Originally Posted by robkowa
As a regular reader of the usual Apple sites (being an Apple fanboy myself), one regularly gets to read gleeful stories about how "RIM CEOs didn't see X coming", "Ballmer didn't see Y coming", etc., and then some triumphalist account of the victory of the iPod, iPad, etc. I think it is time someone wrote an honest article about how Jobs didn't see the success of Android coming: the OS went from 0 to market leader in 2 years in the smartphone market... Here is a competitor who, with a much inferior, but cheaper and universally licensed OS, is overtaking Apple in leaps and bounds. Anyone been around in the 90s, sound familiar? I keep hearing the argument that "market share is for vanity, profits are what really counts, smartphone OS is not the same as desktop OS, etc. etc.", and I'm not convinced. What almost killed Apple in the 90s was that they dramatically lost market share, and I'm not sure that the same won't happen again, in the long run, in the phone market. We're still in the equivalent of the 80s, here, when the Macintosh just came out, and it looked like Apple would rule the world until kingdom come. But they're repeating the same mistakes again.
I don't think that your analysis is correct nor your recollection of history. The Android is Windows analogy has been raised and dashed many times over the past 2 years. Phones are nothing like PC's and phones are only one segment of the overall Post-PC market (which Apple continues to dominate). Apple has never been the market leader in smartphones at any point in its life, but remains the market leader in its chosen segment - high-end smartphones. It massively outsells all high-end Androids/WP7/WebOS put together. The way Apple dominates the financials of the entire phone industry (as it now does in PCs) is totally unlike any former situation with Mac in the 80s/90s where Apple was always way behind the IBM PC/compatibles and then specifically behind MS/Windows. Apple never dominated in units or financially throughout the early/mid Mac days, no matter how much Apple fans want to recall that they did. Today, Apple makes 4% of all PCs and takes over 33% of all the entire PC industry profits. Lenovo would be better off sticking its cash in a CD than make computers (1.5% net margins) and that goes for most PC makers.
If Apple can own 25-33% of the (smart)phone market going forward (ie slow steady growth as it is doing), it will be making phenomenal (see WalMart size) revenue and Exxon/Mobil sized profits given the growth of the underlying market. If it creates a serious $250 unlocked phone, it could take 40%+. Either way, Android mopping up the "Anything But Apple" votes, the "want an iPhone but it's not on my carrier", "the guy in the shop said this was the best one" or the "I'm a nerd and I love rooting" crowd may take 50-60% of the market units but it will always be a far less valuable platform to Google, OEMs and developers. It does not really limit Apple nor its ecosystem. Also, given that iOS owners seem to spend some major multiple (from 5X-18X) on content and apps vs. Android users, it would take a lot more than a doubling of share vs. iOS to make the Android world remotely as valuable as iOS to all the constituencies that count.
Your assumption that to be the dominant player, you need to rule the unit share charts is vastly oversimplistic. You just need to dominate the right end of the sales charts. That, Apple is doing very well and the absolute economics of phones does not mean that even an iPhone is out of the easy reach of most middle income people in the world. It is not losing share, it is doubling sales every year, still with a predominantly premium phone line up.
Did Apple see the "Windows" of the phone world coming from Google - maybe, maybe not - probably expected RIM/MS/Nokia to be the ones to make massive OEM arrangements to combat the iPhone, but not knowing it was Google does not mean they weren't entirely ready for the competition. I think it is clear that this time, Apple learned from its mistakes to create the ultimate ecosystem, maintain brand loyalty in a community 4X the size of the Mac user-base, create and dominate 2 other categories (Touch PMPs/Tablets) and has so far avoided making any particularly egregious new ones.