My 2012 predictions

Posted by Charbax – December 31, 2011

Here are my predictions for 2012, consider some may still be wishful thinking. Cash and control by the CEOs often trumps the better ideas, inevitable developments are sometimes delayed.

- Mass manufacturing of ARM Powered Laptops that have a performance above Intel Atom netbooks, can satisfy most consumers running Android (with full Ubuntu-like Chrome browser running on NDK with lots of RAM), Chrome OS, Ubuntu and Windows 8. In the first half of the year, the processors can be OMAP4460 1.5Ghz, OMAP4470 1.8Ghz, Tegra3 1.3Ghz (higher frequencies if available), i.MX6-Quad, Qualcomm S4, Exynos Dual-1.5Ghz and Quad-core. In the second half of the year those may use ARM Cortex-A15 such as OMAP5, Exynos 5, Project Denver and others already.

- ARM Powered Google TV will take off. Starting from the HDMI output of every high-end Android phone, dedicated ARM Powered Google TV boxes can sell for as little as $50, can accelerate the adoption of mass market video-on-demand to the HDTV.

- The only hope for the HDTV industry is to mass manufacture Quad-HD 4K2K screens at 55" and higher and sell them as soon as possible for sub-$5000 and later sub-$2000 prices. I think that upwards 400 million consumers would consider upgrading their HDTV to 55" Quad-HD type if it can be sold below $2000. Quad-HD content comes from Hollywood as all movies are already digitized in Quad-HD for digital cinema distribution, and with h264 and WebM, Quad-HD movies can fit on Blu-ray disks, 40 4K movies can fit on a 2TB hard drive, 4K content can even be streamed over VDSL, Cable or Fiber to the home Internet connections which those same hundreds of millions of consumers already have or can have for cheap.

- White Spaces will create the biggest chaos in the telecom carrier industry as schemes for cheap White Spaces routers will be available, using the method, whole cities can be blanketed with free or very cheap high-speed wireless data. Every ADSL/Cable/Fiber user can connect the White Spaces routers and provide bandwidth for each whole neighborhoods. White Spaces can become the main worldwide standard wireless data network system to replace cellular, LTE, Wimax for the future.

- Sub-$100 Android phones will become the most popular smartphone category to be sold during the year. Sub-$100 Android phones will have the performance and capacitive usability of at least a Nexus One phone which was the best high-end phone in the world at the beginning of 2010. Without being too greedy for certain hardware features such as Super AMOLED HD, special metal casings, it is possible that high-end Android can be mass manufactured to be sold mostly for as little as $200-$300 unsubsidized for unlocked no-contract use. Expect some high-performance Dual-core phones with nice big capacitive screens and full ICS experiences to be sold below $200 unsubsidized for pre-paid plans soon for sure.

- Over 500 million smartphones to be sold, 90% of those Android. Over 100 million Tablets to be sold, more than 70% of those Android.

- Tablets with keyboard docks are basically laptops with touch screens and will replace most laptop sales. There will be fat and thin keyboard docks, some include batteries and ports while other are very thin keyboards that can be fixed magnetically or by hooks to cover the tablet to function as a thin screen protector. Keyboards remains the fastest way to input text and to be productive with a computing device.

- 7" Tablets will be the most popular size excluding the keyboard docking tablets. Hundreds of millions of consumers will want to use a 7" tablet in their jacket pockets when going outside. A 7" tablet has a 2x to 3x larger screen surface area compared to a smartphone, offering a better experience for video playback, web browsing, games, apps and more.

- Wearable computing will take-off in several areas. From Android wrist watches, to head-mounted displays with augmented reality, to bluetooth headphones, controls that can be snapped to clothing. All can function using Bluetooth to synchronize and use the smartphone or 7" tablet as the brain of the system. The headmounted display system can look like the Motorola Kopin Golden-i which I have used for the past 2 months for augmented video-blogging. Android wrist watches can be used to view notifications and interact with basic functions of Android such as initiating a call, checking updates and other basic features that may not necessitate to pull out the smartphone or 7" tablet from the pocket.

- E-readers will be used for more than basic e-book reading. Using the Chrome-to-phone type functionality, users can click on articles on their laptop and have those instantly synchronize or beam to the e-reader, thus offering a secondary screen much more comfortable to use for article reading. Also collaborative real-time annotations will be the most powerful usage of e-readers for productivity in schools and businesses. Upwards more than 100 million e-readers can quickly be demanded as soon as effective collaborative annotation software and cloud services are available using a stylus. It'll be the most popular way to collaborate on writing and reviewing documents for schools and business.

- ARM Cortex-A15 will be shown early 2012 with devices available on the market before the end of the year. Expect a performance as high as 4x that of current dual-core ARM Cortex-A9 devices.

- ARM Powered servers will be deployed in large deployments, it's possible that Google and other cloud services companies start using ARM servers exclusively in whole new datacenters.

- Android@Home will take off, including embedded ARM Microcontrollers in all types of home appliances, in all electrical outlets, synchronizing all appliances with Android. This is the Internet of Things, we're talking Billions of new ARM Powered devices to be sold every year.

- Stocks that are likely to collapse: Microsoft, Intel, Nokia, Apple, RIM, HP, Facebook, Twitter, Groupon, Zynga and more. By collapse I do not mean instant bankruptcies, but simply that their value may get halved quickly as soon as investors realize those companies don't have much prospects for keeping the same levels of hype and profit margins that makes their current market cap.

- Microsoft does have a chance only if they pivot, it may require a new CEO and new board of directors. They need to stop focusing on proprietary software licencing and they need to use and support Android and focus on making profits on cloud services instead. Microsoft can have the resources to compete with Google on cloud services, it's their only chance to stay highly valuable.

