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Thursday, December 22, 2011

On being reasonable

On being reasonable:

The discussion on why Apple is cheap was very useful. The debate brought into focus the possible causes for pessimism in the face of overwhelming evidence to the contrary. But maybe there is yet another explanation. The way the data was presented was as a difference between historic and projected growth rates. Is this the way analysts actually think?

Perhaps they don’t project growth based on historic growth, but project earnings given historic earnings. In other words they don’t look at the first derivative (change in earnings) but the shape of the actual data.

The following chart shows that data, i.e. forecasts as an extension of a sales trajectory. The blue area are actuals and the grey branches show projections at a given end of fiscal year.

Seen this way, we can imagine how the projections can be considered “reasonable”. Some appear to be linear extrapolations while others show up as the end of “S-curves”.[2]

What none of them imply is exponential growth. But would forecasting exponential growth be considered reasonable? Clearly not since it’s never been consensus. But disruptive companies do follow non-linear growth. In fact, every company that has gone from being small to being big (which is to say all large companies) went through non-linear growth phases. The “natural” shape of growth is exponential.

The failure is therefore not of reason but of failing to use a model that assumes acceleration of sales. I believe that institutional financial advisors are conditioned (or coerced) into assuming that nothing unreasonable ever happens. That seems like a completely flawed foundation to stand on.


  1. This post is inspired by the New York Times chart showing budget forecasts.

  2. The same data shown on a log scale:

Distimo Releases Full Year 2011 Publication

Distimo Releases Full Year 2011 Publication:

It is our pleasure to release our latest Distimo Publication.

This report will give an overview of the most important developments in the mobile app stores in 2011. How did the store sizes develop over the last year? Which store generates most revenue nowadays? What are the most downloaded apps of 2011? These questions will be answered in Distimo’s yearly publication. All data covers the stores during the period January – November 2011 in the United States, unless otherwise noted.

The key findings from this report are:

  • Both the Apple App Store for iPad and the Apple App Store for iPhone still beat the Google Android Market in terms of the total revenue generated by the 200 highest grossing apps. The Apple App store for iPhone generates about four times the revenue that is generated in the Google Android Market.Total revenue generated in the app stores

  • 2011 was the year where in-app purchases and the freemium business model became one of the most important monetization strategies for developers. Half of the revenue of the 200 top grossing apps in the Apple App Store for iPhone is now generated by freemium apps. This proportion is even higher in the Google Android Market where 65% of the revenue from the top grossing apps is generated by freemium apps.

  • The number of downloads in the Apple App Store for iPhone in China increased drastically during 2011. Comparing the number of Apple App Store downloads in the US with the number of Apple App Store downloads in China, we see that China now generates 30% of the total downloads of these two countries in the Apple App Store for iPhone. The number of downloads generated in the Apple App Store for iPad in China are even closer to those generated in the US: China generates 44% of the iPad downloads of these two countries.

  • A dip can be observed in the number of downloads generated in the respective Apple App Stores just prior to the release of a new Apple device, e.g. iPhone or iPad. The number of iPad downloads was at a yearly low in February just before the launch of the new iPad, but they immediately increased again in March. The same happened with the launch of the latest iPhone in October.

  • Nearly all of the app stores more than doubled their number of available apps in 2011. Windows Phone 7 Marketplace showed the largest relative growth of all stores with more than 400% year-on-year growth. Combined, the seven major app stores now offer more than one million apps.

  • The Windows Phone 7 Marketplace is now the fourth largest app store when looking at the total number of available games, having surpassed both the Nokia Ovi Store and BlackBerry App World. The Amazon Appstore – larger than both the Nokia Ovi Store and BlackBerry App World as well in terms of available games – is now the fifth largest app store for games.

You can now download this publication.

The press kit including all image files is also available.

Aside from this free publication, our annual paid report for 2011 is available for purchase for North America, Europe and Asia now as well.

How many Android phones have been activated? (Updated)

How many Android phones have been activated? (Updated):

The following chart shows the reported (circled points) and estimated (lines) for Android activations. The resolution of the sampling is every seven days.

If we take these estimates and then compile a cumulative total of activations we get the green line in the chart below.

The wrinkle in the picture is that Google also occasionally reports cumulative estimates of total Android shipped. They are shown as the blue circles in the chart above. There is some room for error as the cumulative totals may not be reported the same day they happen and the assumptions in the activation rates may not be reflecting occasional slowing.

