There was a claim today from a usually respected industry analyst, Gene Munster of Piper Jaffray, that the new marketing deal between Apple and IBM wouldn’t cause a huge surge of iPhone and iPad sales. His logic is that iOS gear is already being tested or deployed in 98% of the Fortune 500 companies, and 92% of the Global 500 companies.
That figure comes from Apple, and, on the surface at least, Munster seems to be right on. But it’s clear he isn’t paying close attention, for otherwise he would not have made such a rash assumption.
You see, Apple’s figures do not report the actual number of iOS devices being used by these companies. One or two would put them on the list. Maybe someone in the IT department or a corporate executive bought a few for personal use, and decided to see how well they work at the office.
See where I’m going here? If corporations, knowing that IBM is running a full-court press to market and support Apple’s hardware, buy a few hundred or a few thousand, that could be a huge sales increase overall.
Yes, Apple has already gained enterprise cred, putting them in a position to exploit that status and actually put tons of gear into the hands of employees. In this new deal, Apple supplies the hardware and iOS software along with a business-class version of AppleCare providing 24/7 support. In turn, IBM builds iOS enterprise apps, provides business-grade cloud services and expanded on-site support. Some 100,000 IBM employees and outside sales reps will be selling products bearing the Apple logo. 100,000! Can you see where Apple gets a tremendous boost to corporate sales?
Imagine if each salesperson sold a mere 100 iPhones and 100 iPads each quarter. Multiply that by 100,000 and you’ll see some amazing increases in Apple’s sales. Of course, I’m making no assumptions as to how well each will do, or what efforts they would make to push Apple’s products. I also wonder whether a presumed major increase in sales of iOS hardware will create demand for Macs too, although that is not part of the agreement.
Now it has been emphasized both by Apple and IBM that this is an exclusive arrangement. It means that IBM isn’t going to go to, say, Samsung, and sign a similar contract. It’s all about Apple.
Some are wondering whether Steve Jobs, who often dismissed the enterprise, would approve such a move. But they forget that Jobs advised Cook not to consider what he would have done. Besides, the circumstances are different now, and Apple is merely leveraging the public’s embrace of iOS gear, including the business world, and taking it to the next level. Besides, Apple has already added enterprise-level features, including security, to the iOS. Indeed, Google and Android hardware licensees have lots to worry about here because they haven’t so far considered security to be a serious issue.
It’s also important to realize that the enterprise doesn’t move quickly. Company IT people are careful about migrating to new platforms, and even replacing existing gear. The biggest loser in this deal is very likely BlackBerry, which was a corporate darling for many years. What is left of BlackBerry may continue to decline as more and more of their cherished customers buy iPhones and iPads.
Another potential loser is Microsoft, which famously made that deal in the 1980s for MS-DOS with IBM that put the company on the map. Of course, it was a non-exclusive deal, which fueled the rise of PC clones and the ultimate decline of IBM’s PCs.
In any case, Microsoft, despite efforts to improve Windows Phone and the Surface tablet, is being left at the altar here. It doesn’t mean Microsoft will lose the enterprise. After all, you can get Office on the iPad too, but it does mean that the chances for success are lessened at least in the mobile universe. Most PCs will still run Windows, and while there may be more opportunities for Macs, it’s not certain how large the platform might grow.
At the same time, Apple is making a huge effort to fuel adoption of Macs and iOS gear beginning with iOS 8 and OS X Yosemite. The Continuity feature is designed to allow for seamless switching from Mac to iOS gear and back again, and I can see where the enterprise might actually pay attention to this setup.
IBM? Well, the deal is for iOS gear of course. But that doesn’t mean it can’t be extended to include Macs as well. After all, IBM has been out of the personal computer game for years.
Are there downsides to this deal? Sure. IBM’s previous pacts with Apple haven’t worked out so well. The PowerPC came to an abrupt end when IBM and Motorola failed to deliver more powerful and power efficient chips to compete against Intel. Hopes for a PowerBook G5 were stillborn.
Here, though, it’s about software and services. It doesn’t mean Apple has lost its mojo, as one ill-informed commentator claims. Tim Cook is also an IBM veteran, so he presumably understands how the company works, and thus crafted an arrangement that will be profitable for both companies. We’ll see how it plays out, but it all looks quite promising. At the very least, more than a few tech powerhouses are freaking as a result.
