“The list of once-great consumer electronics companies is long,” Michael Holt writes for Morningstar. “Brand loyalty is largely dead, forcing hardware manufacturers to compete on features and price each product cycle. This makes it difficult to sustain a leadership position. Temporary advantages are easy to identify–namely the number of available applications and first-mover advantage on tablets. More relevant and meaningful to a sustainable competitive edge is how a firm applies software to establish user switching costs that will pull customers from one generation of devices to the next. The heart of Apple’s (AAPL) strategy is to create a bond with the user that transcends device cycles.”
“The heart of Apple’s strategy is to create a bond with the user that is more powerful than any given device cycle. Current momentum and execution should deliver many years of customer acquisition, but Apple is building a moat around software that locks in customers. Given the loss of visionary leader Steve Jobs and growing competition from Google, Facebook, and Microsoft, we believe Apple will not be able to sustain its leadership by delivering great design,” Holt writes. “Great design and execution enable Apple to build its customer base, but it is the firm’s software that makes it difficult for consumers to switch to another device.”
MacDailyNews Take: That an insult to Jony Ive and his team who are going to shock Holt back to reality in short order.
Holt writes, “The switching costs Apple has established to date are tied to content and not yet strong enough to ensure long-term lock-in to the Apple ecosystem. Movies, video, and books are often consumed only once. Multiuse content, such as music, is much less convenient to have split across ecosystems. Ultimately, Apple must establish stronger ties to the customer than just music. Momentum is strong, and we believe the firm is on track with iCloud and SIRI [sic] to materially raise switching costs, but a lack of progress with these initiatives would be detrimental to Apple’s long-term success.”
Full article, with bull and bear speculations and more, here.
Another off-the-shelf dumbass, like 99% of all journalists and analists out there. Pack it in asswipe.
Those excerpts contain internal contradictions, bizarre leaps of conjecture, and outright nonsense. I can only imagine how pathetic the rest of the article is, since I’m not sending any traffic their way.
A rambling, self-contradictory piece of shit-stirring analysis about Apple.
Oh yeah thanks for reminding us… APPLE IS DOOMED….. AGAIN!
I guess one dumbass didn’t get any presents from Santa, so he is all PMSed and has to produce BS!
The Mac Observer should restart its Apple Death Knell Counter. Seems like we are in for yet another round of doomsday predictions.
Damn Right! How about that AAPL, going from death due to obscurity to death by popularity. Can’t win, can’t win….
repeat after me:
SLOOOOWWWWWW
NEEWWWWWWSSS
DAAAAAAYYYYYYYYY
ok.
thanks.
There is a “moat” aka ecosystem around every device, Apple tor otherwise, so what’s your point? Seems like every anti-Apple analyst thinks Apple isn’t always moving the bar forward or they’ve been “lucky” ignoring the essential reasons why Apple is so successful. They aren’t likely anytime soon to forget the company they are, as built and setup by Steve Jobs. A setup that has lasting power and sense. As MDN said, Holt is about his ass kicked hard in the reasoning dept. and get a much re-learned lesson about Apple.
Bullshit, plain and simple!
=:~)
I’m not sure the headline accurately reflects the analyst’s message.
The analyst is saying DESIGN attracts customers, SOFTWARE keeps them. And AAPL’s software (based on content and, looking forward, iCloud and Siri) is marching forward.
For example, AAPL is putting more new resources into Siri than just about anything else.
FLAVR vectors across BUN for software development also indicate increasing lock-in (e.g. updates only through App store, data linked to applications, etc.).
As always, impossible to make any meaningful statement about AAPL without zooming out for a larger picture.
“As always, impossible to make any meaningful statement about AAPL without zooming out for a larger picture.”
Totally correct and that is why this guy is smart but stupid. His take is Apple = Dell and someday it will crash cause it only cares about the money, like Dell.
Exactly Norm!!!
Michael Holt writes for Morningstar. “Brand loyalty is largely dead, forcing hardware manufacturers to compete on features and price each product cycle. This makes it difficult to sustain a leadership position.”
Apple’s brand loyalty is growing, not dead. It purposely does NOT compete on price and number of useless features. IT IS NOT DELL OR MICROSOFT, HOLT, YOU PUTZ!!!!
