Apple vs The rest?

- An insiders view.

What is happening in the mobile space? While everyone (and I mean everyone with a so called technology blog) is talking about the long rumored apple phone I wish to dig a little deeper.

(Yes, I will be talking about the apple phone.)

From Microsoft (traditionally a software company) to Apple (primarily a PC/Music manufacturing company) everyone wants to join the mobile nirvana – Add innovative companies like RIM and you have a very competitive business environment.

The current big two players Motorola and Nokia both took a punch to the kidneys when Jobs released his “revolutionary phone” at the Mac Expo.

Interestingly, when we look at the budget that Motorola has it is doing well. It has a $10 billion (yes, 10 with a lot of zeros) cash pile sitting in the bank and it is doing well in the networks and government areas. The cell phone business is strong in Asia and India so why the share price fall? Nokia has a large cash pile and core investments in emerging technologies (a network deal with Siemens for example) so again, does one new competitor justify the share drops?

Just because apple enters a market everyone assumes that they will conquer all – Does apple deserve this mobile dragon killing reputation?

I think not – And I’ll back this argument up.

1. Des anyone remember the apple Newton, the apple cube to name but two products – Thought not.
2. £500 for a phone!! You know what I will take my free RAZR and glue my nano to the back – There a 0 cost apple phone right there!!
3. Will it work? There is a world of difference between a simple MP3 player and a cell phone. Standards such as HSDPA and 3G have to be built in for phones these days.
4. And on the above point – Working on these open technologies and partners (such as the phone carriers) requires sharing of plans and resources, something that apple doesn’t exactly have the best history of doing.
5. Apple is taking on a lot of competitors – It has a home entertainment product, a music product a phone product a software division (and the list goes on) the more that apple moves away from what it has traditionally (and very successfully) focused on the harder it becomes to stay number 1 in any given area.
6. Margins – This is one of the most important areas to any company (and please get up off your knees at the apple PR altar) – Apple makes a lot of money (30% margin on notebooks and ipods). If they are lucky with a phone they might get 10% - AGAIN – NO ONE IS GOING TO PAY £500 FOR A PHONE – NO ONE.
7. Apple will not let third party developers work up software for the phone. Does this sound familiar? Back in the days when there was actually competition between apple and Microsoft Jobs was the one who nailed apple down so tight. This is history repeating itself.
8. The phone is “revolutionary” – That statement really makes me mad. It makes phone calls, does SMS and you can listen to music. WOW! You know what I’ll bet Motorola, Nokia and Samsung wish they had thought f those ideas. Well thank god for Jobs and crew. All those consumers can now pay £500 to make phone calls! GENIUS!

Please.

So what if the big boys release better and better music capable phones (and believe me they will)? – The question that so many Wall Street analysts and apple fan boys don’t want to ask is “has apple stretched itself to far?”

Motorola, Nokia and that company from Korea that builds nice TV’s isn’t about to pack up and stop innovating phones. Apple will have some good PR and a few sales, certainly not 10 million at the current price point.

Now I have been very harsh on apple but with Nokia’s purchase of Loudeye and Sony Ericsson tie up with the very successful Walkman brand it would suggest that they had little choice in the matter. We must also look at the Chinese and other Asian manufacturers who are entering with more sophisticated products every day.

So the billion dollar question:

“Has apple stretched itself to far…?”

.. And that will be answered in my next blog entry.


ali



As always the disclosure: I own both an apple nano and Powerbook. At this point I have no plans to by an apple phone for £500, sorry Steve.

All opinions and thoughts are based on my thoughts, public information or my maths. I do not speak on behalf any organisation mentioned in this blog.