- Apple, the WWDC and the Wacky Run-up After quite a run, and ahead of a 7-to-1 stock split, Apple's stock price had declined slightly before the WWDC keynote on Monday. I suppose this was to be expected. The event was presaged with optimism, skepticism and silly claims about what the company must do to survive. Some weeks back, for example, one online pundit who doesn't deserve to be named or linked suggested that the company would be toast if the iWatch wasn't released in 60 days. When that date passed, and Apple was still here, it merely represented yet another example of commentators lying through their teeth or making downright foolish claims to generate online traffic. Having a respect for facts and logic played second fiddle. There was also the "Apple must" meme, that the WWDC keynote must be filled with new hardware and new product categories, even though it was ostensibly for developers. Thus, we know there would be news about iOS 8 and OS 10.10 because Apple said as much. But expectations that there would be new hardware weren't met. There was no Apple TV or iWatch demonstration for developers, but the people who build apps for Apple gear still got plenty to consider, including a new simplified programming language known as Swift. But OS 10 Yosemite? What about that Looney Toons cartoon character? Clearly Apple isn't taking that into consideration with OS 10.10, which will sport the rumored flatter look and feel, reminiscent of iOS. The improved transparency effects and cleaner text and windows seem interesting enough if a new OS X skin appeals to you. While Mavericks was heavily laden with hardware improvements to use RAM and power more efficiently, Yosemite is heavily disposed towards improvements for Mac users. Front and center is Continuity, which greatly simplifies the passage from Mac to iPhone to iPad, and back again. Email and messages can begin on one, and be completed on another. You can also use your Mac or, with iOS 8, your iPad to make and receive phone calls on your iPhone. Of course your iPhone has to be active on the same Wi-Fi network for this Handoff process to work. SMS messaging is also supported; again with a networked iPhone. You can also use your iPhone to set up an Instant Hotspot, though that would appear to require support from your wireless carrier, as Apple indicates on their site. Clearly Apple's critics will complain that Continuity is yet another way for Apple to rope you in to depending on their ecosystem. But there's nothing wrong with that. Other companies and their sycophants in the tech media are probably jealous. So iCloud becomes iCloud Drive, since you can now use it as an online repository for all your files, and even set up a traditional file/folder hierarchy that can be accessed on all your Apple gear, including your iPhone and iPad, along with a Windows PC. In a sense, Apple is going after Dropbox and the cloud storage systems from Microsoft and Google to set up seamless ways for you to store and easily transfer larger files. Mail for Yosemite, with the promise of greater speed and efficiency, has a new feature, dubbed Mail Drop, which lets you use your iCloud Drive as an intermediary for file attachments of up to 5GB. This will help you avoid the usual problem of sending large files to a recipient. Email services traditionally limit attachments to less than 20MB. Windows users will simply receive a link in their email to retrieve the file, which definitely rains on Hightail's parade. Since iCloud now plays a larger role in storing your stuff, new storage plans are coming. You'll still get 5GB free, but 20GB is just 99 cents per month, and 200GB is $3.99 per month. For small businesses, or families with loads of photos and other files to store and back up, the latter plan is the sweet spot. You'll be able to get up to 1TB of storage once all the options are in place. Spotlight has been enhanced to include both online and local searches, which is something you can already do under Windows. I suppose Apple is hoping you'll move away from Safari searches and rely on Spotlight to find everything. Here's why: While Google search is still supported and remains the default on Safari, Spotlight uses Microsoft Bing. I wonder how Google will react when they get the memo. As with Mavericks, OS X Yosemite will be available this fall, probably between late September and late October, as a free download and is reportedly compatible with the very same Macs that can run OS 10.9. While developers are already downloading the first Yosemite preview, up to one million Mac users will receive access to Yosemite betas this summer. So be prepared to sign up as soon as possible. I expect they will want to get a few releases out before letting non-developers gain access to the seeds. While iOS 8 also comes across as a compelling release, Apple has yet to say anything about side-by-side multitasking for iPads. I suppose that could come later. Meantime, in