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  • Welcome to the World of Automatic Failures — or Not!

    December 16th, 2015

    Call me paranoid — you wouldn’t be the first — but you have to wonder about people who claim that a certain company’s products are destined to be certain failures. Even when they’re not. But products from some other companies are taken seriously as potential “killers” even if the facts are otherwise.

    So you just know that the critics have been salivating over the Apple Watch for months, and it’s not that Apple isn’t helping fuel the negative speculation. As most of you know, Apple hasn’t been exactly upfront in revealing the actual sales, other than to say they exceed their expectations, whatever they might be.

    Of Apple’s recent products, I do agree Apple Watch has been more polarizing. Not everyone who has one loves it. Some find it useful, but not a must-have, not something they have learned they cannot live without. On the other hand, Apple dominates the market, if you accept sales estimates by outsiders as having some basis in fact. Of course, they are looking at the total sales in the “Other” category of Apple’s financials. Those estimates are that around six million were sold the first two quarters, and perhaps five or six million will be sold in the current quarter.

    Not too shabby, and certainly better than Apple did with the first iPhone and the first iPad. No other smartwatch maker comes close. But it may be a year or two before this market settles down and we see the long term demand. So skepticism is not unreasonable, even if it’s overwrought. Saying that the Apple Watch is an outright failure, however, is just absurd.

    Of course they said the iPhone would be a failure. No less than former Microsoft CEO Steve Ballmer — currently ragging on the performance of his successor — said Apple basically had no business getting into that market way back when. Maybe it was karma, but the iPhone remains highly successful, and Microsoft’s mobile handsets have low single-digit market shares.

    While tech pundits weren’t so much predicting failure when Samsung was selling a good number of Galaxy smartphones, they still haven’t done near as well as iPhones, Apple is regularly castigated over the possibility of failure. The slightest clue, such as an alleged cutback in orders in the supply chain, can really force a negative outlook. Apple’s stock price in recent days has been down somewhat over such concerns.

    Unfortunately, the tech media — and I suppose Wall Street analysts — haven’t learned the lessons of history. So this also happened a couple of years back. The same rumors with an iPhone 5s, and the same symptoms. In that case, the stock price dipped for months even though the iPhone remained successful. One argument was that sales could not continue to grow at a high rate. It had to reach a saturation point, as it has with Samsung, where high-end handset sales are lower than they used to be. And don’t forget those murmurings from the supply chain.

    Now when the original supply chain rumors arose back then, Tim Cook educated financial analysts during a quarterly conference call that you cannot take one or two metrics of this sort and make assumptions about actual sales. I also wonder why these people didn’t realize that Apple often depends on multiple suppliers for parts, and is apt to move orders from one to the other not just because of inventory and demand.

    Since this happened, both times, during a December quarter, it makes even less sense. Parts being ordered now would be used for products that are being manufactured for the March 2016 quarter, where sales would naturally be lower than a holiday quarter. But logic never seems to mean much when it comes to Apple.

    The other theory has it that the stakes are high for Apple. Every single product or service must be a stellar success, or the company will be on a death spiral. But if you actually look at the company’s history, you’ll see there have been a number of failed or underperforming products over the years. When Steve Jobs took control of the company in 1997, he killed some products, not just to save money, but because they hadn’t realized their potential. Consider the Newton MessagePad, considered a forerunner to the iPad and, in part, the iPhone.

    Despite striking looks, the Power Mac G4 Cube, released in 2000, never did all that well. Yes, we can argue that Apple priced it too high, and made it too hostile for upgrades. You can also argue that it really wasn’t needed, since existing Power Macs got the job done, even if they weren’t quite as sexy.

    And don’t forget the ongoing reinventions of Apple’s online services. In the 1990s, they tried to ape AOL with a service that used AOL technology, known as eWorld. It never went very far, though some loved it. Apple’s iTools became .Mac, which became MobileMe, and finally morphed into iCloud. Features came and went, and some suggest that, despite the tighter integration with Apple’s products and services, iCloud is still troublesome.

    But few suggest Apple will expire because they are still having problems with iCloud.



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    2 Responses to “Welcome to the World of Automatic Failures — or Not!”

    1. DaveD says:

      I believe that Apple knew the Watch has a way to go before it becomes a consumer want. My guess as to no hard sales number. I do hope that Apple listen to the watch users and include the most desired features to make it better. Not a watch wearer (or a smartphone owner) so I need to be lured in for one.

    2. dfs says:

      There’s another way to measure the success of the Apple Watch: the number and quality of third-party apps being created for it. A prime reason for the iPhone’s remarkable success was the huge tidal wave of apps that quickly began to appear (“there’s an app for everything”). Clever and inventive developers dreamed up uses for the device that in all probability never occurred to Apple, and turned it into the remarkably versatile device we all know and love. The apps sold the iPhone as much as the iPhone sold them. Nothing of the kind seems to be happening for the Watch. The scene seems to be very stagnant and uninspiring, and the new, developer-friendly version of the Watch OS doesn’t seem to be turning the situation around. Who is taking advantage of it? I have a Watch and I wear it occasionally, and I’m still hoping that some developers will give me reasons to wear it more often, but I have to say that my hope is fading. I have a sinking feeling that it’s headed for the sock drawer.

      What I do like about it is its extreme accuracy (it sets its time by the iPhone, and Apple’s time presumably is derived from the National Institute of Standards atomic clock (+/- 1 sec. every 300 million years). Let’s see Rolex or Patek Philippe beat that! But there are plenty of better-looking watches on the market that do the same thing (some of the Junghans radio controlled models and the Frederique Constant Horological Smartwatch, to name two.

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