The growth that Apple has seen over the past decade has been nothing short of miraculous. Starting with the iPod, the company has gone from strength to strength, disrupting market after market. But now, the Cupertino, California, giant is finding itself in unfamiliar territory: Having to defend market share.
UBS analyst Steve Milunovich sent a note out to clients titled "Identity Crisis: Can Apple Play Defense?" in which he examined how things have changed at Apple.
"Apple historically has played the role of underdog, beginning with its niche Mac status after losing out to Windows," explained Milunovich. "The iPhone and iPad are the first times Apple has had a leadership position drawing significant and competent competition."
Apple dodged such competition as far as the iPod was concerned, a class of product that remained dominant until sales were cannibalized by the rip-roaring success of the iPhone. However, given how incredibly profitable post-PC devices such as the iPhone and iPad are to Apple, Tim Cook's hardly in a position to be able to sit back and allow the likes of Samsung and Google to run rings around him.
But can Apple play the defensive game? Milunovich's not too sure.
"It doesn't appear to be in Apple's DNA to cover market spaces just to get revenue," continued Milunovich. "Yet now that the company is so large due to iPhone success, investors are clamoring for product expansion with larger as well as lower-priced phones with Android gaining favor."
Problem is, investors and pundits are clamoring for Apple to either come out with products in cut-throat markets, such as TVs, cheap products, in particular a cheaper iPhone, or copycat products, such as an iPhone with a larger screen.
Milunovich concluded by pointing out that the engineers and designers at Apple may have to put their thinking caps on and start getting creative. But Milunovich cautioned against expecting too much, too soon from Apple.
"The only way out might be innovation in new categories, which will require investor patience. Most companies would rush out a 5- to 6-inch phone; Apple probably won't."