Is Apple the Next RIMM?
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Once the innovative king of the mobile phone market, shares of Research in Motion (NASDAQ: BBRY) have collapsed from well over $100 in 2008 to a measly $6.34.
Palm, the maker of the now archaic Palm Pilot did the same thing just a few years earlier.
Could Apple (NASDAQ: AAPL) possibly be the next RIMM?
In order for consumer product technology companies to stay afloat, and profitable they need to continually innovate. There is no doubt that Apple is currently extremely innovative, but so were Research in Motion and Palm when they were at the top of their games (and share price).
When the iPhone 4S was announced the World waited in anticipation to see the wonders of Siri in action. Apple was once again about to change the rules of the game. They would once again create the extraordinary. Finally voice activation software was about to become part of our daily lives. An infallible Apple always delivers innovation, and each new product unleashes with it a new paradigm of unknown potential. Right?
…. But did Siri really change anything? I personally have never used Siri to do any meaningful work, and I don’t know anyone who has.
It seemed Apple missed on innovation for once.
…. Strike One!
On Friday the long awaited iPhone 5 was finally released. As expected the product quickly ran out, and shares of Apple soon skyrocketed. While there have been some improvements, the screen is bigger, some minor bugs are fixed, the phone is faster and Siri is supposedly improved, the iPhone is lacking in one major area – Apple Maps.
For the IOS 6 Apple decided to create their own mapping software in place of Google Maps. This has been a continuation of Apple’s trend away from Google (NASDAQ: GOOG) products.
In addition to straying from Google Maps, Apple also eliminated Google’s video service, YouTube from their phones. The IOS6 does not come pre-equipped with the YouTube app, and users are forced to download it separately.
While Apple has had success in the past with vertical integration, specifically in the music industry, there is a limit to their expansion ability. The mobile market simply has too many moving parts, and Google needs to play a role in Apple’s expansion. Apple cannot replicate Google Search, YouTube, and evidently Google Maps.
Google is the David to the massive Goliath of Apple, and as we all know David wins the battle. It would be wise for Apple not to fight a war with Google when it can avoid one.
Unfortunately Apple seems to be making this mistake at the moment.
…. Strike Two!
While it is unknown how Apple will fare in the years to come, we can learn a lot from the history of other similar companies. Both Palm and Research in Motion were in similar positions to where Apple is today. Both companies were once leaders in the smart phone industry, with share prices rising through the roof, and seemingly incredible innovation it is not surprising that Wall Street and Main Street alike adored these companies.
Today neither of these companies matter. Users began replacing their old Palm Pilots with Research in Motion’s Blackberries, and shares of Palm fell. Eventually Hewlett-Packard acquired Palm for virtually nothing. Meanwhile Research in Motion was doing an amazing job and shares were skyrocketing. When Apple came out with the first iPhone most people in the industry believed that both RIMM and Apple would continue to do well. Apple quickly outsold RIMM and customers began trading in their old Blackberries for Apple iPhones. Today shares of Research in Motion are trading for a measly $6.30. The company will likely either be forced to sell itself for less than the value of its patents, and other assets, or will have to start selling off assets individually in a liquidation of the entire company.
With Steve Jobs now deceased, a disappointment with Siri, and Apple’s seemingly blatant disregard for user experience with the failed attempt at Apple Maps, and the non-YouTube equipped IOS6, it seems that Apple is making a turn in the wrong direction.
Is it possible that Google is the next Apple, and Apple is the next Research in Motion? I have no idea, but if I had to be in one of these two stocks I would choose Google.
The mobile phone market, and technology markets are extremely competitive with new innovations arriving each year. In order for companies like Apple to stay relevant they have to continue to innovate and expand their offerings to keep up with their competitors. Both Google’s Android and the Samsung (PINK: SSNLF) Galaxy are closing the technologic gap on the iPhone, and Apple’s main advantage is their “coolness factor.” In today’s rapidly changing World “coolness” can be lost just as quickly as it can be gained, especially in the technological space. For proof of this one simply needs to look at the history of MySpace.
Google’s offerings remain years ahead of their competitors however. Yahoo! is making no effort to catch up to Google in Search, and no one is even attempting to compete with YouTube. Also because of the way Google operates, as well as their many different product offerings, the company can afford to strike out many times as they have in the past. Apple only needs a few major slips to destroy or seriously impact their earnings, as well as their brand image.
Google seems to be the safer play, and the stronger of the two companies.
This article as well as many others are published on the authors personal blog: FarrahReport.com
Foolish Bottom Line
The stakes are high and the opportunity is huge after Apple’s introduction of the iPhone 5, so to help investors understand this epic Apple event, the Fool has just released an exclusive update dedicated to the iPhone 5. By picking up a copy of their premium research report on Apple, you'll learn everything you need to know, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.
kf9211 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. 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.
