It’s Scary How Fast Apple Could Lose Its Dominance

Apple (NASDAQ: AAPL  ) – through innovation and disruption -- has been one of the greatest performing stocks over the last several years. But while we often think of Apple as having a giant protective moat around its business, one expert says it could easily be outmaneuvered and lose its dominance.

What went right
Apple was one of the great innovators in my lifetime. Its products not only radically reshaped existing technologies (think cell phones), they also created entirely new ones (tablets). The results of this innovative prowess brought longtime Apple shareholders returns they never dreamed of.

AAPL Chart

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What could go wrong
Of course, what matters to us now is Apple's performance over the next several years. Paul Nunes is executive director of research at Accenture's Institute for High Performance, and co-author of Big Bang Disruption: Strategy in the Age of Devastating Innovation. He makes it clear that any company – no matter how entrenched – can be disrupted with surprising speed.

I spoke with Nunes at the 2014 International CES in Las Vegas. While Apple is protected to some extent by the high switching costs provided by its ecosystem, ultimately the products drive sales and the company must continue its strong track record of innovation.

His book provides the details of how new competitors these days can provide better products at lower costs in a fraction of the time it used to take. As he explains in the video, this new age of innovation, combined with social media's ability to relay information quickly, is what Apple must watch out for.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


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  • Report this Comment On July 20, 2014, at 2:09 PM, ConstableOdo wrote:

    Exactly what company in this world is untouchable by some disruption? How is Apple any more vulnerable than any other company? At least Apple is sitting on $150 billion in cash which a great deal can be put into R&D to give Apple some sort of advantage. I think all those Apple retail stores, loyal customers and 800 million iTunes accounts give Apple a wider moat than most consumer tech companies. Consumers have sunk an awful lot of money for content into Apple and it isn't going to go away overnight.

    Although analysts continue to yap about how smartphones will become a commodity, I'm willing to bet Apple will still prosper with the iPhone. I agree that anything can happen in the future because it isn't written in stone but Apple stands a better chance to survive than most any other consumer tech company on the planet.

  • Report this Comment On July 20, 2014, at 4:09 PM, NotTellinYou wrote:

    Here's my issue with articles such as this. There is FAR too much focus on Apple and "Apple's dominance" and not enough about how the likes of Google, Microsoft, and the like, have yet to do anything innovative that makes money. They have no focus, the waste millions, and have yet to build a product that makes people line up days before release and sells millions the first weekend. Why aren't there more articles about that? Why aren't there articles that speak to the lack of innovation overall in the technology space? It's all about Apple...I guess because with them we'd have nothing of note? Sad.

  • Report this Comment On July 20, 2014, at 9:00 PM, jbelkin wrote:

    Well, this guy is typical of what's wrong with most of Wall Street - he might as well be standing over a stock ticker machine with his old school thinking that if he can't bath in the product, it ain't real. What this guy doesn't recognize staggers the imagination. of course, EVERY company in some sense is vulnerable ... how long did it take Bear Stearns or Lehman to collapse and disappear off the face of the Earth after HOW MANY YEARS in business? By that measure, why not just buy gold and bur it in your backyard. This guy only understands a business and market if you have a monopoly so it's Morton Salt and Exxon for this guy. That is what drove WS all these years but having 60 years of oil in the ground as your "reserve" means nothing if your facts are ALL WRONG about how much energy reserve there is ... I'll bet this guy was running around locking up exxon because 15 years ago, they thought we were running out of energy - lo and behold, 2014 is a whole new world of fracking, LNG, etc, etc ... so this guy is afraid that Apple has no natural monopoly ... but of course, he doesn't bother to understand anything about technology and Apple because it would mean learning about CE, technology and cosnumer behavior ... too much for his brain. I know you're not going to understand all of this but Apple has NO COMPETITORS where it counts- selling at full price and high margins. Aple has managed to combine luxury at a mass market level for technology. No one else can and certainly not in the short term. Why? Apple's competitors do not have the design prowess, software capabaility,, production know-how, distribution and logistics ... plus culture wise, they are not capable. That is the most important thing. Apple's competitors are 400 product VP's in-fighting to make sure their next door office guy does not get a promotion which means they end up releasing 200 products that are diffused. Meanwhile, Apple sells 1 PHONE (and 1 older amortized phone), 2 tablets and a few mac per line (laptop, desktop and professional) and the company's entire effort is directed towards making these few products - as a result, it's always the best - it's as simple as that. They make 80% of ALL the profits in smartphones and the AVS prce of a Mac Pc is 3X the AVS of a WIN PC ... no one promises this will last forever but in the next 3-5 years, they are bulletproof - whether you shoudl buy their stock or not is your call but just because you don't understand a market does NOT make it a whimsy. You should smarten up or stop talking about things you're clueless on.

  • Report this Comment On July 21, 2014, at 3:11 AM, zippero wrote:

    The author is a moron. Apple first commercialized the GUI with the Mac and then spread it later to phones with the iPhone, and there's no other paradigm shift that's going to replace the GUI anytime soon. If there is, Apple's probably the one to give us the next paradigm shift given its track record of coming out with revolutionary devices like the Mac, iPod, iPhone, and iPad. Android merely copied iOS, but in following Windows' open OS model rather than a proprietary OS model, Android fatally sabotaged itself forever because open OS's that are widely distributed across hundreds of smartphone makers across the world GUARANTEE the commoditization of those OS's. Why? Because Android smartphone makers around the whole world have nothing to differentiate themselves from each other except price. Consequently, price wars ensue, profit margins are non-existent, and stock prices that depend on profits go sideways for years (while Apple's with real profits keeps rising). Warren Buffett once said of the innovation cycle that first come the innovators like Apple, next come the imitators like Samsung, LG, Motorola, and HTC, and then come the idiots like certain foreign Android OEMs in China and India who are destroying any remaining profitability in the Android smartphone industry by commoditizing it to death from which it will never recover. The commoditization of Android is irreversible. The iPhone 6 will also accelerate it by co-opting Samsung's heaviest-spending smartphone users from Google Play.

  • Report this Comment On July 21, 2014, at 6:16 AM, mds wrote:

    It's easy to run your mouth off when you have no skin in the game.

  • Report this Comment On July 21, 2014, at 7:06 AM, Mathman6577 wrote:

    @NotTellingYou: I completely agree with you.

    I would also add Amazon and its gimmicks to the list: drones, FirePhone, Kindle (very low market share and low margin), in fact everything except its online ordering system is pretty much a gimmick.

    For some reason Bezos (maybe because he's a crony capitalist) gets a pass while Apple gets raked over the coals if gross margin is 39.7% instead of 39.8% or 14.1M iPads are sold instead of 14.15M.

    There are a few articles from time to time regarding innovation in tech (you'll have to search for them and a lot are from privately-held companies).

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