About Mark Mulligan

Music Industry analyst and some time music producer. Vice President and Research Director with Forrester Research

Why Google Needs to ‘Do an Apple With Motorola’ to Make Play a Success

2012 has been a fantastic year for smartphones, with penetration pushing past the 50% mark in key markets such as the UK and US (some estimates even put US penetration as high as 70%).  Apple’s iPhone is the leading smartphone in most key markets but Google’s Android Operating System (OS) has much larger market share: c. 70% compared to c. 20% for iOS (Gartner estimated global market shares to be 64% and 19% respectively back in Q2 2012).  But these market share statistics can be misleading, particularly when it comes to understanding the digital content and services marketplaces.

Android Fragmentation Complicates Content Strategy

The fragmented nature of the Android landscape is well documented but close analysis of key metrics reveals some startling trends with significant implications for content providers (see figure):

Of course there are many mitigating factors, but that simply does not matter from a consumer perspective nor indeed from a content owner’s perspective.  Both iOS and Android have got vast App catalogues (750k and 650k respectively) and both have vast numbers of apps downloaded (35 billion and 25 billion respectively).  Both also have huge installed bases of devices: 450 million iOS devices and 600 million Android devices.  But there is only one clear leader in paid content: Apple.

Looking just at music sales, Apple’s music annual music sales (based on the last reported 12 months) equate to approximately $4.00 per iOS device, compared to just 50 cents per Android device.  Apple wins in part because of its longer presence in market, but more importantly because it exercises complete control of the user journey in a closed ecosystem.

 

The Importance of Closed Ecosystems

The success stories of paid content to date are closed ecosystems: iTunes / iOS, Playstation, xBox, Kindle.  Though the controlled nature of these ecosystems may limit user freedom, they guarantee a quality of user experience.  In these post-scarcity days of content, the quality of experience becomes a scarce experience which people are willing to pay for.  Google simply cannot exercise that degree of control because of its pursuit of a less-closed (but not wholly open) ecosystem strategy.  It depends upon device manufacturers to determine the user experience and also gives other value chain members much more control, such as allowing operators (Vodafone) and retailers (Amazon) to open their own Android stores, as well as, of course handset manufacturers (Sony).

Smartphones with Dumb Users

In a pure mobile handset analysis this doesn’t matter too much.  But from a content strategy perspective it matters massively so.    The problem is compounded by the fact that that as smartphones go mainstream the user base sophistication dilutes.   With so many consumers increasingly buying smartphones because they are cheap and on a good tariff, rather than for their smartphone functionality we are ending up with a scenario of smartphones with dumb users.  (I am indebted to my former Jupiter colleague Ian Foggfor this phrase). This factor arguably affects Android devices more than it does Apple devices because a) they are more mainstream b) they are often cheaper.  This matters for content owners because the more engaged, more tech savvy smartphone owners are also the ones most likely to pay for content.

Google Needs to ‘Do An Apple’ and Not ‘A Microsoft’

With growth slowing in the digital music space, it is clear that new momentum is needed.  Google is potentially the strongest opportunity to bring mass market traction to the digital music space, but currently its music strategy, and paid content strategy in general, is falling short due to all of the reasons outlined above.

Google does however have an incredibly strong set of assets at its disposal, in terms of installed based and growing adoption.  If Google is serious about making its Play strategy a success then it needs to start putting itself first.  Back in the early 2000’s Microsoft expected to be the dominant force in digital music because Windows Media Player was the #1 music player and Windows DRM was the industry standard rights protection.  But instead of pushing ahead with a bold Microsoft music offering it relied upon its hardware and services partners to do it for them.  Just as Google now is sensitive to the concerns of its commercial partners, so Microsoft was then.  Of course Microsoft lost the battle and their softly-softly approach was powerless to fight off the rapid onslaught of iTunes.   Microsoft eventually realized that it needed to go it alone, launching Zune, but it was too little, too late.  Interestingly there wasn’t much a backlash from commercial partners when it did so. Launching a standalone music strategy was actually compatible with being a platform partner.

Now Google has an opportunity to learn from both Microsoft’s mistakes and Apple’s success by turning its recently acquired asset Motorola into a closed Play ecosystem to rival iTunes.  This doesn’t preclude Android partners from continuing to build their own devices and app stores, but it does create a paid content beachhead for Google, from which it can build a base of highly engaged digital consumers who will quickly learn to value the benefits of a high quality, unified content and device experience.  In a Motorola ecosystem Google can truly allow Google+ and Play to become the glue that binds together its diverse set of valuable assets.  Without it though, Play will continue to struggle for relevance in a fragmented and confusing Android user journey.

