Phone(y) Wars?

The phone wars are heating up.

When Apple entered the consumer electronics business with the iPod 10 years ago, a lot of skeptics said, come on in, the water’s warm. They noted that consumer electronics is littered with failed brands and obsolete hardware: the boom box, walkman, and transistor radio speak to the faddish, temporary nature of consumer taste.

But they underestimated how revolutionary Apple’s plan would be, with the iPod, iTunes Store, iPhone, and iPad. Originally Apple was a computer hardware company; increasingly it’s a software company with a dedicated hardware platform, putting computing power in your pocket, purse, or portfolio. Its operating system can accommodate various dedicated tasks, like streaming video, news feeds, and games, so the smartphone and app-store has become increasingly popular.

Success spawns imitation, so it’s no surprise that multiple models of the touchscreen phone and tablet would pop up, using various operating systems. Google and Samsung’s models were just a little too much like Apple’s, though, and a Cupertino jury decided to award Apple $1 billion dollars.

Microsoft may be the real winner of the Apple-Samsung lawsuit, as appeals and countersuits make their way through the system. Their Windows 8 operating system is build around mobile computing, and is nothing like Apple’s. Blackberry, whose email-ready phones used to dominate corporate computing, may soon be looking down from smartphone heaven.

Amidst all this volatility, one thing is certain: consumers are seeing more choices and better products because of all this competition. Apple’s iPhone may have been one of the first models, but it’s unlikely to be the last word.

Douglas R. Tengdin, CFA
Chief Investment Officer
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