Samsung’s 4th quarter profit jumped 76% on the strength of surging smart phone sales, including its newest big-screen Galaxy S line. Samsung’s share has grown 8 points to 28%, while Apple increased just 1 point to 21%. Apple’s shares have slumped 37% since its September all time high. What is going on?
- A pointed $200 million ad campaign poked fun at Apple and may have knocked it off its icon pedestal.
- Strong engineering with some innovation (bigger screen) shows leadership.
- Lower cost models have undercut Apple’s market.
- Developers are increasingly working on Android apps first.
The deeper answer: The revenge of Apple Maps and a betrayal of trust.
- It is well known that Steve Jobs was at war with Google, promising not to get ‘Microsofted’ again, so it is understandable why Apple would be committed to putting its own mapping tool on its phones.
- However, it is unlikely that Jobs would have allowed a high visitility, statement Apple app like this to launch before it was ready to replace and surpass the established, well-liked Google Maps.
- The Apple app was, despite some well publicized flaws, a fairly strong entry with some new features. But by taking down Google Maps, Apple set a high bar.
Trust Betrayed. When users experienced or read about the Apple Maps software flaws, they felt betrayed. Apple was clearly acting in its own interests, not in the best interests of its customers. Apple broke the trust. How else to explain the glee with which the app’s flaws were publicized? While earlier technical problems with service or antenna could be deflected by a media star like Jobs, poor Tim Cook had to issue an apology. With this backdrop, it is a lot easier for consumers to jump from Apple to well-designed, innovative, and low priced Samsung products.
If Apple stagnates or declines, the the root cause may be traced to the disastrous launch of its map application. It marks the point where internal agendas undermined commitment to the user experience, the bedrock upon which the Apple brand was built. Apple may have felt it was riding a wave and could do no wrong, but it provided a loose brick for Samsung to dislodge. Apple remains formidable, of course, but its brand took a hit and it now appears vulnerable to a strong competitor like Samsung.