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Apple (Nasdaq: AAPL) share prices have been seesawing since July 20, but they have generally been on the uptick. AAPL closed at $261.93 on Tuesday, up 8 cents from the previous day's closing.
This week, however, new challenges surfaced. One is a Nielsen report stating that Android smartphone sales outstripped iPhone sales in the last quarter. Meanwhile, Android 2.2 has come to the HTC Evo and is coming soon to the Motorola (NYSE: MMI) Droid X smartphone.
Then there are problems with iOS 4. Apparently, iPhone 3G owners are dissatisfied with the performance of their devices after they'd upgraded to iOS 4. Further, the Library of Congress has ruled that it's not a violation of the Digital Millennium Copyright Act to jailbreak an iPhone. Days later, a developer created a website that lets users automatically jailbreak their iPhones simply by navigating to the page.
Further, Microsoft (Nasdaq: MSFT) has once again reaffirmed its intention to produce tablet PCs.
Will these challenges weigh upon Apple and drag it down? Or will the company continue to perform well, further lining shareholders' pockets?
Android Marches On
Android smartphones grabbed 27 percent of new purchasers in the second quarter of 2010, overtaking the iPhone, according to the Nielsen Group.
That demand has boosted profits at HTC and Motorola, both of which make Android smartphones.
Meanwhile, the HTC Evo now runs Android 2.2, also called "Froyo," and the Motorola Droid X will receive the Froyo update soon.
Further, several Android tablets are poised to take on the iPad.
Should Apple shareholders be concerned?
"There are still many people who won't move to AT&T (NYSE: T), and now that Android smartphones are easily available across the United States, whereas iPhones are only available from AT&T stores or on the Web, this could tilt things in Android's favor," Ramon Llamas, a senior research analyst at IDC, told MacNewsWorld.
Motorola alone shipped "at least" 1 million Android smartphones into the U.S. in the second quarter, Llamas said.
"If you total up Android devices from Motorola and HTC and Samsung, and consider that they're all available from multiple carriers including AT&T, then stack them up against the iPhone, the numbers show a little more heft towards Android," Llamas remarked.
That might be a cause for concern among Apple shareholders
However, in regard to Nielsen's figures, keep in mind that most of the second quarter of 2010 covers the months leading up to the release of the iPhone 4. Apple generally issues a new iPhone each June, and the existence of the latest iPhone was leaked months before its actual release. Many iPhone buyers may have been -- or are still -- waiting for the new device to become available.
Froyo? Fuhgeddaboutit
Froyo itself probably doesn't pose too much of a threat, Llamas contends.
"As far as Froyo's concerned, welcome to the pack, it's nice to have you here," Llamas said. "The question is, how many devices will you be able to download it to?"
So far, Froyo has been restricted to the flagship Android devices like the HTC Evo and the Motorola Droid X, Llamas pointed out.
"What about the lower-end devices that don't have so much cachet?" he asked. Android's strength lies in numbers, and the more handsets any version of this operating system is on, the better it will fare, Llamas said.
If Android smartphone owners have to buy new devices in order to run the latest version of the operating system, they may not be happy. Nielsen's research shows that 21 percent of Android smartphone owners want to switch to the iPhone, while only 6 percent of iPhone owners would opt for an Android smartphone.
iOS 4 and the iPhone 3G
When Apple launched iOS 4, it told owners of older iPhone models like the 3G that they could upgrade these to run the new operating system. Upgrading a 3G wouldn't give the user all of iOS 4's features, Apple said, but some would indeed be available.
However, many iPhone 3G owners have complained that their devices' performance is severely slowed by the upgrade. Undoing the operation isn't easy -- Apple offers no quick way to downgrade a phone through iTunes, and performing a workaround can be relatively complicated. French network operator SFR has reportedly told its customers who have the iPhone 3G to think carefully before upgrading their devices to iOS 4. In the United States, unhappy iPhone 3G owners' complaints have gotten to the point that Apple has reportedly launched an investigation.
"Look, iOS 4 is really optimized for the iPhone 4," IDC's Llamas said. "You won't be able to access all its functions on the 3G and 3GS. If you want to enjoy all the features of iOS 4, you need to get the iPhone 4."
Chances are, this problem will go away; new software does demand new hardware, and that's a situation common within the electronic products industry.
The Great Escape
Jailbreaking the iPhone is a whole other problem for Apple. Owners of iPhones can now go to JailbreakMe.com to quickly and easily have their devices jailbroken to run apps not approved by Apple.
This could expose those owners to malware and, if they use their iPhones at work, might endanger their enterprise networks.
However, only a small percentage of iPhone owners will likely to opt for jailbreaking, Carl Howe, director of anywhere consumer research, has pointed out. With nearly 240,000 apps to choose from, iPhone users can hardly complain of a lack of choice, he said.
Further, Apple will likely fix the problem with a patch because any threat to enterprise networks could impact its efforts to penetrate the corporate market.
JailbreakMe exploits a flaw in the way iOS 4 renders PDF documents. It does so for the purpose of performing a user-approved operation, but that same hole could be used by other hackers with much more malicious purposes.
"I would be very surprised if Apple hasn't patched this flaw in less than one month," Randy Abrams, director of technical education at ESET, told MacNewsWorld.
Threats to the iPad
On Thursday, Microsoft reaffirmed its efforts to offer a tablet PC. Company CEO Steve Ballmer was tight-lipped about the details, saying only that the company is working with several OEM partners and that it'll run Windows.
However, Microsoft has not been very successful in the tablets market, and it apparently killed its last tablet project, code-named "Courier," earlier this year.
Several of its OEM partners, including HP (NYSE: HPQ), have reportedly dropped their plans to offer a Windows tablet. HP will use the webOS operating system it acquired with the purchase of Palm earlier this year, while Asus will reportedly offer an Android tablet. Samsung, too, is said to be planning to unveil an Android tablet.
However, whether any of these devices can compete with the iPad has yet to be determined.
"Before tablets can be successful and challenge the iPad, their manufacturers will need to decide whether they're offering production devices or consumption devices," Dmitriy Molchanov, an analyst at the Yankee Group, told MacNewsWorld. "That means, are people going to use them to produce documents, edit music or create spreadsheets, or are they going to use them to consume video, audio and text?"
Most of these products will likely be consumption devices, which means that software will differentiate them from each other.
"Running Windows 7 isn't going to sell you many tablets; running an OS that helps you connect to media, friends and the Web easily is," Molchanov said.
Connecting to media, friends and the Web is what the iPad does -- looks as if its position at the top of the heap may remain unchallenged for awhile.
