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Jean-Louis Gassée writes at Monday note that Apple’s most recent quarterly numbers broke a number of laws:
Law 1: Larger size makes growth increasingly difficult. The Law of Large Numbers predicts the eventual flattening of extraordinary growth. "And yet, last quarter, Apple revenue grew 30%, breaking the Law and any precedent," writes Gassée. "iPhone revenue, which grew 57%, exceeded $51B in one quarter — close to what Google achieved in its entire Fiscal 2014 year." Apple’s recent numbers show, the iPhone seems immune to modularity threats.
Law 2: Everything becomes a commodity. As products are standardized, margins suffer as competitors frantically cut prices in a race to the bottom with the PC clone market serving as a good example. "At the risk of belaboring the obvious, a rising Average Selling Price (ASP) means customers are freely deciding to give more money to Apple," says Gassée. "We’re told that this is just a form of Stockholm Syndrome, the powerless customer held prisoner inside Apple’s Walled Garden." Yet according to Tim Cook “…fewer than 15% of older iPhone owners upgraded to the iPhone 6 and 6 Plus. The majority of switchers to iPhone came from smartphones running Google Inc.’s Android operating system.” Apple’s recent numbers show, the iPhone seems immune to modularity threats.
Law 3: Market share always wins. With a bigger market share comes economies of scale and network effects leaving minority players condemned to irrelevance and starvation. Yet despite its small unit share (around 7% worldwide, higher in the US), Apple takes home about half of all PC industry profits, thanks to its significant ASP ($1,250 vs $417 industry-wide in 2014, trending down to $379 this year).
Law 4: Modularity Always Wins. In the end, modularity always defeats integration. Clayton Christensen points out that in the PC clone market, modularity allowed competitors to undercut one another by improving layer after layer, smarter graphic cards, better/faster/cheaper processing, storage, and peripheral modules. Yet, as Apple’s recent numbers show, the iPhone seems immune to modularity threats.
"I have no trouble with the Law of Large Numbers, it only underlines Apple’s truly stupendous growth and, in the end, it always wins. No business can grow by 20%, or even 10% for ever. But, for the other three, Market Share, Commoditization, and Modularity, how can we ignore the sea of contradicting facts?" concludes Gassée. "As Apple continues to “break the law”, perhaps we’ll see a new body of scholarship that provides alternatives to the discredited refrains. As Rob Majteles tweeted: “Apple: where many, all?, management theories go to die?"
(Score: 0) by Anonymous Coward on Tuesday February 10 2015, @09:13PM
The problem with the iWatch is that it's too early. It still requires you to have the phone to do anything, which defeats the point of the watch aside from trendy factor. Heck a Dick Tracy watch had more functionality than the iWatch. Once the battery life and the requirement to have a phone directly next to it are gone, it may be useful, otherwise it's just going to be a trend, most people already are moving away from watches, simply because they already have a phone. It's an interesting experiment. I think full Android in cars will take off before the Apple iWatch, and I'm somewhat surprise Apple hasn't moved into this market more. I'd think it would be a great place to create more interest for their whole ecosystem, and something I think that they would do well in.
(Score: 2) by quacking duck on Wednesday February 11 2015, @04:28AM
Pairing isn't a problem with just the iWatch, it's a problem with *all* smartwatches. After a quick search, it seems the only smartwatch that doesn't depend on your phone being nearby is the Samsung Galaxy S, which has a SIM slot and 3G data connection. But from the review it seems there's a lot of compromises... and it still technically needs to be paired with your phone, just that it can do it over 3G as well as Bluetooth.
I never watched Dick Tracy, but the argument it could do more than the Apple Watch makes as much sense as those who said Apple copied the PADD from Star Trek: The Next Generation... or the Newspads from the movie "2001". No, they really didn't. The PADD and the Dick Tracy watch were *concepts* that were made possible only with special effects and post-production work, whereas Apple and others have made actual real-life working devices.
And Apple is already in the car console space with Carplay, both in new cars and aftermarket units. Too early to say how that market will trend.