Sony: Once owned the portable music space, but its Walkman was replaced by the iPod, and its well-regarded Vaio laptops are getting supplanted by iPads. It has a huge consumer electronics, film and television business but is being slapped by the Koreans below and Apple above.
Intel: A mixed bag, to say the least. Intel is powering Macs and has some chipsets in other Apple products, but its PC business appears to be potentially at risk.
Challenged
Google: A juggernaut in its own right, Google acquired Android and turned it into a legitimate competitor to the iPhone. But it doesn’t sell the OS — it gives it away for free and retains the search rights (the bread and butter).
It was smart to expand into mobile so as to not get eclipsed in that space, but it also created another set of headaches: patent exposure. Apple not only dominates the space but also acquired a huge trove of Nortel patents so as to insulate itself and challenge all comers. This forced Google to pay up for a comparable portfolio, grabbing (former Apple partner) Motorola for $12.5 billion. The jury is still out as to whether this will insulate some of the obvious Apple-inspired tech on the Android.
AT&T: Was desperate enough to let Apple dictate terms for the iPhone, thereby transforming the industry. When iPhone calls got dropped in large numbers, Apple might have saved it from an ignominious demise.
Verizon: We could argue that the phone giant could be put into multiple categories: Challenged? Benefited? Perhaps a foot in each camp?
No doubt, the initial years of AT&T’s iPhone sales took some market share from competitors. But Verizon’s reputation for having reliable network coverage was enhanced. Its savvy advertising also limited the damage. As soon as AT&T’s exclusivity ended, Verizon was right there to become an iPhone4/iPad2 seller. Both products sold well for the company. Verizon’s Android sales meant they were also in a good negotiating position with Apple for contracts. That’s something most other mobile phone companies cannot claim.
Benefited
Samsung: Similar to Verizon and Foxconn, Samsung benefits from Apple as a major supplier but is also a competitor in its own right. The Economist recently reported that Samsung makes 26 percent of the component cost of the iPhone. Indeed, there is litigation between the two firms over designs and patents, but so far, Samsung is a net winner in the new Apple econosphere.
Sharp: Apple invested a billion dollars in Sharp to ensure a steady supply of laptop LCDs, and their ongoing relationship seems to be working well for the Japanese multinational.
Corning: “Gorilla” Touchscreen Glass is the supplier not only to the iPod Touch/iPhone/iPad but also to an entire industry. The i-line and its many competitive inspirations have been a boon to Corning.
Sprint: Will reportedly begin selling the iPhone 5 later this year.
Foxconn: Manufacturer of many Apple products continues to benefit from the relationship with Cupertino.
STMicroelectronics: Makes the Accelerometer and Gyroscope in iPods and iPhones.
Qualcomm: Produces the wireless baseband chips in iPhone4 and to be in iPhone 5.
One day, a new competitor will come along and do to Apple what Apple had done to others. It is the nature of creative destruction that these innovative firms are temporary, lasting a few years to a few decades. Survivors such as IBM and GE are the exception, not the rule. This is why investors must always remain vigilant against losses. There is no such thing as a forever stock holding.
Ritholtz is chief executive of FusionIQ, a quantitative research firm. He is the author of “Bailout Nation” and runs a finance blog, the Big Picture.
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