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The strength of feeling people have about Apple is often surprising. Their incredible success over the last few years has made them one of the richest companies on the planet. The brand loyalty they command is astounding – a recent study estimated their retention rate at 89%. That’s way beyond any of their competitors but it seems you either love them or hate them. You join the cult of Apple and you never get out or you’re on the outside looking in and shaking your head at the believers. What do they see that I don’t?
Well, to be honest I’m not a big fan of Apple. I think their products are overrated and overpriced. I don’t like their closed eco-system and I’m bored of their self-congratulatory attitude. Having said that, I can still see the attraction of their products, it would be churlish to say they aren’t desirable.
In the last quarter (Q3 of 2011) Apple announced a record net profit of $7.31 billion and they sold more than 20 million smartphones. To put that in perspective, in the same period, Google announced a net profit of $2.505 billion and Microsoft announced a net profit of $5.874 billion.
There has been a great deal of discussion about the growth of Android and how it could overtake iOS but analysis shows that the majority of new Android smartphone owners are not switching from the iPhone. The smartphone market in general is growing, so there are plenty of first-time buyers, and many people seem to be switching from BlackBerry to Android. The growth of the iPhone is still outpacing the growth of the smartphone market.
So what has happened to provoke the claim that Apple is in trouble?
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Steve Jobs and the iPhone 4S
There have been countless tributes and articles detailing the life and achievements of Steve Jobs in the last few days. Without going into detail we can safely say that he was a clever and visionary man and that Apple will seriously miss him. If you are sceptical about the impact that one man can have on a company you only need to look at Apple before he re-joined the company and what happened thereafter.
They may have lost an important figure but you can’t reduce Apple’s success to the influence of one man. You would have to assume that there are plenty of other people working there with some serious skills and great ideas. You can also safely assume that he had plans in the works that will come to fruition in the next few months and years. In the long term Apple is weakened by his loss but it isn’t going to cause a sudden collapse.
The negative reaction to the iPhone 4S is actually not that surprising. Expectations were high and they were boosted by the media coverage speculating on a redesigned all-conquering iPhone 5. What we got instead was an improved version of the iPhone 4. Here’s how the iPhone 4S and iPhone 4 compare. It may not be earth-shattering but it is a significant improvement. According to reports emerging on various websites conducting benchmarking tests the iPhone 4S is outperforming the competition. The specs may not be a giant leap but the phone is well-designed and it makes the most of them.
The idea that the iPhone 4S is a big mistake by Apple is not really credible. They have already reported a record 1 million pre-orders in the first 24 hours. You also have to consider the price drop for the iPhone 4 and iPhone 3GS. They’re both still decent smartphones and the price drop will allow them to compete with the huge range of more reasonably priced Android smartphones on the market. They could end up increasing their market share considerably as a result of that move. So, Apple is hardly in trouble, from where I’m sitting they’re still laughing all the way to the bank.
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The Slow Decline of Apple?
If we can accept that Apple isn’t about to implode then we can look at the real risk to their lofty position. Perhaps over time the loss of Steve Jobs will begin to tell. Any company that isn’t led well is at risk, just look at RIM. They went from a similar dominant position in the smartphone market down to a dwindling share because they failed to innovate or keep up with their competitors.
The iPhone 4S is keeping pace with current Android smartphones but give it a few months and there will be smartphones on the market running Android, and probably WP7 too, that have significantly better specs. That in itself won’t be enough because there have been smartphones on the market for a while now that have much better specs than the iPhone 4 and it continued to sell extremely well, but it is bound to have some impact.
There are a lot of things that Apple does right but they don’t have a monopoly on innovation. As more and more new products hit the market offering us new options and technology, from NFC to 3D, there is a danger that one of them will take off and the iPhone could be left behind.
Of course, it is worth remembering that Apple could announce the iPhone 5 whenever they like. They are cash-rich, they have a loyal following and it seems unlikely they will rest on their laurels.
Their current success is not going to last forever – nothing lasts forever. But it looks set to continue for the foreseeable future.
What do you think? Post a comment and tell us.
- Apple, http://www.apple.com/
- BGR, http://www.bgr.com/2011/10/05/apples-fall-from-grace/
- Wired, http://www.wired.com/gadgetlab/2011/10/iphone-4s-success/
- All Things D, http://allthingsd.com/20110923/apples-iphone-has-a-89-percent-retention-rate/
- AnandTech, http://www.anandtech.com/show/4951/iphone-4s-preliminary-benchmarks-800mhz-a5-slightly-slower-gpu-than-ipad-2