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Is Apple Losing Its ‘Cool’ Design Edge?

{complink 379|Apple Inc.} diehard fans believe the company can never do anything wrong. That kind of adulation may be fine when you head a dictatorship, but it can be dangerous for a business enterprise operating in a field as keenly competitive as the consumer electronics market.

Apple should listen to what critics are saying. Late last year, I attended an investors' conference at which participants discussed platform failures and what could derail continued sales expansion at Apple. Of course, not a single person at the conference thought Apple was in jeopardy of losing to anyone in its key market segments (smartphones, portable music players, and tablet PC), but participants were people with millions of dollars at stake, and this was reflected in their analysis. The comment made by one of them is relevant for our discussion here:

    I have a suspicion lots of folks give Apple products leeway for “working” when really it seems the products are simply really working “just a bit” better than the alternative, not the monumental difference users may perceive/experience. This is part of the “magic gap” Apple has, and that “perception” of Apple products “just working” is a great signal to track.

If you've been open-tracking that “perception,” you might have noticed rivals are hurrying to close the design gap. In smartphone OS, the {complink 2294|Google} Android, as at the end of last November, had 46.9 percent market share, up from 43.8 percent in August, {complink 9236|comScore Inc.} reported. Apple's market share rose to 28.7 percent from 27.3 percent during the period (at the expense of RIM, which tumbled more than three percentage points).

In tablet PCs, competitors are chewing at Apple's (still significant) leadership position. EBN blogger and {complink 7526|Semico Research Corp.} analyst Tony Massimini noted Amazon “carved out a 7.5 percent market share in less than 2 months” with the Kindle Fire. Semico projects Apple's share in tablet PCs is likely in the 67 percent range, down from 87 percent in 2010. (See: Is Amazon’s Kindle Fire Burning Apple?.)

But does this translate into a slow market erosion for Apple? Semico doesn't necessarily think so. But another analyst had some dire predictions about Apple for 2012. Apple, according to Brian Deagon, who wrote an article on the subject for Investor's Business Daily, currently has “stale products.” Here's more from the article:

    With the iPod, iPhone and iPad, Apple (AAPL) redefined markets and defined cool. But what's left? The iPhone is boxy, flat and feeling stale. The Samsung Galaxy smartphone seems cooler. With Google's (GOOG) Android platform now the fastest-growing mobile OS, Apple's software advantage will diminish. Smartphones and tablets will become commodity items and Apple will be eaten by the collective Android gang.

The reaction from the Apple fan base has been as expected — fierce. Click here for a review of the comments. My favorite was a writer who in his defense of Apple noted the company “uses its billions of dollars in the bank to lock down its supply line resources for top notch components.” OK, Apple has $85 billion or so in cash and long-term investments and has leveraged that to secure components, but the issue is about design, not the effective use of money.

The anecdotal evidence suggests rivals are responding faster to innovations from Apple, thereby closing the design gap between them and the company. I'll use myself as the purely unscientific example. Here's how I gushed to EBN Community Editor Barbara Jorgensen about my latest purchase. Hint: It's not an Apple product.

    I bought a new personal phone — the Samsung Galaxy S2. It's one of the coolest devices I've had the pleasure of playing with because it does everything I need aside from cook a five-course meal.

    I have downloaded books on it; do my personal appointments on it (separate from work-related appointments, which is liberating); dictated IM on it (I speak, it types — awesome!); played Angry Birds on it (definitely addictive); surfed the Web; asked it for the nearest restaurants during a trip to New York; navigated myself to places around home and well outside of my home state (the GPS is crystal clear and accurate); and even caught a member of the family (who owns an iPhone) admiring it secretly. I may still get a tablet but I know now I don't want a laptop-screen size iPad. Which means? It may be a Kindle Fire!

If I am representative of a large enough portion of the market, I would suggest Apple jacks up its design game.

22 comments on “Is Apple Losing Its ‘Cool’ Design Edge?

  1. Anna Young
    January 6, 2012

    Apple may have held tightly to its market position for this long, however it is possible with increase in price war to hit and make a slight dent with new designs coming into the market. For example, Samsung Galaxy S2 beats iphone 4S hands down. I recently handled a friend's one. The point here is Samsung and the rest are working hard to improve and impact marginal dent in Apple's product. Certainly apple is not laying low too. I know Apple cannot hold the leadership flag for long.