- Intel does have a chance only if they pivot, it may require a new CEO and a new board of directors. They need to licence the ARM architecture and use Intel's semiconductor design and manufacturing facilities to try to make some of the better performance high-end ARM Processors, it's possible Intel can make a very powerful ARMv8 and ARM Cortex-A15 variant and that could bring them a lot of business.

- Apple will still remain successful but they cannot remain a $376 Billion company. Right now, 65% of Apple's profits comes only from the iPhone. We've already established that it's very unlikely Apple can grow that profit stream from the iPhone as sub-$100 Android phones are to be the most popular smartphone category worldwide. I think it's very unlikely that Apple can find a new cash cow to keep as high level of profits and when investors figure that out, the value of Apple on the stock market can be halved quickly.

- Nokia's only chance is to use Android as soon as possible. Same for RIM and HP. But if they insist on being stubborn, they can only go towards collapse.

- All software patent lawsuits are all going to be cancelled and dismissed. It is a worthless strategy of Apple, Microsoft and Oracle to try to sue Android companies on bogus software patents. The Android companies combined have many more patents which they can use defensively and are much more powerful than any of these proprietary platform providers regardless of how many patent trolls each of them can hire to try to extract bans, reporting on these patent lawsuits is and will remain a waste of time. All bloggers need to understand that none of these patent lawsuits are at all relevant. Most of these patents can easily be proven to be worthless simply by showing prior-art to the courts, in nearly all cases there is prior-art that can be shown, simply, stop talking and thinking about it. It'll turn out to have been the biggest waste of time for everyone involved in writing and reading tech blogs in 2011.

- Google+ can overtake Facebook. All Google+ needs to near-instantly overtake Facebook are some features to filter and recommend items to each user based on the +1 ratings that people can do on Google+ and all over the web. Basically, expect Google+ to replace your Google News, Google Reader, Twitter, Facebook, Techmeme, Groupon, IMDB, Skype, Baboo it even might become the main way to generate personalized YouTube playlists.

- Consumer 4K2K Quad-HD camcorders to be sold below $2000 are possible. This may be put investments people have put into Red cameras to risk. Basically new sub-$2000 DSLR and camcorders can include 4K2K Quad-HD video recording simply by using one of the newest processors.

- Camcorders may run Android for support for apps such as one-click upload of pictures and video to YouTube and Google+, collaborative video editing, video streaming, title, description, tags editing etc. More and more camcorders and photo cameras will thus include WiFi, a touchscreen and Android.

- Google may expand Google App Engine to support PHP/Mysql CMS scripts such as WordPress, phpbb, mediawiki and more. Google can thus provide free ads-free hosting up to millions of pageviews per month and above that, require that people use Google ads or pay a small fee for the cloud hosting bandwidth. Google can guarantee secure backups, upgrades, support and more. It'll be disruptive for the hosting and domains industry.

- Some Governments will legalize piracy and make one step further, levy a tax on the ISP or a new tax that every citizen will have to pay to sponsor all artists in each country. For example about $10/person/month for everyone in Europe, the USA and a few other rich regions of the world can collect over $120 Billion per year, which is more than enough to sponsor all music, movies, tv, writers, open source free software programmers and more. Popularity of all works online can reliably be measured to compensate content creators accordingly. This will eliminate existing intermediaries like labels/studios/publishers/proprietary software companies and it is going to be very disruptive towards the new intermediaries like netflix/hulu/spotify/kindle/prime/itunes and other.

  • Bob

    ARM laptops: android will have a major role too, much more than chrome and ubuntu (chrome maybe post-2012 once developers familiarize with html5, monetizing web apps, etc.)

    4k2k tv’s are a tough sell as they exceed human visual acuity at normal distances. possibly useful for passive 3d in avoiding horizontal lines even without 4k2k content.

    white space broadband: god i hope so but most likely post-2012. it could mean the “municipal wifi” model comes back from the dead and this time it might actually work.

    head mounted displays: too nerdy until they look just like normal glasses (not in 2012). the android watches are are very interesting but i’d prefer something that just clips onto an inner-pocket or lapel like an ipod nano. also look for traditional watches with bluetooth 4.0 from the big names in europe and japan. they won’t do android apps but they’ll have caller ID, sms readouts, contacts, playback control, alarms, etc. with a 2-year battery life.

    android”at”home sounds just a little bit gimmicky. android open accessory is more interesting, if manufacturers could just agree to place usb, hdmi and earphone on device bottom with standard spacing and account for protective cases.

    microsoft will keep making bucketloads of cash in 2012.  between win8, xb360, office and massive android patent royalties, 2012 looks good for them.

    intel’s ARM plans are not to license but to manufacture for other ARM licensees.  they have by far the best silicon fabs, always a couple years ahead of competition.  but to become yet another licensee in a world that already has so many (in usa, korea, japan, taiwan, china) they wouldn’t have much to add.

    apple will sell old-model iphones and ipads to compete with cheap androids.  maybe switch from suing to licensing. 

    nokia/microsoft, rim and hp can find a place if they can hang on long enough for html5 web apps to surpass native apps, but that’s post-2012 and html5 still needs more time to mature, as do developers and developers’ kits. maybe that’s too long for shareholders.

    software patents: i understand your thinking and i wish it would play out this way but i’m pessimistic.  if it were simply a matter of finding prior art, the litigation would never start in the first place.

    google+: as soon as they introduce a new feature that gains users, facebook will copy it. maybe another patent war? facebook basically has circles now (groups/lists) and most other google+ features. google+ needs an app platform and extensive API. this was huge for facebook.

