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Will springtime for smartphones signal Apple’s decline?

There are a million different ways to get a good understanding of a market. Some are obvious and others less direct. KitGuru has been checking out alternative sources of information to try and get to grips with Apple’s situation: Will it continue to be mega strong in the future or have the sands of time shifted under Apple’s feet, post-Jobs?

Roll the clock back less than 2 years and KitGuru was hearing reports of Samsung struggling to sell 4 million smartphones a quarter while Apple was banging on toward 20 million.

But Samsung is backed by an entire country, has Android and a tough economy on its side, and has a determination to be number one that you rarely find anywhere else on the planet.

It’s also a genuine inventor and manufacturer, which means that a Samsung product that sells for $400 can have Samsung memory, screen and processor technology etc all built in. That means that for a single unit selling on the shelf – generating direct profits for the Samsung phone division – a wad of cash will also be banked by the various divisions of Samsung that supply the parts.

Nice model.

Apple is more like IBM of old.

Selling the ‘tin’ (i.e. the parts you can touch) is really a platform for services.

We’re now living in a world where Samsung is looking to ship over 18 million handsets a quarter and Apple’s figures could dip below that.

With Blackberry making a dog’s dinner of the ’10’ launch, it has the added burden of losing ongoing services revenue for every ’10’ series phone sold.

The other small smartphone companies – like Sony, Nokia and HTC – are all scrambling to see if they will be viable in the future.

Microsoft will be keen to push the desktop experience of its £190 Windows 8 desktop operating system to one side and focus on how it might actually make some headway in a market that it helped to pioneer 10 years ago with Windows Mobile. Nokia is the key bedfellow here and, around these offices, is much loved.

Sony has completely broken its phone division away from connections/reliances on outside companies – and the senior management team has been told to chase after Apple – using every technology/advantage that Sony has to offer. We suspect that it might be a case of too little, too late – especially when you look back at how the iPod eased the Walkman brand out of the market – never to return.

As we reported before, HTC is having a much tougher time than it was in 2009/10, but they have a low cost manufacturing base and some clever ideas – so maybe they can hold their own at the low end.

The smartphone market today is a bit like comparing IBM, HP/Dell and Compaq back in the day.

In this analogy, Apple and IBM are synonymous. We’re going to put Compaq with Blackberry, because they both have underlying technologies that are interesting/important for the business market – but struggle to cut the mustard overall. Which leaves HP as Sony (great brand value – but from a bygone era) and Dell as HTC (which aims to do what others can, only for less money – the ultimate ‘me too’ purchase).

For fun, we took actual 2 year data from Yahoo and placed some of the aforementioned computer companies on this graphic, so see if the analogies work on a financial level.

If Apple were a PC company, it would be IBM - with far more going on than the 'tin'. Also, it retains a level of cool - which is hard to put your finger on. Don't just look at the trends - also check actual prices for other tech companies.


KitGuru says: Overall, we believe that there is a huge core of Apple fanbois who won’t stray – no matter what – and that is the power of the Steve Jobs legacy. We’re not sure that there will be enough of them to maintain Apple’s 20 million units a quarter shipment rate (in the face of stiff competition from Samsung, HTC, Nokia et al) – but it’s the ability of Apple to carry on ‘charging for content’ that makes it so attractive.

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