
The Smartphone Explosion - harscoat
http://www.avc.com/a_vc/2010/12/the-smartphone-explosion.html
======
replicatorblog
I think one of the things that even brilliant guys like Fred underestimate is
that Apple offers an end-to-end ecosystem that people aspire to join while
Android is the default choice for smart phone carriers that don't offer the
iPhone. Android will likely have greater market share, but will it be the
portion of the market you want to build for?

My view might be clouded because I work in an industry where 45% of revenue
comes from 5% of customers. Will the bulk of dollars available from
smartphone/tablet customers come from the market share leader or the profit
share leader? My guess is the latter.

Even if Android wins in smartphones, I'd bet iOS will continue to own music,
tablets, and TV and TV could be bigger than the rest combined.

~~~
cryptoz
Apple's products are expensive. Since Android is open, you can have android on
a cheap $10 toaster or a high-end $50,000 car. Apple's closed ecosystem
provides a nice environment for those people who are in it, but the vast
majority of mankind cannot afford Apple products. Many, many more people can
afford Android products purely because the variation in price is so huge.

So, while Apple may be happy owning the majority (all?) of the high-end device
market, you will start to see Android running on nearly _everything_ out
there. I wouldn't make any bets that iOS will be "better" for developers as
the future rolls in.

~~~
code_duck
Apple's _other_ products are expensive. iPhones tend to sell for 1-2 hundred
with a contract, exactly the same as Android phones.

~~~
martythemaniak
A very limited, US-centric view. Yes, in the US (and Canada) people buy
subsidized phones and even here that hasn't stopped Android.

In much of the rest of the world, people would be expected to pay 2-3 monthly
salaries for an unsubsidized iPhone. Or they could pay 1/2 or 1/3rd for a
decent Android phone and do the same things. Now do you understand the point
of the article?

~~~
code_duck
Which countries are you referring to, exactly? In Australia for instance, an
iPhone is about $630 AU, a Droid 2, $650. I think it makes sense to compare
phones of similar capabilities.

~~~
martythemaniak
India, China, Eastern Europe, Latin America... take your pick.

When I go shopping for a phone this year, I'll be comparing the iPhone5 with
the latest dual-core 4+" 1280x760 Android monstrosity, then drop 600+ on
either. When the newly minted middle class in those countries goes shopping
for a phone this year, they'll look at a reasonable 3.5" 480x320 Android for
$150-200, compare it with some aging Nokia dinosaur and make their pick. The
iPhone is not going to be figuring into their thoughts very much.

~~~
code_duck
Anyway, you asked me 'now do you understand the point of the article'.

I think I already did, thanks, and as far as I can tell, Android being at a
particularly advantage overseas vs. iOS is neither the point of FW's post or
the article he linked to. In fact, all he said is '. And many of these devices
will be running Android, not iOS'. As far as I can tell, HN has seemed to turn
this into "Android will be devastating iOS because people in Kiribati can't
afford an iPhone!!". Okay, but that isn't what either article was asserting.

~~~
martythemaniak
Well, if you follow the link in Fred Wilson's blog post, the title is "2011
will be the year Android explodes". FW is merely agreeing with that original
point.

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martythemaniak
Not many people have caught onto the fact, but Android has already exploded
massively. It's a moving target, but during the same time that RIM, Apple and
MS shipped their flagship products (iPhone4, BB Torch, WP7), Android outsold
them all combined. With Nokia mired in Symbian-MeeGo nowhereland, there
doesn't seem to be anything on the horizon to slow down that momentum.

Despite all the hand wringing over "fragmentation", the fact is that Android
scales and adapts wonderfully and this will be the basis for its dominance.
Consider the new wave of cheap Android smartphones coming - with what other OS
could a middle-aged Indian man upgrading from an old crummy nokia be just as
satisfied as me - a geeky dev who loves the latest and greatest and has gone
through a dozen smartphones?

~~~
rimantas
When talking the dominance, please, specify what kind of dominance you have in
mind. Nokia has dominance in market share, but what's the point?

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dave1619
I agree with FW that 2011 will see a huge explosion in smartphones. 2010 was
already a huge boom. But the interesting potential lies in the billions of
people in the developing world, can they be enticed to join the smartphone
world with cheap smartphones priced under $100? I think they can. Virgin
Mobile has an Android device for under $200, no contract and only $25/month
for unlimited data and 300 minutes. That's enticing, and it's probably just
going to get cheaper. Android has the price point where it can lure people in
to a smartphone from a regular phone, and it has the platform where it can
keep most of the people. The big question to me is what is Apple's response
going to be? Is Apple just going to sit there and let Android take the low-end
market, or is Apple going to proactively respond and release a lower end
phone, ie., iPhone Nano, that can compete with the low-end Android phones? The
same thing in tablets, will Apple release a 7" tablet to compete with the low-
end Android tablets?

~~~
martythemaniak
To be honest, I am a little baffled that they haven't already. Around this
time last year I wrote about why Apple would use a 960x640 screen in it's 4th
iPhone* and I naturally expected a product line split. It would have made
perfect sense to have a top-end 4" 960x640 phone and a low-end phone using the
old screen, less RAM and other money-saving components.

Perhaps they wanted to hold off another year protecting their high margins,
knowing that even in the developed world, a lot of people would have brought
the low-end iPhone instead of the high-end one? In any case, it would be
interesting to see if this summer they'll introduce a lower-end iPhone or if
they'll continue to be an exclusively top-end provider.

*[http://martin.drashkov.com/2009/12/iphone-4g-predictions.htm...](http://martin.drashkov.com/2009/12/iphone-4g-predictions.html)

