One of the things that seems to have gotten lost in the avalanche of Steve Jobs coverage has been the impact he has had on technology investors. I refer not to the entire technology sector as an investable asset, but rather, the utterly crushing effect Apple has had on specific competitors as Jobs remade entire industries.
It is creative destruction writ large.
Starting with the iPod, consider the companies and franchises that the Apple juggernaut has demolished in its wake. Yes, we know the original Mac was hugely influential, ripped off by Microsoft. AAPL was marginalized as a PC player, only kept alive by a $150m MSFT investment in the a 1990s so as to retain a weakened competitor in the OS space.
Today, the triple threat of iPod/iPhone/iPad has left behind a wake of confounded business models, overwhelmed managements, and bereft shareholders. Let’s look at who has been hurt — and helped — by the elegant interface monster from Cupertino:
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Destroyed
"¢ HP: The printer business may still have some ink left, but the iPad has gutted HP’s PC operations. It has reached the point the company is considering selling the $40 billion revenue division and leaving the PC industry. HP’s tablet entry, the $499 Touchpad, was a disaster — Best Buy was sitting on over 200,000 unsold units. None were selling until the priced was slashed 80% to $99. (Sure, they may lose $200 on each one, but HP makes it up in volume!)
"¢ Dell: About Apple, founder Michael Dell once famously stated “What would I do? I’d shut it down and give the money back to the shareholders.” When Apple’s market cap passed Dell’s back in 2006, Steve Jobs reminded employees of that barb via email. Today, Apple’s profits ($29B) alone are actually larger than Dell’s entire market capitalization.
"¢ Motorola: See Google, below
"¢ Research in Motion/Blackberry: For a very long time, RIMM “owned” the enterprise market for mobile email and text messaging via their “Crackberry.” They are an instructive example of how a leader can get toppled by an innovative competitor. Topping out at $144 per share in 2008, the RIMM now trades in the $20s, with no solid answer to the iPhone. The NYT’s David Pogue just called their latest entry, the BlackBerry Bold 9900, too little, too late.
"¢ Nokia: Not too long ago, Nokia had better than a 50% market share in the mobile phone market. Today? Just 15%, and forced to abandon their own OS in favor of Microsoft’s also ran Mobile OS.
"¢ Ericsson: I’m sorry, but the name doesn’t ring a bell.
Damaged
"¢ Microsoft: Once a vicious and hated monopolist, Mister Softee is currently run by a Steve Ballmer. Bill Gates’ old pal is in so far over his head it would be funny if it wasn’t so pathetic.
Under Ballmer’s reign, Microsoft has become vulnerable. They have missed just about every major trend in technology over the past decade. Ballmer famously said he wouldn’t let his kids use an iPod or Google, missing (amongst many other tech trends) a entire computing shift. As recently as 2 years ago, he claimed Linux was a bigger competitor to Microsoft than Apple. Perhaps a different CEO might have had a strategic counter to Jobs, but Ballmer was not that guy. They still are a cash cow, but that is likely to dissipate over the next decade.
"¢ Sony: Once owned the portable music space, but their Walkman was replaced by the iPod, and their well regarded Vaio laptops are getting suplanted by iPads. They have a huge consumer electronics, film, and television business, but are being slapped by the Koreans below and Apple above.
Intel: A mixed bag to say the last. Intel is powering Macs and has some chipsets in other Apple products, but their PC business appears to be suffering.
Challenged
Google: A juggernaut in its own right, GOOG acquired Android and turned it into a legitimate competitor to the iPhone. But they don’t sell the OS — they give it away for free, and retain the search rights (their bread & butter).
It was smart to expand into mobile so as to not get eclipsed in that space, but it also created another set of headaches: Patent exposure. Apple not only dominates the space, but they also acquired a huge trove of Nortel patents so as to insulate themselves, and challenge all comers. This forced Google to pay up for a comparable portfolio, grabbing (former Apple partner) Motorola for $12.5B. The jury is still out as to whether this will insulate some of the obvious Apple inspired tech on the Android . . .
