A month or two ago I submitted an offer to buy a house. I received the paperwork about an hour before the submission deadline.  Five years ago I would have needed to meet someone in person to sign the required paperwork.  Or possibly I might have been able to receive the paperwork electronically but I still would have been required to print a copy, sign the physical copy, scan it and finally submitted it electronically. Five years ago we weren’t yet in a world capable of supporting an all-digital transaction.

But this time was different.  I received and signed the documents through DocuSign Ink.  I was able to electronically sign the required paperwork which then went immediately to the next parties required to review and sign the paperwork.  I was able to save a copy of the submitted paperwork within my account which I could subsequently access within the app on either my iPhone or iPad.

For the first time I felt like I finally saw the potential of tablets and smartphones.  Don’t get me wrong.  I’m an extremely heavy use of smartphones and tablets. But I’m also a heavy use of traditional notebook computers.  I’ve always been a believer that smartphones and tablets make sense for situations defined by a time/location/task  context.  In other words, tablets and smartphones make sense, but some times traditional computing makes more sense.  This experience called that believe into question.  I’m beginning to think innovation over time can close any chasm between what one can do on a tablet and one can do more easily on a notebook computer.  Notebooks are still far more efficient than smartphones and tablets for some activities (again defined by time/location/task) but I’m no longer convinced that is always going to be the case.

Since 2010 ownership rates have increased significantly – rising from roughly 10 percent at the start of 2011 to over 40 percent today (in another post I’ll talk through why I think tablet ownership rates are actually close to plateauing).  While this ownership rate has largely been driven by entertainment consumption, I’m beginning to think that could change.

In the last three years I’ve witnessed my kids relying almost exclusively on tablets and smartphones. While I’ve largely assumed this was a result of the type of computing activities they are involved in (gaming), I’m beginning to wander if tablets will mature and evolve quickly enough to satisfy their future computing needs. We might soon start talking about “notebook-nevers” as a cohort of heavy computer users who never owned a notebook computer. A recent survey of smartphone and tablet adult owners found 35% of users prefer to access the Internet on their smartphone and 14% prefer their tablet – suggesting a bare majority prefer desktop or laptop computers to access the Internet.

Tablets and smartphones are more personal than traditional PCs – as a result they are redefining what personal means.

One of the next big hurdles for the tablet/smartphone platform is file organization. Apps are largely siloed and as a result related documents are siloed within the apps. Yes, there are cloud storage services like Dropbox or services like Google docs and these services might play a large role. In the recently released iOS 7, Apple redesigned the photo gallery by adding curation features – organizing the photos into “moments.”

With a rapid rate of technological change, comes another technological development. In the digital world that we now live in, it has become common we often create technology to stop other technology from working which in turn spawns additional innovation designed at stopping that technology from working.

Wide deployment of home telephony spawned the creation of the answering machine.  While it’s intended use was to field calls while the homeowner was away, it was frequently used to help individuals avoid certain incoming calls. Caller ID frequently serves a similar purpose today. Universal home telephony service spawned technology use that places limits on the prior technology.

Over the last thirty years we’ve built a ubiquitous cellular network. We are now building technologies to limit and control the ubiquitousness of this technology. As mobile phones have become tools used to detonate bombs for example, we are deploying technologies to block cellular reception in presubscribed areas. We are exploring using technology to stop your cell phone from working while you are the driver of a call.

There are a plethora of examples around us. The iterative nature of technology has us constantly attempting to curb technology application. Technology seeks ubiquitousness. In turn we use technology to guide, mold, and hinder that ubiquitousness. Constantly trying to stop what we’ve started.

The new iPhones went on sale today.  Since the announcement, much as been written about the two models – and especially the implications for Apple.  I previously reviewed some of the insights gleaned from Apple’s financial statements and wanted to enumerate on that discussion.  As the following charts illustrate, Apple’s reported price for the iPhone has declined slightly over the last 18 months. The average price in 3Q13 was a reported $581 – roughly 10 percent below the $646.53 reported in 1Q12.

average iphone price
iphone asp change











This price decline could tell us a number of things. Naturally, on the surface it tells us buyers are moving to lower priced iPhone models.  They could be buying older models or simply iPhone models with less storage. This could tell us interest in the product class is waning and while individuals aren’t abandoning the product they are feeling satisfied with “good enough” and willing to buy either an older model or one with less storage. Both of these options are also consistent with a maturing market.  As a product matures late adopters tend to buy less feature-rich options.

Apple’s fiscal 4Q13 (and subsequently fiscal 2013) ends on September 28, 2013. As a result about eight days of sales of the new iPhones will end in 4Q13 while any after that will land in 1Q14 and fiscal year 2014.  I expect sales to be brisk through those first eight days, but because it is only eight days I don’t expect it to have a material impact on the average iPhone price as reported by Apple at quarter end.  Perhaps the average iPhone price in 4Q13 will be in the $572 range – lower than 3Q13 but not significantly lower.  I do however expect to see the price materially lower in 1Q14 – dropping to something in the $540 range – or about 16 percent below the year-ago price of $640.

