Ok, so this entry is another wound in an age old religious war. Not everyone one at idfive agrees with my analysis – in fact, we’ve had some relatively heated discussion in our managers' meeting about this topic. So, take what you are about to read with a grain of salt (and look for a rebuttal in the near future).

Reason Number 1: They are doing well, granted, but that growth has topped.
For several years now, Apple has enjoyed a rebirth. iBooks, iMacs, iEverything. The cute candy-color and slick design started the campaign that turned things around.

And then came the iPod. This little device really accelerated things for Apple. During Q4 2005, they sold more than 6.5 million iPods. That’s up 220% from Q4 2004. iPod sales are stronger now than they were last year, but the growth has leveled off, and has started to whimper with a sales decline to 8.1 million units Q2 2006 (that’s a 4.7 decline from last quarter)

Reason Number 2: They Lie
Those new, clever and funny commercials are bogus. I have seen Macs go belly up as frequently as I see PCs go belly up. I have seen files open quicker on the PC than on the Mac. I have seen PCs start up faster than I have seen Macs get going. And I am not even going to talk about the price difference between the two.

Eventually, everyone will also realize that the commercials are bogus. And maybe then, the design community will give me back my membership card.

Reason Number 3: Phones can play music, too. And they are also phones.
The same designers that produced the Motorola RAZR (which, by the way, is selling better than the iPod), also designed the Motorola SLVR, which in addition to doing everything a phone does, it also does everything an iPod does – including stuff that it doesn’t do – such as purchase music directly from iTunes. Yes, iTunes will benefit from this joint venture, but considering that much of their recent success is rooted to the sales of iPods, this can’t be all that good. And, there are other phone makers pumping out phones that also play music.

Perhaps iTunes is their sustainable strategy for the future, if so, they needs to start playing nicer with their partners. Keep reading…

Reason Number 4: Closed and secretiveness leads to alienation.
If you think about Michael Porter’s Five Forces, Apple’s success is more or less alchemy. Apple has a very secretive corporate culture. It doesn’t communicate with its customers about what’s coming out and when - making large institutional purchases very difficult, and somewhat irresponsible. It doesn’t give partners and vendors a 'heads up' about changes in software or specifications until they roll out with whatever the next big thing is. This makes is it very hard to support customers’ questions and expectations in joint ventures. If you don’t believe me, ask HP why they don’t work with Apple anymore.

Reason Number 5: Zune, the iPod Assassin.
Initially, I started to write this blog about Microsoft’s “Zune” – an iPod like device that is slated for public unveiling next month. It’s an iPod in the sense that is sleek and that it will play music, video, etc. But is unlike an iPod in the sense that it will come ready with WiFi, and there are speculations that it might become the X-Box’s portable little brother.

Microsoft is also willing to buy you away from the iPod by allowing you to download for free all of the songs you have already bought from iTunes. Wow.

I have also heard rumors that people will be able to listen to other people’s music while they are in close proximity - which is a very intelligent response to the one device, one headset, one ear piece, two people conundrum.

Finally, Zune is being released at the perfect time: Apple has nothing to respond with (or at least that’s what we think since we can’t really know for sure since they are so freaking secretive). Apple is about to suffer a similar fate to what’s in store for Sony’s Play Station 3: a market cannibalization blitz choreographed by good timing, design, functionality and price.

The only thing that worries me about this whole Zune thing is that they plan on doing a Super Bowl ad – that’s so… last century!

On 8/30/06 Andres wrote more about this topic: Apple Droning: Explained