However that leads to a problem. By adjusting for the reported totals we get the orange line. The trouble with it is that it has these improbable “kinks” where the total is adjusted down, something that is not happening in reality. It’s a kludge we need to make estimates fit reality. Normally, this is something we can sweep under the carpet, but with the size of the market, the errors creep up to tens of millions of unitis.

The first downward adjustment would have been 19 million in May. Today, the difference between the green line and the orange is about 25 million.

So the best we can say right now is that there have been between 224 and 253 million Android devices activated to date. Why Google does not report this data regularly and consistently remains a mystery.

Update: The data used in the charts above is available as a Google Docs spreadsheet here.

Google & Apple Leave The Competition Trailing

Google & Apple Leave The Competition Trailing: The latest figures on the state of the U.S. smartphone market confirm what we already knew in that Google and Apple are dominating the scene, but they also underscore just how much work the competition has to do to even make an impact let alone catch up. The figures come from The NPD Group and are good for the year up until October.

The two front runners, Google and Apple, control a whopping 82% of the market between them. Google's Android platform is the leader with over half the market (53%), whilst Apple's iOS platform saw an increase in its share and now stands at 29%. That's great news for those two comanies, but others aren't so fortunate.

RIM, which seems to lurch from one disaster to another these days, now only controls 10% of the market. Just two years ago in 2009 RIM had a 44% market share. Even last year RIM was able to boast that it had 25% of the market under its belt. The phrase 'how the mighty have fallen' would seem very apt in RIM's case. A series of unexciting handsets, technical problems, corporate intransigence and market pessimism have seen RIM dwindle to a shadow of their former glory. At this rate it won't be long before their market share slips into single figures.

It's not just RIM who are facing hard times though, Microsoft too is up against a challenge in the American smartphone market. Windows Phone 7 only has a 2% share and even when combined with WindowsMobile (yes people are still using that) Microsoft barely manages to scrape together 5%. For all their marketing and the positive critical reception Windows Phone received at launch it simply hasn't made much of an impression with consumers. Of course Nokia has weighed into the battle and no doubt Microsoft is hoping that the world's biggest handset manufacturer can make a success of Windows Phone were others have failed.

Android Down, Kindle Outperforms iPad & RIM On The Up

Android Down, Kindle Outperforms iPad & RIM On The Up: Millenial Media released their latest figures today, covering last month, and they make for some very interesting reading. The normal patterns of Android going ever upwards, iOS maintaining an even keel, and RIM racing towards oblivion have been turned on their heads in this latest data set.

Sunday, December 11, 2011

A Closer Look at 10 Billion Downloads

A Closer Look at 10 Billion Downloads:

[This post is by Eric Chu, Android Developer Ecosystem. —Dirk Dougherty]

On Tuesday, we announced that Android Market passed 10 Billion app downloads. We wanted to look a little deeper at that huge number. First question: which app was lucky number 10 billion? Photobucket Mobile. They’ll be getting a great prize package, including tickets to next year’s Google I/O developer conference.

Remember we still have 8 days left to celebrate 10 billion downloads with 10-cent apps on Android Market. You can follow which apps are promoted each day on +Android, our Google+ page.

Here’s a graphical deep dive into 10 billion downloads...

Saturday, November 26, 2011

The AMP Index for Q3

The AMP Index for Q3:

The Asymco Mobile Performance (AMP) index is an unweighted average of:

  1. Share of all handset units sold (global)

  2. Share of smartphones

  3. Share of value (revenues)

  4. Share of profits

For major phone vendors. The raw data for each share is shown in the following charts (note change of vertical scale: each gridline represents 10%).

Note that the vendors are arranged in a particular way: top row are entrants, bottom row are incumbents with late incumbents from Korea arranged in the middle.

Taking the average of each of the lines above, the unweighted share index (Units, Smartphones, Value and Profit) is shown below:

And here it is in sparklines:

Like many indices, this is a generalization that measures a section of reality. The value is in its use as a benchmark and trend analysis.

Apple could buy the mobile phone industry | Updated

Apple could buy the mobile phone industry | Updated:

The last time I did this comparison (Apple could buy the mobile phone industry | asymco) was in June after the end of the second quarter. The following chart is an updated look.


