Webscale playbook: Apple\ Fixed Wireless Broadband Substitution\ Amazon Advertising\ Disney+\ GDPR after Brexit

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Welcome to the Venture Insights newsletter!
In this week’s edition, we look at the performance of Apple, the increasing threat of fixed wireless broadband substitution, Amazon advertising, Disney+’s non-exclusive deal to be carried on Sky Q and General Data Protection Regulation after Brexit.

CHART OF THE WEEK

Apple FY2019 Business Revenue Split (MTN Consulting estimates)



Source: Company quarterly & annual reports; MTN Consulting Analysis

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Webscale Playbook: Apple



Source: Company quarterly reports; MTN Consulting Analysis

Apple launched a slew of services over the years that complements iPhone and other devices in its portfolio. These include iCloud, Apple Music, App Store, and most recently Apple TV+ and Apple Arcade. The move has enabled Apple to create its own strong ecosystem comprising hardware, software, and content – locking its users across ~1.5B active iOS devices into buying/upgrading to an Apple device again. But with the iPhone story showing cracks in the recent past, Apple is turning to its services unit as the next growth pocket – the growth-driving unit doubled its contribution to Apple’s total topline since 2015 from 9% to 18% in 2019. Also, Apple’s supply chain is under immense pressure with the recent virus outbreak in China, exposing its vulnerability and over-dependence on the Chinese market – prompting to explore new manufacturing hub sites. For a more detailed look at the performance of Apple, click to read a report from our US research partner, MTN Consulting. 

Click to read report

Fixed Wireless Broadband Substitution Threats Increase

As recently report in the Australian Financial Review, TPG’s CEO David Teoh and Telstra’s Chairman John Mullen have both highlighted the disruptive nature of 5G fixed wireless broadband on NBN’s fixed broadband infrastructure. These comments are in addition to those already made by Optus’ Allen Lew about their already launched 5G home broadband product. In Venture’s consumer telco survey, when we asked respondents using fixed broadband household services (such as fibre or copper) if they would consider switching to a wireless broadband service, 38% indicated they would consider switching. Whilst the willingness of the early adopter segments to switch to fixed wireless is relatively high, actual uptake has been constrained from the supply side: with limited coverage and choice of services between the MNOs. However, the survey results clearly show that a subset of consumers care about technology upgrades and are willing to shift to a wireless service. See our recent 5G update report for more details on our survey. 

Click to read report

Amazon Advertising: From Duopoly to Triopoly in advertising?

Amazon revenue breakdown (2018)



Source: FourWeekMBA.com

Over the past two decades, global ecommerce giant, Amazon has focused on owning entire market verticals with books being the first market that it dominated. However, to think of Amazon as just an online retailer, would be underestimating the depth and breadth of its presence across multiple markets. Amazon’s ultimate aim is to curate the customer’s entire e-commerce journey. Amazon not only sells products; it also produces television shows and movies; publishes books; operates the world’s largest streaming video-game platform; manufactures a growing array of products. More recently the bright spot was Amazon’s advertising business, which appears to be picking up speed again. Click through to read our report for more details.

Click to read report

Disney+: Non-exclusive deal with UK Sky Q

Netflix penetration across platforms



Source: ENDERS ANALYSIS, RSMB

Disney+ has stuck a non-exclusive deal to be carried on Sky Q in the UK and Ireland. Available from launch on March 24, at this stage there will be no bundling—Sky users will pay £5.99/month, either in their bill, or log-in having signed up direct from Disney—and as such there will likely be less co-promotion and prominence on the user interface than has been seen for Netflix. Although non-exclusive, the level of integration possible on Sky Q is high—as shown by the excellent user experience of Netflix on Q—and cannot feasibly be achieved by other platforms. For a more detailed look at Disney+’s deal with Sky Q, click to read a report from our UK research partner, Enders Analysis. 

Click to read report

GDPR after Brexit – UK citizens must keep protections

The key question is whether the UK will continue to align with the EU on the provisions of the General Data Protection Regulation. If so, it can pursue a decision of ‘adequacy’, which would enable continued data flows from the EU to the UK. The recent UK negotiating statement was mixed on this point, claiming both that “the UK will have an independent policy on data protection,” and that “the UK will seek ‘adequacy decisions’ from the EU under both the General Data Protection Regulation and the Law Enforcement Directive.” This ambiguity is a far cry from the repeated assurance of a previous SoS, Matt Hancock, that “the Government wants to ensure unhindered data flows after Brexit.” An independent policy could mean stricter data protections, which would allow for an adequacy decision. For a more detailed look at whether UK will continue to align with the EU on the provision of GDPR, click to read a report from our UK research partner, Enders Analysis. 

Click to read report

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