Apple's problem isn't design, it's Google

The search giant and its partners are offering better prices, hardware and services.

By TheStreet Staff Jun 5, 2013 3:44PM

thestreet logoThe Google logo is seen on a podium and projected on a screen at Google headquarters in Mountain View, Califorina Paul Sakuma, AP By Anton Wahlman

 

I own Apple (AAPL) stock because I think it's one of the best-managed companies in the world, and Apple has had an epic run based on the iPhone and iPad products. However, recent events and trends are causing me concern.

 

The setup for Apple's big June 10 developer conference keynote sounds like this: Every analyst is enamored by the prospect that newly appointed chief software designer Jony Ive will have eschewed the so-called skeuomorphism design language.

 

What is skeuomorphism? It's the charming icons in the iOS software that we have seen since it was first launched in 2007. Basically, a "books" app icon looks like a wooden bookshelf, the "notes" app icon looks like a yellow notepad and so forth. You get the point -- an icon looks like something similar in the real world.

 

The great hope for Apple now is allegedly that it will relinquish this skeuomorphism in favor of a so-called "flat" design of its app icons. What this means is a design language that looks a bit more like Microsoft's Windows Phone 8.

 

If the rumors are true, Apple's next invention is to make the iPhone and iPad look more like Windows 8, which is "flat." This is supposed to reignite Apple's earnings, which have stagnated so far this year.

 

Aside from the perpetually bored tech press, have you heard any normal person complain about Apple's skeuomorphistic design language on his or her iOS devices? Me neither.

 

If Apple thinks its problem is the look of its software, I get seriously worried. We had better hope Apple is going to get a design revamp right. I have every reason to believe it will be as beautiful as anything.  

 

In the bigger picture, though, for Apple to focus on changing the icon colors is like rearranging the deck chairs on the Titanic -- almost literally. Apple has hit an iceberg, and it's losing water -- fast.

 

The name of this iceberg? Google (GOOG).

 

Google, together with a long list of hardware partners -- SamsungAsusAcerHTCSony (SNE), Lenovo (IBM), ZTEHuawei, Motorola and many more -- are attacking Apple like hyenas bite into a gnu. They're doing it through lower prices, improved hardware, and better services.

 

Let's examine those in turn:

 

1. Lower prices

First, hardware: Apple laptops start at $1,000; Google laptops start at $200. Apple tablets start at $330; Google tablets start at $200. Apple's iPhone 5 smartphone starts at $649; Google's equivalent Nexus 4 starts at $349.

 

Components: Apple now makes (aka engineers) its own CPUs. Google and its partners work with Intel (INTC), Nvidia (NVDA), Qualcomm (QCOM), Samsung and Broadcom (BRCM) for CPUs. Yes, I know, Apple uses some of those, too, for selected lower-value/importance parts.

 

Second, software: Google offers more cloud services, and they are free. Google gives you 15 gigs of storage just for creating an account. Google gives you 100 gigs of storage for buying a $250 laptop, and 1 terabyte for buying a $1,300 laptop. Apple could charge you $50 per month for something like that.

 

2. Improved hardware

 Whether smartphones, tablets or smartphones, it is absolutely true that Apple had superior hardware on most fronts until a year or two ago. Android was laggy, had poor battery life, and Google's first laptops were slow.

 

So where are we now? 

 

Smartphone: Almost everyone agrees that all the high-end Android smartphones are ahead of the iPhone in terms of the hardware experience. They have bigger screens, bigger batteries, and expandable storage, among other things.

 

Tablet: Whatever advantage Apple had in the early days has largely been eradicated. I could argue that most tablets are now the same, but Android invents more in terms of form factors, optional stylus, and so forth. In either case, and equivalent Android tablets tends to sell for $100 less than the iPad.

 

Laptop: Obviously, Google started out by focusing on $200-$450 laptops, but they are no longer too slow for their basic tasks. As for the high end, the $1,300 Google Pixel is starting to address the high-resolution (2560x1700) touchscreen laptops built with the tightest quality standards.

 

3. Better services

Docs: With Google, you can simply open up a web page on almost any platform -- Chrome OS, Android, Apple's iOS, Microsoft's Windows -- and create a word document, spreadsheet or presentation, for free. Open and edit on any device.