Not only is he wrong (in my opinion, of course), but this is why Apple is (rightly) trying to keep Samsung, HTC, et al. from slavishly copying their designs. They all know that great design (externally and internally) is exactly why people love Apple and their devices (i* and traditional computing alike). This is also why Intel is trying to copy Apple’s MBA design. People want the beauty, elegance, simplicity and “just works”ness that Apple provides.
So all that to say, unless his point is that the courts are going to allow everyone to copy Apple’s designs (and frankly, I wouldn’t be surprised see more Pystar-like lawsuits coming as people attempt to further rip off OSX as well), he’s talking out of his ass.
seems like Holt has never heard of the iPhone.
Is it still called lock-in if you don’t want to leave?
He doesn’t get it. Next!
I’m (sic) of these fly-by-night “journalists”. THey aren’t even real journalists. A google search will show they ( these self-proclaimed journalists) are only copy-and-pasting what someone/something has said online previously, knowing that their followers are stupid sheep who won’t even notice they PLAGIARIZED. You know, decades ago in school, if you PLAGIARIZED someone else’s “work” you lost your grades and were suspended or expelled. These days, that earns you a salary and the title ” Joulnalist”. how fkcunig ( rearrange letters) sad.
“Plagiarize,
Let no one else’s work evade your eyes,
Remember why the good Lord made your eyes,
So don’t shade your eyes,
But plagiarize, plagiarize, plagiarize –
Only be sure always to call it please ‘research’.”
Tom Lehrer – Lobachefsky
=:~)
A “moat” is well established around these idioits. The isle of “Analyst of Low Readership Desparity Seeking Publicity” has a moat the size of the Atlantic Ocean between them and reality.
Sad, with such articles he has nothing to maintain readers and will only lose those to superior quality articles.
To me, the bigger question…what is beyond the iPad? What is the “next great thing”?
SJ had the visionary ability to literally will others to embrace and produce the “next great thing”, whether others initially believed it or not. Who at Apple is going to have the presence, vision and drive to fill this void? Whether it comes from a team of people or one individual, this ability is inherently important to Apple’s future position as an Industry leader.
I agree to some extent w this guys reasoning around potential challenges but I seriously disagree with his thought that “switching cost” is only tied to content. Switching cost is both an actual cost and a percieved cost, if things “just works” and provides an appealing user experience then the percieved switching cost is huge and prohibitive. This leads to the issue I have with his narrow interpretation of the word design. All these bozos who believe consumers buy and stay with Apple products only due to their looks are truly missing the point.
“Design is not just what it looks like and feels like. Design is how it works.”quote SteveJobs/JonyIve
Yes, this is exactly my point. It doesn’t matter that Google or Microsoft deliver a good enough solution. At this point, they have to deliver a clear and compelling solution that would make people transition. This is NOT going to happen easily if at all.
Thoughts on Flash – Steve Jobs – April 2010
http://www.apple.com/hotnews/thoughts-on-flash/
So far as I know, the only reason articules like this keep appearing, and have been for nearly a quarter-century, is because analysts need to justify their readership and/or their clientele by giving them assurance they paid good money for their ‘advice’. I wonder when the lightbulbs will start going on in these clients’ heads.
Read the article. The guy is not stupid, just thinks that Apple = Dell = HP. Cause its all about the money! PERIOD.
Its funny, for as long as Apple has been making great products, people keep forgetting history and think that everything is just another Dell product, magically selling well.
iPod, it will never last………… still 70%+ of the market
iPhone, it will never last………… still 70%+ of the market
iPad, it will never last………… still 70%+ of the market
what ever is next , it will never last………… still 70%+ of the market…LOL LOL
Where are you getting your facts from? Highest percent of the market I have seen is 29% of the market for the iPhone. All the others are way off.
“As more developers reach consumers through platform-independent technologies such as HTML5, Apple’s app store could be cut out of the loop as customers gain freedom to transfer their chosen applications from one device to another.”
This point alone proves you do not know anything about Apple. Apple was the first company to push HTML5 over in their fight against Adobe’s Flash. Apple supports open standards.
Thoughts on Flash – Steve Jobs – April 2010
http://www.apple.com/hotnews/thoughts-on-flash/
“As more developers reach consumers through platform-independent technologies such as HTML5, Apple’s app store could be cut out of the loop as customers gain freedom to transfer their chosen applications from one device to another.”
