Harvard Business Review

Horace Dediu: Asymco, Apple and Future of Computing

Editor’s Note: Horace Dediu, one of the most well respected watchers of the mobile industry, and Apple in particular, is the founder and author of the market intelligence site Asymco.com. He is also an independent analyst and adviser to telecom incumbents and entrants on mobile platform strategy. Fortune Magazine declared him as the “King of Apple Analysts“.

Horace has eight years of experience as an industry analyst and business development manager at Nokia, preceded by six years of software development and management in a startup environment, two years of IT management and five years of computer science research in an industrial laboratory. As a business analyst he has a proven track record of achieving/exceeding predictive goals and objectives. He has been a resource for Bloomberg, The Financial Times, The Economist, Forbes and has been cited over 350,000 times.

Dediu also writes for the Harvard Business Review Blog. Recently he was interviewed by Forbes. He is often interviewed by other news sources as an Apple expert.

Horace has an MBA from Harvard Business School and MS Engineering from Tufts University. To learn more about his work please visit Asymco.com. You can also find him on Twitter, LinkedIn and Wikipedia.

eTalk’s Niaz Uddin has interviewed Horace Dediu recently to gain insights about Asymco, Apple and Future of Computing which is given below.

Niaz: Dear Horace, thank you so much for joining us in the midst of your busy schedule. We are very honored and thrilled to have you at eTalks. At the beginning of our interview, can you please tell us more about Asymco?

Horace: Asymco is a web site where I write what I think and where people respond through comments. The idea is very simple and I find it useful because I received over 40,000 comments, something which would be hard to obtain through any other way of writing. Of course what matters is to have good comments, but good comments come if you have interesting things to say and you say them in a way that encourage discussion.  The other aspect of Asymco is that the audience is mostly self-selected. They have not been enticed to visit via any incentives other than their interest in the material. That makes the audience more valuable to me than one which comes by way of being herded from another place.

Niaz: What do you do as an independent consultant and analyst? What is your future plan? And where will be position of Asymco after 10 years?

Horace: I read a lot and write a little. I have no future plans and could not presume to guess what Asymco will be in 10 years. I could not have predicted where it is now so my ability to make predictions on this topic is zero.

Niaz: You’ve declared as the “King of Apple Analysts” by Fortune Magazine.  What does make you very passionate about Apple?

Horace: Apple is an interesting company to study because its success comes from being a serial disruptor. This is a very rare type of success formula. I am trying to “reverse engineer” its operating model and I hope that such a model is one which others might learn from if they were to emulate it. The trouble is that very few others seem to want to emulate Apple. Why that is also an interesting question.

Niaz:  You’ve been resource for Bloomberg, The Financial Times, The Economist, Forbes and have been cited over 350,000 times. You’ve been analyzing Apple’s business strategy and predicting their financials for long time.   So many people in the industry now believe that Apple has lost its image. Fundamentally, Apple is a company that was built to innovate and to make great products. What do you think about the current performance of the company? Do you think apple has lost its image that it has created over the years as a center of innovation and building excellent products?

Horace: I cannot comment on how Apple’s image is measured by people in the industry. I have been listening to commentary on Apple for about a decade and I have never seen any change in pattern. The company has always been perceived as a failure by a majority of observers. With respect to its products, I also do not see a change in the pattern established over the last decade.

Niaz: What’s your evaluation on the performance of Apple CEO Tim Cook? Do you think he is a visionary leader? Will he be able to keep running Apple as the way it should be run?

Horace: I think Tim Cook is the best CEO Apple ever had. During the period of Steve Jobs as CEO, Tim Cook was doing the work which might be considered CEO and Jobs was head of product, culture and many other details. The Jobsian approach of micromanagement is the antithesis of sustainable organizational management. The only reason Apple survived was that Jobs outsourced operations to Cook. Regarding Vision: Vision is not a function that needs to reside in one person and it depends greatly on the process for decision making and the organizational structure. Apple’s functional structure means that vision is developed through a coordinated weekly process. It’s a constant refinement of many ideas rather than a single target that’s set once.

Niaz: As you know, the biggest change in the history of iOS is iOS7. Apple has also launched iPhone 5C and 5S on Sept 10th event. As far as I believe iPhone 5S is the next big thing that will be the door of opportunities for the future of mobile computing, gaming, personal cloud and so on and on. What is your take on iOS 7, iPhone 5C and iPhone 5S?

Horace: The iPhone is maturing nicely and it seems to be entering a new phase of later adoption. It’s now clear to me that after 7 iterations, the iPhone business model is a part of a larger transition in how Apple is building a multi-modal platform with iOS. iOS has turned out to be a very flexible idea which is being adapted to many usage contexts. It is however only one piece of a far larger puzzle where services, devices, and ecosystems are inter-dependent.

