Filed under: Forecasts, Consumer experience, Competitive strategy, Google (GOOG), Apple Inc (AAPL), Motorola (MOT), AT and T (T), Nokia Corp. (NOK), Research in Motion (RIMM)
This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that might eventually succeed them.
Apple (NASDAQ: AAPL) is one of the great stories of corporate America and the stock market. Under the leadership and genius of Steven Jobs, Apple is emerging as the premier technology growth company of this decade and the next. In the past five years the stock has rocketed from $9 to the current $175, and yet the story is actually stronger than ever before.
Apple has three major legs of growth in its arsenal and a distribution system that is second to none. The products of Apple are both cool and revolutionary. The 2002 introduction of the iPod defined the MP3 player space. Apple has sold over 150 million units as of March 2008 and commands over 70% of the market share. Many iPod owners are on their 3rd and 4th units, so the actual penetration of addressable customers has been barely scratched. The newer versions include touch screen and of course can store up to 20,000 songs and numerous movies and pictures.
The Mac computer has been re-engineered these past couple of years and is now the rage of the personal computer market. The new Mac is beginning to enter the traditional enterprise sector while maintaining its dominance in the consumer sector. The Leopard operating system became available in mid-2007 to rave reviews. Apple is taking market share in the competitive PC sector while maintaining its pricing structure. The company doesn’t compete on price but offers such better functionality that buyers do not mind paying full retail price. The attendant software programs are also seeing a resurgence and also carry high margins.
The iPhone is a revolution unto itself. On June 28, 2007, Apple WAS NOT a player in the fiercely competitive cell phone market. On June 29, 2007, Apple became a force to reckon with. The CEO of old traditional global cell phone maker Motorola (NYSE: MOT) stated at a conference, “we have no answer for the iPhone.” (Stunning yet true and, by the way, Motorola is still a “sell” as I wrote last year in BloggingStocks.)
The iPhone will launch its new version with twice the juice and half the price. The $199 retail price, down from $399, won’t mean less revenues for Apple. Carrier partner AT&T (NYSE: T) is subsidizing the difference in exchange for the two-year subscription from the iPhone customer. Apple has sold 5.4 million units of the iPhone as of the end of March 2008. The often-quoted goal of 10 million units sold by year end 2008 should be accomplished by September. Apple will roll out the new iPhone in 70 countries by year end.
The global race for “smart phone” market share will be a three company race: Nokia (NYSE: NOK), Research in Motion (NASDAQ: RIMM), and Apple.
Apple has a brilliant distribution strategy in place with its powerful, globally placed 232 retail Apple stores. Apple is America’s number one retailer in the valuable metric of sales-per-square-foot of selling space. Last year it topped $4,500 per square foot. Apple controls the customer buys from soup to nuts, as customers buy software and other accessories in addition to the Mac, iPod or iPhone.
There is no other story in the technology world like Apple … well, maybe Google, (NASDAQ: GOOG), but that’s another story!
Georges Yared is editor of YaredsGameChangers.com and author of the new report “How to Spot the Next Google.”
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