Having a clear, confident, strategic vision allowed Apple to make long term plans, which included developing custom silicon optimized specifically to competently deliver that vision. In fact, long term plans were essential because of the complexity and expense involved with developing new silicon.
Apple’s original vision for iPad was differentiated from conventional PCs by being effortlessly simple to use. It was kept distinct from phones by running tablet-optimized apps. After two years of incremental improvement, the plan for iPad 3 wasn’t to make iPads cheaper, but to make a new, much more desirable model. That would help keep it separate from all of the cheap tablets being thrown into the market. Just months after Jobs’ passing, Apple’s new chief executive Tim Cook was thrust into position to introduce the tablet as “the new iPad.”
Strategic clarity for The New iPad 3
In early 2012, Apple introduced iPad 3 using an enhanced A5X chip with a quad-core PowerVR SGX543MP4 GPU and a double-wide, 128-bit memory interface. That architecture doubled its graphics performance in order to power the higher-resolution Retina Display of the new tablet. Apple had started its A4 project in 2008, indicating that A5X would have needed to be in planning around the time the first iPad launched in 2010.
A5X | Source: TechInsights
The move to Retina Display resolutions had started with the iPhone 4, which used the extra horsepower of iPad’s A4 to drive a huge leap in display resolution on the physically smaller, lower resolution iPhone screen. The result was a “luxury class” iPhone that could stand out in a crowded market with a visibly superior screen.
Apple’s delivery of Retina Display was a unique way of introducing higher pixel density. Previously, PCs had incrementally increased screen resolutions by simply showing a larger desktop with smaller UI elements. But that wasn’t going to work out well on multitouch mobile devices, where targets needed to remain usably and consistently large enough to tap with a finger.
Rendering the entire display at the same size—but 4x pixel density—resulted in a clearly superior product that customers could see the value in paying a premium for. It also required a huge jump in graphics processing power. Using the best available mobile GPU in A4 enabled Apple to deliver a Retina Display for iPhone 4, but it required more than another silicon generation to achieve this leap in graphics on iPad, where quadrupling the resolution resulted in a 3.14-megapixel display–more pixels than a 17 inch MacBook Pro!
“All they did was improve the display”
To many media critics, the primary enhancement of iPad 3 was trivial. Many were still disappointed that iPad still lacked Mac features like a file system and a serial port. Some are still waiting around for this today, ten years later, as if Apple hasn’t had time to figure out how to deliver features that were on 8-bit computers wired up in garages back in the 1970s.
Writing about the new model shortly after its release, developer Jeff Atwood stated, “iPad 3 reviews that complain ‘all they did was improve the display’ are clueless bordering on stupidity. Tablets are pretty much by definition all display; nothing is more fundamental to the tablet experience than the quality of the display.”
He added, “the new iPad finally delivered an innovation that general-purpose computing has been waiting on for thirty years: a truly high-resolution display at a reasonable size and price.  Until the iPhone and iPad, near as I can tell, nobody else was even trying to improve resolution on computer displays – even though all the existing HCI research tells us that higher resolution displays are a deep fundamental improvement in computing.”
Bill Hill, the developer of ClearType at Microsoft, similarly wrote, “the 3rd Generation iPad has a display resolution of 264ppi.  That much resolution is stunning. To see it on a mainstream device like the iPad – rather than a $13,000 exotic monitor – is truly amazing, and something I’ve been waiting more than a decade to see. It will set a bar for a future resolution that every other manufacturer of devices and PCs will have to jump.”
iPhone 4 and iPad 3 put Retina Display into mass-market circulation, creating awareness that later helped to sell the premium MacBook Pro with Retina Display and ultimately brought Retina across the rest of Apple’s product line. It was the equivalent of jumping from dot matrix printers to the LaserWriter; a monumental, qualitative shift in computing.
The odd model 3
The new third-generation iPad was pushing the boundaries of technology. It still struggled to keep up without running too hot, but Apple addressed this by the end of the same year with iPad 4 and its new A6X chip. That made iPad 3 Apple’s shortest modern product run, as well as being the only product that ever used the all-new A5X chip that had been in development for so long.
Rather than being a flop or a wasted effort—Apple sold 58M iPads that year—iPad 3 was an important stepping stone that helped finance a huge new surge in Ax silicon sophistication. The company had moved beyond simple mass production and was now cultivating a significant lead in mobile graphics. No other computer makers had any commercial need to drive mobile graphics on that level. A5X was using the same GPU core as Sony’s PlayStation Vita handheld gaming system that came out around the same time.
The Retina Display iPad 3 was distinguishing Apple as a premium tier brand in a sea of cheap mediocrity. If Apple had more leisurely just tried to wring all the available profits out of basic commodity tablets—following the cheap device strategy of Google’s Nexus 7—the surge in peak iPads that continued through 2014 might have collapsed early, making it much harder for the company to justify later down the road the speculative development of a high-resolution display and the custom graphics architecture needed to power it.
