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It's a popularity question in my opinion. As long as Apple can command a huge demand for their products they can charge a premium for them through subsidies.

In 2007 when the iPhone first released I was a Blackberry user and owning a Blackberry with BES was expensive. Now I can walk into any Virgin mobile store and buy a Curve for $99 outright and get a plan to power it for $35 a month. What was once a premium product is now in the bargain bin.

Samsung is a follower, not a leader. Samsung phones are a copy of the iPhone design concepts, running someone else's operating system. They will never 'win' using that approach. Microsoft, on the other hand, understands the value of ecosystems and how to run them. Give them a few years (working with Nokia) and you might see something different and interesting.

McBeese, on 01 July 2012 - 12:07 PM, said:

Google is the eco system. Just like Microsoft wrote Windows, yet makes no hardware, and yet Windows owns 91% of the market. So this model has worked in the past and done quite well. There are many more Windows PCs than there are Mac PCs.

McBeese, on 01 July 2012 - 12:07 PM, said:

amsung is not a leader? Really? Out og all the Android OEM's, Samsung commands 40% of that market all by itself, and the GSIII likely will push it to nearly 50%. And it doesn't look anything like an iPhone. Not even by a long shot.

As far as copying? Rally? So Apple hasn't copied anyone ideas? Would you like to me to list the top 20 things Apple has copied or stolen that weren't orginal ideas by Apple? I didn't say the ones they legally bought. Of course buying something you can't do is common these days, so Aple doing it is a good thing for them.
The Samsung Series 9 laptop, mimics the Air on thinness and being nice looking, but compared to Asus latest Ultrabook, the 9 Series as you can see looks nothing like the Air.

Copying isnt a crime...oh wait, unless u copy Apple then they want to sue you for it. Yet find it wrong when others sue them for doing the same?

Copying is one thing, outright theft is another. Samsung is guilty of copying? Apple is guilty of stealing. Which is worse? If you ahve $500 on the table and I remove one take it to a scanner and copy it 500 times and place your back, whay harm have I done to you? That versus, outright stealing it. Which is the worse crime?

W 5 years in the future? Right now iPhone is having a hard time. iPhone will always likely be a fan favorite. Once you invest, they simply can't let go. The issue is, one you buy music videos and apps, your ONLY option to use them is iOS based hardware. Which basically forces you to stick with them. Even tho Android apps pretty much only work on Android devices, you stiall have more options for devices to run your stuff. You can switch from one brand to another and most of the apps you bought will wrk acroos various models. This is the same benefit Windows offers and why it commands the market. Android will do the same.

The other issue is expanding markets. Apple can't compate in every single market. Appel can certainly release a phone in any market,a nd anyoen rich enough can buy one, one way or anoher. But the potentil=al for mass adoption isn't going to happen because the broader the market, the poorer it became.

Just look at the growth numbers of Android in those markets. Even Windows Phone has grown in thos emarkets. Look what happened in China. WP too 7% pf the market over Apple. One poster says wait until iPhone hits China's biggest carrier. It doesn't matter which carrier your devic eis with if A) no one can afford the phone or no one wants the phone (e.g Sprint)

The other issue is change. Apple simply doesn't add or change the phone enough. They wait to years to catch up to a preexisting device, only to get left. In the oriinal release, Jobs said the iPhone was 5 years ahead of everyone else. Well now its nearly 3 years behind everyone else.

Android biggest beenefit isn;t its hardware oe software over Apple. The benefit is the OEM's fighting to have space in trying to outdo the other. Bec they have REAL competition amonhst themselves we get better phone faster, we get price drop quicker, and eveoluton of devices happens faster. In fact its so fast, Apple simply can't keep up. It took 2 years for Aple to cathup to hardware that existed on other devices and as much as 3 years to catchup to some OS features.

