These days, when I think of Apple Inc. (NASDAQ:AAPL), I no longer think of Steve Jobs and his effortless charm. I think of Tim Cook, clumsily replying to Kara Swisher at the D11 Conference by vaguely insinuating that Apple was more interested in smart watches and televisions than smart glasses. Cook’s unclear answers are representative of the once-great company as a whole – unfocused, unsure and reactionary. In contrast, Jobs’ Apple was laser-focused, confident, and proactive.
There is a lot of evidence suggesting that Cook doesn’t know where to go from here – Apple Inc. (NASDAQ:AAPL)’s stock buyback, dividend, and bond sale all indicate that the company could become a slow-growth tech stock like Microsoft Corporation (NASDAQ:MSFT) and International Business Machines Corp. (NYSE:IBM). The iPad Mini and iOS 7 also suggested to investors that the road ahead would be reactionary, rather than revolutionary.
Therefore, if Apple Inc. (NASDAQ:AAPL) is no longer the “Apple” of the tech world, which company could fill its shoes? In my opinion, Sony Corporation (ADR) (NYSE:SNE) could step up to give both Apple and Samsung a run for their money over the next few years, based on some current business strategies that promote gutsy innovation over slavish imitation.
Investing in wearable tech
As Tim Cook continues pondering the possibility of a smartwatch, Sony Corporation (ADR) (NYSE:SNE) recently introduced the second version of its Android smartwatch, the SmartWatch 2, at Shanghai’s Mobile Asia Expo. The SmartWatch 2 is water-resistant, enabled with NFC (near-field communication) technology for electronic payments, it can display maps and it be used to remotely control smartphone cameras and presentations.
This is a big step up from Sony Corporation (ADR) (NYSE:SNE)’s original SmartWatch, which was released early last year as the successor to the Sony Ericsson LiveView watch. Both previous devices could interact with Android smartphones remotely, control music libraries and display incoming messages. However, none of Sony’s smart watches have made much of an impact in terms of overall revenue growth.
A growing market that Apple continues to neglect
Looking forward, market research firm ABI forecasts that 1.2 million smart watches, from Sony Corporation (ADR) (NYSE:SNE) and its smaller competitors, could be sold by the end of the year, generating $370 million in annual revenue. Even if Sony were to control the entire smart watch market, it would merely make up 0.5% of its annual revenue of $72 billion. However, by 2015, ABI estimates that global shipments could increase twenty-fold to 41 million units, which could make the smart watch market a much more lucrative one than it is today.
It’s absurd that Apple Inc. (NASDAQ:AAPL) has fallen this far behind Sony Corporation (ADR) (NYSE:SNE), since a smart watch was nearly created with the sixth-generation iPod Nano in September 2010. The Nano could be clipped onto a watch strap, and its appearance could be altered with a wide variety of digital faces. At the time, all Apple needed to do was upgrade the Nano’s software and add Bluetooth to create the iWatch. Instead, here were are, three years later, and Apple Inc. (NASDAQ:AAPL) is merely hinting at an iWatch to come later this year.
Could phablets and smart watches work together?
Another market Sony Corporation (ADR) (NYSE:SNE) has expanded into is the phablets category, currently dominated by Samsung’s Galaxy Note series, which accounted for roughly 75% of all phablet shipments last year. However, Sony completely blurs the line between phone and tablet with its new Xperia Z Ultra, which has a 6.4-inch screen that dwarfs the Galaxy Note II’s 5.55-inch display. Although the Ultra is smaller than Huawei’s recently introduced phablet, the 7-inch MediaPad 7 Vogue, Sony is seriously pushing the acceptable size limit of a smartphone.
Although the Ultra seems like a goofy attempt to capture some of the phablet market from Samsung, I believe that it could gain some serious ground when used in tandem with the SmartWatch 2 and a Bluetooth headset. Many consumers could stow the Ultra in a bag, while using the SmartWatch to check on basic information and tasks while using a Bluetooth headset to make calls or listen to music. To view movies, make video calls or games, the Ultra could be brought out and used like a normal tablet.
