Eric Schmidt Dreams Big

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    Posted: 30 July 2010 12:11 PM #16

    rattyuk - 28 July 2010 07:35 PM

    ?If we have a billion people using Android, you think we can?t make money from that?? Schmidt asked rhetorically. All it would take, he said, is $10 per user per year.

    Google really thinks that they can get a BILLION Android customers?

    Hmmmm.

    http://blogs.wsj.com/digits/2010/07/28/eric-schmidt-on-google?s-next-tricks/?mod=e2tw

    A billion android devices is a given.  There are 5 billion mobile user accounts.  They will all be smartphones soon.  Google asking for 20% share is not a big deal.  I recently asked the question on this forum of whether anyone believes Apple could achieve 20% share and most responses were negative.  I take it then that most members of this forum think someone else will take the largest OS share.  Android seems logical at this point.

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  • Posted: 30 July 2010 12:36 PM #17

    asymco - 30 July 2010 03:11 PM

    A billion android devices is a given.  There are 5 billion mobile user accounts.  They will all be smartphones soon.  Google asking for 20% share is not a big deal.  I recently asked the question on this forum of whether anyone believes Apple could achieve 20% share and most responses were negative.  I take it then that most members of this forum think someone else will take the largest OS share.  Android seems logical at this point.

    But the question is in what time frame?

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    Posted: 30 July 2010 06:24 PM #18

    Or the question is who makes the most money. Apple has a knack for making the money. Would you expect this to change? Is market share so important.

    Smartphones are relatively expensive phones. Most of the world will probably continue to buy the cheapest or glitziest phone they can find. There’s no chance in that market for either Android phones or iPhones. So what’s the realistic market size for smart phones?

         
  • Posted: 30 July 2010 06:45 PM #19

    Thanks iBob for returning in the argument to the important stuff. Asymco, I love your stuff and indeed Google will eventually attain the mysterious billion users that is certain. But the throw away phrase uttered by our ex board-member implies that it was for headline purposes only.

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    Posted: 30 July 2010 08:51 PM #20

    I think Apple would be happy with a 20% market share in each of their product areas, as long as it follows the trend for the iPhone - 80% of the profit share.

         
  • Posted: 31 July 2010 12:25 AM #21

    NatasRevol - 30 July 2010 11:51 PM

    I think Apple would be happy with a 20% market share in each of their product areas, as long as it follows the trend for the iPhone - 80% of the profit share.

    I respectfully disagree.

    First, I agree that Apple could thrive on a small market share. They’ve proven that with the Mac (7% of the market) and the iPhone (3% of the total phone market).

    But I would remind people to look to the history of the iPod if they want to see the history of Apple with dominant market share. First, they took the 20% of the market with the 80% of the profit. Then they slowly introduced products into the mid-price range and “sucked the air” out of the space for their competitors. Then then finally did the same for the low price range.

    Apple may do quite well on the high end - the profitable end - of the market. And they might be resigned to be relegated to the high end as they are with Macs. But they are never SATISFIED with the high end. If it’s at all possible, they will take it all.

    The Google model (advertising) and the Microsoft model (licensing) is exactly the opposite. Since they take only a small amount from each unit sold, they MUST have large market share to make money. On the other hand, their production costs are almost nothing.

    [ Edited: 31 July 2010 12:29 AM by FalKirk ]      
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    Posted: 31 July 2010 01:28 AM #22

    I’m waiting eagerly for a family of iPads to fill all needs, just as we have a family of iPods. These will wrench away the mobile market from Windows dominant portables. Long live Microsoft.

         
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    Posted: 31 July 2010 03:04 AM #23

    First, I agree with JonathanU and Asymco. Let’s not dismiss everything Schmidt says - he’s not nearly as eloquent as our own Dear Leader, but he’s running a big company with lots of cash and a strategy that’s proven successful in the past (cf. Microsoft).

    FalKirk - 31 July 2010 03:25 AM

    But I would remind people to look to the history of the iPod if they want to see the history of Apple with dominant market share. First, they took the 20% of the market with the 80% of the profit. Then they slowly introduced products into the mid-price range and “sucked the air” out of the space for their competitors. Then then finally did the same for the low price range.

    Ah, interesting analogy. I like it, but there are at least 3 factors breaking it to a certain extent:
    1) The 70%-80% iPod market share is only in the U.S., I believe - The rest of the world is quite happy with a range of lower-priced devices if not downright knockoffs. Note that in this very market (the U.S.) Apple has no chance of achieving such high share with the iPhone, due to its multi-year exclusivity with AT&T.
    2) Nobody cared about the mp3 market. It’s tiny in comparison to the phone market by any measure imaginable (revenues, number used around the world, etc). A whole lot more competitors care about the phone market because it is arguably the biggest market of tomorrow (certainly bigger than either PC or mp3, or combined). Apple by definition will face more competitors, and tougher competitors. Nobody tried to really compete against the iPod until the Zune, which was too little too late. Google is pushing out Android handsets like crazy within a few years of iPhone introduction.
    3) Integration with iTunes was arguably the biggest reason, or at least at the top. You bought and managed your music on your computer, than synced with iPod. Phone software is mostly self-contained within the handset, so that tie-in breaks.

    So yes, Apple can try to go for medium-margin market after the high-margin market, but I’d stick with a 20% market share globally for a pretty rosy scenario. It’s still a lot of $$$ though. :cool:

         
  • Posted: 31 July 2010 05:07 AM #24

    iBob - 31 July 2010 04:28 AM

    I’m waiting eagerly for a family of iPads to fill all needs, just as we have a family of iPods.

