Apple Blows Through a Blizzard of Competition
Dec 8, 2010 5:00 AM PT
AAPL shares may have closed at an all-time high of US$320.15 Monday, but it's difficult to tell how long investor euphoria will last. Shares fell $1.94 Tuesday to close at $318.21, and whether they resume their see-saw ride of recent weeks remains to be seen.
Apple's share prices could have been impacted by bad news this past week. Android's making serious inroads into the mobile market, and IDC reportedly expects it to overtake Apple in mobile display advertising through sheer force of numbers.
Meanwhile, the Chinese government has slapped China Unicom, the only mobile operator currently authorized to offer the iPhone in that country, for trying to prevent owners of the device from going onto rival networks. Since China could be a huge market for Apple, this could impact Cupertino's bottom line.
Further, Google on Monday unveiled a demo tablet from Motorola running a version of Android said to be optimized for tablets.
Meanwhile, RIM is apparently recovering some market share, and it's bought a Swedish user interface (UI) developing firm to work on the UI for its PlayBook tablet in a bid to challenge the iPad.
However, there's still some good news for Apple shareholders. For one thing, expectations are high that Apple will launch its upcoming Mac App Store as soon as this week. For another, retailers are reportedly building their own point of sale (POS) systems using iOS devices.
Little Green Men Bite Into Apple
Android's going to outstrip Apple in mobile display ads, IDC analyst Karsten Weide told the AllThingsD blog. That's because Android devices will outsell Apple's iOS devices.
Google will continue to remain dominant in mobile search, Weide said.
Further, Google Vice President Andy Rubin on Monday showed off a prototype Android-based tablet from Motorola at the D: Dive Into Mobile Conference, Engadget reported. This will run Honeycomb, the next version of Android.
Honeycomb is optimized for tablet PCs, which means Google may have come to its senses and decided to offer one operating system for all mobile devices.
Recall that Google had previously declared that Android is a smartphone operating system and that the Chrome OS was tailored to tablets. If Google's decided to focus on making Android the OS for tablets as well as smartphones, that could make Android even more of a threat to iOS.
"I believe Samsung will do very well in this space," Maribel Lopez, founder and principal analyst at Lopez Research, told MacNewsWorld.
Samsung has reportedly sold 1 million Galaxy Tab tablets, although the figures could not be verified independently. Still, where there's smoke there must be fire, so we shouldn't write off the Galaxy Tab too soon.
"If you'd told Apple three months ago that a more expensive tablet running a version of Android not optimized for smartphones would sell units so quickly, they'd think you were crazy," Dmitriy Molchanov, an analyst at the Yankee Group, told MacNewsWorld.
"The Galaxy Tab has taught us a few things," Molchanov continued. "One, Android sells. Two, Apple has missed a few segments that other manufacturers can capitalize on. Certainly, there's a segment of the population that's very sensitive to upfront costs and less sensitive to recurring monthly fees. That's the segment Samsung has matched up to."
No Dim Sum for Bad Boys
Trouble may be brewing for Apple in China, which has the potential to be one of the company's largest markets. China Unicom, the sole mobile carrier authorized to offer the iPhone there, has been rebuked by the government for trying to prevent customers from moving off onto other carriers, according to Bloomberg.
Apparently, China Unicom threatened to freeze the accounts of iPhone customers if they moved off with the device to arch-rival China Mobile's network. This happened because some buyers purchased handsets for resale, leaving the iPhone in short supply.
China Mobile is the largest wireless carrier in the country and China Unicom the second largest. Unless China Unicom gets a handle on things quickly, it may find that carrying the iPhone is less profitable than forecast. That, in turn, might impact Apple's overseas sales, which account for the bulk of Cupertino's revenues now.
RIM Girds for Battle
RIM recently purchased Swedish firm The Amazing Tribe, specialists in creating user interfaces, to spruce up the UI for its recently announced PlayBook tablet. It will reportedly migrate its smartphones to QNX, the operating system running on the PlayBook, to offer one OS for various mobile devices just like Apple and now Google are doing.
This may revive RIM's fortunes and stanch its losses in the mobile market. Already, Barclays Capital has raised its estimates for RIM in the wake of strong demand for the Torch smartphone and plans to release the PlayBook tablet next year.
Barclays Capital expects RIM to sell 3 million PlayBooks in fiscal 2012 and 5 million in fiscal 2013.
Happiness Is a Warm Mac
There's some good news for Apple, though. For one thing, CEO Steve Jobs is reported to be pushing company staff to complete work on the Mac App Store so the company can launch it this week.
"Apple has proven that the App Store works with mobile," Lopez Research's Lopez said. "It could be a gold mine on a real rich platform like the desktop," she added.
The Mac App Store will only take finished market-ready apps -- Apple has prohibited developers from putting betas, trials and demos in the store. In the long run, that may turn out to be a good thing.
"The Mac App Store is going to be good for high-quality Mac apps and their developers," Carl Howe, director of anywhere consumer research at the Yankee Group, told MacNewsWorld. "Those that can't or don't want to clear that bar with their software have other means by which to market it."
Meanwhile, there are reports that retailers are building their own point-of-sale systems around iOS devices.
"You will see more and more retailers, service centers and other companies looking for creative ways to use tablets," Lopez Research's Lopez opined.
That could open up a new market for Apple, further boosting its bottom line.
"Apple has nothing to lose and about $6 billion to gain," the Yankee Group's Molchanov pointed out. "It's already developed the POS system for its own stores, and it's only good business to market the product to other retailers."
However, the POS market is "very sensitive" to cost, Molchanov warned. "Retailers responded very well to Microsoft's price cuts in 2009," he added. "Competing on price is not something Apple does well."