Microsoft, Google, Nokia Benefit from Apple’s Mistake
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I remember when Nokia (NYSE: NOK) bottomed at $1.63 per share earlier this year. Uncertainty, fear, and intense competition surrounded the company as it fell through the ranks from its position as the top handset maker.
Would the company fail? Would it be bought out? No one knew. However, Nokia sits at a far better position right now than it did a few short months ago.
When the company reported its Q3 financials, it reported $12 billion in cash, versus $6.75 in debt. The load is not ideal, but it at least gives Nokia the cash cushion to continue slicing its businesses down to size. As for its ability to turn around its profit margins, Nokia presents a unique opportunity – its new Lumia phones, which run Windows 8.
A New Operating System
Microsoft’s (NASDAQ: MSFT) Windows 8 requires some learning for the desktop, but its mobile software is intuitive.
Windows 8, for example, comes with a host of advantages. Courtesy of “live tiles,” users can see their apps updated right on the home screen of their phones. This means that Windows 8 users can see weather, e-mail, and other updates without having to open different apps.
Also, Windows 8 makes it extremely easy to run apps concurrently. One example is users using collaborative apps or browsing the web as they interact via Skype. Originally, I did not expect Windows 8 to be so user-friendly. However, I am happy to see that Microsoft designed the platform so intuitively.
This will bode well for Windows 8 devices, such as Nokia’s Lumia line. Also, I expect the “Windows Wave” to carry into sales of Microsoft’s Surface tablets. With a starting price of $499, I was originally pessimistic about the Surface’s performance. However, with a strong operating system, the Surface has the potential to develop some traction.
One problem, however – Microsoft is limiting distribution of the Surface. Microsoft is opening only 34 temporary stores to sell the device. This will hurt internet sales – I expect that customers want to touch and play with a device before spending over $500 to buy it.
Apple Helps
A competitive mishap – Apple’s (NASDAQ: AAPL) software issues – has also helped Microsoft, Nokia, and also Google (NASDAQ: GOOG). Apple had a host of problems with its maps. In Asia, it even led some iPhone users to the wrong destinations. In response, Apple CEO Tim Cook released an apology letter explaining the mishap.
Moreover, Cook recommended that users use Bing, Nokia Maps, or Google Maps instead. (You can read the apology letter here.) Cook even went as far as to explain to customers how to put Google’s and Nokia’s apps on the home page of their iPhones. Apple used to use Google maps in its service, until Apple went at it alone.
Also, some users have criticized Siri, Apple’s “voice assistant” for not being very helpful.
Compounded together, these software shortcomings, though small, come at a price. In the competitive smart phone market, there is little room for error. In China, users have a tendency to switch software platforms (iOS to Android to Windows, for example) more often. For first-time users of iOS, the map trouble may be enough to spur then to try Android the next time around.
To resolve these software issues, Apple made a personnel switch. Apple’s software Guru Scott Forstall is out. And Jony Ive is now in place. Ive led Industrial Design – the group responsible for the slender, graceful feel of iPhone – and is also taking over “Human Interface,” giving him an opportunity to correct the software problems.
The Wall Street Journal says it well:
In other words, the man who made Apple’s devices so pleasurable to behold while turned off will have a chance to improve their look when turned on.
Conclusion
Whether or not Apple made the right personnel decision, improving the small glitches is a must. Why? Because Apple is a brand that has perfected the small details – and has built a raving tribe for its impeccable products.
With its small, troublesome glitches, Apple has opened the door for its competitors. Customers will be more likely to try a Nokia, Android, or other Windows 8 phone the next time around, or to consider a Nexus 7 or Surface tablet.
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ChrisMarasco has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
