HoraceDediu
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How smartphones mean 'game over' for consoles, portable game systems
If there's one Wall Street analyst who consistently makes sense when it comes to computing and mobility, it's Asymco's Horace Dediu. On a regular basis, Dediu charts the sales and shipping information released by consumer electronics companies like Apple and is able to spot trends that spell either good fortunes or a bleak future for the firms in question. Today's target was the gaming console companies, with Dediu's analysis showing how mobile devices -- specifically smartphones and tablets -- spell doom for sales of gaming consoles. Didiu's numbers take a look at data from just two of the big three -- Nintendo and Sony -- as Microsoft does not provide sales information for Xbox. That confetti-like chart at the top of this post shows the bad news for Nintendo. Not only are sales of the latest console (Wii U) tanking, but the two portable gaming units -- 3DS and 3DS XL -- are also showing a precipitous dive towards irrelevance. Add in Sony's numbers (above) and the picture is the same -- for consoles and portable gaming devices, the peak year in sales was in 2008, five years ago. What's the difference? The huge influx of smartphones and tablets, all very capable gaming devices on their own. Dediu sums it up perfectly in his final paragraph: The implications are that Nintendo, Sony and Microsoft are beyond the point of no return in this industry. Gaming, as a business, cannot be sustained as a platform independent of a general purpose computer. Like other "applications" that used to have systems built around them conforming to their needs, the dedicated-purpose solutions came to be absorbed into the general-purpose platforms. And the modern general purpose computer is the smartphone.
Asymco's Horace Dediu measures the iTunes video store
The iTunes video store is a strange market to track. Most of Apple's attention and press these days is going to the App Store, and obviously iTunes wouldn't exist without the music store. But the video store, where you can buy and rent movies and TV shows, is sort of the quiet third pillar of Apple's digital retail service. And Horace Dediu of Asymco has posted that it's doing big numbers indeed. After Apple announced new numbers for both TV show and movie downloads (1 billion and 380 million, respectively), Dediu crunched the numbers, and determined that the rate of spending on iTunes video is about US$1.75 billion per year. That's sizable for sure, though as you can see in Dediu's chart above, video still only makes up a small piece of the amount of money traveling through the various iTunes stores. Dediu also says the picture of what users are spending on iTunes is becoming more clear. He estimates that users spend the most every year on apps, about $16 a year. Furthermore, $12 a year is spent on music, per user, and $9 a year is spent on software (on the Mac App Store or elsewhere). Then, about $2 a year is spent on books, and $4 a year is spent on video. So iTunes video definitely isn't the biggest store that Apple is running, but it does make up a fairly sizable piece of the entire pie.
Daily Update for June 14, 2013
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen. Subscribe via RSS
Asymco's Horace Dediu touts record Apple Store revenues in Q1 2013
Asymco mobile industry analyst Horace Dediu is up to his number-crunching again, this time with numbers showing that Apple Stores continue to have the top retail revenues per visitor of any retailer in the US. The first quarter of 2013 (Apple's second fiscal quarter) saw visitor growth of 7 percent and a new record revenue of US$57.60 per visitor. Average revenue per store was $13 million, a record-setting level for a non-holiday quarter. Dediu noticed that the average visitors per store has steadied out at about 250,000 per store per quarter, and posits that number might be stagnant because fire regulations keep the stores from packing in even more visitors. Apple's employment in stores has increased as well to about 110 employees per store, climbing from less than half that level in 2007. Apple's new retail strategy appears to be expanding US stores in size and opening new stores outside of the US. According to Dediu, that allows for growth in the number of visitors to the US Apple Stores and in "maintaining the brand's relationship with customers."
iTunes is more than earning its keep
As writer John Paczkowski notes in an AllThingsD article today, iTunes was originally "conceived as a low-margin 'break-even' operation intended to drive hardware sales" -- in particular sales of iPods. Now that the iTunes Store is used to sell more than just songs and videos, it's turning into a "significant profit center for the company". Paczkowski was commenting on numbers from Asymco analyst Horace Dediu, who notes that now that Apple has folded its in-house software group into iTunes, Apple software is having "significant implications for iTunes margins." The software, including items like iWork, iLife, Final Cut Pro, Aperture and more, has much higher profit margins than traditional iTunes items like music, books, video, and apps. Dediu deduced that Apple sold about US$3.6 billion worth of its software products in 2012, and that profit margins for software is usually about 50 percent. If that's the case for Apple -- and Dediu is usually correct in his assumptions -- then iTunes is generating operating margins of about 15 percent on gross revenue. That's about $2 billion in profit for 2012, or as Paczkowski so eloquently put it, one "hell of a way to break even."
