An Apple store in China

A new Morgan Stanley survey (via AppleInsider) found that Apple is the most desirable brand of computer in China right now, beating out local heavyweight Lenovo. China became the biggest buyer of personal computers as of August, according to IDC, so that’s great news for Apple.

The Morgan Stanley survey of over 1,500 respondents spread across 16 Chinese cities found that Apple was picked as the brand of choice for people’s next computer purchase 21 percent of the time. That compares with just five percent who currently own an Apple computer. Lenovo still remains the top choice for consumers’ next purchase, but it dropped from 31 to 23 percent. If laptops are considered alone, Apple exceeds Lenovo as the next purchase of choice, with 22 percent of respondents choosing Cupertino’s products over Lenovo’s 21 percent.

Aside from being high on consumer t0-buy lists, Apple also ranked as the most desirable PC brand, according to the survey. It achieved a weighted score of 66 percent, with Asus in second at a close 65 percent.

The main barrier to Apple computers for most respondents was price; only 7 percent of survey respondents said that they would be willing to spend north of $1,000 for a computer, which is where the bulk of Apple’s line lies. Luckily, the trend is changing; of those planning to buy a new computer, half plan to do so within two years and expect to spend 6 percent more than the roughly $700 average price currently paid. If Apple can lower or keep prices the same as Chinese customers grow more affluent and continue to expect to pay more, eventually cost won’t be nearly the barrier it is today.

The iPad is also walking away with the tablet market in China, just as it is elsewhere. Sixty-eight percent of respondents plan to make it their next tablet purchase, while 65 percent of tablet owners currently have one. The iPhone is also poised to do very well, with 40 percent of respondents saying it will be their next device, more than four and a half times the number of current iPhone users as polled.

Apple CEO Tim Cook said that China was now Apple’s second-largest market, and judging by these numbers, it won’t be too long before it climbs to the top spot.

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It’s understandable that analysts would predict a similar sort of trajectory for the iPad that the iPhone has experienced; after all, a tablet is just a larger smartphone, and both categories of devices run basically the same mobile operating systems, at least as far as iOS and Android are concerned.

The only proven tablet OS

But the experience on both Android and iOS tablets for end users isn’t nearly the same as the experience on phones using both platforms. If Android feels a bit immature on smartphone hardware, it feels exceedingly so on tablet devices. IOS, on the other hand, feels tailor-made for each. Nothing about it seems hasty, or an attempt to quickly gain a foothold in a market the OS was shoehorned into in the first place, the way Honeycomb did. Ice Cream Sandwich could improve the situation, but at most, it will probably be an evolutionary update, if the history of Android OS iteration is any example.

In other words, Android has yet to prove it can even deliver a mature, feature-complete tablet OS designed to take advantage of larger-screened devices. That Gold suggests in his note that QNX and Microsoft will be able to each acquire 10 percent of the tablet market by 2015 is an even greater reach, since those platforms have even more to prove in terms of market relevance. RIM can’t even get email working on its platform until 2012, and Microsoft’s software is a risky desktop/mobile hybrid that has yet to see a public release. Predicting either’s ascendancy at this point to a solid but distant third is like seeing Zune and anticipating it would eventually be a serious contender alongside the iPod.

Distribution model differences

Predicting the iPad vs Android tablets market to proceed along the same lines of the iPhone vs. Android phones market also discounts key differences in the distribution model of both devices. Tablets, despite some support from carriers for 3G data plans, stand in for computers more than phones for most consumers, and that’s the way many people shop for them, too.

Carriers, then, don’t have nearly as much say in which devices get pushed as they do with smartphones. In the past (and still today), if you wanted an iPhone, in many markets you were stuck with one or two carriers. If you wanted network choice, you had to go to a different device. Also, carriers have tended to favor Android because it offers them more customization options, allowing them greater controller over the customer relationship.

So long as the tablet isn’t inextricably tied to distribution through network operators, Apple will have an advantage, since it has the strongest marketing, sales and retail network of any device OEM.

Usage still far ahead

As we reported yesterday, Apple’s iOS market share by usage is still well ahead of Android or any other competitor, as measured by website access by platform and by browser. Those numbers combine both tablet and smartphone figures, but since Android is acknowledged to be faring much better versus iOS in smartphones than in tablets, it stands to reason that the iPad is skewing things heavily in Apple’s favor.

