sleepy

Buying Apple Today: Like Buying Microsoft in 1998?

One way I like to look at this is to consider the market cap of whole markets that Apple is in (PC's; cellphones; music and video players; music and video distribution; web services; retail; music, photo and video creation) and estimate the smallest market cap Apple might take from incumbents in each market. The answer gives a surprisingly large total, even without Apple being a dominant player in any market. (And that's before you consider retail banking as a possible market for Apple - give it a few moments thought. A hundred million credit cards registered could become a hundred million retail banking customers.)

Apple knows full well that the market is more powerful than itself (unlike Microsoft, although Microsoft may finally be learning). So Apple can't rush off into the distance with innovation; to move the whole market they have to keep their innovation bottled up and let the competition get close enough to keep up. Some read this as risk from competition and falling margins but it's simply Apple playing its unbeatable hand for maximum long term gain.

Nokia Is the Smart(phone) Bet - Barron's

Carriers no longer want to subsidize Nokia's high end phones when iPhone still sucks subscribers away and Nokia has a declared intention to become a competing service company ("comes with music"); thus Nokia has lost pricing power at the high end, which damages earnings.

By giving exclusive carrier deals, Apple has avoided this fate.

I suspect China (Nokia's biggest market) wants to give its volume business to domestic handset makers in preference to Nokia. This hits both unit and dollar sales.