Thoughts on Flash – Steve Jobs – April 2010
http://www.apple.com/hotnews/thoughts-on-flash/
Just stupid
What this clown and others like him don’t understand is that there is NO compelling reason to jump ship from iOS. NONE. This is off course in part to Steve Jobs leadership, but he did not design the stuff. The people behind the products design and there execution did not pass way with this death. Steve Jobs biggest accomplishment is Apple it self. This guy will be eating crow soon enough.
If Apple were so concerned with “locking” people in to iOS, then it would not have pushed for DRM-free music. You can take your music anywhere, including out of iTunes. Meanwhile, competitors such as Microsoft screwed people with Plays for Sure DRM.
You can join or leave the Apple community. Your choice. My choice is to stay and enjoy the best user experience.
Music binds me to Apple products?
I was sn apple user long before iTunes ever existed and long after music was offered.
New quality products keep me an Apple owner. That’s both stock and product.
“…but it is the firm’s software that makes it difficult for consumers to switch to another device.”
It’s painful to make a switch from any platform to another. “The firm’s (Apple) software” and hardware, in this case don’t make it “difficult” to switch, they make the idea of switching unappealing. For people that “get” Apple, there is no “moat” holding us in. We appreciate the tangible and intangible benefits of using Apple products, and prefer not to use other products. As long as Apple keeps enhancing the benefits of its ecosystem, the moat won’t be used to keep us in, it will be there to keep junk out.
No, he’s not stupid but he’s missing the differentiating element: Apple is focused almost exclusively on delivering a superior user experience on tightly integrated and stylish hardware. I don’t see any of Apple’s competitors taking the same approach.
The fact that this guy thinks it is all about money, switching cost, etc., proves he is essentially clueless.
You are forgetting Microsoft’s XBox 360.
“a superior user experience on tightly integrated and stylish hardware” Says it all about the XBox 360.
I’m sorry, I can’t go on. I’m laughing too hard.
I am not surprise by this article. Holt and all those financial analysts treat us like we are stupid or don’t have a clue. One does not have to read about the Apple bashing to see what the true agenda is, because it is everywhere. We are expected to follow and believe that buying cheaper and poorly designed copies of products is the way of life. We are supposed to buy furniture made of cheap crumbling compressed particle boards; buy cheap cars stamped with Made in America but designed poorly with cheap parts; eat fast food where calories are meaningless; sodas and snacks with no good nutritional value; and PCs with technology designed to nickel and dime us. Ever noticed the advertisements saying how new and great they are, but they don’t explain why? Ever noticed Microsoft’s and Android’s advertisements target which audience? Businesses like them are expecting the clueless to believe and follow. By the numbers, there are way more of the clueless in the world to profit from. The hard reality is, we have been exploited for generations.
Absolutely! The corporate world is so disconnected from real people that they don’t even know who we are anymore. They think we are all Homer Simpson and his family.
What a bunch of hockey puck B.S.!
What a friggin’ nitwit!!!
yes because that’s how they did it with the iPod wasn’t it.
I need to revise or at least add to my previous post.
Although I don’t see any of the competition (ie Google, MS) attract away any huge numbers of Apple users over the next 18-24mo. But I do see that it can be progressivly harder for Apple to lure away future users of Android,MS simply because these platforms will develop and be percieved “good enough” and have their own lock-in features, ie the actual and percieved cost of switching to Apple is bigger than the percieved gains from doing so.
Fortunately both Android and MS8 have a couple of thing to fix, OS continuity&truly delivered upgradeability, holistic view of user experience, hw/sw marching in sync, on-line & retail experience etc etc.
So my personal view is that this would require a mindset change before they occur.
That is unlikely to happen if you think of their current focus and modus operandi.
If your mind is focused on selling ad and help your advertisers monetize these then you will give a different user experience, much similar to attempts by cable providers attempt to force viewers to watch crap just so they can shoot ad’s at you.
If your focus is a split and clearly separated vision of “Office everywhere” and “Xbox360” and nothing in between them you will have a hard time grasping concepts such as “playfully productive” although I would truly love to see mr Balmer demo Excel from a comfy chair using a combined gesture and voice interface.
taken in proper context, Holt is correct.
