Technology

These are the good old days for Apple and not just because Jobs has passed


Companies like products, have life cycles.  Apple is very unusual because it was able to reinvent itself.    In particular, Apple went from being a niche  PC player with a relatively small market share to the leader in revolutionizing music (iPod), the cell phone (iPhone) and creating and leading the tablet market (iPad).    But each of these product categories has its life cycle.  We can see that now with the decline of iPod sales.  The iPhone is on its 4th generation (the iPhone 4S is  just a mid life kicker for the iPhone 4).  We expect  to see an iPhone 5 sometime next year.  How will this product be different?  It can’t really change much in size so it can’t change much in terms of the display now that we have a so called retina display (where individual pixels can not be seen).  The camera can get better but how much better?  Siri can get better but it does its processing in the cloud so it has not much to do with the phone.  Of course, we can get 4G but is that really so important on a phone?  Anyway, I suspect  that the iPhone 5 will be a great success?  But then what?  Eventually there is not that much to add that is meaningful.  So  you either have to reduce price to expand the market our you just have a replacement market. I left out adding more memory?  I am a pretty heavy user of technology.  I have a 64gig iPad but I only really use 32gigs.  I have a 64gig iPhone but I use even less on my iPhone because I do not watch movies on my phone (much).  4G would be helpful to those that us the cellular system for the their iPads.  But most people only us  Wifi on the iPad.  I think the iPad has one or two major product cycles and then what.  Back to cutting prices or having just a replacement market.  And what of the Mac’s.  Apple is doing a good job of increasing the MAC share of desktops and notebooks with innovative and well designed products like the Macbook Air.  There is more head room in traditional personal computers.  But we are still up against limitations.  I have a 27 inch screen that I am looking at right now.  I would not want the screen to be much bigger.  I will of course want more computer memory in the future (I use SSD) and because I am part of the Apple Eco System, I will keep buying macs ever few years.  So here is my point.  Apple became the most valuable company in the world (or close to it) because of the iPod, iPhone and iPad.  I believe that these products  will reach limits that will either force price cuts to explained their markets or slower or declining unit growth.

The guys at Apple are pretty smart and certainly Jobs was.  So what are they thinking?  Well they want to go after the TV industry.  Obviously, home audio visual equipment and the way that media has been delivered by the cable and satiliet companies can be greatly improved on.  But there are many vested interests in particular with respect to the delivery of content.  I don’t see how Apple will be successful in this space but I guess we will have a chance to find out next year.   If they do succeed they will have to do this at a pace that will allow growth even with the decline in the i devices that I predict.  And that means they would have to accomplish this on a world wide basis.

So lets end by looking at a different company and device: The Amazon Kindle Fire.   It is a two hundred  dollar product that  does not compare favorably with the iPad but is a lot cheaper.  It does a great job on books, is ok on video and email etc.  But there is nothing stopping Amazon from staying at the 200 dollar spot and adding functionality and capabilities as the cost of technology declines.  Their plan is to make money on the content.  They have to lock their customers into their own eco system.  It will be harder for them but they have a lot going for them including relationships with so many potential customers for the Fire.

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