What will Apple’s future look like after Steve Jobs?

What will Apple’s future look like after Steve Jobs?

‘I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.’

With these words, Jobs took a step back from the limelight into the no-less crucial role as Apple’s chairman, and he remains on the firm’s payroll.

What now?

The consensus among industry analysts is that there will be little immediate change. Jobs’ replacement Tim Cook has been running Apple’s sales, manufacturing and distribution for the past 13 years. Jonathan Ive, the British-born designer of Apple’s iconic products, remains in place. Jobs himself, health permitting, is likely to oversee product development.

Although Jobs has been ill for some years, the timing of his exit could hardly be better. Apple is on the crest of a wave. In the past five years Apple’s share price has risen 454% as the Dow flat-lined with 0.14% growth, and the Californian company momentarily had more cash in the bank than the US government.

Apple’s revenue in Q3 2011 was up 82% year on year to $28.6bn. Its mobile operating system, iOS, was the world’s second most popular smartphone platform.

If numbers were everything, Apple would be classed as a smartphone manufacturer, not as a computer maker and content distributor. Sales of the iPhone and related goods and services accounted for $13.3bn, just less than half the company’s total sales for the quarter. And sales of the iPad were up 179% to $13.3bn.

Even if Jobs was in the best of health, it would be a good time to go, except that Apple is his life and the expression of his vision.

It would set the seal on a remarkable career that saw him sacked by the board of the company he founded, only to return and triumphantly disrupt half a dozen industries, largely through the sheer force of his will and the exquisite sense to make what people want.

Ben Wood, research director at market analyst CCS Insight, believes the company will continue to be a force for some time. But he cautions that the manufacturing business is cyclical in nature.

‘Just look at IBM, Motorola, Nortel or Nokia,’ he says. ‘There’ll come a time when Apple does falter, and… we’ll see headlines screaming that Apple has lost its way now Steve Jobs is no longer at the helm.’

So what threats does Apple face? Ovum analyst Nick Dillon believes Apple’s current position as the number two mobile operating system is reasonably secure. He predicts that within the next three years Google’s Android, now on 50% of smartphones, will increase its share to around 60%.

He says iOS and RIM will battle it out for the number two and three spots, with a rejuvenated Microsoft Windows Phone 7, and soon 8 – thanks to tie-ups with Nokia and Chinese hardware maker ZTE – making up the top four.
App revenues

But this is a market driven by apps. Last month, Apple announced that it had paid $2.5bn to the developers of the 425,000 apps on its App Store. More than 15 billion apps have been downloaded to some 200 million iPads and iPhones, or around 75 apps per device.

So far, Apple’s hardware and styling has given it the edge, but this can dull quickly, Dillon says. He expects Samsung to take over from Nokia as the world’s leading handset maker, giving it a hardware base that threatens Apple. There is also Google’s acquisition of Motorola’s mobile assets to consider.

Against this is HP’s decision to quit the mobile device and PC market in favour of software and services.

‘The biggest threat in mobiles is losing the hearts and minds of the software developers,’ he says.
Today, Apple’s revenue from its App Store, iTunes, iBookstore and iCloud service account for about 5.5% of sales.

‘They are there essentially to increase stickiness for the hardware,’ says Dillon.

‘Provided Apple can maintain its [hardware] product differentiation and continue to attract a price premium, it doesn’t need to get deeper into software and services.’

But Apple’s relatively closed ecosystem and what some see as autocratic behaviour (Apple would say quality control) has irritated some. There was a big backlash when the company banned Adobe products and tried to impose restrictions on the products for sale at its App Store.

Apple’s subsequent backtracking showed some flexibility; whether it will have to show more as Jobs’ charismatic influence starts to fade remains to be seen.

Written by Mobile Today
Mobile Today


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