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Is Apple losing its ‘king of cool’ crown?

Paul Smith (via AFR) | Feb. 27, 2013
Apple has always managed to cast a shadow over gadget shows that it has nothing to do with, and this week it is doing so again but in a role to which the world’s richest technology company is unaccustomed.

Rumours of an upcoming iWatch could possibly rekindle the imagination, but in the meantime, its rivals are sniffing a chance to steal a march.

Telsyte analyst Foad Fadaghi says he still ranks Apple's products at the top of the pile in terms of quality, along with a number of other models. But he says Apple investors and fans will be expecting more surprises from its next product launch than they have seen in recent times.

"There is an inherent risk that incremental improvements might not be enough to spark the same level of consumer interest as previous models," Fadaghi says.

"While Apple revolutionised the smartphone industry with sleek design and an intuitive user interface, other manufacturers have started to catch up and in some areas exceed Apple."

These areas include cameras, screen resolution and battery life. In addition, he says Apple's hugely important dominance in the availability of mobile apps has been eroded.

Fadaghi says the Google Android application ecosystem is now just a vibrant as the App Store, with most developers having applications available in both marketplaces.

Following last week's launch, Fadaghi nominates the HTC One as a good example of a smartphone that has both better screen characteristics (in terms of pixels per inch ) and a better camera than the iPhone.

"It is also utilising a unibody design that would not feel alien in the hands of a iPhone user," Fadaghi says.

"The challenge for Apple has been to continue to innovate and speed up its product cycle without compromising quality. While efficient and easy to use, the iOS operating system is essentially the same icon-based system from 2007. Five years is a long time in tech without a significant overhaul."

Currently in Barcelona for MWC, UK-based analyst Malik Saadi says Apple has so far been happy to dominate the smartphone market in the top-end range of $US400-plus handsets. He says the Apple name is now established as the premium brand in the mobile market, thanks to superior experience and elegant design associated with its iPhone and iPad series of devices.

"However, the above-$US400 is now saturating while competition is not diminishing," Saadi says. "Sales of devices priced above $US400 are expected to peak this year at 256 million units. In this segment, sales will increasingly be dominated by replacements - not by additions of new adopters.

"After 2013, the fierce price competition will push vendors to lower their margin. This, together with the price decline of hardware components, means that price erosion of high-end smartphones is imminent after 2013."

Saadi suggests that this significant change in the dynamics of the market will force Apple to look for new ways of maintaining growth. One way of doing so, would be a notable step away from its previous practices - following the market into lower price brackets.


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