By rapidly innovating and delivering solutions to problems that most customers weren’t even aware existed, Apple was able to surf the crest of the wave of tablet sales, ending up with a significant lead in silicon processing power, device build quality, and in its tablet-optimized App Store library, all before the opportunity plateaued. Today, it would be extremely difficult to launch a new tablet on any level and expect to get any material attention from buyers.
Flexible and open vs integrated and optimized
Google’s solution to handling different display resolutions in Android had been simply scaling the UI to fit whatever panel a licensee might want to use. This also had the effect of encouraging flexible app development where tablets apps were really just stretched-out phone apps.
While Apple was designing its custom SoC silicon capable of delivering the hardware features it determined would make a desirable phone and tablet, Google’s leading Android licensee Samsung was creating a pantheon of Galaxy Tabs that each used a new display the company had created, along with different GPU architectures and different resolutions at different scalings.
Despite being a leading supplier of display panels suitable for tablets, Samsung didn’t deliver its own equivalent of a “retina” resolution until 2014, in part because it had cheapened out on GPU sophistication to deliver less expensive to build products. Rather than driving new innovation and desirable products, Android was really just driving its licensees to make bad product decisions.
This was particularly strange because Steve Jobs has clearly articulated well in advance three factors that would make tablets successful. Google, Microsoft, and all their licensees ignored this free advice, causing them to repeatedly fail just as Apple was gaining ground in tablets with increasing sales of its first three generations of iPad, as the next segment will examine.
These ten enterprise M&A deals totaled over $40B in 2019
It would be hard to top the 2018 enterprise M&A total of a whopping $87 billion, and predictably this year didn’t come close. In fact, the top 10 enterprise M&A deals in 2019 were less than half last year’s, totaling $40.6 billion. This year’s biggest purchase was Salesforce buying Tableau for $15.7 billion, which would…
It would be hard to top the 2018 enterprise M&A total of a whopping $87 billion, and predictably this year didn’t come close. In fact, the top 10 enterprise M&A deals in 2019 were less than half last year’s, totaling $40.6 billion.
This year’s biggest purchase was Salesforce buying Tableau for $15.7 billion, which would have been good for third place last year behind IBM’s mega deal plucking Red Hat for $34 billion and Broadcom grabbing CA Technologies for $18.8 billion.
Contributing to this year’s quieter activity was the fact that several typically acquisitive companies — Adobe, Oracle and IBM — stayed mostly on the sidelines after big investments last year. It’s not unusual for companies to take a go-slow approach after a big expenditure year. Adobe and Oracle bought just two companies each with neither revealing the prices. IBM didn’t buy any.
Microsoft didn’t show up on this year’s list either, but still managed to pick up eight new companies. It was just that none was large enough to make the list (or even for them to publicly reveal the prices). When a publicly traded company doesn’t reveal the price, it usually means that it didn’t reach the threshold of being material to the company’s results.
As always, just because you buy it doesn’t mean it’s always going to integrate smoothly or well, and we won’t know about the success or failure of these transactions for some years to come. For now, we can only look at the deals themselves.
Jumia, DHL, and Alibaba will face off in African ecommerce 2.0
The business of selling consumer goods and services online is a relatively young endeavor across Africa, but ecommerce is set to boom. Over the last eight years, the sector has seen its first phase of big VC fundings, startup duels and attrition. To date, scaling e-commerce in Africa has straddled the line of challenge and…
The business of selling consumer goods and services online is a relatively young endeavor across Africa, but ecommerce is set to boom.
Over the last eight years, the sector has seen its first phase of big VC fundings, startup duels and attrition.
To date, scaling e-commerce in Africa has straddled the line of challenge and opportunity, perhaps more than any other market in the world. Across major African economies, many of the requisites for online retail — internet access, digital payment adoption, and 3PL delivery options — have been severely lacking.
Still, startups jumped into this market for the chance to digitize a share of Africa’s fast growing consumer spending, expected to top $2 billion by 2025.
African e-commerce 2.0 will include some old and new players, play out across more countries, place more priority on internet services, and see the entry of China.
But before highlighting several things to look out for in the future of digital-retail on the continent, a look back is beneficial.
Jumia vs. Konga
The early years for development of African online shopping largely played out in Nigeria (and to some extent South Africa). Anyone who visited Nigeria from 2012 to 2016 likely saw evidence of one of the continent’s early e-commerce showdowns. Nigeria had its own Coke vs. Pepsi-like duel — a race between ventures Konga and Jumia to out-advertise and out-discount each other in a quest to scale online shopping in Africa’s largest economy and most populous nation.
Traveling in Lagos traffic, large billboards for each startup faced off across the skyline, as their delivery motorcycles buzzed between stopped cars.
Covering each company early on, it appeared a battle of VC attrition. The challenge: who could continue to raise enough capital to absorb the losses of simultaneously capturing and creating an e-commerce market in notoriously difficult conditions.