~~~
irons
_I naturally expected a product line split. It would have made perfect sense
to have a top-end 4" 960x640 phone and a low-end phone using the old screen,
less RAM and other money-saving components._

Since the 2009 introduction of the iPhone 3GS, when the iPhone 3G went on sale
for $99, they've done exactly that. A year later, the 3GS followed it at that
price.

The downside is that when the 3GS was finally discontinued, it was two years
old and had 1/4 the RAM of the then-current iPhone 4, leading to maintenance
trouble for the OS and app developers.

------
fonosip
good points. yet apple has options. the iPad was priced very aggressively out
of the gate, to the point of having no real competitor even now.

the iPhone pricing is muddled by the carrier subscription costs. which
incidentally are the best/most profitable large business in the world right
now.

the iPod touch has no competition even after years in the market.

my money for 2011 is that apple continues to be the money/profit leader. not
android

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swombat
Even on a geeky site like swombat.com, mobile traffic is still only 12% of the
total. Android has a long way to go. I doubt it will achieve all that in 2011.

Just because everyone _can_ access the web on their mobile doesn't mean it
will become their main channel to it. I have mobile devices too, but 99% of my
web browsing is still on my laptop, and until/unless I need to be super-mobile
all the time, that will remain the case.

~~~
cryptoz
> I have mobile devices too, but 99% of my web browsing is still on my laptop

Right. That's because you _can_. In much of the world, there is no such thing
as a high-speed wired infrastructure that lets you purchase $1000 computers,
plug them in and go. Most of the world _does_ have a wireless network though,
and there are already nearly 1 billion 3G phones connected to those networks.

You and I are not good examples of the new market that will exclusively access
the Internet through mobile, so it may be hard to see that it's going to
happen that way. But it will.

~~~
lsc
laptops can run on wireless infrastructure just as well as smartphones can.

I'm typing this on a lenovo ThinkPad x60s. Value was $400 a year or so back
when I got it. Less now, obviously. There are serviceable netbooks for similar
prices new these days. I'm using the verizon brand cellular modem, which works
fairly well (but is also pretty expensive, because I'm an American.)

If I was some guy in africa or china or what have you, this netbook/cellular
setup would not be any more expensive than a iphone, and really the only
downside vs. the iphone is that you've gotta plug the netbook in more often
than the smartphone; on the upside, it's much easier to get the sort of work I
do done with a real keyboard and monitor. Of course, this varies. for
communication that doesn't need to be instant and traditional computer work,
the netbook is unquestionably better, save for the battery life issue. If you
need instant on or work while you walk capability, then the smartphone is your
best choice. It's a tradeoff... I'm just saying that right now, the high end
smartphones don't have a price edge over the low end netbooks.

Smartphones are getting better; fast, but they are still a long ways from
being as functional as a good netbook. As of yet, a good smartphone and a good
netbook are about at price parity. (if this article is right, that might be
changing; I can see situations where saving a couple hundred up front would
make dealing with a smartphone vs. a laptop worth it.)

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code_duck
Fred Wilson does very well stating and investing in the obvious.

~~~
adatta02
Fred Wilson also has the $$ to show for stating and investing in the
obvious...

~~~
code_duck
Sure, as I said, it works well for him.

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mgkimsal
slight prediction here: apple may introduce a 3g plan for a next generation of
iPod Touch, strongarm AT&T or Verizon in to offering a decent unlimited data
plan, and start pushing facetime (and possibly skype) over traditional 'phone'
functionality altogether. Yeah, why would a carrier cannibalize their own
voice network? Perhaps they won't, but they might for the right amount of cash
(isn't it _always_ about cash?)

------
joshu
I can't wait for Dell to get into the smartphone business.

~~~
apu
Hmm I can't tell if you're being serious or sarcastic. I've known just about
as many people who would say this seriously as would sarcastically...

[My experience with Dell has been quite mixed...I have the impression they
used to make fairly reliable machines, but recently not so much.]

~~~
joshu
Sarcastic. They made the exploding laptops right? They'd be perfect to create
a smartphone explosion :)

