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Apple facing new challenges: Telecom expert

Ronald Klingebiel says new ways apps are delivered on phones could spell trouble for Apple after it unveiled its latest iPhone.

September 12, 2013  

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Ronald Klingebiel says new ways apps are delivered on phones could spell trouble for Apple after it unveiled its latest iPhone.

The new 5S has dazzled onlookers with its fingerprint reader, while adding a better camera and a faster processor, but Dr Klingebiel, Assistant Professor of Strategy at Warwick Business School in England, believes that Apple should go beyond product innovation and develop its strategy further as well. Commoditization of mobile hardware and transformations in the way apps are delivered will reduce Apple’s ability to reap profits from smartphones.

Dr Klingebiel, an expert on the strategic management of innovation who has researched and consulted the telecoms industry for more than a decade, said: “The iPhone launch event suggested that Apple’s strategists do not anticipate the rules of the game to change anytime soon, banking on the mobile market to carry on as usual.

“The writing is on the wall, however. Not only are smartphones becoming harder and harder to distinguish, with price competition favouring firms producing at lower costs, like Lenovo or ZTE. But the way that value is captured in the industry is also about to change. And it is unclear whether Apple will get a look in.”

“Apple has powered ahead in the smartphone era with its most recent financial report revealing that the iPhone accounted for US$18.2 billion of its sales from April to June, 50% of its total revenue for the period.”

 The tech giant’s app ecosystem has seen it dominate,  Klingebiel added, but he sees this advantage eroding in the future.

“After the lion’s share of profits moved from handset manufacturers to firms that controlled the link between the operating system and the app store, it is about to move on to the apps themselves. This is facilitated by new challengers in the operating system domain.

“Meet the new crop of open mobile operating systems: Sailfish, developed by Jolla, a Nokia offshoot; Firefox, developed by Mozilla, as in the web browser; Ubuntu, developed by Canonical, a British firm focused on Linux systems; and Tizen, developed by Samsung, Intel, and others. While there are subtle differences between these OS entrants, they have all recognized important trends.

“One is that developers prefer to write applications once, avoiding the tedious adaptation to different platform languages used by iOS, Android, Windows Phone, and Blackberry 10. HTML, a programming language from the computing world, holds out the promise of standardization. While iOS and others increasingly allow for HTML apps, developers are still beholden to customisation and authorisation requirements. The new OS crop largely does away with this, ensuring cross-platform interoperability.”