How to Making Money

 

To support a margin compression theory, the article begins by using institutional selling as proof and presents increasing Android market share as an argument. Let’s take a closer look.

 

1. Institutional Selling

The two examples provided (one institution selling and another expressing worry) are insufficient to support the conclusion that big money has started to dump Apple. What’s happening in the aggregate? Might other institutions have initiated positions or increased their holdings? Unless this table (http://www.nasdaq.com/asp/holdings.asp?symbol=AAPL&selected=AAPL&FormType=Institutional) is out of date (It does include Capital Growth Management’s sale.), there is no significant net change in the number of shares held by institutions.

 

Now, one could argue that CGM’s Heebner and FEAM’s Obuchowski are such stellar managers that their opinion warrants special attention. Well, Heebner’s CGM Focus fund is only a two-star Morningstar rated fund (http://finance.yahoo.com/q/pr?s=CGMFX+Profile). Heebner “knows how to count”, as the author writes, I suppose, but he doesn’t know how to outperform; Obuchowski’s FEAM50 (http://www.1empiream.com/FEAM50_Q3%2010.pdf) and APA125 (http://www.1empiream.com/apa.htm) funds have beaten their benchmark. However, he’s expressed concern about holding Apple two years from now. He hasn’t sold yet.

 

The article hence doesn’t provide either quantitative (as the number of shares held has not changed significantly) or qualitative (as no star manager is cited as selling) evidence of big money starting to dump Apple because of margin compression. For the one under performing manager cited for selling, no reason is provided. As a matter of fact, there’s no evidence for net institutional selling of Apple, period.

 

2. Increased Android Market Share

With a 35% profit share in 2009 (http://www.businessinsider.com/chart-of-the-day-revenue-vs-operating-pro...), the hardware industry's highest, hasn’t Apple been successful in the personal computer market? I would say so, and yet it had only captured a 7% market share. How has it accomplished this feat? By offering something different that consumers value at a premium.

 

The author writes: “Jobs also (understandably) failed to mention that the “commodity’ Androids materially outperform the iOS products in terms of features and functionality. This is pretty much in direct contravention to the concept of the term “commodity”, isn’t it???? I don’t think many Samsung Galaxy S, Droid X or HTC Evo owners will characterize their devices as “commodities”.”

 

A product’s characterization as a commodity is not a function of the quality of its features and functionality or user opinions thereof. The Android clones are commodities because there’s fundamentally little difference between them. One might have a bigger screen, another longer battery life, and yet another a thinner form factor, but they all run the same OS and hence offer the same functionality. If an innovative feature proves popular, it can quickly be duplicated. There’s little that sets one phone apart from the other. They are interchangeable. As such, they must compete on price. You might prefer the Galaxy S, but settle for a Droid if its price is sufficiently lower to sway you. Their makers will generate lower profit margins, just like Windows PC makers.

 

The iPhone, on the other hand, offers something different: superior aesthetics, greater ease of use, no bloatware, superior integration with related products (Mac & iPad), a certain prestige, but mainly a distinct OS. It offers the whole package. Its hardware competitors might best or equal some features, but not the whole. If you value this different product, you can only buy from Apple. By maintaining full control of the iPhone experience, Apple prevents it from becoming a commodity like all the Android clones and, so long as it’s able to produce a superior experience on the whole, ensures premium pricing and high profit margins.

 

The author also writes: “…its business model may prove unassailable unless Apple makes some drastic changes (ex. allowing cloning)…”

 

What if Apple did pursue the Google model and licensed its OS? If it allowed iOS clones, it would cannibalize its sales and its margins would be obliterated, as it would lose its main differentiator. Would it be able to keep generating a $238 profit per phone (http://www.asymco.com/2010/10/31/making-it-up-in-volume-how-to-view-unit-profitability-vs-volume-in-handsets/)? In light of the fact that Google is giving Android away, it’s highly unlikely.

 

Android has already won. The battle for market or unit share, that is. Apple will henceforth never sell as many phones. That’s OK because Apple will probably keep generating the lion’s share of profits (http://www.asymco.com/2010/10/30/last-quarter-apple-gained-4-unit-share-22-sales-value-share-and-48-of-profit-share/) by executing a business model proven successful with the Mac.

