Thursday, April 29, 2010

Sometimes, Predictions Come True

Even a stopped clock is right twice a day.

After being on the wrong side of "ACAS is a buy near $28" it is good to get something conspicuously right, though.

As predicted, Apple's dominance in the handheld market has grown: Apple is now not only the leading smartphone maker by profit, and the leading phone maker by profit, but has just become the #1 U.S.-based cell phone manufacturer by volume (Nokia and RIMM aren't U.S. firms). That's not smarphone volume, but all mobile phones by volume.

Apple is crushing its "we hope to get 1% of the market" objective it announced with it showed the first iPhone three years ago. There are folks predicting gloom, of course – Apple could hardly be worth investing in if "everybody knew" Apple was going to demolish its competition – but Apple's development environment and its freedom to source parts anyplace it likes (other vendors are stuck with the software supported by their OS vendor, though this situation will alleviate itself as competitors replace existing platforms with platforms built atop highly-portale Linux kernels; nevertheless, without a clever API, cross-platform compilation could stymie quick movement to different mobile architectures). Apple's control of its platform and its multiple-architecture-friendly development environment are an asset that shouldn't be discounted.

Apple will get serious competition in the cell phone market, to be sure; it has, after all, been forced to compete on price and features in the iPod space as well. Apple no longer commands the portable music market by force of buying all the 1.8" drives, or because it's cornered the market for solid state storage; anyone can buy the parts Apple buys. Apple just offers a system that's integrated in a way that appeals to users, and which Apple advertises so as to maintain its brand value. Apple dominates the mobile music market despite the obvious opportunity to compete, and despite commanding a premium for its products. Predicting gloom in the phone market seems premature when Apple is just getting warmed up.

I mean, Apple is just about to launch its first iPhone powered by its self-made processor, and will launch a background-processing system that will fool folks into believing they have full-on multitasking even while Apple is sleeping most of their applications (and saving the batteries from lots of avoidable processor cycles). Apple's competitive advantage is still developing.

It's going to be exciting to see Apple fight for more and more in the mobile market, while working to deliver more and more to deserve it. It's a great time to be a fan of gadgets.

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