Apple Inc Shifting to 'Lifestyle Brand' Under Tim Cook; Samsung Losing Smartphone Numbers War

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By Reissa Su | August 1, 2014 8:32 PM EST

Under the leadership of Tim Cook, Apple will make sure it has a device in every aspect of a person's life.

Cook has always put an emphasis on customer satisfaction and loyalty as the most significant measurements for Apple. He believes satisfied and loyal customers are valuable for the future Apple products and services. Customer loyalty is a key determinant for Apple to protect its premium brand and maintain strong margins.

REUTERS
Apple CEO Tim Cook delivers his keynote address at the World Wide developers conference in San Francisco, California June 2, 2014.

UBS analyst Steven Milunovich believes Apple's image will be shifting to a "lifestyle brand" or a luxury consumer franchise as it moves away from being a conventional tech company. In a note to investors, the analyst said Cook has described Apple as a "mega-ecosystem which has grown 10 times stronger" in the recent years.

The addition of the Continuity feature to iOS 8 and OS X Yosemite will allow users to make seamless transitions between Macs and iPhones or iPad anytime they want. As Apple's ecosystem grows with Apple TV, Carplay and iBeacon, analysts believe the "Applesphere" will soon become familiar to everyone.

Meanwhile, Apple's fiercest rival, Samsung has delivered a disappointing earnings report with a significant drop in its operating income. While Apple continues to gain profits every quarter, Samsung's recent operating profit has declined to 25 per cent on a year-to-year comparison.

According to reports, Samsung's mobile business recorded a 30 per cent decline in profits on a year-to-year basis. In the same period, Apple's operating income has increased by 12 per cent and iPhone sales were up 9 per cent.

From a 32.5 per cent market share in 2013, Samsung dropped to 25.2 per cent in the recent quarter. Apple's market share also dropped but only by a small percentage or from 13.4 per cent to 11.9 per cent in the June quarter.

Reports said one reason for Samsung's troubles is its competition with Apple, a company that continues to remain strong and makes high-quality devices. It also hurt Samsung to be going against Apple's iOS, which is considered by loyal customers as the best mobile operating system.

Samsung also makes low-end phones which compete with rising Chinese smartphone manufacturer Xiaomi and other makers of Android phones that battle for supremacy in emerging markets. The existence of Samsung clones sold at a cheaper price affected the Korean electronics giant.

Some have said Apple may have made a mistake by releasing the cheaper iPhone 5C but according to Cook, iPhone sales have increased in the previous quarter with the help of the coloured iPhone and older iPhone models offered at lower prices.

In the last earnings call, Cook said iPhone sales in Brazil, Russia, India and China were up 55 per cent on a year-to-year basis.   

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(Photo: REUTERS / Robert Galbraith)
Apple CEO Tim Cook delivers his keynote address at the World Wide developers conference in San Francisco, California June 2, 2014.
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