This Apple is bitten, but not rotten


On a personal note, I must confess that I was a staunch fan of Blackberry. I loved its quirky ways, and ultimately I could efficiently manage my emails and send out the odd tweet. But the reaction of the company when its connection data system failed was another failure in itself–and consequently, many users voted with their feet.

But Apple is a very different story. Yet, some analysts talk of a possible drop in share price down to $400. What’s happening? Could they be right? Truth be told, competitors are performing so well that Apple finally feels the stress: its phone sales aren’t as booming as we were accustomed to, it has innovated very little and it seems to have retrenched to its already-known products. The main enemy has a name and it is a recognisable one, Samsung.

Despite these points I just mentioned, though, there are a few facts we should bear in mind before jumping into the Apple-is-doomed wagon. Let’see. Apple was the original creator of what we call smartphone, and its market, while wide, is getting crowded. The company has enough patents to considerably improve the iOS system but it seems to need more time.

On the other hand, Samsung doesn’t even own the Android system; it’s Google’s. Samsung has the licence only. And Samsung is no trouble for Apple. The problem of Apple is a pile of idle $250 billion in cash, with which it is doing nothing.

So far, Apple has bought small businesses that merely add applications, resources to increase the value of its products, like Siri, now available on iPhone 4S and iPhone 5.

What really worries analysts is the impression that Apple appears to be morose, at a reachable distance from its competitors, and could become once again a backwater company. I disagree. Apple is just catching up to gain momentum: it has been on the growth trend since 2009–and hedge funds have bullish positions at $575 per share.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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