 

UltraViolet: Analogue Conservatism Masquerading as Digital Innovation

When UltraViolet – the movie studios cloud locker play – was announced last year it rightly caused something of a stir.  Finally the uber cautious movie studios were taking a lead in digital content strategy.  However since then the project has faced a number of criticisms ranging from clunky implementation through to lukewarm consumer adoption (approximately 1 million users have registered to use the service since its October launch).  This week Ultraviolet got two welcome boosts, in the shape of Dreamworks signing up to the initiative and, more importantly, Walmart pushing ‘Disc to Digital’ – its implementation of UltraViolet – across US stores. But as encouraging as these developments are, UltraViolet remains doomed to failure unless it undergoes substantial change.  UltraViolet is an evolutionary, sustaining technology at a time when the movie industry needs transformational innovation. Disc-to-Digital is a Sustaining Innovation Designed to Protect Analogue Business Models With Disc-to-Digital consumers are expected to take their old DVDs and Blu-rays into Walmart so that they can then pay $2 per title for the privilege of being able to watch the movie again via Walmart’s VOD service.  DVD owners have to pay $5 if they want to view the HD version. In short, consumers are expected to pay an extra fee to watch an old movie they have already got and have already paid for.  If this ever takes off I will eat my hat….if I wore one. The problem with Disc-to-Digital is that it is a sustaining innovation designed by the movie studios to protect their traditional business while at the same time giving the gentlest of nods towards digital.  But as appealing an option as sustaining innovations can appear they typically leave traditional companies vulnerable to decimation by disruptive technologies that do a much better job of meeting consumers’ needs.  Recent history presents us with illustrative precedents: while the record labels locked downloads in DRM file sharing went global; while Nokia clung to keypads Apple and Android touch screen smartphones stole their market leadership.  Disc-to-Digital is no different.  The movie studios are missing a crucial opportunity to grow their market with transformational innovation. The Physical Video Product Transition Needs to Start Now Of course with transformational innovation comes disruption, but the price of doggedly clinging to modest incremental changes while consumer behaviour lurches forward in quantum leaps is to end up like the news or music industries, presiding over dramatic loss of revenue.  Movie studios have been partially cushioned from disruption by the unique experience that movie theatres continue to deliver even in the face of numerous digital alternatives.  Although the day-date release debate continues to rage, of more pressing need is overhauling physical sales strategy.  DVD and Blu-ray sales are crucial to studios and are often the way that movies actually end up turning a profit.  Blu-ray proved to be a mistimed and ill-judged last throw of the physical product dice.  Titles priced too high for marginal additional consumer benefit, at exactly the same time that consumers were being presented with a host of new ways to get video content into their living rooms, such as VoD, PPV, IPTV and PC streaming. The net result was that Blu-ray failed to drive the universal format replacement shift that DVD had done.  Many consumers will simply skip Blu-ray, ignoring the last chapter in physical video formats en route to on-demand alternatives. All of which underscores just how important it is for movie studios to play a proactive role in driving the digital transition of their customers, even if that comes at the cost of hastening the demise of the evolutionary dead-end that is Blu-ray.  If movie studios don’t hold their customers’ hands on this journey then consumers will make the move without them and a priceless opportunity to have some degree of control over the digital transition will be lost. This Narrowing Window of Opportunity is the Most Pressing Window Argument Forget the release window debate for a moment, this narrowing window of opportunity is the window that the movie studios should be occupying themselves with.  The book publishers have been uniquely fortunate to be able to help shape their industry’s digital transition by being intimately involved with the technology that triggered readers’ digital transition i.e. eReaders.  Although the digital cat is already out of the bag for video, the digital consumption journey for mainstream consumers is only just beginning and the movie studios have the opportunity play an influential role in that process in a manner that record labels and newspapers would bite their hand off for. UltraViolet could yet prove to be the vehicle – the importance of having most of the big studios pulling together should not be underestimated.   But charging your most loyal customers $2 for the privilege of watching an old movie they’ve already paid for is not a strategy.  The role of UltraViolet should be to deliver new, high quality, convenient digital experiences for customers, not to squeeze extra income out of them for products they have already paid for. Until that change is made though UltraViolet will remain a sustaining innovation aimed at protecting the old way of doing things and as such wholly inadequate for helping the movie studios transition their physical sales businesses.

