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'We Are Now in a Cult-Based Economy': Tech Pro

Friday, 13 Apr 2012 | 1:28 AM ET

Struggling tech companies have failed to acquire "cult" status in an oversaturated market and the successes of Google, Facebook and Apple in particular are largely due to their massive followings in a "cult-based economy", Keith Woolcock, Partner at 5th Column Ideas, told CNBC.

“Apple has one of the smallest R & D budgets; it spends two percent on R & D and has the smallest portfolio of products, so it’s a little bit like what Voltaire once said, God is on the side of the sharpest shots not the biggest armies, and you know you’re competing with a cult," Woolcock told Squawk Box Europe.

“We are now in a cult-based economy, Google is a cult, Facebook is a cult, Apple is a cult, cults are what you need to see through too much choice,” Woolcock said.

In a week when Sony’s new CEO Kazua Hirai doubled the Japanese electronics firm’s annual loss forecast to a record $6.4 billion, Woolcock said things were likely to get worse for Sony if Apple enters the TV market.

He explained that Apple had not become "uncool" despite having a very narrow product range and devices that evolved at a slow rate.

“What’s interesting for Apple now if you look at it over the last couple of years they haven’t come out with any revolutionary products, you know the iPhone 4S was identical to the previous (iPhone) 4 or 3. The new iPad is absolutely identical to the previous one, so now you’re waiting and this is bad news for Sony… Probably the next big product will be the TV market,” he said.

'Cannibalization' Danger

Woolcock added that "cannibalization" within the tech sector - single products with multiple features - would render specialist use products made by firms like Sony obsolete. Woolcock singled out the digital camera market as an example.

“We all have digital cameras, we all have a multitude of digital cameras,” Woolcock said.

“If you’re a company like Sony or Cannon or Nikon that makes a lot of your money from selling single lens reflex cameras with those great big lenses you’re going to have a problem because within the next five years that market’s going to disappear because the new thing that’s coming out, and it started on smartphones and you can turn the function on on your iPhone. It’s this thing called HDR, High Dynamic Range," he explained.

“What that means is you use a very high powerful processor which you have on the smart phone to take multiple shots … it takes multiple shots and then it averages them out," Woolcock said.

"And now, if any of you viewers go onto the internet and put in HDR, High Dynamic Range, look at the types of photos you get, it’s phenomenal, it’s phenomenal, now that will kill the single lens reflex market,” he added.


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