“Investors are in a swoon over Apple Inc., which late last month eclipsed Microsoft Corp. as the world’s most valuable tech company,” David Olive writes for The Toronto Star. “But should you be? Probably not.”
“Exuberant Street analysts with a future price target of $320 or so for Apple imagine the trailblazing company is intent on becoming your near-exclusive provider of text, video and audio content. Your one-stop-shop for the online Toronto Star, ‘Survivor,’ and Mozart’s requiems,” Olive writes. “That’s not Jobs’ plan, however.”
“If it was, the 55-year-old Buddhist would cast off his perfectionism and ‘take it or leave it’ approach, in which he insists on control of both hardware and software. Always has,” Olive writes.
“Apple would license its iPhone operating system to other handset makers, in a bid to make its operating system the standard for the industry. Jobs still refuses to do that, as he did with the early Macintoshes. That’s how Microsoft, which licensed its PC operating system, gained its near-monopoly and became one of history’s most profitable enterprises,” Olive writes. “History is repeating itself. Smartphones based on Google Inc.’s open-source Android operating system overtook the iPhone in sales in the first quarter of this year. The iPhone has dropped to third place, after the Androids and segment leader BlackBerry, made by Waterloo-based Research in Motion.”
MacDailyNews Take: David Olive writes for The Toronto Star’s business section. That’s the Joke of the Week.
Smartphones based on Google’s Android operating system did not overtake the iPhone in sales in the first quarter of this year. Period.
Worldwide Smartphone Sales to End Users by Operating System in 1Q10 (Thousands of Units)
Source: Gartner (May 2010)
Misusing a limited NPD survey that fails to measure little niches, like, oh, say, the business market, is the province of fools and liars. Which is it, Dave, are you a liar or a fool or, most likely, both?
Now, besides the fact that his sales stats are backwards and wrong, Olive’s big theory is fundamentally flawed.
Look at iPod, not the Mac, if you want to see how iPhone’s vertical integration bodes for its future. Google Android offers the same messy, inconsistent Windows PC “experience,” but without any cost savings, real or perceived. Windows only thrived back in the mid-90s because PCs (and Macs) were so expensive and buyers were extremely tech-illiterate; the upfront sticker price roped in a lot of people. Microsoft today still coasts along on the momentum generated at the end of last century. There is no price barrier today: Apple’s iPhone 3G costs just $99 and the 3GS goes for only $199 in the U.S. with a 2-year plan. I’d call Android the “Poor Man’s iPhone,” but you have to spend just as much, if not more, to partake in an increasingly fragmented and inferior platform. As iPhone expands onto more and more carriers, Android’s only real selling point (“I’m stuck on Verizon or some other carrier that doesn’t offer the iPhone”) evaporates.
Olive continues, “In pursuit of market share, Jobs would under-price the competition. But Rogers’ cheapest iPhone package is $99 a month, compared with $29 for the BlackBerry Curve.”
MacDailyNews Take: And what’s the price of ping pong balls in China, Davey? That has about as much bearing on whether people will choose a modern iPhone or an outdated RIM phone to “save” $70, or 4% over the life of a two-year contract that will cost ($70 divided by avg. $60/mo. plan times 24 months). Only someone with the “brainpower” of David Olive would shackle himself to an outmoded RIM device for two years in order to “save” $2.92 per month.
Olive continues, “Apple products would boast more functionality. (The sleek iPhone has just one button; the more user-friendly Android-based smartphones have four or more.)”
MacDailyNews Take: “The more user-friendly Android-based smartphones?” Proof? He offers none. We have some info, though:
• Why I dumped my Android-based HTC Desire and went back to my Apple iPhone – May 17, 2010
• Android users unlikely (and often unable) to upgrade their operating systems – May 03, 2010
• CNNMoney: Android phones in the real world not so good – April 21, 2010
• Google’s big Android problem: Hodgepodge of OS versions litter market on non-upgradeable phones – March 16, 2010
• Google’s Android has a ‘too many cooks in the kitchen’ problem, and it’s getting worse – February 17, 2010
• The Boy Genius reviews Google Android: Half-baked, fragmented, poorly executed, lacking, a mess – January 11, 2010
Since when are four times the buttons “more user-friendly” than one?
Also, according to Davey, Apple iPhone offers less functionality even though it has at least five times the apps of Android. Does anything Olive write make sense?
Olive continues, “Stock prices are based on prospects of future earnings power. Warren Buffett-style value investors, focused on the long term, want to see a ‘moat’ protecting franchises like the iPhone, iPod and iPad. Impregnable would describe Microsoft, whose slow-growth maturity masks its staying power. Taking on Microsoft requires dislodging a firm whose Windows operating system runs nine of every 10 PCs. Microsoft can boast half a billion people using its Office software for daily chores like creating documents and preparing PowerPoint presentations. By contrast, Apple is vulnerable. Dumping Microsoft is inconvenient. Not so discarding your iPhone. Any crowd-pleasing features Apple comes up with can easily be copied by competitors.”
MacDailyNews Take: Try reading the news, Dave. We’ll see how the copying “strategy” works out this time:
• Apple’s patent infringement lawsuit: The elephant in HTC’s new headquarters – April 02, 2010
• ITC votes to investigate Apple’s patent complaint against HTC; consider barring HTC imports to U.S. – March 31, 2010
• Apple patent infringement lawsuit applies pressure to HTC – March 03, 2010
• Apple puts the entire industry on notice by suing HTC for patent infringement – March 03, 2010
• Apple looks for expedited proceedings in patent infringement case against HTC – March 03, 2010
• Patent lawyer: Apple’s going after HTC first, Motorola’s next, but Google’s the real target – March 03, 2010
• The specific Apple patents over which Apple is suing HTC – March 02, 2010
• Boom! Apple sues HTC for infringing on 20 iPhone patents – March 02, 2010
Olive continues, “Nokia Corp., which still commands half the world’s cell phone sales, was the leader for a decade in anticipating fads.”
MacDailyNews Take: David Olive is a clown.
• IDC: Apple posts strong growth in global smartphone market share as Nokia stays flat, RIM declines – May 07, 2010
• Nokia warns on profits as it delays ‘iPhone killer’; shares plunge – April 22, 2010
• To understand market share vs. profits, look no further than Nokia vs. Apple – November 11, 2009
• How Apple passed Nokia to become the world’s most profitable handset vendor – November 11, 2009
• Strategy Analytics: Apple passes Nokia to become world’s most profitable handset vendor – November 10, 2009
The full factually bereft hit-piece – Think Before You Click™ – is here.
MacDailyNews Take: The Toronto Star should be ashamed.
Contact The Toronto Star via web form here: http://www.thestar.com/reporterror/818614