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Apple vs Samsung: Does Apple stand a chance?

BusinessAnalysis
by Rawiya Kameir
, 27 Mar 2013Analysis
Apple vs Samsung: Does Apple stand a chance?

For the first time since the ascent of the smartphone, Apple is finding itself edging closer to the losing side of the mobile market. Amid disappointed reactions to its latest handset and mobile operating system - the iPhone 5 and iOS 6, respectively - and the rise of Samsung as a mobile brand with almost as much of a cult-like following as Apple itself, the Cupertino, California-based firm is in a precarious position.

The criticisms read like the fallout from a company that got too comfortable on its perch. Apple, as frustrated fans and underwhelmed experts will tell you, has failed to imbue its past few generations of mobile hardware and software with anything even remotely approaching the innovation it trumpeted with its first iPhone in 2007. Aside from Siri, released as a part of iOS 4 in 2011, Apple has failed to introduce any notable new features to the iPhone. And its share price echoes that narrative - after reaching a peak in September in anticipation of the iPhone 5 launch, Apple’s stock has tumbled sharply, losing a third of its value as the market comes to terms with concerns that we may be witnessing the decline of the Apple-defined mobile era.

To point out Apple’s missteps would only be half the story. The downward shift is as much the result of Apple’s failures as of Samsung’s successes. Over the past few years, the South Korean firm has made steady, deliberate advances into what was once strictly Apple’s territory, leveraging Google’s Android operating system and its own sprawling electronics empire to its advantage. Those advances came to a head earlier this month when it unveiled the Samsung Galaxy S4, a new flagship handset chock-full of features that are sure to generate both sales and goodwill for the company. We have yet to see how well technologies like integrated health monitoring and eye-tracking will work, but that they exist has earned Samsung points.

In response, Apple has gone into defensive mode. On the eve of the Galaxy S4’s launch, for instance, Apple senior vice president of marketing Phil Schiller publicly bashed Android, in an effort to play down the mounting competition from Samsung. Following the handset’s release, Apple circulated what struck as a hastily composed defence of the iPhone via email and on its website. “Loving [the iPhone] is easy. That’s why so many people do,” the company wrote in a desperate bid to convince users to remain faithful to iOS.

But in order for Apple to stay ahead of the pack and/or win back any ground, it will have to do more than rely on marketing. The firm will have to be galvanised into action beyond marginally improving the iPhone and iPad and begin showing - not just telling - the world why its offerings are better.

As BlackBerry CEO Thorsten Heins rightly pointed out, the iPhone is more than five years old, but still living within the paradigm it created in 2007. “[T]he rate of innovation is so high in our industry that if you don't innovate at that speed you can be replaced pretty quickly," Heins told the Australian Financial Review. "The user interface on the iPhone, with all due respect for what this invention was all about, is now five years old."

But don't chalk Heins' comments up to simply harsh words from a struggling rival; the BlackBerry chief makes an astute observation that Apple must take to heart if it has any chance of reversing its current downward trend.

First, Apple must modernise its mobile OS by instituting a shift away from skeuomorphic design and towards clean, flat design. Its skeuomorphic, realism-based aesthetic makes iOS feel a lot more out-of-date than it actually is. For instance, the Notes app features yellow lined paper and fake leather stitching, though the note-taking mechanism on a touchscreen does not require the app to look like a notepad. To its credit, Apple has hinted that it is moving in that direction, with Jony Ive taking the helm of digital design and a recent update to the iOS Podcast app stripping much of the skeuomorphic elements from the interface.

Moreover, Apple must acknowledge that, for better or worse, smartphone buyers are a lot more sophisticated today than they were when the first iPhone was released. That means it’s not enough for a product to just be an iPhone - it has to be worth its salt in hardware and software. Features like NFC, which Apple has thus far declined to include in its iPhones, have become standard fare across the market. While some, myself included, are sceptical of its usefulness, refusing to address consumers’ growing interest in mobile payments has netted valid criticism for the company.

The same goes for screen resolution. Though Apple has championed Retina display technology, the iPhone 5 did not improve on its predecessor’s display resolution-wise - it’s slightly longer, bending to the market’s desire for bigger screens, but is not full HD, as some had predicted and many would have liked. Today’s smartphone users are savvy, and they know where the iPhone sits in the market. To ignore their demands is to pave a path towards irrelevance.

More broadly, Apple’s success in the battle against Samsung hinges on a return to the innovation that made it a mobile leader in the first place. Rather than react to Samsung, Apple must pre-empt it with products that have an impact on the entire landscape of the market, not just on consumers deciding between a Galaxy smartphone and an iPhone. It’s shown an attempt to move in that direction, with rumours of a smart watch and newly patented smart shoe technology, but that may not be enough.

Clean design, NFC, and full HD screens are important, crowd-pleasing features, but in order to truly live up to its self-ascribed hype, Apple must go beyond even just those. As the pressure from the market piles on, Apple must make consumers feel they need something they never knew they needed. That might be in the form of another device, or it may be a technology integrated into its existing line of iPhones and iPads - either way, it must fathom the unfathomable. That is, after all, how it came to be so successful in the first place.

Accordingly, Apple must ramp up its release cycle and manufacturing process in order to sustain any such innovation. Samsung releases a new flagship handset every six months, with other releases sprinkled periodically throughout the year. That particular cycle may not be the exact model Apple should follow, but it suggests that the firm may have trouble keeping up if it sticks to its yearly update cycle, especially as more viable competition enters the ring. Ultimately, the innovation must come on a steeper incline and at a faster pace, or not at all.

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