AAPL) stock continues to struggle despite the the obvious reality that this company has zero meaningful competition. Yet the media pump the hysterical notion that Apple has lost its edge. Maybe it will, but in the current environment, that's irrelevant. A reader pointed out on Twitter that not one comment on my column supported me; they all attacked me. Let's make a few things clear out of the gate. First, the major criticisms of my article from what amounts to a peanut gallery:
- Google's (GOOG) war on price makes sense as a way to distribute its Web services.
- Google's Android is outpacing iOS worldwide.
- Apple wins with consumers because of a "first to market approach." (That's a head-scratcher, I know.)
- The author -- me -- is an idiot iSheep who does no research and has no idea what he's talking about.
The term originated back in the theatre, where the cheapest seats were those way at the bottom floor and where people purchased peanuts because they were the cheapest snack. If they disapproved of the performance, they would throw the peanuts.The peanut gallery response on AAPL reminds me of the way Research In Motion ( RIMM) bulls countered -- feebly -- when their company was crashing. The random peanut gallery members who think Microsoft ( MSFT) belongs in a conversation about competition with Apple should read this short, but excellent Businessweek piece on MSFT as the "classic value trap." The RIMM permabull of 2011 is the new MSFT permabull of 2012-2013. I invite anybody who claims I do not do "research" to come sit with me in my office as I work 12 to 16 hours a day. Just because I do not regurgitate the same numbers everybody else uses or come to the same conclusions does not mean I do not do research.
To support these attacks with arguments such as Apple wins with the consumer only because it was first to market or Android has a larger market share than iOS reveals a very 2011, RIMM bull-like stupidity. That might be harsh, but that's what it is. The first-to-market thing doesn't even deserve a response. How soon we forget the way Steve Jobs brought wholesale change to the world. The Android-leads-iOS argument is almost as bad. If Apple made iOS an open system, allowing any Tom, Dick or Amazon.com ( AMZN) to use it, the market share it would command would numb the mind. At the Android/iOS market share conversation we enter a crucial crossroads in this discussion. I completely understand what Google goes for by offering inferior hardware at low prices. Please do not confound this dysfunctional salvo at Apple with what Amazon is doing. Amazon produces hardware as just another complementary driver for its e-commerce core. Amazon wants no part of a competition with Apple. In fact, there's more synergy between the two companies than competition: Amazon is just fine with a considerable share of iPad traffic heading to the Amazon Store, while Apple is completely content with its hardware driving a lion's share of Amazon's revenue. Google provides awesome services. I use several, particularly Gmail, Docs and Analytics daily, if not hourly. There's no question about that, but you have to consider what it needs to have happen to win with this strategy. Like Amazon has a foothold on e-commerce, Google dominates digital advertising. In fact, almost 100% of Google's revenue comes from ads and related services. We can argue this point all day, but when you compare the state of online shopping to the world of, say, mobile advertising, both companies dominate (and will continue to), but Amazon operates from a more formidable position of strength. E-commerce players have had years to chip away at Amazon's empire. It's not happening to any meaningful degree. Just check out "Conclusion No. 3" on page 2 of "Apple's Million-Dollar-Per-Day Retail Store in Words and Pictures" for empirical support. Meantime, as online advertising goes increasingly mobile, Google faces increasingly stiff competition from forces such as Twitter, Facebook ( FB), Pandora ( P) and Apple. At some point, Google will want to make money from value-adds to its suite of services (good luck with all of that) as it fights to maintain what amounts to a one-trick-pony revenue core. Looks great today, but the practice of giving everything away -- Android, hardware, services, your entire ecosystem -- might come back to bite Google sooner rather than later. That's not happening at Amazon. Samsung also makes great stuff. I just bought one of the company's television sets. Love it. In fact, in terms of design and user experience, Samsung comes closest to Apple. And I won't even make any patent- or legal-related jokes. But my 9-year old is not getting all excited about shopping for Samsung products and accessories. She watches the TV, but couldn't tell you who makes it. She uses Gmail and Google Search but rarely clicks on ads, and, while she knows these are Google products, the fact means nothing to her. Take her to buy a "Smart Cover" for her iPad mini, though, and she gets all fired up.
I just asked her why. Her response: "Because they have great items." So simple, yes, but that's what you're going for: mind share. And Apple has that among a much wider population than the hip 9-year old set. Amazon does as well, but, again, the competitive scenario isn't quite the same. Until Samsung, Google, Microsoft, RIM, whoever gets to this level with the consumer, Apple will squash them where it counts at retail and continue to steal market share in the enterprise. Follow @rocco_thestreet -- Written by Rocco Pendola in Santa Monica, Calif.