    4k2k cameras: again, human visual acuity is exceeded. hollywood is using these cameras as a “just in case” for the future as 1) people often buy things they don’t really need if the marketing is clever enough and 2) people are starting to get laser eye surgery that exceeds 20/20 vision. also $2k-3k is as optimistic as i’m willing to go for 2012 but the $7k dslr’s should definitely look into this for next year. 

    android camcorders: i’m surprised we haven’t seen an android dslr or camcorder yet. exposing the numerous detailed controls of an advanced dslr to experienced app developers through android’s camera API is tough but a huge opportunity for canon/nikon.  until then, keep an eye on Magic Lantern custom firmware for canon as well as android’s current dslr control apps (possibly working together?). android open accessory might have a role to play too.

    legal piracy and isp tax: genius or socialist naivete? as an american i’m almost indoctrinated into suspicion of such a plan. just don’t do it like canada where you must pay for content *AND* a tax on isp and blank optical disks.

  • Sarahh

    What a BOZO!

  • Bob

    we’ll see in a year.

  • I added Android to ARM Laptops, yes once they show it running a full Chrome browser, most manufacturers may choose to use Android especially for ARM Laptops that have a touch screen thus are tablets with keyboard docks.

    I believe a case can be done for 4K2K even on as small as 46″ LCD size. Regardless of distance from the screen, the quality is better than 1080p, it may not use the full 2160p quality if your sofa is far from the screen, but with 55″ I think that most sofa distances are covered to provide a quality that is at least 2x better than 1080p, and I think it’ll be a trend to reconfigure the living rooms to place the sofa a bit closer to the screen, a smooth LED backlight may be preferable.

    Sure enough the headmounted display isn’t going to be something everything will use in 2012, but I think it’s likely that upwards more than 1 million early adopters will want to try to start using it if the hardware is done right and affordable. Sub-$1000 is a good start, sub-$500 would be even better.

    Read up on “The Internet of Things”, that is the idea. Basic functionality is to monitor your electricity usage, remotely and automatically turn on/off lights, for example with the phone in your pocket or a sensor on your clothes, your house lights can automatically turn off when you leave the room, possibly saving you 50% or more of your electricity bill. But basically all electric power plugs and all home appliances can be much improved being connected to Android at Home, it’s a open standard, the cost difference connecting most appliances will be below $5, sometimes even below $1. It won’t make any sense not to turn them all into Android at home compatible.

    Microsoft can’t expect people will gladly keep paying $100 for the OS if most consumers and enterprise start being satisfied using a free OS such as Android on ARM or Chrome OS on ARM, and with an option to have Windows 8 on ARM licence as multi-boot, Microsoft can’t license Windows 8 on ARM at the same price as high-end Windows on x86, so it’ll be $20 licence max and multi-boot cannot legally be blocked.

    The Intel ARM manufacturing rumors are just rumors, I don’t think Intel can manufacture ARM processors without getting an ARM licence anyways, and it’s anyways much more useful for Intel to simply get the ARM architecture license, it enables them to optimize their manufacturing processes, customize features such as fin fets 3D stacking, evt make their own GPU, using 22nm or whatever smallest process sizes they can come up with. And I think Intel prefers to sell some Intel branded ARM Processors and keep 100% of the profit margins on the processor to themselves, instead of manufacturing for someone else who takes more than 50% of the processor margins. If Intel manages to make the best high-end ARM Processors, then they can charge more for each processor as demand for highest ARM Performance is always high, and I think that could in theory provide Intel with more profits per high-end top performance ARM Processor than Intel currently makes per Intel Atom sale.

    If you look at Apple’s overall 2011 profits, I just don’t see Apple being able to match or exceed that in 2012, and if Apple can’t show significant growth in profits, then investors panic and the stock price collapses.

    4K2K is basically similar to 35mm, the reason Hollywood films in 4K is for digital cinemas where most have 4K projectors today.

  • Sprewell

    Interesting and provocative predictions, though you come across as an Android/Google fanboy.  Here are my reactions.
    – I don’t pay attention to anything beyond 1080p, so your 4K2K analysis was interesting because I’m not very aware of those higher resolutions.  Like Bob, I’m skeptical that they will get much traction this year.
    – White spaces or some similarly decentralized WAN tech will likely do well someday, but it’s not happening this year.  I don’t think they even have a standard hammered out yet.
    – Considering Apple has 70% market share in tablets, the notion that Android will jump to 70% for tablets or 90% for smartphones seems like wishful thinking.  It’s going to take a couple years for Android to catch up on tablets, just like it took a couple years with smartphones, and Apple won’t let their smartphone share drop below 20%.
    – I’ve been saying for a couple years now that 7″ will be the killer form factor for tablets, so I completely agree with you about that.  That is the perfect size for tablet computing, big enough for video and web browsing while portable enough to carry around, like a large paperback.  Steve Jobs was dumb to ignore the 7″ form factor, we’ll see if Apple comes out with the rumored iPad mini to correct this mistake.
    – I completely agree with you about all those stocks collapsing, but you are way off on timing.  Only RIM appears doomed this year, the rest will limp along for years before crashing.  I was hoping RIM could turn it around with the QNX purchase, but they appear too incompetent to do so.
    – Why should Microsoft get into cloud services when nobody makes any money there?  Microsoft is in “milking the cash cow” mode.  They are too clueless to know where the death blow will come from or how to avoid it, but they will slowly and profitably fade for years till it hits.
    – Intel clearly needs to do something, but I doubt licensing ARM is ever going to be in the cards.  If they can ditch x86 and come up with a new power-sipping mobile arch, they may compete again, but I suspect they are too irrationally tied to x86 to ever make that jump, hence all the time they appear to be wasting on getting Medfield to use less power now.  It is amazing that they still don’t have a viable power-efficient alternative to ARM after all these years and no heads have rolled.  They will probably slowly fade into irrelevance like Microsoft.
    – While I can’t stand Apple’s patent-mongering and closed ecosystem- which is why I got my first and last Apple product, a Powerbook, in 2004- their financials are so staggering that they appear unfortunately to be the big winner right now and in the coming years.  Google made $27 billion in revenues so far this year; by comparison, Apple has made $20 billion in profits!  While I agree that after the Apple TV, assuming that is successful, they won’t have another new hit product category to roll out, that won’t matter considering how many years they’ve been rolling in profits with the iPhone now, with many more years to come for their tablets.
    Since they are making billions off iOS while Google makes essentially no money off Android, they can at any moment release budget versions of their high-end products and kill off Android market share.  But they don’t need to do that yet: they can simply suck up all the mobile profits while Google salts the field by killing off RIM and WP7 with a free Android, all while Google makes no money from Android while plowing billions into it, then Apple can turn around and destroy Android once it has fulfilled its unwitting role.  I don’t want Apple to own the mobile market, but the free Android model is just dumb and I don’t see anyone else stepping up. 
    – You are way too optimistic about patent lawsuits.  While you may be right about prior art, the legal system rarely makes sense, so I suspect the patent wars will continue for years to come.
    – I have long believed that the type of filtering and recommendation system that you think Google+ should implement is the future, but I think both Google and Facebook are too dumb to realize that or implement it.  Therefore, somebody new will have to come along and do it.
    – The commonly espoused ISP tax idea that you promote is just dumb.  What about all the people who only use the internet for email?  You will be forcing them to pay for content that they never use.  The solution for content creators is micropayments, somebody will implement that one of these days and it will launch another tech boom. 🙂

