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Apple's Problem Isn't Cosmetics, It's Google

In the bigger picture, though, for Apple to focus on changing the icon colors is like rearranging the deck chairs on the Titanic -- almost literally. Apple has hit an iceberg, and it's losing water -- fast.

The name of this iceberg? Google (GOOG - Get Report).

Google, together with a long list of hardware partners -- Samsung, Asus, Acer, HTC, Sony (SNE), Lenovo (LNVGY), ZTE, Huawei, Motorola and many more -- are attacking Apple like hyenas bite into a gnu. They're doing it through lower prices, improved hardware, and better services.

Let's examine those in turn:

1. Lower prices:

First, hardware: Apple laptops start at $1,000; Google laptops start at $200. Apple tablets start at $330; Google tablets start at $200. Apple's iPhone 5 smartphone starts at $649; Google's equivalent Nexus 4 starts at $349.

Components: Apple now makes (aka engineers) its own CPUs. Google and its partners work with Intel (INTC), Nvidia (NVDA), Qualcomm (QCOM), Samsung and Broadcom (BRCM) for CPUs. Yes, I know, Apple uses some of those, too, for selected lower-value/importance parts.

Second, software: Google offers more cloud services, and they are free. Google gives you 15 gigs of storage just for creating an account. Google gives you 100 gigs of storage for buying a $250 laptop, and 1 terabyte for buying a $1,300 laptop. Apple could charge you $50 per month for something like that.

2. Improved hardware:

Whether smartphones, tablets or smartphones, it is absolutely true that Apple had superior hardware on most fronts until a year or two ago. Android was laggy, had poor battery life,and Google's first laptops were slow.

So where are we now?

Smartphone: Almost everyone agrees that all the high-end Android smartphones are ahead of the iPhone in terms of the hardware experience. They have bigger screens, bigger batteries, and expandable storage, among other things.

Tablet: Whatever advantage Apple had in the early days has largely been eradicated. I could argue that most tablets are now the same, but Android invents more in terms of form factors, optional stylus, and so forth. In either case, and equivalent Android tablets tends to sell for $100 less than the iPad.

Laptop: Obviously, Google started out by focusing on $200-$450 laptops, but they are no longer too slow for their basic tasks. As for the high end, the $1,300 Google Pixel is starting to address the high-resolution (2560x1700) touchscreen laptops built with the tightest quality standards.
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