With news leaking out that Apple will soon introduce a lower-priced iPhone, many investors, managers, competitors and observers are focused on how this will boost Apple’s market share, especially in emerging markets.
Perhaps of even greater interest to me, however, is what this means for Apple as a company, and more generally, whether corporate cultures are fluid enough to accommodate abrupt shifts in strategy.
My conclusion: Leaders should be careful what they wish for.
Apple has been a modern marvel. Starting with the revolutionary iPod, the company’s former chief executive officer Steve Jobs spearheaded an attack on the established order in consumer electronic devices. And this was an industry ripe for disruption. When the state of the art is the Sony Walkman, you know there’s real opportunity to change the game.
Of course, Apple moved on from iPod to iPhone and iPad, using iTunes to shake up the music, book, and software businesses in the process. The one commonality among all these innovations is not just that they were new, but that they were radically new.
Ironically, and unusually for a technology company, Apple was not really competing on the basis of technology. The MP3 player that they called iPod was, and is, considerably inferior to other MP3 players in terms of sound quality. The iPod was a sub-standard technological product competing in a technological arena, yet, it won.
Why? Because Apple differentiated on three key elements that resonated with customers: design, access to content via iTunes and brand prestige. The real innovation was embodied in these first two elements, which, when coupled with the iconic leadership of Jobs, collectively captured cool.
That strategy continued with the iPhone, whose brand cache was so strong that customers lined up for hours to buy each new version the company introduced. The early Samsung commercials mocking the herd behaviour of iPhone fans (yes, I was one), waiting to buy a product for features the Galaxy also boasted (and often with superior qualities), were so memorable precisely because they revealed just what was behind Apple’s kimono.
The iPad was also a revolutionary product. It even started a new product category that customers didn’t know existed. A company that breaks the rules, changes the world, and does it all with panache and coolness is a tough act to beat.
That is, until it starts cutting prices.
Companies that compete on the basis of price become commodity sellers. That the company Jobs ran could be in a commodity business is almost unfathomable. The next thing you know, they’ll be offering coupons in newspaper supplements for phones that are “new and improved.”
Now, there’s nothing wrong, per se, with a strategy that is all about market segmentation, using price as a competitive weapon and targeting promotions to specific customer groups. After all, that’s the bread and butter of the world’s best consumer packaged goods companies, from Procter & Gamble to General Mills. For companies like these, category management and brand management have been elevated to an art form.
Culture shift
But that’s not what Apple is, which means if the company wants to shift strategy in this way, its leaders need to retool the culture in as radical a manner as earlier product offerings changed how people worked and lived.
We should expect many employees to leave, unhappy to work in a company that is no longer changing the world. We should also expect Apple to bring in new talent with backgrounds from the P&G’s and Unilever’s of the world.
Apple stores will need to keep their true believer sales staff energised to sell ten versions of the iPhone to customers who will no longer feel fortunate to even be in the store. They’ll be more demanding customers who will want to know why the iPhone lite sells for $10 more than the latest Galaxy. Maybe Apple will need to bring back its former guru Ron Johnson, who built out the stores, to apply what he learned from his short and unsuccessful stint as CEO ...
OA has contradictions (Sony Walkman only competition then acknowledging iPod's lack of features vs other mp3 players) and fails to recognise Apple's central drive - ease of use. The iMac, iPod, iTunes made things easy. The lack of features was a feature.
"Apple stores will need to keep their true believer sales staff energised to sell ten versions of the iPhone to customers who will no longer feel fortunate to even be in the store."
The queue that forms outside the Birmingham UK Apple store most mornings these days is people trying to get things fixed. It used to be people trying to buy the new things. In that sense, the OA has a point.
To be fair, I think people get stuff online then go into the Apple shop to buy accessories or to get things fixed. Volume does not appear to be a problem.
Well, it's probably true when "other" is used to designate very specific high-sound-quality models (e.g. Cowon a few years ago, not sure where they stand now), you can always find better and ipods are of average sound quality at best, they've never been an audiophile's PMP (or a PMP for driving high-impedance cans).
