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BLOG: Smartphone biz hits component barrier as Apple loses its throne

Jonny Evans | May 20, 2013
While the iPhone has been beaten out of its first place by Samsung devices, Apple has one big advantage: it makes software.

Apple [AAPL] has a problem: the iPhone has been beaten out of first place by Samsung's devices. Yet the company also has one big advantage  it makes software.

Dominance is done
Derek Brown offers us a fairly good assessment of the current situation, and while I disagree with some of what he says, I do agree with parts of his analysis. I'll summarise those points:

  • Android is becoming ubiquitous
  • This ubiquity will tempt developers
  • Apple will continue to play a prominent role, but will no longer dominate
  • Apple's cloud services proposition needs development (he actually claims it's at "Ground Zero," it's not, though I do agree iCloud will need to expand its offering.).

Brown's first point concerning ubiquity makes sense in light of Gartner claimshandsets running Android outsold those running iOS by a factor of four to one in the first quarter.

It will eventually also makes sense in terms of the number of developers working with the platform, though they will continue to face challenges educating that audience into the habit of paying for the apps they want.  

The notion that Apple will continue to play a prominent role, but will no longer dominate makes sense in the event Apple fails to fight back with something distinctive, exciting and new. (Unlikely.)

Flaws in the victory
There's no guarantee the tide won't turn.

Ubiquity has its price.

Speaking to real people I've encountered numerous folk who now own some form of Galaxy device, mainly because they are "cheaper." Most people aren't too interested in the platform, and just want what they perceive to be a smartphone. However, I don't know anyone anyone  who claims to "love" their Galaxy, though this could simply be because they know I write about Apple. Ignoring the anecdotal evidence there is research-based evidence that it is indeed true, that people prefer to use an iPhone.

Again anecdotally, I know a few people who've had to return their Galaxy because it gets broken or breaks down within the first few weeks. The most frequent anecdotally related problem concerning recent Galaxy devices is that of patchy call quality. I have no proof of the latter, but there is evidence thatthese things are prone to breakage.

Low customer satisfaction and complaints of product durability haven't stopped the company cleaning up in the smartphone market. Consumers are cash-strapped and cost conscious. All the same, I believe many Galaxy users would rather have an iPhone, which is reflected in the number of people who switch to iOS from Android relative to those who migrate in the other direction.


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