The fall of the house of Apple

All empires fall, but Graeme Burton sees Apple crumble sooner than most expect

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.

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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The fall of the house of Apple

All empires fall, but Graeme Burton sees Apple crumble sooner than most expect

Likewise, while the iPad remains the number one best-selling tablet computer, the slew of Android-based tablets is fast-chipping away that lead. Indeed, in a recent poll conducted by Computing, 60 per cent of readers told us that they had a tablet computer - with the share between iOS and Android split almost 50-50.

In a year's time Amazon Kindle Fires, Google Nexus and Samsung Galaxies will outnumber the iPad, and ultrabooks based on Windows 8 may offer a more versatile (albeit more expensive) alternative. Indeed, Apple's yearly iPad releases looks positively glacial compared to the speed with which new Android tablet devices are emerging, almost week-by-week.

And as both the smartphone and tablet computer markets approach a tipping point, the lead Apple enjoys in terms of application availability, driven by the early lead grabbed by Apple's iOS eco-system, will likewise melt away.

Of course, Android faces many challenges, too, including fragmentation of the operating system, poor support from many vendors and irritation with, and suspicion of, Android's controller Google.

Innovation? What innovation?

It is also worth asking what real innovation the iPhone has provided in the five years since it first emerged. The iPhone is substantially the same in form and function as it was in 2007. While it has absorbed many new features, some of those, such as 3G support were mere catch-ups. And there's nothing in the iPhone 5 that is genuinely new to Apple's phone range either, that hasn't appeared on phones from other producers.

Android phones, meanwhile, for all their manifold faults, are released every month, each one incrementally better than the last, taking advantage of faster and/or cheaper processors as the technology is developed, with producers doing their best to polish the look and feel.

Don't like HTC? Fine. Try Samsung, or ZTE or Huawei or Sony. And you can spend anything from £50 to £500 on the device, with big screens and small screens.

Don't like the iPhone 5? There's always the iPhone 4. And that's pretty much it, and it's far from the cheapest option out there.

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The fall of the house of Apple

All empires fall, but Graeme Burton sees Apple crumble sooner than most expect

Keep taking the tablets

Meanwhile, the pace of development in tablet computers is equally furious. Google, Amazon and countless Chinese chopshops churn out new tablets of varying quality every week, while Apple hums and haws like a pretentious 'artiste' about releasing a seven-inch version of its own tablet.

Apple's simplicity of product line-up might please Tim Cook because it simplifies purchasing, and maximises buying power and the efficiency of Apple's super-efficient supply chain.

But the uses for which smartphones are being purchased are diverging. When the original iPhone was released, the mobile phone was primarily a phone for most people, with a varying requirement for text messaging.

The iPhone changed that. But today, smartphone users increasingly want devices that reflect how they use their phone. For some, it remains primarily a phone, perhaps used with Skype, rather than the operators' voice network. But for others, it is for gaming, or reading books, newspapers and other material; or, for communicating, whether by email, text message or Facebook and other social media.

One size (or price) no longer suits all. Satisfying all those disparate demands requires a wide choice of devices that Apple does not and cannot meet. Indeed, those demands are much better met by the big-screen devices from Samsung and HTC, in particular.

But Cook is a bean counter, not a technologist, and how in tune is he with customers, whether those customers are buying on their own account, or for their company?

At Computing, we've talked to many companies in recent years about Apple - from trendy ones like The Guardian News & Media, to the tightest-run ships like travel company Kuoni. The message we receive is universal: Apple treats the corporate world with disdain, the discounts for bulk purchases of its products are laughable and, they feel, Apple really doesn't want their business anyway.

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The fall of the house of Apple

All empires fall, but Graeme Burton sees Apple crumble sooner than most expect

For desktops and laptops, companies in the real world struggle to pay the 'Apple tax' for computers that are little more powerful than good PCs available for half the price. So they buy those commodity PCs instead of Apple computers, at a time when the goodwill generated for Apple by the iPhone and iPad could have turbo-charged Apple's presence in the PC market and the enterprise, if it had not been so greedy.

Now, though, the company will have to contend with a rising feeling of ill-will generated both by revelations that have emerged from partner Foxconn's factories in China and by the company's recent spate of intellectual property lawsuits.

Its moment of maximum opportunity has passed.

One illustration of the way in which Apple is falling behind was brought into sharp focus by Nokia at its new Windows Phone 8 launch last week.

When Apple revealed that the interface on the new iPhone would be changed to make it smaller, it caused dismay among users who had already spent good money on equipment, such as loudspeakers, that would only fit the older interface.

That is where Nokia has been surprisingly smart, with its adoption of the Qi-standard wireless charging protocol, not to mention some of the other wireless connectivity features built into its latest Lumia phones.

The interface issue, for Nokia, is suddenly moot, but Apple did not even think of wireless charging, let alone the 'tap to play' features that enable a new Nokia Lumia to stream music wirelessly to compatible loudspeakers.

They won't be game-changers - Nokia is probably still doomed - but it likewise makes Apple, with its faffing about with new, smaller interfaces, look backwards. Why doesn't the new iPhone 5 offer wireless charging and such simple wireless connectivity? Isn't that just the kind of innovation that Apple is supposed to offer, and which would positively have its keenest supporters drooling?

Apple just is not really the technology leader that it likes to portray itself as. Google, Microsoft and others spend a larger proportion of their revenues on research and development. And the most innovative enabling technologies in Apple's products were largely invented elsewhere.

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The fall of the house of Apple

All empires fall, but Graeme Burton sees Apple crumble sooner than most expect

The heart of the Apple A5 microprocessor basically comes from ARM (the iPhone 5 uses an A6 chip, also ARM-based), while Imagination Technologies' supplies the graphics co-processor. The capacitive touchscreen - the real innovation behind both the iPhone and the iPad - certainly weren't Apple inventions either.

Apple, though, cannot change without engendering the kind of disruption among investors that get entire boards thrown out. It is locked into a proprietary, high-margin business model at a time when all its main markets are going commodity (largely thanks to Android, not Windows Phone).

Burning money

Indeed, it's stock market valuation is predicated on it maintaining an ability, not just to innovate, and not just to deliver stylish new products that positively wow people with cash to flash, but in selling those products by the truckload with a high price tag - and a tasty margin for Apple - attached.

Even though it is investors' own fault for buying overvalued Apple stock in the first place, they still won't appreciate being told that the luxury mass-market products company they bought into at $665 per share is now as boring as Sony.

And its claim to be a technology leader look somewhat hollow when it is rivals have developed the all-important mobile communications technologies and some of the key components in Apple's products are invented and made elsewhere.

Apple won't dive-bomb like BlackBerry maker Research in Motion, nor will it fail as spectacularly as Nokia. But its decline and eventual fall is already assured.