How Apple can retain its mobile mojo

It’s been less than six years since Apple began to reshape the mobile world with its iPhone and App Store, but recent headlines suggest the bloom is fading from the iOS rose. In just the last few weeks we’ve read that Android is crushing Apple in the mobile device market, Forbes has explained how Apple is losing mobile and Business Insider has claimed that Samsung is out-innovating Apple. Canaccord Genuity piled on earlier this month by predicting that Apple’s long run as the dominant profit-maker in mobile may end during the current quarter.

Some of the headlines are a little over the top, of course. Apple actually increased its lead in the U.S. smartphone market in the last few months, according to comScore, and it remains atop the worldwide tablet market (for now, at least). But Samsung’s impressive hardware has clearly stolen some of Apple’s brand cachet, and mobile is becoming far more competitive this year with the emergence of Windows Phone, BlackBerry 10 and a small army of smaller operating systems. To stay ahead of that competition and reclaim some of its sexiness, I think Apple would be wise to focus on a few key areas in the coming months:

  • Growing and marketing Passbook. There are some very good reasons why mobile payments have yet to gain any real traction in North America, but Apple’s strategy of pursuing a mobile wallet that consumers can find value in is sound. The company must continue to add vendor partners, however, and should invest heavily in a marketing campaign that explains to consumers exactly how Passbook can serve as a single app for a variety of loyalty programs and mobile coupons. (Something along the lines of “Fixing the Costanza wallet,” in other words.)  And it should move more aggressively to expand Passbook’s support of mobile ticketing, which drove adoption of contactless payments in Japan.
  • Embracing NFC. Apple still seems to think NFC isn’t ready for prime time, which makes sense when viewed only through the lens of mobile payments. (A lack of retail infrastructure and NFC-enabled handsets are big reasons why Google Wallet continues to struggle.) But while NFC may never be the standard technology for digital transactions at the retail counter, it’s an ideal technology for some kinds of mobile marketing and peer-to-peer content transfers. Samsung has effectively capitalized on its integration of NFC with clever (if risqué) commercials that wisely don’t even mention the technology’s name. Apple should eliminate Samsung’s advantage here as quickly as it can without diminishing the iPhone’s performance or design.
  • Diversifying its hardware lineup. I know this suggestion borders on blasphemy considering Apple’s tried and true strategy of maximizing margins by offering an extremely streamlined lineup of smartphones and tablets. But big margins will become less attractive if Apple’s worldwide market share winnows as the competition heats up. Meanwhile, mobile devices are constantly taking on a wider range of sizes and designs at a variety of price points: Oversized handsets are gaining traction, smaller tablets are a hit, and the market for low-cost smartphones is poised to explode in the next several years. I think Apple has been wise to stick with a minimal hardware portfolio thus far, but it’s time to diversify.

There are other areas where Apple should step up its game as well: It should be more flexible with its iAd business to grow revenues from lucrative tablet ads, and it should continue to move into the enterprise as BlackBerry struggles to find its footing. And just to be clear, I don’t at all think Apple is anywhere near doomed (unlike some other onlookers). But I do think Apple is in danger of losing valuable momentum at a crucial time in the mobile industry. Tightening its focus on these three areas should help it maintain – or even build on — that momentum.

Relevant Analyst
Colin Gibbs

Colin Gibbs

Founder and Principal Peak Mobile Insights

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