Ever Since Apple Inc. (NASDAQ:AAPL)’s stock hit unprecedented highs in September 2012, it has shed off more than one third of its value. Not only is company CEO Tim Cook under pressure to reverse this trend and perform as Steve Jobs would have wanted, but the 52 year old may also have to make the toughest decision yet in his career.
As we all know, media outlets all over the world have been awash with rumors of an ‘iPhone mini’ launch, or simply put, a cheaper iPhone. Apple’s long term stand has always been to remain at the top of the industry. In fact, Tim Cook, in a timeless address a while back, was noted to say that Apple would not, at any one time, venture into the low end smartphone business. Cook, at the time, maintained low-end was not reflective of Apple. Nonetheless, Cook forgot some old proverbial saying coined by our ancestral wise men; words are like a double edged sword, they always strike back.
Now more than ever, Apple Inc. (NASDAQ:AAPL) needs an ‘iPhone mini.’ There is no denying that the high end of the market has gone Samsung’s way. Tim Cook will ultimately have to bite the bullet and make the hardest choice of his career. Will he stand firm with the high end market or will he venture into the low end market?
Apple did it with the iPad mini, it can do it again
Already, Tim Cook has shown that he is not all about maintaining the lavish image that is so deeply engrained in Apple. By introducing the iPad mini, Apple showed that it could lower its prices and bow down to market trends in order to maintain that highly coveted bottom line. Although the iPad mini doesn’t present a budget proposition when compared with competitors’ tablets, its price is considerably lower than the conventional iPad.
I believe that the launch of this iPad mini helped Apple in so many ways. In an unprecedented projection, the IDC expects Android tablets to outstrip iPads in 2013. I readily agree. I am however certain that if it were not for the iPad mini, it would be a story of ‘trounce’ rather than ‘outstrip.’ The iPad mini greatly helped Apple to draw in budget witting consumers.
The IDC expects android’s tablet market share in 2013 to increase to 49% from 42% last year. iPads on other hand are expected to control 46% of the market in 2013, down from 51% in 2012.
With Apple slowly losing its grip on the tablet market, I am disposed to believe that Apple will have nothing to fall back on. It will unavoidably have to make the ultimate choice- budget market or bearish demise.
It’s a matter of when, not if
I believe that Apple’s entry into the low end market is a question of when and not if. All indicators show that Apple has reached a dead end. Google Inc (NASDAQ:GOOG)’s strategy of appealing to the masses has paid off and in the process; cost Apple its sizeable market share. As I discussed in a previous post (here), Android is now not only the biggest mobile operating system in the world, but it has also stolen that title from Apple’s iOS in the potent U.S market. Not to mention, Google’s Android is also the biggest OS in China, the world’s biggest smartphone market.