Here is a discussion of the changes since the last analysis:

  • Sony Ericsson was valued through its acquisition by Sony. We did not have a way to value the enterprise before as it was not traded independently. Last June I estimated a 14x multiple on its trailing twelve months’ profits and got $3.0 billion. Since then half the company changed hands for about €1.05 thus yielding a total company value of $2.8 billion. The enterprise value should be therefore slightly lower but I’ll stick with the current transaction value as the EV.

  • Motorola Mobility has entered into an agreement to be acquired by Google for $12.5 billion by Google. The company’s enterprise value jumped as a result to about $8.6 billion.

  • RIM’s share price collapsed and it’s now also trading at an EV of about 7.3 billion (Yahoo finance).

  • Nokia’s price has also dropped and it now has an EV of about $13 billion (Yahoo finance).

  • HTC recently dropped significantly in price and is now worth about $15 billion EV. (Note that pricing of its equities is subject to suspended trading due to drop limits).

  • LG’s phone business is still losing money and it’s still difficult to value. In November it was revealed that the company was seeking to raise $890 million in capital to fund new initiatives including smartphones. The share price fell by 14%. In June I suggested a nominal value for the phone business of $10 billion. I think that’s very generous and with recent events I would place that value at $9 billion today.

  • Samsung’s fortunes have increased. In June I applied a 14x multiple to their trailing 12 months’ operating earnings. Given overall discounting of the sector I applied a multiple of 13 today. That yields a business value of $78 billion. Interestingly, that is larger than the value of all other competitors apart from Apple. That also makes it six times more valuable than Nokia.

  • Apple’s cash and cash equivalents and investments grew by about $12 billion and were worth about $82 billion as of October.

In summary, in June Apple’s cash was about 53% of the sum of competing phone vendor enterprise values. Today it’s about 61%. Excluding Samsung, Apple could buy the industry and still have $25 billion left over. This makes the claim that “Apple could buy the industry” even more believable.

This analysis is mainly academic. It does not imply that any such transaction will take place. As the purchase of Motorola shows, control has a premium and individual buyers may be less “rational” than markets. What it does show however is that the entire industry is in a state of crisis. Valuations for phone companies are collapsing and two major brands (Motorola and Sony Ericsson) are being absorbed and could disappear.

At the same time entrants are arriving with completely different business models. Amazon, Facebook, Baidu, Alibaba are intent on selling phones or platforms to be valued as enablers for asymmetric business models rather than as phones. One could argue that what Apple itself sells is more than hardware and that its value-add “on top” of hardware is increasing. This is a sign of commoditization. Certainly the voice business is well beyond that point but it now appears that even the smartphone business is already in an advanced state of value compression.

All the while the overall market is growing. I had separately looked at the profit pool and concluded that the brands are suffering. Summing up the votes from stock markets, the sentiment is even worse. 2012 is looking more and more as a year of inevitable and dramatic industry change.

Tuesday, November 08, 2011

Generation App: 62% of Mobile Users 25-34 own Smartphones

Generation App: 62% of Mobile Users 25-34 own Smartphones:

Nielsen’s third quarter survey of mobile users reveals that while only 43 percent of all US mobile phone subscribers own a smartphone, a mobile phone with a powerful operating system, the vast majority of those under the age of 44 now have smartphones. In fact, 62 percent of mobile adults aged 25-34 report owning smartphones. And among those 18-24 and 35-44 years old the smartphone penetration rate is hovering near 54 percent.

Other groups show slightly lower penetration rates. Around 40 percent of 12-17 year-old teens and 40 percent of 45-54 year-olds reported owning a smartphone, as opposed to a more basic feature phone.

After younger adults, the segment with the second fastest-growing smartphone penetration rate is those aged 55-64. Smartphone penetration among this older group is only 30 percent, but it jumped 5 percent this quarter.

As the smartphone market continues to expand, Android remains the most popular smartphone operating system in the United States, with 43 percent of the market, while Apple is the top smartphone manufacturer, with 28 percent of smartphone consumers sporting an Apple iPhone.



4G marches on – LTE soon to reach majority of world’s population

4G marches on – LTE soon to reach majority of world’s population:

Fourth generation or 4G mobile networks promise faster connections enabling users to do more while on the go. There’s quite some confusion about what 4G actually is and what technologies can be called 4G or not. 3GPP Long Term Evolution, or LTE for short, seems to be the technology that currently shows the most promise to be able to cut the Ethernet umbilical cord and set us free. Other than the promise of speeds in excess of 100 Mbps, why should you be excited about LTE coming to where you live?

