Wednesday 26 October 2016

Apple's hot streak leaves opponents out in cold

Another year, another new iPhone that will sell like hotcakes. But why is Apple so dominant?

Published 12/09/2015 | 02:30

Apple CEO Tim Cook during the media event in San Francisco on Wednesday
Apple CEO Tim Cook during the media event in San Francisco on Wednesday
The new Apple iPhone 6S

As I sat listening to Apple chiefs show off new iPhones and iPads this week in a giant San Francisco theatre, a woman next to me was going nuts.

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At every new feature mentioned, she whooped, squealed and clapped maniacally. It didn't matter how minor each new function was: every new detail was met with gasps and exclamations.

"Wow!" "Oh my gosh!" "Would you look at that!" "Ahhhhh!"

At one point, when Apple vice-president Phil Schiller showed some photos from the new iPhone 6S camera, she made a noise I've only heard in more private situations.

This woman was an Apple employee, not a journalist. But her enthusiasm was real. And she's not alone.

If there is such a thing as a tech war going on, Apple is crushing its fellow combatants.

In cold war terms, we are in the 1990s and Apple is the US while Samsung is the declining USSR.

(Google is China, lurking in the background, ever-present and poised to be an emerging threat when the time comes. And Facebook is Germany: dominant in niches but still not foreseeably big enough to go head to head with the top world powers.)

The main fight used to be between Apple and Samsung. But the difference in the fortunes of the two in recent weeks could not be more striking. While Apple's launch event was watched by 40 million people and had ordinary people talking the next day, Samsung's launch (yes, it had one as big as Apple's) was pretty much ignored.

Do you even remember the name of Samsung's just-launched phones? They're called the S6 Edge Plus and the Note 5. But who talks about new Samsung models any more? Or new Nokias? Or new Dell computers?

And it's not just in our everyday lives that Apple appears to have the upper hand. It is destroying rivals in the profit-and-loss stakes, too. Most industry estimates reckon Apple hoovers up as much as four-fifths of all the world's mobile phone profits. In other words, it takes 75pc of all the money with around 15pc of the phone market.

Put another way, Apple is currently making around €1bn profit per week. And because it is making so much money, it can't spend it. So the company now has around €140bn in spare cash, a pile that keeps growing.

Apple, literally, doesn't know what to do with its money.

By contrast, Samsung is laying off employees. Once-great rivals such as HP are scattered. Dell, which used to be a much bigger company than Apple, is rising again but only after a decade of decline.

And while emerging Chinese manufacturers such as Huawei are becoming major players on the global scene, they are doing so largely on the basis of commoditised products at keen prices rather than uniquely designed goods.

Why is Apple so dominant now? And what does this mean for the kind of tech that we'll see in our homes and businesses in the future?

Those who say that Apple is a cult are way off beam.

Apple is ahead because it makes easy-to-understand, good-looking, fairly advanced gadgets that quickly become part of our everyday life. These products - phones, computers, music services - are now aimed at ordinary people, not tech nerds.

The company has also proved one counter-intuitive marketing fact: price doesn't matter if you make the best-looking, most accessible product. A new iPhone 6S costs between €700 and €1,000. A new Huawei G4, which has 80pc of the functionality, costs €250. Guess which one will sell more?

Similarly, a MacBook Pro costs €1,500 compared to an equally powerful Dell, Lenovo or HP laptop that costs €750. Guess which model sells in droves?

So let's not kid ourselves that Apple's success is somehow down to a small rump of 'fan boys' who will buy anything with an Apple logo on it. Apple makes stuff for ordinary people who aren't especially into gadgets.

Whether the company can keep up this kind of dominance is another question. Last week's mega-launch yielded only one sure thing - the iPhone 6S. Even with its marginal technical specifications, it will continue to be the phone of choice for the largest single bunch of people shopping for a new mobile.

But it's not as clear that its other new products will take off as much.

The giant iPad Pro, for example, is a tough sell for the kind of ordinary punter who might buy an iPhone or a MacBook. It's a 13-inch tablet that will cost more than €800. For an idea of how big that is, imagine separating the screen from a normal laptop and then using it as a standalone tablet. It looks as if it would appeal more to business people in specific industries (like health or audio-visual editors) than home users.

Similarly, Apple doesn't have the kind of Apple TV set-top box it really wants yet, despite the newly-updated model.

This is because TV and movie studios won't do streaming deals with the company. They're terrified Apple will eat them alive and that they'll end up as depleted entities, like the record labels after the onset of online music consumption.

Then there is the Apple Watch, which appears to be a slow burner. (Apple won't release figures on the Watch, which is usually a mixed sign). Only a fool would bet against Apple here, but it is not taking off in the same way the iPhone or iPad did.

Despite all of this, the Californian giant looks set to stay on top for a while yet.

It's increasingly Apple's world - one that we happen to live in.

Irish Independent

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