 

As it reaches critical mass, Google’s model might indeed become unassailable. No other company will beat Google at its game. Apple has chosen to play a different game that might also be unassailable. They’re two different ways to win. Google will attempt to monetize Android through market share dominance, while Apple will maintain its profit share dominance among hardware makers through innovation and differentiation. Apple’s margins will suffer significantly only if it’s unable to keep offering something different, valued at a premium by consumers.

 

In short, the article fails to show an institutional dump of Apple shares. It doesn’t even show that the one (marginally competent) institutional manager mentioned for selling did so because of expected margin compression. Moreover, it is misguided in using Android’s unit share dominance to deduce margin compression at Apple. Apple’s profit margin will only suffer significant compression if it fails in the execution of its business model.

 

To further the analysis, is Google’s licensing model superior to Apple’s integrated model, as many seem to believe? In the personal computer market, Microsoft made money by selling Windows to hardware makers. In the mobile phone market, Google is giving Android away, while planning to monetize market share dominance through services (search and others). The hurdles it faces with this model are not insignificant. Its lack of control over its OS is a liability: witness Verizon’s pre-installation of Bing on some Android phones (http://www.broadbandreports.com/shownews/Verizon-Bing-Wont-Be-Exclusive-On-All-Android-Phones-110294). Its platform is a customizable OS that hardware makers and wireless carriers can tailor to suit their own ends, which may be to Google’s detriment, and they don’t have to pay for it. Its success is far from assured. Might Google be going back to producing its own branded phone because its current strategy is proving difficult to monetize (http://www.engadget.com/2010/11/11/this-is-the-nexus-s/)?

 

Apple, on the other hand, is already monetizing the iPhone. As a matter of fact, it made as much money in Q3 2010 as all other phone makers combined (http://www.asymco.com/2010/10/30/last-quarter-apple-gained-4-unit-share-22-sales-value-share-and-48-of-profit-share/), in spite  of commanding only 4% market share. Apple won both the unit share and profit share battle in MP3 players with the iPod, as no worthy competitor came forth. This is not the case in smart phones with the emergence of Android. Nonetheless, the Mac, with 35% of PC profit share in spite of only 7% market share, has proven that Apple’s model can thrive even in the face of strong competition. 

 

Trevor Ginn runs the online baby and nursery shop Hello Baby. Hello Baby’s first iPhone app, Peek-a-boo Baby Rattle, cost the company $750 and receives 3,000 downloads a week.

Many leading major brands, including Audi, Zippo, Orange and Cadbury, are using branded iPhone apps as a way to reach their target audience. It’s not hard to see why when more than 3 billion apps have been downloaded, and iPhoneclass="blippr-nobr">iPhone users are generally young and affluent. A branded iPhone app is a combination of product and entertainment, but most importantly, it cannot be perceived as advertising. When done right, it’s a great way to not only increase brand awareness but drive direct traffic.

These days, branded apps are not just for big corporations with money to burn. They are well within the reach of every small business. A simple, but effective iPhone app can be launched for as little as $750. Here’s how.

Step 1: Pin Down a Useful Idea

Don’t fall into the trap of thinking that your app has to be groundbreaking or fiendishly clever. Develop a simple app that has a real use for your target audience. For example:

• A world clock that converts multiple time zones (for a watch manufacturer or retailer)
• A customized MMS message generator to celebrate special occasions (for a gift store)
• A baby rattle (baby product manufacturer or retailer)

The app need not be revolutionary or unique, but should be visually attractive, easy to use and serve a useful purpose. The iPhone is designed to be simple and intuitive to use, so your app should be too.

Step 2: Write Up a Spec

Writing a specification document will focus your ideas. It is also the blueprint for the app, which is to be given to the development team. The better the initial specification, the more likely it is that the app will be a success. Never assume that a developer is a psychic and will automatically know what you want. A good spec should have the following elements:

• A functional description. Draft a detailed explanation of the functionality of the product. You should detail, for example, the navigation, functions of each screen and what happens when buttons are pressed.
• Diagrams (or “wireframes”) of the screens. This can be done using Google Docsclass="blippr-nobr">Google Docs, Visio or even PowerPoint.
• Style guidelines. To help the designer determine the look and feel, describe the target audience for the app and give examples of designs you admire. Remember, to cut costs, stock images can be cheaply bought from sites like iStockPhotoclass="blippr-nobr">iStockphoto.

Step 3: Find a Developer/Designer

You can usually hire freelancers at a lower cost than an agency. Building an app will require both design and coding skills. You may not be able to find someone who is good at both, so hiring two freelancers is not uncommon.

