Apple's Supply Chain Becomes a Weapon

The way that Apple has fostered its relationships with suppliers and manufacturers over the past few years has led to this moment, a time where products like the iPhone, iPad and MacBook Air are not only made using the best materials and manufacturing processes available in the world, they’re also less expensive to make and generate far more profit than competing devices, TNW argues.


That's an important observation. In past decades, one might have argued that Apple makes above-average profits because of its brand. In other words, users paid an "Apple tax" that corresponded to the perceived higher value of an Apple product.


Now, Apple might actually be able to sell at high margin, using the best materials, and set prices at retail that take advantage of a decade-long effort to optimize its supply chain. 


So now Nokia finds it has to price its latest smart phone at $200 less than the iPhone, even when its cost of components is higher than Apple's cost for components, the Wall Street Journal notes. 

How to Model Broadband Consumption With Few Data Points

“Nearly all communications traffic, including Internet traffic, can be approximated with high accuracy by the log-normal distribution,” says Phoenix Center Chief Economist Dr. George S. Ford. That’s important, as it means we generally can predict overall end user behavior when we actually know only a couple of key data points.

Among the practical implications are estimates of what is likely to happen when  a broadband service provider imposes a monthly usage cap of 250 gigabytes. The log-normal distribution suggests how many customers would hit the limit.

The log-normal distribution also generally allows some estimation of how consumption will vary across the entire customer base, knowing only the consumption of the top one percent, and the consumption of the top 10 percent of users, an analysis by Dr. Ford suggests.

The point is that “averages” (the arithmetic mean) don’t tell an observer very much when any service has an asymmetric distribution, as always seems to be the case for Internet consumption by consumers.

Cisco’s Visual Networking Index reports that the top one percent of users accounted for more than 20 percent  of Internet traffic and that the top 10 percent of users accounted for 60 percent
of traffic.

That means a Pareto distribution, which would ideally show that 20 percent of instances account for 80 percent of the impact would also likely hold.

Ford notes that Comcast’s 250 GByte  per month usage cap on its residential broadband
customers, taken with Comcast’s own statements that 99 percent of its residential customers will not approach that cap suggests that only one percent of Comcast’s residential users consume 250 GBytes per month or more.

Comcast also indicated that its median customer consumes about 8 GBytes to 10 GBytes per month.

The log-normal distribution could well inform many other sorts of policies, such as what amount of consumption a “typical” user requires.

“My approach to approximating usage patterns may be useful for variety of policy issues,” says Ford. “ For example, when addressing universal service for broadband, the level of service that qualifies as ‘broadband’ will have to be parameterized.”

Knowledge of the usage distribution may aid in establishing these service level definitions that can be described as “reasonably comparable to those services provided in urban areas, for example.

Twitter Use Highly Correlated with Smart Phone Use

Twitter usage is highly correlated with the use of mobile technologies, especially smart phones, according to the Pew Internet & American Life Project.


About 20 percent of smart phone users also are Twitter users, with 13 percent using the service on a typical day. 


By contrast, Internet users who own more basic mobile phones are roughly half as likely to use Twitter overall (nine percent do so), and just three percent of these more basic phone owners are “typical day” users.


Indeed, this correlation between Twitter adoption and smart phone ownership may help to explain the recent growth in Twitter usage among young adults. 

Those ages 18 to 24 are not just the fastest growing group when it comes to Twitter adoption over the last year, but also experienced the largest increase in smart phone ownership of any demographic group over the same time period.

Marketers Think Tablets Will Change How Content is Presented

A survey of 212 global marketers showed that popular belief holds that there will be some big changes in all aspects of content over the next 12 months, from design, to copy, right though to delivery.


Of those interviewed, 45 percent think tablet consumption will have a very high impact on design of content, while 35 percent think it will have high impact, the IDG Connect survey finds. 