I think it's more accurate to say the iPod (which one?) was not superior in all aspects of an MP3 player (especially in price). But IMO it had a very healthy balance of well done properties and good design. It was a device easy to love because unlike most other devices, it had way fewer glaring flaws and frustrating UI decisions.
TL;DR: It's better to be great overall than excelling at just some features while also having crappy downfalls.
As someone who used to be in to audiophilia, debates on sound quality of equipment and the supposed night and day differences are an incredible exercise in futility and purchase justification. Smoke some cannabis and $5 earbuds fed by a no-name MP3 player will deliver more detail than the custom modded Sennheisers fed by an amp and DAC stack imported from a boutique in Belgium would have gotten you otherwise.
Do you actually smoke weed ever? That's the wrongest thing I've ever heard. Smoke weed and now you can hear just how bad those shit earphones are, and just how much better the $500 earphones are.
I've done this experiment about 100 times with half a dozen people and the results are always the same. Weed makes shit headphones less tolerable, not more tolerable.
I'm not lambasting shit sound equipment. I'm lambasting YOU for being WRONG.
And I'm providing helpful information based on actually taking the pepsi challenge while high on "cannabis" as you put it (I've never met an actual weed smoker who calls it cannabis so I can tell you're not much of one).
If you want to make terrible gear feel good, drink alcohol. That actually does help. But it's not because you're hearing it better... it's because your senses are impaired.
The DACs are pretty much the same as you could find in any other mp3 player. The cowon ones and so on were somewhat better, but not massively so. You can see a battery of tests performed on various ipods as well as professional DACs costing thousands of $ here: http://www.daefeatures.co.uk/rmaa.php
They don't kick out a lot of power, so they don't cope well with fancy headphones.
The bad reputation of the ipod's sound stems largely from those white earbuds that came in the box, which are genuinely abominable. That and confirmation bias/placebo/etc.
It's a complete crock. Most MP3 players today, and iPods for their entire history, offer pretty much perfect audio reproduction (modulo lossiness in MP3). Plenty of folks don't like the earbuds and, to be sure, the iPod was not technically superior to its rivals on first release -- the thing that made the iPod successful was end-to-end near seamless experience including purchasing of music, redownloading lost content, ripping music, managing library, syncing to devices, and so forth, which Apple's rivals repeatedly and ineptly failed to reproduce (Microsoft came close, with Zune, but it was too little too late). And yes, iTunes on Windows is a slug, etc., but rival products were always in some crucial respect worse.
Yea any digital signal has to pass through things called "DAC's" that obviously come with different quality and price. DAC's along with the power supply/design greatly effect the sound of digital audio.
Not true. iPods were regarded as having crummy DACs until the Shuffle, which was a paradox in that it had incredibly limited features but also very good audio quality.
I said DAC's+Power+Design = "audio quality" and I have no idea how good or bad the ipod sounds. My point was that saying all digital devices sound exactly the same is false.
You're right -- I stand corrected. A bit more research shows that some iPods have had weak bass output and other issues but -- again -- no more so than rivals, and most iPods have pretty much flawless output (again, modulo the quality of the encoding and the output device).
More to the point -- making a blanket claim about iPods having always been inferior reveals the writer to be an anti-Apple troll.
Having done a bit of surfing and having been around a long time, I sometimes think of these things in surfing terms. Apple caught a couple of good waves and rode them masterfully, but missed a few others. Same with Microsoft. Microsoft is looking a little tired and might want to stick to safer waters, but Apple has another great ride in them for the next wave, if they can keep others from stealing the wave.
I'm not sure why introducing a lower price iPhone necessarily means the end of Apple. The iPod has had a whole line of products across the price range and seems to have done reasonably well for itself. Nor do I think "lower price" is necessarily the same thing as "commodity" since having a lower price doesn't prevent a product from differentiating itself from the competition.
