Fortune Magazine: What's Apple Gonna Do With All That Cash?

First it was Wired Magazine playing personal shopper with Apple's $15 billion in cash, now Fortune Magazine is at it as well.

"If the past is any guide, Jobs & Co. could very well use some of the money to swallow smaller companies. In 2001 Apple bought education software company PowerSchool; in 2002 it went on a binge and snapped up audio production company Emagic, video effects company Nothing Real, and FireWire developer Zayante. (Apple’s acquisition record is mixed; it sold off PowerSchool last year and its FireWire technology has taken a backseat to USB 2.0, but audio and video software efforts have flourished.) It’s conceivable that Apple could use cash to buy its way into a new niche, like social networking or online collaboration."

Link to Fortune article.

Fast Company: Open Season on Apple

Fast Company’s lastest cover story paints a picture of Apple in 2008 as a company under attack by numerous enemies.

“In a way the company has never seen, the barbarians are massing at the gates. From hardware to software to services, major competitors with serious R&D and marketing budgets are laying siege to the House of Jobs. As Apple moves into new markets, it has made powerful new enemies, some working in concert.”

I would argue that Apple is the one “massing at the gates.” Apple is seizing new territory from cell phone makers with its iPhone and gaining more ground in the computer market with its OSX and MacBooks. Nokia, Dell, and other companies in these matured markets have been forced into a defensive position. Take, for example, Nokia’s plan to release a touchscreen phone and Michael Dell’s recent promise to create “product lust,” an obvious attempt to copy Apple’s advertising savvy.

The only area in which Apple finds itself on the defensive is with the iPod. Its most deep-pocketed competitor, Microsoft, finally has a product that could seize ground in the contrarian market (people who will not buy an iPod no matter what), but Apple’s innovation has continued to outpace Microsoft and the rest of competition. Based on current product lines (including cell phones that play mp3s), there are no signs the iPod’s market size or market share will shrink in 2008.

In the near future, based on its current product profile, Apple seems unlikely to give ground in any of the markets it currently competes. In fact, Apple has plenty of market share to gain in two of its three core markets (OS/computers and cell phones). It also could be argued that the third market, mp3 players, will continue to grow in overall size as mp3 players begin to catch on in unsaturated markets globally (Asia).

For continued growth in 2008, Apple will need to focus on the affordability of its products and the openness and versatility of its products.

Google Codes No Evil (For the iPhone, At Least)

Google officially introduced an iPhone-optimized Google.com--just go to Google.com on your iPhone to see it (or just look at the picture on the right). The coolest feature is the auto-suggestion.

There aren’t many companies that would improve the functionality of a competing product, but Google continues to do that with the iPhone. Google is smart enough to know that people using mobile Google search is more important than the success of their Android mobile OS.

iPhone Smudge Parody

I can tell you that the iPhone's screen is perfectly visible even when it's all smudged up. Still, this video is pretty funny.

iPhone Commercial Parody

A young woman uses the iPhone's visual voicemail to skip over her mom's numerous voicemails and...uh..oh god no!

iPod Touch Mugging Commericial

Rehashing Last Quarter's iPhone Sales

Maybe because iPhone news is thin these days, Roughly Drafted is revisiting iPhone sales numbers from last quarter. Roughly Drafted's Daniel Dilger points out that of over 4 million smartphones sold in the previous quarter, iPhone sales represented over a million of those, giving the iPhone around 27% smartphone market share. He also points out that the overall smartphone market increased 180% from the previous quarter. From the article:

"A large chunk of the new growth in smartphones can be attributed to Apple. It’s hard to say whether that’s because the iPhone attracted a new audience to the smartphone market by offering an approachable product, or if Apple simply gobbled up a large portion of the existing demand that would otherwise have resorted to smartphones using software from Palm, Symbian, RIM, or Microsoft."

Using a percentage of the smartphone market share is totally useless because there isn't even a consistent definition of what a smartphone is. In a couple years, what now constitutes a smartphone will simply be known as a cell phone. Using the percentage of overall cell phone market share is much more telling.

"Overall, NPD counted 38 million mobiles sold in the US in the same quarter, which gave Apple almost 3% of all of the nation’s new phone sales in its first full quarter of sales. Incidentally, in just a day and a half of sales in June, Apple sold over 1% of the phones in the previous quarter."

As I've stated before, Apple's eventual matured share of the cell phone market will be determined by the direction they take with future versions of the iPhone. A $400 cell phone is not an affordable choice to most people and can't capture as large a portion of the market as the iPod has. Choice is an important word here because buyers can choose from a huge market of free cell phones. Choice, cost, and the cell phone industry's current business model are what really differentiates this market from the mp3 market, rendering iPod comparisons almost useless. Although it is important to note that the current cellular business model is likely to change dramatically if the open network model of the 700 mhz is successful.

This revisiting of past sales for future speculation is like estimating the iPod market's share based on the sales of the first version. But I, of all people, appreciate the need to give people something, anything, to read about the iPhone. Besides, Roughly Drafted is just a great site.