Companies that had market dominance always had a golden era: a time when everything went right, market share did nothing but grow, its stock soared, and the company had nothing but awesome coverage in the media. The first half of the last decade belonged to Google and the second half obviously belonged to Apple. That said, Apple’s golden era is now over.
While Apple is still strong and selling well, it is no longer the darling of the media. In the past it was taboo to knock on Apple in the media. Now that line has been crossed and there is no going back. Microsoft lost the media in the late 90s with the IE fight and anti-trust battle, Google lost its halo with its on again, off again do no evil in China policy over the past few years. This year Apple seems to have stumbled with the kicking down the doors of a journalist’s source demanding the lost iPhone back. Someone should remind Steve Jobs that an attack on one journalist is an attack on them all and that some journalists went to jail to protect a source just a few years ago under a Bush administration crackdown. If journalists are willing to stand up to the full force of the US Federal Government, they will stand up to Steve Jobs.
This led to bad blood with the media and the media jumped on the iPhone 4.0 antenna problem with glee. Business week even mocked Steve Jobs’ claim that the iPhone 4 was the most successful product launch in Apple’s history. Remember Jon Stewart’s AppHoles? The rock star treatment of Apple in the media is over. That will make Apple spend more time and energy on its image. (Something it is good at, BTW.)
The media is not the only reason why Apple’s golden era is over. The second reason is the government. Last summer’s blocking of Google Voice by the AppStore led to the first threat of FCC and DOJ investigations. Now there are grumblings in Washington DC about more investigations (which I don’t think are necessary, but obviously the government has less important things to do.) Once DC opens up a case, expect the EU to follow suit. Government investigations and suits distract companies and they never fully recover. Just ask IBM and Microsoft. Apple will not only be distracted by these potential governmental probes, but will also have to devote more resources to its legal and government affairs issues, resources that should be going to products.
The third reason why the golden ear is over is increased competition and the “second mover advantage”. Apple was the first mover in the uber cool app driven web integrated smart phone category: they created a new category and reaped the rewards for years in both market share and mindshare. As with all first movers, Apple spent a lot of time and money educating the consumer base, telling them that they want this new product category. As what always happens with a new category, second movers then come in and free ride on that education and offer similar and sometimes superior products. The second movers get the second mover advantage and start to eat away at the first mover’s margins and market share. This is what is happening with Google’s Android. Android is growing faster than the iPhone and overtook the iPhone’s market share in the United States for smart phones in the first quarter of this year. A year ago Android was a rounding error, now it is a dominate player and formidable competitor to Apple. Second mover advantage at work.
I also won’t count out Microsoft. While I am not confident that they can create a better offering than the iPhone or Android out of the gate, they are masters at the second mover advantage game. (Remember how the Mac created the PC revolution, Netscape created the Internet revolution, etc.) Microsoft is flush with cash coming off its 150 million Windows 7 sales this year and motivated. Apple will face massive competition in the form of two tech industry giants: Google and Microsoft. In addition you can’t expect Samsung’s Galaxy, RIM/Blackberry and Nokia to roll over and die either. So five giants on Apple’s heels, as well as any startups that emerge.
Don’t get me wrong, Apple will still be strong and successful. The golden age is just over. Welcome to the rest of us Apple.