The low-price iPhone is precisely targeted at markets whose price-structure is setup differently than the United States (read Asia). In the United States, carries subsidize the device price in exchange for a multi-year contract with the consumer. In many other countries, this isn't the model. Consumers buy the phone up-front. There is no subsidy. In order to sell a product in that market, and make your pricing attractive, it can't be a $600 device - it needs to be more-affordable. That's why they're releasing a less-expensive device, and it's no coincidence that it's happening around the time they're striking a deal with China's largest carrier.
I agree the doom and gloom is tiresome and poorly substantiated. That being said, the phone market is not the same as the music player market.
The iPods segregated themselves among different use cases and different needs. The Shuffle was always pitched as the "active" iPod (see: the clip on the back), the Nano the everyday iPod, and the iPod Classic the one for the serious enthusiast who needs enormous storage above all else.
The smartphone market lacks such segmentation. Everybody wants a phone that makes phone calls, receives texts, and runs apps. There's not really any room to segment price-wise except to simply make the same thing but cheaper.
It's just like when Apple sold a plastic MacBook. This is not the end of Apple, nor any other hyperbole. This is Apple, doing as a large company does, diversifying their product offerings.
This essay's "analysis" reads like it was written by a high school student. It's first-level analysis and doesn't really take into account Apple's (long) history.
We are in the tail-end of the lull Apple's top-level product cycle. iPad was released in 2010. That's just shy of 3 years ago. I can't promise Apple's next major product initiative is going to be successful, but commentators whose opinions assume that Apple is not working on anything other than iterating on existing product lines are pretty ignorant. There are tons of exciting trends in hardware and software now that Apple is well poised to take advantage of. They surely have plenty of stuff cooking in the labs, it's just a question of when the stars align enough in their prototypes, their supply chain, and consumer demand for them to release them.
The effect of losing Jobs is potentially borne out in two ways:
- Lack of attention to detail in all new products (software, hardware)
- High-level loss of strategy
The first effect is something that we could probably expect to see right away if the legends are true. It's debatable if Apple has lost their edge wrt to "shipping it when it's ready." (See: Maps) High-level loss of strategy, however, is not something that will really be knowable for a much longer time period. Apple's high-level strategy was probably set out for the next 10 years while Jobs was still around. Major disruptive technology or trends notwithstanding, I'd imagine Apple will follow the path he laid out.
The point is that any analysts pointing to Apple's lack of blockbuster product releases as being due to Jobs' untimely death are ridiculous, since it assumes the 5-10 year product roadmap they surely had evaporated when he died. (Nevermind the countless prototypes of future products they were probably working on with him.) If analysts want to obsess over the "Jobs is gone so Apple is doomed" narrative, they best focus on places where Apple is producing poorly-designed products that lack attention to detail. There's a dearth of these types of articles, they almost all focus on the "oh my God, Apple hasn't released any new product lines in the period since Jobs died, they must not be working on anything cool!" (The reason being most analysts don't know shit about what makes for good design and how to recognize it, and are not in a position to properly critique Apple's products beyond how their margins are shrinking and OMG SAMSUNG)
It's beyond stupid to assume there are not many internal projects at Apple going on, the big question is if when they ship, if they are worthy of the Apple brand. The truth is, we just don't know. If anything, the lull in the product release cycle we are experiencing may point to the fact that Apple is more than willing to continue to work on stuff until it's ready, which is a core attribute of what has made Apple successful.
iOS 7 seems like exactly the kind of inattention to detail people have dreaded since Jobs left. Hard to imagine he would have rubber stamped something so ugly and inconsistent.
Maybe. I'm letting it bake a bit. Generally speaking, radically new stuff from Apple is roundly rejected initially by the digerati. I agree some stuff seems weird but I think a lot of designers don't "get" what they're going for.
To me it looks amateur, which is what I'd expect from a UI design done by a hardware guy. Giving the design job to Ive instead of somebody with the right background is Cook's first really serious mistake, IMO.
I'm seeing about 50/50 content of tech postings of "Apple is failing to innovate" and "Apple's latest innovations really suck". I'm not entirely sure I know what they've done to deserve the ire of the tech media lately, but they've certainly done something for all the "Apple can do no right" commentary I've seen lately.
