The Macalope: Threat mis-assessment


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Writing for The Motley Fool, Sam Mattera is here to tell us about … THE BIGGEST THREAT TO APPLE.

Is it killer bees? It must be killer bees, right? It’s always killer bees.

“The Biggest Threat to Apple Inc.’s Dominance Is This $80 Smartphone” (tip o’ the antlers to Jim Miles).

Actually, “killer bees” is much more likely. I mean, come on. They kill by stinging.

So, what dominance are we talking about here? Apple’s never been dominant in smartphone market share; it’s hovered between 15 and 25 percent for about five years. And an $80 smartphone certainly isn’t going to affect the company’s utterly dominant profit share position.

So, what in the wide, wide world of crappy Apple coverage are you talking about?

The steady market-share erosion of iOS has been met largely with indifference because most of Android’s massive market share comes from cheap, low-end devices like the Optik 2 that aren’t even in the same league as Apple’s products.

And the profit! Don’t forget the profit!

(He forgot the profit.)

The stark difference in quality shows up in usage statistics—despite having a minority of the market, Apple dominates when it comes to things like Web traffic, online shopping, and app revenue.

And profit!

But not all cheap Android devices are garbage.

Less than $100 now buys you a quality phone

Case-in-point: the Moto G. [Emphasis Mattera’s.]

Indeed! And how much profit did Motorola make last quarter? Oh, right, it’s part of the reason that Apple and Samsung’s profit share adds up to more than 100 percent, because everyone else is losing money selling smartphones.

It might not be as good as Apple’s iPhone 5s, but the Moto G is arguably better than Apple’s iPhone 4s, a two-year-old phone Apple still sells for $450. With its faster processor, larger screen, and expanded memory, the $180 Moto G is an easy winner over the iPhone 4s.

No one cares about processor speed or memory. Well, except pundits. They love that stuff because it makes their job easier. “Phone Y has more memory than phone Z. Therefore phone Y is better!” No. What matters is the user experience. In that regard, the iPhone 4 really isn’t a good phone anymore, but the 4s still is.

Larger screens matter to some users, but they’re still a minority. What does matter to the people who actually use their smartphones as smartphones instead of paperweights are the user experience and the ecosystem, and Apple’s are still the best.

Apple has threats, to be sure. But a cheap phone from a company that’s being sold off because it can’t make a profit isn’t really at the top of that list.

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