After I submitted my previous column to the Institutional Investor
Magazine, on the financial innovation taking place at Apple (NASDAQ:AAPL
), I learned that Sprint, T-Mobile and now Verizon are all fighting to best one another’s iPhone offers. What is really amazing about the situation is that no matter how this war among wireless carriers plays out, there will be one clear winner — Apple. And in the end, the carriers will be collective losers — they’ll be killing their margins to out-subsidize one another. They will be spending millions of dollars on advertising to get customers to come to their stores to buy — yes, Apple iPhones. If consumers choose Apple’s iPhone Upgrade Program instead of the carriers’, then Apple will win even bigger (as I argued in that column). In the meantime, 2015 will likely mark the year that AT&T’s and Verizon’s U.S. wireless service businesses went from growth to stagnation.
Another observation about Apple: Its brand extends far beyond technology and coolness. Over the years, the company has accumulated incredible goodwill with consumers. There is only one other company that comes to mind that has generated a similar amount of affection: Amazon.com. Amazon made shopping online easy, its customer service is impeccable, and it is transparent with consumers about pricing. After all, it allows other merchants to sell their merchandise through its website. Amazon will even ship it for them.
Consumers’ trust in Amazon’s (NASDAQ:AMZN
) pricing is so great that most people don’t even bother with comparison shopping anymore; they skip Google (NASDAQ:GOOG
) (which is not good news for Google, by the way) and go directly to Amazon. I recently found myself willing to pay a few dollars more on Amazon than on a competitor’s website because I knew that if I needed to return the product, the process would be seamless. That goodwill turns Apple and Amazon into “platforms” (a very trendy word on Wall Street now), allowing them to launch a wide variety of new products. Continue Reading »