The world's most valuable tech company is riding high, but there are a few companies it should notice in the rearview mirror.
Apple APPLE INC. AAPL 0.52% is on top of the world. The stock hit a new all-time high late last month, and now the market is looking forward to next month’s debut of the Apple Watch as the class act of Cupertino makes its first push into wearable computing.
This doesn’t mean that the coast is clear for Apple. There are a few companies that may have Apple in their crosshairs, and we asked our Motley Fool investing experts which companies they thought that Apple can’t ignore if it wants to stay on top.
Rick Munarriz: There isn’t a riverboat gambler as gutsy as Amazon.com’s AMAZON.COM INC. AMZN 14.2% Jeff Bezos in consumer tech, and that could spell trouble for Apple down the line. Bezos conceded late last year that he has spent billions on failures at the leading online retailer, but that hasn’t stopped him from placing more bold bets. He’s crazy as a fox, and margin-heavy Apple is the mother of all hen houses.
Amazon isn’t afraid to sacrifice margins for the sake of market share, explaining why you can buy a Kindle e-reader for as little as $79 and a Kindle Fire tablet for less than $100. His aim isn’t always true. Last year’s Fire Phone was a flop, and that’s comforting for Apple investors since the iPhone accounted for more than two-thirds of Apple’s sales in its latest quarter. However, with Kindle and Fire TV products butting heads with pricier Apple counterparts the battle is real. Apple rightfully commands a market premium for its products, but with Bezos willing to take big hits in the pursuit of relevance it’s a hard company to dismiss in Apple’s rearview mirror.
Dan Caplinger: Many investors see Garmin GARMIN LTD. GRMN -2.02% as already having gotten defeated by Apple and other mobile-device makers, as the company that pioneered special-purpose GPS devices for navigation has found that smartphones like Apple’s iPhone have enough navigational prowess to handle ordinary GPS applications like driving directions without a custom device. Yet as Apple prepares to move into the smartwatch market with its Apple Watch, Garmin will once again pose a competitive threat that Apple will have to overcome.
Garmin has done a good job of catering to enthusiasts with its watch offerings. Its D2 Pilot and Quatix Marine watches help airplane pilots and boat captains handle essential navigational tasks, with specific capabilities that an all-purpose watch like Apple Watch won’t be able to match. At the same time, Garmin has a good reputation for its fitness products, with the Forerunner series of high-end watches providing independent GPS navigation without the need for wireless connectivity along with a host of heart-rate and physical-performance metrics for avid runners, cyclists, and other athletes.
Garmin’s focus on specialized niches has served it well after losing much of its all-purpose GPS business. To maximize its success, Apple will have to lure some of Garmin’s loyal customers away by going beyond basic apps to take full advantage of whatever technological capabilities the Apple Watch ends up having.
Tim Beyers: Web-based computing is no longer a “someday” affair. For evidence, look at the astounding growth of salesforce.com. The poster company for cloud computing doubled earnings per share in the latest quarter as revenue soared 25.7% and its backlog of booked business grew to a whopping $9 billion.
Importantly, salesforce isn’t the only one seeing heightened interest in cloud alternatives. In its annual report on the state of the cloud, hosting provider RightScale said that 88% of the 930 IT professionals it surveyed are using the public cloud to power apps and get business done.
Why should Apple investors care? The iEmpire banks on attracting users into a closed, device-dependent ecosystem. Richer cloud environments could help break the company’s vice grip on users, and no one is working harder than Google GOOGLE INC. GOOGL 2.91% to enable this future.
Success has come slowly but surely. According to Net Applications, Chrome has consistently grown its share of the browser market since April of last year. (From 17.92% then, to 24.69% as of February.) Chromebooks are also on the rise, accounting for 25% of low-cost laptops sold in the U.S. Sales are on track to nearly triple over the next three years, Gartner reports.
For now, Chromebooks are limited in scope and functionality when compared to a full-blown Mac. What happens when that’s no longer true? What happens when I can get a high-performance Alienware laptop built to run Chrome OS apps as fast and functionally as native software on a MacBook? That could take years, of course. But it’ll be a disruptive day for Apple when it finally arrives.