Whether Wall Street’s famed analysts like it or not, Apple has become a revenue and profit behemoth which displays no signs of slowing down in either category.
The company’s competitors, and they are many and varied, have implemented some desperate moves to counter Apple’s explosive growth and dominant positioning. How’s that working out so far?
On Disrupting The Disruptor
Desperate moves? Actually, yes. Up and down the line up of would-be Apple competitors, desperate actions seem to be the norm.
The critics laughed at the iPod when it was launched over a decade ago. But the iPod paved the way for the iTunes Music Store, now the largest media retailer in the world.
Apple’s retail stores were considered to be an albatross, an expensive example of Apple jumping the shark, yet today they’re ubiquitous, and highly profitable.
Critics scoffed at the iPhone as mere eye candy; not a smart phone for the enterprise; yet it dominates both consumer and business.
The iPad was laughed at as nothing more than a large iPod touch (fair enough), but now dominates the now crowded field of tablet purveyors.
What of the competition and their desperate moves? Microsoft is opening their own stores, as close to an Apple Store as possible (taking a cue from Burger King’s playbook which shadowed McDonald’s locations).
Google and Amazon, which hope to make revenue and eventually profits from iPhone and iPad knockoffs, sell their competitive devices at about the manufacturing cost; hoping to make it up on volume, I guess.
Microsoft launched a tablet-like device that also acts as a notebook with Windows, called it a no-compromise device, which was quickly skewered by tech pundits as being an overpriced and compromised device.
Now there’s word that Google might launch there own brand of retail stores later this year. It’s widely known that Microsoft’s stores don’t make money, and it would appear that Google’s stores would lose money, too. It’s important to sell a product with actual profit margins to help pay the cost of overhead.
The only major competitor to take a bite from Apple’s revenue and profit stream seems to be Samsung, which does so by spending ten times the amount Apple spends on advertising, and by copying Apple products, seemingly at the atomic level.
Even then, Apple’s profits far surpass those of Samsung’s efforts in smart phones and tablets, leaving the rest of the competitive field not so very competitive. All are losing money on their own smart phone and tablet efforts while Apple’s revenue, profits, and customer base continue to grow.
How can the competitors compete? Differentiation. The problem that Apple’s competitors have is insufficient differentiation. And, where they differ the most is in price, which means lower revenue, and little profit. Or, in screen size (which ups the product cost, further diminishing margins).
There’s just not enough differentiation to take a bite from Apple’s revenue and profits.
Check out my missive The Problem That Microsoft, Google, Samsung, Amazon And PC Makers Really Have With Apple for more insight.
About Kate MacKenzie
kate ,
some of my friends are well known artists and dinner discussions often drifted to the “spirituality ” of this or that “object” being raised roman catholic i had a different idea of “sprit”
I came to realize that what they meant by spirituality was “that which allows us to recognize something as what it is”
Plato had his modes of causation, the “ideal” being our idea of the object. the material world degrades that ideal as we apply the practical . plato said “an object is what it is to the degree that it participates in the idea of itself” in this way we can change a shoe into a hammer by using the heel to pound a nail in .i would not want to build a house that way. the shoe imperfectly conforms to the idea of “hammer”
Apple spends time and thought determining what the spirituality of the object they create is, and fitting a material to that end . the progression of products is a refinement of that expression not a change for changes sake . the zen saying is “one candle in a dark room changes the nature of the room a thousand candles just make it brighter” . they are talking about a difference of kind as opposed to a difference of degree . in order for apples competition to make something different they would have to redefine the spirituality of the object . they might as well make square tires because “they look cool” and give the tires away to gain “market share” the round tires are the only ones driving down the road