  • If you look at daily sales, I believe Android may now have overtaken the iPad. Daily sales, not yet quarterly. For Q1 2012, Android tablets likely have more than 50% of worldwide sales.

    If Apple wants to keep their 20% marketshare for smartphones, they’ll have to say bye bye to the profit margins really fast, and I just don’t think Apple is willing to let go of making $500 in pure profits per iPhone.

    Google makes all of their money on cloud services, by that I mean also all the advertising free online services like search, mail, maps, etc, Microsoft needs to dedicate over 1000 engineers into making the best possible cloud video editing web apps, cloud photo editing web apps, and they need to double down on Office 365 and provide all the Office features on the cloud both ad supported and for professionals for a fee. All Microsoft needs is to find ways to make about $20-$30 per user per year in revenue from cloud services, then that would possibly enable them to keep the same amount of profit stream and keep the investors happy.

    Google’s business model is generating more sales to the worlds businesses, and they are the best at it. Basically Google automatically connects customers with stores and has ways to prove to every business that it basically makes no sense not to advertise on Google because nearly every drop of potential in sales increases can be trtacked, measured and is proven, so basically companies know exactly that for every $1 invested in Google ads, the companies get $5 extra in sales, it’s a no brainer to buy as much Google Ads as Google’s performance models show makes sense to buy. Google’s busines model is they prefer not sell ads that doesn’t turn out to actually bring more sales to each advertiser.

    On the other hand, Apple’s business model right now is ONLY the iPhone. Nearly nothing else. 65% of Apple’s huge profits is only the iPhone. Not the iPad, not the iPod Touch, not iTunes, not the Macintosh, for sure not Apple TV, the only source of profits for Apple is the iPhone. My simple claim is that as soon as most consumers know to buy unlocked no contract sub-$100 phones that perform better than an iPhone 4, then very few people will still be signing up for $3000 contracts for an iPhone or paying $700 for an iPhone. The era of huge smartphone profit margins is almost over.

    The patent lawsuits are useless noise on the blogosphere because nearly all the suits never can ultimately reach a ban, most patent lawsuits get dismissed because prior-art can easily be shown, and else the companies can very easily circumvent the patents by simply modifying a few lines of code here and there, for the consumer there is no difference if for example the slide to unlock goes from right to left or left to right.

  • Markc

    I mostly agree with the points you have made except I think it will take up to another 5 years for half of them to become fully realized, not 12 months. Another point is that OS ubiquity almost belongs to Android, and that will see it penetrate where iOS and W* can’t possibly go (quickly enough), but I also think there is room for other even more open OS’s to take on Androids mantle. And I don’t mean Ubuntu but rather full Qt/QML/HTML5 operating systems that are only starting to emerge in 2011/2012. There is a significant percentage of developers that will never touch JAVA, hence Android, so as Android impacts on iOS/W* develshare those that simply will not move to JAVA have no where to go, except to these yet to emerge completely open (no Googlegate) non-JAVA operating systems. Qt and it’s C++/QML JS/HTML5 QtSDK/QtCreator Nokia-free developer environment is the best of class alternate system just waiting to soak up all those millions of C++/C#/LAMP developers who, like I stress, will never touch anything to do with JAVA.

  • Sprewell

    Not sure where you are getting daily tablet sales numbers from, but the Q3 figures show both iOS and Android tablet share falling while iOS maintains its dominance.  We’ll see what the holiday sales figures show, I’m fairly certain the iPad will remain on top for the next year.  Apple has had no problem staying at around 25-30% smartphone marketshare with no decline in margins right now, so not sure why you see that going away.  Apple is happy to take in $30 billion in profits from the high end of the market every year while Google kills off all the other platforms in the middle and low end with a free Android, particularly since Google makes no money from Android and will have to give up subsidizing Android eventually.

    Google makes no money on anything other than search, which I wouldn’t call a cloud service.  Cloud service usually refers to online providers who store your private data, while Google search indexes public data.  You can redefine the term “cloud” to include search if you like, but the fact remains that Google makes 99% of their money from search, which is much worse than Apple’s reliance on the iPhone.  Considering that search is the only online service that makes any money, I don’t see why Microsoft would waste any money building all those online apps you want.  I’m not saying cloud won’t make money someday, but Microsoft’s M.O. is to copy others, so not sure why you think they’d ever lead the field. 😉 

    I estimate that 25% of Apple’s profit this quarter will be from the iPad, so they certainly seem to have another big profit center.  I think you are also underestimating the iPod, which still has almost 80% market share and maintains high margins.  I’m not sure why you think a sub-$100 Android phone will ever perform better than an iPhone, when Apple has so many billions more in profits to plow back into iOS while Google makes no money from the free Android.