addition to the Swift development language, Apple is moving towards giving developers more flexility in building and selling iOS apps. There is, for example, support for Touch ID and third-party keyboards. So, although the new QuickType predictive keyboard scheme may appeal to most users, those who want a Swype or another third-party keyboard to replace Apple's will get full system support. Would that were true with other apps, and it would be nice to be able to pick something else as the default for such tasks as email and browsing. As predicted, HealthKit will be designed to allow developers of health and fitness apps to seamlessly communicate with your iOS device and the new Health app. Such major medical institutions as Mayo Clinic have announced full support, which means you'll be a tap away from monitoring your physical condition, and your doctor can receive immediate updates should test results require their attention. Apple, by the way, promises what appears to be bulletproof security for Health and also for HomeKit, a tool for developers to build apps to better integrate your connected home. The HomeKit feature is called Secure Pairing, which supposedly means that only a registered iOS device can unlock your home, adjust the lights, turn on the microwave, or perform many other functions in your home. Developers will be able to bundle apps at a special discount and offer beta testing functions via the App Store. A new "Explore" feature will make it easier for you to discover the more than 1.2 billion apps now available for iOS users. While iOS 8 won't look altogether different from iOS 7, and thus isn't apt to be quite as polarizing, that can't be said for Yosemite. Right after the initial announcement appeared in the tech media, one of my friends, who has already had a love/hate relationship with Mavericks, responded with just one word, "YUK!" Her concern is that it looks more like iOS, but I reminded her that it's still OS X and her Mac will still run like a Mac despite the changes. Oh, and by the way, the iPhone 4 is not on the iOS 8 compatibility list. It was hit or miss with iOS 7, so it makes sense it has been retired from future iOS updates. In any case, Apple's stock price resumed its upward climb Tuesday morning. Evidently Wall Street was impressed.
- 2014 — The Year the Sky Didn’t Fall for Apple At the start of 2014, even the most diehard Apple fanatic might have wondered about the future prospects of their favorite fruit company. Sales didn't always meet Wall Street projections, and profits were flattening. The stock price was way down from historic highs. To no surprise, some members of the mainstream media were calling for CEO Tim Cook to take a hike. Could it be that Steve Jobs' handpicked successor was a monumental screw up, or was there a long-term plan in place that would set things right before long? Questions, questions. Many of the particulars are ably recorded in a no-holds barred editorial from Daniel Eran Dilger, a frequent guest on The Tech Night Owl LIVE, over at AppleInsider. So I will be brief about some of the details. Now understand that the perception that Apple was on the rocks was largely manufactured. When Steve Jobs introduced iterative upgrades to Apple gear, that was part of the standard upgrade cycle. When Tim Cook did the same, there must be something terribly wrong with Apple's mojo, and the company clearly lost its power to innovate. After all, Cook was the supply chain expert. What right did he have to operate a company known for its amazing innovation? You'd think that Apple was supposed to upend a market every year. The critics forget the years that passed between the first iPod, the first iPhone and the first iPad. Miracles don't come every day, but where were the trendsetting products from Tim Cook's Apple? This didn't stop iPhone sales from climbing, at a time when Samsung's sales began to falter. The claim that Samsung had it all over Apple when it came to high sales and meeting the needs of a variety of customers was shown to be shaky. Yes, Samsung still sold loads of mobile handsets, but far too many were cheap, with little profit. While Apple continued to make huge profits from iPhones, Samsung's margins continued to shrink. Tepid response to the latest Galaxy series didn't help. Apple moved far more iPhones. Amid rising sales, Apple's first maneuvers for 2014 were financial. Stock buybacks and the seven-to-one stock split pleased Wall Street. But was Apple just stalling, avoiding the question of what innovative products were in the pipeline? Yes, Apple made promises, but when were they going to deliver? WWDC came, as usual, in June. The critics said it was all about the software, but Apple added an amazing number of new features to iOS and OS X. The bill of particulars was far larger than what Google and Microsoft were promising. True, some suggested Apple bit off a little too much this time, but the bugs are being