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Insight: Jobs exit opens door for nimble Apple rivals

A man holds a Samsung S II and Samsung Ace smartphones next to an Apple iPhone 4 in Houten
A man holds a Samsung S II and Samsung Ace smartphones next to an Apple iPhone 4 in Houten

By Alexei Oreskovic and Miyoung Kim

SAN FRANCISCO/SEOUL (Reuters) - The changing of the guard at Apple Inc gives rivals from Google Inc to Microsoft Corp and Samsung Electronics Co Ltd an unprecedented opportunity to take on the consumer electronics powerhouse.

Steve Jobs passed the reins at Apple to his right-hand man Tim Cook on Wednesday, saying he could no longer fulfill his CEO duties.

Technology executives around the world praised Jobs' skills as an innovator and a business leader, but as the dust settles, industry insiders and analysts expect his departure to ratchet up the competition as rivals look for fresh opportunities.

"What this will do is clearly embolden the competitors, because a lot of them think they just can't compete with Steve Jobs," said Rob Enderle, principal analyst with the Enderle Group, whose clients include Apple rivals such as Microsoft, Lenovo and Dell.

As tech companies step up efforts to chip away at Apple's strongholds in consumer electronics, PCs and entertainment, the company will also have to defend its internal ranks from outsiders looking to lure away its top talent.

"Companies lose a lot of their aggressiveness, their culture, their sense of purpose, when the founder steps down," said Michael Cusumano, a professor at MIT Sloan School of Management.

But he said competitors may not be able to truly benefit from the change at Apple for a couple of years. Cook has effectively been running the company since January -- a period during which Apple has thrived. And Jobs, known for his obsessive attention to detail, intends to remain active in his new chairman's role for as long as his health allows.

What's more, analysts say, Apple likely already has a full pipeline of Jobs-grade products that should see it through the next few years.

GREENER PASTURES

Apple's biggest vulnerability in the short term may be its employees. Companies such as Google, whose chief executive Larry Page co-founded the company and is an outspoken advocate of investment in research and innovation, could prove particularly appealing to Apple engineers.

Even Apple nemesis Microsoft may appeal to some Apple employees thanks to efforts such as its xBox video game business, which has many parallels to the media-centric devices made by Apple, noted Mike McGuire, an analyst at industry research firm Gartner.

"These executives inside Apple are some of the most sought after executives in the industry," said one Internet executive who wished to remain anonymous.

If Jobs' influence wanes, many employees may no longer feel as passionately about working for Apple. Others may simply find it tough to resist the promise of a hefty raise or a promotion at a rival company.

"It would shock me if people didn't leave within a year, or six months," said the Internet executive.

Overall though, Apple's culture and work environment are so unique that convincing its employees to leave will be tougher than it seems, said McGuire.

"I'm sure there are lot of those big head-hunting firms who have got their execs booking flights and trying to figure out how they can get involved but I think a lot of them are going to be disappointed," he said.

RISING CHALLENGERS

Jobs' decision to step down comes as Apple is on a roll, with the company delivering blockbuster financial results and Apple challenging ExxonMobil for the title of America's most valuable company.

Last week, Hewlett-Packard Co effectively conceded that it couldn't compete with Apple's iPad and iPhones and pulled the plug on its nascent business producing tablets and smartphones.

But other companies are ramping up efforts. Google's recent move to acquire Motorola Mobility signals the Web search giant's plans to challenge Apple's iPhone more directly by selling its own, home-built smartphones.

Samsung and HTC, which use Google's Android software, are also gaining share in the mobile market.

"Even before Steve Jobs' (resignation), Samsung was getting more and more optimistic that they can actually take on Apple in the smartphone arena," said Mark Newman, a former director of strategy at Samsung, where he worked for six years.

"The game is really now Samsung's to lose ... They are picking up market share because of the change in dynamics in the smartphone industry," added Newman, now a senior analyst for global memory and consumer electronics at Sanford C Bernstein.

Samsung's Galaxy range of smartphones and tablet computers running on Google's Android operating system are seen as the key competitors to Apple's iPhone and iPad, products that have changed the industry.

Taiwanese group HTC Corp -- led by another well-known industry figure, Peter Chou -- has seen sales of its handsets surge in the last few quarters and has a reputation for innovative flair.

"Next year is probably going to be the heaviest competition year Apple has ever had," said Enderle.

But with the intensifying competition, some industry insiders believe the only way rivals will truly get a leg up on Apple will be if Apple stumbles.

"It's all about if Apple at some point makes a significantly bad decision," said Georges Nahon, the CEO at Orange Labs, a division of France Telecom SA.

"It has to be the convergence of a couple bad decisions internally and major changes happening in the market that they didn't see coming," he said.

(Additional reporting by Tarmo Virki in HELSINKI, Ju-min Park and Hyunjoo Jin in SEOUL, Tim Kelly and Ayai Tomisawa in TOKYO, Clare Jim in TAIPEI, Cathy Yang in HONG KONG; Writing by Lincoln Feast; Editing by Dean Yates, Andrew Callus, Gerald E. McCormick, Gary Hill)

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