"When it comes to really big things, itis hard to beat really big numbers."
One of my favorite TV shows is Numb3rs. Charlie Eppes, Ph.D., is a mathematics professor, skilled in all kinds of advanced mathematical analysis. Heis a consultant to the FBI in Los Angeles, and he uses mathematics to help solve crimes.
There are a lot of cool things about this TV show, but the basic idea is that quantitative mathematical analysis can provide insight when mere conjecture is insufficient.
This week, I ran across two charts in my reading on the Internet, very numbers oriented, that were in great contrast to something that weive all been talking about lately.
Namely, the Apple buzz.
Iive written about this buzz briefly in recent articles. The first was about a paradigm shift, and the second was about the success Apple has had in creating a buzz about their products. We can talk about shifts and buzz, write deep into the night, but thereis nothing like a few numbers to put it all in perspective.
The World According to Apple
If one were to analyze the growth of Apple in numbers, we see fairly steady growth. While Apple is still subject to setbacks due to seasonal buying habits and the specter of Macworld each January, the year over year growth appears to be pretty good. Switchers and some organizations are beginning to embrace the Mac, and finally Apple has enough visibility and momentum, thanks to the iPod, that consumers are taking notice of the company in all its offerings.
Instead of Apple being perceived as a very small computer company, itis now seen as a $20B company that sells a lot of very nice electronics. And oh, by the way, they make very nice computers.
In this sense theyive become the Sony of the U.S. Sony, recall, also makes a very nice line of computers called the Vaio, but theyire not Sonyis bread and butter.
If we take the glass is half full approach, and do some extrapolation, we can size up Apple in terms of its unit shipments for various products. Daniel Dilger at Roughly Drafted Magazine recently published a chart extrapolating Appleis sales of Macs, Apple TV, and iPhone over the next few years.
The really cool part is that the total unit shipments of these devices is rising rapidly, and to Appleis great satisfaction, the Macintosh will soon no longer have to do all the heavy lifting for the corporation.
But look at the absolute numbers. In 2008, Apple might sell 8 million Macs. Write that on an envelope.
The World According to Microsoft
In another article I ran across recently, IDC data for the unit shipments of Vista and the previous Windows OSes was published. (The chart says "unit shipments", but I believe they omitted the ix 1,000i scale factor.)
The chart says that Micrsoft will issue about 90 million new Vista licenses in 2007. In 2008, to contrast to the Apple numbers above, the Vista shipments jumps to about 150 million. Write that number down too.
150 million vs 8 million. Apple remains at 5.3 percent through 2008.
I should point out that if IDC did their homework, they looked at Vista sales to date, included economic conditions, large organization statements about their planned rollouts, and previous data for the penetration of Windows XP back when it was released. Clearly, the chart doesnit account for massive economic disruption. Nor does the Apple estimate.
Looking at the Numbers
These numbers tell a story that weid rather not dwell on. They say that while Apple is growing and branching out, and while itis not a zero sum game, there is no massive trend to indicate that the Apple buzz is doing much to turn the tables on Microsoft.
What the buzz is doing is something else. Itis insuring that Apple products will be widely accepted and become successful. Given Appleis gross margins, that will make a lot of money for Apple. Secondly, the buzz helps keep the enthusiasm going for a superior OS, Mac OS X, until Apple has had a chance to embarrass Microsoftis Vista. Finally, it keeps the stock growing so that the stock holders remain happy and all those (legal) options for employees are actually worth something.
But when it comes to the hard cold reality of the numbers, Apple isnit going to make a dent in the body armor of Microsoft in the next half decade.
Depending on how you look at it, thatis okay. Youive probably read a million words about all the reasons you want to be in the Apple camp. Iive been writing passionately about Apple for nine years now. We know what we want, and it doesnit hurt to kick a little dirt in Microsoftis face now and then. So long as itis tempered, responsible, and good natured.
Even so, one can look at the numbers and see why Microsoft shouldnit really be very worried. When financial analysts, driven by the buzz, ask Steve Ballmer for an interview, and then start by asking questions about the iPhone, itis all part of the buzz. Mr. Ballmer should calmly respond by stating that he rather talk about his own products and eagerly move forward -- dismissing the bait, er, the buzz. But it just seems outside the capabilities of Mr. Ballmeris personality. So be it. It makes for good stories, but it doesnit change the numbers.
Beyond the Numbers
Right now, youire thinking that extrapolations never tell the whole story, and youire right. For a hundred years, scientists and economists have made projections that never came to pass because an unseen, disruptive force changed the equation. We were supposed to run out of oil, then the estimates of reserves changed. The hole in the ozone layer was going to kill us all. But we fixed it with worldwide cooperation. The Soviet Union was going to colonize the moon and dominate all of Europe. Now the U.S.S.R. is gone. These days, global warming threatens us, and weire really cooked unless we do something soon. But we will. Forty years before the effects become of grave concern, weire furiously working on alternative energy sources for cars.
Iim not trying to incite a discussion about global warming. But I do want to point out that projections are seldom very reliable over long periods. Historically, something breaks. And so we have to look beyond the numbers for long term insights -- to the extent we can.
There are things that could go wrong with the projection that the Vista successor will repeat Vistais success.
- The Internet has changed everything. The changes could get out of control.
- International thieves and the failure of banks to institute sound security practices could lead to Vista becoming untenable in the home.
- A leadership vacuum at Microsoft could lead to critical mistakes.
- A massive cyber assault, brought on by unforeseen international tensions, could unravel Vista and lead to massive defection.
- A new, unexpected technology or invention could make current operating systems obsolete. Even Mac OS X.
- An ugly incident in which lives are lost, something that cannot be covered up or blamed on a "commputer glitch," could sour millions, even if itis an irrational response.
We live in an age that is contradictory. We generally embrace our digital cameras, TiVos, mobile phones, and notebook computers. But weire also a fickle society, driven by the Borg-like spread of consensus in the blogosphere. Once an idea or technology is discredited, itis hard to reverse.
Whatis the bottom line, Dr. Eppes?
Right now, the numbers say that Apple has no chance of turning the tables on Microsoft. In numbers. But sometimes the numbers are irrelevant. All a company can do is lay the very best foundation it can, be excellent in everything it does, and then roll the dice.
Right now, everything Microsoft rolls comes up craps. Apple continues to roll naturals. One has to wonder how long that trend can continue before some disruptive force blindsides the cozy extrapolations.
Thatis our only hope Obi-Wan, because right now the numbers, the really big numbers, look awfully imposing. Thatis not to say we stop going to the church of Apple. Thatis not to say we donit enjoy the buzz. It just says that when we daily enter the hallowed ground, we do it with some modesty and humility.
The buzz is fun. Talk is cheap. The numbers tell all.
Until the big disruption comes.