Apple’s market disruption acuity is bad news for Android

“Every startup and business initiative likes to describe itself as being ‘disruptive,’ that is, an interrupting force that changes the prevailing nature of a given industry, shifting the balance of power and the identity of those making the most money,” Daniel Eran Dilger reports for AppleInsider. “Apple’s iPhone has, since its debut in 2007, had a spectacularly disruptive effect on not only the smartphone market, but has also disrupted the revenues of parallel standalone devices, ranging from personal cameras and camcorders to dedicated game consoles and GPS products.”

“Particularly since 2010, observers who formerly dismissed and underestimated the impact of the iPhone have now jumped to the conclusion that Google’s Android will, is, or perhaps already has had a similarly disruptive effect on Apple’s future prospects, acting as a disruptor of Apple’s disruption,” Dilger reports. “However, as noted in a report by the developers of Intercom, there’s more than one type of disruption, and all forms of disruption aren’t equally valuable, important, or sustainable.”

Dilger reports, “While offering cheaper, low end smartphones is often also described as ‘disruption,’ the value of this ‘low end distribution’ is clearly not as great as Apple’s high end disruption, as evidenced by the fact that Apple earns so much more than the rest of the mobile industry combined… The vast resources at Apple’s disposal make it obvious that, given the choice between earning profits and saturating the market with ‘device shipments’ to gain market share, Apple is explicitly choosing to make money rather than to just set temporary sales records for the likes of IDC and Gartner.”

Much more in the full article – recommended – here.

MacDailyNews Take: As we wrote last November: Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth.

19 Comments

  1. And the truth shall set you free!! (should the analysts and pundits actually choose to open their minds rather than twist the world to match their viewpoints).

    The excerpt is written so well that I have to read the whole article.

  2. MDN, please cease disparaging folks based on socioeconomic conditions by using derogatory terms such as the “Hee Haw demographic.”

    Not everyone who wants an iPhone can legitimately afford one. And not everyone who can afford one chooses to buy one. That is particularly true if you have a family and need to allocate your resources towards future needs at the expense of current gratification.

    I can afford an iPhone, but I choose not to do so because I don’t want to pay hundreds of extra dollars each year for mobile data service. And, if I am not going to pay for mobile data service, why should I spend hundreds of dollars on an unlocked iPhone? I have a serviceable, modern “feature phone” and various Wi-Fi devices (iPad, iPod, etc.). An iPhone is a luxury to me, not a necessity.

    Many of your MDN Takes are funny. Some are highly intelligent and even prescient. But a few are just downright mean-spirited and ugly. Why not use a little discretion and trim those out?

    1. Yup. My take too. I have an iPhone but as you say it’s a luxury and I’m willing to pay for it. Many people can’t afford it and should not be ridiculed because they can’t afford it or have to spend money elsewhere. And MDN, you’re wrong about the low end of the smart phone market for Apple. They will be going after it and will be happy to have it. Damn happy! They won’t be selling $49 smart phones but they will have a cheaper iPhone available soon. What will you say then MDN? Just like the iPod, Apple will offer more than one iPhone for consumers. They don’t want to let Android take more market share. And more folks in the ecosystem helps the bottom line too. Even if they are humble people with simple means. Haughty and arrogant is not a requisite to own an iPhone you know MDN.

  3. Poor Google, how their strategy is such a looser. How they have so quickly taken most of the market-share from Windows phone, Blackberry, Nokia, Palm and to some extent Iphone to become the #1 outlet for their ads. No disruption here..

    1. Every Android device sold moves another user to mobile search where Google’s ad rates are a fraction of desktop ad rates, and dropping. Google is committing suicide and, quite frankly, cannot put that genie back in the bottle. Now Facebook and Samsung are kidnapping even those search customers by hacking the Android OS to their own advantage and there;s not a thing Google can do about it.

      The second problem with dominating the low end market ties back into declining mobile ad rates. The low end demographic doesn’t spend money on line, so ads served to those people become even less effective and per click rates decline even further. Google’s original search business is being eroded by its own customers. Lack of foresight has caused Google to lose control of its business.

      1. The consumer market is moving more and more towards towards mobile, so your entire argument is nonsense. With Google search, Google maps, Gmail, Google docs, on and on.. Google has done a great job of getting their product on devices, that’s the bottom line..

        1. Try to follow along here…

          Everything that moves users from desktop to mobile search DECREASES Google’s revenue because mobile ads cost less, because they are less effective. It’s a BAD thing. Got it?

          1. Desktop computing is about to die. Got it? Is that too hard for you to follow? ALL advertising will head to mobile. Is that clear enough? And hence pricing too. How about that? Do you need pictures? Diagrams?

            1. Yes, exactly. And Google can put its products on mobile all it wants, but the fact is that its per click rates on mobile are a fraction of what they are on desktop systems and they are declining. It’s so bad they won’t even answer questions about it on conference calls. Their revenue stream is drying up as search goes mobile. Is that too difficult to follow?

  4. MDN: when the Hee Haw crowd makes their purchase they become defensive for their lack of knowledge, morality and wisdom. They don’t want it pointed out that they chose to use a stolen product that is the knockoff of a real device nor do they want to be labeled as cheapskates or poor people. Their attempts to buy the illusion of wealth should be pitied along with their poor understanding of how best to allocate their meager resources. We need to turn a blind eye to the other purchases they make on the grey and black markets too because they have never learned anything about making moral choices due to a poor upbringing. When MDN puts that whole life style into a single phrase like ” Hee Haw demographic” is hurts them deeply because they never view anything as their fault or responsibility.

  5. Even though Apple is making the most profits in the smartphone business, Apple stock is in the toilet. Although it doesn’t make much sense that a profitable company is losing the most in stock value, it is certainly happening. Most investors truly believe that Android OS will put Apple out of business. Apple’s continually collapsing P/E certainly indicates that much. Most healthy companies have been at least been able to stabilize their P/E and possibly even changed the direction.

    What’s wrong with this picture? I’m not sure. There has been a steady collapse of Apple’s valuation. Not a spur of the moment collapse. The iPhone’s major profits have done nothing to change that from happening. If anything, it has probably made the outlook worse. Nothing Apple has done over the last five years have helped the company’s long-term outlook. There must be some investor rule of thumb that says companies that sell cheaper products have a better long-term outlook. Apple is bucking overwhelming odds and Apple shareholders are currently taking the brunt of it.

    The bottom line is, if Apple’s smartphone strategy is that much superior, which is the approach I prefer, then why is Apple’s stock struggling to maintain value. Wouldn’t investors naturally choose the company with the best chances of survival to put their money into? Then, why is Apple always considered the company most likely to fail which the P/E clearly shows to be the case? It’s basically a lack of confidence in Apple as a company with a future.

    I have no reason to sell my Apple stock because I bought in when the price was well under $100. I’m only speaking for those who have purchased Apple shares within the last year or so. Apple just seems like a risky purchase when there seems to be no clear-cut advantage of iOS over Android as far as investment value is concerned. Nobody wants to invest in a company whose long-term outlook appears cloudy and that seems to be the general consensus.

    1. I don’t understand your comment. You seem to think the stock market actually reflects the reality of companies’ health and success, when in fact, the stock market is now just another casino and Apple’s stock is being purposely manipulated, for profit.

      Further, the “general consensus” is clearly not that Apple’s long-term outlook appears cloudy. It’s that Apple’s outlook is so obviously good, that its stock can be manipulated down and it will always pop back up (when the manipulators decide it’s time). I call this treason.

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