Apple Sells Well, So Why Are Shareholders Nervous?

Posted: Jan 29 2014, 12:30am CST | by , in Apple


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Apple Sells Well, So Why are Shareholders Nervous?

There’s surely one over-riding reason for disappointment in Apple this morning and that’s the company’s lack of progress in wearables and the home. One again Apple has enjoyed record sales of its flagship phone but like Samsung it is under pressure. The difference lies in how the two are reacting

The Financial Times reported at the end of last week:

Profit growth at Samsung’s mobile division, its main earnings driver, has stalled as the top end of the smartphone market becomes increasingly saturated. Sales of mobile devices declined 9 per cent from the third quarter, contributing to a drop in overall operating profit of 18 per cent to Won8.3tn ($1.2bn), matching guidance Samsung gave earlier this month.

Yesterday Samsung let it be known that it will reveal a new Glasses product before the Fall. Earlier this month the company also announced its entry into the smart home market. This looks like Samsung’s first big, home-grown ecosystem play as it will look to partners to integrate products into its home automation system.

The South Korean government meanwhile has announced it is backing the accelerated adoption of 5G – the successor to LTE, the fast mobile network. The South Koreans will have trial 5G networks in place by 2017. Samsung is a key 5G infrastructure player and should see its Tizen html5 OS come to life in a faster mobile web word. But it is also claiming to have some very novel, super-fast infrastructure technology for 5G, a claim met by skepticism at first. The skepticism is beginning to quieten down.

On top of this we are waiting on an early release of the Samsung S5 and a new generation Galaxy Gear. The company is also making heavier investments in its software and services, trying to close the gap in experience with Apple.

In short Samsung is in infrastructure, devices, home automation and wearables and is moving into ecosystem services. If you look around the US tech scene there is only one company you might say that of right now. That is Google, with its fiber and Loon infrastructure projects, Nexus range, the Android ecosystem and the connection with Nest in the home, and Google Glass.

Samsung recently reached an inclusive patent agreement with Google – they will not war over IP for the next ten years. In fact they look likely to share a lot of intellectual property. Samsung also cleared the decks with infrastructure rival Ericsson.

What’s clear from these actions is that Samsung management is ready to move on. Under pressure in smartphones it is plotting and executing on radical new moves.

In contrast Apple is not. Tim Cook still talks about the disruptive new products in the pipeline. And he’s right that Apple has a distinct model that other companies envy. It’s hard to avoid the conclusion though that the market is punishing Cook. Look around and it is clear to see why.

Source: Forbes

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