vanquished, and the end result presents many new opportunities for developers to make a profit and to benefit customers. For regular people, the real significant event came in September, with the introduction of the iPhone 6 and the iPhone 6 Plus, a phablet with a 5.5-inch display. The critics had been long clamoring for Apple to enter the larger smartphone space, but Apple, as usual, took its sweet time about developing the right product. Certainly the public embraced the new gear, with record sales the very first weekend and chronic shortages through most of the holiday season. But some people realized that the romantic ideal of the larger smartphone wasn't quite so compelling after you spent a little time with one. One-handed operation meant something, and the larger handsets could be difficult to fit in a smaller pocket or purse. And don't forget Apple Watch. An early production model was demonstrated, and delivery was promised in early 2015. October brought new iPads, but the flagship model, the iPad Air 2, thinner than its predecessor, was the lone compelling upgrade. The iPad mini 3 was little different from its predecessor aside from Touch ID, and it still cost $100 more. It wasn't such a great deal, and the jury is out how well tablets sold this holiday season. But the iPad Air 2 is, as my friends across the Atlantic are apt to say, a marvelous piece of kit. It will be hard for my wife to give up the one she is using when the Apple editorial loan expires in February. The other product intro in October, the iMac 5K, was simply stunning, particularly the picture and the technology that makes it happen for a price that even Dell couldn't match. Last I checked, Dell's 5K display is just about the same price as the 5K iMac, but Apple gives you the computer as part of the package. None of this means everything went perfect for Apple. Don't forget the missteps — or alleged missteps — depending on your point of view. So those celebrities whose nude photos, stored in iCloud, were hacked and circulated online have only themselves to blame for poor password choices. Why did they have those pictures there in the first place? But the iOS 8.0.1 update was the worst sort of failure, fixing most iPhones, but causing some to lose their cellular connections and Touch ID capability. Apple pulled the update in little over an hour, and released a fixed version the very next day, but the publicity fallout continues. Yes, Microsoft has done worse, far worse, but this is Apple. Please don't get me started about iTunes 12. The complaints haven't been stilled, and I wonder whether Apple needs to get back to the drawing board to sort things out. Some alleged scandals were just nonsense. An iPhone 6 Plus was no more prone to bending than other large mobile handsets. No, Apple didn't suddenly out of the blue sneak a security update onto Macs with OS X Mountain Lion, Mavericks and Yosemite. That particular update came using the App Store update mechanism, the successor to Software Update. Where there's an automatic install option, as there is in Yosemite, you can switch it off. Besides, the NTP security flaw, impacting the time syncing feature of OS X, Unix and even Linux distributions, could allow a remote attacker to gain control of your computer. Even the U.S. Department of Homeland Security got in the act to report the danger, so was it wrong for Apple to protect you in a way that did no harm? For 2015, we know the Apple Watch is coming, but there is no consistency on how well it'll do. And what about the fate of Apple TV? Is there an Apple TV set on the horizon? An iPad Pro, a version with a display that's 12 inches or more? Is there something out of the blue in store? And what will Apple do to flesh out the features for iOS 9 and OS X 10.11? And I will not speculate on the code name for the next Mac OS.
- Apple and Microsoft — About Philosophy So in recent days, more and more tech pundits have published comparisons between OS X El Capitan, still a ways from release, and Windows 10, which arrived this week for download and bundled with some new PCs. Looking over these two, which actually derive an idea or two from one another, you can see where Apple and Microsoft have seriously diverged in how they approach platforms. For years, Microsoft has touted Windows Everywhere, meaning that, whatever device you use, you'd have access to a version of Windows. This would extend to point-of-sale devices and other gear that doesn't necessarily strike you as related to a PC, though they are, in fact, computers. Windows 10 takes that integration attempt a step further by building an operating system meant to work on a host of devices. But there will be touch-centric and mouse-centric interface changes as needed. So when you use a convertible PC notebook, one that can act as a tablet with a removable or rotating display, and one that works as a regular PC, there's a Continuum mode. It can be made automatic