This isn’t meant to be a pricing forecast exercise but rather a narrative around the evolution of technology adoption.  As much as we might want to ignore it, supply is upward sloping and demand is downward sloping.  By introducing a lower priced option – even if it isn’t as low as the financial markets think it needs to be – supply shifts in. Even with no change in demand, a higher quantity of demand is, well, demanded.  So if the average reported price does come down as I expect, then unit volume will move up – perhaps significantly. iPhone demand is price elasticity so consumers will respond to prices – as we’ve seen with tablets.




Much of the focus on UltraHD to-date has been on resolution.  Even the nomenclature – 4K – is a focus on resolution. I’ve seen dozens are articles written in the popular press that – in attempting to convey UltraHD attributes to the layperson – describe UltraHD in terms of Full HD (ie 1080P). These articles often focus on the characteristic that UltraHD is roughly four times the resolution of Full HD – hence 4K. While factual – this misses one of the real opportunities for UltraHD. I believe the success of UHD will be decided by much more than just “more” resolution.

It is first worth pointing out that a move to higher pixel density screens isn’t happening solely in the TV category.  Across all screens, technology is migrating to higher pixel density screens. Mobile phones, tablets, computers and of course TVs are all moving to higher high resolution screens.  This was a large – though under-reported – story coming out of the 2013 CES – where we saw many of the first mobile phones and tablets to have full HD screens.

High pixel-density screens allow us ultimately to cram more ‘stuff’ onto a screen without the user losing clarity of view. I think the best example is with something like Microsoft Excel. Imagine Microsoft Excel running on two screens – both the same size.  One is a traditional Full HD screen.  The other an UltraHD screen. While on the HD screen you might be able to comfortably view say columns A to P – on the ultraHD screen you might be able to comfortably view columns A to X in a single view.  Because of the higher pixel density, you can more clearly see more information on the same size screen.

We typically think of higher resolution giving us a better picture image of the same content we are viewing on a lower resolution screen.  But higher pixel density screens can actually give us not just better but more.  And therein lies one of the real opportunities for UltraHD.


Apple released quarterly results for their fiscal third quarter yesterday.  While a tremendous amount of ink has been spilled dissecting every ounce of the most recently concluded quarter as well as pontificating about the implications, I thought it worthwhile to look back over the last 15 quarters to see if any insights might be gleaned. Here are few nuggets:

On Unit Volumes

Apple reports quarterly unit sales for iPhone, iPad, iPod, and Macs.  All, but iPhones experienced a unit volume decline in the fiscal third quarter on a year-over-year basis.  iPhone sales were up 20 percent on a year-over-year basis – driven in part by international growth. Mac sales were down 6.6 percent – the third consecutive quarter of year-over-year declines. Sales are off about 4.5 percent over the last three quarters. iPad sales slipped 14.2 percent on a year-over-year basis – the first quarter to experience a decline in sales. Apple suggested the decline was primarily driven by tough year-over-year declines.  As the chart below illustrates, the iPad sales growth on a year-over-year basis has been slowing over the extended time period as the product category matures. Growth in the second fiscal quarter was 65 percent on a year-over-year basis. Even comparing 3Q13 unit volume to 2Q12 unit volume shows a growth rate of 23 percent. iPod sales declined 32 percent on a year-over-year basis and have been in decline since at least the close of 2010.

One Average Selling Prices

Because Apple reports both unit volume and revenues for the segments for which they provide breakout details, one can also look at changes in realized prices over an extended period of time.  Beginning in the fourth fiscal quarter of their 2011 fiscal year, Apple changed slightly how they report revenue for the four hardware categories for which they provide a breakout. While they had previously included product specific accessories in the reported category revenue (ie iPad accessories in the iPad category), they stopped doing so with the first fiscal quarter for their fiscal year 2012.  The prior inclusion of revenue for these accessory categories essentially inflates the average price (because it increases reported revenue without a corresponding change in units sold) so take that into account when looking at average price information.  With that said, year-over-year information for the last three fiscal quarters is a like comparison. For the fourth fiscal quarter of 2012 Apple reported results in both ways.  The average iPhone price is about $18 less under the current method and the average iPad price is about $27 less. I believe these figures also provide a rough estimate of the dollar value of accessories purchased by consumers.

Price changes over the last 15 quarters provide interesting insights into the evolution of these categories. Quarterly sales for iPod were down 32 percent from a year ago, 39 percent from two years ago, and over 50 percent from three years ago. At the same time, the average price has increased slightly (up 2 percent on a year-over-year basis).  While unit volume is down significantly, the units they are selling have a slightly higher price. This could simply be an iPod Touch story (raising the average selling price) – though the average iPod price is very close to the price of the iPod Nano. iPod prices remain nearly ten percent below their high.

Mac prices have actually been up for three consecutive quarters on a year-over-year basis and were up over six percent in fiscal Q3 – though they remain about 5 percent below their highest quarter. Conversely, iPhone prices were down roughly 4.4 percent on a year-over-year basis and have fallen for six consecutive quarters. Prices are down about 12 percent from their peak.