For more on media product innovation strategy get my latest report ‘The Media Format Bill of Rights’.  Just sign up for email updates to this blog to receive your free copy.

The Media Format Bill Of Rights: A Manifesto for the Next Generation of Media Products

Today I have published the first Media Industry Blog report:

The Media Format Bill Of Rights: A Manifesto for the Next Generation of Media Products

The report is available free of charge to subscribers of Media Industry Blog (to subscribe simply submit your email address in the form on the top right of this page).

The Media Format Bill of Rights builds upon a series of concepts and frameworks first discussed in the report ‘The Music Format Bill of Rights’ (which can be downloaded here).  Although some principles translate cleanly across other media industries many others have a more complex story.  This report looks at just how diverse the challenges are, and makes the case for a media product innovation framework across multiple media industries.  Here are a few highlights.

The Future of Paid Content Is At Stake

With the notable exception of games, media industries have failed to translate the digitization of consumer media consumption into digitization of their revenues. Digital revenue shares will continue to either remain stuck in single digit percentages or help pull down total revenues for as long as the digital products they depend upon fail to fully embrace the capabilities of digital interactivity. Digital content products need dramatically reinventing for the digital age, to be built around four fundamental and inalienable principles of being Dynamic, Interactive, Social and Curated (D.I.S.C.).

This is the case for nothing less than an entirely new generation of media formats and products. Products that will be radically different from their predecessors and that will crucially be title-specific, not store or service specific. Rights owners will have to overcome some major licensing and commercial issues, but the stakes are high enough to warrant the effort. At risk is the entire future of paid content.

The Consumption Era Has Yet To Be Monetized

Ever since consumers started downloading from Napster and ripping DVDs and CDs the balance of power across all media industries shifted from media company to audience. The digitization of content consumption is firmly established, yet the same cannot be said of media business revenues.  Digitization is transforming consumers’ relationships with content and threatens 20th century media business practices with obsolescence and irrelevance. And yet, even though the PC and connected devices are stealing ever larger shares of media consumption, only the Games and Music industries have managed to convert more than 5% of their total revenues to digital products. And for the music industry it is hardly a success story, with overall revenues declining more quickly than digital can make up for. Underlying the cross-industry inability to successfully monetize the consumption era is a recurring theme: the lack of new products and formats tailor made for the digital age. The Games Industry got it right (witness the continued growth from mobile and social gaming, and the ability of consoles to flourish even as the retail channel perishes) but other media industries have yet to get there.  Three core factors underpin these challenges:

  • Content scarcity is gone
  • Concepts of ownership are fluid
  • Consumers consume more yet pay less

Piracy is Both Cause and Effect

Piracy is routinely held up as a root cause for media industry problems but is in fact as much symptom as it is condition.  Piracy has flourished in its many forms because it has moulded itself most closely to changing consumer demand.    The history of 20th century media businesses can be mapped by format milestones: vinyl, VHS, the DVD, cable TV, the CD. The download and the stream were the first tentative steps towards a new wave of formats and didn’t ever get out of first gear. They are transition technologies that failed to become the holistic format milestones for their age that predecessor formats were. Previous media formats shaped and dictated revenue growth, digital heralded decline. Why? Because the download and the stream are owned by audiences as much as they are by media companies.  And media companies haven’t yet realized that because these democratized quasi-formats are fantastic consumer tools they therefore need to ensure their products do more, much more. This is no longer a dubbed-cassette-copy-versus-original-CD arms race. Consumers can create digital content every bit as good as good as that of media companies.

The harsh reality is that convenience, portability and quality are the standards which consumers already get from free and illegal digital content products.  Paid content strategy must be founded on going above and beyond these digital basics.  Premium digital products and formats must deliver rich and interactive experiences that are:

  • Dynamic – always change and update with new content
  • Interactive – empower user participation and customization
  • Social – place social functionality and connectivity at the core
  • Curated – curate discovery and editorial

Embracing Disruption

It would be puerile to suggest that the D.I.S.C. principles apply uniformly across all media types. Applicability varies and of course implementation must be tailored, but the fundamental principles have vital relevance across all major media industries. The media industries are now at a juncture where embracing disruption can save them from perpetual decline and potential annihilation. The paradigm shifts in media industry business models and consumer behaviour have been happening more quickly in the last 15 years than ever before, but these changes are still only a small part of much bigger processes that have many years yet to play out and which will come to full fruition when the Digital Natives generation come of age. D.I.S.C. strategies need pursuing now, before the condition is incurable. Media companies can identify the size of the format innovation opportunity by combining the applicability of D.I.S.C. principles to their industries with the scale of industry-wide disruption they are experiencing (see figure). But acting now rather than later will be the difference between using D.I.S.C. as a catalyst for growth as opposed to an air bag to cushion the blow of a market crash. Timing is everything.