Sites such as Elance and oDesk allow freelancers to be sourced from all over the world. By posting the spec on one of these sites and asking for quotes, you will receive multiple offers. Create a shortlist and ask these people for examples of work and references before making a choice. Finally, before staring the project, you should agree on a deadline and specific milestones. The freelancers may require an upfront payment before starting, which is normal, but don’t pay more than 50% up front.

Step 4: Design, Build and Test

Once you have selected your team, the project is ready to start. Each project will have three basic stages.

1. Design. The designer will turn the wireframes into a visual design./> 2. Build. The coder will build the app based on the spec using the visuals./> 3. class='blippr-nobr'>Testclass="blippr-nobr">test. Testing should ensure that the functionality detailed in the spec is present and also that the app is robust enough to deal with real users.

Once the work has started, monitor the progress carefully and ask for frequent updates. Always encourage your team to talk directly to each other during the build as this will speed up the development process.

Step 5: Launch It

class='blippr-nobr'>Appsclass="blippr-nobr">Apps are published in the iTunes store through a service called iTunes Connect. Once submitted, an app can take several weeks to be approved and be available for download.

There are numerous press and blog outlets that may be interested in covering the release and features of your app, so use the launch as an opportunity to get some PR for your business. Write a press release and distribute it to:

• Press release distribution sites
• iPhone app directories, review sites and blogs
• Publications in your industry

Also, don’t forget to talk up your app on your company’s own blog, Facebookclass="blippr-nobr">Facebook and Twitterclass="blippr-nobr">Twitter pages.

More App Dev Resources from Mashable:

- 5 Musts for Mobile App Marketing/> - HOW TO: Build an App for Your Small Business/> - Top iPhone Developer Discusses the Future of Media Apps /> - HOW TO: Develop iPhone Apps With Staying Power

Image courtesy of class='blippr-nobr'>Flickrclass="blippr-nobr">Flickr, mzdoherty.

For more Mobile coverage:

class="f-el">class="cov-twit">Follow Mashable Mobileclass="s-el">class="cov-rss">Subscribe to the Mobile channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for iPhone and iPad

bench craft company

Fox <b>News</b> Decoded - Swampland - TIME.com

What do you do to amp ratings after you've won a big victory at the polls and the public has wandered off to start celebrating the holidays? At Fox News, the answer is obvious: you up the ante.

Sarah Palin on Fox <b>News</b> Watch | Palin Attacked On Fox <b>News</b> | Video <b>...</b>

The Fox News Watch crew better learn to watch when the camera is rolling from now on, because they might soon feel the wrath of the Mama Grizzly. Nevermind that Sarah Palin is their Fox News co-worker and a likely contender for the ...

<b>News</b> Corp developing a tablet-exclusive publication

News Corp Logo Reuters is reporting that News Corp, the world's third-largest media conglomerate, has confirmed they will be releasing a news publication developed specifically for tablet computers like the iPad. "It's a tablet-only ...

bench craft company

 

To support a margin compression theory, the article begins by using institutional selling as proof and presents increasing Android market share as an argument. Let’s take a closer look.

 

1. Institutional Selling

The two examples provided (one institution selling and another expressing worry) are insufficient to support the conclusion that big money has started to dump Apple. What’s happening in the aggregate? Might other institutions have initiated positions or increased their holdings? Unless this table (http://www.nasdaq.com/asp/holdings.asp?symbol=AAPL&selected=AAPL&FormType=Institutional) is out of date (It does include Capital Growth Management’s sale.), there is no significant net change in the number of shares held by institutions.

 

Now, one could argue that CGM’s Heebner and FEAM’s Obuchowski are such stellar managers that their opinion warrants special attention. Well, Heebner’s CGM Focus fund is only a two-star Morningstar rated fund (http://finance.yahoo.com/q/pr?s=CGMFX+Profile). Heebner “knows how to count”, as the author writes, I suppose, but he doesn’t know how to outperform; Obuchowski’s FEAM50 (http://www.1empiream.com/FEAM50_Q3%2010.pdf) and APA125 (http://www.1empiream.com/apa.htm) funds have beaten their benchmark. However, he’s expressed concern about holding Apple two years from now. He hasn’t sold yet.

 

The article hence doesn’t provide either quantitative (as the number of shares held has not changed significantly) or qualitative (as no star manager is cited as selling) evidence of big money starting to dump Apple because of margin compression. For the one under performing manager cited for selling, no reason is provided. As a matter of fact, there’s no evidence for net institutional selling of Apple, period.