After dissing 4" phone, it took them 3 years to decide, that maybe 4" isn't so bad. In fact, even 4.8" devices are very nice to hold even if tyour hands are small. Those who calim its to big, are just spoiled into think otherwise.
Its going to be 1985 all over again for Apple, but sooner than 5 years. As a single maker of its own devices, it hardest problem is not increasing demand. Apple is good at marketin =g and has a huge demand, but they simply can't fill it. Those waiting will simply fill it with something else. And once a person gets inside one exosystem, they rarely leave it for another.

1,000,000 Android devices are being activated per day. What is Apple going to do if and when that numbers doubles. Based on present growth, Android could be at 1.5M devices per day before this year is out.

And you're saying 5 years from now? As Android gets into more countries before Apple, It will be much harder for Apple to come right in to. And Windows is pushing to those same markets as well.

Once MS kills off RIM, Apple will be its next target. If Analyst are correct, Apple and MS coudl end up splitting that bottom 30% with Android being the top dog at 60%+.

HankRearden, on 01 July 2012 - 12:09 PM, said:

"Many" is an understatement. Mac are drowning in the sea of Windows PC's. I did read somewhere that in 2009, it was said 80% of Mac owners also owned a Windows PC's. Now that Mac's are Intel and Windows can be ran directly or through VM's, It is safe to say that more than 1/2 the Mac owners likely run Windows on their Mac's. Which adds to Microsoft overall userbase. In fact to get 100% sofwtare and hardwre compatibility, you must run Windows. Even tho Mac's are now Intel based, they still don't support every PC based option avail.

The reaosn the MS model works is because, software sells hardware. Without software, computesra er just a bunch of boxes with lights that blink. Its software that brings out the best. The world has over 7B people. Windows and Android was designed for mass adoption. While iOS was designed for Apple fanbase mostly. Apple won;t even go the licensing route, because it woudl reduce them to a software company and even tho they would make a lot of money for them, selling hardware is what they want.

The smartphone market is currently expanding to encompass those folks around the globe that have been using feature phones. There are 5 billion cellphone users in the world today, and in 10 years, most of them will be using much more affordable smartphones. It's only logical that today's most expensive phone is going to have major issues trying to maintain its slice of the smartphone market when the smartphone market becomes the largest portion of the cellphone market and becomes mostly driven by sales made in emerging markets.

Carriers' willingness to subsidize the high cost of the iPhone won't last forever. In fact, it's already cracking. Over the last few years, iPhones have been great for getting a carrier network some media attention and accelerating the new subscription rates for smartphones when smartphones were all expensive devices, but those ultra high subsidies of $450+ per device are already preventing them from making any money, while Apple carries away pile after pile of cash that carriers could have been using to expand their high speed data network coverage.

Globally, Apple's going to be in even bigger trouble down the road. There's an expansion of mobile data services about to take place globally too. In order for these far less wealthy carriers to compete with each other, they're going to have to invest more heavily in cheaper devices that are much more affordable to their customers than an iPhone ever was. This move will allow them to have to have cash for expansion of their network capabilities while simultaneously offering affordable, competitive data plans that can appeal to the masses. This will come at the expense of any investment in the iPhone.

eMJay, on 02 July 2012 - 06:53 AM, said:

Apple will be able to command a high premium if Apple can maintain a high degree of desire from a significant customer base. Really that is key here. This can sour only if the carriers feel the potential losses of not having the iPhone are minimal. As demand for Apple's iPhone remains high it is in the carrier's best interest to continue with Apple.

My opinion is that Android is becoming more and more desirable. The one million activations per day supports this conclusion. The almost 60% of the smart phone market, and still growing also supports that same conclusion. As the Android OS continues to evolve and better itself it makes it that much more difficult for Apple to maintain a high degree of desirability. If I were Apple that would be what keeps me up at night. Apple no longer has a 5 year technology leed over its competition. With respect to hardware alone, I'd say they have fallen behind. With respect to software I believe they still remain supreme. However, in terms of consumer freedom they simply can't compete. I believe this puts Android in the unique situation of potentially besting Apple. As Android's user experience rises it gets closest to offering a well rounded product giving their customers both freedom, liberty and value all rolled into one package.