    You may be right that patent bans are rare and that nobody knows what the final outcomes will be, but those are not the only reasons to talk about patent lawsuits.  The fact remains that these patent lawsuits chill innovation, because small companies that want to add innovative features are scared of getting sued and spending years and millions of dollars in court.  So even if there isn’t the big ban or certainty that you’d like, the patent lawsuits are already having devastating effects as we speak.  This is why I will never buy an Apple product again and why I don’t want them to dominate the market, but unfortunately their competitors so far appear incompetent, including Google with their dumb free business model with Android, not to mention the stupid decision to make Java the main app framework.Your content tax idea is dumb because public schools, public funding for the arts, and whatever public projects you may like are also stupid. 🙂 The notion of a “right to access content” or a “public right” to the internet are also beyond moronic.  If you think such public models would ever be able to compete without the govt losing billions on them every year, just like the US postal service is now losing billions, you are fairly ignorant of the realities of these markets.  Your content tax fantasy is ridiculously utopian, which is why it will never happen, not to mention a privacy nightmare.  I agree with you that suing torrent pirates is a dumb strategy, but that won’t end until the online content creators come up with a business model that works better and put the old media completely out of business.  Until that happens- and again, the solution is micropayments for online content monetization- we’re stuck with the status quo of dumb old-school media giants doing increasingly desperate things to try and save their doomed models and businesses.

  • In France Apple’s iPhone market share slipped to 20 percent from 29 percent and in Germany to 22 percent from 27 percent. Similar drops were seen in Italy and Spain. In Germany, Android achieved a dominant 61 percent share of smartphone sales in the latest 12 weeks up until the middle of December. Source: that was before the latest part of the Christmas selling period and the latest part of the year where Android growth and iPhone marketshare collapse continued. By the end of 2012, Android will have over 80% market share and iPhone will be below 10% worldwide.

    As for Android tablet market share, the Honeycomb calculations were all bogus based on totally failed calculations by blogger hacks, and Android has overtaken iPad in daily sales only since December 2011 as Kindle Fire, Nook, Archos G9 and many other Android tablets have been released, the price difference being the main reason people are now buying more Android tablets every day then they are buying the iPad.

    Google makes 99% of their money from online advertising, this is not limited to search! You are totally wrong! The advertising is also spread out throughout the internet using Google Adsense, it is spread out throughout Google services like Gmail, Maps, YouTube, Mobile and more. Just look at the official Google earnings reports it’s right there. All the webmasters making most of their revenues from AdSense, they are all doing cloud services, they are doing web apps, web services, web content. Google powers all that! Do you have any idea how many hundreds of Billions of dollars Google is powering and generating throughout the world every year? Google is absolutely central and essential to power and monetize most the whole web! Google’s business model is 10000x more reliable than Apple’s. Apple has absolutely NOTHING other than the iPhone to build its profits. Without the iPhone, Apple is pretty much worthless. The iPhone is ONE smartphone. That’s it. Nothing more to see there. It doesn’t matter if the iPhone was the best smartphone in the world (WHICH IT IS NOT), it is simply completely ridiculous to defend the valuation of $376 Billion for a company that can do nothing other than a smartphone. It’s a piece of hardware, that is all, there is nothing more at Apple.

    The iPad is not 25% of Apple’s profits. The iPad is barely 10% of iPad’s profits. The iPhone is 65% of Apple’s profits. That means that iPhone means 6.5x more profits to Apple than the iPad. And the iPad has just been overtaken by Android, already. Barely 9 months after Honeycomb, the first true tablet OS, was introduced. That means all other Apple activities represent less than 25% of Apple’s current profits. All of Macintosh business, itunes, ipod touch, all that is less than 25% of Apple’s profits all included.

    The reason a sub-$100 Andoid phone is as good as an iPhone 4 is quite simply because the ARM Processors and cheap capacitive LCD screens are simply THAT cheap NOW. It actually costs less than $50 to manufacture an Android phone with a 3.5″ capacitive screen and a processor faster than the iPhone 3GS. For $99 you can now sell an Android phone with up to 4.3″ WVGA capacitive screen, slim form factor and an ARM Processor that is faster than the iPhone 4 and of course fully smoothly running Ice Cream Sandwich. That is a smartphone sold for $99 WITH NO CONTRACT, on pre-paid or even unlocked. Can be sold in every supermarket. In every Cotsco, Wallgreens, WalMart, CVS Pharmacy, everywhere, you will see these $99 Android phones that are at least as good as an iPhone4 in terms of hardware, and by far much better than the iPhone 4 in terms of software, hardware features (for example replaceable battery, dual-SIM card slots, MicroSD, larger screen options, HDMI output etc), Android is much much better value for money.

    It is simply completely wrong to think Google doesn’t profit from Android. Google is making more than $5 Billion per year in revenue from Android. that is NOT even including the many more Billions of dollars that Google is making from these over 300 million new Android users in 2011 who are all becoming completely hooked into using all Google cloud services, they all setup or increase their use of Gmail, Google search, Google Maps, YouTube, all those Android users use Google services more on the desktop also! Google’s average income per user is nearly $40 per year. For Android users, Google’s revenue per user is over $80 per user per year in average! You have no idea how huge Android is for Google’s current and future profits and revenues! And on top of that, Google profits also from all the competing smartphone platforms such as iPhone and even Windows Phone, Google makes more money the more people use the Internet, it nearly does not matter which OS people use, Google makes more money the more the Internet is being used. Google is basically powering and monetizing the whole Internet. Most pageviews that people do worldwide, Google makes money on more than 50% of all monetized pageviews worldwide.