 

2. Increased Android Market Share

With a 35% profit share in 2009 (http://www.businessinsider.com/chart-of-the-day-revenue-vs-operating-pro...), the hardware industry's highest, hasn’t Apple been successful in the personal computer market? I would say so, and yet it had only captured a 7% market share. How has it accomplished this feat? By offering something different that consumers value at a premium.

 

The author writes: “Jobs also (understandably) failed to mention that the “commodity’ Androids materially outperform the iOS products in terms of features and functionality. This is pretty much in direct contravention to the concept of the term “commodity”, isn’t it???? I don’t think many Samsung Galaxy S, Droid X or HTC Evo owners will characterize their devices as “commodities”.”

 

A product’s characterization as a commodity is not a function of the quality of its features and functionality or user opinions thereof. The Android clones are commodities because there’s fundamentally little difference between them. One might have a bigger screen, another longer battery life, and yet another a thinner form factor, but they all run the same OS and hence offer the same functionality. If an innovative feature proves popular, it can quickly be duplicated. There’s little that sets one phone apart from the other. They are interchangeable. As such, they must compete on price. You might prefer the Galaxy S, but settle for a Droid if its price is sufficiently lower to sway you. Their makers will generate lower profit margins, just like Windows PC makers.

 

The iPhone, on the other hand, offers something different: superior aesthetics, greater ease of use, no bloatware, superior integration with related products (Mac & iPad), a certain prestige, but mainly a distinct OS. It offers the whole package. Its hardware competitors might best or equal some features, but not the whole. If you value this different product, you can only buy from Apple. By maintaining full control of the iPhone experience, Apple prevents it from becoming a commodity like all the Android clones and, so long as it’s able to produce a superior experience on the whole, ensures premium pricing and high profit margins.

 

The author also writes: “…its business model may prove unassailable unless Apple makes some drastic changes (ex. allowing cloning)…”

 

What if Apple did pursue the Google model and licensed its OS? If it allowed iOS clones, it would cannibalize its sales and its margins would be obliterated, as it would lose its main differentiator. Would it be able to keep generating a $238 profit per phone (http://www.asymco.com/2010/10/31/making-it-up-in-volume-how-to-view-unit-profitability-vs-volume-in-handsets/)? In light of the fact that Google is giving Android away, it’s highly unlikely.

 

Android has already won. The battle for market or unit share, that is. Apple will henceforth never sell as many phones. That’s OK because Apple will probably keep generating the lion’s share of profits (http://www.asymco.com/2010/10/30/last-quarter-apple-gained-4-unit-share-22-sales-value-share-and-48-of-profit-share/) by executing a business model proven successful with the Mac.

 

As it reaches critical mass, Google’s model might indeed become unassailable. No other company will beat Google at its game. Apple has chosen to play a different game that might also be unassailable. They’re two different ways to win. Google will attempt to monetize Android through market share dominance, while Apple will maintain its profit share dominance among hardware makers through innovation and differentiation. Apple’s margins will suffer significantly only if it’s unable to keep offering something different, valued at a premium by consumers.

 

In short, the article fails to show an institutional dump of Apple shares. It doesn’t even show that the one (marginally competent) institutional manager mentioned for selling did so because of expected margin compression. Moreover, it is misguided in using Android’s unit share dominance to deduce margin compression at Apple. Apple’s profit margin will only suffer significant compression if it fails in the execution of its business model.

 

To further the analysis, is Google’s licensing model superior to Apple’s integrated model, as many seem to believe? In the personal computer market, Microsoft made money by selling Windows to hardware makers. In the mobile phone market, Google is giving Android away, while planning to monetize market share dominance through services (search and others). The hurdles it faces with this model are not insignificant. Its lack of control over its OS is a liability: witness Verizon’s pre-installation of Bing on some Android phones (http://www.broadbandreports.com/shownews/Verizon-Bing-Wont-Be-Exclusive-On-All-Android-Phones-110294). Its platform is a customizable OS that hardware makers and wireless carriers can tailor to suit their own ends, which may be to Google’s detriment, and they don’t have to pay for it. Its success is far from assured. Might Google be going back to producing its own branded phone because its current strategy is proving difficult to monetize (http://www.engadget.com/2010/11/11/this-is-the-nexus-s/)?

