Time for Apple to Get Off Its High Horse

The iPhone formula needs a shake-up before Apple loses the platform war to Google in price-sensitive emerging markets.

Published

4 months ago

Categories

Technology, Finance

Topics

Consumer Electronics, Finance

People

Jon Gordon, Tim Cook

Companies

Samsung C&T, Apple Inc., The Goldman Sachs Group, Inc., Google

Transcript

Six years on, it's easy to forget just how amazing the iPhone was when it made its debut. The high-end handset has steadily evolved over the years, pulling in hundreds of millions of devoted buyers along the way, and helping Apple capture more than half of the US smartphone market. Its runaway success though is now turning into a liability, with Apple too scared to shake up its successful formula even as the competition pulls ahead. Let's be honest here -- the Samsung-Google partnership is no longer just a rebel alliance. It's winning the war on multiple fronts, from shipments to screen size to new activations. The biggest exception perhaps is profit margins, where Apple still commands more than anybody else in the smartphone business. (SOUNDBITE) (English) REUTERS TV REPORTER JON GORDON, SAYING: "That focus on maintaining those margins is now starting to limit Apple's growth prospects. The firm has a choice - either risk becoming a niche but highly profitable player, or try a bolder strategy with a product mix designed not just for the high-end." One solution might be for Apple to license its iOS to 3rd-party hardware makers. But those who know Apple's history will tell you sharing is simply not in its DNA. What's really needed is an iPhone light, built and priced for fast-growing emerging markets, a product that was leaked online and then denied by Apple earlier this month. China will soon be the company's top market. CEO Tim Cook says so himself. But right now Android absolutely rules there. It has a hefty 90 percent of the market. Lower price tags might go a long way to getting multiple Apple devices in Chinese users' hands, which Goldman Sachs suggests is key to customer retention. The arrival of the iPad mini is a sign that Apple is aware of the need to cater to a more cost-conscious market. It's under pressure to make some kind of change with its stock dipping below $500 in a clear technical downtrend, and with talk its new flagship iPhone 5 is not selling as fast as anticipated. (SOUNDBITE) (English) REUTERS TV REPORTER JON GORDON, SAYING: "Apple's strategy has clearly served it well over the years. But to repeat that success in emerging market battlegrounds, Apple needs to rethink its high-end only approach before the world's next-generation grows up on green robots instead of pricey fruit." ENDS