Those Silly Industry Analysts Revisited

June 8th, 2012

So there’s a report from IDC claiming that the Windows Phone platform will overtake Apple’s iOS by 2016, if only by a slight margin. This particular survey presents Android as remaining number one, and evidently iOS as falling, with Windows Phone grabbing a fair share from Apple’s share.

Now to be perfectly fair, IDC previously pegged Apple as due for a fall in 2015, but has since changed their tune. You wonder whether that 2016 date will slip to 2017 next year. But all that depends on how Microsoft’s mobile platform will fare after Windows 8 arrives. But it’s just as possible that Windows 8 will do well with the consumer market, but it won’t lift Windows Phone at all.

What makes it all the more confusing is the story that Microsoft evidently won’t provide an upgrade path from the current version of Windows Phone, 7.5, to version 8. That approach merely repeats the mistake in the Android universe, where only a small fraction of smartphones are running version 4, Ice Cream Sandwich, which shipped last fall. You also have to wonder how people who are buying the Windows Phone flagship, Nokia’s Lumia 900, are going to feel knowing that the OS their gadget is running is a dead end.

In the larger scheme of things, I wonder if any independent statisticians have ever taken IDC’s estimates and actually bothered to measure how accurate their prognostications really are. And if they are seriously incorrect, why would anyone pay them to deliver an analysis? Shouldn’t accuracy be the first priority?

Now part of the problem is that Apple is constantly underestimated. Ever since they got into the consumer electronics game in a big way with the original iPod, so-called industry analysts have said they are destined to fail. Even when the iPod dominated two thirds of the market, with all other contenders left behind, a fall was considered as inevitable. When Microsoft begat the Zune, that original rebadged Toshiba digital music player was crowned as the ultimate iPod killer. It didn’t happen, although Microsoft only recently retired the Zune brand. That’s a rarity, because Microsoft will usually beat a product into the ground over and over again and seldom gives up. Often billions of development dollars will be wasted in the hope that, if they throw enough money into solving a problem, they are destined to succeed.

Well, it did work with the Xbox. The latest version of Microsoft’s gaming console does earn profits, but not if you count all the money that was squandered to boost it over the years. The jury is out on Bing, which seems to have mostly cannibalized search traffic from Yahoo!, which also uses the Bing platform. So it’s a no-win. Google retains two thirds of the share market in the U.S., give or take a few points, while Microsoft and Yahoo! continue to bring up the rear. I would hate to see Google continue to own the market, but I would have hoped that would-be competitors would have learned a thing or two. But billions of dollars later, including an expensive TV ad campaign, and Microsoft still isn’t doing very well with search.

Now in the real world, Apple’s greatest success with the iPhone is that it’s hugely profitable. Apple’s profits from smartphones continue to outpace the industry. Sure Android might deliver larger numbers, but they are spread over dozens of models — often barely distinguishable from one another — from a number of manufacturers. Since Google is giving Android away, the only profits to come their way are from ad clicks. Even there, income growth could be better. Worse, 38% of the people buying new iPhones these days switched from Android or BlackBerry. That’s not good news for the long-term prospects of Google’s mobile platform as the smartphone market gets more and more saturated.

The industry analysts will continue to tout Android’s growth as an indication that Apple is in trouble. But as long as the iPhone’s year-over-year sales growth remains high, it’s a dumb argument.

With tablets, the industry analysts keep revising their figures, hoping against hope that someone’s tablet du jour will gain a few legs up on Apple. It may have happened for a quarter when the Amazon Kindle Fire arrived and seemed to give the iPad a run for its money at the low end of the market. But Fire sales have tanked since the first of the year, so the skeptics are hoping for better action when Windows 8 ships this fall.

But it’s not that Windows 8 represents an easy path to tablet heaven. There will be two versions, one for Intel processors — similar to the current crop of failed Windows tablets — plus an RT version for ARM processors. The latter won’t run Windows apps unless they are recoded for a platform with limited resoruces. But I’m not seeing much love from the media when it comes to Windows 8. Even though some praise the Metro interface, the chinks in the armor are growing wider. One columnist from ZDNet, part of the CNET division of CBS, called Windows 8 a “design disaster.” I regard it as schizophrenic, and poorly organized, so perhaps we came to the same conclusion. But industry analysts continue to believe that Microsoft is destined to succeed.

I wonder how many industry analysts and tech pundits have speculated about Microsoft’s Plan B, and what the company should do if Windows 8 tanks. Right now, I don’t think Apple has much to fear from Windows 8. My gut opinion — and I wouldn’t take it to the bank — is that Windows 8 will be a middling success, and Microsoft will have enough ammo to tout the speed of migration to the new OS. At the same time, they’ll be figuring out a way to rush out a Windows 9 to straighten this mess out.

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2 Responses to “Those Silly Industry Analysts Revisited”

  1. Sean says:

    Android sales have been falling over the last 4 months according to recent data.

    It is just as I predicted. People initially thought Android was a cheaper version of the iPhone. Once they used it for awhile they realized it was nothing close to an iPhone, and not any cheaper. So what do they do? They run back to the iPhone, as that 38% shows. That number will only grow over time as people become more disheartened by Android fragmentation.

  2. dfs says:

    There’s one war being fought which industry analysts diligently track, and they largely base their recommendations on it. This involves the number of units sold, the percentage of users who use this pc/smart phone/tablet etc., market share and so forth. There’s another and quieter war going on, and it would be interesting to track how that one’s playing out. I mean, the competition for developers. What I mean is if you’re a developer you’re faced with the problem of what platform to write for, or at least what platform to prioritize. My hunch is that everything about Android, and particularly its notorious fragmentation, has the effect of putting off developers, so that they gravitate towards the Mac. And I suspect that there’s going to be plenty about Windows 8 that will have the same effect. If I’m a developer, I have a limited amount of time, energy, and money and I want to invest these things as profitably as possible, and the OSX and iOS platforms strike me as better bets. It used to be that one of the big selling points for Windows was that it offered a much larger library of software products. I can’t help wondering whether that’s always going to be the case.

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