Has Apple Lost its Cool?: How Market Dynamics Are Changing The Way Apple Plays

Steve Jobs And The Era Of Innovation

When Steve Jobs (RIP) was fired from Apple, he started a company called NEXT and it’s the technology developed at NEXT that later formed the renaissance at Apple when Steve was re hired. Under this renaissance, Apple murdered Sony’s Walkman with the iPod in 2001 and later obliterated Blackberry with the release of the iPhone in 2007. Apple went ahead to reinvent tablets with its legendary iPad which was first released in 2010 while its Notebooks and Desktops were and are arguably still the best in the market right from design to performance.  During this period, Apple was the trend and pacesetter with software and hardware way ahead of it’s time while others followed. Apple was always 5 steps ahead of its competition on any front they decided to pursue.

However,  things weren’t going to stay this way for long.  After Steve Jobs died and Tim Cook took over, its been quite a difficult time at the fruit company.

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Can Tim Cook The Job Steve’s Way?

That’s a question many people are answering negatively right now and I empathize with Tim Cook. Tim can never be and should not be Steve Jobs and yet everybody is expecting him to be Jobs. They judge all his decisions based on “WHAT STEVE JOBS WOULD HAVE DONE” . Tim Cook has however,  managed to keep Apple in the top 10 global most profitable companies posting profits and not losses and I think its time to cut Tim some slack and let him Cook his own way other than Jobs’s way.

It’s however clear that Apple is struggling to keep up with the market as they have been playing catch up in the market and innovation arena lately. Using the 4P’s of marketing commonly referred to as the “Marketing Mix”, I show you how market dynamics are affecting Apple’s game as we figure out the question “Has Apple Lost its Cool”?

1. Price: Leadership Vs. Mass Adoption

Apple products are pricey in comparison to the alternatives like Samsung, HTC, LG, Sony and Huawei among others that can do what an iPhone does. The average price of an iPhone is about $700 unlocked or without a contract. A Macbook starts at $1000 and an iPod starts at $49 and goes upto $229 while the iPad mini goes for $329 and the iPad goes for $499 yet many people still  buy Apple products and as a result Apple makes money through massive sales.

Its however unlikely that these massive sales are leading to mass adoption or huge profits like they used to. Compared to Samsung that makes a flagship phone and releases 3 versions of the same to fit different price segments and markets, Apple may have to pick a leaf which it seems to have already done in the iPhone 5c.

Apple’s pricing and distribution strategy clearly shows that they aren’t making devices for everyone but are making superior devices for the upper middle class. They are targeting those  who want “To be and think different”.  Research has also revealed that there are fewer people buying the iPhone and many more returning their old phones for a newer models which means there are lesser new or first time customers and Apple may just be playing with existing customers. So even though iPhones may not be for every Tom Dick and Harry; Maybe it’s time to at least consider Tom and Dick. Harry can wait.

Apple’s strategy was to offer iPhones in the US and Europe on contract through its partners the carriers AT&T, Verizon, Sprint and T-mobile among others. The iPhone is currently at $199 for the 5s and $99 for the 5c while the 4s is free on contract in the US. This was working just fine until Samsung. The growth of Samsung shook Apple so badly that it immediately acknowledged competition when it unleashed its legal arsenal on the Korean giant. Unfortunately the suit may have done more harm than good as we earlier predicted.

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The problem started when Samsung and other notable rivals (HTC, LG, Huawei, Sony Acer, HP Dell Lenovo among others) started offering cheaper or more affordable alternatives to the iPhones, iPad and the Mac books consistently chewing into Apple’s market. At first they looked like Apple wannabes and copy cats but later many of them actually started innovating and producing awesome products which slowly gained traction.

The reactionary release of the longer iPhone then a plastic one plus a mini iPad proved that Apple was no longer leading but following. Even though Macbooks are arguably still the best laptops on the market, the question remains are they as profitable as they used to?

2. Product: Its Time To Listen To The People

When Steve Jobs came back to Apple, it’s said that he reduced Apple’s products from 40 to 4  so that they could focus rather than aimlessly shoot and miss. At this point, Apple was still leading the innovation front and Steve Jobs believed that people didn’t know what they want and would take what you give them as long as its good. The combination of a good product and effective marketing was magical

But this only worked for a while…

That kind of marketing Orientation is called “Production Orientation” where companies believe that if they can pack as many features into a product, people will love it. Unfortunately, the changing times have shown that people actually know what they want and making what people want and not what you think they may want can help you sell better – “Market Orientation” .

This is seen in how Apple has taken its time to make a larger display, or improve its battery or make a smaller tablet/phablet amid multiple suggestions to do the same. As a result, Apple has became reactionary with rumours once again about a possible Phablet and a cheaper iMac.

Companies spend millions of dollars in research and development which also involves finding out what people want and predicting their changing needs and trends so as to remain relevant. Failure to do so culminates into the Blackberry or Nokia kind of Situation.

The Problem on the Product front is that there are currently multiple good enough alternatives to all Apple products and as such Beautiful design and Craftsmanship are no longer enough to keep you on top.

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Companies now have to go the extra mile in finding the intersection between beauty and functionality/benefits while keeping ahead on the innovation front to change existing products into disruptive devices that can be used on our everyday lives as seen with the iPod.

3. Place: US Market Getting Saturated

Not so long ago, Apple products were predominantly American and having an Apple product was left to the affluent who could afford to travel abroad and then spend thousands of dollars on gadgets. In short, Apple products were not easily accessible outside of the US. Companies like Blackberry had an African stronghold in countries like Nigeria and South Africa that drove massive sales. So gone are the days when you could ignore Africa and still survive as a global brand.

With Samsung and Microsoft inventing all sorts of initiatives to gain and retain an African market share, Apple up until now doesn’t seem to see this as necessary. With the US market getting saturated, they will have to expand into other countries and continents in order to effectively compete as they are beginning to do with Europe and Asia.

With the likes of Samsung selling millions of pieces in markets other than Asia using multiple distribution channels, Apple is going to have to think more globally than ever before as the American market may no longer be enough to enable them stay on top.

4. Promotion: Am I Hearing Benefits Or Just Fancy Features & Software Gimmicks?

Apple used to pride itself in being different and they rode on the mantra of “Think Different Be different” for a while. The difference between then and now is that Apple is slowly stopping to communicate benefits and starting to focus more on features. Devices are thinner, faster, and apparently “smarter” but its getting harder to cite a real benefit in the heap of all marketing lingo.

When Steve Jobs was launching the iPhone he cited the issues smartphones had then and how the iPhone was going to solve them. But now we don’t solve issues, we are more into how many fancy tricks my phone can perform. If this kind of marketing tone continues, I am afraid people are going to see right through it and soon enough it will be harder to get people to adopt these products because they see no tangible benefits.

The Above are some of the challenges Apple is facing in keeping it’s cool and whatever the future of Apple is, I can safely say that they aren’t having an easy time now. With the need to continuously innovate disruptive products, while finding new ways to market them right staying cool has never been harder. Considering the theory of “Product Life Cycle”, may be the time for an “Apple Killer” is nigh just like Apple did to Blackberry. For now only time will tell.

What are your thoughts? Share in the comments so we can continue this conversation

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Image: Business Insider


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