There is no doubt that Apple Inc. (NASDAQ:AAPL) has done some amazing things in the last decade or so. The huge run up in the share price clearly reflects that. However, the recent drop shows that investors are starting to realize that the company isn’t perfect. No company is. That said, as the share price comes down, investors might be tempted to buy what looks like a value. But is it?
Apple Inc. (NASDAQ:AAPL) is everybody’s target. While on one level that’s an enviable position to be in, it also means that competition is fierce. That makes missteps increasingly costly, as everybody and their brother looks to take advantage of them. Anyone thinking about an investment in Apple should take the time to consider the company’s competition.
Here’s a list of some of the best positioned companies gunning for Apple Inc. (NASDAQ:AAPL):
Google Inc (NASDAQ:GOOG)
Google is probably the biggest threat to Apple. The two companies have taken vastly different approaches to their businesses and, in that, Apple seems to have a competitive disadvantage. Google’s business is built largely on advertising revenue. Its goal is to get more ads in front of people so it gives away a lot of its intellectual property simply to gain more eyeballs.
Apple Inc. (NASDAQ:AAPL) keeps everything close to the chest and, in the end, has found itself a consumer products company. It has to keep selling more devices to make more money. Google lets other people sell devices, providing the building blocks for those products free of charge. Thus, Google’s Android operating system is used by many manufacturers and it has access to more customers.
These two companies have something of a love/hate relationship that has recently been more hate than love. This is particularly true as Apple kicked some of Google’s applications off the base iPhone only to have Google ramp up its app efforts. Unfortunately for Apple Inc. (NASDAQ:AAPL), those efforts have been well received. This complex relationship is one that investors need to watch carefully.
Amazon.com, Inc. (NASDAQ:AMZN)
Although it may not seem like a direct competitor in some ways, Amazon is an increasing issue for Apple. For example, in the tablet space, Apple is a clear leader, but Amazon’s Kindle has been getting more and more competitive. A large part of that is Amazon’s massive customer base. The recent music push, in which Amazon will give customers free online digital versions of music purchased through the company’s website is a clear attack at the dominance of the iTunes marketplace.
Will the Kindle replace the iPad? Probably not, but coupled with Amazon’s reach in music, books, and video, it is a competitor with which Apple has to be concerned. Moreover, the Kindle app allows Amazon to piggyback off of Apple Inc. (NASDAQ:AAPL)’s success and diverts potential iTunes customers to a competitor. Of course, Amazon’s app also works on Google’s platform. Amazon is investing heavily in its future today, so profitability looks weak. However, Apple would be foolish to count this major competitor out.