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Apple's impending downfall?

Apple
by John C. Dvorak, 15 Jan 2013
Apple's impending downfall?

Apple's stock begins to falter while Samsung Galaxy S sales hit 100 million, and we have to wonder: What is in store for Apple and its offerings?

Make no mistake, Apple is still the leader in mobile phone technology from a number of perspectives, not the least of which is the prestige of owning an iPhone. This, of course, amounts to fashion, and fashion is fickle.

Apple has already reportedly cut orders for iPhone 5 parts, indicating that sales are falling. In this economy, one has to question how much longer the expensive iPhone can compete with lower cost smartphones.

I personally expect the Apple TV set, which should come along this year, to add excitement to the overall tech scene, and especially to Apple Stores. Apple makes its money in the stores and if the Apple TV is anything but the kind of yawner you'd find at Tesco (which is unlikely), then it will draw people into the stores, further feeding cash into the company coffers.

But what can Apple really do with a TV set that the others cannot copy within one product cycle? It can introduce a few new features and have a killer design, but both will be replicated in one way or another within a few months, killing Apple's edge.

If Apple has a flaw, it's the inability of the company to crush the competition using the kind of aggressive tactics that companies like Microsoft and Intel have always applied. These companies are very aggressive, undercutting the competition and playing dirty when needed. Apple has never undercut anyone and relies on angry attorneys to initiate litigious action.

Let's ask one simple question: When was there ever an iPhone sale? You know, buy an iPhone, get one free! You have never seen anything like this. And why not? The long term success means getting people addicted to your OS.

There should not be 100 million Galaxy S phones sold. Since the first iPhone rollout in 2007, Apple should have pursued a strategy of undercutting the competition to maintain a high market share, no matter what the costs, or losses in profits. Sure, by remaining overpriced the Apple stock has skyrocketed, but it will never fly like that again with its conservative approach toward sales.

Apple's edge was iOS. Unlike the Android OS, it is the sole maker. Samsung is forever at risk that a cheaper manufacturer will come along with a better idea. Apple does not have this worry. Apple instead should be concerned that people will buy an Android phone before they get an iOS phone and become locked into that competing OS. Apple had to hook as many users as possible before the onslaught of Android, which, to be honest, only began in earnest in 2010, or maybe 2011.

While Apple was making a fortune with great margins, the majority of users adopted Android. Apple helped itself somewhat with the iPad, which attracted more users to iOS, but the phones were mass market devices that were lining up.

Now we hear that Apple is thinking of making a low cost iPhone. It may be too late for that, though, the way things are going.

I fear that during this slide Apple will release its TV. Things will stabilise for a bit but then continue to slip. And what will happen? Everyone will wrongly blame the TV for the decline.

Maybe a huge upgrade of the Macintosh will help things.

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