple or Google shareholder.

To me, the first-order issue is the sheer scale of mobile. We’re going from 1.5bn PCs on earth, either corporate and locked down or consumer and shared and in neither case really mobile, to perhaps 3bn smartphones, that are completely mobile and personal. This means that the internet, by whatever metrics you want to use, gets two or three or four times bigger. It also means the internet can 'eat' a lot of new sectors, across things like, say, retail or payments.

Within this, complexity. I think there are three big differences between the desktop and mobile internet: 

  • ‘Pre-Netscape’ - the desktop internet resolved pretty quickly into ‘the web, and everything else’, and didn’t change much for 20 years. Mobile does not have that single unifying interaction model. We have apps and app stores and messaging systems and iBeacon and a lot more besides, and none of this is finished yet - we do not have resolution into one settled way to do things. Everything is still changing. 
  • ‘Pre-PageRank’ - as a consequence of this complexity the door is wide open for ways for people to find and discover services and ways for companies to reach those people. After the early chaos of the web Google’s PageRank gave a single unifying vector - we do not have such a vector for mobile services. Given the much greater complexity and sophistication of the smartphone platform versus the PC web browser, we may never even get that one unified tool. 
  • Identity -  a smartphone is a a social platform in a way that a PC never was - it has an address book and many other features that apps like WhatsApp can leverage. But it isn’t clear what the point of identity that ties all of these together would be - is it the PSTN number? Email address? Facebook ID? Or some shifting mess of all of these? We have Facebook and Gmail, but it's almost as though we're waiting for them to be invented again. 

As platform owners, Apple and Google will play roles in shaping some of these (or, at least, they will try to). But really, the platform wars are over and everything is wide open. What you look at and how you engage with it, share it, find and discover it are all wide open opportunities in a way that hasn’t been true on the web for a long time. That makes this a really exciting time to be talking to entrepreneurs at a16z

Polarisation, continued

Playing with a new chart format. This shows quarterly handset unit revenue at the 8 'branded' handset OEMs, over the past three years. It includes all phones, not just smart.

Screen Shot 2013-05-02 at 5.15.40 PM.png

The polarisation of the industry is pretty clear. Not shown: the 'other category - Chinese OEMs making up increasingly large volumes for which this sort of data simply isn't available.

Smart devices versus Broadband lines

Sometimes the simplest observations are the most compelling.

According to the ITU, there are now around 650m fixed broadband lines in the world. 

In the 24 months to December 2012, around 915m iPhones, Android phones and tablets will have been sold. At the current rate of growth, which shows no signs of slowing, there will be twice as many of these smart mobile devices as there are broadband lines within a year.

Transient

Of course, real life is messier than that makes it look - you need to think about multiple users per PC and multiple PCs per connection, etc, etc. But none the less, the shift in the balance of consumption over the next few years will be profound. 

Polarisation, continued

Sometimes the simplest images are the most compelling.

Transient

This chart shows quarterly revenue for the handset units of Samsung, Apple, Nokia and the rest of the industry since July 2011. It includes some estimates for small points of detail it it is mostly just the data the companies report.

Apple (with cyclical swings) and Samsung are taking almost all of the growth - one taking the high end and the other taking all the rest. 

US Q2 smartphone share

As reported by the US operators, supplemented by some reasonable solid estimates on my part. The iPhone had around 47% share in Q2, roughly level with Android (RIM is now very small in the USA). 

2 years ago the iPhone was only offered by AT&T, which had 30% of the market. Today it is offered by operators with 80%. I strongly suspect that the iPhone ‘5’ will be ranged by T-Mobile (whose spectrum has been reconfigured, making this more practical): all things being equal that would take it slightly over 50% market share. 

This is especially relevant in the light of this internal Apple survey, disclosed today as part of the Apple/Samsung patent lawsuit: people choose operator first and phone second, especially in the US, given the highly variable coverage that operators provide. 

Handset revenue

Sometimes the simple charts are the best. This shows quarterly revenue for handset manufacturers (using the handset business unit for companies that do other things as well), for Q2 2012 versus Q2 2011.

In the last 12 months Apple and Samsung grew, as did Sony (from a very small base). All the other ‘traditional’ branded manufacturers shrank. In total, Samsung and Apple’s revenue grew by $10.9bn year-on-year: the other branded OEMs combined shrank by $6.3bn. 

(The Apple number is slightly misleading because it catches the company in a cyclical dip in iPhone sales - run-rate growth is higher)

Not shown: Huawei and ZTE plus (literally) thousands of other smaller manufacturers in China and now India, which is increasingly difficult to estimate with a straight face: many of these are effectively Mediatek vendors. In effect, the market is polarising between ultra-low-cost manufacturers at the low end and high-volume high-efficiency  manufacturers at the high end.

Another (slightly flippant) way of putting it: the market is polarising between quad-core phones and quad-SIM phones.