Fresh numbers [PDF] from Informa Telecoms & Media show a majority of the world’s population will have the the option of LTE for mobile broadband soon, with around ten percent already living where LTE is running. We crunched the numbers and here are the key facts:

  • Around 13% of the world’s population live in countries where there are already running LTE implementations or where LTE is being deployed.

  • Another 41% of the population live in countries where LTE is in trials, including countries like China and India.

  • Finally, another 24% of the world’s population are awaiting LTE, with planned or launch to be decided status on LTE in their countries.

Note that this doesn’t take into account how widespread the actual implementations by operators are.

Out of all mobile subscriptions, LTE will for the foreseeable future account for only a small percentage of worldwide subscriptions. Less than 1%, in fact, and, according to Informa Telecoms & Media, LTE will account for just 8% still by 2016. If we put this in terms of actual subscribers instead, ABI Research predicts that there will be 16 million LTE subscribers by the end of 2011, which, if true, is a drastic rise from the 1.9 million subscribers in the second quarter of the year, stated by Informa Telecoms & Media, out of which 1.8 million are in the US and Canada.

Clearly the largest growth potential for LTE is outside traditional markets such as North America and Western Europe.

Picture courtesy of LTEMaps. In the picture, a red marker per country for all operators to show commitments and a blue marker to show actual deployments.

4G devices slowly emerging

The Global Mobile Suppliers Association (GSA) published an update to its Evolution of LTE report, confirming that 248 operators “have committed to commercial LTE network deployments or are engaged in trials, technology testing or studies.” GSA also stated that 197 LTE devices aimed at users have been announced, spanning 48 manufacturers.

So far we’ve not seen a huge amount of 4G-capable devices but major manufacturers such as Motorola and Samsung have already introduced both smartphones and tablets supporting 4G, and more is coming from them and others. In the “Worldwide LTE Mobile Phone 2011-2014 Forecast”, IDC analyst Ramon T. Llamas predicts that by end of this year, mobile phone vendors will ship a total of 5.5 million LTE mobile phones worldwide. That is still dwarfed by the worldwide shipments of an expected 420 million smartphones in 2011.

At Pingdom we’ve seen real life LTE demonstrations with download speeds of around 82 Mbps and upload speeds of around 67 Mbps. That’s not far from the stated LTE peak rates of 100 Mbps down and 50 Mbps up. To put that into perspective, Akamai’s most recent State of the Internet report for Q2 2011, shows an average connection speed from South Korea, the country usually rated as having the fastest Internet speed in the world, of almost 14 Mbps and 58% of connections to Akamai from there running at speeds over 5 Mbps.

Also, the Pingdom office is located in an area where a 4G network was launched over a year ago, promising speeds of up to 80 Mbps.

Real benefit or buzzword?

But is LTE just the emperor’s new clothes, dazzling us with faster speeds but offering little else?

There’s no denying that not being tied to the ethernet jack in the wall is a great attraction but what’s interesting will be what that speed offers us in terms of what we can do with it.

On a country level, something like LTE can mean the ability to develop telecommunications and skip ahead. Already back in 2008, China was reported as having surpassed the US as the number one country in the world in terms of Internet users. Earlier this year, Forbes reported that, according to China’s Telecommunications Administration Bureau, there are 477 million Internet users in the country. But as amazing as those numbers may be, China still lags in the backwaters of the Internet when it comes to connection speeds. Akamai’s figures show that the average connection speed in China climbed to just over 1 Mbps, with an average peak connection speed just over 4.6 Mbps. Also, the high broadband adoption speed (connections to Akamai faster than 5 Mbps) is lingering in low single digits (0.5%) and even broadband adoption (speeds of more than 2 Mbps) is very low at 9.3%.

On a user level, higher mobile broadband speeds offer the possibility of new applications like virtual and augmented reality, HD video streaming, and HD video conferencing. The development toward faster mobile broadband speeds go hand in hand with the development to faster processing power and more storage capacity in mobile devices. With dual-core processors and gigabytes of space, that part of the equation seems to be solved. Apps and other software that take advantage of the new speed and power is arguably the next frontier.

Next: will telcos manage?

With increased speed comes increased volumes of up- and downloads. Telcos around the world have already been complaining about smartphones and tablets sucking up too much bandwidth, and more recently about “chatty” apps that poll in the background, taking up even more of the scarce space in the wireless pipes. Will telcos manage with users filling up the space as LTE rolls out around the world? That’s a question for another blog post.