  2. Tony Massimini
    January 6, 2012

    Bolaji

     

    Thanks for the plug on my article.  I think it is dangerous for companies to focus so heavily on the HW details and the design.  These are important certainly.  but last year we saw about 100 tablet models hit the market and the vast majority did not catch on.

     

    What is the real purpose of the device?  For Apple and Amazon it is not an end in and of itself but a vehicle to do more business.  And that's what the customers are looking for.  It is the apps and the content like music and books.  Amazon wants a portable portal (oooh now that sounds interesting) for online sales.  If you get too wrapped up in the GHz, gigabytes, etc., you miss this point.  Providing content and services and making it easy for people to use at a reasonable price are keys to success.

  3. Wale Bakare
    January 6, 2012

    If you get too wrapped up in the GHz, gigabytes, etc., you miss this point.

    I think, the likes of Amazon may profit from the imbalance on the contents provision, and the resulting end may as well impact on market share ratio sooner than expected.

  4. bolaji ojo
    January 6, 2012

    Tony, Correct. Too deep a focus on size, performance, etc., and other elements of design and an OEM can quite easily miss winning over its market. You quite rightly noted the ecosystem surrounding Apple's products and that is critical to the company's strong market share.

    Still, Apple wins also on design — the look and feel of its products — in addition to the ecosystem. All of its Mac computers are distinct from anything else on the market and even this applies to the iPhone, the iPad and iPod devices. Design is an integral part of Apple's marketing strategy.

    It's also important to note that Apple is itself not a content generator, not now anyway. It might do this later. None of its current products has Apple content in them. Instead the company has been quite good at getting third-party content providers to get onboard and form the ecosystem we all talk about. Apple is not the ecosystem; it is an enabler.

    These same developers are being encouraged to develop apps for Android, Windows and Nokia (before it dumped Symbian.) Google depended upon the same crowd to establish a vibrant ecosystem for Android. I have never missed or longed for the Apple ecosystem and since buying the Samsung Galaxy S2 phone, I've never even thought about Apple's ecosystem.

    That, I believe, is the challenge facing the company. That it is being copied faster. Even then, as you noted, Apple's innovative environment should help it in the next-gen products. Sometimes, I wonder what the company might to do next.

  5. _hm
    January 6, 2012

    @Bolaji: You could first had some praise for Apple for doing chimerical work. Subsequnt to that you could have predicted your fallacy! It is quite difficult to understand why do you want Apple to fail? Do not you like new wondeful product from Apple which millions of consumer enjoy?

  6. ankushskapoor
    January 7, 2012

    I also agree with this.

     

    I personally feel when someone says that samsung is a better phone the comparison is always with iphone, which actually created the form factor most the smart phone users use today. Everyone had a base to compare and beat. Yes there were touch screen phones but the iphone form factor was something that took everyone by surprise. 

    Nowadays companies wants to make a phone with a corner to corner touch screen and one button. And imho if some big giant like samsung goes back to the drawing board and comes up with a different form factor, that would be interesting, becuase other than the die hard fanbois most of the people need something that is new and refreshing.

  7. DataCrunch
    January 7, 2012

    Apple and its products are still the benchmark in which competing companies and products are compared to, similar to when RIM/BlackBerry was the “leader”.  Instead of hearing the term “BlackBerry Killer”, we now here “iPhone/iPad Killer” referring to potential competitive threats to Apple's offerings.

    With that said, Android is a force to be reckoned with.  Apple may still have a cool factor associated with the brand, but how long can that hold.  Android's interface is similar and there are no shortages of apps.  Android is also gaining a lot of momentum is the enterprise business space, similar to where RIM and Microsoft used to have the leadership title.  Apple was always considered cool, but what hurt it previously is the mass adoption within the business world.  Microsoft beat Apple in the desktop PC world and Android may be doing the same in the mobile device world.

  8. FLYINGSCOT
    January 7, 2012

    It is unlikely any company in this day and age can maintain such a dominant market share (like 87% tablets in 2010) for ever.  The revenue potential is just too great to keep out rapidly improving companies like Samsung and LG.  Also it is not just the device itself that sells but the overall package (phone plus contract).  When faced with $80 a month for an Iphone on Verizon why would one not consider a very capable LG Android on Virgin for $35 a month.

