September 6, 2012

iPhone 5 - An Apple Gamble?

September 06, 2012 Posted by Vijay 2 comments
So Apple finally muscled its way and put Samsung into submission. The court verdict was for Samsung to cough up $1bn in damages for having copied Apple's iconic iPhone. A big blow for Samsung for sure, since it could lead to injunction of its other famed Galaxy line of phones. The latest and very impressive Galaxy S3 has been added to the list of Samsung phones Apple wants to be banned from sales across U.S. No doubt, there is no better form of flattery than to be copied, but Samsung's sales of its smartphones have leapt to such big highs, Apple could not ignore the potential dominance of the South Korean giant. The other way to look at it, if you are a Samsung supporter is - that Apple, the most valuable technology company in the world could not ignore Samsung's rapid rise to the top. If Apple had not intervened the copying innovation Samsung has been leading, Apple could be realistically threatened of its Smartphone crown.

The timing of the court order is very peculiar indeed. It happened just days before Samsung's event at IFA Berlin. It has also happened few weeks before a blockbuster launch of the next 'iconic' iPhone. And in this duration, Nokia announced its new Lumia series of Windows phones, and Amazon will be announcing new Kindles and a potential phone offering too. So what does all this mean to the launch of the iPhone 5 on September 12? Apple's gamble seems to be all on one device, the iPhone. While it has been an incredible device like all Apple products, and arguably copied a lot by Samsung (though it takes one thing to copy and another to do it right and better it!), this is the time of beckoning for Apple the company. Snapping at its heels are competitors who are aggressive, and innovative in their own unique ways.

Amazon has snatched a chunk of the tablet shares with their Kindle Fire last year, and with their online Kindle books offering, coupled with Amazon prime and video services like Hulu and Netflix. All the competition in the world for the iPhone is via Android, so any victory over the Samsung Galaxy line is also a victory against Android. But Apple will be under extreme pressure this time, to deliver much more with the iPhone 5. Not only has the public been patient enough to wait for the iPhone 5, and holding back buying the iPhone 4S, the expectations after all the events preceding its launch will be huge. Anything less than spectacular from Apple could severely impact the company. For multiple reasons.

One is, the court verdict which Apple can pompously state means it is the technology king, and others are copy cats. That means Apple has to continue to lead the way and better its own products. So- pricing of its new iPhone should be better and not stick to niche market segment. For, Apple relies entirely on margins of its iPhone, and not necessarily on volumes. Apple just has the one iPhone flavour. Samsung has different offerings, different hardware catering to different consumer segments. iPhone currently is only for the ones who can afford or are passionate about an Apple product. So even if Samsung lost the court verdict, I strongly feel Apple is the one under more pressure.

Samsung has a variety of successful business ventures, including semiconductors, televisions, fridges, you name it. You can have an entire home setup (apart from furnishing) with all Samsung products. So, a Samsung monopoly on all things digital is what Apple should be most worried about. And that is exactly the reason why the court verdict was vital for Apple's sustained dominance. That said, the iPhone 5 has to be better than the Samsung S3 to begin another mobile war for technology geeks to lap up. All good things come to an end. I have a feeling (being anti-Apple anyday), the iPhone 5 would be the beginning of Apple's decline. Samsung can still survive because of its global presence, and variety of product offerings. No company can survive just on one or two products when competition is so intense and aggressive. 


John L said...

Hey Vijay,

Are you sure you want to bet that iPhone5 will be start of decline for Apple?
I wouldn't be so sure.

But, I agree that a company depending on 2 products cannot rule the world & markets for too long.


Vijay said...

I do feel this is make or break - atleast as far as Apple's dominance goes. It is going to be very difficult to sustain - and that's how all companies go .. they peak and decline .. or stagnate .. Apple will stagnate for sure in the near future, and unless they find mass appeal, decline would be a foregone conclusion