Why Apple Stock Is A Long Term Winner

apple picAs the entire world’s population goes online, there is a mad rush to be the #1 supplier to each and every individual.  Retailers, social media companies, mobile operators, device manufacturers, messaging companies, software companies and credit card companies all want to own you in order to sell to you, for you and through you.  Oh and they also want to be your bank so they can make money on everything you buy or sell.

But some are closer than others.

Amazon wants to be the world’s store. Facebook wants the entire population to be liking and buying through their portal.  Google wants to know everything about everyone so they can sell and help others sell effectively. Apple wants to control everything you do, buy and sell through your AppleID and TouchID.

It is unclear whether or not Steve Jobs set Apple’s current strategy in motion or not, but regardless of that, someone at Apple is definitely driving the bus.

The most recent Apple announcements were profound, but not for the reasons you might think.  While the world has focused on the size of Apple devices, it is really the strategic value that is most powerful with ApplePay and the Apple Sim.

The goal of today’s Internet-focused companies is to own the customer in the most comprehensive way possible and therefore be able to leverage that relationship. There are four cornerstones of the customer conquest: Identity, Communication, Device and Payments.  And there’s also the power booster: Things.

Identity. The first and foremost key to the quest is the login, the identity.  A simple and universal identity is required to own the customer.

Apple has been consistent and steadfast in their management of the AppleID although Facebook and Amazon have both recognized and excelled in this area from day one.  Google’s distributed development approach fostered innovation but has them playing catch up with identity integration.  Mobile operators have hardware identity on their devices, but haven’t expanded that relationship beyond the devices sold in their stores.  Microsoft has missed the boat several times over the years on this one.

Communication. Email, SMS, Messaging, Videoconferencing and Voice.

Email while plentiful is not unique enough to control the customer by itself.  People have multiple email addresses and interoperability among email clients eliminates email as a real differentiator.

Videoconferencing is not yet interoperable.  Microsoft’s Skype has held a dominant and early lead.  Apple’s Facetime is only available on Apple devices.  Google hangouts has not gained the traction needed to be a dominant player.  People use what is available in their ecosystem of choice.  Many people necessarily have multiple means to chat via video depending upon what the other party uses.  Video is not a differentiator.

Voice calling is ubiquitous, interoperable, declining and not a differentiator.

That leave SMS and Messaging.  SMS is the most ubiquitous communication channel in the world, but it is proprietary and controlled by the mobile operators.  OTT (Over the Top) messaging has allowed simple interoperable texting across devices independent of the mobile operator.  Apple combined SMS and OTT messaging with iMessage seeking to dominate the messaging space.  Google quickly followed with an integrated offer of their own consolidating all messaging including SMS on Android devices into Hangouts.  Facebook messaging is among a handful of highly successful OTT messaging applications like Snapchat and WeChat.  Microsoft has been blind to the consumer messaging opportunity by their cash rich enterprise focus including Lync.  They squandered the lead they once held with IM.  Amazon is noticeably absent from the messaging landscape.

Publishing content is not a key cornerstone and why LinkedIn, Twitter and Yahoo all are far behind in the ultimate quest to own the consumer.  That is not to say they aren’t highly successful businesses, they just aren’t positioning themselves to ultimately own all the consumer’s financial transactions.

Device.  Mobile phone networks are private, controlled by the mobile operator.  This is a strategic advantage similar to the local loop connections to your home owned by the phone and cable companies.   There is a public back door to mobile phones and other device via Wi-Fi.  When using Wi-Fi, the operating system of the device controls the traffic.    Apple and Google own the device OS market share.  In the Android space, phone manufacturers like Samsung are trying to further wrestle control from the OS and differentiate by putting custom features and controls into their devices.  This is the front line in the battle for you, the customer.

Somewhere much farther back are those who failed to adapt quickly enough to the mobile first mindset:  Microsoft, Amazon and ironically, Blackberry.

Apple took a revolutionary step towards commoditizing the mobile network with the Apple Sim.  With the combination of control of the mobile network choice and OS, Apple is rising above the rest of the pack.  They have the device market share to drive change.

Payments.  Paper money is so 20th century.

Electronic commerce is the next logical step in the evolution of currency.  Biometrics like fingerprints, facial recognition and voice recognition provide the only truly unique global identification system.  They are also cost effective – no hardware to account for or produce.  ApplePay is not significant only for Apple, but for all NFC payment options including Softcard (mobile operator backed solution) and Paypal, among others.  NFC failed to launch previously because Apple wouldn’t put NFC chips in their devices.  Despite not having access to Apple’s NFC chip, Android solutions will be propelled forward because the terminal vendors now will support NFC payments.  Merchants that turn on ApplePay will have other NFC choices like Softward and Paypal instantly available.

Now retailers including Walmart are rebelling against Apple with a competing network called MCX.  This feels a lot like Microsoft’s insistence that consumers use IE if on Windows.  Forcing them to use IE instead of focusing on creating the best customer experience was a strategic error that generated branding baggage Microsoft carries to this day.   MCX retailers will eventually relent, but not until customers have left their brands in droves.

Looking Ahead to Things.  All the fuss of today is really just the warm up for the next several decades of innovation.  All this identity, communication, device and payment technology will get miniaturized and stuffed into billions of Things – clothes, cars, pets, jewelry, shoes, robots, medicine, food and yes, people.

Apple has vision and understands their customers.  The potential impact of their strategy to own the customer goes well beyond the disruption caused by the iPod, iPhone or iPad.  The biggest peaks are yet to climb.

About the Author:  http://wp.me/P4RDqP-1