    My content tax system will happen simply because content creators DO NOT NEED and DO NOT WANT any types of intermediaries. They don’t need new intermediaries like Apple, Amazon, Netflix and others to come in and claim control and ownership of the distribution models. All kinds of intermediaries are completely stupid and incompatible with the Internet. As simple as that. When you put content on the Internet, on your own server, using p2p software, IT MAKES NO SENSE that any of these intermediaries should even touch for a second any of the revenues of content. EVERYONE in society has to pay for content. As simple as that. Just as you have to pay for the roads that the Government builds for you, just as you have to pay for the schools and hospitals that the Governments build for you. Just as you have to pay for trash, water, electricity, you have to pay for content. All forms of content. Content is research. It’s information. It’s commentary. It’s art. Content is everything. You have to pay for it. Even if you only use email, you can use web contents in your attachments, in your copy and pasting quotes from stuff. And just because you don’t have a car does not mean you should not pay for the roads that the Governments build. Just because you don’t like to go to the public museum does not mean you don’t have to pay for archeologists to discover truths about our past. Just because you don’t vote does not mean you don’t have to pay for your Government to function. Just because you don’t get sick does not mean you don’t have to pay for the public hospitals, just because you don’t have children does not mean you don’t have to pay for the public schools. This is how a humane society works. It’s not about left wing socialism or right wing ultra capitalist ideaologies, it’s about what is decent and humane.

  • I’m not a programmer, so I may not understand why some programmers don’t want to touch JAVA. As far as I understand, the reason Google chose JAVA is for the virtual machine. The idea being that the apps need to work smoothly on as many hardware configurations as possible and that using JAVA is a good way to implement that virtual machine layer. But that Android also does support Native code if you use the NDK to develop your apps, though I guess that even NDK Android apps need some parts of JAVA in it to function properly.

  • Fang

    – All software patent lawsuits are all going to be cancelled and dismissed.
    It is the best thing I hope in 2012.

  • hkwint


    Some good points, but you’re totally wrong on Apple earnings. Search for “boombustblog apple margin compression” on the internet, and you will find excellent sources / theory on why the stock and their earnings will go down.

    Why is GoldmanSachs (the smartest bankers on earth) selling AAPL stocks – while it says those very same stocks will go up in price (seducting stupid clueless and also emotional investors to buy GS’s overpriced AAPL stocks of which GS knows they’ll certainly drop – at the ‘peak’ value’)? Why – for the first time in years – did Apple make less profits than expected, why they usually always make more money than expected?

    What will be the consequences of the ‘silent riot’ of publishers, to say “NO” to the extraordinarily high margins Apple wanted to take out of selling e-books? Now content publishers found out they can bargain with Apple, what happens to the margins?

    What will be the consequences of all the competition when it comes to distributing music?
    What will be the consequences to Apple’s earnings if MSFT takes a tinier margin of sold apps in their ‘app’ store?

    Of course Apple will never want to produce “cheaper” phones, because then they will be eating their own ‘high end’ segment. Then they would compete against their own cash cows! Surely, they not want that. In the same way Intel never wanted to make Atom, but they were forced – in my opinion because of the OLPC / AMD combination.

    Who’s the no.1 smartphone market in the world? It’s China. Their average wage is less than $200, even for good jobs. So can they pay the outrageous margins Apple wants to make? Probably not. Will they buy songs on iTunes, or legal movies? Probably not, they’re not used to paying our ‘Western price’ for content.

    Who has the best understanding of the no.1 smartphone market? Surely, not Apple. They barely understand the Western market, because they just found out the amount of damage to their image all their patent lawsuits are doing them – so now they prepare to do it under a different name.
    No, I think the best to deal with the Chinese market are Chinese companies. Surely Apple can’t compete on the no.1 market.

    So, Apple can only aim for the high-end Western market on which competition is increasing, meaning lower margins. Look at how Microsoft fails while there’s certainly a leveled playing field: Only if it has lock-in power or other ‘artificial’ monopolies (like patents) can it enforce it’s high margins.

    Why are so many of the patent lawsuits in Europe? Well, possibly because after In Re Bilski, many of the software patents might not be enforceable in the US anymore. That means Apple’s patents decreased in value, and one day it will be reflected in share prices / market cap (same for MSFT, IBM and Samsung).

    And is in not true that Apple was once a fashion statement, but right now the iPhone is the product for the ‘large masses’, which you cannot use to be distinctive from other people?

    So, from every side there’s lots of competition arriving. Competition means, finally prices and margins will be going down, the end of the ‘fat margin’ tablet / smartphone-market. This means Apple will not be able to continue their growth of the past few years, and that means lower market share and probably also less earnings.

  • Bob

    i’d like to suggest reading the predictions at, last 3-4 posts with possibly more to come. he’s got decades of experience and impressive contacts. also grades previous predictions at year’s end and even though he usually scores 50-60% (often because things end up taking longer than a year), it’s always tons of fun to read. seems to agree with charbax about apple profits and intel getting back into ARM. for the record, i’m not him, we’re both named bob.

  • Pug_ster

    Yeah, I think you are overly optimistic in your predictions.  I suppose that Android will eat more into Apple’s share of phones and probably by the end of the year, we will probably see more of an equal share between Apple and Android in terms of tablets, maybe Android will even overtake them.  I am hoping sometime this year we will see cheap cpus of the likes of mediatek, rockchip and allwinner that will gain some traction into mainstream, but the software support for them is mediocre at best.  So I doubt that will happen.  Forget about setup boxes.  Logitech revue was a bomb.  I know because I got one.  Unless Google dedicate its OS to support setup boxes, I doubt that would supplant roku boxes.

