A, The next billion surfers forecast

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Throughout time, apples have taken the lead over other fruits in directing the course of human history. It’s unlikely you’ll find an argument against Apple Computers being the apple of our time. I’m not sure what it means for the computer culture, smartphone culture, app Market culture and OS culture but with influences across our daily lives, any wobble is tectonic. Apple will persist, certainly, but it’s role as a leader is taking some serious hits.

Apple hit a trillion bucks. Apple stopped disclosing iPhone sales numbers. iTunes heavyweights leave (WSJ projects 14% revenue loss over time). China closes its markets to Apple. Apple moves high end iPhone production to India. Apple 2019 Q1 sales underperform. Amazon’s key to the next Billion internet users is via cell phones in India potentially absorbing every penny Apple loses and then some.

The White Elephant Billion

Even before a billion people got online, major companies, most notably Microsoft, have been announcing that they will be the ones to get the next billion people online. What does that look like? It looks hard. There’s an 80/20 “rule” that seems to stick to almost twenty percent of everything dictating eighty percent of the rules. That’s a little 80/20 joke but it’s to serve as an example. With just one billion people already online, we’re already around 20% though it’s a shrinking percentage.

That’s 20% of the people on Earth more or less establishing 80% of the the status quo for everyone. Other status quotients (plural?) include needing to fight hunger, abuse, pollution and extreme poverty. The gap between the Internet connected and not-connected for is large. There’s illiteracy, dictatorial regimes guaranteeing an uneven distribution of wealth, starvation, a lack of transportation and no robust infrastructure at all outside cities – and often, that’s “cities,” in generously thick air quotes, standing in the way.

Amazon hasn’t said they want the next billion online users but guess what? They’re now poised to nab 800 million people; that’s roughly how many in India are ready and willing to buy what Amazon’s selling and they’ll get there anyway Amazon provides…

And the iTunes played on while the Apple sank

Amazon is taking a page from Google’s playbook. Eric Schmidt once explained the “Long Tail” to his team and investors. While tons of money can be found in a few sources at the tall, vertical ‘head’ of an X, Y graph, there’s more money among more sources in the long, low, horizontal ‘tail’ of that same graph. (Use your left hand and make a ‘gun’ so your forefinger and thumb are out. Now point to the right: With your thumb straight up and longer index finger out to the right, you’re illustrating the Long Tail.) The scale of money is higher along the vertical, and falls off quickly as units or number of people increase as the graph extends to the right. Overall, however, there’s plenty of money in that index finger, it’s just harder to get to.

Google ads and their video on demand (before acquiring YouTube) services benefited by honeymooning the the Long Tail. The next billion Internet users live there and connecting to them is to close that chasm-sized gap with high technology. Or not.

Apple has high technology nailed. Thousand dollar phone? Apple can beat that by another couple hundred dollars. Thirty dollar phone? Apple offers nothing remotely close to that and creates software updates to essentially shutdown and brick any of their hardware that’s deemed too old. That is not Long Tail friendly.

Amazon has figured on letting others deal with hardware (outside their own AWS cloud services of course). Amazon is a destination, not a transport. Apple is not a destination; they sell fancy methods of virtual transportation. Amazon thought hard and imagined a way to utilize what people in the Long Tail already have available for technology and it’s anything but high technology. Cheap cell phones. Not so much smartphones, but just smart enough to arrive at bare bones websites. Amazon has redesigned everything in their India destination so users don’t need email addresses, computers or even physical addresses to shop!

It’s a jungle out there

The Internet’s first billion users entered the Internet through the world wide web through Internet Explorer (let’s just deal with that having been the major market share at the time even though Safari and Netscape, and browser xyz existed) and Windows. It was a transportation miracle and a pricey one at that. The operating system alone as a disk cost $140 bucks and desktops were easily over a thousand dollars.

The forecast? The next billion Internet surfers will arrive at Amazon through smaller, cheaper cell phones running (as most do now) Linux operating systems. The Creative Commons licensing means the operating systems are basically free leaving the bulk of the cost as hardware. Strangely, with speed requirements and bandwidth limitations what they are for Internet protocols, the billion users using high technology hardware probably won’t cross paths with the billion users coming in through destination-centric methods but both will contribute almost equally to the profits of retailers. Leveling that field would be the next, wise solution to provide to avoid a deep rift in the online population and simplify things for developers.

I mentioned that not even a physical address would be needed for new Internet shoppers to purchase goods… Amazon is already utilizing established vendor locations as pick-up points! No HQ3 or 4, minimal delivery driver costs and in lieu of an email address (which most of the next billion don’t have anyway), shoppers just need a phone number. You can see the reason for the excitement felt by 800 million people in India? Most have rinky-dink phones by our standards but now have access to desirable retail previously reserved for the west and it won’t cost them anything more than what they’re already spending on cell service.

I’ll go one prediction further. I’ll even say that Microsoft will be along for the ride. As noted at the start, Apple is heaping on the troubles. Meanwhile, Microsoft has been making more wiggle room for itself in the open source world and Creative Commons license world. With Amazon acting as the revenue destination, Microsoft could swing again at making cell phones, this time leaving the Windows operating system to PC’s and opening development to Linux programers for cell phone operating system building. This is logical since even Windows 10 has recently been drifting toward playing nicely with Linux where even sandboxing doesn’t require a college degree to get working…

Windows and Linux traditionally have been like the square peg and grapefruit. Sandboxing is running one environment within another for testing purposes. The square peg and grapefruit are so unalike that historically, Windows users have had loads of hoops to jump through to test Linux applications. Now, Windows 10 has been working toward a friendlier environment, almost literally. Additionally, Microsoft has been opening patents up to reduce the trouble of allowing Microsoft applications to run on Linux. It’s a big lovey dovey fest and there’s no mention of Apple and there’s no trend toward high technology hardware.

Just food for thought.

80/20

Mind you, if only 20% of this forecast is right, it will change 80% of the industry.

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