November 7, 2011 Reports
Nokia has launched its comeback with two very solid Windows Phone devices at 420 and 270. Next year Nokia, like Apple, will have handsets with uniquely appealing industrial design. However, Nokia will not launch in the USA until 2012 and needs to add cheaper smartphones to the portfolio. Nokia and Microsoft face a hard struggle in establishing a third mobile app ecosystem. However, it is not impossible (Google has managed it in 18 months) and given more devices and the right execution they could manage it. 2012 will be the critical year. We believe that the flaws in the Android proposition mean there remains a real window of opportunity. However, if Apple launches a cut-price iPhone then the market will be turned upside-down, again.
Nokia has launched its comeback with two very solid Windows Phone devices at 420 and 270. Next ye [...]
October 19, 2011 Reports
Apple is now a $108bn company, with annual revenue up 66% from a year ago and 40% gross margins. September quarter iPhone sales dipped to 17m ahead of a new product launch, but Apple still sold 72m in the last 12m, compared to 40m in the 12m to September 2010. Apple has now sold 40m iPads for $20.3bn revenue, and 11m in the last quarter. All other competing devices have sold perhaps 4m. We expect Apple's dominance to continue through 2012 and potentially beyond. Google's Android sold even more smartphones than Apple, activating 150m in the last 12m and 55m in the September quarter. Yet in October Apple sold 4m of the new iPhone 4S in just three days, bringing in around $2.6bn: Google's annual run-rate mobile revenue is now $2.5bn.
Apple is now a $108bn company, with annual revenue up 66% from a year ago and 40% gross margins. Sept [...]
October 5, 2011 Reports
Amazon has taken the ereader to $79 and the tablet to $200. The Amazon Fire is everything that Android tablets are not: a coherent high-quality user experience rather than a box of components. It will sell well, while new sub-$100 Kindles will reinforce Amazon's dominance of ebooks. Amazon began as a bookshop, but just 30% of Q2 North American sales were physical media of any kind. The Fire is part of a broader strategy to embed Amazon in online buying of everything from shoes to nappies to iPads and TVs. The Kindle Fire is a shop window on every coffee table. Media companies should not expect Amazon to be a more congenial partner than Apple. Amazon's long-term stake in the health of the books or magazine industries is limited: the Kindle is a new way to reach readers and viewers, but not a saviour.
Amazon has taken the ereader to $79 and the tablet to $200. The Amazon Fire is everything that Androi [...]
October 4, 2011 Reports
Apple will release the iPhone 4S later this month, with substantially upgraded internals but the same design. Despite disappointment at the lack of something with a 5' on the box, this is a solid update that maintains Apple's competitive positioning. The most significant omission was a lower-priced iPhone. Apple sells the 3GS and now the 4 at lower prices, but lacks a dedicated device to address the sub $300 (SIM-free) market where most future growth will come from. We think this is only a matter of time. Apple's new Siri' voice assistant looks very impressive as a USP. If it works, and spreads, it will join apps as a structural problem for Google, drawing people away from web search.
Apple will release the iPhone 4S later this month, with substantially upgraded internals but the same [...]
August 18, 2011 Reports
In this report we outline the current state and likely development of the war between mobile platforms. We discuss installed bases and activity levels, the key issues facing Apple and Android, including Android fragmentation and Google's acquisition of Motorola, and go on to look at the tablet market and the outlook for RIM, Nokia and Windows Phone.
In this report we outline the current state and likely development of the war between mobile platform [...]
July 27, 2011 Reports
CPW Europe had a weak first quarter, with like-for-like revenue growth of -3.3%, with all of the drop coming from the 18 to 24 month contract length shift in the UK. We expect its performance to improve through the rest of its fiscal year, but it will need to in order to hit even the bottom end of its full year guidance. The US mobile retailing operation is doing much better, with very strong revenue growth, and is likely again to exceed full year guidance.
CPW Europe had a weak first quarter, with like-for-like revenue growth of -3.3%, with all of the drop [...]
July 13, 2011 Reports
Apple has now sold 25m iPads since launch, worth $15bn, and will probably sell 40-50m in 2011. Competing tablets have sold perhaps 2-3m in total so far and will not be competitive with the iPad until 2012 at the earliest. Android phones are now far outselling iPhones, but benefit from a narrower user experience gap and from selling at a half of the price. Android tablets must compete with the iPad at the same or higher price points, a far harder task. We believe it is possible the iPad will retain a 50%+ share. Media companies have veered from euphoria to outrage when contemplating the iPad and its autocratic creator. Android offers them little chance of either in the near future.
Apple has now sold 25m iPads since launch, worth $15bn, and will probably sell 40-50m in 2011. Compet [...]
