The fall of the house of Apple

By Graeme Burton
12 Sep 2012 View Comments

It is when an empire is at its zenith, the height of its powers, that it is most vulnerable - the further it extends, the more enemies it collects, the more fronts it has to defend and, above all perhaps, its enemies learn, copy, adapt and counter-attack. And when those attacks come on all-fronts, the giant can slowly be overwhelmed.

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Collapse is rarely swift, but once an organisation becomes bureaucratic, ossified and locked into destructive behaviours, it is assured and the downfall, when it comes, may surprise.

And so it is with Apple, whose moment has decisively passed, its decline sown over the past five years due to its failure to appreciate how the demands from users in the smartphone sector that it defined have widened beyond its ability to satisfy them.

The ho-hummer of today's iPhone 5 launch, while rivals such as Samsung and Nokia launch far more compelling products, is indicative of the mounting challenges that Apple faces.

A pioneering company needs to constantly innovate in order to survive, while satisfying rapidly divergent customer demands. The new iPhone offers little that is innovative - it's lighter, thinner, has a bigger screen, and supports LTE as expected - but there was more innovation on offer in the launch of Nokia's new Windows Phone 8 Lumia last week. That reflects the imminence of the company's decline.

In a year - maybe two, maybe less - it will be an overpriced also-ran ill-equipped to take on hoards of competitors it faces in all its core markets. Yet at the same time, it will struggle to compete on price, having established itself as a high-margin vendor, with a stock market valuation that reflects this.

Already, Android-based mobile phones vastly outsell Apple iOS-based phones, and that gap is increasing fast as Android becomes the smartphone operating system of choice, not just in the US and Europe, but in discerning emerging markets, especially China.

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