We sometimes see reports that claim Apple is losing ground, but more often than not, those numbers reflect shipments, not actual sales to consumers, as Kevin Tofel pointed out. Many of the Android devices reported as shipped are likely sitting on store shelves, whereas Apple’s numbers represent devices actively being used by consumers.

Determining the actual gap here is made even more difficult when you consider that new Android tablets are constantly coming to market. Combine old stock with new, throw in a glut of essentially obsolete devices in the form of the discontinued HP TouchPad, which could be had for just $99 during the last couple of months, and you get even more of a statistical minefield that probably doesn’t represent long-term trends in any accurate way.

Apple is best positioned to innovate

The iPad has a huge lead in its current form, and Apple has lots of money to spend on R&D, which makes it the best-positioned tablet-maker to introduce category-innovating new form factors, features and technologies. The competition can try to shake things up, too, and have done so with different sizes, detachable laptop docks, etc., but if the groundwork isn’t laid, these variations on Apple’s successful model have little chance of succeeding.

Predictions that draw parallels between the smartphone realm and the tablet market are missing the point; the real future makeup of the tablet landscape will be drawn by unconventional attacks like Amazon’s $199 Kindle Fire, which counts not on mimicking Apple’s success, but on consumer willingness to sacrifice on features in order to get a low-cost, content consumption device.

Even so, I think the iPad will weather these and other assaults and continue to reign beyond the 2015 mark, for the reasons outlined above and my past arguments about why Apple’s tablet is still more appealing than the Amazon offering.

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Since the early adopter crowd is the group most likely to cycle through devices quickly, this makes sense. Android handset makers usually don’t adhere to any hard-and-fast update schedule, and they often release multiple devices or iterations of the same device within a single calendar year. If what you’re after is the latest available tech, Android has the edge, regardless of whether or not the overall user experience of iOS is arguably better.

Of course, it helps that Android has around a dozen hardware partners in the U.S. alone offering a variety of devices across all major carriers, but even among that crowd, some single device makers are beginning to pull away from the field with aggressive hardware upgrade plans.

The best example is Samsung, which announced a new 5.3-inch smartphone on Thursday at the IFA 2011 European tech conference. The new Galaxy Note, as the monster phone is called, also has a 1.4 GHz dual-core processor under the hood, as well as a pressure-sensitive touchscreen that can be used with a stylus for accurate drawing, sketching and writing. The huge 5.3-inch display boasts an impressive 1280×800 resolution, on par with many netbooks. Bristling with new shiny bits, it’s an early adopter’s dream device.

The features mentioned above won’t appeal to all, because as Steve Jobs has rightly pointed out in the past, most consumers are after an overall experience, not a list of specs. But one group, namely the early adopter group, is very much focused on the list of specs, and Samsung is showing that you can do well by appealing to that level of interest.

Early adopters buy early and buy often. The nature of Android devices makes it more possible for those on the edge to stay there, no waiting required. Given the rise in popularity of smartphones, combined with a generation of device buyers that grew up using them, we might see more and more consumers comfortable with device updates that are much more frequent than once (or less) yearly.

Apple doesn’t adhere to a strict yearly schedule with its Mac releases; approximately every six to eight months, it introduces minor overhauls and spec bumps when new processor tech is made available to keep its machines more or less current in terms of specifications. Doing the same with an iPhone might make sense and attract the wandering gaze of customers focused firmly on the horizon of mobile tech.

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Apple Store Sanlitun in Beijing, China

Apple has been showing strong growth in greater China in recent quarterly reports, including a sixfold increase in year-over-year revenue in the company’s third quarter. In its most recent investor call, Apple reported its total sales revenue in the region as $3.8 billion. Now it looks like Apple is even beating a longtime regional heavyweight for the first time, as Lenovo saw just $2.8 billion in sales (via FT) during its most recent financial quarter.

Lenovo still grew 23.4 percent compared to its business a year ago, and it remains the third-biggest PC maker worldwide by shipment volume (and the largest in China for eleven years running). But Apple pushed past it, due in large part to strong iPhone and iPad sales, which are doing much better than Lenovo’s Android-based LePad tablet and smartphone lineup. Note that Lenovo actually originally sold off its smartphone business in 2008, only to buy it back in 2010, which gave the iPhone a considerable head start in securing a beachhead for Apple. Also, Apple’s iPhone presence in China could get even stronger when China Mobile starts selling the Apple device.

