Apple Is Walking a Fine Line

The iPhone 5 is here, and so is the new version of OS X for the Mac. They're being touted as great advancements to the Apple's (Nasdaq: AAPL  ) robust operating systems.

But hidden among all of the hoopla is a serious challenge to Apple's position in the market. It's picking fights with rivals, and leaving customers in an awkward position going forward.

The good old days
Apple has gained share in the PC market and become a dominant player in both smartphones and tablets for one simple reason -- Apple's products just work. Open the box of a Mac, an iPhone, or an iPod and, within minutes, you're up and running. The operating system is elegant and easy to use, and there's an ecosystem of apps that make the devices all the more usable.

But Apple is trying to take over more and more of that ecosystem, which is a dangerous path for the most valuable company in the world. When the iPhone was launched in 2007, the phone came integrated with Google's (Nasdaq: GOOG  ) Maps and YouTube apps, arguably the two most popular apps on the iPhone. Today, you have to download a new YouTube app on iPhones and iPods, and on the iPad, you're relegated to using YouTube on Safari. Google Maps? Good luck with that on Safari.

Devices that used to "just work" are becoming maddeningly frustrating to use for tasks that used to be taken for granted. By taking over more of the device, Apple is risking alienating both business partners and customers, who expect simplicity for the price of Apple's devices.

Apple starts a war on two fronts
Apple has always had a problem with Adobe's (Nasdaq: ADBE  ) Flash player. Steve Jobs resisted allowing Flash on the iPhone since its inception. He argued that Flash was a drain on the iPhone, and the next generation HTML would prove more useful. He may have been right, but this was the first big fight Apple picked over its iDevices. But Apple's innovative new product wowed consumers so much, that few noticed its shortcomings (or cared). Today, Apple has an even bigger battle on its hands.

We knew that Apple was introducing a maps app with iO6, but in eliminating YouTube, Apple shoved Google from its place as a key partner. The backlash to the Maps app has been the biggest negative of the iPhone 5 launch, and it may take years for Apple to catch up to Google on Maps.

Picking and choosing partners
Even while Apple's original partner, Google, has been shoved to the side, Apple has added new key partners to iOS. Facebook (NYSE: FB  ) , Twitter, and Yelp (NYSE: YELP  ) are all very integrated into iOS, and Facebook and Twitter are key partners on OS X. But will Apple soon abandon them for new partners in the future?

With Samsung and Google's Android operating system catching (and passing) Apple in many respects, I think it's a risky choice to be kicking partners out. Apple has always been a closed system, but the company now faces a choice between further walling consumers off from the outside or keeping some level of openness. As an Apple user, this is a huge concern for me.

Is this the future?
If Apple chooses to continue keeping consumers in its ecosystem, it risks losing the grip it has on mobile devices. For example, if you buy a Samsung phone, you can use Dropbox to access files and music online, outside of Samsung's grasp. Apple's iCloud isn't nearly as friendly with other devices, and its devices aren't leaps and bounds above the competition anymore, leaving an opening. This is what has made me think twice about upgrading, and has me considering how I'm going to keep files I have open to other devices I may own in the future.

It's hard to argue that Apple's stock isn't still a great deal, but I'm beginning to wonder about some of its strategic decisions. Apple has in-sourced chip design and maps while closing off other partners since the iPhone was first introduced. That's served the company well so far, but will it last with competition as strong as it is today? I think Apple is walking a fine line.

For a deeper look into Apple's position, along with updates about the iPhone 5 launch, check out our premium report on the stock. Click here to find out more..

Fool contributor Travis Hoium manages an account that owns shares of Apple. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

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


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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 September 24, 2012, at 9:10 PM, rhealth wrote:

    walking a fine line

    yes they are Travis. As Apple continues to throw up walls in their kingdom, they may yet find themselves alone in an empty castle.

  • Report this Comment On September 24, 2012, at 9:15 PM, boydp182 wrote:

    Your kind of missing the point and looking at the glass half empty. Getting out of googles ecosystem is a good thing. You can still download YouTube app and this works better for consumers as google can update it and make it more to its liking.

    As far as maps. I think it works great. It's s work in progress and just another map service we can have. People can still use google maps and they should have a standalone app soon. You still have bing maps and map quest you can use as well. Apple maps integrates very nicely with Siri. This is something apple needed to do in order to advance this the way it should.

    iCloud works great and I can still use google drive, box, or Dropbox.

    I just don't get the negativity.

  • Report this Comment On September 24, 2012, at 9:31 PM, NickD wrote:

    Apple without Jobs........give a Billion dollar business to a bunch of morons

  • Report this Comment On September 24, 2012, at 9:32 PM, NickD wrote:

    Apple without Jobs....

    have fun

  • Report this Comment On September 24, 2012, at 9:32 PM, NickD wrote:

    Apple is dead

  • Report this Comment On September 24, 2012, at 9:32 PM, NickD wrote:

    sorry but its true

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