    I think we already have to view the iPad as the “classic” and the iPod Touch as the iPad’s version of the shuffle. Not sure that a form factor smaller than the iPod Touch would be very practical. It’s possible that Apple could introduce a 7 inch tablet that would effectively play the role of the nano. But I don’t see it happening any time too soon. Just an interesting way to frame a possible future.

         
  • Posted: 31 July 2010 05:47 AM #25

    Roman - 31 July 2010 06:04 AM

    (T)here are at least 3 factors breaking (the iPad/iPod analogy) to a certain extent:

    1) The 70%-80% iPod market share is only in the U.S., I believe - The rest of the world is quite happy with a range of lower-priced devices if not downright knockoffs. Note that in this very market (the U.S.) Apple has no chance of achieving such high share with the iPhone, due to its multi-year exclusivity with AT&T.

    Don?t be so certain that the iPhone has no chance to dominate the U.S. market. Right now, both iPhone and Android are eating up the market share from dumb and feature phones as fast as their respective handsets can be made. The battle between the iPhone and Android won?t really heat up until, oh, say, 2012 - when a certain exclusive agreement expires.

    Roman - 31 July 2010 06:04 AM

    2) Nobody cared about the mp3 market. It’s tiny in comparison to the phone market by any measure imaginable (revenues, number used around the world, etc). A whole lot more competitors care about the phone market because it is arguably the biggest market of tomorrow (certainly bigger than either PC or mp3, or combined). Apple by definition will face more competitors, and tougher competitors. Nobody tried to really compete against the iPod until the Zune, which was too little too late. Google is pushing out Android handsets like crazy within a few years of iPhone introduction.

    I?m not so sure that there wasn?t any money or any competition in the mp3 market. But I take your point. There will be heavy competition in the phone market.

    But the smartphone market is also very different from the mp3 market in another important way. Yes, the iPod had iTunes. But the iPhone has apps and iOS is a platform. Only a few platforms are going to garner enough money to generate enough interest for enough developers to create enough apps to make a platform viable. Both iOS and Android are ?in? the app game. If Nokia, RIM, HP/Palm and Microsoft don?t jump in soon, they?re going to find themselves shut out of the app game forever.

    Roman - 31 July 2010 06:04 AM

    3) Integration with iTunes was arguably the biggest reason, or at least at the top. You bought and managed your music on your computer, than synced with iPod. Phone software is mostly self-contained within the handset, so that tie-in breaks.

    As previously mentioned, I would argue that the App store is an even more potent weapon for the iPhone than iTunes was for the iPod. 

    Roman - 31 July 2010 06:04 AM

    So yes, Apple can try to go for medium-margin market after the high-margin market, but I’d stick with a 20% market share globally for a pretty rosy scenario. It’s still a lot of $$$ though. :cool:

    As I said in reply to another post, I think we should consider the iPod Touch to be the equivalent to the iPod Shuffle. Whether Apple will bother to create a 7 inch ?Ipad Nano? is beyond my feeble powers of prognostication.

    I don?t know if the iOS line can follow the successful trajectory of the iPod line. But I will note that the iPod Touch and the iPad have no competitors at this time and the iPhone is selling as fast as it can be made. Market domination is certainly not assured. But I?m simply not willing to rule out the possibility of market domination this early into the game.

    [ Edited: 31 July 2010 05:49 AM by FalKirk ]      
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    Posted: 31 July 2010 11:24 AM #26

    If we see a front facing camera on the iPod touch this year then we have a SIP based video smartphone.  Waiting for Apple to enable more calling features via the backend server farm in NC.  The facetime networks use IP based traffic, so if Apple does the routing they will be able to support WIFI calling outside of their own network and use the carrier network for the last mile data network connectivity.  As far as Android vs iOS folks seem to group all Android as a battle for OS dominance.  If things were that simple Nokia would have already won with Symbian.  The data aggregators will lump all of Android together like every model is actually a direct competitor with the iPhone but not include the iTouch because it doesn’t include a SIM.  Nintendo is feeling first hand the lack of focus on a competitor.  Since iPod Touch was not a portable game device because it lacked dedicated controls it was ignored by the data aggregators, Sony & Nintendo until it was so large it couldn’t be stopped.
      Apple could enable SIP functionality with a software update on the iPod and increase their userbase overnight without paying all the royalties for using the carrier mobile networks.  I still think Apple is planning to use provide their own network services   MVNO patent .

    When we break up all the different devices using iOS it is easy to compare with other providers but this hides the synergies between the offerings.  Personally I think Apple plans to dominate Personal Mobile Computing as highlighted by SJ.  The phone is just a portion of the strategy and if you focus too much on the phone functionality as the primary driver of the device you miss the bigger picture.

         
  • Posted: 31 July 2010 12:31 PM #27

    pats - 31 July 2010 02:24 PM

    Apple could enable SIP functionality with a software update on the iPod and increase their userbase overnight without paying all the royalties for using the carrier mobile networks.  I still think Apple is planning to use provide their own network services   MVNO patent.

    Can you (or anyone) expand on this thought? I’d like to know more.

         
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    Posted: 31 July 2010 02:34 PM #28

    IMO the switch from circuit switched technology to packet switched gives Apple the opportunity to provide cloud communications (Think Apple’s version of Google Voice).  Facetime uses Internet based voice and data communications instead of relying on the carrier’s circuit switched network.  When the carriers switch their networks to LTE then all the traffic will become packet switched: Voice, SMS, Data and Apple could provide data center hosted services that run over the Internet infrastructure.  Apple would provided an IP based PBX maybe via mobile me which would provide connection to the public switched telephone network similar to Skype.  Apple could bulk purchase data from the mobile networks to provide last mile service.  For businesses a software based IP PBX could be included as part of OS X Server something like Asterisk