Samsung, Apple and Becoming Microsoft
The business insider had a fascinating chart and commentary on the third quarter units shipped of smartphones. In a nutshell, the third quarter was the first time in recent history that a single android manufacturer shipped more units than Apple.
The analysis repeatedly describes the trend as ‘worrisome’ for Apple. Here’s a snippet:
As the history of the tech industry has demonstrated again and again, technology platform markets tend to standardize around a single dominant platform. Although several different platforms can co-exist while a market is developing, eventually a clear leader emerges. And as it does, the leader’s power and “network effects” grow, while the leverage of the smaller platforms diminishes.
So, the question is: Who will be the Microsoft of the Smartphone market? Apple or Samsung?
I suspect that one of the key dynamics that will effect Apple’s future is it’s cash. In their 10K, they have $81.5 billion of it.
When Steve Jobs was alive, the investment community was happy to let them hold it. The feeling was that Steve would put it to work better than they could. It will be interesting to see if they continue to have such patience with Tim Cook.
At same time, Microsoft has $57.4 billion on its balance sheet so apparently being an emerging mobile platform is better than being a dominant desktop one in today’s market. Seriously, the most likely explanation is that Microsoft has spent years investing and trying to diversify its market positioning, including a huge and costly bet on online and search. Apple has yet to seriously start looking at acquisition or other lines of business. Again it will be interesting to see what Tim Cook does and how much patience the financial community has with him.
Samsung is already a diversified consumer electronics business and Google (the creators of Android) is, of course, a player in the mobile market because they need to find a constructive way to invest their own huge pile of cash generated by their search business.
The product developments are the sexy part of the smartphone market but sometimes, if you want to see where a market is going, you need to follow the money. In today’s market, its still anyone’s game.