AT&T: Was desperate enough to let Apple dictate terms for the iPhone, thereby changing the entire industry. When iPhone calls got dropped in large numbers Apple may have saved them from an ignominious demise.
Benefitted
Sharp: Apple invested a billion in Sharp to insure a steady supply of laptop LCDs.
Corning (GLW) – ‘Gorilla’ Touchscreen Glass is the supplier to not only iPod touch/iPhones/iPads, but the entire industry. the i-line and its inspirations has been a boon to Corning.
Sprint: WSJ reporting they will get iPhone 5 in October)
Foxconn: Manufacturer of many Apple products (but still has not resolved its worker suicide issues).
STMicroelectronics Makes the Accelerometer, Gyroscope in iPods
Qualcomm (QCOM) – Wireless baseband chips in iPhone4 and to be in iPhone 5
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Hat tip Josh Brown, John Melloy,
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Erm, you do want to include ARM Holdings in the list of companies ‘helped’ by Apple. ARM designs the processor cores in those iPads and iPhones. Apple was an investor in ARM before it went public in the late nineties. Look at the stock chart of ARM beginning when Apple introduced the iPad. Look out Intel, because the storm is still brewing.
Jobs turned me into a Newt!
http://www.youtube.com/watch?v=zrzMhU_4m-g
I got better.
To say Google is challenged by Apple is pretty ridiculous. I’d argue the other way around. Android OS share has been gaining massively on other smartphone ecosystems, including Apple, in the past year and a half.
In the destroyed category, what about the music industry???!!
“[Sony] slapped from below by the Koreans and from above by Google.”
Racial hierarchies need lovin’ too, I guess.
>BR: Foxconn: …(but still has not resolved its worker suicide issues).
Barry, the numbers, here, do not support your conclusion. At the time of the multiple reported suicides that made media headlines, the rate of suicides within the Foxconn employees per year was smaller than the rate for the population at large in those areas of China; and there was evidence to that effect at the time, even though the media missed or ignored it. Remember that Foxconn employs hundreds of thousands of workers (just under 1M actually).
Here’s a quick example of the numbers, easily found in the “intertubes”:
“That 17 people have committed suicide at Foxconn is a tragedy. But in fact, the suicide rate at Foxconn's Shenzhen plant remains below national averages for both rural and urban China, a bleak but unassailable fact that does much to exonerate the conditions at Foxconn and absolutely nothing to bring those 17 people back.” http://www.wired.com/magazine/2011/02/ff_joelinchina/all/1
benefited: Samsung, HTC, MMI and their suppliers who are selling millions upon millions of android smartphones many would say much better meet the needs of the consumers who aren’t served by Apple’s ‘my way or the highway’ approach. 500,000 per day at last count.
the game is not over…
HP has shown people the way. The actual HP Touchpad device blows the iPad 2 out of the water (I have even less respect for anyone who bought that horrid device now). WebOS is a vastly superior OS as well. People were lining up outside of stores, ordering from multiple sources because they feared they would be canceled, buying for friends and neighbors, selling on Craigslist at 300% markup, etc…
What HP failed to realize is that it takes a bit of sugar to lure people like Barry out of their iSlavery. The Apple fanbois can’t see anything past their Macs. You need to give them a reason to try freedom.
Now, think about it. HP took a $100 million loss on the 400,000 HP Touchpads it sold over the last weekend. How much did they blow on those stupid Russell Bland commercials etc? Instead of spending even a penny on advertising, they should have done the following:
Hold a sweepstakes. Give 10,000 Touchpads to lucky winners. Sell 100,000 pads for $99 to the next 100,000. Sell 200,000 pads for $199 to the next 200,000. Give 300,000 people a free touchpad case, and sell the device to the general public for $299.
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