NEW YORK (
winning streak has been good for its investors and good for Apple, but seldom has a tech success shared so little wealth with the rest of the sector.
Call it hardball or capitalism in its purest form, but Apple's autocratic approach to business and the current sway its products have in the market have been nothing but punishment for other players.
Sure, to the winner go the spoils and all that -- Apple shares are up ten-fold in the past 10 years. But unlike past stock rockets riding surging tech trends, Apple's rise has not been particularly uplifting for investors outside Apple.
In fact, Apple is killing tech as we know it. Some examples:
Adobe , whose Flash Jobs dubbed as slow and buggy. Ever seen a vicious virtual public stoning? Look here.
Nokia We hardly knew ya. Apple's ascent in smartphones leaves you stranded on Planet Dumbphone.
RIM Out of touch in touchscreens. Quitting BlackBerry used to take a 12-step program.
Microsoft Chin up! PCs are still huge.
Intel Not inside and not along for the ride in iPhone or iPads
The trick behind Apple's solo success is that the company strives to pull all its own strings. Few companies are permitted behind the fortress walls. The recent vow to exclude
ads from its devices is just the most recent example of
to blaze its own path.
Take the iPod. It didn't make MP3 players that loaded songs via USB from any computer like all the other devices. Instead, the proprietary iPod became a key special agent for iTunes, the music and media service Apple used to corner the music industry.
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"Hardball has worked like a charm so far," said MKM Partners analyst Tero Kuittinen. "They clubbed the music industry like a baby seal. Now they're trying to do the same with television, movies, book publishing, Adobe and advertising."
What makes this argument difficult is that Apple is so good at what it does. People willingly pay extra for Apple gear. Maybe it's the coolness, maybe it's a cult, or maybe it's the so-called halo effect, but Apple has demonstrated a deft hand at making products that people enjoy.
The new iPhone, for example, doesn't have the best parts available. In fact it doesn't measure up to the Google Android-powered HTC
Incredible and the
EVO phones, which are superior machines.
But Apple, and more specifically Steve Jobs, famously hone the design process by dictating hardware specifications and blending them with software for a more cohesive product.
It's that singular view that pushes Apple to design its own chips, its own operating systems, its own meticulous production process (outsourced to Asian contract manufacturers), its own stores and its own customer support. A company, you could say, that might be freakishly focused on control.
And it's certainly nothing like the PC sector, which had countless contributors and beneficiaries during its boom. The PC movement fed a whole ecosystem of suppliers, manufacturers and retailers. Investors could play chip strategies with
. Stocks of hardware shops like
returned gains by the bucket. And in its prime,
was a growth stock.
Apple's tech support system is largely out of reach of the average investor in public companies. "Apple's secret sauce is its developer community, most of which are private companies," said Bay Bridge Capital's Blake Bath. Bath says his firm sold Apple as it approached $200, "value guys that we are."
One winning alternative to hunting for core Apple stocks is betting against its rivals, said Bath.
"Short anything that Apple sets its sights on -- like music and
Warner Music Group
, or phones and Nokia and RIM, and likely in the future, streamed video content like
. Those seem to be the best plays," Bath said.
The force of Apple's single-minded push is likely to meet increased resistance. Business partners unwilling to let Apple call all the shots may be encouraged to go elsewhere. And there are still a few remaining alternatives to Apple.
"Apple could well drive some of the targeted industries to get a lot cozier with Google and Microsoft than they would have been otherwise," said MKM's Kuittinen.
There's also the question of sustainability. As some have argued,
Apple's winning streak won't last forever.
"While Apple seems infallible now, the beauty of the technology sector is its creative destruction principles," said Bath, citing examples like Netscape and AOL. "Market segments have a way of shifting around significantly every few years."
--Written by Scott Moritz in New York.
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