With the rise of the at cost phones and tablets from the Android camp, Florian Müller wonders whether Apple is doomed unless it can impose a lot of differentiation through the enforcement of patents.
Apple has two important advantages compared to the Android camp: the app store and the great quality of the hardware. The app store is important for serious use, as you need good applications to get some work done on the device. This is still a very strong point for Apple. Even though Android is catching up in the number of apps available, they are not yet catching up in app quality. And this is not surprising as the Apple App Store is still making developers a lot more money than they can on Android. Add to this that it is much easier to support the entire Apple ecosystem, and I do not see that Android will be catching up soon.
The hardware quality is a different advantage that is very difficult to overcome for the competition. This is not that cannot build them, but that they lack the DNA for tasteful design. Apple in addition has huge margins which they can use to innovate while the competition gets slowly starved off funds. Many people regard them as overpriced, but apart from the iPhone they are not selling at a huge premium, in fact their large economies of scale allow them to price their offerings quite competitively. Their relatively high prices are the result of a refusal to skip on quality, and it leaves them in a pretty good position as the high end tech brand.
The opening Android has is almost exclusively by price, and it is only in phones where the large margin of the iPhone leaves Samsung an opening to compete at the quality end of phones. Everyone else needs to reduce product quality to be able to undercut Apple, and this is a huge problem. The only individual phone that has even come close to iPhone sales levels is the high end Galaxy S III, which is only a bit cheaper, and I believe this shows that phones are cheap enough that people are willing to pay a premium to get the best possible experience.
Apple might eventually be forced to reduce their 50+% margins on the iPhone to a more reasonable 30%, this would correspond to a price drop from 700$ to 500$. The Nexus 4 was priced at 300$, without LTE though, so the question is whether Apple could maintain a 150$ premium on its phones. I believe that many people will prefer a higher quality handset that lasts well for one more year, for the same total cost, to repeatably replacing junk. Also we must not forget that phones are cheap, that the premium for an iPhone is only about 300$, or 12.50$ per month for 24 months. This looks like a very reasonable price to pay for getting the best experience for a device you use hours every week.
The real problem that can break Apple is the web revolution, which causes nearly everybody to move their data into the cloud as a convenience to ensure that all our different devices have the same data, as well as to facilitate better sharing with other people. Apple will always be at a disadvantage here as their way to make money is to create the best devices, and their instinct is to restrict their services to users of their devices. Google has much better web service offerings and Apple has so far not been able to provide something matching. Ironically, even Microsoft is much stronger in web services than Apple. In general, iMessages is their most successful web offering, but the app store is really breaking at the seams, and should be rewritten.
There are similar problems with the iCloud offerings, they seem to not work right all the time, with the risk of data loss. Also they are not very useful for collaboration.