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.