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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...