History is going to repeat itself at Apple in few years from now, I think. Just as it lost the PC battle to Microsoft even though Apple pioneered the concept of PC, the smartphone pioneer may lose the battle to Google/Samsung in more ways than one. With the announcement of iPhone 5S and 5C, Apple has clearly communicated it’s intention to remain as a premium provider while lacking the speed and agility of Samsung in terms of features. I can see a few things happening as a result of this.
Market Share
Apple’s US market share may start eroding at a slow pace given that it has still not caught up on things like bigger screen, NFC etc (fingerprint scanning is not going to make a big difference because it’s not available to developers and it may actually make it harder to unlock your phone by rejecting your own fingerprint often :). When they skipped these features last year, most people (including me) assumed that they are just slow to catch up. But now, it is clear that they have something against adding these features. Like always, they are trying to force their opinions on customers. Apple fanboys won’t have a problem with that, but I am not sure about the millions of non-fanboys who started loving Apple because it gave them a great phone/tablet that they can boast about. These converts may start wondering why they are sticking with Apple.
Global market share is never going to get better with the way iPhone 5C has been priced outside US in countries like India and China where there is no contract subsidy. People may actually start disliking the Apple brand in India because it never produces something that makes sense for the average Indian smartphone user. Apple had a great chance of doing well in India where there are numerous iPhone developers churning out iPhone apps day in and day out. The other irony is in China - the iPhone is assembled in China but Apple makes sure the Chinese can’t afford it!
Profit Margins
So far, the argument in support of Apple has been “hey, who cares how many Android phones sell but Apple has the big margins”. This could be challenged with the introduction of two phones that are more or less the same except Aluminium vs plastic and the not-so-must-have fingerprint scanning. Just think about this. iPhone 5S with a green or orange color 3rd party case will look and function pretty much like iPhone 5C :) So, why bother spending another $100 to buy 5S? How many folks are going to buy it just for the aluminium back? The profit margins may erode as well if most people start ignoring iPhone 5S.
Developers/Apps
You know which platform the first VisiCalc and Lotus Notes were developed for? Apple II. Fast forward and now most developers are targeting Windows first. It doesn’t matter that iPhone is the first choice smartphone platform today. As high end users start moving to Android, developers will follow them with no choice. Once the tide turns against iPhone, there’s no stopping. Does Larry Page know how to monkey dance like “Developers, Developers…” because he may have to do it soon.
Let’s see what happens in the next few years. For now, I am doing two things - dumping Apple stock and decided to buy a cutting edge Android phone next time.
