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EDA Graffiti

EDA GRAFFITI, WITH EDA VETERAN PAUL MCLELLAN, DIGS INTO THE WORLD OF DESIGN TO FIND OUT HOW WE GOT HERE, WHERE WE ARE GOING, AND WHY EDA IS DIFFERENT.



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Friday, November 13, 2009

iPhone is number 1

Nov 13 2009 12:00AM | Permalink |Comments (4) |


I’ve talked before about just how amazing Apple’s performance in the cell-phone (and laptop) market is. Last quarter, only two years after entering the cell-phone market, Apple became #1, at least if you measure by how much money they made rather than how many phones they shipped.

Apple shipped 7.4 million iPhones for $4.5 billion but they made more profit on them than Nokia made on the 108.5 million phones they shipped for $10.36 billion. Strategy Analytics estimated (since Apple doesn’t tell) that Apple made a profit of $1.6 billion whereas Nokia made only $1.1 billion.

I had a slide from Morgan Stanley at the ICCAD meeting last week that showed that iPhone is the fastest ever adoption of a consumer electronics technology. Actually, that’s not really fair since Apple waited until the market already existed unlike, say, RIM (blackberry) who had to create the market for smart-phones. But Apple has executed flawlessly so far.

Of course there is a big patent battle going on since it is impossible to build a cell-phone without infringing lots of patents held by lots of different parties. Indeed, when I was at VLSI I got involved in patents that we might be infringing. Patents were divided by the industry into essential and non-essential. An essential patent was one that you had to infringe to build a conforming GSM handset. For example, Philips owned a patent on the specific parameters used in the voice compression algorithm GSM adopted and they wanted, I think, $1 per phone license fee. Unsurprisingly Nokia owns lots of patents on cell-phone technology so thinks that Apple should pay them a license fee on all those iPhones as, I’m sure, do dozens of other people (the iPhone is GSM technology, although a universal iPhone that also supports CDMA is rumored to be coming).

The Motorola Droid came out this week too. I’ve not used one so I don’t have much to say but one thing that it has (free) that iPhone does not is turn-by-turn directions when driving. I hadn’t realized that Google had built up their own turn-by-turn database because they didn’t want to pay high royalties for map data. Then they said sayonara to Navteq (acquired by Nokia for $8.1 billion) and Tele Atlas (acquired by Tom Tom for $2.7 billion). Apple doesn’t have their own map database and if you want turn-by-turn directions on the iPhone then “there’s an app for that” and Tom Tom will sell you one for $99.99. It will be interesting to see how this particular little corner of cell-phone space plays out.

Reader Comments



at 11/13/2009 9:42:03 AM, Dan said:
There's also that MotionX turn by turn GPS app for $3.99 or so.



at 11/13/2009 2:55:44 PM, 3EDNH said:
Why in México is to much expensive?



at 11/13/2009 2:55:53 PM, S.B. said:
IF your numbers are right that's a bit more than $600 for an iPhone and slightly less than $100 a phone for Nokia. Goes to show that a huge marketing budget is king. The iPhone was a "hit" due to a really cool GUI (MMI). The phone itself is a mediocre phone (call quality and data rates, but closing the gap with the 3GS, however AT&T's 3G coverage is skimpy). I'd be interested to see the growth rate (or some other metric like smart phone market share) for iPhone vs. others now that many other phones have similar touchscreen GUIs.



at 11/16/2009 4:34:26 PM, SteveM said:
My favorite Android app is Google Maps with traffic data dynamically updated. The roadmap has walking and transit directions ... and with an open platform there will be even cooler devices than the Droid. Love the iPhone, but I'm predicting that Android will gain the larger market. One question is why does Apple maintain an exclusive with AT&T ? The Verizon commercial hammers on this point and resonates with me.

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