In addition to the aforementioned challenges, Nigeria also had (and continues to have) shoddy electricity.
Both Konga — founded by Nigerian Sim Shagaya — and Jumia — originally founded by two Nigerians and two Frenchman — were forced to burn capital building fulfillment operations most e-commerce startups source to third parties.
That included their own delivery and payment services (KongaPay and JumiaPay). In addition to sales of goods from mobile-phones to diapers, both startups also began experimenting with verticals for internet based services, such as food-delivery and classifieds.
While Jumia and Konga were competing in Nigeria, there was another VC driven race for e-commerce playing out in South Africa — the continent’s second largest and most advanced economy.
E-tailers Takealot and Kalahari had been jockeying for market share since 2011 after raising capital in the hundreds of millions of dollars from investors Naspers and U.S. fund Tiger Global Management.
So how did things turn out in West and Southern Africa? In 2014, the lead investor of a flailing Kalahari — Naspers — facilitated a merger with Takealot (that was more of an acquisition). They nixed the Kalahari brand in 2016 and bought out Takelot’s largest investor, Tiger Global, in 2018. Takealot is now South Africa’s leading e-commerce site by market share, but only operates in one country.
In Nigeria, by 2016 Jumia had outpaced its rival Konga in Alexa ratings (6 vs 14), while out-raising Konga (with backing of Goldman Sachs) to become Africa’s first VC backed, startup unicorn. By early 2018, Konga was purchased in a distressed acquisition and faded away as a competitor to Jumia.
Jumia went on to expand online goods and services verticals into 14 Africa countries (though it recently exited a few) and in April 2019 raised over $200 million in an NYSE IPO — the first on a major exchange for a VC-backed startup operating in Africa.
Jumia’s had bumpy road since going public — losing significant share-value after a short-sell attack earlier in 2019 — but the continent’s leading e-commerce company still has heap of capital and generates $100 million in revenues (even with losses).
Airbnb’s New Year’s Eve guest volume shows its falling growth rate
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between. It’s finally 2020, the year that should bring us a direct listing from home-sharing giant Airbnb, a technology company valued at tens of billions of dollars. The company’s flotation will be a key event in…
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
It’s finally 2020, the year that should bring us a direct listing from home-sharing giant Airbnb, a technology company valued at tens of billions of dollars. The company’s flotation will be a key event in this coming year’s technology exit market. Expect the NYSE and Nasdaq to compete for the listing, bankers to queue to take part, and endless media coverage.
Given that that’s ahead, we’re going to take periodic looks at Airbnb as we tick closer to its eventual public market debut. And that means that this morning we’re looking back through time to see how fast the company has grown by using a quirky data point.
Airbnb releases a regular tally of its expected “guest stays” for New Year’s Eve each year, including 2019. We can therefore look back in time, tracking how quickly (or not) Airbnb’s New Year Eve guest tally has risen. This exercise will provide a loose, but fun proxy for the company’s growth as a whole.
Before we look into the figures themselves, keep in mind that we are looking at a guest figure which is at best a proxy for revenue. We don’t know the revenue mix of the guest stays, for example, meaning that Airbnb could have seen a 10% drop in per-guest revenue this New Year’s Eve — even with more guest stays — and we’d have no idea.
So, the cliche about grains of salt and taking, please.
But as more guests tends to mean more rentals which points towards more revenue, the New Year’s Eve figures are useful as we work to understand how quickly Airbnb is growing now compared to how fast it grew in the past. The faster the company is expanding today, the more it’s worth. And given recent news that the company has ditched profitability in favor of boosting its sales and marketing spend (leading to sharp, regular deficits in its quarterly results), how fast Airbnb can grow through higher spend is a key question for the highly-backed, San Francisco-based private company.
- 2009: 1,400
- 2010: 6,000 (+329%)
- 2011: 3,1000 (+417%)
- 2012: 108,000 (248%)
- 2013: 250,000 (+131%)
- 2014: 540,000 (+116%)
- 2015: 1,100,000 (+104%)
- 2016: 2,000,000 (+82%)
- 2017: 3,000,000 (+50%)
- 2018: 3,700,000 (+23%)
- 2019: 4,500,000 (+22%)
In chart form, that looks like this:
Let’s talk about a few things that stand out. First is that the company’s growth rate managed to stay over 100% for as long as it did. In case you’re a SaaS fan, what Airbnb pulled off in its early years (again, using this fun proxy for revenue growth) was far better than a triple-triple-double-double-double.
Next, the company’s growth rate in percentage terms has slowed dramatically, including in 2019. At the same time the firm managed to re-accelerate its gross guest growth in 2019. In numerical terms, Airbnb added 1,000,000 New Year’s Eve guest stays in 2017, 700,000 in 2018, and 800,000 in 2019. So 2019’s gross adds was not a record, but it was a better result than its year-ago tally.
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