Niaz: Over the last 12 months, Google Android devices have outsold iOS by about 3 to 1. There are now perhaps 775m-800m ‘official’ Android devices in use, versus perhaps 415m iOS devices. This is without counting sales of the Amazon Kindle Fire or the (very) many Android devices sold in China that are not connected to Google services – these may be a further 150-200m active devices now (or more). So, the Android install base is more than double the size of iOS. If you look just at phones, there are may be 250m iPhones in use and perhaps 700m ‘official’ Android phones alone.  How do you see iOS vs. Android war? Is android is a threat for iOS (directly or indirectly)? Who is actually winning?

Horace: Those numbers are not exact. The numbers I use are: Google has reported 1 billion activations and Apple cited 700 million iOS devices will be sold by October with iTunes accounts (as a proxy of usage) totaling about 650 million. I consider both of these to be great performances especially since they happened in less than 7 years–a type of growth that is unprecedented even when considering many products which were free to use like Facebook. 700 million unit volume of sales, often under supply constraints, with an exceptionally high margins of near 40% is nothing short of amazing.  That does not detract from Android however. Android has turned out to be a force which destroyed many businesses: Nokia, RIM, HTC, Microsoft. However, iOS has been contributing to this disruption as well. Android is a low-end approach and iOS is a high-end/new market approach. Both have squeezed almost all other platforms out of the industry. Android is a threat to iOS but it’s one of many. A few years ago the threat to Apple was Windows, or some iPod killer or many others long forgotten. Apple does not win by eliminating competition. It wins by creating new markets or re-defining the basis of competition where, at least initially, there is no competition.

Niaz: Are you optimist about the future success of Apple? Like after 10 years and then 20 years?

Horace: Let me put it this way: if there were no Apple then somebody will have to invent an Apple to do the same thing Apple does. In that sense I’m optimistic that there will be an Apple in some way in perpetuity.

Niaz: This is an interesting month. We have already seen so many things and we are also going to see so many things in this month. The company valuation from 2007 to today: Microsoft is down -1.5%; Nokia is down -82%; RIMM is down -78%; Apple is up +507%. In this situation what do you think about Microsoft-Nokia deal? And how should tech industry look at this deal?

Horace: The deal says more about Microsoft than about Nokia. Microsoft decided that they need to become an integrated hardware/software/services company and to organize itself functionally. This is an abdication of its role as the supplier of software modules to a complex value chain. To make such a huge concession says that we are really far into a new era. The problem for Microsoft is that it’s not clear that it can function as a completely new organism, especially one without any leader on the horizon.

Niaz: Can you please tell us about wearable technologies? How big is the market of wearable technology? What are the challenges for Apple to be the best player in the field of wearable technology?

Horace: The market for wearable technologies is very small, almost immeasurably small which is why it’s such an exciting area. It’s like a vast new continent with nobody living on it. There are challenges but they can be solved by having a development process that is guided by an understanding of what users need and how to deliver a workable solution. These were the same challenges in developing smartphones which were easy to use and making them affordable to many people. The answer is in an integrated approach to development.

Niaz: What will be the next big innovation from Apple?

Horace: I have no idea but it’s likely to involve refining new user interaction methods. Similar to the breakthroughs that came from the use of a mouse, a scroll wheel and a touch screen. It means making computers better at gleaning our intentions without our getting involved in explaining them.

Niaz: What do you think about the future of computing? What will be the most exciting and big thing in tech?

Horace: See above, new interaction methods.

Niaz: Will Apple, Google and Samsung be the major player for the future of computing? Or we can hope to see some new faces?

Horace: I am fairly sure Samsung will not be because they have not yet grafted software and services to their operating structure. I would give Amazon a higher probability in being a successful platform alternative.

Niaz: In 2011 you’ve written a blog post ‘Steve Jobs’ Ultimate Lesson for Companies’ on Harvard Business Review Blog and you have cited ‘A leader should aspire to do more. A leader should claim to have left a legacy not just on their company but on all companies.’ As you know Google, Amazon, Samsung, Facebook … all have learnt lifetime lessons from Steve Jobs. What do you think about the impact that Steve Jobs have created?

Horace: He led by example and like all great leaders sacrificed much as a way to inspire others to follow him. He also spent time in the wilderness and chose asceticism. This gave him authority. Many historical figures had the same quality. The problem is that few business leaders have it but I don’t see why they shouldn’t.

Niaz: Do you think it is possible to disrupt Google? How?