To read the full report, which includes industry-by-industry analysis, simply subscribe to Media Industry Blog using the email form at the top right of this page.  If you are already as subscriber but haven’t yet received your free copy please email musicindustryblog AT gmail DOT COM.

Full table of contents of ‘The Media Format Bill of Rights’

  • The 20,000 Foot View
  • Setting the Scene
  • The Media Consumption Pendulum Has Swung Sharply
  • (Apparently) The Revolution Will Not Be Digitized
  • It is Time to Jump Off The Treadmill
  • Digital Does Not Need to Mean the Death of Ownership
  • The Media Format Bill Of Rights
  • Applying the Laws of Ecosystems to Media Formats
  • Building the Future of Premium Media Products
  • Applying the Media Product Bill Of Rights Across all Media Industries
  • Embracing Disruption is Risk and Dangerous But a Necessity
  • We Are In the Per-Person Age, Not the Per-Device Age
  • Conclusion

Google Consumer Surveys: A Third Way for Content Strategy

Google’s new Consumer Surveys product is a typically disruptive innovation from the search giant.  Leaving aside the massive disruptive threat to survey vendors, Google Consumer Surveys gives publishers a new consumer monetization tactic that will help reduce the recurring conflict between paid content and ad strategy.  A struggle which often begets strategic paralysis.

Freemium Strategies Don’t Work So Well When Advertising Pays the Bills

Paid Content hasn’t been the runaway success story publishers hoped for.  The real success stories of paid content are tied to device ecosystems: iTunes, xBox, Play Station, Kindle etc.  Publishers however don’t have the benefit of ecosystems and have instead had to grapple with converting small single digit percentages of their audiences to digital subscriptions whilst desperately trying not to kill the golden goose of advertising revenue, the tactic for monetizing free use. The problem with this twin track, freemium model is that though it works well enough for music services like Spotify for publishers it creates a tension that threatens the core of their digital revenue strategy, putting paid customer acquisition in direct competition with ad revenue.

Take the example of the New York Times.  The Times is one of the more progressive and innovative of publishers in the digital arena yet they are grappling with how to grow their paid content customer base.  Despite having a very popular website with more than 30 million monthly unique visitors and a monthly print circulation of 30 million the New York Times has only converted 454,000 of those consumers into paid digital subscribers.  That’s a free-to-paid conversion ratio of 1.5% compared to Spotify’s US conversion ratio of roughly 13%.  Freemium just doesn’t translate as well for online news.  The Times’ near term solution is to scale back what is available to non-paying site visitors in an attempt to nudge the next wave of potential subscribers over the paid content hump.  But such a strategy has massive risk.   With just 1.5% of its monthly visitors paying for content, the Times relies heavily upon advertising for monetization rather than being able to view it as a loss-leading customer acquisition funnel in the way that Spotify can.  Scaling back free content will inevitably have an impact on site traffic and thus on advertising revenue. So publishers are faced with the risk of an overly ambitious paid content strategy killing off their advertising business, with the hunt for extra revenue effectively having the polar opposite effect. This is problem that Google  Consumer Surveys helps solve.

Consumer Data: the Third Way for Content Monetization Strategy

One of the most important dynamics of the shift in consumer content consumption in the digital age has been a paradigm shift in perceptions of value.  Because most of the content that is consumed digitally is free it is easy to, wrongly, assume that consumers do not value content anymore. Consumers do value content, they just don’t have to pay for it anymore to value it.  They also value much more than just the quality of the content itself, they value things like convenience, experience and immediacy. The problem with paid content strategies is their fundamental assumption that consumers still only transact in monetary currency.  Digital consumers in fact transact in three equally valuable currencies (see figure):

  • Money
  • Time
  • Data

Freemium strategies predominately play to the first two of those currencies.  Google Consumer Surveys enable publishers to start harvesting that third currency by getting consumers to part with personal data in return for ‘free’ access to content that they would otherwise pay for.

