Lenovo's decision to buy Motorola's handset division will shake up other smartphone vendors. And Apple could be among those shaken the hardest, says JP Morgan analyst Mark Moskowitz.
Announced Wednesday, the $2.91 billion agreement will see Motorola's mobile phone business and associated patents switch parent from Google to Lenovo. The deal will boost Lenovo's smartphone presence from its home base of China to other major markets around the world. So how might such a force affect Apple?
In an investors note published Thursday, Moskowitz said that the move will futher consolidate the fragmented Android smartphone arena. And in so doing, it will also limit Apple's ability to woo Android users unhappy with the current crop of cheap but lower-quality devices.
The smartphone market itself may follow the path of the PC market, according to Moskowitz, meaning slower growth, more vendor consolidation, and less of a distinction between different products. If so, that could spell trouble for Apple, which commands a premium price tag for its seemingly unique devices. And with more budget-friendly phones coming from Samsung and Lenovo, Apple may need to rethink its resistance against a low-cost iPhone.
"In September 2012, we wrote that the smartphone's contribution to growth at Apple could be peaking and that the iPad needed to carry more weight in the model, which has not come to fruition," Moskowitz said. "We think this means that Apple needs to innovate and enter new product categories or services in the next 12-18 months. If not, then there is risk of the China Mobile rollout for Apple being the last major growth catalyst."