For and Against: Will 2012 be a good year for Apple?
For
Technical and Marketing Manager
Ben Green
Ben Green is Technical and Marketing Manager with Harwin plc, a UK manufacturer of interconnect components for demanding environments and which feature on many high-profile space programmes such as Robonaut. Harwin also manufactures a range of PCB hardware solutions designed to cut manufacturing costs.
Against
Journalist, editor and writer
Chris Edwards
Chris Edwards reports on electronics, IT and synthetic biology. He has close to 20 years’ experience of journalism as an editor and writer. He is a long-standing contributor to E&T and other IET publications, including Flipside. He also writes for the Guardian.
When Steve Jobs passed away last year it felt more like the death of a much-loved statesman than of a figure from commerce or technology. I don’t remember the same reaction for any other major corporate figure in recent years. But that’s because Steve Jobs was like no other businessman or inventor of our age, and so I suppose it’s fair enough to be concerned for the future of ‘his’ company.Personally, I have very little doubt that in this coming year Apple will thrive, prosper and even enhance its reputation as the provider of the coolest tech on offer. But given that Jobs was so iconic, and bearingin mind the slump in the company’s fortunes after he was forced out in 1985 and how he led the company’s comeback more than a decade later, why am I so positive about the outlook for Apple in 2012?
There are many reasons: I could start with the fact that Apple’s sales figures in 2012 are already pretty much pre-determined by the current generation of iProducts that are available now.
The team responsible for Apple’s game-changing products is still in place, headed by its senior vice president of industrial design, the recently knighted Jonathan Ive. Ive is credited as the leading designer and conceptual mind behind the whole lineage of Apple products starting with the iMac, through the MacBooks and onto the iPod, iPhone, and iPad. He is a multi-award winner with over 400 patents to his name; as recently as 2010, Fortune magazine named Ive as the “world’s smartest designer”.
While Jobs will be hugely missed, don’t forget that his long illness (he was first diagnosed in 2003) did not stop the company becoming one of the world’s largest technology companies by revenue (over $65bn in 2010) and profit.
In fact, Ives is only one of a set of top execs who have been with the company for more than a decade - others include Tim Cook, Jobs’ successor as CEO who held the post while he was absent through illness, Peter Oppenheimer, Apple’s chief financial officer, head of product marketing Philip Schiller, and Scott Forstall who heads Apple’s development of software for the iPhone and iPad. In other words, the team Jobs put together and which has been responsible for so much of the company’s success is still very much in place.
But the main reason Apple will go from strength to strength is the sheer weight of the brand, the ubiquity of its products and its market penetration.
Apple, according to a study by global research agency Millward Brown, is now the most valuable consumer-facing brand in the world. Somehow it manages simultaneously to appeal to businessman, tech geek, child, adolescent, teenager, home user, stay-at-home mum and silver surfer alike. I work in marketing at tech company Harwin. I use an iPad to present new company developments because it is very portable, easy to use and - crucially - because it says to customers (without needing to use the words) that Harwin is a modern company with an up-to-the-minute approach to business. Shamelessly, I am associating my company with the values if the Apple brand…and I am not alone.
People choose Apple for many different reasons. The cool, funky factor makes iPhones the number one must-have item for teenagers and the stylish, while the sleek design of Apple’s iMac and MacBookAir PCs and laptops makes even non-techies fall in love with ‘their Mac’. And it’s a love affair that I believe will last. According to the Economist, Apple’s share of the tablet market is over 61 per cent. Combined, the total Android share is about 30 per cent and under pressure. While many other tablets offer the same (or even better) performance, they do not have the ‘wow’ factor.
Apple changed the world by making technology desirable and easy to use. While other companies make products with the same functionality they are following a trend - set by Apple - and they lack any immediate differentiating element.
Companies take time to turn around. And very often the process takes longer because it takes time to work out when things are going wrong. It’s only when you look back that you see the decisions that thrust the company onto the wrong course.
Naturally, people are looking to see how Apple fares after the sad loss of Steve Jobs. But anything that affects Apple in 2012 began some time ago and is likely to take a similar course to the fate of other one-time technological stars from Silicon Valley. Internal politics will no doubt take their toll on the company as people in various management layers attempt to bolster their positions, but these issues can take years to surface, as seen in Microsoft once Bill Gates gave up day-to-day control of the company.
Apple’s ability to outrun competitors such as Microsoft lay in enticing users to buy its products, who would then encourage others to do the same. Apple’s ability to command high profits lay in its careful balancing act between control over its ecosystem and freedom, as well as the realisation that there was no point in attempting to become the mass-market leader in any segment.
Although the iPad leads its segment, very few of Apple’s decisions point to the company believing that it will stay that way for long. The company is in no hurry to drop prices as competitors attempt to build up a market presence in tablets. The premium model has worked well so far: so why change it?
But a number of the elements that have fed Apple’s rise are likely to start working against it. The most important is its user base. Both of them.
Today’s Apple represents a struggle between the factors that rescued the company from demise in the 1990s and those that have made it the darling of Wall Street in recent years. In many respects, the modern Apple is a mirror of its 1980s version.
When it started, Apple developed a largely open platform for the home computer user. Then it discovered a more consumer-oriented focus with the launch of the Macintosh that would see the company try to control more of the ecosystem around it.
When it had its near-death experience, Apple embraced a more open future once again: wrapping a comfortable interface around a Unix core. At the surface, the reborn Macintosh was easier to handle than a Windows PC, but if you peeled away the covering, you could see the ugly but powerful belly of the beast.
Now OS X is mutating into iOS, an operating system where things are carefully locked away out of sight. The ‘Lion’ edition hides folders that users were able to access when things went wrong to make things easier to set up.
Gradually, control has passed out of the hands of the user and into those of the vendor. Crucially, this makes it hard to present Apple as a counter-cultural brand.
And services that long-term users have come to depend on are being switched off, unless they upgrade to the latest software. MobileMe never really worked properly but, until later on this year, at least it’s still there. If someone doesn’t want to switch to Lion, the benefits of moving to iCloud are far from compelling. And they start to wonder why they pay more for the privilege.
The last factor is one that lies outside Apple’s control: the interaction between economic and technological cycles. All new product cycles suffer plateaus in growth and we have a couple of products likely to suffer this effect at once: the computer and the smartphone. The next steps in both will demand big changes to make the most of improvements in compute performance: and those leaps could come from anywhere. They very rarely come from a company seen to be on top of it again, because that is the one that suffers the most from the situation presented by Clayton Christensen in ‘The Innovator’s Dilemma’.
2012 is likely to be a bad year for Apple. It might just take a while for it to become obvious. *
Do you agree?
Apple will be fine following the death of Steve Jobs
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