Apple Riding High, but for How Long?

Apple, the global market leader in smartphones, is enjoying record profits and sales that have transformed it into one of the world’s most valuable companies. But the mobile computing industry it has conquered in just five years is changing rapidly, and nothing, not even Apple’s vaunted brand premium — the ability to charge more than its competitors for premium smartphones — appears guaranteed.

The premium is Apple’s reward as progenitor of the modern smartphone segment: the sum of its software DNA, intuitive user experience, cash-generating universe of applications, cultivated image of hipness and first-mover advantage. But Apple’s main rivals — Samsung and other sellers of cellphones using the Google Android operating system, like HTC of Taiwan and Huawei and ZTE of China — are making smartphones for much less, and the iPhone is becoming ubiquitous, threatening to dull its cachet. For now, said T. Michael Walkley, an analyst at Canaccord Genuity in Minneapolis, the iPhone lineup has momentum and Apple should be able to pad its lead over its rivals this year. “But I cannot say with certainty that five years on, Apple will still be on top,” Walkley said, noting that Apple and HTC did not even make smartphones six years ago. “I assume they will be, but it is difficult to predict anything in this dynamic market.”