Apple Needs to Fight Back Before It's Too Late

Apple (NASDAQ: AAPL  ) finds itself in an unusual position these days.

It's the underdog. It's the unloved. It's the one clawing for technological relevance. It's the one backpedaling as it desperately reaches for its slingshot.

As all eyes turn to Times Square tonight for Samsung's shiny new Galaxy S IV smartphone introduction, Apple investors are hoping the class act of Cupertino aims well.

I'm an iPhone
Apple's marketing chief went on the offensive yesterday. Phil Schiller was chatty with a few major financial news outlets, talking down Google's (NASDAQ: GOOGL  ) Android as a way to play up Apple's position.

"When you take an Android device out of the box, you have to sign up to nine accounts with different vendors to get the experience iOS comes with," he told The Wall Street Journal. "They don't work seamlessly together."

"With their own data, only 16% of Android users are on year-old version of the operating system," Schiller told Reuters, going on to point out that more than half of Android smartphone owners are running software that it more than two years old.

Apple hasn't really had to take shots since its successful "I'm a Mac" ads attacking Microsoft (NASDAQ: MSFT  ) to prop up computer sales back when Macs were a material contributor to Apple's business. Mac sales accounted for just 10% of Apple's revenue in its latest quarter.

Fighting ire with ire
A surprising report earlier this week claimed that Samsung actually outspent Apple in advertising last year.

It makes sense. Have you been seeing as many Apple ads as you used to come across? Unlike the "I'm a Mac" ads that would hammer Windows Vista, the ads that the tech giant is putting out these days do more in singling out iOS benefits than calling out the competition.

Samsung isn't playing so nice.

It tripped up Apple's iPhone 5 launch last year by putting out a series of ads mocking the folks waiting in line for Apple's new smartphone, playing up the Galaxy S III's superior features.

Were the ads effective? Well, Apple shares have surrendered more than 35% of their value since the iPhone 5's launch. You be the judge.

No more Mr. Nice "i"
It will be interesting to see if Schiller reaching out to media yesterday to knock Android is the beginning of another attack strategy.

Dissing Microsoft clearly paid off. Apple belittled Windows so much that even Windows 7 and Windows 8 haven't been enough to preserve the PC industry. It whetted appetites for something more, and that's when Apple unleashed the iOS revolution.

Apple's been battling Samsung in the courtroom for a long time. The legal fisticuffs have been flying worldwide. However, Apple needs to go on the attack, especially if tonight's S IV features are seen as truly bar-raising updates.

Android is the new Microsoft. Android is the new bully that needs to be taken down a peg, controlling two-thirds of the global smartphone market according to industry tracker Gartner. Apple's share of the smartphone market was a mere 19% last year.

Android attack
Taking down Android won't be easy.

When Apple was taking shots at Microsoft, the latter was an easy target. Microsoft's the company that made computing more expensive by forcing hardware makers to shell out serious money for its operating system. Android, on the other hand, is the mobile operating system of the people. It's open source. It's free for handset makers to put out or skin into their own platforms.

We get a sense for where Apple could attack even the specs-rich Galaxy S IV from Schiller's comments. Challenging Android by drumming up the lack of seamless integration is a start. Apple can also play up the engagement given the studies that show that iOS owners use their devices more than Android buyers.

"At Apple we know that it's not just enough to have products pumped out in large numbers," Schiller argues. "You have to love and use them. There is a lot of data showing a big disparity there."

If Schiller's aim is spot on, it might work. Apple needs to do something as it waits out the next iPhone or the long-rumored release of a cheaper smartphone. 

Fretting about Apple's fall?
There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


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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 March 14, 2013, at 6:44 PM, dwilh51183 wrote:

    TIM COOK IS TO LAID BACK. HE DOESNT HAVE THAT COMPETITIVE SPIRIT LIKE AN ATHLETE. HE'S OK W BEING IN 3RD PLACE. HE IS WAY TO SLOW GETTING CHEAPER IPHONES ON THE MARKET, WAY TO SLOW BUYING BACK AAPL STOCK, . IF EARNINGS AND STOCK GOES DOWN ANYMORE HE SHOULD BE FIRED

  • Report this Comment On March 14, 2013, at 7:13 PM, Shiroto wrote:

    Judging the effectiveness of advertising by the effect on a company's share price seems untenable to me, given that advertising is geared to consumers and focused on sales of products. As far as sales go, Apple's Iphone 5 and Iphone4s were the two top selling smart phones in the U.S. in the fourth quarter. Hmmm.

    Yes, the smart phone market is very competitive. For non apple phones, I find players such as Sony, HTC, LG and Huawei more interesting investment prospects than the press favorites of Samsung, Blackberry, Nokia.

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