 

With Apple? Not so much.

 

Maps: Actually, let's not go there, shall we?

 

Just-In-Time Information: Google has NOW. Apple has NO-thing.

 

Voice: With Google, I get a free phone number and it works on most of my devices -- all PCs, all Apple iOS, all Android. With Apple? No such thing.

 

Calendar: The Google calendar works on every device, from every maker. Apple's calendar? It's great if you use only Apple hardware; otherwise... not so much.

 

What about tech support? Apple has great tech support, the best in the business. The Apple stores are little museums, and everything is neat and clean. If you have a hardware issue with your iPhone, the Apple store will be more helpful in making things right than any other entity.

 

But you know what's better than the best tech support in the world? No need for any tech support in the first place, that's what.

 

At least on the software side -- and that's where the action is for most people -- with Google, all you do is to log in with your Google ID, and then everything "just works." Apple has tried to copy this but, as we all know, it is just not that easy to get it to work. It takes a few trips to the Apple store to get it right.

 

But wait, there's more!

 

Google's attack on Apple isn't stopping there. In the coming year, as I have been writing in previous articles, Google will start to offer free mobile telephone service to go along with its free SMS service. This will enable you to buy a sub-$300 Android smartphone contract-free, and pair it with a $20 per month data plan, saving you up to $70 per month compared to an iPhone.

 

That's $70 per month -- $840 per year, or $1,680 over the iPhone's two-year contract.

 

The price pressure on Apple has barely started. It's going to get a lot worse. The peasants -- Google and its umpteenth partners -- are storming the castle; the hyenas are biting into the gnu's flesh.

 

And I haven't even mentioned the future Chromephones and Chromepads (see TheStreet here and here).

 

The advent of Chromepads and Chromephones starting over the next year or so will further help Google lower its prices and improve the quality of its cloud services. More headaches for Apple.

 

So Apple, please tell me you have something more important to announce next week than changing the look of the icons on the iPhone. If you don't have anything else material to show, please tell me beforehand, so I can sell my stock.

 

At the time of publication the author was long GOOG, AAPL, INTC, NVDA, BRCM and QCOM.

 

 

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5Comments
Jun 5, 2013 5:55PM
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The difference between $1000 and $200 laptop, is a huge difference in hardware/performance.
Jun 5, 2013 4:49PM
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Apple has already said it's a software company not a hardware company so that says something about where they are focused....don't you listen/read?   I do not believe nor have they anounced that the "problem" is the look of the icons they have so I think you wasted a lot of energy in your comparison with the supposition that this is the big change Apple is announcing.  It seems the only deciding factor is screen size to those getting a G3 or G4.  If this is a real factor then I'll rest easy knowing that NOTHING could be LESS challenging for Apple to do than this. More room for a bigger bat and components, Apple has already proven that they can package smaller and lighter than anyone so going bigger is easy.

      Most people I see using big screens need glasses and are not aware of iphone features such as  three finger tap and scroll  on the screen to zoom, Nor that you can pick a larger font for texting etc. hold the i-5 phone sideways, tap and you can read anything without the bulk of the big phone, once they see this they look dumbfounded standing there with an almost etch a scetch size phone in their hand becaseu they couldn't see.     I went on a sailing trip and the captain was constantly trying to recharge his large screen, my i-5 motored on.  I'll agree a large screen has advantages in some situations but something is to said for a phone you don't mind being in your pocket and travels well. I'll mirror my phone with my i tv ( a snap to do)  onto my big screen TV  if I want to show  big pics  or play a game.  The aluminum case is pretty stout on i-5 so no need for the rubber sleeve, keeping it even smaller in comparison.

   Google wants your info, they want to feed there advertising, Amazon wants to sell you stuff, personally I would not go onto any of these platforms so they can spy, that is why they "subsidize" by taking zero profit in hardware/software that's the trade off, you sell your privacy to them for a few hundred bucks...NO THANKS.

 

Jun 6, 2013 12:45AM
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Consumers usually screw themselves and the same fate awaits them with Google.

Jun 6, 2013 12:44AM
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Apple and Microsoft need to fight fire with fire and give away advertising for free. Google uses ad revenues to give away software so nobody should complain if Apple and Microsoft did same with ads to Google.
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