 

Apple, on the other hand, is already monetizing the iPhone. As a matter of fact, it made as much money in Q3 2010 as all other phone makers combined (http://www.asymco.com/2010/10/30/last-quarter-apple-gained-4-unit-share-22-sales-value-share-and-48-of-profit-share/), in spite  of commanding only 4% market share. Apple won both the unit share and profit share battle in MP3 players with the iPod, as no worthy competitor came forth. This is not the case in smart phones with the emergence of Android. Nonetheless, the Mac, with 35% of PC profit share in spite of only 7% market share, has proven that Apple’s model can thrive even in the face of strong competition. 

 

Trevor Ginn runs the online baby and nursery shop Hello Baby. Hello Baby’s first iPhone app, Peek-a-boo Baby Rattle, cost the company $750 and receives 3,000 downloads a week.

Many leading major brands, including Audi, Zippo, Orange and Cadbury, are using branded iPhone apps as a way to reach their target audience. It’s not hard to see why when more than 3 billion apps have been downloaded, and iPhoneclass="blippr-nobr">iPhone users are generally young and affluent. A branded iPhone app is a combination of product and entertainment, but most importantly, it cannot be perceived as advertising. When done right, it’s a great way to not only increase brand awareness but drive direct traffic.

These days, branded apps are not just for big corporations with money to burn. They are well within the reach of every small business. A simple, but effective iPhone app can be launched for as little as $750. Here’s how.

Step 1: Pin Down a Useful Idea

Don’t fall into the trap of thinking that your app has to be groundbreaking or fiendishly clever. Develop a simple app that has a real use for your target audience. For example:

• A world clock that converts multiple time zones (for a watch manufacturer or retailer)
• A customized MMS message generator to celebrate special occasions (for a gift store)
• A baby rattle (baby product manufacturer or retailer)

The app need not be revolutionary or unique, but should be visually attractive, easy to use and serve a useful purpose. The iPhone is designed to be simple and intuitive to use, so your app should be too.

Step 2: Write Up a Spec

Writing a specification document will focus your ideas. It is also the blueprint for the app, which is to be given to the development team. The better the initial specification, the more likely it is that the app will be a success. Never assume that a developer is a psychic and will automatically know what you want. A good spec should have the following elements:

• A functional description. Draft a detailed explanation of the functionality of the product. You should detail, for example, the navigation, functions of each screen and what happens when buttons are pressed.
• Diagrams (or “wireframes”) of the screens. This can be done using Google Docsclass="blippr-nobr">Google Docs, Visio or even PowerPoint.
• Style guidelines. To help the designer determine the look and feel, describe the target audience for the app and give examples of designs you admire. Remember, to cut costs, stock images can be cheaply bought from sites like iStockPhotoclass="blippr-nobr">iStockphoto.

Step 3: Find a Developer/Designer

You can usually hire freelancers at a lower cost than an agency. Building an app will require both design and coding skills. You may not be able to find someone who is good at both, so hiring two freelancers is not uncommon.

Sites such as Elance and oDesk allow freelancers to be sourced from all over the world. By posting the spec on one of these sites and asking for quotes, you will receive multiple offers. Create a shortlist and ask these people for examples of work and references before making a choice. Finally, before staring the project, you should agree on a deadline and specific milestones. The freelancers may require an upfront payment before starting, which is normal, but don’t pay more than 50% up front.

Step 4: Design, Build and Test

Once you have selected your team, the project is ready to start. Each project will have three basic stages.

1. Design. The designer will turn the wireframes into a visual design./> 2. Build. The coder will build the app based on the spec using the visuals./> 3. class='blippr-nobr'>Testclass="blippr-nobr">test. Testing should ensure that the functionality detailed in the spec is present and also that the app is robust enough to deal with real users.

Once the work has started, monitor the progress carefully and ask for frequent updates. Always encourage your team to talk directly to each other during the build as this will speed up the development process.

Step 5: Launch It

class='blippr-nobr'>Appsclass="blippr-nobr">Apps are published in the iTunes store through a service called iTunes Connect. Once submitted, an app can take several weeks to be approved and be available for download.

There are numerous press and blog outlets that may be interested in covering the release and features of your app, so use the launch as an opportunity to get some PR for your business. Write a press release and distribute it to:

• Press release distribution sites
• iPhone app directories, review sites and blogs
• Publications in your industry

Also, don’t forget to talk up your app on your company’s own blog, Facebookclass="blippr-nobr">Facebook and Twitterclass="blippr-nobr">Twitter pages.

