Friday, September 07, 2007

Who Wants To Compete with Steve Jobs & Apple?

After Wednesday's announcements, would you want to walk into the CEO job at a competitor of Apple's?

Let's review what just happened.

After only 2 months on the shelf, Jobs has slashed prices and increased capacity/functionality of the iPhone. This is not because the iPhone was a failure. This is Jobs and Apples putting the big competitive squeeze on their competitors.

How can you compete with someone who moves the yardsticks so significantly in so short a time? I'd guess that if the firm you joined as CEO had hoped to have a competitive phone out by Christmas, now you will toss it in the dumpster as already obsolete, in terms of price/performance.

Jobs is now racing down a value-added/volume curve, pricing ahead of current volume, and about to reap tremendous value-added from the market for new iPhones, iPods, etc.

Rather than bid down the price of Apple's stock, as sellers have effectively done this week, I think the price will ultimately head the other way. Once the mediocre investors have finished dumping the stock, and the wiser investors scoop it up at a cheaper price.

Sellers of Apple stock miss the big picture. The firm has quickly and consistently improved every element of its product lines- computers, music players, phones, and the new AppleTV. These are the actions of a strong competitor which is getting even stronger and more dominant.

So a few iPhone buyers got stuck paying a lot to be early adopters! So what? This is normal in the electronics sector. Being first with a new toy (remember the Apple Newton?) always means paying full list, and then some. Boo-hoo.

From Apple, they should expect rapid follow-on at better price/performance points.

Everything I see in Apple's broad new product announcements screams strength and improved sales and profits going forward.

This is classic, textbook Schumpeterian dynamics at work. Jobs is cutting the footing out from underneath his competitors as he introduces new features to Apple's products and raises the bar for what is now default performance.

Personally, I own one of the original iPod Shuffles. If memory serves, I paid $100 for a half-gig model. Now, a new Nano has several gig of storage, a video screen, and costs only $150. I'm seriously considering an upgrade, just because of this new product introduction.

You couldn't give me a job as CEO of one of Apple's competitors in phones or music players and/or online music purchasing right now.

No comments: