SHARE



ABOUT THE AUTHOR


Dave Michels
Dave Michels is a Principal Analyst at TalkingPointz. His unique perspective on unified communications comes from a career involving telecommunications...
Read Full Bio >>
SHARE



Dave Michels | November 26, 2012 |

 
   

Apple is Killing Us Softly

Apple is Killing Us Softly While we marvel at the design and innovation of their products, we need to understand the cost. Apple earned this. But at what point does it become too much?

While we marvel at the design and innovation of their products, we need to understand the cost. Apple earned this. But at what point does it become too much?

Apple is a phenomenal company and Steve Jobs was a brilliant visionary. The company is an icon to the American dream--from Dad's garage to world's most valuable company in about 35 years. It is nice to see the company rewarded for innovative products that captured the hearts and desires of so many people.

But Apple's incredible rise is not a reflection of the economy in general. Economic conditions, and how to fix them, were indeed among the top and most controversial aspects of the recent election. Apple is not the rising tide that lifted all boats, but rather the opposite. It is a zero sum economy, and Apple's growth is at a far greater price than is reasonable.

Take a look at the nearby shopping center: Most likely the busiest store is the Apple store, on average consuming more dollars per square foot than any other retailer--a feat that is becoming easier with all the nearby "For Lease" signs. Gone are the computer stores, software stores, music stores, and movie rental stores. The nightmare of owning a Blockbuster in the age of the iPad was the theme of a "South Park" Halloween special.

The problem is bigger than retail.

Consider consumer electronics as a whole. Once-dominant Sony, Panasonic, and Sharp are all in crisis. Sony's Walkman products owned the market for portable music pre-iPod. Computers? Dell, HP, and Lenovo are scrambling to react to Apple's Air and iPad. Distribution? Think Borders, Capitol Records, Egghead, and Blockbuster. Cameras? Nikon and Canon are both down about 50% in profits--despite the bankruptcy of Kodak and an Enron-like fiasco that beset competitor Olympus. Cell phones? Blackberry has been hemorrhaging customers since the iPhone's introduction, and the then-market leader Nokia is on the edge of irrelevance. Games? Sony and Nintendo have both reported declines in forecasts and revenue. The list goes on.

Sony recently posted a record loss of $5.55 billion. It is being hit hard across multiple business units including computers, cameras, music players, gaming, movies and music--all of which compete with Apple.

With music players and mobile phones, Apple taught Microsoft some hard lessons about consumerization. Microsoft is attempting to respond to the iPad with an ambitious strategy around Windows 8. Microsoft, like Google, has been pushed into manufacturing its own tablet at the expense of longtime hardware partnerships. There is no denying that Microsoft's influence has diminished with Apple's rise.

There are always winners and losers, but we are talking entire industries here--VoIP and unified communications included. Cisco and Avaya both reported declines in UC revenues, and along with most of the industry, now prominently feature iPad apps in their portfolios. Remember when a vendor's products had the same vendor's name on them? FaceTime visually connects the C-suite, which has impacted Cisco and Polycom. There are an astonishing number of iPads on display in conference booths at events that don't even list Apple as a sponsor or exhibitor--including Enterprise Connect and CES.

Vendors have little choice but to try to ride Apple's coattails. That's because Apple doesn't easily share. When Microsoft rose in the '90s it also brought along Intel, Compaq, HP, Dell, Adobe, Symantec, and many more. Many vendors are happy to just be ignored by Apple--ask Adobe.

Typically, when a manufacturer rises, the channel wins. But with Apple, its direct retail dominates. Many of Apple's retail partners are gone, including CompUSA, Circuit City and countless local Apple dealers. There's a strong ecosystem of third-party accessories, but many pay Apple licensing fees. Software distributors should be growing with the success of new platforms, but the App Store has a lock on the market and takes a hefty 30% distribution fee (previously, software distribution was a low-margin business).

There are a few winners with Apple's success. China got most of the manufacturing jobs. US victors include Corning, numerous software developers, FedEx, and UPS. And of course an army of lawyers that have litigated suppliers, competitors, and partners.

That sucking sound from Cupertino isn't just related to competitors. It's also about practices. An example is BYOD, the result of corporate phones not being as desirable as iPhones. Aberdeen estimates that 1,000 smartphones adopted via BYOD can cost an organization an additional $170,000 per year--largely due to 1,000 monthly reimbursement checks instead of a single check for a discounted contract. That's cash that could have gone to other corporate purchases. Consumerization has a nice sound to it, but Apple is making modest or no attempts to accommodate the needs of large organizations.

I get capitalism. Apple earned this. But at what point does it become too much? Typically, we rely on antitrust rules to protect us from big companies. Antitrust laws were drafted in response to abuses from Standard Oil which, at one time, was the most valuable company in the world. Apple currently holds that title, but antitrust rules don't seem to apply as Apple is not the dominant (monopolistic) vendor in most of its markets. Its anti-competitive effects are not from its market share, but rather from its wallet share. There's only so much oxygen in the economy, and entire industries are suffocating.

In October and September, Pandora, a music streaming service, had its stock halted from trading. Not because of what the company did or said, but because of a rumor that Apple was going to expand into music streaming. Pandora's stock dropped 11% on that rumor. Pandora has multiple viable competitors, but the Internet is big enough for all of them to flourish--unless one of the competitors is Apple.

Apple makes wonderful products. I don't mean to tread on their innovation or success. My goal is to question when too much of a good thing becomes poisonous. While we marvel at the design and innovation of their products, we need to understand the cost. When it comes to our economy, do we want to continue to let the i's have it? All around us companies are struggling. The general news is poor quarterly announcements and layoffs. Where has all the money gone?

Dave Michels is a contributing Editor and analyst at TalkingPointz.





COMMENTS



Enterprise Connect Orlando 2018
March 12-15 | Orlando, FL

Connect with the Entire Enterprise Communications & Collaboration Ecosystem


Stay Up-to-Date: Hear industry visionaries in Keynotes and General Sessions delivering the latest insight on UC, mobility, collaboration and cloud

Grow Your Network: Connect with the largest gathering of enterprise IT and business leaders and influencers

Learn From Industry Leaders: Attend a full range of Conference Sessions, Free Programs and Special Events

Evaluate All Your Options: Engage with 190+ of the leading equipment, software and service providers

Have Fun! Mingle with sponsors, exhibitors, attendees, guest speakers and industry players during evening receptions

Register now with code NOJITTEREB to save $200 Off Advance Rates or get a FREE Expo Pass!

November 1, 2017

Your customers (internal and external) demand that you offer them the ability to connect by any means. With the adoption of cloud communications tools you now have access to an expanded portfolio o

October 18, 2017

Microsofts recent Ignite event had some critically important announcements for enterprise communications. Namely, Microsofts new Team Collaboration offering, Teams, will be its primary communicatio

September 20, 2017

Customer experience can make or break your business. But how do you achieve outstanding customer service when you're dealing with outdated organizational structure, lagging technology, dated proces

September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.