MONSTER: Here’s Why Apple is the NEW Wal-Mart
Wal-Mart (NYSE:WMT) has been the face of corporate dominance for over a decade. However, is Apple (NASDAQ:AAPL) the NEW Wal-Mart?
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Two interesting characteristics raise the issue: 1) companies and service providers will do just about anything to work with Apple; and, 2) as soon as Apple enters a product line, other companies become in serious danger.
Let’s start with Apple’s unilateral negotiating power. TomTom and Garmin (NASDAQ:GRMN) were once the leading GPS companies on Earth. Then, Apple’s App Store and Google (NASDAQ:GOOG) Maps disrupted the sector via free smartphone alternatives. TomTom’s stock chart is worth a thousand words:
Then, a couple weeks ago the once mighty TomTom exhibited the ultimate act of desperation. The GPS company threw themselves at the feet of the Grand Inquisitor and begged for food in the form of signing a global agreement with Apple for maps and related information. King Apple now has access to awesome technology and IP via cheap outsourcing. That’s some serious corporate power over a company and industry that once was the hottest in tech land.
Regarding serious danger for other companies, let’s look at Apple’s coming Passbook application. The new app is a clear attempt to put Square out of business and harm Google Wallet. Sound impossible? Given Square’s incredible dependency on iPhone to gatekeeper transactions, one swing of Apple’s sword could eliminate what Apple could easily consider a leach on their walled garden. The prize is worth billions of dollars, so friendly combat doesn’t look likely. And why shouldn’t Apple step on Square? Apple has spent unprecedented fortunes procuring one of the most rabid user bases in business history. Maximizing the margin on financial transactions via smartphone “wallets” is a no brainer for Apple … and shareholders aren’t interested in Square’s brief bridge from physical credit card transactions to pure digital.
Apple’s Wal-Mart-esque powers are not new. Of course, iTunes has dictated music pricing to the dismay of music publishers. However, the quantity and speed at which Apple is now spreading its tentacles is breathtaking. One has to wonder how long Apple can keep their logo reminding consumers of the tree of knowledge’s fruit rather than the surreptitious serpent slithering in the background.