2 Reasons Why Apple Has No Competition In The Marketplace (Part 1/3)

Updated: Aug 1


Table of contents

  1. Why Apple has no competition.

  2. What separates Apple from their peers?

  3. Apple provides the best Value-for-money in the status symbols goods segment.

  4. “Apple Products are not expensive!” says their customers.

  5. Apple, no one to compete with in the luxury space for electronic devices.

  6. There will always be a market for luxury goods.

  7. The Market for Luxury goods will inevitably continue to increase in the future.

  8. There are plenty more developing nations for Apple to tap into in the future as their addressable markets.

  9. More Apple Retail Stores around the world equates to more Sales for Apple.



Disclaimer: This communication is provided for information purposes only and is not intended as a recommendation or a solicitation to buy, sell or hold any investment product. Readers are solely responsible for their own investment decisions.


1. Why Apple has no competition


When I tell others that Apple has no competition,


The most common reactions I will get fall along the lines of:


“You cannot be serious.

Apple is faced with a barrage of competition, and it’s only increasing every day.

There are players like Samsung, Huawei, Xiaomi etc all looking to grab a piece of the pie.

And then there are smaller smartphone manufacturers who are also entering the market because it is such a lucrative segment.”


In these 2 Venn diagram that follows, I can illustrate why that may be the case,

That Apple indeed has no competition.



Diagram 1: Where most of the electronic devices manufactures fall into



When you look at electronic devices manufacturers who have advanced technology capabilities.


We see most of the players who are supplying most of the smartphones in the market.

In the intersection of this Venn Diagram, you have players like:


Apple, Samsung, Lenovo, Huawei, Xiaomi, Oppo,Vivo, LG etc


We can also include players like:

Google and Microsoft in it (for their electronic devices business segments like the Pixels phone and Surface laptop ranges),




Diagram 2: Where there are none other than Apple in the space.


However, if we were to look deeper and consider the various customer segments in the space, you have various customer groups like the:


i. Bargain/ value hunters: look for the best value for money product range- i.e., device which provides the most features with the least amount of money paid.

ii. Tech-savvy customers who prefer to have the ability to customize their electronics devices.

iii. Luxury preferred groups who prefer to use premium range electronic devices with a luxurious brand.


Notice there are plenty of players who offer electronic devices for group i and ii,

But there is none other than Apple who can cater for the 3rd group.



Previously Vertu and Blackberry were in this position too, but they are then eliminated by new competitors because they lack the competitive advantage of having cutting-edge technology


More about Blackberry later.



a. What separates them from their peers? Apple is Luxurious, their competitors are not


Unlike their peers, Apple is a Luxury Brand.


Why Apple is luxury brand.[1]


What sets Apple different from the other players is that they are not only selling electronics,


They are also selling an enticing lifestyle and culture for people who use their products.


Most Apple product users tend to stay with the brand throughout their life and eventually become advocate of the brand too.


Although the technology offered by Apple might have changed throughout the years, the lifestyle they promise remains the same.


Angela Ahrendts the ex-CEO of Burberry, was hired as Apple’s Retail Chief, and was compensated more than Apple’s own CEO Tim Cook during that time.
Angela Ahrendts the ex-CEO of Burberry, was hired as Apple’s Retail Chief, and was compensated more than Apple’s own CEO Tim Cook during that time. [2]

So just as we cannot compare a brand like Uniqlo with LV,

So just as we cannot compare a brand like Uniqlo with LV,

Nor can we compare a Toyota with a Porsche


Nor can we compare a Toyota with a Porsche

We should not compare other electronic device manufacturers like Samsung with Apple as well.


We should not compare other electronic device manufacturers like Samsung with Apple as well.

Because they are targeting different group of customers (one is targeted towards the mass-market and the other is targeting the luxury niche market).


It would make more sense to compare the players if they are both serving the same niche market:


I.e. one can compare Gucci to LV.


 one can compare Gucci to LV.

But in Apple’s case, there are none at the moment, because although some of the product ranges provided by their peers (i.e., Samsung’s high end smartphone ranges) may be targeted towards the higher end luxury range customers


But neither any of these company’s brand as a whole is considered to be a luxury brand like Apple.



b. Apple provides the best Value-for-money in the status symbols goods segment.


For various status symbol goods for example:


1. Homes we live in

2. Cars we drive

3. Clothes & Apparels we wear

4. Electronic devices that we use so frequently.

Examples of status symbol items we buy to show off our status
Examples of status symbol items we buy to show off our status

Electronic devices segment provides the highest value-for-money amongst the other goods when taking into consideration the:

i. Units required (purchase cost) &

ii. Frequency of use


Electronic devices segment provides the highest value-for-money amongst the other goods when taking into consideration the:

And it is also the segments where Apple is able to dominate since they are the only electronic device manufacturer which provide luxury brand items.


And it is also the segments where Apple is able to dominate since they are the only electronic device manufacturer which provide luxury brand items.

Apple’s iPhones and iPads are status symbol products
Apple’s iPhones and iPads are status symbol products [3]


“Apple Products are not expensive!” says Apple customers.


