Apple is sitting just about as close to the top of the world as possible right now. The world’s most valuable company, it’s got a market capitalization flirting again with the $500 billion mark, and even a flash crash in morning trading on Monday didn’t bring its share prices under $500.
The company is poised to make a big media announcement on Wednesday — which we assume is the next-generation iPad — which is almost guaranteed to send consumers to Apple stores around the world to stand in line for its next product.
Yes, Apple is flying high. But it has its vulnerabilities, too. Here are some things that Apple should watch out for:
Android — Technology industry experts eyeing the all important “market share” number are no doubt noticing that although the smartphone and tablet markets are growing, Apple isn’t finding new customers as quickly or in the same volume as Google’s Android platform. There are several reasons for this, of course. Android tablets are made by several companies; the iPad is made by Apple and Apple alone. Also, it’s natural that Apple — the first significant mover in the tablet and smartphone market — should lose some market share as other companies rush in with their own versions of the gadgets.
Kindle Fire — The Kindle Fire, Amazon’s seven-inch tablet, has seen enormous growth in the tablet market, though the tablet is admittedly going after a different market than Apple. There are some reports that Apple is taking defensive moves against the smaller tablet market and buying up 7.1- or 7.85- inch screens for an “iPad mini.”
Labor issues — Apple’s efficient supply chain is one of the main keys to its success, but it’s also proven to be source of trouble for the company, after media reports brought concerns about the conditions at factories in its supply chain.
For its part, Apple has joined the Fair Labor Association, which conducts its own audits of it member facilities. The FLA has already visited some factories associated with Foxconn, which makes electronics for several companies including Apple.
“We care about every worker in our worldwide supply chain,” Apple spokesman Steve Dowling told The Post. “We insist that our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever Apple products are made.”
China — Apart from labor issues there, Apple faces other problems in China. The country is one of the most critical markets for Apple, but the company has had some serious challenges in the country. The most prominent barrier that the iPad faces in China is the opposition of Proview, a debt-ridden electronics company that claims to be the rightful owner of the trademark for the name. The claim has resulted in government officials yanking the tablet from store shelves in some Chinese cities, despite high demand for the product, The Washington Post reported.
Intellectual property issues are a major snag for many foreign companies trying to do business in China, where regulatory agencies have yet to create an environment that’s friendly to foreign companies.
Patent suits — Speaking of intellectual property, Apple is also embroiled in several lawsuits with smartphone makers Samsung, Motorola and HTC over technology in handsets and tablets. The Cupertino, Calif.-based company has a mixed track record on these suits so far, with suits in the win, loss and tie columns around the world.
For example, Apple won a limited victory in the U.S. against HTC after the International Trade Commission ruled to ban imports of HTC devices with a certain dialing feature — one that HTC has said it will remove from its phones. But a German court decided to throw out cases filed by both Apple and Samsung last Friday.
On Wednesday morning, Reuters reported that Samsung has filed another suit against Apple in South Korea, accusing Apple on infringing on its patents for the iPhone 4S and the iPad 2, indicating that the battle over intellectual property is far from over.
Video content producers — A report from the New York Post claimed that Apple is trying to launch a Netflix-like service by Christmas, which would further lock its customers into its iEcosystem. But although the company is said to be driving a hard bargain with content providers, they reportedly aren’t too interested in what Apple’s selling. According to the report, Apple wants to control the pricing of the service and share in the profits.
“They want everything for nothing,” an unnamed “media executive” told the newspaper.
Textbook industry — Apple has made some big moves to shake up the textbook industry, which has made it frenemies with the big publishing houses that have cornered the high-profit market.
In remarks to biographer Walter Isaacsson, late Apple co-founder Steve Jobs said that he believes the process “by which states certify textbooks is corrupt” and said he wanted to give away textbooks through the iPad. Apple has made some moves to democratize the textbook space with its latest announcement about iBooks but has been criticized for locking lower-priced textbooks into such a high-priced gadget.
Windows 8? — Tim Cook himself said that it’s never a good idea to count Microsoft out of the race, referring to the company once as the “horse in Redmond” that’s always spoiling for a race. His remarks were referring to Windows Phone, but with Windows 8, Microsoft is angling to crack the tablet market, using the system’s integration with PCs as a way to overcome its late entry into the space.
The system, now in the Consumer Preview stage, has been getting high praise from testers who like its new layout and say that it will be a good system for the touchscreen.
Privacy advocates — Sen. Chuck Schumer (D-N.Y.) has called on the FTC to investigate Apple and Google after reports that smartphone and tablet apps could pick up more data from consumer’s phones than they realize.
Late last month, the Path journaling app landed in hot water when it was revealed that the app was picking up the contact information on users’ phones. Other reports have indicated that some apps have access to users’ photos. Reuters reported that Schumer wrote to the agency, saying that Apple and Google should be required to protect users’ private content.
Apple and other technology companies will have to be nimble in the future as privacy regulators hammer out the ground rules for the mobile industry.
Investors — Apple’s investors are clamoring for a dividend as Apple debates what to do with its huge $98 billion pile of cash. Cook and Apple’s chief financial officer Peter Oppenheimer have both said that the company is seriously considering what the best option for all that money may be, but Apple’s investors might grow impatient.
Ultrabooks — The trend that was all the rage at this year’s Consumer Electronics Show was the ultrabook. The ultrabook genre, essentially an attempt to catch Apple’s MacBook Air, has the potential to encroach on sales of the MacBook Air and to hurt Apple’s growth in the enterprise market. The tablet computer has caught quickly with the business set, but the lack of a keyboard has help some back from a full conversion. If ultrabooks actually do take off, it could spell trouble for iPad sales.
Hackers — In some ways, an increased threat from hackers shows that Apple is a victim of its own success. As the company’s marketshare increases, so does the benefit of hacking its systems. Apple traditionally held such a small part of the market that it wasn’t worth it to hackers to take the time to learn how to crack its systems. But now, particularly if you count the iPad as a computer, Apple is a formidable competitor in the personal computing market.
Its own reputation — Apple’s biggest challenge, by far, is maintaining its own image as an innovator. The company has built its remarkable comeback story on a history of innovation and the ability to direct — not follow — consumer demand. With the loss of co-founder Steve Jobs, industry-watchers will be casting an increasingly critical eye toward chief executive Tim Cook, who is tasked with keeping up Apple’s reputation as an innovator.