In my book, Google Inc (NASDAQ:GOOG) is the Robin Hood of the tech industry. It stole all the spoils of the rich, which is of course Apple Inc. (NASDAQ:AAPL), and redistributed these said spoils to the entire industry, save for Nokia Corporation (ADR) (NYSE:NOK), Research In Motion Ltd (NASDAQ:BBRY) BlackBerry, and few other fringe players. Oh, did I mention that Nokia and Research In Motion Ltd (NASDAQ:BBRY) BlackBerry are also fringe players as of this writing?
Where am I headed? It’s simple. Google Inc (NASDAQ:GOOG) created an ecosystem that not only rivaled Apple Inc. (NASDAQ:AAPL)’s iOS, but that also rallied support from key handset makers; handset makers that have since gnawed into Apple Inc. (NASDAQ:AAPL)’s market share and sent demand for its iconic iPhone several notches down. Now, Google Inc (NASDAQ:GOOG) is at it again. Remember pro-Apple Topeka analyst Brian White with his preposterous $1000 plus price target on Apple? White issued the price target not once, but twice; most recently in January.
Now, take Brian White’s positive outlook on Apple Inc. (NASDAQ:AAPL), remove the half bitten fruit and add Google Inc (NASDAQ:GOOG) to the picture. Google is in the process of stealing Apple’s $1000-plus share price dream. As of this writing, its share price has, for the first time, crossed the $900 mark and the prospect of it crossing the $1000 mark is brightening by the day.
Where did Apple Inc. (NASDAQ:AAPL) go wrong?
There are no premium products in technology and if so, not for long
The premium product approach doesn’t work in technology. History has shown us that over and over again. Do you remember cathode ray tube color TVs back in the 50’s? Even with a protruding back that was reminiscent of the jawbone of a Zinjanthropus, these colored TVs were exclusively reserved for top income earners in the U.S. Now, however, if you see someone with a CRT TV, I’d recommend you call the police and report a missing artifact; our museums can’t bleed any further.
Apple took the premium product approach and, for some time, raked in unbelievable returns. However, with Google Inc (NASDAQ:GOOG) catering to the masses, the iPhone quickly started losing out to Android handset makers. Not to mention that some unregistered tech buffs in China had manufactured iPhone replicas in epic proportions. This literally divided the market and sent more consumers Google’s way.
Now, smartphones have become a necessity and Google, due its approach of catering to the masses, has the ultimate edge. Technology is a necessity and not a luxury. The snob appeal that Apple has perfected for consumers in emerging markets is now working against it.
A personal account on how Apple is losing out.
So one day, I take a walk on the streets of Nairobi, Kenya; the capital of Kenya and a key investment destination in East and Central Africa. I meet some youth donning a cap and listening to music from his Samsung Galaxy. Out of curiosity, I ask, “You are using Samsung, what do you think of Apple?” He replies, “Sorry dude, the Apple season is over. Right now it’s the season for oranges.” Stunned as you are, a good number of people in the emerging markets know of iPhones but don’t even know of a company called Apple. On the other hand, a good number of consumers in the emerging markets use Google interchangeably with the internet. And Samsung has become the synonym for smartphone.
Even struggling Finnish handset maker, Nokia Corporation (ADR) (NYSE:NOK), has a huge footprint in emerging markets. Not because of its feature phones, but because of its battery life. Most consumers (save for those who can comfortably afford $600 for a smartphone) are driven by simple, yet critically important, needs when purchasing smartphones; needs such as battery life, functionality, and price greatly affect buying decisions.