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Has Apple peaked?

by Scott Bicheno on 22 July 2010, 07:00

Tags: Apple (NASDAQ:AAPL)

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Tough at the top

Let me get this out of the way first: Apple is an incredible company - as emphasised once more by its recent quarterly revenues. It has competed single-handedly against PC giant Microsoft for all of its history and has set standards for design and customer loyalty that all other technology companies look upon with impotent envy.

Its most impressive achievements, however, have been in redefining product categories. Prior to the iPod there were already digital media players, but so much did Apple set the standard for them that iPod almost became the generic name for the whole category, like Hoover or Google.

And the more we look at competitive offerings in the smartphone market, the more apparent it becomes what a paradigm-defining product the iPhone was. The iPhone was launched in early 2007 and it took the rest of the world two or three years to catch up. That's a hell of a long time in the technology business.

But catch up they did. Google's Android operating system offers an equivalent user experience, while OEMs like HTC have stepped up to the plate in terms of handset design. The justification for paying the Apple premium for the iPhone is no longer so clear-cut, and do you think there would have been so much fuss over Antennagate if everything else about the iPhone 4 was streets ahead of the competition?

As we wrote earlier this week, a chink in Apple's armour has been exposed and it threatens many of the assets that give Apple an advantage over everyone else: coolness, customer loyalty and a reputation for design infallibility. Antennagate will be consigned to the history books and Apple will continue to sell tonnes of product at hefty margins, but the question remains: where does the company go now?

The obvious answer would appear to be the iPad. Once more Apple seems to have defined a product category when so many - most notably Microsoft - had tried and failed to do so. It appears to be selling well, but it's harder to accept the usual Apple marketing hyperbole that the iPad is ‘magical' and ‘revolutionary' when there are so many ultra-portable computers around in the form of smartphones already. To remind you, we've embedded one of the ads below.