Tom Keene Destroys Apple With One Simple Question
On his show today, he said to Wired writer Steve Levy, "What I see is a generational divide, is that true? Older people use iPhones, younger people use Samsungs."
Levy deflected the question saying it's not quite true yet, but people are watching the Galaxy S IV to see if it changes things.
If it's not true yet, then why does Keene think youngsters are picking Samsung? It's in part due to Samsung's effective marketing.
Samsung ran an ad in September of a hipster sitting in line for the iPhone 5. He's using a Samsung phone. People in line say, you're going to ditch that phone, right? He says no, he's just holding the spot for his parents.
The obvious implication is iPhone users are super lame and old like parents. Or something like that. Samsung followed this ad up with more ads of hipsters using Samsung phones.
Apple meanwhile has only advertised its products instead of people using its products lately.
However, this is just a small part of the story for Apple.
The big picture is that Apple is no longer destroying expectations with its earnings. The stock has slumped, and expectations for the company have been dialed back.
As a result, the story on Apple has shifted from "Greatest Company Of All Time" to "What's Wrong?"
And when people ask what's wrong, they are starting to answer with what's right at Samsung.
This ignores the fact that Apple, at least in the U.S., where Tom Keene lives, is selling more phones than Samsung.
It also skips over the fact that Apple had the two best selling smartphones in the world in the fourth quarter. This happened despite the small screens, the closed operating system, the loss of Apple's cool factor, and any other reasons people are postulating for its decline.
The Samsung-is-winning argument also misses that last week Adnaan Ahmad at Berenberg Bank wrote that the problems plaguing Apple might actually be the same for Samsung in the near future.
The high-end of the smartphone market is drying up. After a 5-year period of phenomenal growth as everyone ditched feature phones for smartphones, the next wave of smartphone buyers will be more price sensitive.
Therefore, the growth of the iPhone business is expected to crawl to single digits, unless Apple releases a much cheaper phone. (In which case, who knows what would happen.)
Samsung already sells a lot of cheap phones, so its unit sales should be fine. However, it has been making the bulk of its profits on high-end smartphones. If the high-end smartphone market is slowing, it will impact Samsung.
There's no doubt that Apple is facing a new problem with its iPhone business. But if there's a reason for it, it's market dynamics as much as competition from Samsung.
People still want iPhones, when they can get them. The problem for Apple right now is pricing and distribution.
To solve that problem means making sacrifices, which is something Apple hasn't traditionally done.
Anyway, we took a long detour away from the original premise of this post. If Keene thinks Apple is for old people, it's not great for Apple. The message has slipped away from Apple.
That's one of the many things Apple misses with Steve Jobs dead. He knew how to control the message. Current CEO Tim Cook has not figured it out.
Here's the video; Keene's question is at 1:50.