rajsekar

Apple: On an Innovation Treadmill

Excellent analysis by Daniel. I wish analysts really poke deeper into overhyped stocks and companies like Apple. Of course Apple fanatics cannot digest such analysis. Most of the commentators forget a fundamental fact about Apple. Apple is a carefully crafted and built company piloted by Jobs. Similar fate awaited Dell and Sony recently. Jobs decides the strategy and how to execute everything. Hence the entire foundation of a company is hinging on a single individual who has an aversion towards building an ecosystem around Apple products. You have to compare this strategy against Microsoft which has built a strong channel partnership and ecosystem around Windows software. Apple fans can hate Microsoft, but the fact of the matter is that the entire IT infrastructure in the world predominantly runs on Windows ecosystem and there is no way that Apple can capture even 50% of this market. Apple is digging deeper to innovate the mobile phone and home video segments, which has good growth potential in developing countries like India and China. But Steve Jobs' aversion to channel partners will slow the growth momentm. Instead Jobs wants to price his products at premium and maintain Apple's margins. Which is a better strategy? - having an open ecosystem with unlimited growth potential coming from community developers and channel partners or selling Rolls Royce to few Kings? A classic flaw of Steve Jobs is to tie up with AT&T for five years - he could have sold iPhones to atleast three carriers in US. Where is the 10 millionth iPhone?