More App Dev Resources from Mashable:

- 5 Musts for Mobile App Marketing/> - HOW TO: Build an App for Your Small Business/> - Top iPhone Developer Discusses the Future of Media Apps /> - HOW TO: Develop iPhone Apps With Staying Power

Image courtesy of class='blippr-nobr'>Flickrclass="blippr-nobr">Flickr, mzdoherty.

For more Mobile coverage:

class="f-el">class="cov-twit">Follow Mashable Mobileclass="s-el">class="cov-rss">Subscribe to the Mobile channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for iPhone and iPad

bench craft company>

Fox <b>News</b> Decoded - Swampland - TIME.com

What do you do to amp ratings after you've won a big victory at the polls and the public has wandered off to start celebrating the holidays? At Fox News, the answer is obvious: you up the ante.

Sarah Palin on Fox <b>News</b> Watch | Palin Attacked On Fox <b>News</b> | Video <b>...</b>

The Fox News Watch crew better learn to watch when the camera is rolling from now on, because they might soon feel the wrath of the Mama Grizzly. Nevermind that Sarah Palin is their Fox News co-worker and a likely contender for the ...

<b>News</b> Corp developing a tablet-exclusive publication

News Corp Logo Reuters is reporting that News Corp, the world's third-largest media conglomerate, has confirmed they will be releasing a news publication developed specifically for tablet computers like the iPad. "It's a tablet-only ...

bench craft company

bench craft company

bench craft company

Fox <b>News</b> Decoded - Swampland - TIME.com

What do you do to amp ratings after you've won a big victory at the polls and the public has wandered off to start celebrating the holidays? At Fox News, the answer is obvious: you up the ante.

Sarah Palin on Fox <b>News</b> Watch | Palin Attacked On Fox <b>News</b> | Video <b>...</b>

The Fox News Watch crew better learn to watch when the camera is rolling from now on, because they might soon feel the wrath of the Mama Grizzly. Nevermind that Sarah Palin is their Fox News co-worker and a likely contender for the ...

<b>News</b> Corp developing a tablet-exclusive publication

News Corp Logo Reuters is reporting that News Corp, the world's third-largest media conglomerate, has confirmed they will be releasing a news publication developed specifically for tablet computers like the iPad. "It's a tablet-only ...

bench craft company

 

To support a margin compression theory, the article begins by using institutional selling as proof and presents increasing Android market share as an argument. Let’s take a closer look.

 

1. Institutional Selling

The two examples provided (one institution selling and another expressing worry) are insufficient to support the conclusion that big money has started to dump Apple. What’s happening in the aggregate? Might other institutions have initiated positions or increased their holdings? Unless this table (http://www.nasdaq.com/asp/holdings.asp?symbol=AAPL&selected=AAPL&FormType=Institutional) is out of date (It does include Capital Growth Management’s sale.), there is no significant net change in the number of shares held by institutions.

 

Now, one could argue that CGM’s Heebner and FEAM’s Obuchowski are such stellar managers that their opinion warrants special attention. Well, Heebner’s CGM Focus fund is only a two-star Morningstar rated fund (http://finance.yahoo.com/q/pr?s=CGMFX+Profile). Heebner “knows how to count”, as the author writes, I suppose, but he doesn’t know how to outperform; Obuchowski’s FEAM50 (http://www.1empiream.com/FEAM50_Q3%2010.pdf) and APA125 (http://www.1empiream.com/apa.htm) funds have beaten their benchmark. However, he’s expressed concern about holding Apple two years from now. He hasn’t sold yet.

 

The article hence doesn’t provide either quantitative (as the number of shares held has not changed significantly) or qualitative (as no star manager is cited as selling) evidence of big money starting to dump Apple because of margin compression. For the one under performing manager cited for selling, no reason is provided. As a matter of fact, there’s no evidence for net institutional selling of Apple, period.

 

2. Increased Android Market Share

With a 35% profit share in 2009 (http://www.businessinsider.com/chart-of-the-day-revenue-vs-operating-pro...), the hardware industry's highest, hasn’t Apple been successful in the personal computer market? I would say so, and yet it had only captured a 7% market share. How has it accomplished this feat? By offering something different that consumers value at a premium.

