I am fascinated by Apple’s business strategy and product management. Every year Apple makes a huge bet on delivering complex technology products into the hands of untrained users in the one of the toughest computing platforms – the smartphone. Plus they build custom silicon, new materials and software features in every version. In effect, Apple makes a multi-billion dollar bet on their ability to ship a product that is leading edge, complex and customised that customers will buy and that it will work flawlessly according to their reputation.
Product Management: – Think about this – there is no
market testing, no
customer engagement, no
user roundtables to fine tune the product in the final phase of product development.
Quality: Apple will ship tens of millions of units in the first month. They will have no chance to recall the product if it is faulty. The brand and financial damage will be immediate and huge. The iOS operating system can be updated.
Premium Pricing Why not double down the bet and charge premium pricing ? A careful marketing program and strong corporate leadership has been able convince customers to pay premium to get Apple products. This is familiar to Enterprise IT, we do it every day to incumbent vendors.
I continue to watch in a sort of car-crash fascination, waiting for the day when Apple will ship a product that serious bugs or hardware failures. While they have the money to make the best possible product from the best possible materials and technology, it would take a single failure to dispel the mythos they have built over the last decade. If it ever happens, then they would stand level with Enterprise IT companies who are flawed, uncertain and unable to innovate in the face of the current market transitions.
And so to other topics.
Custom Silicon & Materials
Lots of custom silicon discussed at the event. A9X CPU, custom screen driver chips just to make a pseudo-flash of the main display, custom display refresh chips, camera sensor, taptic feedback and so on. And materials like glass & aluminium alloys.
While Apple is pitching these substantial features there is still more COTS silicon. I believe that Apple is using an amount of custom silicon as a differentiator. Compared this with Samsung or Huawei which use a higher percentage of common components to reduce development time, lower costs and remove risk. Apple bears a lot of financial and brand risk associated with building & manufacture of custom silicon and, tellingly, has yet to fail to deliver.
iPad Pro as an Enterprise Product
I don’t see the iPad Pro replacing Windows desktops in the Enterprise because at $1000 it is twice the price of low-end Dell/HP/Lenovo. The enterprise loves cheap desktops 1There are a number of small/medium sized business that might play with it. Or ego-centric mid-level managers who roam the corridors between meetings and sending email.
- Pencil – because people can’t change the way they think. That said, some users need it, just not in the Enterprise.
- Microsoft Office, external keyboard and big screen make it attractive to people who want to quit to low-quality desktops & laptops. Many people like MS Windows but the x86/Windows market shrinks every month while Apple sales in this segment grows.
The difference between the iPad Pro & Microsoft Surface is the software. iOS is dedicated to tablet use case where Microsoft tried to put Windows into the tablet and failed somewhat on the user interface. Watching Microsoft demonstrate its Office suite on the Apple stage was a surreal moment.
Personal Views on New Products.
We have a family iPhone rotation, so we buy 1 phone every year. Phones then move from adult to teenager in a strict rotation. Lots of great features on the new iPhone6S. I was always going to buy another iPhone, and the feature upgrades will keep me on the Apple smartphone trend. No reason to change.
iPhone Upgrade Program
As installment plans and ‘subsidised’ phone plans fade out, many people cannot afford the £600/$600 to buy an iPhone. In typical Apple fashion, they have turned it into an upsell opportunity with a new iPhone yearly & AppleCare+. I have been buying my phones outright, i.e. not on a plan, for about five years. Will consider the refresh plan but doubtful that the numbers work in the UK because of significant price markups for the UK Market.
I think this plan could be attractive to the enterprise market. Buy a thousand phones on per headcount cost, with maintenance and upgrades ? Thats an
opex model of smartphones. I expect that a lot of mid-sized businesses will find this attractive, big business will not.
TL:DR – Meh. iPad Pro is too expensive for a nice to have and too big for my purpose. I will continue with an MacBook Pro and iPad Air.
I use desktops and would find the ‘iOS on a desktop” painful. Would like a the Pencil to draw network diagrams but not enough to overcome sticker shock.
TL:DR – meh.
Apple TV doesn’t seem useful outside of the USA. We don’t get US TV networks in the UK like Hulu and who cares about MLB/Baseball ? We have a NetFlix subscription which is occasionally watching on cable box but mostly on personal computers. Games = ‘meh’ to us.
We own an
old TV and never use it. We aren’t likely to start using it now. Again, the over-price is too high to overcome the lack of features relevant to me.
I would like an Watch. I don’t want one, I don’t need one. Once again, the overpricing of the product outweighs the perceived value for me. At £299 for least priced watch, it is way above my perceived value of around, but less than, £100. The watch I would like to purchase is around £450 and simply not worth that price. I also believe that many people desire Watch given the prices people are paying for used models on eBay – its common to see people paying 75% of retail, which is crazy. Better value to buy new.
Fanboy Realism ?
I remain committed to MacBooks/OS X & iPhone/iOS platforms and strongly believe in them. However these moves into adjacent markets to grow the Apple business don’t resonate for a number of different reasons but the consistent them is overpricing for the value returned. Is it reasonable to price high in a new market and expect customer to follow ? Sure, Enterprise IT companies like EMC, Cisco, IBM have done this for decades. Its not a new idea but it is also one that rarely works.
- Largely because of the cost of operating and securing MS Windows on the desktop. Antivirus and asset management doesn’t come cheap. ↩