China, Apple’s second largest market after the U.S. seems to be spoiling Apple’s party
China’s government-controlled television broadcaster China Central Television put a spanner in the works. In a prime-time program aired last Friday night, the powerful television accused Apple of avoiding warranty obligations and of adopting different customer service policies in China from what it offers to its customers in other countries. The program also targeted Volkswagen, alleging that it was selling cars in China with substandard direct-shift gearbox.
Google (NASDAQ:GOOG)’s X-Phone
Another scene is developing on the Google front, where the same story of partners becoming competitors – something that is now commonplace in the smartphone industry – is unfolding.
Google developed Android OS and gave it to the world free (with certain terms) so as to generate ad revenue through Google apps. It, however, did not account for Samsung making such a success of it and growing bigger than the Android brand it was riding on. Unlike other Android licensees, Samsung’s Galaxy brand has as much, if not more, recognition as Android.
Although Google’s revenues from mobile apps are expected to touch $8 billion in 2013, the company seems to be worried about Samsung gaining too much clout. The signs were there for everyone to see at the launch of Galaxy S IV. There was no mention of Samsung’s latest offering being a part of Google’s Android.
Last December there was news that Motorola Mobility, the company that Google acquired in early 2012, was developing a sophisticated handset called X-Phone, with state-of-the-art features.
Although motivated by Samsung’s growing clout, X-Phone will obviously also challenge Apple.
How much of a worry is it for Apple?
Apple Inc. (NASDAQ:AAPL) needs to address the issue arising from China, where it has 17,000 company owned outlets. As of now Apple doesn’t appear to be concerned and seems to be sidetracking the issue by saying, “Our team is always striving to exceed our customers’ expectations, and we take any customer concerns very seriously.” It may be too early to tell but regardless of whether the allegation is proved right or wrong, it needs to be taken seriously. When the same channel had taken on Yum Brands over the quality of chicken served at its KFC outlets, it eventually led to a 6% fall in sales for the quarter.
The issue of Google’s X-Phone is, however, not an immediate threat. Motorola had a backlog of 18 months when it was taken over. Even if the X-Phone is launched this year, it will not be until September, by which time Motorola is expected to clear its pipeline products.
Apple Inc. (NASDAQ:AAPL)’s fundamentals haven’t changed much. All is quiet on that front. Eventually Apple’s bosses will have to address investor concerns regarding the cash pile – make a good investment and/or hike the dividend payout. Or even better, they might pull up a rabbit from the hat and surprise us all – a never seen before feature in the new version of iPhone perhaps.
The article Time to Buy Apple Again? originally appeared on Fool.com and is written by Sujata Dutta.
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