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Is Apple a Tech Giant Heading for a Fall?

written by: •edited by: J. F. Amprimoz•updated: 8/22/2011

When one of your major income streams comes from legal action and you're planning to build a spaceship-style HQ, you have to take a step back and wonder if things are getting a little out of hand...

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    Are Steve Jobs and Apple overreaching themselves? Once upon a time there was a little company called Apple, who made nice computers that anyone could use.

    Their personal computers were designed so that anyone new to computing could intuitively get a handle on the use of a mouse and a graphical user interface, and while these devices weren’t as widely used as a Windows IBM compatible PC, they were seen as much cooler devices by their small group of fanatical users.

    In fact, you could describe the little company called Apple as the antithesis of the big business behemoths such as Microsoft and IBM, focusing as it did on software and processing power that was ideal for creative endeavours like desktop publishing, graphic design and video editing.

    Being cool because you’re different brings with it particular danger, of course. Once you start becoming popular, there is that chance that you become just like your competitors. This seems to be the case with Apple, who since 1996 have transformed from a poorly performing company with a small band of loyal users into highly commercial giants whose current strength and power can be compared to Microsoft and IBM at their respective peaks.

    Did Apple sell out on its old, loyal user base without them even realizing it? Is Apple’s current commercial and technological strength changing the very ethos of the company?

    Has Apple peaked too high, too soon?

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    Samsung Tablet Patent Dispute

    You may be aware of the recent patent dispute between Apple and Samsung (soon to be extended to Motorola) which has led to the European Union agreeing to an Apple request to ban the sale of the Samsung Galaxy Tab 10.1 across Europe (including the UK) on the grounds that the design of their tablet breaks what is known in the EU as “Community Design” of the Apple iPad tablet.

    Thanks to a German court, Samsung’s tablets are banned from further sale (barring those already with wholesalers and stores) based on a trademark concept that would look pretty flimsy in a US court. Community Design is basically a means of trademarking the design of a product based on a text description; no art is required. The smart money is on Apple using this legal construct to launch preliminary injunction against the Samsung tablet to force their competitor out of the market.

    It’s a pretty heavy handed tactic, although it has every chance of being thrown out by the courts when Samsung appeal later in August.

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    The World’s Most Valuable Company

    The dispute with Samsung is just the tip of the iceberg, of course. Over the past few years, Apple has been involved in various patent disputes with pretty much any technology company that you can think of. Licensing agreements have usually been the outcome, with Apple profiting very nicely from a now regular income stream from various competitors.

    Microsoft, meanwhile, has regularly worked to find beneficial agreements for both parties, usually resulting in a like for like licensing agreement.

    That Apple should exercise its right to protect its patents is not the point here – of course they should. What is disconcerting, however, is the manner in which they are doing so.

    We only have to look at the recent news that Apple has become the world’s most valuable company to realize that in a summer in which investors have been low in confidence, Apple has become a safe haven for those more concerned with long term financial safety. All of this occurs in the year when rare metal supplies – vital for the production of iPads and iPhones – were disrupted when Japan suffered from the Tōhoku earthquake.

    Long term confidence in Apple therefore hangs on the strength of their patent claims.

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    Has Apple Become the Modern Microsoft?

    A respected position in any stock portfolio and a penchant for allocating an ever increasing budget to the legal department has seen Apple recently transform into a mirror image of the very company its vociferous users once criticized for these self-same tactics: Microsoft.

    Obviously this is somewhat ironic. Both companies share similar beginnings, but while Apple earlier focused on usability and being “insanely great”, Microsoft trod the IBM path to satisfying big businesses with a range of hardware and software solutions with compelling reasons to upgrade every four years or so.

    Microsoft has regularly been accused of releasing a sub-standard operating system, but this has never happened to Apple until Mac OS X Lion came along, with its collision of traditional OS X stylings with the iOS-like Launchpad. With legal action doing the rounds and Apple pushing its way into the business market, one has to wonder if there is a “Microsoft did this” check list that Steve Jobs and co are working their way through.

    At this stage, the only thing Apple is missing is an anti-competition suit, but given their treatment of Samsung and various other competitors during 2011, it can only be a matter of time before this happens – and the wool finally falls from the eyes of many of its long-term users and evangelists.

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    Apple Has Peaked Too Soon

    It would be nice to be able to argue that this is all par for the course in 21st century business, but there is every chance that this reduces the situation to a far too simplistic level; stating that “Microsoft did it first” is similarly unhelpful. Anyone who truly loves Apple and their products and has been purchasing Macs over the past 20 years or so should be taking a good look at recent events and wondering what happened.

    Because – and this is going to prove contentious – there is every chance that if Apple hasn’t already peaked, then the pinnacle of their remarkable turnaround since Steve Jobs returned in 1996 is very, very close.

    A new iPhone device is expected in 2011, allowing Apple to further tighten their grip on the smartphone market, and push into new territories such as China. However this is where they face competition from Nokia in a land where the latter still hold a large share of the market. With Microsoft and Nokia likely targeting this market with the rumored stripped-down Tango release of Windows Phone, Apple will need to move quickly, something that seems unlikely without any Apple stores anywhere in China.

    Meanwhile, reviews of Mac OS X Lion have been conspicuous in their lack of genuine praise. A bold move it might have been, but there are already stories of users reverting to Snow Leopard. This doesn’t bode well.

    As for the litigious side of Apple’s business model, it doesn’t take more than 30 seconds on Google to discover that Samsung began selling a multimedia picture frame back in 2006, some months before the iPhone and years before the iPad. Its visual similarities to these devices are astounding! Throw in the fact that Apple's legal documentation features a manipulated image of the Samsung Galaxy Tab that appears to show it as having an iPad-copying 4:3 aspect ratio (it's actually 16:10, ideal for viewing widescreen movies) and no Samsung logo and it all seems very murky indeed...

    Perhaps it’s finally time for Apple to begin consolidating, rather than expanding. While no one would deny them the opportunity to build a massive new self-sufficient headquarters that is likely to become one of the most remarkable architectural projects in the world, there is a feeling of the white elephant about it.

    After all, once you have peaked, there is only one direction left to go…