Google Consumer Surveys are not an alternative to paid content or advertising, but instead a complement.  They enable publishers to more easily build blended content monetization strategies that soften the increasingly adversarial relationship between advertising and paid content.  Of course some best-practice publishers already pursue effective triple tier content strategies, but now Google have just made it a lot easier for everyone else to join in.

Game: How Not to Survive a Digital Transition

It has been an eventful week for the UK Games industry with leading national retailer Game first suspending trading in its shares and then calling in the administrators.  Yet this morning the Electronic Retailers Association announced that Games have just become the largest UK entertainment sales category.  So how can these apparently contradictory dynamics co-exist?  The answer lies in the success of Games as a digital product, or rather series of digital products.

It is Gaming Channel Strategy that Is Undergoing the Digital Transition

The modern day games industry has always effectively been a digital, or at least electronic, business, selling software than exists only in digital contexts.  What has changed since the first Magnavox Odyssey video game console in 1972 is that the channel strategy has become ‘digitized’.  In the console arena, online marketplaces allow gamers to download directly to their consoles, in the PC space retailers such as Steam enable games to download directly to their computers and in the mobile and tablet space, well they’ve been digital from the start.  Thus we have the global Games market with the largest digital transition of any entertainments sector: 39% compared to 29% for music and 4% for newspapers according to PWC.

The more digital the UK Games market became, the more exposed Game became.  With 300 stores across the UK, Game is to UK Games sales what HMV is to UK music sales, in more ways than one:

  • It has a dominant high street footprint
  • Its core market of physical buyers is shrinking
  • It faces fierce digital competition on multiple fronts
  • It lacks the device ecosystem of many of those new competitors
  • It hasn’t translated its physical dominance digitally

The Games Industry is a Digital Transition Best Practice

There are also some telling differences between games and music:

  • Unlike music, the game industry’s physical customers are not analaogue hold outs. A large portion of physical music buyers, the Digital Refusniks are often older and do not tend to be very technology minded or web-literate.  Physical games buyers however are quite the opposite.  Gaming is a technology centred activity and many of those gamers who still buy physically are younger, pre-credit card age Gamers.  Thus while the music industry frets about how to persuade the Digital Refusniks to embrace something alien to them, the physical games buyers will naturally transition to digital.
  • Digital opens up new gaming audiences in a manner music companies would dream of. Whereas digital has largely transitioned the music industry’s most valuable existing customers, digital is opening up new markets and customers for games.  The average profile of an online social gamer is an early 40’s woman.  Not exactly your core xBoxer.  Similarly mobile app stores are bringing whole new swathes of consumers into the gaming market.

Digital is a success story for the Games Industry.  The struggles of Game are a reflection of the company’s inability to construct a long term and effective digital strategy, not of the state of the games industry.  The future is bright, the future is digital, for the industry if not the high street retailers.

Hotfile: If It Looks Like A Duck…

A brief post to get some facts and sense into the continued fallout from my quotes on the BBC about HotfileTech Dirt’s otherwise fair and balanced piece unfortunately misinterprets a key issue as do many of the comments there.

Here’s the original quote that caused all the controversy:

“If the service providers are serious about wanting to heed the industry’s concerns then instead of assuming that all of the content is legitimate until found otherwise, they should actually assume that most of the content is illegal and take action.”

I stand by that quote 100% but let’s be crystal clear what it means: the service providers (i.e. the Locker services such as Hotfile) should stop misusing Safe Harbour arguments and admit to what they already know, i.e. that most of the content up there is copyright infringing professional content.  It does not however mean that it should be assumed that the average user of the service is uploading infringing content.  Indeed there are plenty of legitimate uses, but the majority of the content is not legitimate.  And I invite anyone to provide evidence that shows otherwise.  Until then I’ll apply inductive reasoning:  If it looks like a duck, swims like a duck, and quacks like a duck, then it’s probably a duck.

A Simple Equation

So how I can simultaneously argue that the majority of content on Hotfile is illegal but the majority of users are not necessarily uploading illegal content?  The answer lies in a simple equation:

A minority of users (typically Hotfile’s pay per click affiliate partners) upload almost exclusively pirated material and account for the majority of files.

Thus the majority of content can be illegal even if the majority of users don’t populate it with illegal content.  Unfortunately those people who do upload legitimate files, such HD home movies, HD training and educational videos etc.  are essentially Hotfile’s human shield.  Hotfile is in the business of making money via illegal content.  They are not a Dropbox.  They are not in the business of making money off files which will have audiences numbered in the 10s, 100’s or low 1000’s.   And the majority of people who seek out Hotfile for content (though probably don’t upload themselves) do so to find illegal content.  If in doubt, take a look at any of the satellite sites which are used to navigate through Hotfile’s vast database.  For example the tag line on the most popular Hotfile search engine, aptly name Hotfile Search Engine is

“Search Everything on hotfile.com. Free Movies, Games, Software, Music…”.