China is a key market for Apple going forward, as it continues to grow in terms of consumer buying power on the world stage. Chinese consumers seem to be gaining confidence, especially when it comes to luxury goods, and Apple is perceived as a luxury brand there perhaps more than anywhere else in the developed world. That means Apple is in a good position to continue to capture market share away from competitors as Chinese spending power increases.

It’s a small but significant milestone as Apple continues to grow its business in markets that hold a lot of future growth potential. It will be interesting to see how that is affected by the release of the iPhone 5 and other upcoming devices, including ones that remain speculative, like the low-cost or prepaid iPhone.

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However, it wasn’t really a terrible loss for RIM, as the entire smartphone market grew 78 percent overall. Though Apple did surpass RIM in sales volume (and seems poised to ship even more in the future, since supply constraints provided a choke point in 2010), it still has a long way to go before it approaches Nokia, the reigning king of the smartphone hill.

Nokia shipped 26.5 million devices during the three-month period. Apple, by contrast, shipped only 14.5 million, almost half as much as its biggest rival. Nokia benefits from a much greater presence in Asia and Europe, and will be hard to shake from its lofty perch, though it’s losing ground. It held 34.4 percent of the market in this latest scan, down from 37.8 percent from the same period the previous year.

Apple’s market share grew from 17.0 to 18.3 percent over the year. The BlackBerry’s take dropped as much as Nokia’s, falling from 19.6 to 16.1 percent; RIM shipped 12.3 million devices during the quarter. The Canadian company is missing out in large part due to “a limited presence in the high-growth touchscreen segment” according to Strategy Analytics.

According to analysts from Canacord Genuity, a firm 0perating in RIM’s own backyard, Apple’s lead in the smartphone market may be insurmountable at this point, even for Google.

Following Monday’s conference call, the firm raised its target price on Apple stock to $421 and called Apple “unbeatable.” Analyst Micheal Walkley said simply, “We agree with his views,” referring to Jobs’ claim that “we’ve now passed RIM and I don’t see them catching up with us in the foreseeable future.” Analysts also agreed that Android was too fragmented, and argued that the App Store’s head start in terms of its software library is a market-defining advantage.

Unbeatable is a strong word to use in a sector as prone to transformative change as mobile tech, but Apple is currently occupying a position in the market that almost no one would’ve predicted five years ago, so perhaps in this case, it’s merited.

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When you continually take such wide strides in innovation, intentional or unintentional, there will always be casualties. In 2010 alone, Apple held no less than five major media events that in some way affected the way markets were defined and revenues were earned for a significant number of companies.

Dead or Dying Already

This year we have witnessed the fall of HP’s Slate that Microsoft CEO Steve Balmer introduced at CES, a massive shift in consumer purchasing behavior in the netbook market and media moguls struggle with the hard decision between propping up traditional print or adopting newer digital technologies. When it comes to development platforms, Steve was more than willing to speak out and share his thoughts on the subject, while evidence continues to mount that he was right about Adobe Flash on mobile devices. With just one of two new lenses, two consumer markets were affected: the digital snapshot camera and the handheld HD video recorder. I loved my Flip Mino HD video recorder (past tense). With HD video recording capabilities, on-device editing, and the ability to share instantly online, the justification for a separate Flip video recording device just did not make sense any more.

September 2010 Media Event

There is a reason the entire tech industry pauses a moment to see what Steve will say next at these major press events. Many are holding their breath to see if their bottom line will be affected in either a positive or a negative manner. Every time Steve talks, things change. And yesterday’s event was no different. In many ways, the latest media event from Apple will shake more things up than any previous media event yet this year.

Multi-Room Entertainment Systems: AirPlay has some pretty big names backing it including Denon, Marantz, B&W, JBL and iHome. Simply having the ability to stream music simultaneously to multiple rooms could add some serious competition to products like the Sonos Music System, Bose SoundLink, Yamaha MusicCast and Klipsch LightSpeaker to name a few. Apple is potentially cannibalizing its own product by competing with the presently available AirTunes capability of the AirportExpress.

Print Apps in App Store: So what will happen to the sale of printing apps now that Apple will support printing on the iPad? Until we see exactly how printing will work, it is hard to say at this point. But rest assured that consumers’ willingness to pay a premium for specialized printing abilities will be at a minimum. Currently there are more than a dozen apps for the iPad that can print. Many of these are currently priced anywhere from $4.99 to $9.99. These price points will likely drop, as will support for some of the apps simply because the market will shift in this category.

