Five Key Risks To Apple's Dominance

Cupertino, California-based Apple has been one of the dominant market share leaders in the smartphone and tablet space, thanks to its iPhone and iPad.

The key reason for the success is the ecosystem Apple has created including iOS and app store that has over 350,000 apps.

However, Jefferies analyst Peter Misek has listed five key risks that could impede Apple's dominance. Following are the risks:

1) Closed system: iOS is a closed system that carriers, content providers, and partners fear as Apple exercises exceedingly tight control over the ecosystem. This could cause carriers to shift subsidy dollars away from iOS devices toward other devices that are likely to have more open ecosystems and lower price points.

In terms of content providers, we believe Apple is having a difficult time coming to terms with them. Aside from Disney (the owner of ABC, Pixar, Buena Vista, etc.), we believe content producers have been leery, especially on subscription pricing, Misek wrote in a note to clients.

2) Technical limitations: iOS devices have a handful of technical limitations that could impede growth, the two most important being security and bandwidth inefficiency.

We continue to believe there is a pending spectrum and capacity crunch, the analyst said.

It could cause a crisis with prices jumping or services being hampered.

3) Arrogance and institutional complacency: Complacency is one of the major impediments to continued innovation and the competitive drive found in most technology companies. When companies appear to be alone at the top of a competitive market for extended periods of time it can breed a self absorption that fosters counter-competitive forces and destroys innovation.

4) Size: As companies grow larger it becomes increasingly difficult to manage disparate projects and R&D can spread too far and wide without cross collaboration.

5) Internal bias: A belief and/or desire to do it all internally creates issues for companies as they attempt to horizontally and/or vertically integrate too far all at once. Lack of specialization destroys profit and dilutes core compete.