Competitive pressures forcing Apple to up its ante
By Edwin Yapp January 9, 2013
- Apple no longer stands head and shoulders over the competition; needs to show innovation leadership
- Competitive pressures forcing its hand on product cycles, which has led to better products for consumers
Periscope by Edwin Yapp
FIRSTLY, a very happy new year to you, dear readers, and may this year be a good year for you to achieve all your goals and targets.
Over the past two weeks, I've been retreating to take stock of the year and while I'm not big on making resolutions, I do believe that it's important to constantly evaluate our goals and objectives and to see if they are turning out the way we want them to.
Which brings me to my first column of the year, based on two interesting stories that caught my eye over the weekend.
The first is a Reuters report, which cited Strategy Analytics as saying that Samsung Electronics is expected to widen its lead over Apple in global smartphone sales this year with 35% growth.
Reuters reported the analyst firm as saying that South Korea's Samsung is forecast to sell 290 million smartphones this year, up from a projected 215 million in 2012. Apple's smartphone sales, on the other hand, are projected to reach 180 million this year, up 33% from last year, slightly trailing Samsung's 35% increase.
The wire news agency said this would give Samsung a 33% share of the 2013 smartphone market, up from last year's estimated 31%, while Apple will hold 21%, versus last year's 20%.
Meanwhile CNET reported a related story, noting that Apple could find itself launching an "iPhone Mini" sometime this year, in response to Samsung's rising dominance in the smartphone segment.
Quoting Neil Mawston, executive director and an analyst with Strategy Analytics, CNET reported, "We believe Apple will have to launch an 'iPhone Mini' at some point over the next three years to address the hundreds of millions of prepaid users worldwide who cannot afford the current iPhone.
"The iPhone 5 is growing fast and profitably right now, so there is limited incentive for Apple to launch a profit-squeezing iPhone Mini this year," Mawston said. "We [therefore] expect the iPhone Mini to [arrive] likely next year, in 2014, when Apple's penetration of the global postpaid smartphone market will be nearing saturation and Apple will be forced to discover fresh growth streams elsewhere."
What I find interesting about these two stories is that over the past two years, Apple has been kind of playing catch-up in the smartphone world, notably after Korean giant Samsung trained its crosshairs on it.
So the question that came to my mind was whether Apple had taken stock of what it was experiencing or whether it has rested on its laurels, depending too much on past glories to maintain its lead.
In earlier days when Apple dominated the smartphone game with its iPhone, iPhone 3GS and iPhone 4, the Cupertino-based digital device maker had the luxury of taking its time to perfect its product, conducting test after test, rolling out teaser advertisements and literally keeping the whole world in suspense for its next product.
But over the last two years or so, competition from Samsung and Google -- the latter as the developer of the hugely successful Android operating system which Samsung is using to good measure, and with the introduction of its own Nexus range of smartphones and tablets -- has pushed Apple to the brink.
Case in point: The iPad Mini. Notwithstanding the fact that we will never know whether the late Jobs had warmed up to idea of selling a 7-inch tablet before his death in October, 2011 [Jobs famously derided the 7-inch tablet as 'dead on arrival'], the Mini did come to market.
Yes, the iPad Mini has appealed to some looking for a smaller, more portable iPad, but most would agree that there is no new innovation in the Mini save for the fact that it retains the same screen resolution as the iPad 2 but on a smaller screen.
And now, there is talk about an iPhone Mini? By the way, Samsung also recently announced its Galaxy S3 Mini for certain markets.
It's not surprising that Apple has had to conform to what the market wants due to the pressures exerted by other smartphone and tablet makers ably led by Samsung, Google and to a lesser extent, Amazon in the form of its hugely popular Kindle Fire tablet.
The fact remains that however popular Apple's range of smartphone and tablet lines, there simply is just more variety and volume out there of Android-based phones. This simple fact accounts for why Android thumps Apple's iOS operating system as far as market share is concerned.
To protect its turf, both from a market share and revenue point of view, Apple has had to move into areas which it had not traditionally bothered with, citing low margins as one of the main reasons for not doing this earlier.
And what's more is that Apple had to do so at a much more rapid pace than before because it simply can't wait to introduce a new product on a yearly cycle, a luxury it had enjoyed before competition heated up.
Which raises another question from many: Has Apple lost its way where innovation is concerned? This was the very question some friends over the holidays asked me while we caught up during meals.
To them I said this: I do believe that Apple has been and will continue to be a very innovative company, and it will continue to be right up there. But it would need to begin truly innovating again -- and do this soon. This is where the post-Jobs Apple must show its mettle against the rest of the field.
Some have doubted Apple's CEO Tim Cook's ability to lead since his first year in charge was fraught with a number of faux pas -- the most prominent of which was the Apple Maps debacle -- viewing him as a person who may not have the foresight or vision Jobs had.
Personally, I think it's still early days to judge what Cook can do and this question can revisited after this year has passed.
In the meantime, what's clear is that the gap between Apple's leadership and what other companies are capable of today has narrowed, and this can only be good for consumers as competition will spur better products and services, and hopefully, become cheaper for us to enjoy.
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