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Muhammad Bazil
Muhammad Bazil
Articles (192) 

Why Apple Will Prosper Despite Mounting Adversities

May 30, 2012 | About:

Hitting the trillion dollar mark is becoming harder and harder for tech titans Apple (NASDAQ:AAPL). Earlier this year, April to be precise, a trillion dollars was a reachable goal. This is, however, not the case right now as the stock has since tumbled. In my opinion, I believe that the giant has merely slipped — it is not a fall. Why is this so?

Despite the mounting adversities, Apple managed to post higher revenues as opposed to core competitor Samsung. It made $22 billion off smartphones while Samsung made $17 billion. Mind you, this was after Samsung took the lead in the smartphone market.

This shows that Apple perfectly balances the needs of its stakeholders. What do I mean? For starters, stakeholders cannot be used interchangeably with shareholders. Stakeholders are anyone with interests in the activities of a given company (customers, shareholders, government, etc). Unlike Samsung, Apple knows that it must satisfy both customers and shareholders. Samsung, on the other hand, places too much emphasis on products and forgets that shareholders want to enjoy in the success of the company through increased revenue. In my line of thought, Apple’s tactful approach gives it an edge against Samsung in the long haul.

Bearish outlook

Toni Sacconaghi, an analyst at Sanford Bernstein said that Apple’s performance would continue dropping over the next few months. He particularly cited that this quarter had nothing exciting to offer. I remotely agree with him as there are no product expectations until September when the iPhone 5 hits the markets.

Another issue that cannot be overlooked is Google’s growing momentum. According to Gartner, Android currently has its shadow above 56% of the smartphone market. Apart from the fact that Android has taken the lead from IOS, it has the edge in terms of versatility (Android targets different handset manufacturers while IOS exclusively provides base for the iPhone). In addition to that, Android extends the platform for one of Apple’s biggest nightmares — Samsung galaxy series.

These two factors are currently weighing Apple down.

The harsh reality

As per now, the one big problem that seems to have established permanent residence on Apple’s front yard is Samsung. It has just released the new Galaxy S3 smartphone in 27 countries in the Middle East and Europe. The move has been deemed as an advancement to smother the entry of the iPhone 5. In my opinion, this is true.

Firstly, the Galaxy S3 phone has a similar music streaming service that pretty much has the makings of iPhone’s iTunes. This phone also has an eye tracking movement system that prevents the screen from dimming. In case you don’t know, Samsung is one of Apple’s leading suppliers. It mainly supplies mobile chips and panel displays. There may be a possibility, however remote, that Samsung installed the eye tracking movement system in preparation of what is to come in the iPhone 5.

This shows that Samsung is indeed intimidated by the iPhone 5; possible signs that the iPhone 5 may be bigger and better.

Silver lining

Apple’s fast approaching silver lining is however at the corner. Apple will rattle the industry with the much awaited iPhone 5 slated for late this year. In my line of thought, Apple is obliged to deliver perfection. This comes after recurrent complaints about software glitches in previous products. My foresight is that the iPhone 5 will grab a greater market as compared to its predecessors. In the process, it will give Apple a fresh boost of energy.

Facebook, the eight-year-old social network that made entry into the stock market in mid-May, may also help Apple in a remote fashion. How is this so? Facebook acquired Instagram for $1 billion. For those who don’t know, Instagram is a leading app maker that exclusively makes apps for the IOS platform and now recently released an app for the android platform. The IOS platform has a user base of over 30 million. Facebook will be able to expand Instagram’s market and in the process trigger an increase in iPhone sales.

In conclusion, I agree with the fact that seems low at Apple at the moment. This, however, doesn’t sway my confidence. The tech industry is very dynamic and the tables could soon turn. Similarly, Apple has the financial muscle and tact to forge ahead.

About the author:

Muhammad Bazil
Muhammad Bazil is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. He has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. His articles have been featured on the homepage of Yahoo!, MSN and numerous local news websites.

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