Apple Is No Longer Cool? Get Real

What's the coolest brand in tech? Not Apple (Nasdaq: AAPL  ) , says Investor's Business Daily's Brian Deagon. He thinks 2012 will be the year the Mac maker finally loses its cool factor:

"With the iPod, iPhone and iPad, Apple redefined markets and defined cool. But what's left? The iPhone is boxy, flat and feeling stale. The Samsung Galaxy smartphone seems cooler. With Google's (Nasdaq: GOOG  ) Android platform now the fastest-growing mobile OS, Apple's software advantage will diminish. Smartphones and tablets will become commodity items and Apple will be eaten by the collective Android gang. Apple's next big hope is the TV market, a tough nut to crack and where Samsung is king."

I count three big assumptions central to Deagon's thesis:

  1. Apple is out of ideas that will redefine cool any further.
  2. The current iPhone design isn't cool.
  3. Cool is best measured by smartphone activations.

Let's address each issue and then I'll let you weigh in.

Apple is out of ideas? 
Deagon's been around a long time, so it surprises me that he's asking "What's left?" for Apple. So what if we don't know what's next? That's been true many times before.

What was left after OS 9? How about OS X? What was left after the multicolored clamshell iMac? How about an integrated-flat-screen iMac? If you're investing in Apple, you're investing in the belief that there will always be a need for simple, clean designs of otherwise technically complex gadgetry.

Whether he means to or not, Deagon is arguing that most tech is already simple enough and that there's little left for Apple to improve. He also dismisses the TV opportunity because Samsung is already “king”. Color me doubtful.

Tech companies are trying to reinvent TV not because they can, but because the tech hasn't kept pace with consumer desires. Consider how the Internet works: A few clicks gets you what you want, when you want it. Viewers rightfully want this same level of control brought to the television, and only a handful of companies are in position to make this happen. Apple makes the list; Samsung doesn't.

 

The iPhone is too boxy to be cool
Say what you will about smartphones -- I'd agree the lines between “smart” and “feature” phones is blurring -- but we're still in the early stages of a global switchover to handheld wireless computing.

That favors Apple, which not only has brand awareness due to the popularity of the iPhone but also gets $650 per iPhone sold despite pricing the device for between $199 and $399 each at retail locations. AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) -- Apple's largest U.S. carrier partners -- make up the difference via subsidies. They're willing to do it because, despite a flood of new Android devices reaching market, the 4S continues to sell out. Professional analysts polled by Fortune put last quarter's handset sales at around 35 million, up 83% year over year. Cool.

Smartphone activations = cool? Probably not
Rising sales of Android handsets won't necessarily correlate to rising developer interest in the platform and only coders can eliminate the “software advantage” Deagon refers to. They're the tastemakers when it comes to mobile software.

Right now they love iOS. Don't believe me? Read this post from blogger Robert Scoble. Go ahead, click. I'll wait. (Taps feet.) See the trend? A value chain of investors, developers, and tech insiders is supporting new software on iOS first because it has the best economics. New research from Flurry Analytics supports this. Android versions bring in just 24% of the revenue of their iOS counterparts, the firm found.

So what's "cool"? For consumers, I suppose it's in the eye of the beholder. For investors -- and, for that matter, developers -- it's all about the money:

Foolish Bottom Line
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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Google and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 12, 2012, at 7:37 PM, JokerJoey wrote:

    Just a couple of other points: With just a couple of phone products, Apple has narrowed the gap between the iPhone(s) and the plethora of Android phones (what? something like 50 or 100 of the darn things?) to within one whole percentage point in terms of sales and activation as of the end of the last quarter of 2011. And that's not counting China which comes on line tomorrow (January 13, 2012 as this is written), which promises to turn things absolutely upside down in terms of number of phones sold.

    Secondly, think that 4S is too boxy? Ok, try Siri for a while and you'll forget all about boxy, roxy, schmoxy and any other 'xy" you can think of. And if you're still adamant about the design, wait until you see the new design for the iPhone 5. Trust me.

    Lastly, if you think the appearance of a television from Apple will just be another device, you are seriously smoking something. When it's announced I promise you that it, along with the iPad 3, will not only create a new class of product, but a whole new paradigm for the decade.

    I would say this all adds up to one whup-ass bunch of cool!

  • Report this Comment On January 12, 2012, at 8:18 PM, Bladrunner wrote:

    Tim:

    I respect your opinion - but I have to agree you are smoking something. Innovation is not always about actually inventing the technology, but having the vision to integrate into a platform that has never been seen/utizled by the consumer as with the apple products.

    I understand you have to keep your column going - but trying to create drama just for the sake of creating a soap opera piece is rediculous. Apple, while a huge company, does deserve the respect for their creations and success and not the feeble comments you've made to create the good vs evil scenario within your article.

    Trust me, people that understand the dynamic you're trying to create, can see right through it. I think you are so off the mark, it's not even funny. It's like a politician trying to steer the audience far from the truth in order to save one's own survival.

    I think you can find better use of your time reporting about real issues, rather than turning your reporting in the OK maganine fluff of the tech. world.

    As Apple has, create my friend - don't try to destroy just because you were not there first.

  • Report this Comment On January 12, 2012, at 8:33 PM, TMFMileHigh wrote:

    @Bladrunner,

    >>Innovation is not always about actually inventing the technology, but having the vision to integrate into a platform that has never been seen/utizled by the consumer as with the apple products.

    I'm confused. Don't we agree on this point? Give the article another read and then let me know specific areas where you believe I've got the story wrong.

    Thanks for writing and Foolish best,

    Tim

    --

    TMFMileHigh

    connect: http://timbeyers.me

  • Report this Comment On January 12, 2012, at 11:42 PM, Bladrunner wrote:

    Tim:

    I stand corrected - I misread who you were rebutting.

    Best,

    Jeff

  • Report this Comment On January 13, 2012, at 1:32 PM, TMFBent wrote:

    The iphone is the epitome of cool, which is why you see it being squinted at by high-waisted geezers hoping to find the internet on it so they can bluetooth their grandchildren.

    Android has cheap going for it (certainly not ease of use) and I see a lot of young people buying them because they're not iPhones -- since having the same thing as everyone else, including granny, isn't exactly cool.

    Cool is probably less an issue than technologically obsolete, however. Android is popular among many because the phones have cutting-edge hardware, minor stuff, you know, like 4G support (4 or 5x faster than 3G on ATT in my tests). Some people don't want to wait for a once-a-year love fest for Apple to release a phone that's already 3 months or more behind on technology.

    Of course, some of that won't matter to many iPhone users, 1/3 of whom reportedly think that their iPhone 4s is 4G device.

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