9.2-Apple: from leader to follower-2014-08-13

Right of the bat, some people will be shocked by the title. Unfortunately, since the passing of Steve Jobs, in 2011, Apple has lost its leadership. The technology business is a rate race. You can be market leader one day and almost disappear the next. Just ask Research In Motion (RIM), the makers of the Blackberry. Do you remember the Blackberry? RIM dominated the business smartphone for years. Now their name is almost forgotten. In 2007, Apple came out with the iPhone and, in 2010, the iPad. Before the passing of Steve Jobs, Apple was two years ahead of everyone else. At that time, they OWNED that market. They had initiated the changes that killed the Blackberry. Now Apple is falling behind.

To illustrate this, let’s take the large smartphone market. In the fall of 2011, Samsung came out with the first Phablet (the combination a large smartPHone and a small tABLET). I was an early adopter when I bought my Samsung Galaxy Note 1, in December 2011. I can remember the critics of the time hailing that it was too big, that you would look stupid using a large phone, bla, bla, bla… Now the larger smartphone has become the norm with the Samsung Galaxy series and others. Why? Because, more and more people are using their smartphones as miniature portable computers these days! Therefore, they need more screen real estate: to view the internet content they seek, read and answer emails, participate on social medias, edit documents, read the news, show photos, view movies and TV shows … you name it! These are the same reasons that gave birth to the mini tablet market which is growing leaps and bounds.

Up to now, Apple had snubbed the larger smartphone market. They had imposed the new phone standard years ago, why would they now have to follow Samsung and Android? Because, larger smartphones is now the new norm imposed by Samsung and Android! According to the rumors, Apple is about to cave in and announce a larger iPhone: more than three years behind the pack. They have no choice; their market share is shrinking by the day. Meanwhile, Samsung’s market share has almost tripled during the last three years and is now twice the Apple market share as you can see below.

Apple-2014-08-13

Pride and Business don’t mix!

It’s easy to recognize a market leader. When a company leads, the others are trying to copy it success. The followers copy the products and the strategies of the market leader to catch up and try surpassing it. In technology, the longer it takes for a company who has lost its leadership to turn around and become a follower, the more damaging it gets. Often, the confidence and the pride that the market leader feels holds it from becoming a follower. Its super hard for a market leader, who had been dictating the market, to realize and admit that it has to become a follower.  Take RIM for example: they were dominating the business smartphone of their era. The others, like Nokia for example, were copying RIM’s design: a small screen and a keyboard. Then, Apple changed the ball game with a revolutionary new design: a larger screen, a popup keyboard, and icon finger navigation. Confident that they OWNED the business smartphone market, RIM took years to adapt. Now they have almost disappeared! Pride and business don’t mix!

Apple had both the market leadership of the smartphone and the tablet. For whatever reason, they have not kept pace with the market and need to become a follower. It took them three years to realize that the larger smartphone was now the norm. Pride and business don’t mix!

Losing the mobile operating system battle

More critical than losing the large smartphone market, Apple’s iOS mobile operating system has been surpassed by the latest Android versions. The operating system is the software that makes smartphones and tablets work and give them their functionality and their personality. (To learn more about what an operating system is, please read:     04.1–What is a computer?-2012/01/16). According to many reviews over the last year, Google’s Android operating system has now surpassed Apple’s iOS in term of functionality, versatility, custom ability and stability. THIS IS A BIG DEAL! A lot more than the large smartphone market! It was not the Blackberry hardware that made it disappears; it was RIM’s inability to come out with a new operating system, in a timely manner, to compete with iOS and Android.

Apple has not learned

Apple has not learned from its 1980’s mistakes. Its survival was in danger because it was constraint by its closed PC market, while Microsoft Windows was being adopted by a multitude of hardware makers competing against Apple. Steve Jobs came to their rescue and not only saved the company but propelled it in front of the pack once again with popular innovations. Now Steve Jobs is gone and Apple is drifting again. The reason: continues to have a closed market. Only Apple (and its subs) makes Apple products. It’s very profitable to corner a market, but protecting such market is super difficult. Meanwhile, the rest of the industry makes Android and Windows based products. Hundreds of companies working against Apple! A massive army against one company! The outcome is predictable unless Apple can constantly reinvent itself which is not a small task. The recent history does not bode well, but who knows?

Alliances

To survive when you have the rest of the industry competing against you, you have to make alliances and focus on niche markets. We can see that Apple is currently doing just that. It recently (June 2014) signed an important alliance with IBM. This exclusive partnership will see users of Apple’s mobile devices able to access IBM enterprise software and IBM enterprise customers able to access Apple mobile hardware, service and support. This is a strategic Cloud/Mobile alliance for both large companies to help them contain the competition from Google/Samsung, Microsoft/Dell, Amazon/Kindle and a multitude of other manufacturers and suppliers.

Apple’s dominance of the Enterprise Mobility Market is slipping

Android is gaining acceptance in business at the cost of Apple’s iOS popularity. Microsoft languishes at the bottom. Up to now Apple has OWNED the Enterprise market. Its IBM alliance is an effort to protect this dominant position.

According to Good Technology, Android device activations among its 5,000 worldwide enterprise clients during the second quarter of 2014 reached 32% of total activations, an increase of five percentage points. Activations during this period for iOS devices, meanwhile, declined five percentage points to 67% of total activations. That leaves 1% for Windows Phone, which has remained flat for the past five quarters. BlackBerry activations are not tracked by Good Technology.

Apple-Enterprise

Due to its early start, two years before everyone else, Apple will continue to dominate the Enterprise Mobility Market for quite a while. But to maintain that position it will need to demonstrate leadership which it has not for the last few years. Meanwhile, the rest of the industry will be after Apple’s share of the Enterprise Mobility Market.

Niche markets

Since the Apple iPad had no competitors for quite a while, it has been adopted by numerous individuals (my wife and my daughter being amongst this group) and organizations (businesses, schools …). It will therefore be harder for the iPad 10 inch tablet competitors to win back these organizations and individuals. This is one example of a niche market where Apple will most probably do better. Since Apple’s products are generally priced higher than the competition, to succeed Apple will most probably focus on the luxury higher price markets, where price is less a significant purchase decision criteria. The fact that the new iPhone 6 is rumored to have a “sapphire crystal display”, which would make it almost unscratchable and unbreakable, but would carry a much higher price tend to indicate a move towards such niche markets. Since Apple cannot compete in the low end price markets (for example: small tablets selling for less than $100 at Costco), we should not be surprised to see high priced fancy products from Apple in the future.

The Apple religion

I know that many Apple fans will hate me for writing the above. How can I dare say such things about Apple, when Apple cannot do wrong! Apple is like a religion for many Apple fans! I apologize, but the facts are the facts! I don’t hate Apple, to the contrary, my wife uses an original 10 inch iPad and I would not dare propose to trade it, at least not for now. With this iPad, at a time where there were no competitive products, she was motivated for the first time to learn and operate, by herself without my help, a computer product. I had for years tried to have her use a Windows laptop without success. Even if a Samsung/Android product could provide more flexibility and functionality, it is not worth the time and effort to have her convert. What she has works for her and that’s key! If you are like me and enjoy keeping up to date, it’s a different ball game. Keep reading my articles which should help you stay up to date.

One Response to 9.2-Apple: from leader to follower-2014-08-13

  1. TIM HELMS says:

    very good info

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