Analyst: Apple needs to 'think different' to 'regain mojo'

Analyst: Apple needs to 'think different' to 'regain mojo'

Summary: Apple is one of the biggest tech success stories of the decade, but one analyst believes that the company needs to "think different" in order to address the challenges it faces over the coming years.

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TOPICS: Apple, iOS, iPhone
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Apple has carried out the biggest turnarounds over the past decade, but Sterne Agee analyst Shaw Wu believes that he company needs to "think different," and "change its strategy to regain its mojo."

In a note to investors, Wu suggests that Apple needs to address two critical areas. First is the fallout from the fact that the iPhone 5 is no longer viewed as a high-end product in the face of competition stiff competition from Android handsets. Secondly, Apple needs to become more aggressive in the mid-range markets.

However, Wu says that there is evidence to suggest that Apple is making forward progress in both of these areas.

First, the company stepped up to the challenge offered by larger form factor smartphones from the likes of Samsung, and bumped up the screen size of the iPhone from 3.5-inch to 4-inch. However, this may not be enough.

In the face to handsets such as the 4.8-inch Samsung Galaxy S III and the 5.55-inch Galaxy Note II, the iPhone 5 "is viewed as mid-range but with a high-end price."

Apple is "leaving money on the table by not participating in larger touchscreen form factors," claims Wu. He believes that while Apple is right to avoid the low-end market, the company needs to more aggressively target the midrange markets.

He points out that "the iPhone 4 and 4S are highly desired by many," but due to supply chain constraints, partly down to the fact that manufacturing capacity had been scaled back in favor of iPhone 5, they are "not as widely available as they could be."

The iPhone 4 and 4S are particularly attractive since their bill of materials costs have come down dramatically since the devices were first released.

Closing on a positive note, Wu says that investors "have shown a willingness to accept lower margins for sustainable top-line growth" with companies such as Amazon and Google, and that this should give Apple the space it needs to adopt a new strategy over the coming years.

Topics: Apple, iOS, iPhone

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  • So...

    What's Apple doing about it's stagnating OS? It's not all about hardware. iOS just doesn't have the "pizzazz" it once did in the days before Windows Phone and Android. It's not "Sunny, and 73 degrees" anymore.
    The one and only, Cylon Centurion
    • If iOS is "stagnating"

      Then Android must be downright rancid considering that MORE THAN HALF of Android phones are still running Gingerbread or earlier (cf http://developer.android.com/about/dashboards/index.html). If you make the argument that Honeycomb is leaps and bounds beyond iOS6, the fact that just over 10% of devices run it pretty much dilutes it's relevance.
      matthew_maurice
      • Jellybean that is.

        Frickin' lack of edit!
        matthew_maurice
        • You need more than edit.

          The figures you are quoting from the link you providing show that 43.9% of android devices are running Honeycomb or above. Also note that these are world wide figures taking into account many markets where iOS doesn't exist.
          alex_darkness
          • Honeycomb was for tablets...

            ...while Android 2 (Gingerbread and earlier) was for phones; thus quoting figures for "Honeycomb and up" would definitely give the wrong impression. The figures for newer versions of Android should be Android 4 (ICS and Jelly Bean).

            Android 4.2 finally hit my Galaxy Nexus today.
            John L. Ries
          • That's not true...

            They should start at Android 3.0 because that was the shift to the modern UI.
            slickjim
          • That means that MORE THAN HALF are running Gingerbread or before.

            Exactly as Matthew indicated. Even with "Project Butter", you can find someone leaving the butter in the freezer and it is not as soft and smooth as Google intended. So Google is still trying to catch up to the UE of iOS 1.0
            Bruizer
          • There are two very important aspect of the Gingerbread situation

            1) iPhone is selling against phones that are running Android 4.0, 4.1 or 4.2. That is what people will be viewing when they shop for a new phone. Gingerbread has little to do with that.

            2) Android 2.3 to 4.0 saw massive improvements and new features. It is very easy to see the improvements the moment someone picks up the phone. Over 50% of the Android market is going to immediately notice the improvements over their current Gingerbread device.

            iOS on the other hand looks rather stagnant. The only real difference between iphones is the physical body of the device (casing, screen, etc). iOS looks like it hasn't changed in years. Nothing exciting jumps out. Siri is still in beta after years and apple maps is a black eye. Both of which Google has managed to deliver better apps for iDevices.


            Some people will be scared of Androids changes and some will be comfortable with iOS remaining largely unchanged, but this article is about Apple regaining its mojo.


