Apple's situation and why it tends to get darker.
Autor: rodrigottr | Publicado: 2011-09-04T00:40:00-07:00

Unarguably Apple has the leadership over this wave on technology industry. The iPhone did changed everything since 2007 and now the iPad is doing the same. Apple on the right moment provided the standards for the path of human communication and information computing right on the time when laptops and PCs where extinguishing most of their possibilities. 

And that tends to remain for some time as computing gets more democratic and powerful. One don't even need to think very much to see how most of smartphones today have an influence of the iPhone and how most tablets are imitating the iPad. 

And those shapes tend to stay in the industry for a comparable time as PCs, notebooks and netbooks have stood (and the PC in the shape we know it began with the MacIntosh in 1984) so we can bet smartphones and tablets will remain in the shape they are for at least one more decade. But even having a small share of cellphones today Apple has build for itself a brand that is so desirable that fans stand for days and hours waiting in lines for and pay for expensive gadgets that have profit margins around 50%, the highest in the market. 

All that has contributed for Apple to become the most valuable company in the world and facts like having more money then US government are also a evidence of power and success of Apple's strategy. 

But sometimes, things are not exactly as they seem. 

While Apple has set the standards over how are devices going to be for the present life cycle, and that means touch friendly, app friendly, stable and responsive, and easy to be learned and used by anyone, Apple's platform lost its position of largest OS platform in market share for Google's Android. Reasons for it was mostly because prices, as there are Android phones costing 1/3 of an iPhone, more heterogeneity (as commented on this article) of the hardware, and reseller friendliness as Google's Android became the preferred platform of most carriers as Apple showed it intends to bypass cellphone carriers and sell phones to consumer directly and also doesn't allows carriers to change anything on the phone. That doesn't seem bad at all since Apple has the largest revenue share keeping the largest profits. But on last quarter only 25% cellphones sold in the world where smart phones. And between them, only 20% where iPhones. Meaning only 5% of cellphones in the world sold where Apple iPhones. Also we have to remember that if only 25% of cellphones sold this quarter where smartphones a even smaller number of world cellphones must be smartphones. 

Just like computers have substituted typewriters, smartphones tend to substitute common dumbphones and that transition is just beginning. Cheap Samsung smartphones cost 189 US$ and cost 1/3 of an iPhone and soon there will be smartphones priced on 50US$ as there are already many common cellphones. The number of 3 billion cellphones in the world will soon be hit and passed. And the problem Apple is going to face is that 93% of smartphones sold in 2009 where priced on a 100US$ average. Only 7% where priced on a 350US$ average. And that is still far from the 600 US$ price of the iPhone 4. 

So, as cellphones get substituted by smartphones Google is already one step ahead over Apple and is much more likely to get a hugest bite from this market then Apple. Apple's business model has never been designed for low cost markets. But the problem is that low cost markets are more then 93% of cellphone markets today. Even don't make sense in big markets like India to try selling apps of 3,99 US$ for consumers that can buy meals for many days with this amount or even don't make sense a iTunes Store selling music that can be downloaded for free. On hardware side Apple's stile made it hard to think of different hardwares for phones that are supposed to run thousands of apps smoothly. 

So as Apple has the best margins in the world selling devices it has already lost in market share to Google and that tends to get worse as Google's Androids are much more prepared to go low cost then Apple ever thought being. But that is no trouble. Trouble is that both know future points to cloud computing and Google is also one step ahead on it. 

Google believes that in the future devices will be dumb monitors only capable of being online while most data and processing will be in the cloud. Of course some capabilities will be possible offline like offline mail or photos and music as computers already used today. OSs will be just very powerful browsers and oriented to get you to what really matters: the web. Google is also working on this vision a longer time as it is since 2009 it has already showed works on the Chrome OS and other works.

Apple has just recently showed its proposition of cloud computing with the iCloud that intends to work on the opposite way of Google's. Apple's vision is more about a syncing between devices with the same account making everything always available offline. In others words Google's approach sees the cloud as the center while Apple sees the device as the center. 

Both views have their pros and cons. Some believe people won't trust all it's data, files and personal information to the cloud. But most agree that a cloud centered model would make devices cheaper and then is more friendly to most of users. The same thinking has already made possible cheaper and more mobile computers like the netbooks we know today. 

So, in other words, Apple's vision has no vision for maybe 80% or 90% of computing of the future knowing most of computing in the future will come from substituting the omni presents dumbphones today for little pocket computers as smartphones and tablets are already.

That's not a problem at all for Apple continuing on the market. There is no other company today intending to fight for high margins markets that can provide such complete and solid portfolio. But that is a big problem for Apple if it intends to rule this industry. We can't exactly understand why Apple fights Google when we can see their markets are completely different. But unarguably both companies are fighting for everything these days. And that seems to be a fight for their values and ideas. There is enough space in the market for both companies to live but there is not enough space for two companies that are prophesying the future of technology. And that is why both companies are fighting and that is the fight Apple has already lost and still didn't noticed.&nbsp;&nbsp; 

Google's vision will centralize most of creativity as it centralizes most of players and users and Google will be the next monopolist on tech industry as Microsoft was in the past. 


A Vision turnaround?


It's said that good leaders are capable of creating good leaders capable of succeeding them. That the teacher who is not surpassed by his disciples is not a good teacher. That good leaders like to be surrounded by people better then they are. 

Now we see that Apple has been conduced until this leading point by Steve Jobs. And we see that his vision for Apple worked until now but we don't know if will work in the coming future. In next years we will be able to see if Steve Jobs has done the most important job that a teacher must do: create people that surpasses him. And according to recent problems Apple had to decide about Steve Jobs succession my bet is that SJ has failed on that. 

If any other person inside Apple realizes that Apple's vision is in trouble and decides to change it, then that would sound like saying SJ is wrong. And that would be heard as a blasphemy inside Apple. Apple was always conduced with tight control and iron fist by SJ. If we think Apple makes a very tough control of its products then you can imagine how their workers must be controlled. Its&nbsp; founder and genious leader insists to keep on work even when he looks more like a walking dead then a man. That's a serious example of person that can't let go. The only problem is that thigh control doesn't walk together with creativity. And now that Apple has to create a new vision if wants to face Google on ruling the industry this creativity is going to be more important then ever. 

So, I don't believe in any vision turnaround for Apple. And that is sad.