neutrino23

How Apple's Market Share Will Propel Stock to $500, Part 2

I can't do the arithmetic to say that AAPL might reach a particular target, but I can see that Apple is a very unusual company. They have no debt, a huge amount of cash, no legacy technology holding them back, they own their own technology and designs. They now have this fantastic machine for developing new tech products. They are not limited to PCs, iPods and iPhones. Any consumer product that involves software is a potential target for Apple expansion. This will be fantastic to watch.

The Problem with iPhone Killers

I don't much care for the religion analogy as it obscures rather than illuminates. The whole business of iPhone killers (or BB killers or what have you) is driven by the tech pundits looking for splashy headlines. I think the business people are just looking for profits and survival. As such Apple seems to be looking for a secure market position, they are not trying to dominate the market.

The tech blogs focus too much on superficial features of phones and extrapolate market penetration based on that. Market share is earned by a mix of characteristics, one of them being the product itself. In addition you need to consider company reputation, product reputation, customer support, retail outlets, advertising, and many other things.

For a newcomer to become a hit is not an overnight process. Share grows over time and now the competitive situation is much tougher. When Apple introduced the iPhone there was no Apps store and no other phone similar to the iPhone. Newcomers don't have that benefit. Apple and others will not sit idly by and let another company gain share without a response.

My take is that Apple will continue to see strong growth. Apple has a great mix of reputation, 200+ retail outlets that also provide support and now they have a huge installed base. Keeping a customer is cheaper and easier than getting a new customer. Apple also has the power to add more extrinsic value to their phones. iTunes Music Store and the Apps Store are examples. Expect more ventures like this next year (my opinion).

RIMM will do OK but continue their slow loss of market share.

Android phones will replace Nokia as the provider of low cost phones. Probably in a few years the numbers of Android phones will exceed the number of iPhones. iPhones will capture the lions share of the profit and will continue to be the feature leaders.

WM will malinger but not die as MS will keep shoveling money at it. Perhaps they will find a way to give it away and make money elsewhere such as in selling office for mobile phones?

Symbian OS will fade away year by year. It might not be bad, but there is just no reason for it to live. Why switch to something that is maybe almost as good as Android and a distant second to OS X?

Verizon's Droid Is the Real Deal

It will be interesting to see how this plays out. A problem is that most of the people who know about products like this at the roll out are far more detail oriented than the general public. Nothing bad with either group, just that you can't project the reactions of one group based on the reactions of the other.

I doubt that most people care about a phones OS or heritage very much.

Apple has a tremendous head start in the market. They have access to customers through 200 odd Apple stores plus the ATT stores plus online sales. They have tremendous mindshare in that the Apple brand and iPhone name are extremely well known. Not to mention the App Store which has been a true phenomenon.

Droid will probably do OK as it has no competition from Apple on Verizon. We'll see how reliable it is and if it really works out in the wild.

I'll agree with some earlier posters. I travel a lot on business and use an iPhone. Now and again the network slows down but I've had good connectivity in every major city in the US. Only when you get out in the dessert or farmland does the signal drop off. Now and again I see four bars of signal but very slow internet speeds. In these cases I can still make calls and text.

I'll offer a defense of those touting Apple's seeming invulnerability. Apple has already achieved tremendous market penetration and built a large infrastructure for support. They were able to do this partly because there was almost no competition when they first came out and they were able to piggyback on the support structure put in place for computers and iPods. The competitors like Pre and Android phones don't have that luxury. They have to compete in today's world where Apple already exists as a fierce competitor (and RIM and Palm as well). The Apple App store is a reality that Apple didn't have to contend with when they first came out. Android phones face that reality. Most of all, if Apple gets a hint that any competitor is encroaching on their growth Apple has massive resources in engineering, design and marketing to make a very strong response. They may stumble but you have to like their odds.

AAPL Smartphone Shows the Way to Competitors

It is a complex issue. Without question Apple has the better product and, as pointed out above, has the depth of engineering and design IP to keep turning out new products for the foreseeable future.

Yes competitors can try to copy some features but that is like driving by looking in the rear view mirror. Your future products are determined by what Apple brought out last quarter.

The one fly in the ointment could be the "good enough" effect. That is where people admit you have by far the better product but the cheaper, poorer one is "good enough" for them. As closely as Apple follows their customers I doubt this will catch them by surprise.