Sony, Nokia, RIM, Who is Apple’s Next Victim?

This week the latest evidence of the disruptive power (to borrow a term from Horace Dediu) of the iPhone becomes apparent. Apple has moved ahead of Nokia to becomes the largest manufacturer of smartphones in the world. That’s the world market not just the US. Nokia hopes to stop this freefall (a loss of 23 market share points in 12 months) with their new Windows Phone 7 devices, but it’s not exactly clear how Nokia will succeed with Windows Phone where every other vendor has failed to make any impact. RIM continues their downward spiral which shows no signs of abating (and no signs of their QNX based smartphones either, not even a mockup of the OS. Nothing.), it’s very possible by this time next year if those phones are not released that RIM could be below 10% marketshare in the US and worldwide.

Sony has never really seemed to recover from not designing the iPod, and the iPhone should have been designed by either Nokia or RIM.

That’s three former market leaders taken down by Apple’s expansion beyond Macs. So if the iPad is the next disruptive product and it is certainly looking that way who are the next companies in danger of being Apple’d.

HP: The leader in PC market share is the most vulnerable to the iPad assault. There are a lot of HP laptops in both consumer and corporate settings that could be replaced by the iPad. HP seems to have realized this threat and has their own tablet and OS. To date, the traction of their WebOS tablet is lukewarm at best. You have to wonder how long until HP for both smartphones and tablets goes running back to Microsoft. Speaking of the Redmond Giant.

Microsoft: With a potential decline of PC sales to tablets comes the inevitable decline of Windows licensing revenue, and even more dangerous for MS the decline in MS Office revenue. MS could monetize the iPad disruption with Office for iPad,  18 months post launch and there’s zero signs of Office for iPad even being in development. MS seems to be holding back their one big application card for their tablet OS, but right now that’s a lot of revenue missing from Office licenses for iOS devices. Redmond’s real counter to the iPad is Windows 8 for tablets and PCs. It should be ready in 2012 but could easily slip into 2013 due to the complexity of combining a desktop and tablet OS. Demos of the upcoming OS have been seen, but there are no devices, no required specs, no price points, and no firm release dates.  Windows PC manufacturers may have a hard time matching the 2012 iPad price point, just like their Ultrabooks designed to rival the Macbook Air are allegedly having a hard time matching the Air’s newest price point and features.  Apple’s buying power in the key components of tablet design makes the odds of PC manufacturers denting the iPad marketshare even tougher. Traditionally, the Wintel crowd has always beaten Apple on price point. Just like the iPod battle, right now the iPad/Apple has economies of scale working to their advantage. Microsoft’s decision to not run a separate OS for tablets (which again seems to be about accessing MS Office) is a huge gamble for Microsoft and its’ partners. If Windows 8 as a tablet OS flops, Microsoft may not have time to convert Windows Phone 7 to tablets before Apple’s tablet lead is insurmountable.

Google:  It’s becoming clear that the carriers are selling the Android phones, and unfortunately for Google carriers are not having any success selling tablets. Google did a great job creating a phone OS (granted not one backed up years of OS patent development like Apple or Microsoft) to counter the iPhone when every established player (RIM,Nokia, Palm,Microsoft) seemed frozen by inaction. The tablet OS experience seems to be a much bigger problem, and right now resembling the iPod more than the iPhone. The dedicated tablet application market for Android is a mess, and Android’s application phone market place is not generating revenue for developers to drive them to create specialized tablet versions of their applications. The iPad’s dominance in tablets could eventually cripple the overall Android app store. This app store erosion could eventually lead to an Android phone sale decline. Ask RIM about the importance of a powerful app store and how quickly smartphone sales can disappear. The real danger for Google is that the same hardware companies that produce their current gear could easily be redirected to Microsoft and the allure of their professional desktop applications on their tablet OS. Google would lose control of search and any number of other paths to their advertising network if they don’t gain tablet OS marketshare. Android v Windows could be an insane battle for the non iOS marketshare of tablets and smartphones. Windows having one huge advantage of Nokia being strategically tied to Microsoft. Course ironically Google could refocus their efforts on iOS and pay Apple through the nose to be the default search platform. One can only imagine the pound of flesh Steve will exact from Google if Android’s tablet OS marketshare has tanked, and that’s presuming that there isn’t an Apple search product waiting to be released.

Other companies in danger but not really market leaders right now? Dell and Asus have to view a shrinking PC market with pure panic. Their margins are already stretched and they haven’t found any real success with any non Wintel PC product. An accelerated race to the bottom of the Wintel PC market could be an absolute bloodbath.

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