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:
- Apple is out of ideas that will redefine cool any further.
- The current iPhone design isn't cool.
- 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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