Have you ever asked yourself what the world might look like if the Apple iPhone was NOT the most popular phone in the world, and if Apple simply became just another company? No we’re not saying that Apple never existed, just that after it revolutionized handsets and cellular devices and other ‘connected’ devices such as the iPad, it then faded into being an also ran?
Could it happen? Well let’s not worry about the fickleness of consumers right now and how they view brands, but let’s assume it COULD happen. What would the world look like, post iPhone, if Apple was once dominant, but no longer?
Apple fans everywhere will be cringing at the thought, but we thought the same back in 1978 when Apple really did invent the PC industry, and then along came the PC, and then Windows and there is every chance that history will repeat itself. It’s not a certainty, but there is a chance.
This is not just Faultline’s predilection for backing the underdog (though we heartily backed Apple when it was the underdog), but because there have been a few headlines this week which made us ask this question ‘ first that the iPad 2 may be late, and secondly that the iPhone has now fallen behind HTC devices in popularity in some parts of Europe. You add the fact that last week the Wall Street Journal talked about European and US legislators looking closely at the terms and conditions Apple is imposing on iPad content suppliers. The European Union is said to be ‘monitoring the situation.’ Effectively Apple’s terms prevent Android Market offering content more cheaply (this is already common with Apps) as well as raising fear, uncertainty and doubt among some content suppliers whether or not they will upset Apple if they sell their own product from their own web site.
There is no greater way to erode a giant than to bring it under anti-trust scrutiny, just as its popularity wanes, and when it begins to get the technological side of its knickers into a twist.
The reports of iPad delays come from Yuanta Securities analysts quoted in Bloomberg, talking about ‘production bottlenecks’ at assembly partner Hon Hai Precision Industry in Taiwan. This has resulted in some design changes made by Apple in February which might push the shipment date back from April to June, which in turn will give other tablets, mostly Android based, a chance to catch their breath and catch up some revenue points. This is particular good for challengers Motorola Xoom and the Samsung Galaxy Tab 10.1 version. Previously, like lambs to the slaughter, these products would have hit the shelves just as news of the imminent iPad 2 emerged, which would have slowed sales.
It could be that the reports of delays are not true, or that Apple goes ahead and announces this in March for a June delivery. But both strengthen rival offerings.
A number of Android 3.0 tablets are set to emerge in April and May and the delay in iPad 2 shipments will give the Android camp the briefest window of opportunity. But in some parts of the world, people are beginning not to prefer Apple devices anyway, and in the fickle world of consumer electronics, there are our usual golden adoption rules, people must be able to afford the device, they must want the device and they must know someone that has the device, in order for it to take off. In the case of the Xoom and the Samsung Tab 10.1 we know of no-one that has this device, but their spec is good enough that between April and June, enough of them will ship, not just in the US, that they will be seen being used, and that’s one of the key aspects that make them desirable to a wider audience. The cat will be out of the bag.
Already this has some analysts cutting their iPad forecast from 30 million units to 23 million after Apple sold 15 million iPads to date. If that means there are 7 million other brand devices out there, the iPad will still remain supreme, but less so, as those shipments of alternative devices will stimulate further non-Apple Tablet sales.
If we add the news that in the UK the iPhone has slipped to sixth place in the pcking order of most wanted handset, where once it was one of the strongest iPhone markets. This finding came from a mobile tracker survey from uSwitch.com, and this shows HTC top of the smartphone rankings in February with the HTC Desire as the bestselling device, followed by the Desire HD upgrade and the midrange HTC Wildfire. After that comes the BlackBerry Curve 8520, the Samsung Galaxy S and finally the iPhone 4.
Critical among the reasons for this, is not that consumers prefer them, but that operators do ‘ those other devices are all offered by operators for free with two-year data contracts as low as £20 a month. And critical to this is the price at which the devices are sold to operators to tempt them into this type of deal. HTC is clearly very happy with giving away margin for scale, but that’s not something that Apple can allow.
So in order to put this right Apple has to continually innovate, or it has to drop its pricing. What if it does neither? It’s hard to see Apple agreeing to a lower margin, and it’s equally hard, in the portable connected device space, anticipating the type of innovation ‘ ‘sans’ Steve Jobs ‘ that Apple can bring to the party in the near future, which will differentiate its devices. The big differentiation WAS the Apple App Store and iTunes, but with that being slowly matched by Google, what is its next differentiation point? Better graphics? Faster response, more apps running concurrently, a faster processor? The additional of a better camera? These are already out there.
Sure it can design an even faster A4 processor, but right now it is already way behind in the pure processor power stakes, so that’s merely catch up. Apple may remain the strongest handset and Tablet inside the US, but we have to remember, as profitable as that market is, because of its high smartphone penetration, it is only 10% of the world’s phones, and falling (though more of its smartphones).
The powerbrokers of the new smartphone and tablet markets are the technology providers who offer faster processors, better screens, better integrated graphics and additional features like indoor GPS and higher MP cameras. It has taken them a while to catch up with Apple, but there is every chance that we have to begin to imagine a world where there is little immediate innovation to come in the handset market and HTC, Samsung, LG, ZTE, Motorola, and one day even Nokia, may all catch up. What then? Last time that happened, in the 1990s in PCs, Microsoft screamed away from Apple and left it limp and dying until Steve Jobs returned to it to breathe new life. Someone give us a reason to believe that Google will not do the same again this time and we’ll print it.