Could Apple be the Next Sony?

The Mac maker is currently the Ferrari of technology manufacturing. Is that about to change? Yesterday we shared Trip Chowdhry's thoughts on Apple AAPL, a company he believes will not go to $1,000. Today we bring you the analyst's thoughts on Apple's rising popularity. “If the whole world had gold in their hands, do you think gold would have that exclusivity anymore?” Chowdhry questioned. “No. It would be no different than dirt or mud. Let me put it in a more simple way: if you, me and the whole world drives Ferraris, do you think Ferrari will have that kind of brand exclusivity to it? The same thing may happen with Apple.” Chowdhry thinks that the exclusive nature of Apple's products is part of the appeal. “We have gone to so many conferences,” he told Benzinga. “Two years back, only 15% to 20% of the people were using Macs. Today, in the conference, I see 90% to 95% of the people who are using Macs.” “If everybody uses a Mac, the many of the early fans liked Mac is because of exclusivity,” Chowdhry continued. “Now if the whole world uses Mac, [if] everybody has one, how is it different? Exclusivity is a problem. At $1,000, people anywhere from Silicon Valley, from San Francisco to Timbuktu, the whole world uses Apple. And that's a situation which is not good for Apple because it loses exclusivity.” The Next Sony? Chowdhry said that Apple's market share in pre-season generally is not more than 15% to 20%. “And that is the recipe of success, because it's exclusive,” he said. “Same thing if Apple products are highly popular, it loses exclusivity. If it loses its exclusivity, Apple fatigue sets in. If fatigue sets in, people go for other things. And it is no different from what happened to Sony SNE. Sony was massively successful. And what happened? Everyone had a Walkman.” Looking back, Chowdhry said that the Walkman was initially an exclusive item. “First, few people had Walkmans,” he said. “People would say, ‘Look, this guy has something on his head!' Then what happened? They put another hole next to it for a friend to plug in his headphones. ‘Oh look, a companion walking! Two together!' Very exclusive. When that exclusive phenomenon [ended], [Sony] lost its exclusivity and the fatigue set in.” Based on Chowdhry's research, Apple's success depends on the consumer perception that they are getting something exclusive. “But if you become a mass-merchandise [company], chasing the $1,000 mark because that's what analysts said it should be, you compromise on exclusivity, you compromise on the talent, and you probably may compromise on the quality also,” Chowdhry warned. “Those are indications of a downward spiral.” Avoiding Customer Fatigue Ultimately, Chowdhry thinks that Apple needs to be “very focused” in its effort to avoid the aforementioned customer “fatigue.” “[Apple needs to] make sure they don't end up being the next Sony,” Chowdhry insisted. “They are riding a very strong wave right now. But the focus should be on products and customer expectations at each and every launch. Their focus should never be, ‘We need to be an X billion-dollar company, our stock should be at X billion dollars,' because that will make them make wrong decisions. And instead of the stock going up it could go negative.” We should remember that in the consumer space “it only takes one bad strategic decision for the company to go south,” Chowdhry warned. “Sony and HP HPQ are examples of that. Even Atari, Nintendo (NTDOY), these old guys. One bad strategic decision and the company hasn't been able to recover.” “Do I think the stock will go to $1,000?” Chowdhry continued. “I don't think it will go there. And I think having those kinds of targets in mind is utter foolishness. Instead of going up, the stock will go down, because they should not be doing what they need to do for the stock to go to $1,000. They should be making sure that they have multiple categories of products and multiple geographies, but not capturing more than 10% to 15% of the market, maximum. They need to be like a Ferrari, they need to be exclusive.” Follow me @LouisBedigian