This was a post from the guys at Pingdom, a site monitoring service that makes sure you're the first to know when your site is down. Check it out for free.

The end of the independent phone brand

The end of the independent phone brand:

As shown in the yesterday’s post, in the third quarter, overall mobile phone profitability declined. The eight vendors I use as a proxy showed a total net profit of $8.51 billion, down slightly from $8.57 billion and a drop of $9.01 billion in the first quarter.

Overall, the industry dropped by 1% sequentially but is still up 30% over last year and has a 20% compounded growth rate over a three year period.

  • Nokia returned to profitability, though at $180 million it’s only about 2% of the top eight.

  • Motorola remained in the red with a small loss of $20 million, an improvement over the $90 million loss of the previous quarter. Motorola is being acquired by Google after an accumulated mobile operating loss of $4.69 billion since the beginning of 2007. It’s unlikely we’ll receive any updates on performance thereafter.

  • Samsung had a great quarter with a sequential increase of 19% and year-on-year growth of 130%. The total profit amounted to 25% of the peer group.

  • Sony Ericsson broke even with about $50 million in operating profit. Like Motorola its performance was barely break-even during the last four years and its also disappearing from our list of independent vendors as it becomes part of Sony.

  • LG had its sixth consecutive quarterly loss and is now appealing to investors for more capital to continue operating as a smartphone vendor. Raising dilutive capital seems a radical approach and not one that inspires confidence.

  • RIM had a sequential reduction in profit of 35% and y/y reduction of 30%. The company is exhibiting clear signs of decay and the stock market is valuing the company below book value.

  • Apple profit dropped by 19% but grew 43% y/y during a transitional quarter. The growth remains 43% compounded over three years.

  • HTC has a 1% sequential increase but a 78% y/y growth.

To illustrate the performance in terms of profit, pricing, volumes and margins, I developed the following chart. 

The solid areas representing profit are operating profit/phone in the vertical axis and volumes shipped in the horizontal. The blank areas above are the cost of goods sold per phone and the combined solid and blank represent the average revenue per phone.

Some of the areas are over-represented due to the lack of resolution available.

Using before-and-after pie charts for positive profits, we can see how the entrants (RIM, Apple and HTC) went from 6% of profits to over 73% four and a half years later.

I feel that this is somehow the end of an era. I’ve written before about the brutality of this market, listing 13 companies which were either merged or acquired or disappeared in the last decade. Now both Motorola and Sony Ericsson will soon be added to the list. On average, it’s as if one phone vendor has disappeared every year for fifteen years.

And it’s still not over. RIM is also becoming a going concern issue, and LG has a big question mark above it.

Of course, ZTE and Huawei and Lenovo are joining the list of competitors but I note that they are not focused on mobile phones. They are opportunistic phone vendors, depending on other businesses to compensate for the risks inherent in phone sales. It’s interesting to note that neither Apple nor Samsung are pure phone plays.

In fact, of all the phone brands only RIM and HTC are exclusively phone-only companies. It may indicate something profound is happening. The notion that the development and marketing of phones as an activity independent of other business models may be coming to an end.

Android OS Fragmentation: Gingerbread Rising To 44.4% – Overtaking Froyo

Android OS Fragmentation: Gingerbread Rising To 44.4% – Overtaking Froyo:
Google regularly releases a chart concerning the distribution of Android platforms amongst active devices. According to the newest chart, which came out last week, Gingerbread has overtaken Froyo in terms of market share.

The histotical distribution clearly shows the very steady increase of Gingerbread (2.3) throughout the past 6 months, and at the same time a more and more decreasing growth of Froyo (2.2).

Below you can see the exact percentages for each platform. For those who did not know the sweet codenames of each version by heart, Google has inserted an extra column with the dessert names.

As we can see from this table, Froyo still holds an impressive 40.7%, but has been pushed back to second place by Gingerbread, which accounts currently for 44.4% of all active devices. Gingerbread has overtaken Froyo for the first time since its release in December 2010.

Eclair, although falling back 4.5% in the last 3 months, still reigns 10.7% of the market, although having been released more than 2 years ago, in October 2009.