This reminds me of Windows 95. When Win95 first released, if my memory is right, we were using Mac System 7.1 or maybe 7.5. It was an okay OS. But many in the MacWorld felt that Win95 finally bested Apple as an OS. And I watched that event begin a slow erosion of Apple. Android has some pretty compelling features as early as 2.2.3 vs. Apple's iOS 5. It shows how fast Android is moving. And the hardware manufactures push out new devices every three months. This can be a blessing and a problem at the same time. One thing it is for sure is one fast moving train. One that started after Apple's iPhone released and is now blown past the 2:1 ratio in market share. It is now steadily going for 3:1. Not by what's been sold so far. But instead by what is selling today. Apple 23% vs Android's close to 60%. If Apple gives up just a couple points and Android gains a couple, 3:1 becomes reality. If Android somehow manages to reach 75% I'd start to question Apple's future as a player in the smart phone business. At that point I'd expect developer intest to wane and profits to sour especially if this happens in a market contraction of the smartphone annualized volume.

$150 billion in revenue from 250 million iPhones sold. That is $600 per iPhone, very impressive. That also helps explain why so many younger iPhone owners I see drive such old P.O.S. cars. The iPhone club appears to be a rather expensive club to be a member of. Without rich parents, it seems many young people have to make other sacrifices to get in. I'm sure glad my self worth doesn't hinge that much on other people's first impressions of me. Luckily, for some of us, our self confidence isn't based on the cost of our phones.

WallyDuke, on 02 July 2012 - 09:50 AM, said:

You're making a lot of assumptions about Apple customers. From the customer point of view, the iPhone and Android are pretty much the same cost at the checkout. It is the carrier that is hit with higher subsidy costs to carry the iPhone. In general, competition keeps the price of the iPhone normalized at check out.

eMJay, on 02 July 2012 - 06:53 AM, said:

o matter which country the iPhone arrives, none of those countries aregoing to hit the sales numbers Aple has in N.A. We are the biggest buyers f iPhone and where Aple's largest fanbase is.

I do agree APple can command a premium, but because of that, the devic eis limited in other markets.
I have given examples before in relations to what you said. Based on the retial cost of the lowest new iphoen option, the device is $650. I will used Globe Telecom as I am more familiar with them. Globe os the largest telecom in the Philippines. Based on numbers nearly 90% of thecountry is poor. Most of the rich who are their are companies that have moved from the USA to the Phils. However the pay structure is bad. Example, it takes the "average" Filipino a month to make what is equal to $300USD. 70% of the population has more than 3 family members where in many cases even if both parents work, the expenses of school, college, food, clothes and transportation and rent takes up all their income.

Question...how does a family of 5 afford an iPhone? They can't. Here in the USA we take for granted we can afford these. Again this is why Aple's Mac market is most limited to countries like NA and Europe. We are the only countries that ahve the income level high enough to afford these options.

Most countries don't have a credit program. Like for example, getting loans is not based on credit, its based on the ability to pay back. Globe does offer post pay devices including iPhone, but you still need a substancia ipfront payment which is 1/2 the cost of the device. Even something as cheap as an iPod is considered to be a luxury device. I bought my wife's niece and her son an iPod Touch, and the school kids think hey are rich, until they tell them a relative in America sent it to them.

Apple can but refuses to market in these areas with affordable options. Until they do, whaiever does will always drop Apple to a niche market. Its not abot how much money they make, as they will always make money. But again I see this as a repeat of the PC revolution all over again. The reason Adrid is activating at 1M per day is becaus eof those emerging mkets. Nokia-Soft also have a chance to gain traction in thes emarkets.

The Philippines has over 130M people. Nokia is the most used phone in ALL Asian markes because those ate the cheapest options. Smartphones by HTC, Samsung, Huawei (likely spelled wrong) and Nokia are popping up more and more as cheap options. Samsung's Bada is going to get some of the market Symbian once had and Android will as well. If APple doesn't put their footin the door now, they are going to miss that boat.