 

The author writes: “Jobs also (understandably) failed to mention that the “commodity’ Androids materially outperform the iOS products in terms of features and functionality. This is pretty much in direct contravention to the concept of the term “commodity”, isn’t it???? I don’t think many Samsung Galaxy S, Droid X or HTC Evo owners will characterize their devices as “commodities”.”

 

A product’s characterization as a commodity is not a function of the quality of its features and functionality or user opinions thereof. The Android clones are commodities because there’s fundamentally little difference between them. One might have a bigger screen, another longer battery life, and yet another a thinner form factor, but they all run the same OS and hence offer the same functionality. If an innovative feature proves popular, it can quickly be duplicated. There’s little that sets one phone apart from the other. They are interchangeable. As such, they must compete on price. You might prefer the Galaxy S, but settle for a Droid if its price is sufficiently lower to sway you. Their makers will generate lower profit margins, just like Windows PC makers.

 

The iPhone, on the other hand, offers something different: superior aesthetics, greater ease of use, no bloatware, superior integration with related products (Mac & iPad), a certain prestige, but mainly a distinct OS. It offers the whole package. Its hardware competitors might best or equal some features, but not the whole. If you value this different product, you can only buy from Apple. By maintaining full control of the iPhone experience, Apple prevents it from becoming a commodity like all the Android clones and, so long as it’s able to produce a superior experience on the whole, ensures premium pricing and high profit margins.

 

The author also writes: “…its business model may prove unassailable unless Apple makes some drastic changes (ex. allowing cloning)…”

 

What if Apple did pursue the Google model and licensed its OS? If it allowed iOS clones, it would cannibalize its sales and its margins would be obliterated, as it would lose its main differentiator. Would it be able to keep generating a $238 profit per phone (http://www.asymco.com/2010/10/31/making-it-up-in-volume-how-to-view-unit-profitability-vs-volume-in-handsets/)? In light of the fact that Google is giving Android away, it’s highly unlikely.

 

Android has already won. The battle for market or unit share, that is. Apple will henceforth never sell as many phones. That’s OK because Apple will probably keep generating the lion’s share of profits (http://www.asymco.com/2010/10/30/last-quarter-apple-gained-4-unit-share-22-sales-value-share-and-48-of-profit-share/) by executing a business model proven successful with the Mac.

 

As it reaches critical mass, Google’s model might indeed become unassailable. No other company will beat Google at its game. Apple has chosen to play a different game that might also be unassailable. They’re two different ways to win. Google will attempt to monetize Android through market share dominance, while Apple will maintain its profit share dominance among hardware makers through innovation and differentiation. Apple’s margins will suffer significantly only if it’s unable to keep offering something different, valued at a premium by consumers.

 

In short, the article fails to show an institutional dump of Apple shares. It doesn’t even show that the one (marginally competent) institutional manager mentioned for selling did so because of expected margin compression. Moreover, it is misguided in using Android’s unit share dominance to deduce margin compression at Apple. Apple’s profit margin will only suffer significant compression if it fails in the execution of its business model.

 

To further the analysis, is Google’s licensing model superior to Apple’s integrated model, as many seem to believe? In the personal computer market, Microsoft made money by selling Windows to hardware makers. In the mobile phone market, Google is giving Android away, while planning to monetize market share dominance through services (search and others). The hurdles it faces with this model are not insignificant. Its lack of control over its OS is a liability: witness Verizon’s pre-installation of Bing on some Android phones (http://www.broadbandreports.com/shownews/Verizon-Bing-Wont-Be-Exclusive-On-All-Android-Phones-110294). Its platform is a customizable OS that hardware makers and wireless carriers can tailor to suit their own ends, which may be to Google’s detriment, and they don’t have to pay for it. Its success is far from assured. Might Google be going back to producing its own branded phone because its current strategy is proving difficult to monetize (http://www.engadget.com/2010/11/11/this-is-the-nexus-s/)?

 

Apple, on the other hand, is already monetizing the iPhone. As a matter of fact, it made as much money in Q3 2010 as all other phone makers combined (http://www.asymco.com/2010/10/30/last-quarter-apple-gained-4-unit-share-22-sales-value-share-and-48-of-profit-share/), in spite  of commanding only 4% market share. Apple won both the unit share and profit share battle in MP3 players with the iPod, as no worthy competitor came forth. This is not the case in smart phones with the emergence of Android. Nonetheless, the Mac, with 35% of PC profit share in spite of only 7% market share, has proven that Apple’s model can thrive even in the face of strong competition. 

