Apple Under Pressure

Carl Weinschenk
Slide Show

Access to Enterprise Software from Mobile Devices Lagging

A time comes in a company’s existence when it must make the transition from totally dominant to being a major player – but one that must share the limelight with near or full equals.

At one point – and, really, it wasn’t that long ago -- Research In Motion’s BlackBerry was the beginning and end of what would become known as the smartphone industry. Its struggles to thrive and even survive in the industry it created are well chronicled.

The cable industry has had to adjust to life as the vastly dominant purveyor of entertainment video to one that increasingly shares that stage with all forms of telecom provider. It’s different, of course, since this is a case of an industry and not a single company making the transition. But the acceptance of a more competitive landscape is conceptually the same. To a great extent, the industry has done well by substituting data, voice and nascent advanced services revenue for the video business it is losing. The point is that cable operators didn’t cry in their beer. The industry arguably is stronger now than a decade ago.

How will Apple handle this inevitable transition? Or will it have to?

Datamation reports that Citi sees demand for the iPad and the iPhone “softening.” The story offers extensive quotes from CNET’s Lance Whitney and Business Insider’s Jay Yarow on what Citi sees. Whitney focuses on reduction of component work orders and Yarow describes the downward trend in Citi’s prediction of Apple unit sales.

The story closes with rumors that production is beginning on the next iPhone. It would be the successor to the iPhone 5.

Getting a read on the trajectory of Apple is further muddled by ComScore numbers, which still show the brand advancing. The questions are if the softness seen in the Citi report is real and, if so, whether it is a leading indicator of fundamental change, or simply a valley between peaks.

In general, subtle pessimism about Apple has emerged. The two greatest threats are Samsung – maker of the Galaxy S III -- and Google, which provides the industry with the Android operating system.

Last month, The New York Times posted a long feature on Samsung and the danger it holds for Apple. The theme is that the two companies are very different. Apple is narrowly focused, for instance, while Samsung Electronics is part of a bigger entity that makes everything from televisions to vacuum cleaners. The two also have different philosophies:

Where Apple stakes its success on creating new markets and dominating them, as it did with the iPhone and iPad, Samsung invests heavily in studying existing markets and innovating inside them.

TheSpec’s take on the Google/Apple competition has a financial focus. Like Samsung – which is a major Android user, though it is using the Tizen OS – Google is a much broader company than Apple. The implication is that Apple continually is challenged in a way that the other two are not:

The changing fortunes underscore the strength and predictability of a growing advertising market, compared with consumer electronics. While ad prices can vary with the strength of the economy, there’s usually steady demand for ads generally. In consumer devices, Apple faces pressure to constantly come up with a new home run product, said Nabil Elsheshai, an analyst at Thrivent Financial for Lutherans, which holds Google stock.

It’s obvious that no successful company – and the approach that led to that success – will go unchallenged. And the challenges will be great and well financed. Apple’s products always will be iconic. But BlackBerries are iconic as well, and that doesn’t help sell products in the future. Three things seem to not be in Apple’s favor: the huge target on its back, the reliance on a narrower range of products and the absence of its main creative force.

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