Overview
This timely report includes an analysis of the impact of Apple's recent court victory over Samsung. Apple is now the largest company in history - find out why!
This report is about a company that doesn't own public networks (like AT&T and Verizon); it doesn't own vast computer installations (like Google); it is not a massive software manufacturer (like Microsoft); it is a company that primarily deals with providing end users the access devices that allow connection to all of these other companies' assets. Many would not even call it a telecommunications company at all; but by almost any measure, it is the most successful telecommunications company of all time. This company is Apple! The story of Apple is the story of traffic generation from mobile devices and how to use that storm of traffic to successfully build a business.
It has been six years since our last network traffic forecast (2006) and many things have happened since then. To bring that report up to date, we issued a "Network Traffic Report --2011."
We are now focusing on a particular aspect of that traffic – mobile device originated – and the main company responsible for much of that traffic – Apple.
The major events affecting North American network traffic growth are:
The dramatic rise in traffic from Advanced Access Architecture (AAA) Lines (FTTP and FTTN). The startling increase in IPTV Traffic. The increase in overseas traffic, especially from the booming economies of the Far East. The relative decline (in the period of this forecast) of high-speed access lines and the traffic from them. This includes xDSL lines and cable modems. Other traffic items (sources) increase in the period, but with much less impact than these five.
-- but the most important event has been
This report begins with a short history of Apple, and then we will move to an overview of the financial underpinnings of Apple. We will use the two major telecom companies – AT&T and Verizon – as well as the other two companies often involved with the same things that Apple is – Microsoft and Google, for comparisons. It is important to understand Apple's financing to understand the range of strategic options that are open to them and also to understand the depth of their success.
The next area of focus is the traffic on the Internet coming from mobile devices, and the extent of the growth of this traffic and Apple's involvement. The story about Internet traffic is the heart of the Apple success. More than any other company, they have managed to monetize this traffic without requiring astronomical investments and maintenance. We will rely heavily on our recent report mentioned above, "Network Traffic Report – 2011," for forecasts and comparisons.
To help understand the entirety of the telecom marketplace, we introduce a section outlining the recent history of the telecommunications industry and the major players in it (at least as relates to this report.) the intention of this section is to locate Apple on the continuum of telecom companies. As will be seen, it only fits poorly.
We conclude the main section of this report with a discussion of Apple's strategies as well as those of the other major players.
The Appendixes provide a discussion of IPTV and a forecast for IPTV traffic. Also, extensive material is in the Appendixes, to help the reader with the various traffic concepts in this report.
This report provides:
A History of Apple. A discussion of Apple finances. A comparison of Apple finances to the finances of other players. A discussion of mobile generated network traffic. Forecasts for Mobile Traffic. Forecasts for Apple device generated traffic. Discussion of and forecast for Apple Strategies. Description of the total telecommunications marketplace with an emphasis on Apple's place in it. Discussion of and forecast for the strategies of other major players. Discussion of and forecasts for other (other than mobile) sources of Internet traffic. Appendixes to help understand traffic nomenclature, and concepts.
Table of Contents
The Lightwave Network Series of Reports
The Lightwave Network
The Lightwave Series of Reports
General Reports on the Network
General Market Reports
Specific Systems Reports
Apple – The Eye of the Storm
Introduction
Impact of Samsung Court Victory
Apple History
Apple – A Financial Giant
Current Assets
Net Income
The "Storm" - Mobile Data Traffic
Mobile Devices
Apple's Role in Mobile Device Traffic
Apple Traffic Summary
Forecast for Apple Generated Traffic
Market History
Post-merger Competition
RBOC Purchase of IXCs
RBOCs vs. Cable Companies
RBOCs Are Becoming Wireless Access Companies
RBOC Loss of Main Lines
It's a Wireless Access Industry!
