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Apple may have disappointed Wall Street with its fourth quarter earnings, but make no mistake about it: most companies would kill for a quarter like it.
The company issued a strong guidance for the first quarter of fiscal year 2012, and Apple's CEO Tim Cook is confident.
Case in point: when it comes to the nascent tablet market, Cook isn't at all worried about possible competition from new devices like Amazon's Kindle Fire.
Why? According to Cook, past is prologue for Apple:
We’ve seen several competitors come to market to try to compete with the iPad. Some had different form factors, different price points. And I think it’s reasonable to say that none of these have gained any traction thus far.
And in fact, as all of those competitors were coming to market, our share actually went up, such that in the June quarter, according to IDC, we were responsible for three out of every four tablets sold.
Cook's position is not unexpected given the iPad's dominance of the tablet market. But the tablet market is rapidly evolving and part of that evolution is that the distinction between tablets and e-readers is blurring.
Just look at Barnes & Nobles' NOOK Color. It's technically an e-reader, but it's based on Android and it runs apps. The app ecosystem Barnes & Noble is building around the NOOK Color is, not surprisingly, nowhere near as large as Apple's iPad ecosystem, but with popular games like Angry Birds available on the Color, one has to ask: do you really need several hundred thousand apps to have a viable, profitable app ecosystem? Probably not. In fact, having an app store with fewer, higher-quality apps might not be such a bad approach.
Like the NOOK Color, which has reportedly racked up several million unit sales, the Kindle Fire is an e-reader that does double duty as a tablet.
It might be quite a capable tablet thanks in large part to Amazon's existing ecosystem, which brings more than just books. Kindle Fire owners will have access to Amazon's music and video content, as well as its Android app store.
Yes, the Kindle Fire isn't as powerful as the iPad, and it might not be quite as pretty, but at $199, considered by many to be a magical price point for consumer electronics devices, there's a decent chance it doesn't have to be.
Unlike direct iPad competitors such as the Samsung Galaxy Tab, which costs nearly as much as an iPad, Amazon is offering consumers a great color e-reader that also has the ability to support many of the activities that are popular on the iPad at less than half the price.
From this perspective, Apple's concern shouldn't be that other companies will build a better iPad, but rather that they'll build devices which offer more bang for the buck and which appeal to demographically distinct, larger segments of the consumer market that the iPad isn't tapping.
Pre-sales for the Kindle Fire may surpass pre-sales for the iPad, and given that Apple has sold under 15m iPads this year (far fewer than many analysts had predicted), it's clear the converging tablet/e-reader market is still up for grabs.
If Tim Cook assumes that early domination of a nascent market guarantees long-term domination of a mature market, he could have a tough time ahead of him as Steve Jobs' successor.