Horace: That’s easy. Google relies on keeping too many secrets. Giving away all that it holds dear will cause its business model to change. Let me put it this way: Google beat Microsoft because it developed and gave away that which Microsoft kept dear: source code to operating systems. (Microsoft finds it impossible to react unless it sells hardware–not easily done in volume and at a high premium.) Now turn the discussion around and ask what Google holds dear. The answer is the data which every consumer has to give. It’s now given freely in exchange for a service. But if that data were brokered by the user directly to the advertiser then Google has nothing to sell. For this to happen there must be a revolution in both the perception of what users give up when they use online services and in the ability of advertisers to act on their own to understand the mind of the consumer. If a consumer can become a free agent and an advertiser can do analytics then the economics of the internet (i.e. global information systems) will pivot yet again. Maybe Google will be flexible enough to pivot along but it will be a different company.

Niaz: Dear Horace, thank you once again for giving us time and sharing us your invaluable ideas, insights as well as knowledge. We are wishing you very good luck for all of your upcoming endeavors.

Horace: Thank you for having me.

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Further Reading:

1. James Allworth on Disruptive Innovation

2. Viktor Mayer-Schönberger on Big Data Revolution

3. Gerd Leonhard on Big Data and the Future of Media, Marketing and Technology

4. Brian Keegan on Big Data

5. Irving Wladawsky-Berger on Evolution of Technology and Innovation

6. Ely Kahn on Big Data, Startup and Entrepreneurship

7. danah boyd on Future of Technology and Social Media

Rita McGrath: Strategy in Volatile and Uncertain Environments

Editor’s Note: Rita Gunther McGrath, a Professor at Columbia Business School, is a globally recognized expert on strategy in uncertain and volatile environments. She is an author of three books: The Entrepreneurial Mindset, Marketbusters and Discovery-Driven Growth. She is about to publish her new book: The End of Competitive Advantage (Harvard Business Review Press). In addition, she has been a regular contributor at Harvard Business Review. Her thinking is highly regarded by readers and clients who include Pearson, Coca-Cola Enterprises, General Electric, Alliance Boots, and the World Economic Forum. She is a popular instructor, a sought-after speaker, and a consultant to senior leadership teams. She was recognized as one of the top 20 management thinkers by global management award Thinkers50 in 2011.

She’s also been recognized as one of the top ten business school professors to follow on Twitter. In 2009, she was inducted as a Fellow of the Strategic Management Society; an honor accorded those who have had a significant impact on the field. In 2013 she will serve as Dean of the Fellows.  You can read her full bio from here. Follow her on Facebook, Twitter and LinkedIn. Read her regular write ups at Harvard Business Review Posts.

eTalk’s Niaz Uddin has interviewed Rita McGrath recently to gain her ideas and insights on Strategy in Volatile and Uncertain Environments which is given below.

Niaz: Dear Rita, thank you so much for joining us. We are thrilled to have you at eTalks.

Rita McGrath: It’s a pleasure.

Niaz: You are globally recognized expert on Strategy in uncertain and volatile environment.  Can you please tell us about the term ‘Strategy’? Why is strategy so much important?

Rita McGrath: Strategy is fundamentally about making choices.  Choices, of course, about what to do but equally importantly about what not to do.  I think of strategy as a central, integrated concept of how we’re going to achieve our objectives.  In a business sense, it’s what customers we seek to serve, what we’re going to do for them that is better than other options they have, and how we differentiate our offerings.

Niaz: How to differentiate between ‘Personal Strategy to live everyday life’ and ‘Business Strategy to Run Google’?

Rita McGrath: Personal strategy obviously involves your own choices about how you are going to spend your time, invest your resources and plan for your future.  A business strategy is different in that it involves persuading many more people to support you and take actions that are consistent with your vision for the future.

Niaz: How can we integrate personal and business strategy to ensure that both personal life and professional life are going smooth and exciting?

Rita McGrath: I think you need to allocate personal time to different activities and then let the best uses of your time in each case “win”.  I don’t think you always have personal and professional life in perfect balance – but you can try to get them to work together.  I like to use the metaphor of a gyroscope – never falls over but adjusts to its environment.

Niaz: You have written an article at Harvard Business Review Blog ‘The world is more complex than it used to be’. How the world is more complex than it used to be? And why?

Rita McGrath: As I say in the article, it’s because things are more connected and interdependent than they have historically been.  That means that you can have interactions that are unpredictable, so that you can’t predict the outcome by knowing the initial conditions.  The net and advanced communications technologies have made many more connections than used to be possible.

Niaz: In your book ‘The Entrepreneurial Mindset’, you have said, ‘We have to have Entrepreneurial Mindset to succeed in unpredictable world’. Why do you think entrepreneurial mindset can help us to succeed in unpredictable world?

