Investors have been less than enthused about Apple Inc. (NASDAQ:AAPL)‘s prospects, despite still solid business results. The change in sentiment is largely a result of the fact that Apple Inc. (NASDAQ:AAPL) is looking more and more like a consumer products company. That means it needs new markets, but so far it isn’t finding them.
Changing the World
There is no question that Apple Inc. (NASDAQ:AAPL) products have changed the face of the world over the last decade or so. After falling into obscurity, the company brought back its co-founder and a string of new devices came out. The iPod, iPhone, and iPad changed the way people interacted with music, telecommunications devices, and computers.
While Apple may not have been the first to market in any of the categories in which it is now a leader, it was the first to make the products that customers wanted. All others just followed its lead. After three home runs, however, hitting a fourth is a tall order.
Part of the problem is that increased competition is pushing the envelope to the point where Apple isn’t as much of a leader anymore. For example, Samsung teamed up with Google Inc (NASDAQ:GOOG) to make its wildly popular Galaxy line of products. Although the devices look a great deal like Apple’s products, Samsung has been doing a lot more than Apple Inc. (NASDAQ:AAPL).
For example, when Research In Motion Ltd (NASDAQ:BBRY) launched its new smart phone, it had a nifty feature for separating work from pleasure. It also contained the same high-level of security for which Research In Motion Ltd (NASDAQ:BBRY) is so highly regarded. Samsung quickly came out with similar offerings. Apple, not so much.
Moreover, as Nokia Corporation (ADR) (NYSE:NOK) has been working to launch a new high-end smart phone in developed markets, Samsung took advantage of an exposed flank. Indeed, Samsung has started to challenge Nokia Corporation (ADR) (NYSE:NOK) in its emerging markets stronghold with cheaper phones. Apple Inc. (NASDAQ:AAPL), not so much.
New Products or New Markets
Apple has major challenges ahead. If it wants to keep growing it has to either bring out great new technology or find new markets. New markets will become increasingly important as competition heats up in developed markets. New technology, of course, is the harder of the two options.
With regard to new markets, Apple has been slowly pushing into China. That’s not good news for Nokia over the long term. However, it has been a difficult road for Apple Inc. (NASDAQ:AAPL). Not only has China called the company out for treating its citizens “differently” than it does others, but Apple hasn’t been able to secure a relationship with the country’s leading cell phone provider.