The Wireless Access Landscape
Forecast for Wireline to Wireless
Recent History - The Super Competitors
Update on the "Super-Competitors"
Strategies of the Major Players
Apple Strategies
Other Major Player Strategies
Google Strategies
Management and Financial Items
Network Items
Summary and Forecast of Google Strategies
Options for Google
Verizon Strategies
Management and Financial Items
Network Items
Summary and Forecast of Verizon Strategies
AT&T Strategies
Management and Financial Items
Network Items
Summary and Forecast of AT&T Strategies
Comments on the Strategies of the Major Competitors
Approach to Forecasting Traffic on the Internet
Total Network Traffic
Nomenclature
Major Traffic Sources
Summary
Approach to Forecasting Traffic on the Internet
High-Speed Access Lines (xDSL and Cable Modems)
Traffic Forecast for High-Speed Users
Dial-Up Traffic
AAA Traffic
Mobile Traffic
Total Internet Traffic
International Traffic
VoIP Traffic
Other Data Networks
Private Line Networks
Voice Traffic
Total Network Traffic
IPTV
Four Other (Non-IPTV) Sources of Traffic
AAA Access Lines
Mobile Devices
International Traffic
H-S Access Lines
Dial-up Traffic
AAA Traffic
Mobile Traffic
Total Internet Traffic Forecast
Lightwave Network
Network Location of Internet Traffic
Internet Traffic Forecast
Other Traffic Types on the Backbone Network
International Traffic
Network Location of International Traffic
Forecast for International Traffic
VoIP Traffic
Location of VoIP Traffic on the Network
Forecast for VoIP Traffic
Other Data Networks
Location of Other Network Traffic
Forecast for Other Network Traffic
Private Line Networks
Location of Private Line Traffic
Forecast for Private Line Traffic
Voice Traffic
Location of Voice Traffic
Forecast for Voice Traffic
Appendix I, Traffic Statistics Relationships
Appendix II, Data Traffic Fundamentals
Internet Traffic Calculations
Bits and Bytes
Transfer Rate
Busy Hour Traffic
Protocol Efficiencies
Statistical Multiplexing
Peaking
Summary of Concepts
Table of Figures
Figure 1: Lightwave Network
Figure 2: Market Capitalizations
Figure 3: Current Asset Comparison
Figure 4: Net Income Comparison
Figure 5: Mobile Traffic
Figure 6: Internet Traffic Components
Figure 7: Forecast for Apple Generated Traffic
Figure 8: Summary of Competitive Position, Pre-Mergers
Figure 9: Revised Competitive Structure Due to IXC Purchases
Figure 10: RBOCs Subsume IXCs and CLECs
Figure 11: RBOCs vs. Cable Companies
Figure 12: Telcos vs. Cable Companies – 2009
Figure 13: Verizon Wireline vs. Wireless Revenues
Figure 14: Verizon Loss of Main Lines vs. Wireline Revenue
Figure 15: Wireline Customers vs. Wireline Total Revenue
Figure 16: FiOS vs. Uverse Services
Figure 17: FiOS vs. Uverse Quarterly Additions
Figure 18: Wireless Competition
Figure 19: Forecast for Wireline to Wireless Migration
Figure 20: The Super Competitors
Figure 21: Google as a Serious Threat
Figure 22: Comparison of Net Income - Including Apple and Microsoft
Figure 23: New Super Competitors Chart
Figure 24: Google Strategies
Figure 25: Verizon Strategies
Figure 26: AT&T Strategies
Figure 27: Premise for Forecasting Traffic on the Internet
Figure 28: Internet Traffic Formula
Figure 29: Total Traffic Compared to IPTV
Figure 30: Data Traffic from Major Sources – NO IPTV
Figure 31: Comparison of Four Major Sources to Total Traffic (no IPTV)
Figure 32: Dial-up Lines Forecast
Figure 33: Dial-Up Traffic Forecast
Figure 34: High-Speed vs. Dial-Up Traffic
Figure 35: Ratio of High-Speed Traffic to AAA per Line Traffic
Figure 36: AAA Line Forecast
Figure 37: AAA Traffic
Figure 38: Mobile Traffic
Figure 39: Lightwave Network
Figure 40: Network Location — Internet Traffic
Figure 41: Internet Total Traffic Forecast
Figure 42: Internet Traffic Change over Time
Figure 43: Network Location of International Traffic
Figure 44: International Traffic
Figure 45: Location of VoIP Traffic
Figure 46: VoIP Traffic
Figure 47: Location of Other Network Traffic
Figure 48: Other Data Networks
Figure 49: Location of Private Line Traffic
Figure 50: Private Line Networks
Figure 51: Location of Voice Traffic
Figure 52: Voice Traffic
Figure 53: Traffic/Speed Relationships
Figure 54: Example of Various Traffic Sizes
Figure 55: Multiples of Byte
Figure 56: New Transfer Rate Forecast
Figure 57: Summary of Concepts
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