Rita McGrath: Because in a world of temporary advantage, you need to innovate to create a pipeline of new advantages even as old ones fades away.  That requires thinking like an entrepreneur at all times.

Niaz: How can we stop acting by the old rules and start thinking with the discipline of habitual entrepreneurs?

Rita McGrath: Adopt what I call the “new playbook” for strategy – stop thinking in terms of sustainable advantage and start considering what strategy looks like when advantages are temporary.  For instance, get away from industry analysis and realize that you are competing in arenas.  And that your most significant competition may come from other industries, not within your own.

Niaz: As you know we love to talk about ideas, spreading ideas and getting inspired by ideas. But at the end of the day, Business Models are very important to implement and survive with those ideas. Can you please tell us about Business Model and its importance?

Rita McGrath: Well, an idea without a business model behind it is simply entertainment, in my view.  A business model describes what you are going to sell, to whom you are going to sell it and how you are going to get paid for it.  If you don’t have that, you don’t really have a business.

Niaz: In this world of full of uncertainties how to make great and sustainable Business Model?

Rita McGrath: I think it’s going to have more to do with networks and longstanding ties than with product or service innovation.  It will also have to do with the customer experience – that’s much harder to copy than a technical innovation.

Niaz: What should be the strategy of startup companies those who are getting all giant companies like Google, Apple, Facebook and Amazon as competitors?

Rita McGrath: Find a customer niche that really wants what only you can provide and service them with well designed offerings that create a complete experience.

Niaz: Can you please briefly tell us about your best selling HBR article ‘Discovery Driving Planning’?

Rita McGrath: Discovery Driven Planning was developed to create a disciplined way of planning for new ventures, when you don’t have a lot of information.  It emphasizes learning and incorporating new information into your plan when you hit key checkpoints in the development of your venture.  It provides a discipline, but one that is suitable for uncertain environments.

Niaz: Why do we need ‘Discovery Driving Planning’?

Rita McGrath: Because conventional plans don’t work without a great deal of information that you simply don’t have with a new venture.  It’s a recipe for developing big, expensive  flops, like the Iridium project or the recent bankrupt casino in Atlantic City.

Niaz: In your books ‘Market Busters’, you cited, ‘Companies must grow to survive’. Can you please tell us how to identify specific types of growth opportunities?

Rita McGrath: In marketbusters, we look at 5 lenses to find new growth opportunities.  First is the lens of the customer experience – how can you make that better.  Then, are there ways to reconfigure products and services to better match customers’ desires. Next, could you develop a new business model?  Or anticipate and take advantage of shifts in your entire industry?  Or finally discover entirely new market spaces where you could compete.  We find that any one or more of these can help to identify opportunities.

Niaz: You have said, ‘For Growth, New Ideas Aren’t Enough’. So what do we need in addition to ideas for growth? 

Rita McGrath: A systematic innovation process, with a governance process, a funding process and concrete ways for ideas to get transformed into businesses.

Niaz: By this time we have created much knowledge, generated many ideas, innovated important tools and gained efficient and effective productivity. In such an exciting time, we see companies to fail to grow. Why so many good companies fail at growth?

Rita McGrath: Because they are trapped in old ways of thinking.  Many try to exploit old businesses, even though that isn’t where their future lies.

Niaz: Could you explain the principal steps that a company needs to go through to create a growth framework?

Rita McGrath: Sure. These are the steps-

  1. Identify the growth gap
  2. Obtain senior level support and resource commitment
  3. Set up an innovation governance process
  4. Build a system to deliver the key steps – ideation, incubation, launch, acceleration – of a successful  venturing program
  5. Create the supporting processes for innovation

I go into this in more detail in my new book – I can send you a copy if you’d like.

Niaz: I would really love to get a copy. Rita, Thank you so much for giving us your invaluable time, sharing us you impressive ideas and illuminating us with your great experience. All the best wishes for your upcoming book ‘The End of Competitive Advantage’.

Rita McGrath: You’re welcome Niaz.

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Further Reading:

01. Philip Kotler on Marketing for Better World

02. Hugh Mac­Leod on Creativity and Art

03. Daniel Pink on To Sell is Human

04. Naeem Zafar on Entrepreneurship for the Better World

05. Derek Sivers on  Entrepreneurship, CD Baby and Wood Egg

06. Jeff Haden on Pursuing Excellence

07. Philip Delves Broughton on What they teach you at Harvard?

08. Gautam Mukunda on Leadership

09. Gerd Leonhard on Big Data and the Future of Media, Marketing and Technology