(Not saying all of it is undeserved, but it seems like there's a lot more dog-piling happening than actual considered criticism of the company's direction).
> When the state of the art is the Sony Walkman...
The author either wasn't around in the 90s, or thinks Apple invented the MP3 player.
The first MP3 player appeared 4 years before the iPod. In the U.S., the Diamond Rio was fairly well known, at least in tech circles (i.e., people who knew what an mp3 was).
When your business is booming you can make your products appear prestige by high prices. But then your business grows so big that you have to keep a big load of customers satisfied or else you start making losses.
There are lots of things at play here, saying a company must not change is kinda funny coming from an apple fan....
Apple might finally be implementing the full iPod strategy (iPod with high price, new iPod types with lower price crowding out the low-end) for the iPhone and it signals the end of the company?!? This is just a working, historic strategy that is going to be repeated.
The (culture?) shift at Apple is very apparent. They no longer make premium prices that people would say is a ripoff (non-retina Macbooks). They make premium products that people would say are very, very much worth the money (retina Macbooks, Airs). The non-retina Macbook has been the same exact design for about 5 years with very minor upgrades; buying it is foolish compared to the things Apple considers its future (rMBP, MBA). Few (though not zero) non-Apple products can beat the Retina and Air on price, specs, and performance, but many can beat the non-retina on all those things.
One thing that Apple does is clearly telegraph where they are planning to go. They drop support for old devices quickly and lavish support onto the product vectors they want to go all out on. As a consumer it makes the decision to buy a slightly cheaper but soon to be unsupported device vs. a more expensive but should have good support for the next 3 or 4 years easy.
But once you end up dropping off of the support curve, it gets frustrating rather quickly. I have a 6 year old Dell laptop and a slightly newer MBP.
The Dell is still finding lots of life even these days, doing time as a file server/NAS device and now a Chromecast laptop for my living room (for Chrome tab broadcast). I recently installed Windows 7 on it and it runs pretty much what I need like a champ -- full driver support and everything.
Now my MBP, I can't really find much use it for other than a little web surfing, and even that is hopelessly crippled due to OS requirements for flash upgrades -- even though the hardware is powerful enough to do what I need, the version of OS X I need to get the latest flash updates (so I can watch Hulu on it for example) doesn't support the device. Hell my virtually unsupported netbook from the same era is more useful at this point.
Turns out no. It doesn't work either. I probably burned up 2 full days trying to get it to work. Would have just been easier to load bootcamp and Windows on the machine.
The interesting thing about Apple is that they seem to be more revenue from providing music and apps these days than they used to. Maybe they are looking to change their position from a hardware company that also sells other shit to an other shit company that also sells hardware?
You know, in the same way that IBM shifted from being an hardware company that did bits of consulting to a consulting company that also sells hardware.
Or perhaps the author is reading way too much into a commoditization of a product line that is getting a bit long in the tooth?
On top of that, for years now, gallons of ink have been spilled over hand-wringing about how Apple needs to go downmarket. And now, apparently, we have handwringing over Apple 'going downmarket.'
All this proves, I think, is that articles about Apple generate page views.
50 comments
[ 4.5 ms ] story [ 110 ms ] threadWith news leaking out that Apple will soon introduce a lower-priced iPhone, many investors, managers, competitors and observers are focused on how this will boost Apple’s market share, especially in emerging markets.
Perhaps of even greater interest to me, however, is what this means for Apple as a company, and more generally, whether corporate cultures are fluid enough to accommodate abrupt shifts in strategy.
My conclusion: Leaders should be careful what they wish for. Apple has been a modern marvel. Starting with the revolutionary iPod, the company’s former chief executive officer Steve Jobs spearheaded an attack on the established order in consumer electronic devices. And this was an industry ripe for disruption. When the state of the art is the Sony Walkman, you know there’s real opportunity to change the game.
Of course, Apple moved on from iPod to iPhone and iPad, using iTunes to shake up the music, book, and software businesses in the process. The one commonality among all these innovations is not just that they were new, but that they were radically new.
