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Apple in 2012: Stuffed Pockets, Stiff Competition

Apple in 2012: Stuffed Pockets, Stiff Competition

Apple's annual holiday money binge is over, and it appears the company once again emerged with a bulging wallet. 2012 will be a challenging year for Apple as companies like Amazon find new ways to battle it in fields like tablets. However, it seems Apple already has plans of its own in the works: A product announcement is reportedly slated for later this month.

By Rachelle Dragani MacNewsWorld ECT News Network
01/04/12 5:00 AM PT

Despite the loss of its Cofounder and CEO Steve Jobs, 2011 was a kind year to Apple financially. Over the past 12 months, the company enjoyed record iPhone sales, kept the iPad in the top spot in the tablet market, continued to win new patents while bitterly fighting for its existing ones, and logged record Mac sales.

That's not to say things are completely rosy. Flooding in Thailand is threatening the tech manufacturing industry overall, although Apple showed last spring after Japan's devastating earthquake that it could recover relatively quickly from unexpected slowdowns.

Other challenges continue to emerge from top competitors like Samsung. It and others have been engaged in public, bitter patent disputes with Apple over the past year, and they don't show signs of stopping. Apple and Samsung are still waiting on rulings to determine whether or not the Galaxy Tab will be banned in some parts of the world. One recent patent drama arrived when it was discovered that Samsung -- intentionally or not -- hired the same child actor that appears in Apple commercials. The Samsung commercial only appeared in South Korea, and it was stripped from YouTube and other outlets after the accusations surfaced, but the fuss indicates how tightly wound both companies are in the debate.

2012: Year of the Tablet Challenger?

As tablets continue to become more mainstream, the question arises of whether or not a worthy contender will emerge to knock the iPad out of its reigning position, although no product has yet been able to come close.

"With Android and other devices, there will be a market for those, but I see it as serving a small niche, and they won't have the mass market that Apple does. In terms of software and usability of the other devices, they're not close to what Apple is delivering. Their innovation and philosophy is so fast and on-target that competition will succeed not based on how smart they are, but if Apple screws up or can't maintain it's position, and I don't see that happening," Trip Chowdhry, senior analyst for Global Equities Research, told MacNewsWorld.

That advantage is also still clear when comparing the iPad to e-readers. The holiday season of 2011 saw the announcement of Amazon's tablet, the Kindle Fire, which severely undercuts iPad on price. Just before Christmas, Apple iPad sales were still ahead of Kindle sales, according to numbers released by IDC, and the iPad remained the top option not just for tablets, but compared to e-readers as well.

Numbers from SodaHead consumer polls revealed that demographics played a big part in demand for the different products, and that while a change might be slow, alternatives to the iPad certainly appeal to a certain type of consumer.

"The Kindle Fire and Nook pose growing competition for the more expensive Apple iPad as voters increased in age. ABC News conducted a poll on SodaHead in which the iPad had less than a 10 percent lead over the Kindle Fire. Apple dominates in marketshare, but the Steve Jobs-less Apple can't rest on its fan base as consumers look for alternatives," said Jason Feffer, cofounder of SodaHead.

Apple has long relied on that fan base, and particularly the design and 'wow' factor of its products -- an appearance for which Apple can thank industrial designer Jonathan Ive, who received a Knight Commander of the British Empire title from Queen Elizabeth this week. However, Feffer says his polls show that factor could be wearing off, especially in terms of Apple's premium pricing.

"Apple continues to wow consumers in 2011, but far less than it has in the past. A small group of Apple fanboys remain loyal, but Apple has more women fans overall. Apple can also depend on people from the top and bottom income brackets. Kids without money want their rich parents to buy them iPads. Cost-conscious consumers prefer Droid and Nook for the price, regardless of features or quality," said Feffer.

Announcement Coming

One thing that remains a solid carryover from years past is Apple's penchant to keep quiet about future products and let the rumors swirl as they may. The company is apparently planning a media event in New York in January. Apple didn't respond to our requests for comment, but the latest report from All Things D indicates that the event will most likely focus on a media announcement, which some speculate will be in regard to e-books.

A software update that could give Apple an edge on the growing and highly lucrative e-book business could have serious rewards, and according to Chowdhry, no one is better poised than Apple to be successful in the area. The company, he said, creates app stores based on three dimensions: understanding and appealing to the critical mass, being self-contained, and having the advantage of a dedicated sales and marketing team specific to that area, such as a music marketing team for iTunes.

"Apple also has put its bet on the right format for e-books, which consumers have shown they prefer over the Kindle's format, and they have the critical mass. Plus, they've created a product that is far superior to the Kindle and other e-readers, because the iPad can be the best e-reader, the best media consumption device, the best game-playing console, the best communication device, and the device can be what you want it to be," said Chowdhry.


Rachelle Dragani is a freelance reporter based in Brooklyn, NY. She enjoys staying on top of e-commerce deals, reporting on what new gadget is coming your way, and keeping tabs on anyone trying to hack into your info. Feel free to e-mail her at rachelle.dragani@newsroom.ectnews.com.


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