Experiences that were once almost exclusively the preserve of the consumer space are suddenly applicable to the business landscape.  Now everything has the potential to become three dimensional.

This trend is already impacting the world of fiction publishing. Take Papercut for example; available through the App Store, this is being billed as an “enhanced reading experience” for iPad and includes three short stories interwoven with animation, interactivity and sound. As readers proceed through the text additional text appears without the need for page turning. 

Europe Risks Becoming a "Digital Desert"

Alcatel-Lucent Chief Executive Officer Ben Verwaayen said Europe’s phone companies risk turning the region into a “digital desert” by shying away from investing in networks.


Verwaayen says a combination of regulatory barriers and economic crisis are contributing to the problem.


In an interesting twist, given the "warnings" about the United States "falling behind" in some key communications capabilities, be that broadband access, the speed of broadband access, smart phone ownership, messaging or other advanced applications and services. 


But innovation and technology leadership changes over time, whether the issue is consumer behavior, supplier prowess or advanced technology adoption. 


Telecommunications companies in the U.K., Germany, Italy and France have been reluctant to invest as much as their counterparts in the U.S. and Asia in faster mobile-phone and fixed-line networks because of Europe’s sovereign debt crisis and regulatory decisions deemed unfavorable by Verwaayen. As a result, Europe is falling behind, he argues. 

“Five years ago in the U.S., you knew that leaving L.A. meant going into the desert, meanwhile Europe was ahead,” Verwaayen said. “Five years later that has reversed. The creation of value has come back to the U.S.”


Five years ago, U.S. firms had five percent share of the smart phone operating system market. Today, U.S. firms have 64 percent share. 

Cricket Will Test Consumer Willingness to Forego Subsidies on iPhones

We are about to get a clear test of consumer willingness to pay full retail prices for “hot” devices such as the Apple iPhone. Cricket Communications will be the first prepaid service provider in the U.S. market to offer iPhone to its customers.

Beginning on Friday, June 22, 20012, Cricket will offer iPhone 4S and iPhone 4 with its $55 per-month, all-inclusive unlimited talk, text and data plan. The issue is that consumers will have to pay full retail prices for their devices.

The Apple iPhone 4S will be available for $499.99 for the 16GB model and iPhone 4 will be available for $399.99.

That is significant as mobile service providers just about everywhere are looking for ways to reduce the amount they spend on handset subsidies, hopefully without placing themselves at a disadvantage in the continual task of attracting new customers, most of whom have to be taken away from another service provider.

So Cricket’s sales volume will be a key indicator of consumer willingness to buy devices without major subsidies.

"Our customers want the best products available and we are excited to bring iPhone to our pre-paid consumers with an industry leading $55 per-month service plan," said Doug Hutcheson, Leap Wireless president and chief executive officer.

iPhone 4S and iPhone 4 will be available in Cricket company-owned stores and select dealers in nearly 60 markets, online at www.mycricket.com/iphone and over the phone at 800-853-7682.

Cloud Adoption in Europe Will Slow Because of Euro Crisis, Other Issues

Sometimes end user demand and supplier readiness are not the primary near-term issues that can accelerate or delay adoption of new technologies.


European privacy rules, multi-country business processes, a deep euro crisis and a lingering recession will conspire to delay cloud computing adoption in Europe by at least two years when compared to the U.S., according to Gartner analysts. 


Gartner said that although interest in cloud is high in Europe, the diversity of Europe’s 44 different nations will result in slow cloud adoption in this region.


"The opportunities for cloud computing value are valid all over the world, and the same is true for some of the risks and costs," said Paolo Malinverno, vice president at Gartner. "However, some of cloud computing’s potential risks and costs — namely security, transparency and integration — which are generally applicable worldwide, take on a different meaning in Europe.”


The continuing economic crisis within the countries using the single European currency has deep IT implications, because increasing uncertainty about the euro is causing major investments to be put on hold. 


This is slowing down decision making and will dampen spending.