  • Sprewell

    hwint, all I said is what Apple’s earnings come to this year, so for me to be “totally wrong,” you’d have to have a different set of facts from their publicly disclosed numbers, which you don’t.  Instead the blog you reference says that their margins will go down from the 40s to the 30s, ooh, big drop! 😉 That’s nothing and it’s merely a prediction on that blogger’s part.  I simply assume that Apple’s total profits will roughly stay the same, which is now a ridiculously large amount of money.  Who cares what Goldman does?  I’m talking about Apple’s numbers, not what some Wall Street twits do.  Not sure what expectations you had for Apple’s profits this year, but they are almost double last year’s profits, which were almost double the year before.  If you’re saying that didn’t meet expectations, your expectations are ridiculous. 🙂
    I agree that content creators and others will revolt at some point, but Apple could care less about that.  They break even on content sales now and only care about hardware sales, so even if they start losing a bit on content, that’s a great bargain for them because the profits are much bigger on their high-end electronics products anyway.  All their competitors are pegging their cut on their app stores to Apple’s, so nobody’s undercutting Apple’s app store yet, nor would it matter because those are wholly different and mostly much smaller platforms.  You say that Apple won’t want to do cheaper phones, but then point out that Intel was forced to go the budget route: what is your point?  I made a specific prediction: Apple will use Android to kill off the competition, then head downmarket and kill off Android.  Google will not be able to match them in an arms race considering how many billions Apple has stockpiled, especially when Apple makes some return on every dollar invested in iOS and Google makes nothing from Android.As for China, even if Apple doesn’t do well there, the Chinese are irrelevant as long as they are using a free Android, as that won’t put any money in Google’s coffers either.  Only if one of the other budget OS’s that actually costs something takes off in China will it possibly matter, but even then, Chinese margins will be so slight that the competitor will never make enough to compete with the western billions that Apple can pour into iOS.  The fact that Microsoft is failing when they don’t have a monopoly says nothing about whether Apple will fail, as Apple’s M.O. has never been to slavishly copy others like Microsoft’s was.  As for patents, I hope you’re right, but I see new patent lawsuits in the US all the time so I doubt it.
    It seems like you are throwing a lot of claims out and hoping something sticks, but I don’t see any of that affecting Apple much.  Don’t get me wrong, I think Apple will hit a bottleneck soon, because they’ll run out of new product categories after the Apple TV comes out and because their closed policies choke off some growth.  But when you are the biggest and most profitable company in the world, that is nothing: they will still be the godzilla that kills off everyone else in the near-term unless something new comes up.  Everyone has been claiming that Apple’s margins would fall for sometime now- I thought the stock was overpriced at $90/share in 2007- but their margins keep going up, not down.  I think there are some fundamental flaws in their closed model that could bite them one day, but only if they have a credible competitor to take advantage of those weaknesses and unfortunately none are on the horizon.

    Charbax, I’m extremely skeptical that “Android will have over 80% market share and iPhone will be below 10% worldwide” for smartphones this year, not going to happen, let’s see what the numbers show then.  As for tablets, I doubt even with the arrival of the Fire, Nook, etc that Android has caught up, but we’ll soon see the tablet numbers for this quarter.

    Sorry, you are totally wrong about Google’s online ads, it is well known that the vast majority of Google’s profit comes only from search ads.  The non-search ads that they put on blogs or gmail or youtube or their other apps bring in something like 30% of revenue, but all the profits come from the highly-paid search ads.  I’m not sure why you go on about all the silly services that Google is supposedly “powering;” do you have any idea of all the millions of people powering their cellular calls and mobile internet usage through the iPhone?  My point is that the number and variety of customers is irrelevant, what matters is that Google is far more reliant on a single product than Apple is.  Google’s business model is actually far weaker, as I believe advertising is about to be killed off completely by micropayments.  Google can always switch to micropayments-powered search, but it’s also questionable if their type of “global search” will be the way we access information going forward.  I don’t expect it to be, so I wouldn’t be surprised if Google’s out of business in a decade.I don’t know why you keep saying that Apple is so reliant on the iPhone after I pointed out the massive and continuing success of both the iPod and the iPad.  Yes, the iPhone is still their killer product, but the others bring in billions also and the iPod has even higher market share.  The iPhone is not “a piece of hardware,” it’s an advanced smartphone with an OS that a quarter of all consumers, usually the richest ones, prefer.  As for their valuation, I agree that Apple was once overvalued, but after their massive recent success their price to earnings ratio is 15, average by historical standards and low for a tech company, ie not overvalued unless you see their numbers massively collapsing.  As for the iPad, I estimated that it would be 25% of their profits this quarter, ie about 14 million iPads sold minimum at an average profit of $150 comes to $2 billion, which is about a quarter of the $8 billion in profit they’re likely to pull in for the holiday quarter.  I’m sorry but Honeycomb sales are a joke, hence the tablet market share numbers I linked to earlier.

    What is your source for your claim that 65% of Apple’s profits come from the iPhone?  50% of Apple’s revenue comes from the iPhone, so the iPhone would have to be so much more profitable than all their other products for it to give 65% of profits, which isn’t likely.  I’d guess that the iPhone is more like 40-55% of all Apple’s profits.

    I don’t know why you go on about the hardwarein the iPhone 4 vs Android phones when hardware is fairly commoditized.  Apple buys from the same Asian suppliers as everyone else, they just buy the more advanced hardware like the Retina display earlier, but everybody else soon has it.  My point was that Apple can pour billions more into their software than Google can put into Android, a point you ignore.It is simply wrong to attribute Google’s mobile revenue to Android, when the fact is that they were the default search provider on the iPhone and most smartphones anyway.  So they could have made that $5 billion without ever wasting billions on Android, and they wouldn’t have pissed Apple off so that they are now considering switching to Bing.  So congrats, you just wasted billions on Android to make no extra money that you wouldn’t have made anyway and now you pissed off other smartphone makers, who might replace you as the default, great move! 😉 The other Google cloud services are irrelevant, as I pointed out that only search ads are profitable, plus anyone can use Youtube and those other services on the iPhone also. You have little idea how much of a bust Android is for Google financially.  Funny how you admit it doesn’t matter to Google what OS people use, after saying that it’s important to Google that they do it on Android. 🙂