The biggest change in average price come from the iPad category where average prices have fallen nearly 35 percent from their peak. Prices were down 15 percent on a year-over-year basis in fiscal Q3 – consistent with recent quarters. This price story tells perhaps the richest story and highlights the evolution within this category. When iPad first launched, cellular connected tablets were a significant share of sales but as usage patterns became more solidified consumers came to learn more clearly how they would use tablets. As opposed to devices that you frequently used in a mobile-connected setting, they became devices that one uses more heavily in a static location (like a home or office) where Wi-Fi  is readily available. Wi-Fi networks have at the same time become more prevalent. Perhaps the long-run decline in price is also a story of consumers shifting more tablet activities to the cloud and therefore requiring less storage on their devices. At the same time Apple did most recently introduce a model with 128GB of storage. Price declines in recent quarters are clearly a sign of composition shift – as consumer adopt the smaller screen (and lower priced) iPad mini.



For many tech categories, new models were historically announced at the beginning of the year and then brought to market in the Spring period (March/April). I think some if not all of this timing was driven by the need to sufficiently inventory the supply chain in advance of the holiday season.

A few years ago I did an analysis of the seasonality of sales for consumer tech products. The results surprised me. The fourth quarter represents about 27 percent of total annual sales volume – the most of any quarter – but significantly less than what I would have expected. I also found that new product categories are heavily dominated by the fourth quarter. Regardless of when they are announced or when they ultimately hit retail channels, a new category will typically see well over half of its annual sales volume in the fourth quarter.  Over time, as the product category matures, sales in the fourth quarter move from 50%+ of annual sales volume to roughly 27%.

I think this phenomenon is driven by the fact that consumers like to both give and receive “new” tech products during the holiday season.  As a product category matures it becomes more heavily driven by replacement cycles – consumers buy a new one when the old one breaks.

This relationship holds across a number of categories and time periods.  I refer to it as the Law of Nascent Product Seasonality. Here’s a recent example.  Apple launched the iPad in April 2010.  They would go on to sell 14.79 million units in 2010, but 7.33 million would be sold in the fourth quarter.  Despite the category being well received, Apple still sold about half of their first year total sales in the fourth calendar quarter.

Supply chain dynamics are improving significantly. The world is becoming flatter and not only can goods be moved quicker and more seamlessly around the globe, but so can ideas and the marketing messages of these products.

Take for example the Xbox Kinect.  It was launched globally in November 2010 and would go on to sell 8 million units in its first 60 days on the market – laying hold to the Guinness World Record of being the “fastest selling consumer electronics device.” This is an incredible supply chain feat that is rarely given its due credit.

Historically announcement and release periods were months apart. While that is still the case for a myriad of products, it is equally not the case for a large number of products that are coming to market on the day they are announced or quickly thereafter.

We have seen a shift as companies like Apple began to make more product release announcements in the Fall. Note how Apple’s announcements have change.  Until the iPhone 4S was released in October 2011, Apple had primarily released new models in the June/July time frame. The same is true for iPad. Only the iPod series of products have historically enjoyed a fall release.

iPhone releases
iPhone: June 29, 2007 (4GB and 8GB), February 5, 2008 (16GB)
iPhone 3: July 11, 2008 (4GB and 8GB)
iPhone 3G: June 19, 2009 (16GB and 32GB), June 24, 2010 (8GB Black)
iPhone 4: June 24, 2010 (16GB and 32GB), February 10, 2011 (CDMA), April 28, 2011 (White), October 14, 2011 (8GB)
iPhone 4S: October 14, 2011 (16GB, 32GB, and 64GB)
iPhone 5: September 21, 2012 (16GB, 32GB, and 64GB)

iPad releases
iPad (1st generation): April 3, 2010
iPad 2: March 11, 2011
iPad (3rd generation): March 16, 2012
iPad (4th generation): November 2, 2012
iPad mini: Novemeber 2, 2012

iPod Touch releases
1st generation: September 14, 2007
2nd generation: September 9, 2008
3rd generation: September 9, 2009
4th generation: September 8, 2010
5th generation: October 15, 2012

Following the success of Apple, other companies began making September launches and we saw in 2012 not only releases from Apple, but also from Amazon and others.  Even Microsoft released Windows 8 in the fall.

Today, speculation abounds that Google will launch their new Nexus 7 at an event July 24th and their Moto X at an event on August 1st. Here’s a full list of rumored upcoming launches. We are seeing companies like Google attempt to get in front of the back to school selling period as well as a slue of September release announcements.  And so with it August becomes the new September.


Colin Dixon recently wrote how “in the digital world…rentals outpace sales more than two to one.” Colin posits that access not ownership is the driver behind this dynamic. In the physical world, disk sales are almost double disk rentals in terms of revenue. I would argue it is access not ownership that also drives this dynamic. Let’s remember – it is entertainment!  And individuals want to be entertained in an easy way.  We are in a period of mass experimentation with a myriad of competing services.  But it will be access not ownership that wins the day.  Access can be ownership, but in the end it is easy of access consumers are looking for.