Last week I lamented Many Don't Understand The Google/Apple/Microsoft Business Model Dynamics. If it this was was widely understood, it would be common belief that Samsung is most likely to be the one to beat in the smart phone race, and Google's Android is nigh the de facto standard mobile OS. Apple's cult-like popularity has blinded many to facts, figures, trends and logic, but here goes anyway...
As most know by now, Apple won a billion dollar settlement against Samsung week before last (Apple v. Samsung verdict). That billion dollars pales against potential Samsung flagship phone sales though. Apple's problem is that it has shifted from trying to compete in the market to trying to compete in the courts. That is the mark of a company that has reached its peak. Don't believe me? Check out the result of trying to induce legal restraints on raw market forces... Meanwhile, Galaxy sales go supernova - New York Post.
As reported by Business Insider...
That's right! The forced imposition of legal restrictions on the free market actually boosted Samsung's Galaxy sales significantly. People are now starting to research the "Better Product". So, what does Apple do instead of learning its lesson? As a result, Apple enjoins the Samsung flagship model as well. Apple is now apparently run by lawyers instead of designers, creative talent and engineers. Let's see how well that works out for them. In the meantime, let's see the actual market's reaction...
Samsung Galaxy S3 now outselling iPhone 4S in Southern California - San Fransisco Examiner
A survey of 32 Verizon, Sprint, and AT&T retailers in Los Angeles, Orange County and San Diego show that the Samsung Galaxy S3is easily outselling the iPhone 4S. 28 of the locations that were surveyed are saying that Samsung is the winner. This is based on sales from the past 10 days.
The Samsung Galaxy S3 is on its way to becoming the biggest Android headset yet. Not only has it received excellent reviews, but sales figures are staggering. Samsung is expected to announce another Android headset very soon.
Hopefully, you get the hint by now, because it's apparent Apple's management doesn't. Less money legal fees, more money on R&D!!!
Most people don't even get the endgame here. This is not going to be a battle between Apple and Samsung. Apple has already lost this by maximizing profits last year in milking the iPhone 4 franchise with the iterative, barely evolutionary iPhone 4S instead of coming out with a revolutionary iPhone 5. Yes, it made them he most profitable company in the world, but it sold their prospects to hold that title in the future to Samsung and Google. The real battle will be between those two companies - Samsung and Google. As Samsung both eliminates the threat of Apple through market while at the same time effectively narrowing the playing field by marginalizing the other Android players (even the good ones) such as HTC, it allows Google to take the gloves off its Motorola Mobility acquisition and truly get busy. You see, there will be no OEMs to anger because Samsung would have put them all out of business or sidelined them. An all out, R&D budget busting battle between Google and Samsung with Samsung innovating on the software side (ex. the S3) while Google innovates on the hardware and business model side (ex. the Nexus series) will be a boon for consumers. If you think the GS3 is a phenomenal device (and it is, try one out if you haven't already), wait until Google opens up the spigots!!!
Waiting in the background for someone to make the hubristic error that Apple just made will be Microsoft and their synthetic purchase of Nokia, throwing some pretty innovative tech at the marketing waiting for it to stick. The battle royale has yet to come, here's one of the reasons why...
Many people are still totally oblivious to exactly what it is that Google does. Here's a tutorial.
Industry Leading, Subscription Based Google Research
Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.
Google Final Report 10/08/2010
A couple of bits from our archives...
The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as valuation for each business line.
Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.
Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.
Unique, Indpendent and Accurate Apple Research
It is worth noting that the key assumptions that underline the above valuations – (1) iPhone continuing to witness stupendous growth ******* in 2012 and ****** 2013 over a larger base and (2) iPhone margins continue to remain healthy off stable prices and despite increase in material cost – should be keenly watched over the next couple of quarters.
Then ask them bout the logical argument behind the concern with Apple and the extremely volatile price action of the last few weeks. As stated many times in the past, The BoomBustBlog argument and analysis is solid.
What else is there to the earnings announcement? Well we were absolutely correct in terms of the oncoming margin compression of the the product lines, something that was actually easy to see coming but many refused to admit. Of course, there will be those select few that say, "But wait, the company reported an INCREASE in margins while you said there will be a decrease!". Yes, that's true and both can exist simultaneously.
Comments are always welcome.