HDR Apps in App Store: Just as the 5.0 MP camera that Apple introduced with the iPhone 4 has likely cut into the sales of casual point and shoot digital cameras, updating the on board camera app supplied with each iPhone will undoubtedly affect the sales of HDR Apps. This includes wonderful Apps like HDR Camera, TrueHDR and Pro HDR. I have tried these apps and I must say that the when the camera is held steady, the results are stunning.

Roku and Boxee media Devices: While the new Apple TV is not revolutionary, the price point sure is. At the magical price point of just $99, it will be hard for any household with iPads, iPhones, iPods and iMacs to refuse. Especially when this device will make it easier than ever to view all of the memories captured, organized and edited with each of those iPads, iPhones, iPods and iMacs. If Apple would ever decide to make MobileMe free to Apple customers again, this one time cost would be easy to justify. Devices like Roku and Boxee now have some serious competition to contend with.

Everyone wants to lead, but just how far out in front is Apple? Can any company, including Google, have as dramatic of an impact across the entire technology industry, each and every time they decide to have their CEO invite the media over for a chat? In fact, it may be a good idea to check with Steve before you make any sudden moves in the tech industry.

So how has Apple affected your life in 2010?

No matter what your company did in the past two years, Apple did it better. It reminds me of Sony in the 80s and Microsoft in the 90s. Companies were afraid of Microsoft in the 90s. All Microsoft had to do is decide to enter your space and you’d be out of business, if you weren’t lucky enough to be bought by the company. That’s not the case anymore. In this sense, Apple is the Microsoft of this decade.

Let’s take a look at RIM’s BlackBerry Torch, just released last week. Gizmodo had a great post on why the Torch launch was an utter failure, with only 150K units sold in the first week. In that article, they said:

The hordes are proclaiming the Torch a massive failure, and they’re right — but not because of how many units they sold. 150,000 handsets is a lot of phones. In fact, it’s totally in line with other major launches of the last couple of years: Sprint sold that many Evo 4Gs in its first three days, and it’s three times as many as the Palm Pre managed at launch.

Who it didn’t compete with, of course, is the iPhone. The 3GS and 3G both moved a million over their opening weekends, and 1.7 million people took home an iPhone 4 at launch. And that’s where RIM got into trouble.

They’re right. 150K units is a great number, but it doesn’t compare to Apple’s 1+ million numbers every time a new iPhone comes out. That’s the point. The Blackberry Torch, HTC Evo and Palm Pre all look like complete failures when measured against Apple.

Recently, Asus said they’re lowering production of netbooks due to a lower sales forecast. Nowhere in that quote did their CEO say Apple’s iPad is to blame, but it didn’t stop every blogger from making that causal link. What about the fact that netbooks have had the same Intel Atom processors, same form factor, same low-resolution monitors and same version of Windows XP on them since 2006 as the reason for lower sales? Maybe it’s time for Asus to actually innovate instead of putting the same stuff inside a different color case and throwing a $299 price tag on it.

The specifics of how other companies are doing doesn’t really matter. The issue is that, no matter what any tech company does, they’ll be compared to Apple in some way. Tech companies can’t release a mouse, display, keyboard or television-connected device without being compared to Apple. I’d like to see Microsoft release a battery charger at this point without drawing a negative comparison. Wait, never mind, they have one of those.

My point is, Apple is the yard stick by which all others are measured. There are better products out there with zero visibility and meager sales. In fact, the next Apple is probably out there somewhere. Let’s hope manufacturers don’t just throw up their hands and scale back in the face of stiff competition from Cupertino, and as consumers let’s keep an eye out for the next little guy swimming bravely upstream.

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For the moment, though, Apple is doing much better than anyone in the space, really. The latest comScore report, which covers a three month period from September to December of 2009, shows Apple as having 25.3 percent of the total smartphone market share, up 1.2 points from 24.1 percent at the beginning of the period measured.

Research In Motion (RIM) came in first place overall once again, with 41.6 percent of U.S. smartphone subscribers opting for a BlackBerry device. But that number represented a slide, ultimately, as RIM began the measurement period with 42.6 percent. Microsoft and Palm likewise slipped, with MS dropping from 19 to 18 percent, and Palm losing 2.2 points, down to 6.1 percent.