Apple doesn't need to make a smaller phone. They could simply make a phone like the 3GS, use hardware that is good enough to run iOS5.1 (right now) and sell the devie for $400. Right now any single core snapdragon which is now cheap can run iOS5 and Aple doesn't have to use fancy hardware features. All they need is a 5MP camera which is also cheap now and 1GB of RAM. Most of those telecoms are all GSM based and thus one model could be activated on any carrier worldwide. ith the telecomes only subbing 1/2, they would sell likehotcakes. But Apple has some sense of prode that they refuse to market to these and thus they will get pasted up yet again.

HankRearden, on 02 July 2012 - 08:18 AM, said:

Very good points. The Windows Android annalogy is dead on. I remember in the 80's shooping at a place called Eggead software. They had shelves and shelves of Mac stuff for a small store. The PC shelf for PC's using DOS 3.3 and OS2 Warp were very small. Apple had the commend, they were first with theMac and they had no competition and apps were being released almost daily.

Once Windows 3.1 came, you could see things changing. PC apps were starting to get more shelf space and it was almost dead even. Once Windows 95 appeared, the major devs showed a major shift. Names like Adobe and others were cranking out for both, but the PC apps were showing up much faster. As I watched thsi store which was right outside my job, Icould see Mac shelves geiing smaller and pushed to the back of the store and PC apps and books being everything else. I even remember the first Windows for Dummies books. Mac stuff then was pushed to a couple shelves behind the counter.

Most devos right now make more money making apps for iOS. Apple has insured the apps are of goodquality and the platform simply dicatates nothingless. Android users get the kickback of getting many of those apps FREE. But the quaityof them is not as good even in the case of the exact same app. But theAdroid phones come with so mnay features, that a buyer has less money to spend after the purchase, and thanks to many of those being free there investment is near zero. after that initial purchase.

Iagine if APple was ctivating 1M devices per day, the blog like thsi one woudl be all over it. But since Android did it, PCW has almost nothing to show for it.

As EnJay said, there is a market of 5B people that is basically untouched. Apple simply at this point doesn't have the resources to get to them. They can't even keep up with thedemand they have now. The demand is so high they dont even worry about meeting it because, its time to now start making the new devices.

Just look at the carrier numbers in the USA. With the iPhone 4, ATT said they sold about 14M in a whole year. Tat si a not of phones. However, right Android is selling that many in just 14 days. Big difference. In the first 3 months ATT said they sold about 6M iPhone 4's, and the res of the sale sslacked off as the year went by. That meas it wook them 9 months to sell 8M more. That si slightly over 1M per month average, again comapred to Android now wo is selling 1M per day.

Verizon said even after it got iPhone, several of ist other 4G phones were still selling better. Sprint made a $22M investment only to basically sell only half what they ordered. Many carriers now are complaining about the cost in subsidizing iPhone bec it requres a huge investment of upfront money. Apple makes the carriers pyay them upfront for so many devices, if the carrier can't sell them all, then it is a lose for them and Sprint has suffered greatly. T-Mobile the only major carrier to not have iPhone yet, may not even want it now.

I also think Samsung with the GSIII has started a trend where phone makers wont be making so many different models fr carriers. They will make a single model with theneeded hardware for each carrier. It cost for more money to make once device and have different variants for each carrier. Once thsi happens, cost will drop even further. HTC already did similar with the HTC Desire. It rolled it into various models over several carriers. But each phone still had a distinct look. This could change. Ssung had a preorder of over 9M devices and hey couldnt evenfill the order fst enough. Yet Sammie has a lot of factories.

It si estimated that nearly 400,000,000 smartphone will be activated thsi year alone. With nearly 60% of that being Android, that is a lot of phones. How can Apple meet a similar demand with only one model? They simply can't. There loyal fanbased is all they will have to keep them going. And as we saw, the Mac fan base was nto enough to keep Aple running. It is now 20% of their income. If iPhone is reduced to 20% of Aple income liek the Mac was, then waht?