Ironically, and unusually for a technology company, Apple was not really competing on the basis of technology. The MP3 player that they called iPod was, and is, considerably inferior to other MP3 players in terms of sound quality. The iPod was a sub-standard technological product competing in a technological arena, yet, it won.
Why? Because Apple differentiated on three key elements that resonated with customers: design, access to content via iTunes and brand prestige. The real innovation was embodied in these first two elements, which, when coupled with the iconic leadership of Jobs, collectively captured cool.
That strategy continued with the iPhone, whose brand cache was so strong that customers lined up for hours to buy each new version the company introduced. The early Samsung commercials mocking the herd behaviour of iPhone fans (yes, I was one), waiting to buy a product for features the Galaxy also boasted (and often with superior qualities), were so memorable precisely because they revealed just what was behind Apple’s kimono.
The iPad was also a revolutionary product. It even started a new product category that customers didn’t know existed. A company that breaks the rules, changes the world, and does it all with panache and coolness is a tough act to beat.
That is, until it starts cutting prices. Companies that compete on the basis of price become commodity sellers. That the company Jobs ran could be in a commodity business is almost unfathomable. The next thing you know, they’ll be offering coupons in newspaper supplements for phones that are “new and improved.” Now, there’s nothing wrong, per se, with a strategy that is all about market segmentation, using price as a competitive weapon and targeting promotions to specific customer groups. After all, that’s the bread and butter of the world’s best consumer packaged goods companies, from Procter & Gamble to General Mills. For companies like these, category management and brand management have been elevated to an art form.
Culture shift But that’s not what Apple is, which means if the company wants to shift strategy in this way, its leaders need to retool the culture in as radical a manner as earlier product offerings changed how people worked and lived. We should expect many employees to leave, unhappy to work in a company that is no longer changing the world. We should also expect Apple to bring in new talent with backgrounds from the P&G’s and Unilever’s of the world. Apple stores will need to keep their true believer sales staff energised to sell ten versions of the iPhone to customers who will no longer feel fortunate to even be in the store. They’ll be more demanding customers who will want to know why the iPhone lite sells for $10 more than the latest Galaxy. Maybe Apple will need to bring back its former guru Ron Johnson, who built out the stores, to apply what he learned from his short and unsuccessful stint as CEO ...
OA has contradictions (Sony Walkman only competition then acknowledging iPod's lack of features vs other mp3 players) and fails to recognise Apple's central drive - ease of use. The iMac, iPod, iTunes made things easy. The lack of features was a feature.
"Apple stores will need to keep their true believer sales staff energised to sell ten versions of the iPhone to customers who will no longer feel fortunate to even be in the store."
The queue that forms outside the Birmingham UK Apple store most mornings these days is people trying to get things fixed. It used to be people trying to buy the new things. In that sense, the OA has a point.
This has not been my experience. Any opinions?
It's a completely pointless statement though.
TL;DR: It's better to be great overall than excelling at just some features while also having crappy downfalls.
I've done this experiment about 100 times with half a dozen people and the results are always the same. Weed makes shit headphones less tolerable, not more tolerable.
I'm not lambasting shit sound equipment. I'm lambasting YOU for being WRONG.
And I'm providing helpful information based on actually taking the pepsi challenge while high on "cannabis" as you put it (I've never met an actual weed smoker who calls it cannabis so I can tell you're not much of one).
If you want to make terrible gear feel good, drink alcohol. That actually does help. But it's not because you're hearing it better... it's because your senses are impaired.
I always found the menu wheel too fragile.
They don't kick out a lot of power, so they don't cope well with fancy headphones.
The bad reputation of the ipod's sound stems largely from those white earbuds that came in the box, which are genuinely abominable. That and confirmation bias/placebo/etc.
Yea any digital signal has to pass through things called "DAC's" that obviously come with different quality and price. DAC's along with the power supply/design greatly effect the sound of digital audio.
More to the point -- making a blanket claim about iPods having always been inferior reveals the writer to be an anti-Apple troll.
