Steve Jobs mentioned at Apple’s Q4 results report that he sees the smartphone market in 2 phases. In the first, the potential market grows as do actual sales. All boats float though not at the same rate. In the second phase the market is mature and competition becomes a zero sum game.
Thinking of the second phase first I can see the real advantages to owning the high end of the mature smartphone market if you make hardware because that’s where the high profit margins are.
On the other hand, if you’re an advertising company which gives away software in order to track users for advertising purposes then you might want volume more than the high end segment especially if your OS competitor who specialises in high end also allows you to track their web users mobile web use.
This puts hardware firms using Android at a competitive disadvantage, they have a commoditised OS running on expensive hardware. Each of these firms must constantly iterate to make use of the latest processor, screen, etc without Apple’s power of purchasing scale. It will become increasingly complicated for firms like HTC, Samsung, Motorola to walk this tightrope and still make a profit.
Anyone who doubts Apple’s ability to make compelling products with high prices that sell exceedingly well despite their Apple tax needs a refresher course.
Microsoft is one unknown in this equation. Android is their natural competition. Can they tackle iOS and Apple? Remains to be seen.
Of course those are only the known unknowns. Ouch. It’s all to play for but right now, of all the players, I’d be happiest if I were Apple.