It's not all doom and gloom in the Android world. Comscore just released its findings for the three months ending in May, and they are as follows:

Samsung's is the top overall mobile manufacturer at 25.7 percent. LG's second at 19.1 percent. That's counting smartphones and non-smartphones, however. Apple's third at 15 percent (the largest gainer with a 1.5 percentage point increase over February), followed by Motorola (which has more than a few non-smartphones) at 12 percent, and HTC at 6.1 percent.
Google's still well in the lead for total smartphone subscribers, at 50.9 percent. Apple's second at 31.9 percent, and it again was the highest gainer at 1.7 percentage points. (Android grew about half that.) BlackBerry fell 2 percentage points to 11.4 percent, and Microsoft's Windows Phone showed just 0.1 percentage points of growth, to 4 percent even.
We'll be looking for Android's numbers to take a pretty big bump maybe not in the June findings, but certainly July, as the Galaxy S III is finally hitting stores.

Article Link:

Comscore: Samsung top mobile manufacturer, Android top platform

I still don't understand the contrived comparison between Apple sales and Android sales as being the benchmark for success of failure. It's seems to me that profitability and the viability of the whole range of offerings give a better perspective. Sure Android sales will continue to climb but I do no believe that at this point or even in the near future that Android sales will cannibalize Apple sales. In fact, I suspect that Android market penetration my very well plateau as WP8 finds its way to the market. It's all about the bottom line and it looks like Apple's bottom line will be very healthy for years to come.

The article is pretty nebulous and the comments from Strategy Analytics even more so. I was unwilling to spend $7k to see the actual report but in the final analysis I would get that this article and the SA report are more vapor than hard data. Apple may or may not have it tough in five years but the article does nothing to support the notion that they will.

This post has been edited by nonseq: 02 July 2012 - 12:05 PM

nonseq, on 02 July 2012 - 11:59 AM, said:

I would say this. If the market expands and Apple can keep the desire high at the retail level, then yes they should have no problem. I would agree with everything you just said.

If the market starts to contract and Android share rises, then that has a greater affect on Apple. Meaning less smart phones are sold over all and Android grows at the expense of Apple. In that situation, Apple would be headed where RIMM is now.

If the market continues to expand, but Apple stands still or lowers while Android rises to say 75%, then I'd be willing to bet that developers would shift to Android and the desire for the iPhone would diminish such that high subsidies might not be possible.

Those are the three situations I see as potential outcomes.

HankRearden, on 02 July 2012 - 12:24 PM, said:

I guess the big question is whether or not there is or will be a market for Premium Android apps that aren't limited by compatibility with OD version. At this point I'm not sure that there is and I doubt that Android app developers are able to pull in the kind of revenues that would entice a switch from iOS development. For now, I'm working on iOS apps and WP8 apps in the near future. Theirs not much attraction to Android for me.

nonseq, on 02 July 2012 - 12:29 PM, said:

Absolutely.

In order for the developer to feel compeled to leave iOS, they'd have to see some kind of departure from iOS devices. Right now, we're no where even remotely in that world. So my even thinking it is a little weird at this point. I'm only pointing out the three forks in the road that I feel might exist in the future if one of three conditions arises. And even then I only bring it up because Android has swelled to one million activations per day. I still remember when they hit 340,000 and Steve Jobs himself said he didn't quite believe it. Even I was cautious about those numbers. And here we are a year or two later and they are now breaking the one million mark. So I'm ponding out loud what might happen if Android grows to 75%. What affect that might have on iOS developers.

Also, I just get the feeling that Apple needs a shake up with respect to their hardware. I think consumers want a larger display, and perhaps LTE. I believe Apple will deliver both of these with the iPhone 5. It's also that I see people around me that are long time Apple users looking for change. Friends tell me that they want widgets and their choice of hardware. So I'm trying to put that into perspective. Anyway, just thinking out loud.