If Hotfile Wants to Go Legit It Must Sacrifice Much of Its Revenue

So let’s not dress up Hotfile for something it is not.  It is a site designed to make money from unlicensed content and the majority of files and traffic are for that same unlicensed content.  If Hotfile really want to go legit they need to ban the affiliate customers who repeatedly upload illegal content.  Of course if they did that they would lose their core revenue stream.  But if Hotfile are serious about being legit then that is exactly what they need to do.  Until then, all of the Safe Harbour bluster only goes to pollute and discredit this incredibly important basic tenet of the web.  And once Hotfile finally goes down the tube, which it will, it is the rest of us who will be paying the price of more draconian legislation because Hotfile just shot Safe Harbour between the eyes.

Why Apple’s Dividend Payment Is Actually a Product Strategy Story

Let me say upfront that I’m not a financial analyst so this post is intentionally light on financial analysis, focusing instead on the strategic perspective.

Apple’s decision to use approximately half of its vast $97 billion cash surplus in a mix of dividends and stock repurchase says as much about the company from a strategic perspective as it does financially.

In these days of low interest rates on savings, having large reserves of cash isn’t the strategic plus it once was, which is why financial analysts and investors haven’t exactly been getting wildly excited about that $97 billion being left to sit in the bank.  By deciding to pay a dividend to shareholders and to repurchase stock, but to leave half the money untouched, Apple is able to have its cake and eat it. It has sent a positive message to the market, allowing investors to share further in the company’s current prosperity but at the same time it will retain approximately $50 billion, a vast chunk of working capital.   To date Apple has been using its cash reserves to fund areas such as product development, strategic investments and retail stores.  Apple has had the benefit of being able to invest in its own business in an organic manner with the agility necessary to anticipate and meet market changes and consumer demand.  It is no coincidence that during the same period Apple has been able to develop an unprecedentedly successful portfolio of products.

Apple’s Message: Innovate to Win, Not Acquire to Win

A common strategy for successful companies is to buy their competition out of the marketplace, particularly when that company has large cash reserves or easy access to capital.  But such a move isn’t for Apple.  In so many of their product categories Apple is the leader, in terms of either market share or innovation leadership, often both.  Apple could have, for example, bought a handset competitor, just like Google did (though for different strategic reasons) when it acquired Motorola for $12.5 billion last year.  But instead of going down that path, Apple is holding true to its current course and its core values of building better products.  A point underlined by CEO Tim Cook’s quote from yesterday:

“Innovation is the most important objective at Apple and we will not lose sight of that.”

Apple Is Still Surfing the Success Wave

By meeting the markets half way with a dividends pay out Apple helps put one set of persistent questions to bed, allowing it to focus market attention more squarely on the product story.  And by committing $10 billion to stock buyback Apple is also showing the market just how much it believes in itself.  Apple continues to ride the crest of a very, very big wave.  It has been on top of its game for close to a decade now, establishing leadership in its three core device categories with the iPod, iPhone and iPad.  Without compromising its pricing and positioning principles, Apple has stayed ahead of the competition despite being under simultaneous attack from multiple quarters. Things should get even better this year:

  • Android tablet competitors remain niche while iPad goes from strength to strength
  • iPhone continues to increase momentum, with Apple now the third biggest mobile phone company globally, and the iPhone 5 will almost certainly supercharge sales further
  • Apple looks set to finally play its TV cards fully.  If Apple gets its TV play right it will not only extend its footprint in the home, it will reach new households, potentially on a scale which would make current iPad sales look like small change.

Planning for the Trough

10 years ago Sony had the same momentum, prestige and allure of Apple, now it is firmly in Apple’s shadow.  5 years ago Nokia was at the top of its game, the clear global leader in smartphones, now it too toils in Apple’s slipstream.  Apple has that priceless commodity of momentum, momentum that has swept giants such as these aside.  But every single company in history goes through cycles, as indeed Apple has already done so itself.  And Apple’s management is smart enough to know that every peak of a wave has its trough.    When that time eventually comes (and it may be long way off yet) a $50+ billion cash reserve will come in supremely handy for rebuilding success, once again.