The Week in Review – April 6-13, 2013 – Stratechery by Ben Thompson

It was a week of beginnings and endings.

The iPhone launched on T-Mobile on Friday to lines nearly everywhere, although they quickly dissipated. There seems little reason to doubt the iPhone will soon be more that 50% of T-Mobile smartphone sales, just like the other major carriers. More pointedly, it seems increasingly clear that limited carrier distribution of the iPhone was the most significant factor in Android’s past success in the U.S; the rest of the world, where an iPhone 5 costs $600, not $200, remains a different story.

The Facebook First also began sales on AT&T, albeit without lines. I went to check it out and will have a brief report early next week. Facebook Home also launched on Android Play to middling reviews; do users know what they’re getting into? Both angles actually makes one more bullish on Apple: one of their most important competitive advantages is retail and the direct connection they enjoy with regular consumers.

On the other side of the spectrum, IDC announced that PC Sales had plummeted by 14%, double the 7% predicted. It seems there are three significant reasons why:

PC’s have long since become good enough from a performance perspective. There is no compelling reason to upgrade
The iPad does many of the jobs PC’s were previously hired to do more effectively, eating into time spent on PCs and PC-buying budgets
Windows 8 may disincentivize traditional PC users from upgrading, while not yet offering a compelling alternative to iPad use cases

I didn’t write more about this report, largely because it feels like it’s been coming for a long time. Two key pieces:

From January 2010: The iPad: It’s for Everyone Else

The reason this matters is that the vast majority of users are primarily content consumers. These are the people buying netbooks as their primary computers, or simply avoiding computers as much as possible. They simply want to go on Facebook, check their email, watch YouTube, and at most, upload pictures. Apple’s value proposition to these customers is: The iPad is a superior content consumption experience with sufficient creation capabilities to meet your needs.

From three weeks ago: The iPad and the Disaggregation of Computing

It is not so much a computer as it is an appliance, significantly better at some use cases – reading, drawing, playing games – and significantly worse at others – writing, organizing, editing. In this way it began the disaggregation of personal computing. Instead of using one device for all of our computing needs, we used two. True, you can use the iPad as your only computing device, but most don’t; they simply keep their old laptop a little bit longer than they would have otherwise, and use both.

Here on stratechery I wrote three articles and five linked-list items; this felt much more balanced and sustainable than last week’s madness. Moreover, I’m pushing to make the linked-list items clearly pertinent to the themes I’m focused on here at stratechery, and more substantive than simply pull quotes. They’re arguably articles in their own right, just of a different style. I trust you find them useful.

As always, I greatly appreciate your spreading the word about stratechery and following @stratechery.

Articles | Linked List Items | Other Links Worth Reading

Articles

Apps, People, & Jobs to Be Done

I’m skeptical about Facebook’s mobile prospects generally (see here and here), and Facebook Home specifically. For one, I question the addressable market for the First. In this article, though, I question the product itself:

The reason why smartphones rule the world is because they do more jobs for more people in more places than anything in the history of mankind. Facebook Home makes jobs harder to do, in effect demoting them to the folders on my third screen.

Read the whole thing.
Mobile’s Hierarchy of Needs

This is a high-level strategy piece that uses Maslow’s Hierarchy of Needs to analyze the basis of competition in mobile.

The iPhone and, say, the Galaxy S 4 both have “good enough” hardware, “good enough” software, and a “good enough” app selection (and the end-game for “good enough” is commoditization and razor-thin profit margins). The next means of differentiation and competition is in services. It’s a competition that will be waged not only by the operating system vendors and device manufacturers, but also by pure service plays such as Facebook (on the big side), and outfits like AppGratis (on the small side).

Read the whole thing
Apple, Samsung, and the Parable of the Model-T

As I noted above, it seems increasingly clear that users prefer the iPhone, all things being equal. But as Apple increasingly saturates markets where price is equal, thanks to carrier subsidies, it may be time to consider more SKU’s.

Still, the idea that Ford became overly focused on production as opposed to customer needs is a worrying one; if this fall brings nothing more than a 5S, with the same form factor as the 5, well, that will be great for production costs, but not so great for customers who prefer a larger phone, or a cheaper one (and remember, Cook is a production guy, not a product one).

As an aside, I now understand why sites write anti-Apple articles. This was by no means anti-Apple, yet it achieved traction for being presented as such. The truth is I think the iPhone is a superior experience and that Android’s market share dominance is largely driven by carrier availability in countries with subsidization models, and by price in pre-pay markets. But my goal here is to not simply react to the world as it is today, but to think about the world as it may be years from now. Apple is certainly contemplating their 3~5 year road map; this article should be read in a similar vein.

Linked List Items

The Death of HTC in Seven Bullet Points, Revisited link — The HTC One is getting amazing reviews, even as their financial performance tanks. Unfortunately, I think it’s the latter that is more pertinent to their long-term survival.
Samsung’s Press Page link — The S 4 is only one of a plethora of new Samsung devices. Further evidence they are pursuing a much different smartphone strategy than is Apple.
Huawei, MediaTek and the Lower Right link — Huawei is facing similar challenges to HTC in building a sustainable brand. Meanwhile, MediaTek is increasingly dominating the cheap Android market.
LINE Enters E-book Business with LINE Manga link — One of LINE’s advantages vis a vis Facebook is that it’s platform was designed from the beginning with App Store’s in mind.
The Samsung Mega link — In the long run, phablets are a much greater threat to iPads than are Android tablets.

Stratechery by Ben Thompson

The Week in Review – April 6-13, 2013

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Linked List Items

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