Google had the lowest market share of the bunch, with 5.2 percent of subscribers. But that number was up from only 2.5 percent in September, suggesting that it was probably helped along considerably with the introduction of the Motorola Droid. 2.7 points also represents the largest market share grab made by any smartphone manufacturer over the period of the report, so Google is indeed the company Apple needs to be most worried about.

Palm is probably the company everyone needs to be least worried about. The Pre and Pixi maker lost almost as much market share as Google gained, and was the only company on the list to post such a significant loss of ground. The Pre Plus and Pixi Plus could alter its fortunes, but I honestly can’t see customers who were disappointed with the originals going back for more at this point.

Going forward, Apple’s main concern is going to be with Google and how it fares now that it’s begun taking more control over its own smartphone future. The Nexus One drastically undersold the iPhone both in the first week and in the first month, so that’s got to be good news for Apple. That said, Google is doing something pretty much unprecented with regards to smartphone sales in the U.S., and it’s only selling the device in the U.S. as of yet. Apple had the advantage of selling its device through AT&T when it launched, which was an established sales and marketing channel for such devices already.

Apple’s growth over the period measured in the comScore report remains impressive, though, given that it had not introduced a new smartphone model since much, much earlier in the year. Google’s rise can be almost entirely attributed to the initially strong sales of the Motorola Droid, which was arguably the “it” device of the pre-Christmas season.

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By that I mean, in the true sense of the term, will the iPad be an intensely attractive thing that is briefly coveted and then forgotten? Right now, the general sense from the tech press is that Jobs has done good, and that very few will be able to avoid picking one of these up when they become available in the next two or three months. But will that enthusiasm transfer to the general public?

I’m not the only one who isn’t so sure about that, judging by Steve Jobs’ performance at the Yerba Buena Center for the Arts today. Sure, he showed off the iPad’s capabilities with the showmanship of the veteran salesman that he is, but he also framed the presentation in a way that struck me as odd. It almost seemed more like a stockholder speech than the unveiling of an exciting new device to an eager public.

First, he established where the product was needed. He visually created a new category in which the iPad fit, which is something many bloggers and tech writers had been wondering about. It makes sense to address it once, and after having discussed the success of your existing platforms. The connection is understood, and once you demo the device, people will see why they need or want this device. Problem solved.

But not in the eyes of Jobs, apparently. The end of his presentation today was essentially a drawn-out justification of why Apple’s iPad is, in fact, a viable platform, and not just an ultra-niche device that most consumers could easily do without. “Do we have what it takes to establish a third category of products?” That’s what Steve Jobs asked rhetorically at the close of his presentation, but was it a rhetorical question, or is Apple actually unsure?

Let’s make one thing clear: I want an iPad. I want everyone to want one so that we can use them creatively together. But I also wanted a Sony Reader and a Kindle. I want a chumby. I want all kinds of things that ordinary people would never dream of wanting. The iPad, if I try to look at it dispassionately, is essentially a media player that’s too large to carry around comfortably in your pocket, too small to be preferable for movie viewing to your TV, and could even represent a significant recurring money drain if you get 3G service. It’s an e-reader, yes, but by and large, people aren’t yet really lining up to get at those.

Don’t get me wrong, I think that if anyone can make this kind of product commercially viable, it’s Apple. All I’m saying is that if even Steve Jobs has to seemingly go out of his way to justify its existence, then how can I possibly avoid doing the same?

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It beat the BlackBerry 8300 (Curve), which came in at No. 2. BlackBerry’s cumulative share still exceeds the iPhone’s, however, as the touchscreen Storm and entry-level Pearl also placed quite high on the list. Coming in at No. 3 was Motorola’s RAZR V3, despite its considerable age and lack of smartphone features.

By the numbers, the iPhone 3G took 4 percent of cell-phone ownership in the U.S. (it’s unclear how previous models and the 3GS fit into this breakdown), while the Curve had 3.7 percent. The gap was wider between the second- and third-place finishers, with the RAZR taking only 2.3 percent. Meanwhile LG had a strong showing, with four handsets appearing in the top 10, and a cumulative market share of 6.4 percent.

As to web activity on cell phones, Google topped the list of sites accessed via a mobile device, and competitor Yahoo came in second with its Yahoo Mail site. Gmail came in third, and YouTube won out in terms of destinations for mobile video, making it a very solid year for Google in terms of the mobile web.

Notably, no Android devices made the top 10 list of popular devices, but Motorola’s Droid arrived late to the game. Expect to see it, or possibly the Nexus One, somewhere on this list in 2010.

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