or require manual switching, but it will deliver the right input scheme for your setup. In passing, I wonder how some people might react if they don't get the memo, or OK everything and have Windows 10 switch modes when they didn't expect it. I also gather hardware makers will also have to adjust their drivers to allow for the smoothest switch. The other problem is the so-called Universal app, which means a developer creates one version that works on any Windows 10 device. The problem is that a Universal app is also "fat," meaning it has the binaries for both mouse and touch versions and is thus potentially much larger. This could become a serious problem for a notebook with a small SSD, quite common, or a smartphone without lots of storage. Contrast that to Apple's approach in iOS 9, where the OS downloads will be smaller, and you'll download apps stripped of the code you don't need on your device. Apple also does not believe that you can integrate a toaster oven with a refrigerator, to use Tim Cook's famously exaggerated example. Thus Mac notebooks do not have touchscreens, and the iPad, although keyboards are available, is primarily touch-centric. The operating systems may share some code and features, but they are optimized for the different user conditions. Integrating, to Apple, would remain a poor compromise, and it's an open question whether putting Windows 10 everywhere is actually going to work. Indeed, it remains to be seen whether those convertible PCs will succeed in a declining market where Apple is one of the few companies to grow sales and market share. Right now you pay a premium to have a notebook that can double as a touch-based tablet, and the sales case has yet to be proven. This fall, prices are expected to decline for such gear, but, again, that doesn't mean people want all-in-one devices of this sort, as opposed to a computer with an integrated display, such as the iMac. So the features touted by PC fans as superior to OS X are partly related to philosophy. You don't need Continuum, but Apple has Continuity, providing for some level of integration among your Apple devices. The operating systems and the way you interact are different but you can still switch rom one to the other more smoothly. Well, mostly, because Continuity, and the Handoff feature can be buggy. One hopes things will be better when El Capitan is finalized. The other difference is Cortana. Apple's virtual assistant, Siri, remains on mobile gear, because Apple believes these are more personal devices that are a better fit for such a feature. Microsoft, wanting to have the same things everywhere, more or less, brought Cortana to the Windows 10 PC, bugs and all. While it may be suitable to some — and I expect home users will benefit most from Cortana — early reviews indicate "she" is buggy, and voice recognition is apt to cut off with a response before you're finished. A famous example is asking the name of the President of the United States. Cortana may cut off before "States," and thus identify the President of United Airlines instead. Surely that and other recognition glitches will be fixed before long, but Cortana is something Microsoft has had for a while, starting with the Xbox gaming console. So it's hard to excuse problems of this sort. Apple could have released a version of Siri for OS X, but hasn't done so. The use case is questionable, whereas Microsoft has no compunctions about throwing something out there for those who might want to use it. Or maybe just for bragging rights. That said, it's troubling that Windows 10 appears to have shipped with loads of bugs, not just in Cortana, but in Mail and other apps. While you expect glitches early on, and OS X Yosemite wasn't immune by a long shot, there appears to be too much going on that's not so pleasant. It may be that Microsoft ran headlong into getting Windows 10 out for back-to-school PC sales, hoping the worst glitches would be fixed by fall. OS X El Capitan will probably appear no later than late October, and one hopes the worst bugs will be eradicated. But doing any comparison is a little unfair right now, particularly for features not fully baked. One thing is certain, however, and that is that the next OS X is not just a bug fix update. There are lots of under-the-hood changes that promise better performance and security. The feature enhancements promise to improve productivity. So far most of what Microsoft is offering with Windows 10, aside from a couple of controversial features, is the removal of the Windows 8/8.1 excesses, and a few features "borrowed" from the Mac to improve multitasking. But Windows 10, absent the bugs, performs well enough, and the Microsoft Edge browser is good enough that the company ought to consider a Mac version. That's saying a lot, but the enterprise won't switch until they know everything's all right, and that may take a year or two to happen. Meantime, PC sales will continue to decline.