    I agree with you that most of the current content intermediaries will be put out business, because a lot of what they do is useless and they’re paid way too much.  But that doesn’t mean there will be no intermediaries, you will just have less of them and more efficient ones: ISPs and web hosts to sell basic internet service, micropayments providers to handle all the payments, software providers to write blog and commenting software, and a vast sea of content filters, both human and automated, who will tell you what content on the internet you are most likely to like.As for the notion that everyone has to pay through a tax, we all pay for food on our own too, but we don’t institute a required food fee and then hand out food to everyone.  The point is that such centralized schemes, whether for information or medicine or education, inevitably get taken over by special interest groups, whether doctors or teachers or whoever, who then demand ridiculous fees from everyone else.  This has been proven over the last century, which is why practically every country is moving away from such govt schemes, not towards them.  The point about email is that there are many grandmas who only use email without going to any websites, so they’re not “pasting” anything.  Making them pay a flat fee is just dumb, which is why all internet service should also be metered.  And yes, such metered models should now be applied to roads and museums and votes and hospitals and education vouchers, everything you list and more, because many of those should have been privatized long ago and because the computer and the internet now allow us to meter all those things easily. 🙂
    A “humane” society works by bringing the most riches to the most people and that is related to ideology, because it has been shown through the evidence of the last century that capitalism and free markets do that job the best.  So we all want what is humane, you simply cling to an old socialist ideology that does a very bad job of creating and spreading wealth, because you are probably ignorant of all its failures.

  • iPhone manufacturing cost $150, being sold for $600 average to carriers = 300% profit margin
    iPad manufacturing cost $225, being sold for $500 average to resellers = 122% profit margin
    iPod Touch manufacturing cost $110, being sold for $150 to resellers = 36% profit margin
    Macbook Air manufacturing cost $650, being sold for $1000 to resellers = 53% profit margin

    More than 65% of Apple’s current profits comes from only the iPhone.

  • Google sites represents 70% of their revenue, that includes Search and every advertising supported Google web services, including Gmail, YouTube, Mobile advertising and everything else.  30% of their revenue comes from powering the web, AdSense revenue for all the worlds webmasters. As you say, Google only keeps 32% of revenue from advertising on third party websites. Yet it is documented that advertisers benefit plenty times more than what they spend on Google advertising. That is why Google makes about $35 Billion in revenues per year but generate over $1 Trillion in yearly economic activity throughout the world. This also is documented. That includes the over $100 Billion yearly Android consumer electronics industry. The many hundreds of Billions of dollars generated through carriers based on Android hardware. And most importantly the several hundred Billion dollars in economic impact on advertisers that spend about 40% on the Google sites and 60% on Google ads that power all the non-Google publishers and web apps of the web.

  • Apple will be forced because of dissapearing iPhone profits to make the foolish mistake of trying to buy a cloud and social media company like Facebook, that’ll absorb a big part of their cash very quickly. And that failed attempt at competing on cloud and social media will quickly collapse. And it’ll accelerate the spectacular Apple bankruptcy.

  • Sprewell

    Apple buying a social network?  That makes no sense when Facebook revenues are a tiny portion of Apple’s, while Facebook stock is way, way overpriced.  Nobody’s buying Facebook, they’re going to IPO on the stock market, and there’s no other social networking company to buy.  Apple already has their cloud play in iCloud, but who knows how well it will work.  Their previous online attempts have all sucked, so maybe Apple just can’t compete there.  Massive losses at Apple!  No chance, their revenues may go down, but they have a while to go for losses.  As for a dividend, Apple could easily pay that out as they have about $90 billion in cash and other investments, while Google has only about half that, $45 billion, again because Apple mints money on iOS while Google essentially makes nothing off the free Android.

    Saying Google generates “over $1 Trillion in yearly economic activity” is just silly, that would be like saying that the iPhone “generates” hundreds of billions of dollars in mobile data usage because people use the iPhone to suck down lots of data.  Who cares how much money others are making off ads or Android, what matters is how much Google makes and that’s reflected strictly in their revenue.  I don’t know why you only focus on manufacturing costs when most of the value-add is in software these days.  Also, your costs are way lower than the actual amounts, it’s $200-250 for the iPhone 4S and $340 for the iPad 2, not to mention the giant software costs of developing iOS, which is why your margin figures are way off.  I think your iPod Touch mnfg cost is right and I didn’t bother looking up the Macbook, but you did not supply a source for your claim that the iPhone delivers 65% of Apple’s profits, so I guess you’re pulling that out of your ass. 😉

    You really seem like a Google fanboy, but let me emphasize that I’m not an Apple fanboy; in fact, I already said I’d never get an Apple product again.  I hate how they are going nuts with their patents, exerting such tight control over their app store, and generally making it such a closed platform.  But I am not most people and I’m just pointing out the fact that Apple is killing everybody else in the mobile sector.  Those closed aspects will probably trip them up with time, but not if there isn’t a credible competitor to take advantage and so far there is none.

    While Android may be widely deployed, its business model is a joke, as it depends on Google taking a bunch of advertising profits and diverting them into Android development, with no return directly attributable to Android.  That means they can never compete with the billions that Apple is stockpiling and can pour into iOS, which Apple can use at any time to essentially kill off Android.  Google will not be able to fight that fight and will have to pull out, and since Google essentially develops Android on their own, that means Android will fade away.  I don’t want this to happen, but unfortunately that’s what appears set to happen.

  • Bob

    now that it finally has market and a $100 price things should turn around. before this they were basically wasting everyone’s time and money. i don’t know if the content owners will ever accept it completely but if someone writes a user-friendly bittorrent+rss app, that won’t be such a problem. also it’s “set-top boxes.”