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Apple Inc. (AAPL)’s iOS 7: A Nightmare for the Competition?

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iPhone and iPad users will no doubt delight in the lively, dynamic look, feel and functionality found in Apple Inc. (NASDAQ:AAPL)’s revolutionary new mobile operating system, iOS 7.  Apple investors, however, are likely to find their delight in the problems Apple’s competition will face if they try to duplicate the iOS 7 UI.

Background

Apple Inc. (NASDAQ:AAPL)’s iPhone, introduced in 2007, caught the smartphone competition flatfooted. While smartphone OEMs scrambled to create the operating systems and hardware needed to match the iPhone’s robust touch interface, Apple captured valuable smartphone market share.

With the launch of the iPad in 2011, the situation was the same – Apple gained significant tablet share, while the competition played catch-up.

Today, with competitors’ improvements in operating systems and hardware, the difference between Apple’s and the competitions’ user interface has narrowed. And while Apple Inc. (NASDAQ:AAPL)’s integrated app ecosystem continues to provide Cupertino with some competitive advantages in mobile, the commoditization of mobile UIs looks to be putting pressure on Apple’s industry-leading margins.

iOS 7: Rebuilding the Competitive Moat

With the launch of iOS 7 later this year, Apple Inc. (NASDAQ:AAPL) looks to achieve, once again, a significant competitive advantage via the look and feel of its new UI. And just as importantly, Apple may find their competitive advantage to be sustainable, given the difficulty the competition will face replicating software and hardware required for an iOS 7-like UI.

Software

The best way to explain iOS 7 is to consider the difference between looking at picture of a fish (iOS 6) and gazing into an aquarium (iOS 7).  Apple Inc. (NASDAQ:AAPL)’s iOS 7 uses complex software effects, such as stacking and layering, blurring, and natural movement to create a three-dimensional, immersive experience. Content no longer slides off screen – it morphs and reshapes within a space. Objects move and shift perspective naturally –  turning, bouncing, sliding, and colliding.

While the incorporation of sophisticated motion and depth into iOS 7 is intended to delight users, it is also meant to inspire developers to move into a new phase of app development.

While critics may deride this major change in the iOS look and feel as “gimmicky”, I suspect Apple’s dynamic interface will inject a level of fun and wonder into the iPhone that existed at its launch. Fun should never discounted in mobile, as it increases user exploration, discovery and value.

Hardware

Like the original version of iOS launched in 2007 – the boundary pushing software for iOS 7 requires extreme hardware specs.

Only the most sophisticated (and expensive) GPUs can handle the graphics incorporated into the iOS 7 user interface. In addition, Apple Inc. (NASDAQ:AAPL) for the first time, has added a full physics engine into iOS 7 support natural object movement. As a result, Apple has substantially increased both the cost and complexity involved in mimicking Apple’s new operating system.

Headaches for the Competition

The success of iOS 7 could be profound.

Most of Google Inc (NASDAQ:GOOG)‘s  Android-powered phones and tablets can’t replicate the iOS 7 experience. While high-end Android phones and tablets could theoretically render an iOS 7-like experience – the vast majority of Android phones and tablets are low-end and mid-tier products. The Android smartphone and tablet OEMs in this space don’t have, and can’t afford, the hardware and modified software specs required for a dynamic, iOS 7-like UI.

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