October 7, 2011 / 12:42 AM / in 7 years

Apple's lead over rivals could narrow without Jobs

SEOUL/SEATTLE (Reuters) - If the death of Apple’s inspirational leader means a slowdown in the company’s blistering pace of innovation, it could give breathless rivals like Microsoft and Samsung a chance to catch up.

A bouquet of flowers in honor of the passing of former Apple CEO Steve Jobs lies in front of the sign of Apple headquarters in Cupertino, California October 6, 2011. REUTERS/Norbert von der Groeben

The extinguishing of the creative force behind the iPod, iPhone and iPad means a host of competitors — already closing the gap in some markets — will redouble efforts to counter the domination of Apple Inc in consumer electronics.

“No question, competitors like Microsoft will try and capitalize on any weakness, stumble or oversight to shift the public’s attention away from Apple and toward their own offerings,” said Todd Lowenstein, portfolio manager at HighMark Capital Management.

“Apple is still the unquestioned leader, but competitors like Android and Microsoft are coming to market with compelling offerings and seemingly are starting to close the gap.”

Luminaries of the tech world paid tribute to Apple co-founder Steve Jobs after his death on Wednesday, from Microsoft Corp Chairman Bill Gates and Google Inc chief Larry Page to Samsung Electronics’ CEO G.S. Choi and Sony head Howard Stringer.

But investors said emotion will not take any edge off fierce competition with Apple.

“The downturn in the economy will likely spur more and more competitors with more and more mimicry products,” said Stanley Crouch, chief investment officer at fund manager Aegis, pointing to Amazon.com’s new low-cost tablet computer as a recent example.

“When you get this incredible pressure from low-cost entrants, it’s very tough to maintain market share and margins,” said Crouch.


South Korean conglomerate Samsung is one of the best placed companies to deliver something fresh and exciting to rival Apple, analysts said.

It already makes the closest competitor by sales to Apple’s iPad tablet and the two companies are scrapping for top spot in the smartphone market, having overtaken Nokia, the market leader for the past decade, earlier this year.

Apple is also Samsung’s biggest customer through the sale of mobile chips and display screens. The relationship and rivalry has helped Samsung become a top global brand over the past decade with a stock market value of $115 billion, a third of Apple’s.

But the two are also involved in a bitter dispute over mobile devices, suing each other in 10 countries involving more than 20 cases since April.

Samsung’s Galaxy range of smartphones and tablet computers run on Google’s Android operating system, which Jobs believed to be a blatant copy of Apple’s mobile interface.

“Steve Jobs was particularly passionate about the enforcement of Apple’s intellectual property,” said Florian Mueller, an intellectual property expert. “From a strategic point of view, Mr. Jobs’ successor doesn’t have a choice other than to fight equally hard.”

The global scrap between Apple and Samsung — with both sides trying to ban the sale of each others’ products in several countries — is not likely to cool, said Colleen Chien, assistant professor at Santa Clara University’s School of Law.

“I don’t see that’s going to disappear just because of the passing of Steve Jobs,” she said. “Jobs was a very competitive person and the patent lawsuits were an extension of the company’s strategy of getting more aggressive.”


Jobs, the man known for minimalist design and marketing genius, handed the reins of Apple to long-time operations chief Tim Cook in August.

Cook unveiled the latest version of Apple’s iPhone this week, in a launch that, unusually, failed to wow fans.

The iPhone — introduced in 2007 with the touchscreen template now adopted by its rivals — is still the gold standard in the booming smartphone market, and its sales have dealt a blow to the ambitions of many competitors.

But phones based on Google’s Android, which is available for free to handset vendors such as Samsung, HTC, LG and Motorola now have a greater combined market share than Apple’s iPhone.

“Apple is facing a competitive fire storm from not just one company but a coalition of rivals that are trying to beat it, including some of the largest consumer electronics companies on the planet,” said Ben Wood, head of research at British mobile consultancy CCS Insight.

Microsoft is set to release a new generation of Windows phones in the next few months in partnership with Nokia, and has its sights set on Windows-based tablets flooding the market next year, marking the next great tech battleground.

“Industry eyes will inevitably turn to the iPad 3 launch next year to see whether Apple can continue the company’s impressive legacy of innovation created by Steve Jobs,” said analyst Neil Mawston from Strategy Analytics.

In a sign of more immediate competition, Amazon took the wraps off its Kindle Fire tablet last week, tacking on a mass market-friendly $199 price tag that analysts said poses a serious threat to the iPad.

Jobs liked to make him competitors uncomfortable. Rivals were “flummoxed” by the iPad, he declared in March when he took the stage to unveil Apple’s latest tablet.

“They went back to the drawing boards. They tore up their designs because they weren’t competitive,” Jobs said.

Lee Seung-woo, technology analyst at Shinyoung Securities, said Apple had transformed the industry, but its influence would wane without Jobs at the helm.

“Under Jobs, Apple consolidated segmented IT sectors into one big consumer market and claimed so many victims,” Lee said. “Without Jobs, Apple’s rivals now have some time to step up and majors such as Google, Samsung, Microsoft and Facebook will try to fill the gap.”

Additional reporting by Tarmo Virki in HELSINKI, Rafael Nam in HONG KONG and Faith Hung in TAIPEI; Writing by Anshuman Daga; Editing by Neil Fullick, Elaine Hardcastle and Bernard Orr

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