  9. t.alex
    January 7, 2012

    I saw an Acer laptop at the shop yesterday. It is a suprising clone of the Mac Book Pro, especially the keyboard, the touchpad and the colour. However, after a quick try, the touchpad is not as good. It is just a matter of time before it behaves exactly the same as a Macbook.

  10. Clairvoyant
    January 8, 2012

    True, Flyingscot. It can be very difficult for any leading company to stay on top in the marketplace.

  11. bolaji ojo
    January 8, 2012

    _hm, That I raised some questions about Apple doesn't mean I don't like the company or want it to fail. If you are a supplier to Apple or a shareholder in the company, you should seek to better understand its business model and the current as well as potential challenges. That's the definition of a good friend.

    Apple has many great products and also has many hungry rivals. The company didn't get to where it is now by being content with what it has achieved. In asking questions about the competition's strategy and if Apple was slacking, we help propel the company to greater heights. That's the intention, anyway.

  12. Ariella
    January 8, 2012

    Of course, when you have achieved the postion of king of the hill, everyone who wants to be king will work at getting you down.

  13. jbond
    January 9, 2012

    My daughter who is a senior in high school has been dying for an Iphone. Ofcourse all of her friends have them and she just thinks they are the best things out there. She was willing to pony up whatever it took to get one. After a visit to the At&T store to view other options and checking out my husbands Samsung Infuse, she really liked the Samsung Galxay S2. Shocking how finding out that other phones offer the same features and some better ones than the Iphone has actually changed a teenagers cool factor.

  14. Eldredge
    January 9, 2012

    With the iPod, iPhone and iPad, Apple (AAPL) redefined markets and defined cool. But what's left?

    I tend to agree with that statement. Apple has definitely lead the market, and others are following at breakneck speed. Apple has, and will continue to do well. But they also have created a hard act to follow – even for themselves.  

  15. bolaji ojo
    January 9, 2012

    Jbond, That's exactly my point. The challenge Apple faces is that rivals are not only imitating her products but also creating the ecosystem that separate Apple from the competition. The anecdotal evidence is there that many other potential Apple customers are increasingly opting for rivals' devices after trying them and finding out the ecosystem is supportive.

    Apple, though, is still the market leader and the coming updates to its products may blow away the competition. Again.

  16. bolaji ojo
    January 9, 2012

    Eldredge, Apple “created a hard act to follow — even for themselves.” I like the way you put it. Rivals are chasing Apple but it has to outperform itself too. It will be interesting watching as things shake out over the next year.

  17. Eldredge
    January 9, 2012

    Yes, it will! They have raised the bar pretty high for both design and innovation. It will be interesting to see what new products they have in the offing.

  18. Ashu001
    January 9, 2012

    Quite right you are.

    With the Galaxy S2 ,Samsung has hit on a massive Iphone killer here.

    Lets see how things progress as the Iphone loses market-share to this upstart.

    Ashish.

  19. Ashu001
    January 9, 2012

    Bolaji,

    A lot of Apple fans would jump off bridges and cliffs before they accept that Apple is losing its cool factor.

    But reading through one of favorite books-The Innovators Dilemma ,you can see that this concept plays out again and again in the Tech space.An upstart(Samsung,LG) comes in and goes one up on the Pioneer (here APple)in a space.

    Very much bound to happen and its about time we welcomed back the competition!!!

    Ashish.

  20. Barbara Jorgensen
    January 9, 2012

    Apple's ability to command a premium for its products is directly tied to its design and technology ability.  From what I read and hear, the latest iPhone is just slightly better than the prior version, and that's not enough for folks such as myself (and apparentyl Bolaji) to abandon other brands. Apple is looking over its shoulder at Samsung (note the lawsuits) and Samsung is doing a good job of giving it reason to worry. Apple doesn't want to be a price leader, but it is going to have to better than most with its product upgrades to maintain the value of its brand.

  21. bolaji ojo
    January 9, 2012

    Ashish, Competition is always good for everyone in any market. It makes leaders stay alert, keep followers on their toes and is highly beneficial to the end market consumers. What I like about the stiffening of the challenge Apple is facing from rivals is the expectation of what the company might do next. I can't wait for Apple to blow past them again.

    Who knows? We might end up with another nifty gadget!

  22. Ashu001
    January 10, 2012

    Bolaji,

    This is precisely what a lot of Apple Fanboys are hoping for.

    Only time will tell if they get what they wished for-Anyone for  Apple TV???

    Ashish.

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