Tablet-oriented Honeycomb is currently at 1.9%, showing a modest increase from 1.1% in August. It might not go any further up, as version 4.0, a.k.a. Ice Cream Sandwich is on its way, which was built to function well on both smart smartphones and tablets. It made its debut on October 19th on the Galaxy Nexus, and should roll out globally throughout November.

Wednesday, November 02, 2011

Millennial Media Releases Q3 Mobile Mix Report

Millennial Media Releases Q3 Mobile Mix Report:

Today, we released our Q3 Mobile Mix Report, which included a special spotlight on Apple/iOS. We took a big picture look at iOS, and saw that over the last year, impressions on the operating system grew 60 percent. Of particular note, iPad impressions have grown 456 percent over the last year!

In our Q3 ranking of the top manufacturers on our network, Apple continued to lead, with a 23 percent share.

Here are a few additional highlights from the Q3 report:

  • The iPhone accounted for 54% of the iOS impressions on our platform, while iPod Touch and iPad combined to make up the other 46%.

  • Android was the leading OS on our network in Q3 with 56% of the Connected Device & Smartphone impressions.

  • Android made up 15 of the top 20 phones on our network. HTC had 6 of those phones, and grew over 100% year-over-year as a manufacturer.

  • When breaking down ad spend on applications, Android apps had a 49% share. This was a 20% growth quarter-over-quarter.

  • Gaming was the number one app category on our network, and grew another 26% in the last quarter.

Download the free full report including the Top 20 Mobile Phones, Top 10 Mobile Application Categories and more.

Mobile Mix complements our monthly mobile advertiser-focused Scorecard for Mobile Advertising Reach and Targeting (SMART)™ report.

Please visit our website to access additional research reports, including the Mobile Intel Series: Automotive guide.

If you have any questions or suggestions for future reports, please send them our way.

A tale of two disruptions

A tale of two disruptions:

Last quarter the iPad had unit growth of 166% with revenue growth of 146%. The iPad is selling more than twice the (also rapidly growing) Mac. The two product lines are shown below:

A big reason the Mac is still growing is that it now consists of 74% portables and the MacBook Air and Pro products are still largely unmatched and have a near monopoly in their target price.

The Mac’s average selling price has remained remarkably steady for three years.

But more importantly the iPad and the Mac both outgrew the PC market. Taken as OS X vs. Windows, the growth rates were 27.7% vs. 2.5%. If iOS is included along OS X, Apple grew its “computer” shipments at a rate of 99%.

The following chart illustrates the growth rates for Windows, Mac and Apple as a combined OS X/iOS.

The Windows platform still ran on 82% of PCs sold in the quarter with iOS taking second with 10.5%, OS X third with 4.7% and Android at about 3%.

Even though Mac OS X grew faster than the overall PC market for 20+ quarters, its market share is still below 5%–lower than what the iPhone has been able to obtain in the far larger mobile phone market.

That share has grown from 3.2% in the same quarter of 2008 but it’s still a very slowly changing landscape.

However, if we include the iPad, Apple begins to not only grow very rapidly, it moves up sharply in terms of ranking among PC vendors.

Last quarter’s 16 million OS X and iOS tablets brought it into second place behind the 16.6 million PCs that HP sold. That was enough to give Apple 15% share vs. 15.7% for HP. Over the last three years Apple has gained nearly 12 points of percentage of share.

The other vendors mostly lost share but the most affected were the smaller OEMs. HP lost 2.6 points, Acer 3.9 and Dell 3.4. However “Other” lost 10.5 points. Lenovo is the only major vendor to gain share (+4.48 points).

What’s interesting about this pattern is that whereas in the phone business “others” is a rapidly growing group of companies, in PCs the smaller vendors seem to be suffering. They still make up about 30% of the market but that’s down from about 40% three years ago.

In contrast, “Other” went from 15% to 24% of the phone market in the same time frame. Part of the explanation is that the entry of the iPad took the wind out of the “low end” netbooks and other cheap PCs. Consumers migrated low-end usage to a product re-built around those jobs.

In the mobile phone market, the disruption is in the opposite direction: communication is moving rapidly up-market from real-time voice to latent messaging and from storage consumption to broadband consumption. The companies being rewarded today in the phone business are those who are leading the charge to new markets.

In other words, on the PC, we are witnessing low-end disruption. On the mobile phone we are witnessing new market disruption. The irony is that the low end PC and the high-end mobile are very nearly the same thing but the industries, channels and incumbent business models are very different.