            All of those Android Gingerbread users are coming up to renewal periods for the phone contracts.
            Emacho
          • There is a major flaw in your stagnant argument though

            The vast majority of iOS users are not complaining and of those that do claim it is stagnant, such as your self, are those that prefer Android and would not touch an Apple product. If the person complaining isn't going to by the product anyway it's a waste of the manufacturers time to worry about what they are saying. Have there been any major changes in the OS, no but as the old saying goes if it isn't broken don't fix it.
            non-biased
          • Just as a note, even Samsung is producing brand-new products...

            using Android 2.3--not ICS or JB.
            Vulpinemac
      • Umm

        not when 10% is 25% to iOS on phones!

        Also, Android has gone through multiple revisions and iOS pretty much had stuff stapled on top of an OS that is rife with mold it is so stale!
        slickjim
      • Love the attempt to be clever

        But you kind of missed. He's talking as an operating system, but thanks for pointing out gingerbread so we can all see how a mobile OS should be continually getting better.

        And no, iMaps and including native panoramic camera features aren't real improvements.
        blarelli
      • Android stagnating?

        Sorry mate but you are comparing IOS6 against Honeycomb. Seeing Ice Cream Sandwich has come out and been surpassed by Jellybean with Key Lime Pie not too far off, then perhaps you ought to, like Apple, update to today's standards.

        A Galaxy Note 2, using a quad core, is far and away so much better than any current Iphone it doesnt really meet the idea of a fair comparison.

        The whole problem with Apple is that they are doing what they did when Jobs wasnt around and instead of surging ahead with new ideas, they are suing. Jobs certainly pushed Apple so far ahead of anyone else that they werent even remotely in the league but since he died, they have been sitting on their laurels. The public doesnt care what you did two years ago, they want to know what you can do for them NOW. The fact that Android runs more phones than IOS does, that Google Play Store is bigger than Apple's App Store means that Apple have lost it. Sure, if they come back with something amazingly innovative yet again, they will regain what they lost but if they dont, have a long last look at them as they sink below the waves!
        greg-w-h
        • So how are things in fantasy land?

          First, the Galaxy Note 2 is far and away so much better? Based on what the spec sheet or just your opinion? Neither one makes it a better phone for anybody but yourself. If it was the best phone for everyone it would be outselling all other phones.

          Doing what they did when Jobs wasn't there? You do realize that it was Jobs that pushed the lawsuits don't you? You do realize don't you that under Jobs they introduced their market changing products about every three to four years right? Why is it all of the sudden Apple has lost it since they are not doing this every year? No they have not come out with anything market shattering as of late but who really has. Do you think putting a bigger screen on a phone such as the not is innovation? It's not innovation, it's just offering a bigger screen. Smart phones advanced at an incredible rate for a few years and now we have reacted a point where there isn't much innovation, just adding to the spec sheet. That will change in the next year or two, somebody will have a market shattering innovation, might be Apple, could be Samsung or it could be somebody we have yet to hear of or expect anything from.
          non-biased
    • What is Apple doing about a stagnating OS...

      It's called Johnny Ives...the same guy who designs the hardware is now overseeing the software. If there's anyone close to Steve Jobs on this planet, it's probably Ives...he worked with him more closely than anyone on product development. This just happened in the 2nd half of last year, so be prepared for a different experience...hopefully, with iOS7. I agree, would be nice to see a new look.
      Troythestargazer66
      • New look or experience would be nice but

        Apple needs to be careful with any change like that. The actual users (for the most part) are not complaining and if you change what isn't broken you might drive a lot of users away.
        non-biased
  • Apple should do what it always did

    rather than try to make a better widget, do something new in a way nobody else thought of. The iPad threw out the notion of a tablet with a stylus and a desktop OS. The iPhone threw out the idea of a phone with a tiny screen and a plastic keyboard - but now everyone else has done those things too. The iPod came with a way to buy tunes legally and not catch a whole bunch of viruses.

    So come up with something that currently isn't being done. Surely Steve Jobs left an idea or two lying around!
    Mac_PC_FenceSitter
    • You think they're not?

      They may be completely out of ideas in Cupertino, but I'm betting they're not.
      matthew_maurice
    • No Stylus?

      You kidding? The Galaxy Note 2's stylus adds yet another way to be productive. You have to try it to see what I mean as I cant describe it well enough. Sure, I can use my finger on the screen all I like but there are times when the finger is as good as using a sausage while the stylus allows accuracy.

      Stylus isnt dead yet. I would much prefer just voice control over everything but the fact is that no voice recognition has yet fully mastered the Aussie accent. Until they get that right, I love the stylus for different reasons.

      One reason? My work is on the road the whole day. People ring me and say "write this down" and I often dont have any paper in the car to write on or a good enough surface etc. Now I take out my Galaxy Note 2, pull the Stylus out and that pops up "S-Note" and I use the stylus to write it directly on the phone's screen. I can also add voice to that if I want to in case that helps.
      greg-w-h
  • Just Say It

    Just say what everyone knows; Apple does not do well without Steve Jobs. They don't have the leading edge in visionary talent anymore. Apple seems to be run by the accountants now.
    Sean Foley