Kass: Google/Android Is an Apple Eater

So many have paid to see
What you think
You're getting' for free
The woman is wild
A she-cat tamed
By the purr of a Jaguar
Money's the matter
If you're in it for love
You ain't gonna get too far...
(Oh-oh, here she comes)
Watch out boy
She'll chew you up
(Oh-oh, here she comes)
She's a maneater.

--Hall and Oates, Maneater

I wrote two critical columns yesterday regarding Apple's ( AAPL) new product launch and a critical view of the company's pricing strategy.

When I wrote my original negative piece on Apple in September 2012, my principle concern was the rapidly changing competitive landscape. My thesis was that Google's ( GOOG) Android, Samsung and others were rapidly catching up with Apple's history of product innovation and that, in the fullness of time, Apple's products would be more costly and provide equal or less product performance and innovation than its competitors.

Today, I want write about how far Apple is falling behind its competition, particularly the Google/Android ecosystem. When I see how innovative Google and its partners have become, it is clear Apple is beginning to fall behind its primary competition ecosystem.  When is the last time you saw something this cool from Apple?  When is the last time you saw anything cool from Apple?  It used to be a given that Apple was introducing things nobody had even thought of before. Now it seems to be playing catch-up or not even in the ballpark.

The next set of Android phones will have the new Qualcomm ( QCOM) chip and are likely going to further differentiate their product from the leading competition, including Apple. As an example, notice the comments in this article regarding voice recognition.

These new phones will all start to hit the market soon, starting with the Google Nexus 5.

Google, unlike Apple, understands the importance of market share; it is going to price this device at breakeven -- about $300 to 350 and less than half of iPhone D(ud) -- and that is going to be much higher spec'd (better and bigger screen, processor, battery and camera).

Google is simply more innovative. It develops a broader ecosystem that includes newer and cooler devices like Google Glass, in addition to handsets and tablets, with numerous partners. It delivers better products, and prices them more aggressively to take market share. Meanwhile, Apple lives in the past and tries to compete on the basis of hardware features much more than it has at any point in the past.

This is not a good recipe for maintaining a significant price premium.

At the time of publication, Kass and/or his funds had no positions in the securities mentioned, although holdings can change at any time.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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