- About Terminating iTunes with Extreme Prejudice So iTunes hasn't exactly received the love in recent years. Some say it's bloated, although technically that's not quite true. Others are just overwhelmed by all the features that are regularly added, without taking steps to simplify the interface so the power of the app is at your beck and call. Others fret over stability and reliability issues, and reports that music databases may be borked with iTunes 12.2 and Apple Music only make matters worse. Now my history with iTunes goes back to its origins as SoundJam and later SoundJam MP Plus from a now-defunct publisher known as Casady & Greene. In 2000, Apple made the smart decision to buy the product, and bring along its developers, including Jeffrey Robbin, now a VP of consumer applications at Apple. In addition to being lead developer of iTunes, Robbin is credited with helping to create the software for the iPod, and was, several years ago, reported to be a part of the development project to create an Apple TV set. Of course, that project appears to have been discontinued, but it's notable how Apple has put Robbin in charge of significant projects. I've known him for years, and he's a real talented guy and deserving of his success. But something's gone real wrong with iTunes, and it's in need of serious repair, or Apple needs to start over and rethink the app. Before I go on, don't assume that starting over is anything new with Apple. Ask users of Final Cut Pro, for example. Although the new and far cheaper version, Final Cut Pro X, got a whole lot better over time, some loyal users chafed at the changed interface and lost features, and went elsewhere. Still, Apple is not shy about changing thingsy, and it's high time that iTunes go under the knife. The latest version, 12.2, was released to introduce Apple Music. It's otherwise substantially the same as the previous cluttered version, only it's more cluttered. It only adds new layers of inconsistency and unpredictable behavior to an app that was already breaking at the seams. A major change of version 12 was the use of a context-sensitive navigation bar that totally confounds muscle memory. So when you move from Music to Podcasts or to Movies, the options and the width of the nav bar labels changes. This may make sense from a logical point of view, but it means that you have to stop and think before you click. Apple Music merely adds extra labels for the Music section. There's no Apple Music icon, since the feature integrates with existing music features. All right, that's part of it, and I suppose most of you have gotten used to the poor implementation of this feature. There's more, however. With Apple Music, context menus usually don't work, and the ellipses that are usually placed next to the titles of albums and tracks don't deliver consistent context results. Select an album in the For You page and the ellipse will only allow you to share the album. When you click on the album to open its playlist, you have additional options to share an album, but none to tell Apple Music you want that thing off your list post haste. To make matters worse — and more confusing — if you tap and hold an album title in the For You list in Music for iOS 8.4 (and now the 9.0 beta), you not only have extra choices, but one entitled "I Don't Like This Suggestion." Why isn't that readily available with iTunes? Tell us Mr. Robbin! I realize that iTunes is very much a browser, meaning that the content you access can be instantly altered. I suppose that adding more context options is something that could be done on-the-fly without updating the app, and maybe it'll be fleshed out over time as the service is refined. For now, however, the interface and the layout are poorly designed, as if it was perhaps thrown together to meet a deadline with the hope it'll be fixed later. Kirk McElhearn, Macworld's "iTunes Guy," and my go-to expert on such matters, suggests that Apple's marketing people are being given too much power to drive the look and feel of iTunes. It's more about turning visitors into paying customers, but it doesn't even succeed on that level. If they hope you'll buy a track you're enjoying in Apple Music, the process is definitely not easy. Or perhaps Apple really does believe that we are all destined to rent music, and this is only guiding you into that direction. Remember, when you rent music, you own nothing other than the tracks you've previously purchased. Anything you've downloaded from Apple Music stops playing when you stop paying. If you decide one month you have other priorities, and you've spent days fine-tuning your custom playlists, will Apple allow you to suspend your membership for a while, and allow you to pick up where you left off a month or two later? Just asking. The reason I suggest Apple should kill iTunes and try over is that the app has moved in the wrong direction. It doesn't mean it should be split up into separate media apps, as is done in iOS. Having a single place to get play and acquire content on a Mac or PC is probably the more efficient idea. But that shouldn't keep Apple from starting over and devising a better way. It's not that there is better competition out there, particularly if you are accustomed to the Apple ecosystem. But how long will Apple allow this messy situation to continue before taking action?
