This question has been ruminating in my head for a year and I don’t have a clear answer. The question: “How long can Apple’s competitors stay in business?”
Based upon marketshare you would think Apple is about to be overrun by hoarded of tech gadget manufacturers whether it be PCs, smartphones, tablets, or even wearables. The competition is intense and Apple seems to have a smaller marketshare in every segment. Based upon profitshare you would think Apple has overrun every tech gadget segment so thoroughly that it’s fair to ask my original question.
How long can Apple’s competitors stay in business?
To be honest about it, the initial answer for a few of those competitors would be, “A long time.” That’s because Apple’s major competition– Microsoft, Google, Samsung, and a few PC makers with access to cheap money and cheaper labor– have very deep pockets, and while they all push more products into the market (thereby keeping the components industry in good health), not one of them does what Apple does.
Own their respective industry segment’s profits the way Apple does.
Here’s a quick rundown. Among smartphone manufacturers, Apple– so says the soothsayers and trackers of such guesstimates; and no on denies the accuracy of their guesses– Apple takes home more than 90-percent of the profits. Samsung gets most of the rest, which leaves Google, Microsoft, and a dozen Chinese knock off makers to battle around in the dirt for scraps.
A similar situation exists in the tablet segment, and even the PC industry, where Apple might have 10-percent marketshare in developed countries, takes home more than 50-percent of the struggling industry’s profits. For Apple, both shares– market and profit– are growing while the rest of the industry lags behind as the post-PC era transforms the entire personal computer business model.
Look at the littered technology gadget landscape since the iPhone launched in 2007. Motorola is a shell of its former self, bought and sold a number of times. Microsoft spent $9.5-billion on Nokia’s remains only to write off $7.5-billion as a loss a year or so later. HTC, once the largest smartphone maker is worth less than the cash it has on hand and there’s not much of that. Samsung’s profits have fallen for almost two years straight. Google has no return on its investments in Android and Motorola (bought by Lenovo from Google last year, and now Lenovo is losing money).
There isn’t much data on the wearable technology industry, but it’s safe to say that Apple– which has already sold millions of Watch units only months after release, and is poised to sell millions more before the end of the year– has sucked up a huge chunk of the entire watch industry’s profits in less than a year.
Why does Apple dominate so?
The key to Apple’s success is complicated, but it’s a valuable mixture of hubris, design esthetic, engineering prowess, manufacturing capability, and the all important differentiation factor.
Apple’s products– unlike the mass of competition in each product segment– are different. Different hardware, different software, different sales channels, different support, and, importantly, a different but well integrated ecosystem that smacks of usability, security, dependability, and, increasingly, privacy.
Apple controls the profits in nearly every industry segment– PCs, smartphones, tablets, watches (and probably streaming TV devices, but no one is counting), applications, and more. How long before competitors begin falling like flies to the wayside. Wait. They already are.