Will Apple's Success Be a Cakewalk?
Joel is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Well, it seems the patent war has subsided and we are now heading onto the 'Android War'. In one of the accusations against Samsung, Apple (NASDAQ: AAPL) has brought to notice that features used in Google's Android system also mimics the features of the Apple iOS. Google (NASDAQ: GOOG) CEO Larry Page and Apple counterpart Tim Cook reportedly met in order to discuss the intellectual property disputes. Since the discussions aren't public, we can't comment on that. But what is Google doing to save its Android from being fired by Big Bad Apple? Nothing much, it just listed out around 7 patents of Motorola Mobility that Apple seems to have infringed upon. Good work Google!!
Stakes Too High
Google realizes that it has to do something to stop Apple from deterring companies willing to build Android phones. Apple on the other hand knows removing Android from the market would mean calling in Microsoft (NASDAQ: MSFT) to share the spoils of the war in the mobile space in the US.
Apple also knows what problems the patent suit filed against it can do, and therefore likes to silently find a solution for it. Google has already started working on the small modifications it needs to do in the Android software to defray the suit filed against Galaxy Nexus and many others. If Google files a suit against Apple and that too on technical grounds like phone and video players, email notification, and voice recognition software, and if Apple is found guilty that any of its products - the iPhone, iPad, and iPod Touch use these patents, they would be banned in the U.S. Changing these important features to avoid this from happening might make these products lose their charm.
Apple is clever enough not to disturb Google when three of its biggest products are at stake. The company's third quarter reports tell us that almost 3/4ths of the total revenue it earned was because of these products. Almost 40% of its net sales come from voraciously loyal Apple fans in the US, which it will lose if there is a ban. The Holy Bible says: As you sow, so shall you reap.
Biting off the wrong Chip?
Amazon (NASDAQ: AMZN) is all ready to kindle up our minds in the coming week with the launch of its Kindle Fire 2. Microsoft will bring out its Surface RT tablet in mid October. Apple's iPhone 5 will be out in the market somewhere between these two release dates. Along with that the company is planning to announce its much rumored iPad Mini, thus competing with the tablets made by Google, Amazon and the less fortunate Research In Motion. There may be many Apple enthusiasts willing to buy the wonderful phone, but it definitely is very highly priced. That stays the same for the iPad mini, when compared with Google Nexus 7, Kindle Fire 2 or the Windows RT.
One of the major chip suppliers of Apple is Samsung. Now after Apple has done enough to generate enmity with this chipmaker, should it think of changing chip suppliers?
Well, that might be the case. But the Cupertino based company very well knows Samsung provides them with the best compatible SSDs (especially the SD 830). But Apple did make an offer to TSMC which it declined. That still leaves Apple with the option of using Intel (NASDAQ: INTC). If at all Apple does that, then should we expect their product prices to go up?
The Foolish takeaway
Apple is one of the most influential and successful businesses of the century. Those lucky enough to own shares have a lot of reasons to bask in its continuing success. With a strong and consistent EPS and an annual earnings growth rate over the past five years of 64.95% Apple's relative strength trend has been increasing over the last few months commendably. If we compare the stock's performance with the overall market over the past year, Apple displays exceptional strength.
With a Debt/Equity ratio of 0% and a large amount of cash at its disposal, Apple is all geared up to make its investors happier with the upcoming release of its new products. However, the company anticipates some production hiccups in the initial months of the release of the iPhone 5 as Sharp Corporation, the LCD manufacturer declares supply shortages.
Despite all (small) odds on its way, the word definitely is "hold" (and if possible a buy). So, what do you folks think about Apple? Feel free to comment.
Joel has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Google, Intel, and Microsoft. Motley Fool newsletter services recommend Amazon.com, Apple, Google, and Intel. 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.