In the technology world, the name Mary Meeker is one to conjure with. Her official job title is managing director at the investment bank Morgan Stanley. Unofficially, her title (granted by Barron’s, a specialist financial publication) is “Queen of the Net”. This is mainly because her regular research reports on “internet trends” have become required reading for anyone interested in understanding what’s going on in the networked economy.
But it also has something to do with the fact that she’s been around a long time. In August 1995, for example, her employer was the lead manager on the Netscape IPO which triggered the first internet boom, and she was the firm’s leading research analyst. In August 2004, Morgan Stanley also led on the Google IPO — and guess who was their leading analyst then too. Given the seven to one ratio between internet and calendar years, this means that Ms Meeker has been watching the industry for about 105 internet “years”.
Her latest “internet trends” presentation is a powerpoint essay so overloaded with data it would cause Edward Tufte, the celebrated expert on data visualisation, to faint. For me, two charts in particular stood out. The first shows sales of smartphones and PCs on the same timescale. It suggests that, sometime in 2012, sales of the phones will exceed those of PCs. The second chart contains two pie-charts which capture the distribution of Apple’s revenues in 2007 and 2010. The differences are striking.
In the second quarter of 2007, for example, 47% of Apple’s revenues came from its Macintosh range of computers. The iPod accounted for 29% of revenues and iTunes for 11%, while “Others” accounted for the remaining 11%. The iPhone brought in 0% for the simple reason that it didn’t go on sale until that summer.
Spool forward to the first quarter of 2010 and, according to Meeker, the iPhone now brings in 40% of Apple’s revenues, while the iPod and iTunes together account for 24%. Sales of Macintosh computers are now responsible for only 28% of the company’s sales. These are the numbers which underpin Steve Jobs’s recent assertion that Apple had become a “mobile devices” company.
He followed up with a new metaphor, likening PCs to “trucks” — ie things that companies need to have but which few individuals own. This kind of talk prompted journalists to wonder whether his long-term strategy was to get out of the computer business altogether. In a nicely ironic touch, a blogger wrote a “Dear John” letter from Steve to the Mac (you know the genre: “It’s been lovely knowing you but I feel that the time has come for us to realise our individual potentials separately…”).
This triggered a terse, irritable response from Jobs. Suggestions that Apple was thinking of dropping the Mac were, he emailed, “completely wrong. Just wait”.
Well, we’re waiting. Some seasoned Mac users are beginning to get impatient. Dan Gillmor, the prominent Silicon Valley observer and evangelist for “citizen journalism”, has been a Mac user for many years, but recently announced that he’s moving to Linux running on the beautiful new ThinkPad laptops emerging from Lenovo. Other Mac users are beginning to mutter about whether Apple has essentially lost interest in what was once its keystone product. Sure, the company continues to make incremental improvements in the MacBook, Mac mini and iMac lines, but somehow the fire has gone out.
In a way, that’s not surprising. Companies go where the commercial opportunities are. The inescapable conclusion to be drawn from Apple’s recent history is that the spectacular growth opportunities are in mobile devices, not deskbound computers or even laptops. The iPad is selling at a rate of a million a month. More than 1,4-million of the new iPhones were sold in the first four days. And the pace seems to be increasing. It took the first iPhone 74 days to reach its first million. The iPad got there in 28. Only things like the Nintendo Wii (13 days) shift faster. Then there’s the small matter of the 40% contribution the iPhone now makes to Apple’s bottom line. In those circumstances, if you were Steve Jobs, what would you focus on?
For the rest of us, the thing to focus on is the way smartphones are overtaking PCs as the gateway that most people will use to access the internet. There are now only three players in that game — Apple, Google (via the Android operating system) and RIM (makers of the BlackBerry). Until recently, I would have said that the (open, permissive) Google/Android system would win out over the (closed, tightly controlled) Apple device. But sales of the new iPhone lead one to wonder if it will be Apple, and not Google, which replaces Microsoft as the company we love to hate. – guardian.co.uk