Companies come and go in the technology sector; companies at the top one decade may be facing bankruptcy in the next. The rise and fall of BlackBerry Ltd (NASDAQ:BBRY) is illustrative of the turnover at the top of the technology sector.
Given this general pattern, many investors are asking whether the same thing that happened to BlackBerry Ltd (NASDAQ:BBRY) will happen to Apple Inc. (NASDAQ:AAPL). This article explores whether Apple Inc. (NASDAQ:AAPL) has any advantages that may save it from BlackBerry Ltd (NASDAQ:BBRY)’s fate.
The fall of BlackBerry Ltd (NASDAQ:BBRY)
Not too long ago, BlackBerry Ltd (NASDAQ:BBRY) was a leader in the smartphone market. Not only did it sell a lot of smartphone devices, it seemingly diversified away from hardware by generating revenue from software and services.
Unfortunately, as BlackBerry Ltd (NASDAQ:BBRY)’s device sales tapered off due to competition from Apple Inc. (NASDAQ:AAPL) and other smartphone makers, so too did revenue from non-hardware segments. The lack of significant switching costs — users can switch to a different device after their initial contract expires — proved fatal for the company’s market leadership; the company is now worth only a fraction of what it was worth just five years ago.
Such a swift fall is commonplace in the tech sector, and the ubiquity of smartphone devices will only make competition more fierce. BlackBerry can probably hang on to its reduced share of the smartphone market, but it will never regain its dominance.
Is Apple Inc. (NASDAQ:AAPL) different?
Despite the recurring pattern of those at the top of the tech world falling hard, many investors are convinced that Apple Inc. (NASDAQ:AAPL) is different — and they may have a point.
Like BlackBerry, Apple Inc. (NASDAQ:AAPL) integrates its own software into its devices. The two are intertwined just like BB10 is integrated into BlackBerry’s devices. The crucial difference is that Apple has an entire ecosystem of products that interface well with one another — and not so well with non-iOS devices. For instance, iPads cannot sync all media content with an Android device, therefore iPad users are more inclined to buy an iPhone.
Apple’s iCloud service will only strengthen the degree to which the company’s products rely on one another. By synchronizing content across all of its devices, Apple creates an additional incentive for users of one Apple product to buy Apple products across all product categories.
According to a 2012 CNBC survey, half of all American households own at least one Apple product.