May 22, 2011 Reports
Amazon now sells more ebooks than print books on Amazon.com, while overall US ebook sales were 15.6% of the consumer market in March, up 142% from last year. Meanwhile, for some publishers over half of book sales are now through companies that are not book sellers. Waterstone's has been bought by a Russian investor for £53m, with James Daunt parachuted in to take it back to its roots in bookselling, while in the USA John Malone has bid for Barnes & Noble valuing it at $1.45bn. As book buying moves away from bookshops and away from print, both retailers and publishers will need to rethink both their scale and the way that they engage with readers. Beautiful shops and beautiful apps are probably an insufficient response.
Amazon now sells more ebooks than print books on Amazon.com, while overall US ebook sales were 15.6% [...]
May 5, 2011 Reports
CPW Europe had a difficult quarter, with volumes falling 9% and like-for-like revenue 2%, due to continued prepay weakness and the shift to 24 month contracts in the UK. The US business was again very strong, growing volumes at 26%, and this strength is likely to continue due to an acceleration in store roll outs. Keeping the European business flat in 2011/12 will be a challenge, but the US business is likely to more than make up for this at the group level.
CPW Europe had a difficult quarter, with volumes falling 9% and like-for-like revenue 2%, due to cont [...]
April 17, 2011 Reports
Market data and industry anecdote point to an explosion in ebook sales in the US and UK in 2011. Leading consumer publishers are seeing ebook sales at 10-15% of total sales in January and February, driven by Christmas device sales. So far ebooks had been strongest in niches: romance, business books and frequent travellers. They have now moved into the mass market: few genres will be untouched. This shift brings with it a very different market structure, with Waterstones likely to shrink dramatically, technology companies with little stake in the health of publishing taking major roles and publishers faced with disintermediation and forced to build direct consumer relationships for the first time in their history.
Market data and industry anecdote point to an explosion in ebook sales in the US and UK in 2011. Lead [...]
January 20, 2011 Reports
CPW's European volume and revenue growth dropped in the December quarter, but this was largely due to the higher mix of prepay in the Christmas period, with underlying trends (strong contract, weak prepay) unchanged. US volume growth surged to 34% as the company continued to roll out standalone stores in malls and shopping centres, and there appears to be plenty of growth to come. Looking forward, the UK business is likely to suffer from the longer handset contracts that have been rolled out by the UK mobile operators over the last two years, but continued strength in the US is likely to more than make up for this.
CPW's European volume and revenue growth dropped in the December quarter, but this was largely due to [...]
December 17, 2010 Reports
With the completion of digital switchover still on track for mid 2012, stabilisation of the main digital broadcast platforms is expected, with roughly equal numbers of subscription pay-TV and free TV homes, though with marked differences between the platforms in terms of demographic composition and the proportion of pay-TV customers. Further marked differences exist between the satellite, cable and terrestrial platforms with regard to PVR adoption, notably higher in pay-TV households where distribution can benefit from box subsidies and greater product consistency. National PVR penetration of TV homes is expected to grow from slightly below 50% in 2010 to over 70% in 2015. As DSO nears completion, the stage is set for broadband connectivity. Although household penetration of internet-enabled TV devices is expected to exceed 50% by 2015, the emergence of hybrid broadcast and broadband services is expected to proceed much more slowly, limited by a number of factors not least the ability of service providers to monetise their non-linear on demand offerings.
With the completion of digital switchover still on track for mid 2012, stabilisation of the main digi [...]
December 9, 2010 Reports
Google has launched a dedicated ebooks store in the US, with support from 4,000 publishers, providing an ecommerce platform for independent book retailers. Google's aim is not revenue from ebooks, though the market is attractive: we estimate ebooks will be 5% of the US books market in 2010 ($1bn) and could grow to perhaps half of all book sales within the next five years. Like Amazon and Apple, Google is using ebooks to support its broader strategy, driving search traffic and building an ecommerce platform. Revenue from ebooks is less important than supporting these objectives.
Google has launched a dedicated ebooks store in the US, with support from 4,000 publishers, providing an ecommerce platform for ind [...]
November 8, 2010 ReportsCPW's European handset business had a steady quarter, with growth dipping slightly on the previous quarter but still in line with full year guidance. Smartphone sales are surging, and CPW is orientating its business towards them, but their impact is not unambiguously positive in Europe. The US handset business continued to enjoy strong growth, with this side of their business benefitting strongly from smartphone growth, and this outperformance led the company to increase its full year EBIT guidance. The UK big box' roll-out is continuing, but no sales figures or indications have been given, and the full year operating loss guidance has been increased, eating up some (but not all) of the outperformance from the US. There appears to still be much experimentation involved at this stage, and even more uncertainty about the eventual success or failure of this new business.CPW's European handset business had a steady quarter, with growth dipping slightly on the previous quarter but still in line with full year guidance. Smartphone [...]