No company has been able to sustain market leadership for more than a few generations — far less if a company’s innovation is easily copied. And as we all know, practically all western companies (Apple included) have been giving away technological property to pirates in China and 2nd-world manufacturing sites for a generation or more. Western car companies sat on their fat asses while Japan stole the majority market share right from under their noses, and Japan is a tiny island with resource limits. Today the aspiring Chinese and Indonesian entrepreneurs will take no prisoners. With offshoring has come western unemployment and a glut of copycat Asian products that look, but don’t function or last, like the real thing. Walmart has convinced stupid Americans that this is healthy. Got no full-time job? No matter, buy your disposable plastic junk here and save!
And of course Microsoft, the biggest tech copycat on the planet, is ready and willing to destroy perceived competition, if only they could figure out what it is. Android is already a dead technology walking, with the MS hounds close on Google’s trail. Only a matter of time before Apple, too, makes a misstep and loses a market or two.
There you go. Macroeconomically, the West has chosen to slit its own throat to save a manufacturing dollar. The buzzards are always around to pick off cheap sales. And successful companies, even Apple, trip up after complacency sets in. Let’s just hope it’s not in our lifetimes.
For the analyst to make such a stupid comment, would be equivalent to saying Apple is ditching its core concept of trying to make great products for people. If design changes are required from time to time to give the best experience to customers, then they will change designs — but not at the expense of trying to make great products of people. People have been speculating about Apple’s future for the past 30 years. Further, Apple will not pay dividends for the same reason Berkshire Hathaway does not pay dividends. If the company can create more value to shareholders by re-investing their money into building products and increase share price (hopefully), then it would be stupid to pay dividends.
This writing is an ill-informed crock of shit.
If you compare the comments on MDN to, say, those at MacRumors, I don’t know why the comments here seem more one-eyed and Mac-fan-rabid. Whilst I’ve been an Apple fan for a couple of decades, I keep my data in a format that is cross-platform. All my email is in IMAP, and all my files are cross-platform. I avoid putting photos in iPhoto format. So, in an instant, I can switch to, say, Windows 8. Not that I am, but I am not stuck with Apple.
Let’s say – and I can’t see any right now – but imagine another manufacturer suddenly came up with a string of drop-dead-gorgeous designs for their laptops and desktops. As said, I don’t know why all the other manufacturers designs look pathetic- but imagine if they did get their act together, I’d be ok with switching, if Apple continued their 4 year stunt of refusing to offer matte screens on all desktop gear and the smallest notebooks.
What I observe is another shot in an ongoing war waged against excellence by closet Luddites who crave a return to the business-as-usual market landscape of a generation ago, when market leaders were perennial, market dynamics were comprehensible, upstarts were quickly put in their place, and the past largely defined the future for lazy, puffed-up technology analysts to easily make their consensus forecasts, collect their bribe money, and go home to watch their Laverne and Shirley collection.
The guy is FOS. ITunes music is open IF the record company says it is. That is the same for all stores. Apple locks people in through amazing ease-of-use and quality. My brother just switched to Samsung. Hooked his phone up to his Windows computer and it wasn’t recognizable. Hours of finding software, downloading, finding an iTunes sync program. But he complained about MobileMe not consolidating his Outlook 2007 duplicate contacts and his gmail contacts! Plus he hates AT&T. He’s not a results-oriented individual, he is a compulsive “punisher.” He already returned one Samsung phone for another and found the whole change process Apple’s fault. These are American consumers: scatty, compulsive. You can only wish them luck.
The best, most sustainable way to “lock in” customers is to build the best products. Everything else is a gimmick.
I stick with Apple products BECAUSE THEY LACK FEATURES!!!!
What do I need with this setting and that setting and those settings and that configuration. Do you, as I still do, spend 20% to 50% of my time configuring, reconfiguring my Windows computer?
Apple gives me the features I need. No more. And configures the system for me so I can be productive.
I am always amazed when I get on my MacBook and begin “producing” things immediately instead if spending an hour updating/configuring before I start.
My 2 cents…
As long as you know your limits you will do fine. Having the luxury of being able to configure and reconfigure your computer gives you more power over your environment. I see one iPhone user, I have seen them all. No one have anything more than the next, they are all clones of one another. iPhone just got the ability to multitask, albeit Steve Jobs iteration of multitasking, where as every other device out there has been multitasking the accepted way since the beginning. Tabbed browsing has just been invented in Apple world for the iPad. How long have we all been using tabbed browsing while surfing the web?
With article’s like this one I predict the rapid decline of Morningstar. It won’t be able to sustain it’s minimal following as its readers catch on and seek better advice. Morningstar soon to be a hasbeen.