SA Author Dan Ramsden wrote an article titled: Why Apple's Controlling Nature Is a Core Assest, Not a Flaw. There are many who share a view that Apple's (AAPL) controlling nature is a strength. This article is a follow-up to Dan's original, and will attempt to take the reader through an alternative viewpoint for their consideration.
For a quick trip down memory lane; remember the early days of personal computers when AAPL decided to go the route of controlling both its hardware and software with an iron grip. To APPL's dismay, just like a toddler that doesn't like to share its toys, we all know how that ended and continues to bode for its marketshare of PC's.
This is a sharp contrast to the other side of the story, where open ended IBM (IBM) compatible PC's that ran Microsoft (MSFT) Windows and Unix based operating systems, faired much better by exploding in growth and as a result clearly won the PC arms race.
The point here is to consider that the very same thing is happening now with APPL in the smartphone industry. Juxtapose history with Google's (GOOG) free Android OS, and compatible like manufacturers. Compare this to the ease of adoption and pirating that took place with the Windows OS (which is essentially the same as the low barrier offer of "free" in Android's case)
Although AAPL has other means of generating revenue to say the least, and are by no means in dire straits, what ends up being puzzling is that what had caused AAPL a failure in the past seems to be at risk of being repeated to some degree.
To drive this point home, Android now accounts for a massive 75% of all smartphone OS's in use. This is a sharp contrast to APPL's iOS which currently sits at 16.9%, and is projected to increase by only 1% within the next 4 years! This is a scary thought for any AAPL shareholders, and I don't think that the iWatch is going to increase marketshare drastically. Moreover in the end the iWatch may not be the innovative product that many are hoping AAPL needs to release in order to reinvigorate its fans.
Personally unless fashion changes, I can't picture people walking around their offices talking to their wrists like Dick Tracey. Nor can I picture people trying to read e-mails off their small wrist screens. Why drain your battery faster using Bluetooth smartphone to iWatch, only to check your wrist to see if you have an e-mail waiting. For insistence any smartphone user can just as easily grab their smartphone and look at it, or simply listen for a tone. To add to the control freak point, can any smartphone be used to connect to an iWatch, or will it have to be an iPhone. I would hazard a guess that it would have to be an iPhone, even though the technology exists to get a message notification from any smartphone.
So what happens when iOS gets dated as some say it already has, can consumers easily dump AAPL products for the next best thing. Which appears to be the bendable LED smartphone concept. What clearly seems to be the trend in this infant industry is consumers have shown little brand loyalty. This is supported by the fact that Windows phone is supposed to be growing its marketshare over the same period as per the above linked article. How can AAPL continue to have huge growth projections if its marketshare is not projected to growth in tandem.
AAPL is very close to announcing new product on September 10th. There are rumors of biometric fingerprint scanners being added to the iPhones (Blackberry Q10's still to be the choice for cold days where gloves are required). That said what could go right for AAPL is that the lower end iPhone's pick up in the emerging markets especially China. Furthermore a clear adoption of its total ecosystem. For example, I still don't understand the value proposition of Apple TV.
In my opinion the best part of Apple's business is iTunes. This is mainly due to the fact of not having to be expected to release a new smartphone and the expectations that go with that. People in the world will continue to listen to and purchase music for quite some time, and being able to order your song a 3AM in your PJ's is a very good business indeed. iTunes has maintained top of mind brand recognition and should continue to do so.
In conclusion AAPL appears to not have learned from its PC era mistakes which nearly caused an extinction event. Furthermore AAPL's growth projections are not a sure thing at this point in time when compared to the explosive growth and adoption of Android devices. Even billionaire celebrity cheerleaders cannot alter reality. In the end shareholders of any smartphone company need to be nimble, as growth projections and adoption can change on a dime, just as they did for Blackberry (BBRY).