A look at Apple's international retail strategy
Asymco analyst Horace Dediu does a very good job of dissecting the Apple financial data released publicly to discover trends and tidbits of information. Today Dediu looked into Apple's international retail strategy and pulled out some tasty nuggets about Apple Stores. Apple's rate of store openings is surprisingly slow, but Dediu goes on to point out that sales outside of Apple's retail channel are a much higher portion of the total than they were in 2007. The percentage of sales from Apple Stores has actually dropped from 17 percent in 2007 to 12 percent in 2012. Dediu points out that while, currently, most Apple Stores are in the Americas, the company's strategy is to open more stores in other markets. Whereas almost 80 percent of store openings in 2007 were in the US, that number shrunk to about 15 percent in 2012. Dediu notes that, "It would seem reasonable therefore to expect that the priority for most, if not all, future openings should be outside the US to address the current sales/retail presence imbalance and to accomodate the bulk of future growth."
Daily Update for January 10, 2013
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen. Subscribe via RSS
Asymco breaks down the App Store numbers, finds iTunes economy is a $12 billion annual business
While corporations -- including Apple -- keep financial information locked away except for those items that require public disclosure, the job of Wall Street analysts like Horace Dediu of Asymco is to take bits of information scattered hither and yon and meld them into a more realistic model of how a company is performing. Dediu took App Store numbers released on January 7 by Apple, mixed it with existing info, and came to some fascinating conclusions: The iTunes economy defined as gross revenues transacted through it is now about US$12 billion/yr. Over the last five years content owners (media and app) received a total of $24 billion while Apple spent about $10 billion to create those sales Seen as a retail business, iTunes costs about $3.5 billion/yr to operate. This includes merchandising, payment processing and "shipping & handling." Total revenues have risen steadily in a range of 32 to 38 percent compounded over the last four years. Apps are now a third of all iTunes revenues, (about $4 billion/yr) having taken that share in only 4.5 years. Non-app media still make up two-thirds of iTunes in terms of sales value but their growth is now 28 percent vs. about 50 percent for apps. Those results, taken directly from Dediu's post, show that sales of traditional media -- movies, TV, books and music -- are growing at about half the rate of apps. They also highlight that the sale of media and apps is a vibrant part of Apple's financial picture.
Visualized: Apple and Samsung occupy the 99 percent... of phone profits
Financial maven and maker of beautiful graphs Horace Dediu has found that between the top eight mobile phone vendors, Apple and Samsung share 99 percent of the total spoils. Of RIM, LG, Sony (Ericsson), Motorola, Nokia and HTC, only the latter made a profit -- claiming that left over one percent. The remaining six all recorded losses for the quarter, Mr. Deidu adding that several of those companies are carrying feature phone businesses that they should shed before they become an albatross around their neck.
Apple and Samsung earn 99 percent of mobile phone vendor profits
While the two big smartphone vendors, Apple and Samsung, are battling it out in the courtrooms, they're still in total control of operating profits. Horace Dediu of Asymco has just published his analysis of operating profits for the top eight mobile phone vendors and found that Apple and Samsung together pulled in 99 percent of the profits in the first quarter of 2012. Apple had the largest share of that total, with a full 73 percent of the profits made by the top mobile phone vendors. Only Apple, Samsung, and HTC made a profit in the first quarter of 2012, and HTC's share was a tiny 1 percent. The other companies on the list -- Motorola, Nokia, RIM, LG, and Sony Ericsson -- all had losses for their handset businesses. Apple and Samsung are reaping the benefits of being the top vendors in the lucrative and growing smartphone business. Profits from the eight top vendors detailed in Dediu's report have gone from US$5.3 billion to $14.4 billion, primarily from carrier subsidies on pricey smartphones. [via MacRumors]
Google reportedly makes more per iOS device than Android device
According to Horace Dediu of Asymco, Google's smartphone revenue per year is on the rise. On the surface, this appears to be good news for Android, but a closer look at the source of the revenue shows that most of this increase is from iOS. In fact, Deidu suggests revenue per device from Android is slightly declining. If you are wondering, Google is making money because of its prime placement as the default search engine on the iPhone and iPad. Dediu also notes that though the Android platform is sustainable from an economic point of view, Google is only getting US$1.70 annually per device, while Apple is making over $576 per iPhone sold. You can read his post on Asymco's website and comment on his analysis.
