Apple vs. Samsung – Who’s the daddy now?

Samsung is eating away at Apple’s image but its fans are still not those with the purchasing power.

• The problem with being the coolest and the best is that there is only one way to go.
• It is a paradoxical part of human nature that when everyone has the newest, coolest product, it immediately becomes old hat.
• This is exactly what seems to be beginning to happen to Apple.
• Numerous surveys are pointing to the younger generation shifting their desire towards Samsung products and (shock of shocks) Microsoft!
• This is further exacerbated by the fact that many members of the younger generation end up with hand-me-down Apple products which in its eyes is the epitome of uncool.
• Samsung and Microsoft have deliberately played on this as much as they can with their marketing tactics and it does seem to bringing in some results.
• Last night’s Superbowl was a classic example with Samsung spending $15m on a two minute advert (see it here) that succeeded in stealing more of the cool factor from Apple.
• To my mind, this represents a great investment for the future, but the problem with courting the younger generation is that they have little or no disposable income.
• It is great to be the owner of a product that many people want to buy, but if few of those people can actually afford to purchase the product, then one is not going to reap the benefits.
• While Samsung’s brand and share are clearly on the ascendency it is primarily with those that are less affluent and less able to indulge their desires.
• Hence, I suspect that Apple is not going to lose out nearly as quickly as the nay-sayers are now begging to predict.
• The end result will be a slower than expected loss in market share and a company that performs better than many expect.
• Going back to my Apple bond analysis, for a long-term investor the shares look like they offer incredible value as long as one can withstand the twists and turns of short-term sentiment.