In early December, 2011, I wrote an article on why I thought Apple would lose the smart phone war to Android. Read it here: http://www.garynorth.com/public/8798.cfm
Apple’s momentum is now slowing. It suffered a profit decline in the fourth quarter. That has not happened in a decade.
It is a great company. It sells music. It sells hype. Hype sells. But Apple’s hype depended heavily on Steve Jobs.
In the battle for market share in smart phones, Apple’s days of wine and roses are over. Now Apple will have to compete.
Its share price is down 30% since September. No surprise there . . . not to me, anyway.
Here is reality: free is good. Expensive is not good. Android’s operating system is free. There is open entry. There are lots of genius Asians who want a piece of the action in the market for smart phones. They cannot be stopped.
Proprietary software cannot remain highly profitable in a world economy with open entry and open source code. It can be profitable in niche markets, but these markets will decline as a percentage of total market share.
Competition will be fierce. Profit margins will shrink.
The free market always relies on price competition to penetrate new markets. The largest market in history is Asia’s.
Asia will not adopt Apple. Apple’s products are for rich Westerners. The future of mass production and mass consumption does not lie with rich Westerners.
Samsung is nibbling away at Apple’s profits. Meanwhile, the Coolpad is nibbling at everyone’s profits in China. This is great for consumers, but bad for investors in Apple.
All this seemed obvious to me in late 2011. It will become more obvious to investors as time goes by.