Clay Christensen in the Innovators Solution lays out an explanation for what is happening here. Apple used vertical integration to make a giant leap forward with their iPhone that you couldn't have made in a non-integrated company. They ended up overshooting the typical consumer's needs though in the following iterations of the iPhone. And the technology that was at first difficult for competitors to reproduce became easier to replicate (thanks in part to Android). Samsung, HTC, and others were able then to provide good enough devices (and in certain ways, better devices) to consumers at a lower price point.
Apple's response has been to move up market towards tablets, and have been able to use their vertical integration to produce devices that no other Android manufacturer could match at first. Microsoft is building their own device to have similar quality, but they are doing it as a vertically integrated company. Amazon showed you could do a partial vertical integration (heavily customized Android and integration into their own media resources) to take away the low end of the tablet market from Apple. And slowly the Android tablet manufacturers are catching up to Apple.
So what this makes me ask is what will be next for Apple? They haven't been good at playing the high-volume, low-profit electronics game, so they'll need another "blockbuster", highly innovative device, and I am excited to see what that will be. It drives the industry forward, and creates exciting new technology we all get to benefit from eventually.
Apple's response has been to move up market towards tablets, and have been able to use their vertical integration to produce devices that no other Android manufacturer could match at first. Microsoft is building their own device to have similar quality, but they are doing it as a vertically integrated company. Amazon showed you could do a partial vertical integration (heavily customized Android and integration into their own media resources) to take away the low end of the tablet market from Apple. And slowly the Android tablet manufacturers are catching up to Apple.
So what this makes me ask is what will be next for Apple? They haven't been good at playing the high-volume, low-profit electronics game, so they'll need another "blockbuster", highly innovative device, and I am excited to see what that will be. It drives the industry forward, and creates exciting new technology we all get to benefit from eventually.