Apple products received one of the higher value for money ratings by their customers compared to their peers, although Apple products are higher-priced than them.
Apple products received one of the higher value for money ratings by their customers compared to their peers, although Apple products are higher-priced than them. [4]

So contrary to popular beliefs, Apple products are not expensive for the value they provide (for their niche market)

they are only perceived to be expensive by non-Apple customers.




c. Apple, no one to compete with in the luxury space for electronic devices.


Other luxury brands will compete amongst one another, but not Apple.


Luxury apparel brands like LVMH, Dior and Gucci will have to compete with one another

Mercedes will have to compete w BMW vs Audi

Lamborghini will have to compete with Ferrari and Porsche




But not Apple, because they have no competition in the space they are operating in.

Why Apple has no competition
Maybe Dyson, if they start making really good electronic devices like computers & phones one day, which seems to be a very unlikely plan for now since they are more focused on home appliances instead.



2. There will always be a market for luxury goods


Regardless of which economic cycle we are in,

There will always be a group of customers who want to or are willing to buy luxury goods,


Because luxury goods serve as symbols of identity for the buyers- to communicate to others and themselves about who they are.


The psychology behind why people buy luxury goods [5]
The psychology behind why people buy luxury goods [5]

For most of us the desire to distinguish ourselves as individuals amongst our peers is built into our DNA. And what we consume helps to make clear that distinction. - Dr Paul Harrison [6]

Pertinent quote by the famous movie fight club on why people buy expensive things
Pertinent quote by the famous movie fight club on why people buy expensive things [7]

Apple, just like any luxury brand companies are targeting:


  1. Higher income consumers who can afford their goods, and/or

  2. Consumers who may not be earning high income but are willing to stretch themselves financially to acquire these goods (i.e., through credit purchase which are becoming more accessible now through new platforms that provide Buy Now, Pay Later services).




The Market for Luxury goods will inevitably continue to increase in the future.


Although the inequality divide may still be there, and the gap between the rich and the poor is widening. [8]


The world’s income and wealth as a whole is growing.


GDP per capital across the world is increasing:


We are all getting wealthier as a whole and are having higher amount of income compared vs the past.


And all these excess money will go somewhere


As observed, there is a positive correlation between *GDP per capita and the *value of global luxury goods market around the world along the years.


When GDP per capita is increasing, the latter will follow.

The luxury goods market is closely correlated to to GDP per capital growth. (source: Statista)

Similarly, when GDP per capita is decreasing during periods of economic contractions like 2008, 2015 and recently 2020 from the Covid pandemic,


global personal luxury goods spending experienced a decrease too.


But ultimately both are displaying an upward trend over the long run and will most probably continue to be the case going into the future,


as nations become more productive and innovative technologies surface to help enterprises generate more economic value to the society.




There are plenty more developing nations for Apple to tap into in the future as their addressable markets


Although Apple is the world’s largest company by market cap.

Contrary to popular beliefs, there are still plenty potential new markets Apple can tap into over the long run.


Similar to the other luxury brand companies, Apple’s business model is not to target the mass market;

They are more targeted towards the affluent market due to their premium pricing models.



As countries around the world become more developed and more of them obtain statuses of higher-income nations,


Apple will start to expand into those countries through increasing their marketing efforts or establishing their retail stores in them.


As more countries become more developed, that will result in a larger addressable market size for Apple and other luxury brands to tap into
As more countries become more developed, that will result in a larger addressable market size for Apple and other luxury brands to tap into [9]


3. More Apple Retail Stores around the world equates to more Sales for Apple.



The number of Apple Retail stores are opened around the world have a positive correlation with Apple’s revenue
The number of Apple Retail stores are opened around the world have a positive correlation with Apple’s revenue [10]

As of now, most of the Apple Retail stores are only available in more affluent and developed countries.


List of Apple stores around the world as of 2021
List of Apple stores around the world as of 2021 (Source: Wikipedia)

Hence when more countries have become more affluent and developed in the future,


it will make sense for Apple to start establishing more retail stores in them to increase brand awareness in those markets, resulting in increase in sales.




Endnotes:

[1] Summers, M. (n.d.). How Apple Became A Luxury Brand Without Us Realizing It. Ranker. https://www.ranker.com/list/apple-transformation-to-luxury-brand/megan-summers.


[2] Newcomb, A. (2019, February 6). Apple paid its retail head $170M to transform its stores. Did she do it? NBCNews.com. https://www.nbcnews.com/business/business-news/apple-paid-its-retail-head-170m-transform-apple-stores-did-n968416.


[3] iPhone, iPad are status symbols: Research. Deccan Chronicle. (2018, July 9). https://www.deccanchronicle.com/technology/mobiles-and-tabs/090718/iphone-ipad-are-status-symbols-research.html.


[4] Transparent Compensation & Culture. Comparably. (n.d.). https://www.comparably.com/.


[5] Page, V. (2021, May 19). The Psychology Behind Why People Buy Luxury Goods. Investopedia. https://www.investopedia.com/articles/personal-finance/091115/psychology-behind-why-people-buy-luxury-goods.asp.


[6] How luxury items are consuming our identity. this. (2018, April 10). https://this.deakin.edu.au/society/how-luxury-items-are-consuming-our-identity.


[7] says:, E. Z. (n.d.). We buy things we don't need with money we don't have to impress people we don't like. StareCat.com. https://starecat.com/we-buy-things-we-dont-need-with-money-we-dont-have-to-impress-people-we-dont-like/.