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Apple Inc NASDAQ:AAPL Faces Internal Issues

SSNLF, RIMM, GOOG

Recall that the Age of Apple started back in Y 2005, the company’s share price was 35, from there it climbed all the was to 700 + on 14 September 2012, becoming America’s largest, most valuable and influential company until the fall in late September.

The California based technology giant has seen its stock price dive into Bear Market territory recently. Investors and analysts alike now are expressing doubts about whether Apple can keep up pace of innovation that rocketed it into space under the late, great Steve Jobs.

Apple’s current problems affects more than Apple shareholders. We all know that the technology business is all about leading the pack and staying there. It is now a global game where, at any time, there superpowers in the field that dictating the shape of the industry and the innovation that drives it.

Apple’s SmartPhone, tablet market and content-selling business, until just recently were almost monopolies, and now have become, overnight, highly competitive fields.

Management at Apple is top-down and is now all of a sudden in state flux. Apple’s customers are just on the back of the map app mis-step starting to rise up against its high profile closed-system policies.

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Fortunes are built on knowing that a dominant position is cracking well before the edifice breaks and falls to earth

So, here is the Big Q in the air about tech business: Is Apple going to leas for more than a generation or not? High flying tech companies have one thing in common they eventually loose their dominance and fall from grace. Apple is a tech company albeit a highly branded one.

Here is how one analyst I read put it, “Apple has always been a company whose brand can be at dramatic odds with its fortunes, a superb illusion. In its darkest days in the 1990s, its true-believer loyalists even before Steve Jobs returned to rescue the company fanatically maintained the myth of the company as the alternative tech brand. This was true even though its market share had shrunk the company to irrelevance.”

The “sainting” of Jobs as an American Hero drove Apple-ism from the geek tech community to Main Street.

When Steve Jobs died, his status rose and fueled Apple’s stock value, unusual in that it might logically have pointed to the unique vulnerability of the 1-Man Show without its Star. Its Cult status brand, all covering product lineup, outlier value and vast cash pile ought to be larger than one man, yes? Well perhaps no, as we may be seeing now.

Apples genius is in its design there is something very short lived about its position IMO. Apple has not created monopolies, the real secret to generational success in business. It has opened new markets for everyone to compete in.

Such markets; SmartPhones, tablets, digital content distribution have grown to be the dominant ones in the technology business now. In the case of SmartPhones and tablets, what you have are basic machines. It is a game of price, features and narrowing margin brought on by the competition of other giants in the business.

The SmartPhone market was split between a growing iPhone dominance, the stalwart BlackBerry NASDAQ:RIMM and a divided Android field is for the most part now, an iPhone Vs. Samsung PINK:SSNLF world.

And, clearly Samsung’s consumer electronics marketing ability and its huge advertising budget is large and strong enough to go head to head with Apple’s brand mythology and seemingly presence everywhere on the planet.

Apple’s once dominance of the tablet business is fast eroding. Last year it had a 60% share of the market at this time last year it is 50%.

Samsung, at 6.5% was not a player before Christmas last year, it is now a player, it has 18.4% of the tablet market going into the Holiday shopping season

ITunes, a once disdained monopoly, is now struggling in this new streaming world.

Added to the products problems there are problems at HQ. Now the Apple devotee’s and tech press sees and smells signs of internal confusion at Apple, so I expect that soon Apple will come under intense media scrutiny, that could lead to a Short sellers fest that could cut the company’s market cap by 50% off of the September high.

Right now there is a pitched battle going on at Apple’s HQ: Scott Forstall, who guided the iPhone business, the core business, and who was after Tim Cook’s job, was booted from his job running iOS software last week by Cook and replaced by Jony Ive, a Jobs and Cook loyalist.

John Browett, who ran Apple’s huge world wide retail business, was shown the door. Mr. Cook, a bottom line business man, says he will now be running that group personally.

For the company and its investors, the bet now focused is on Tim Cook, that is very different than a bet on Steve Jobs, Cook is not Jobs even though he apes Job’s public attire.

Next there is growing backlash against Apple products. Apple has become a “peer-pressure” buy, often at the expense of functionality and common sense, I never got caught up in it.

Apple’s authoritarian product control at the detriment of its consumers broke into the open with its decision to abandon Google Maps NASDAQ:GOOG.

Apple does what it does really well, like getting e-mail and making calls on the iPhone. Succeeding with that sort of hauteur is dependent on charisma and sex appeal, a very expensive proposition in a commodity type market.

The Age of Apple will likely be relatively short lived. It is not a bad thing, it means innovation happens in the technology business and new markets open when the mighty fall, and the mighty always fall.

General Motors dominated for 3 generations, IBM dominated for 2 generations, Microsoft dominated for 1 generation. Apple, perhaps a decade if it is lucky. Stay tuned…