October 27, 2010 ReportsVMed's Q3 results showed continuing strength in the face of heavy marketing by BT Retail and BSkyB, although cable churn increased significantly. There are plenty of further challenges on the horizon, including a downturn in consumer confidence and later, the launch of YouView and wider deployment by BT of next generation access. The broad based nature of the company's growth and its plans for further product development in TV and broadband continue to give us confidence in the potential for further growth in cash flow, albeit at a more modest pace.VMed's Q3 results showed continuing strength in the face of heavy marketing by BT Retail and BSkyB, although cable churn increased significantly. There are ple [...]
October 21, 2010 ReportsMicrosoft's new Windows Phone 7 operating system is launching with a big bang: ten handsets, eighteen operators, and a massive marketing campaign. The OS itself is positioned firmly in between iPhone and Android in terms of ease-of-use and customisability; it is as fast as the best-in-class but no faster; and its interface is bold but will not be to everybody's taste. A lack of apps, limited distribution, and expensive handsets will likely limit sales in the short term. Longer term, being late in the game with no truly compelling unique feature will make building a major position very challenging, but not impossible.Microsoft's new Windows Phone 7 operating system is launching with a big bang: ten handsets, eighteen operators, and a massive marketing campaign. The OS itsel [...]
October 20, 2010 ReportsThe decline in UK residential broadband market growth has paused due to accelerating adoption by older householders and increased household formation. We expect 970,000 net additions in 2010 and 20.5 million broadband households by 2015. However we expect growth will continue to decline from 2011 as the impact of the government spending review feeds into consumer confidence and the market becomes increasingly saturated. As BT's next generation access network is deployed, there is likely to be accelerated improvement in DSL price/performance, with DSL customers migrating to a 40 Mbit/s headline speed as it becomes available. The impact of this is likely to be compounded by Virgin Media up-rating its broadband portfolio from speeds of 10, 20 and 50 Mbit/s to 20, 50 and 100 Mbit/s. In the absence of further consolidation, in market share terms the industry appears set to remain divided into three strategic segments: the big three', brand extenders, and Sky. We expect residential broadband market revenue (excluding content) to continue to decline gradually, stabilising by 2015 as the impact of market share gain by lower priced ISPs attenuates due to a combination of a maturing market and reduced price differentials caused by NGA.The decline in UK residential broadband market growth has paused due to accelerating adoption by older householders and increased household formation. We expect [...]
June 17, 2004 Reports
The unveiling of new handheld gamers at E3, the games industry's annual gathering in Los Angeles, has resuscitated interest in the fast maturing market for handheld gamers. Sony's PlayStation Portable (PSP), Nintendo's dual-screen GameBoy and Nokia's redesigned N-Gage QD are major product plays for companies that must each prove themselves again to be innovative or continue to decline.
The unveiling of new handheld gamers at E3, the games industry's annual gathering in Los Angeles, has resuscitated interest in the [...]Sector Technology.
January 31, 2003 Reports
Interactivity via the TV set was one of the most misguided bubbles of the late 1990s. Fancy software and mini keyboards were supposed to provide a replacement for the PC. As matters have turned out, the use of SMS to accompany TV programmes is the means by which new technologies provide a limited form of interactivity to viewers.
Interactivity via the TV set was one of the most misguided bubbles of the late 1990s. Fancy software and mini keyboards were suppos [...]
October 25, 2001 Reports
In this short note Chris Goodall looks at consumer payment technologies. He says that the banks and credit card companies are under no immediate threat from new technologies. Do not be confused by the wizard new technologies coming out of Nokia; technical advances are not going to change payment systems much in the next five years. Rather, he suggests, observers should focus on three interesting companies which use low technology solutions to solve particular payments problems. These companies support, rather than undermine, existing players in the consumer payments industry.
In this short note Chris Goodall looks at consumer payment technologies. He says that the banks and credit card companies are under [...]
March 15, 2001 Reports
The purpose of this report is to look in more detail at the actual capital expenditures that 3G operators can be expected to make. We show that costs will be very much lower than expected. This is because most operators will be able to offer a good service to large numbers of customers by installing relatively few base stations. This is excellent news for operators, but infrastructure vendors such as Ericsson and Nokia will see much lower volumes of equipment orders than most analysts are projecting. The evidence for our conclusions is derived both from an analysis of actual 3G infrastructure orders and from an analysis of theoretical capacity.
The purpose of this report is to look in more detail at the actual capital expenditures that 3G operators can be expected to make. [...]
March 15, 2001 Reports
Microsoft has never made much impact on the Internet. As a result, we still have a proliferation of standards and competing suppliers of the underlying technology, of which the most obvious is Java. Almost all the new generation of Internet access devices, such as phones, PDAs and TVs, all use underlying software that does not work well with Microsoft technology. Genuine interoperability is not yet available. The key points we make are as follows:
Microsoft has never made much impact on the Internet. As a result, we still have a proliferation of standards and competing supplie [...]Sector Technology.