Apple The Eye of the Storm

Market Studies

1394 Market and Technology Study

Apple The Eye of the Storm: Mobile Device Internet Traffic

Published: August, 2012


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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

  • The increase in popularity of using mobile devices and especially using them for data intensive applications.

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


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


Major Traffic Sources


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


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


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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