These are without a doubt Apple’s glory years. The company has a stellar range of consumer products including the block busters: iPad2, iPhone4 (soon 4S), and MacBook Air. Our household alone has at least half a dozen pricey Apple devices. And still I don’t think it will last. By that I don’t mean that Apple will somehow run into trouble overnight but rather that it faces twin challenges that will likely significantly reduce its influence over time: price and software.
People writing about smartphones love to point out that two thirds of Americans don’t have one yet, as if that implies that two thirds of Americans are Apple’s addressable market for the iPhone 4S. That leaves out the fact that about half of those people (one third of the overall population) are in financial difficulty. They do need a mobile phone and most have one (a feature phone at the moment), but they are highly unlikely to replace those with iPhones. Instead they will replace them with Android phones. Every major carrier in the US is now offering at least some Android phone for FREE with a new plan. And FREE is powerful attractor. That is true throughout large parts of the rest of the world as well and is clearly visible in Gartner’s smartphone market stats. Apple is a high end brand and that’s deeply in the company’s DNA.
The second and even harder challenge for Apple is software. Endusers care about apps way more than they do about hardware. And yes, to-date there too Apple has been a leader. But as the number of Android devices surges, there are fewer and fewer companies that can afford to have only an iPhone version of their apps. Now for purely functional apps that’s maybe not an issue but many apps these days have a social or network component. Even if the experience of “Find My Friends" winds up being awesome, making it limited to iOs devices will ultimately be self defeating as at least some of my friends will be on Android. Cross-platform software from independent companies (that specialize in software) will win the day and that will significantly reduce the reasons to pay extra for an Apple device.
Now throughout this post I have only mentioned Android, but Microsoft cannot yet be counted out. Their latest mobile software is beautiful and they are aggressively courting developers. Plus with Nokia they now have a potent hardware partner and one that knows how to serve the complete mass market. And unlike RIM, Microsoft has separate profit engines that give them the ability to keep pushing.
None of this will happen overnight though and it would be foolish to try to call the top in Apple’s stock price (at least I am not prepared to do that as I am often surprised how much longer things last than I think). In the meantime I am pretty sure that I will get myself an iPhone 4S and participate in celebrating Apple’s glory years.