 

Trevor Ginn runs the online baby and nursery shop Hello Baby. Hello Baby’s first iPhone app, Peek-a-boo Baby Rattle, cost the company $750 and receives 3,000 downloads a week.

Many leading major brands, including Audi, Zippo, Orange and Cadbury, are using branded iPhone apps as a way to reach their target audience. It’s not hard to see why when more than 3 billion apps have been downloaded, and iPhoneclass="blippr-nobr">iPhone users are generally young and affluent. A branded iPhone app is a combination of product and entertainment, but most importantly, it cannot be perceived as advertising. When done right, it’s a great way to not only increase brand awareness but drive direct traffic.

These days, branded apps are not just for big corporations with money to burn. They are well within the reach of every small business. A simple, but effective iPhone app can be launched for as little as $750. Here’s how.

Step 1: Pin Down a Useful Idea

Don’t fall into the trap of thinking that your app has to be groundbreaking or fiendishly clever. Develop a simple app that has a real use for your target audience. For example:

• A world clock that converts multiple time zones (for a watch manufacturer or retailer)
• A customized MMS message generator to celebrate special occasions (for a gift store)
• A baby rattle (baby product manufacturer or retailer)

The app need not be revolutionary or unique, but should be visually attractive, easy to use and serve a useful purpose. The iPhone is designed to be simple and intuitive to use, so your app should be too.

Step 2: Write Up a Spec

Writing a specification document will focus your ideas. It is also the blueprint for the app, which is to be given to the development team. The better the initial specification, the more likely it is that the app will be a success. Never assume that a developer is a psychic and will automatically know what you want. A good spec should have the following elements:

• A functional description. Draft a detailed explanation of the functionality of the product. You should detail, for example, the navigation, functions of each screen and what happens when buttons are pressed.
• Diagrams (or “wireframes”) of the screens. This can be done using Google Docsclass="blippr-nobr">Google Docs, Visio or even PowerPoint.
• Style guidelines. To help the designer determine the look and feel, describe the target audience for the app and give examples of designs you admire. Remember, to cut costs, stock images can be cheaply bought from sites like iStockPhotoclass="blippr-nobr">iStockphoto.

Step 3: Find a Developer/Designer

You can usually hire freelancers at a lower cost than an agency. Building an app will require both design and coding skills. You may not be able to find someone who is good at both, so hiring two freelancers is not uncommon.

Sites such as Elance and oDesk allow freelancers to be sourced from all over the world. By posting the spec on one of these sites and asking for quotes, you will receive multiple offers. Create a shortlist and ask these people for examples of work and references before making a choice. Finally, before staring the project, you should agree on a deadline and specific milestones. The freelancers may require an upfront payment before starting, which is normal, but don’t pay more than 50% up front.

Step 4: Design, Build and Test

Once you have selected your team, the project is ready to start. Each project will have three basic stages.

1. Design. The designer will turn the wireframes into a visual design./> 2. Build. The coder will build the app based on the spec using the visuals./> 3. class='blippr-nobr'>Testclass="blippr-nobr">test. Testing should ensure that the functionality detailed in the spec is present and also that the app is robust enough to deal with real users.

Once the work has started, monitor the progress carefully and ask for frequent updates. Always encourage your team to talk directly to each other during the build as this will speed up the development process.

Step 5: Launch It

class='blippr-nobr'>Appsclass="blippr-nobr">Apps are published in the iTunes store through a service called iTunes Connect. Once submitted, an app can take several weeks to be approved and be available for download.

There are numerous press and blog outlets that may be interested in covering the release and features of your app, so use the launch as an opportunity to get some PR for your business. Write a press release and distribute it to:

• Press release distribution sites
• iPhone app directories, review sites and blogs
• Publications in your industry

Also, don’t forget to talk up your app on your company’s own blog, Facebookclass="blippr-nobr">Facebook and Twitterclass="blippr-nobr">Twitter pages.

More App Dev Resources from Mashable:

- 5 Musts for Mobile App Marketing/> - HOW TO: Build an App for Your Small Business/> - Top iPhone Developer Discusses the Future of Media Apps /> - HOW TO: Develop iPhone Apps With Staying Power

Image courtesy of class='blippr-nobr'>Flickrclass="blippr-nobr">Flickr, mzdoherty.

For more Mobile coverage:

class="f-el">class="cov-twit">Follow Mashable Mobileclass="s-el">class="cov-rss">Subscribe to the Mobile channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for iPhone and iPad

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