Can the iPad sustain its incredible yearly growth?
Horace Dediu of Asymco examined the history of Apple's iPad sales since 2010 and calculated that its grown at an astonishing rate of 150 percent each year. Based on Apple's stellar iPad launch weekend, Dediu believes this phenomenal growth is sustainable. As Philip Elmer-DeWitt points out, Dediu goes above Wall Street's current consensus and predicts Apple will sell 12.2 million tablets by the end of this quarter. [Via Fortune's Apple 2.0]
63% of last quarter's iPhone activations were outside the U.S.
Horace Dediu, analyst and financial blogger at Asymco, provided several fascinating charts at the end of last week that not only show how dramatically iPhone activations have increased over time, but also how the U.S. market makes up a shrinking portion of that overall market. As Apple 2.0 editor Philip Elmer-Dewitt noted in an analysis of Dediu's numbers, "The U.S. is becoming a progressively less important market for sales of Apple's most valuable product line." While the chart above shows that the percent of iPhone sales outside of the U.S. actually fell during the last quarter, this trend should reverse in the near future. It's expected that Apple will report another sharp increase in international sales after this quarter is complete, since there has been unprecedented demand for the iPhone 4S since it went on sale in China last month. The emphasis on the international sales numbers doesn't mean that the U.S. market is by any means saturated with iPhones. In fact, the chart below shows just how much iPhone activations rose during the last quarter of 2011 in the U.S. alone. The increase in the worldwide activation numbers is just as staggering.
Apple rollin' in the dough: 75% of cell phone profits
The news just keeps getting better for Apple in the mobile phone business. Just yesterday, IDC reported that the company is in third place in terms of worldwide mobile phone sales. Today, Asymco analyst Horace Dediu announced that with a relatively small piece of the pie (IDC said 6 percent of market, Dediu says 8.7 percent), Apple is pulling in a whopping 75 percent of profits in the industry. Philip Elmer-DeWitt at Apple 2.0 notes in an analysis of Dediu's numbers that out of the top eight manufacturers, only five are showing meaningful profits. Samsung has about a 16 percent profit share, while "Nokia, Research in Motion, and HTC are just scraping by. Motorola, LG and Sony, which bought out Ericsson last month, are still in the red." As Elmer-DeWitt points out, this is for all mobile phones, not just smartphones. And these numbers are for the worldwide market, not just the United States. He concludes that "This doesn't bode well for the manufacturers who have hitched their wagon to Google's Android or Microsoft's Windows Mobile 7."
Discarded iPhones in the US
Horace Dediu of Asymco is good with numbers and his latest work uses this skill to look at discarded iPhones in the US. Dediu takes monthly comScore data and quarterly activation data provided by the wireless carriers to calculate the install base of the iPhone in the US. His number crunching and resulting graph shows the number of new activations and the calculated number of iPhones being put out of service each quarter. According to Dediu, the discard rate, which is the number of phones being discarded over the number of new phones, is 50% in the US. Most of these discards are coming from AT&T as Verizon has not carried the iPhone long enough for customers to begin replacing their handsets with a new model. Dediu claims most of AT&T's reported activations were from customers replacing iPhones and that the carrier only added one million new iPhones thus far this year. He also points out that AT&T's discard rate has skyrocketed to 81% since Verizon introduced the iPhone 4 earlier this year, a figure that suggests AT&T is adding fewer new iPhone customers now that people have a choice in wireless carriers. It's an interesting look at the iPhone that goes beyond unit sales. You can read the full report at Asymco's website.
Annual revenue per iOS user estimated at $150
We all know that Apple's iOS devices are popular. Surveys and analyst predictions place Apple at or near the top in the smartphone, tablet and media player market. That's great for headlines, but what does it mean for Apple's bottom line? Horace Dediu of Asymco did some fancy figuring and calculated that the annual revenue for each iOS owner is US$150. This is based on 180 million current iOS users with 200 million iOS devices. Given the astronomical growth of the iOS platform, this installed user base could quickly climb to 500 million users, a lofty figure that would provide Apple with $74 billion per year in recurring revenue. Mac sales are also climbing and could easily reach 100 million active users who generate $24 billion a year in revenue. Combine the Mac users with the iOS users and Apple could pull in a cool $95 billion per year in revenues from OS X and iOS devices alone. These numbers are a conservative estimate as Dediu does not factor in sales from iTunes, iPods, accessories and software. It also assumes a very generous 3.5 year life span for iOS devices and 5.5 years for Mac hardware.
