Timeline Strategy Consulting

Are Camera Phones Killing the Digital Camera?

Actual data on Flickr disagrees with your conclusion. I would be quite worried if my livelihood depended on the sales of non-specialized, point-and-shoot cameras. Even digital SLR's could be in peril, at least in terms of the sheer number of users posting on sites like Flickr. The volume of content may still be generated by certain camera models, but like beer sales, in which hard drinkers account for 5% of customers but 80% of sales, this is not welcome news for retailers.

Have a look here for the data showing that iPhone is now the single most popular camera by user on Flickr:

www.flickr.com/cameras/

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What this tells me is the following:

1. iPhone, at 3 megapixels is capable of taking very good shots in the right conditions
2. Convenience is a leading factor
3. Cameras will never, ever beat mobile phones for sheer numbers, and thus will be snowed under in terms of users

I also take issue with your use of intention surveys relative to metrics that measure actual behavior. Why would you use a proxy when the real data sits in front of you?

Companies' Cash Holdings: The Winners and Losers

Apple did not always have this cash 'problem'. If one looks back at their 2005 cash position, it's interesting to note that they had only a little more cash then than they have managed to generate in FY 2008 alone.

What's the difference? iPhone! Not only is it a magnificent way to generate annual sales of 10+ million units at a revenue per unit level equal to the Mac Mini (iPhone subsidized price that carriers pay is $600+), but the subscription revenue model also means that the cash is recognized immediately while the revenue comes in slower.

In short, this line extension will so much increase Apple's cash position that it funds anything that they choose to do. Thus far, that has not been something as dramatic as a big acquisition or a share buyback. However, I would argue that using cash to make supply agreements such as what they entered into with LG, is a very good use for their cash. At a time when global demand is soft, their money can buy a preferential supply position that should theoretically ensure a years-long lead with new technology like OLED.

Furthermore, Apple wanted to play it somewhat safe with this cash position should there be a year-long and deep recession. Layoffs crush the culture at innovative companies, and should be avoided like the plague. The cash guarantees that layoffs don't need to happen. Leave those for Microsoft.

Finally, people seem to itch for Apple to spend its cash, but who shouldn't underestimate how difficult it is to pull off a successful acquisition. Even the best acquisitions are a years-long diversion for big portions of a business. The business world is littered with unsuccessful acquisitions, or acquisitions that could be considered modestly successful, but that had an opportunity cost that was too high. Apple has been wildly successful without big acquisitions. It's just not their style.

Has Stagnating Innovation Led to This Economic Crisis?

Congratulations on a well-written and powerful article.

If America could stop its love affair with liquidating itself just long enough to take stock, we would see exactly what you say; a decline in basic research that dries up the pipeline. And yes, lucky lenny, he is exactly right - go study the history of technology of innovation in the United States. Almost every basic electronic innovation we take for granted came out of government labs as part of military research or during the space race. The free market didn't, I repeat, DIDN'T, create those basic innovations. It may have put them in your hands, but it didn't make them from scratch.

I am afraid that this is a trend that's not easily changed but I have hopes that Obama elevates science to a higher level of visibility and respect.

If we just look at who innovates well, and relatively efficiently, Apple rises to the top of the list. One can argue that they are a technology compiler and that they do little basic research, but for about $700 million a year (or around 2% of sales) they produce big innovations in the following areas: human/machine interfaces, use of wireless technology, organization and display of information, miniaturization, industrial design, and convergence of multiple technologies.

Tech Troubles Aren't Over - Barron's

Hey Scalpulator - Although iPhones sell for $199/$299 via AT&T, Apple recognizes revenue estimated at $500 to $650 for each iPhone they sell through AT&T carrier subsidies. Thus, the $99 price is not that much different from their current price.

iSuppli has done extensive iPhone teardowns to determine accurate costs, and they estimate that Apple pays about $150 to $170 in costs per iPhone.

So, the correct answer is, yes they will make a lot of profit. And yes, they will sell a lot of iPhones. Don't believe the sceptics who think that every product is affected equally due to recession. There are so products that, while not exactly 'recession proof', are at least recession resistant.

PS What's the point of this article in general? Why can't I just read the original Savtitz article? There's nothing new or novel here, just a re-hash of what someone else wrote.


On Dec 14 04:49 PM Scalpulator wrote:

> Does anyone really believe that an iphone will be profitable at $99
> during a 100+ year flood?