The iPods segregated themselves among different use cases and different needs. The Shuffle was always pitched as the "active" iPod (see: the clip on the back), the Nano the everyday iPod, and the iPod Classic the one for the serious enthusiast who needs enormous storage above all else.
The smartphone market lacks such segmentation. Everybody wants a phone that makes phone calls, receives texts, and runs apps. There's not really any room to segment price-wise except to simply make the same thing but cheaper.
We are in the tail-end of the lull Apple's top-level product cycle. iPad was released in 2010. That's just shy of 3 years ago. I can't promise Apple's next major product initiative is going to be successful, but commentators whose opinions assume that Apple is not working on anything other than iterating on existing product lines are pretty ignorant. There are tons of exciting trends in hardware and software now that Apple is well poised to take advantage of. They surely have plenty of stuff cooking in the labs, it's just a question of when the stars align enough in their prototypes, their supply chain, and consumer demand for them to release them.
- Lack of attention to detail in all new products (software, hardware)
- High-level loss of strategy
The first effect is something that we could probably expect to see right away if the legends are true. It's debatable if Apple has lost their edge wrt to "shipping it when it's ready." (See: Maps) High-level loss of strategy, however, is not something that will really be knowable for a much longer time period. Apple's high-level strategy was probably set out for the next 10 years while Jobs was still around. Major disruptive technology or trends notwithstanding, I'd imagine Apple will follow the path he laid out.
The point is that any analysts pointing to Apple's lack of blockbuster product releases as being due to Jobs' untimely death are ridiculous, since it assumes the 5-10 year product roadmap they surely had evaporated when he died. (Nevermind the countless prototypes of future products they were probably working on with him.) If analysts want to obsess over the "Jobs is gone so Apple is doomed" narrative, they best focus on places where Apple is producing poorly-designed products that lack attention to detail. There's a dearth of these types of articles, they almost all focus on the "oh my God, Apple hasn't released any new product lines in the period since Jobs died, they must not be working on anything cool!" (The reason being most analysts don't know shit about what makes for good design and how to recognize it, and are not in a position to properly critique Apple's products beyond how their margins are shrinking and OMG SAMSUNG)
It's beyond stupid to assume there are not many internal projects at Apple going on, the big question is if when they ship, if they are worthy of the Apple brand. The truth is, we just don't know. If anything, the lull in the product release cycle we are experiencing may point to the fact that Apple is more than willing to continue to work on stuff until it's ready, which is a core attribute of what has made Apple successful.
(Not saying all of it is undeserved, but it seems like there's a lot more dog-piling happening than actual considered criticism of the company's direction).
The author either wasn't around in the 90s, or thinks Apple invented the MP3 player.
The first MP3 player appeared 4 years before the iPod. In the U.S., the Diamond Rio was fairly well known, at least in tech circles (i.e., people who knew what an mp3 was).
https://en.wikipedia.org/wiki/Portable_media_player
I've always assumed Apple gained an immense advantage in MP3 players by not being first to market.
But once you end up dropping off of the support curve, it gets frustrating rather quickly. I have a 6 year old Dell laptop and a slightly newer MBP.
The Dell is still finding lots of life even these days, doing time as a file server/NAS device and now a Chromecast laptop for my living room (for Chrome tab broadcast). I recently installed Windows 7 on it and it runs pretty much what I need like a champ -- full driver support and everything.
Now my MBP, I can't really find much use it for other than a little web surfing, and even that is hopelessly crippled due to OS requirements for flash upgrades -- even though the hardware is powerful enough to do what I need, the version of OS X I need to get the latest flash updates (so I can watch Hulu on it for example) doesn't support the device. Hell my virtually unsupported netbook from the same era is more useful at this point.
You know, in the same way that IBM shifted from being an hardware company that did bits of consulting to a consulting company that also sells hardware.
Or perhaps the author is reading way too much into a commoditization of a product line that is getting a bit long in the tooth?
On top of that, for years now, gallons of ink have been spilled over hand-wringing about how Apple needs to go downmarket. And now, apparently, we have handwringing over Apple 'going downmarket.'
All this proves, I think, is that articles about Apple generate page views.