- Apple and Product Saturation Once upon a time, it was a very rare thing to see anyone with an Apple product. Consider all those years where the Mac barely made a dent in the PC business, and many people who did use Macs were often regarded as being just a little weird. Well, maybe I just took it personally, but it was a lonely world out there when I visited friends and family and found computers that, to me, were more than a little alien. Now even though Apple owns the premium PC market nowadays, and the overall market has seen better days, it appears that there’s still plenty of room for the Mac to grow. Apple clearly isn’t following Microsoft’s playbook — to merge desktop and mobile platforms — and there still appear to be a fair number of people for whom a tablet is not a PC replacement. In other words, there are still untapped markets for Apple to sell more Macs, at least so long as PC demand remains fairly decent. But if it continues to fall at the current rate, Apple will be playing in a smaller and smaller market. In the mobile universe, smartphones and tablets have grown really fast. It’s hard to find anyone nowadays who doesn’t have one or the other — or both. Even folks at the low end of the income scale can get a smartphone free or at a really low price with a fairly cheap wireless plan. Tablets can be had for $50-$100, although I wouldn’t say much about the quality. And I suppose if a smartphone does a decent job of handling phone calls and texting, that may be all that some people actually need. Regardless, smartphones dominate, so it seems that fewer and fewer people don’t have one. This means that the handset makers, and that includes Apple and Samsung, are fighting to make new sales in a smaller and smaller pool of customers who don’t have one of these gadgets. In the U.S., the wireless carriers have made sales a little more difficult by lengthening the time before they allow early upgrades. Well, that’s one excuse Apple CEO Tim Cook gave for fewer iPhone sales. But he ignored the fact that the largest wireless carriers were also busy advertising extra-cost schemes where you could upgrade your mobile handsets more frequently. What this means, though, is that a large portion of customers for current smartphones are upgraders. It’s not their first purchase, so sales growth is being reduced. If the upgrade cycle lengthens, as it has with the PC, it also hurts sales, and it’s clear Apple isn’t the only tech company to see reduced growth. Apple, however, shows no inkling of moving down-market. The iPhone 5c, which may or may not have been successful — depending on whom you ask — was simply a repackaging of the previous year’s technology for $100 less. Apple clearly intends to play in the most profitable segments, as they’ve done with Macs. So will Apple have to accept growing sales at maybe a few percent a year, which is typical for a large company serving a saturated market, or are there different ways to go? One way is to succeed in emerging markets where a growing middle class will aspire to more expensive gear. This is the logic behind Apple’s expansion into China. If Apple’s efforts to gain traction in China, India and elsewhere succeed, sales may grow at a faster rate, but probably nowhere near the levels achieved in the early days of the iPhone and iPad. So what is Apple to do? Well, the financial community demands new products in new categories, and Tim Cook keeps claiming they are planning just that. In fact, he’s said it again and again, and I can well understand why some media pundits might just be a tad skeptical. But it’s also true that the refreshed Mac Pro clearly demonstrates that Apple still has it in them to innovate in surprising ways, although that product obviously didn’t create a new product category. So if the pressure was high in 2013, it is far higher in 2014, particularly after releasing financials and guidance that the investment community regards as underwhelming. But what are the new product categories that Apple plans to enter? Cook says more than one, so where does Apple go next? Clearly Apple won’t tell you, although it’s possible, I suppose, for increased pressures, particularly from the investment community, to force disclosure of at least a few hints. Up till now, Apple hasn’t listened to Wall Street because, frankly, financial analysts have never understood the company. That may not change now, but if the hopes and dreams for new product initiatives don’t play out by spring or summer, increasing skepticism from the media and Wall Street could force a different response. But there’s clearly precedent. Remember that the original iPhone was announced months before it was actually released. There was no product to make obsolete, of course, and it’s also true that FCC testing would have revealed its existence before long. Certainly one excuse Apple gives to withhold information on a new product is how it would impact sales of existing models. If those existing products are made by other companies, of course, Apple could still stage an early preview, build demand, and, in turn, possibly kill sales of the competition as customers wait for Apple’s solution. This could play out nicely with a smartwatch, the rumored iWatch. If Apple plans a connected TV set, a surprise demonstration might really spook the rest of the industry, particularly since most competing products were already presented at the CES earlier this month. Sure, Apple usually doesn’t spill the beans on future products, except, of course, when they do. Maybe it’s time for Cook to rethink the strategy, not just to satisfy Wall Street but to tempt millions of potential customers. There’s a lot to be said for building demand early, particularly if Apple has a real hit or two in the wings.
This article was posted on Thursday, July 17th, 2014 at 12:00 AM and is filed under News and tagged with: Android, Apple, Applecare, cloud services, Fortune 500, Gene Munster, Global 500, Google, IBM, Intel, iOS 8, iOS hardware, iOS software, iPad, Mac Os X, Macintosh, Macs, Microsoft, Microsoft Windows, Motorola, Ms Dos, Office on the iPad, OS X Yosemite, Piper Jaffray, Powerpc, Samsung, Steve Jobs, Surface tablet, Tim Cook.