Yes, one aspect of Apple's success is that they have entered the entertainment and fashion businesses. And in those industries, what is hot and new had better look, sound and feel both hot and new. One can even imagine at some future product introduction the device being walked down a lighted runway by a bulimic Eastern European model while fashion editors and celebrities sit in judgement as their pictures are snapped.
Much of the bitching about the iPhone 4S is remarkably superficial. The core complaint seems to be that Apple didnt sufficiently titillate and, more to the point, that the owner can not flash it for all the world to see and receive awed gasps in response. But hey, for the latest Most Valuable Brand on Earth, the price of fame and fortune may well be a fickle, demanding customer who wants her technology blingy. Accessorizing with Apple, indeed.
The more strategic point is that Apple may be engineering a shift in its value proposition, repositioning this latest round of products to optimize the underlying power of the technology behind it. In business history, speed kills, by which we mean that runaway growth is the incurable cancer that destroys most companies.
This is a company that gets strategy. It understands that every new product can not be a blockbuster, that there are times when you have to consolidate your gains in order to prepare for the next phase. Apple was initially mocked for the iPad. Who's laughing now, baby?
On top of the pressure it faces to come up with constant innovations, this year's Japanese earthquake and the Chinese rare earth inventory pressure affected global supply chains. Apple could well have been forgiven a year without a new phone. Consider, too, the emotional toll of making a new product announcement as your founder and inspirational leader lays dying. All in all, this week's performance was a tour de force. JL
This article combines reporting by John Sutter at CNN and Stephen Wunker at Forbes:
First, from Sutter at CNN: Usually a cause for techno-euphoria, Apple's iPhone-a-palooza event on Tuesday had an unintended and unlikely effect: It made some corners of the Internet mad. Apple's new CEO was panned by many online as dull compared to Steve Jobs. Does iPhone 4S live up to hype? Many observers seemed underwhelmed by Tuesday's Apple news. Here are five reasons why some people are calling the iPhone 4S announcement a dud (The Rumor Mill, The Wait, The Dull Presentation, The Look, The Name).
Second, from Wunker at Forbes: Apple may not have announced an iPhone 5 today, but it seems hardly to matter. The company’s new Siri “intelligent assistant” melds computing into everyday life in a remarkably novel — and useful — way. A dozen years ago, we in the PDA business (in a former life, I led the smartphone program at Britain’s Psion PLC) heard consumers ask for voice activated organizers, but we never imagined something so far-reaching, intuitive, and…fun. This looks like another mega-hit for Apple.
Details on Sutter's 'dud' reasoning:
Bloggers have been gossiping about the details of the fifth-generation iPhone literally since the iPhone 4 was unveiled in June 2010. In the process, they may have set some unrealistic expectations --- including hopes that the phone would "radically change," which it didn't.
Apple usually announces a new iPhone in June. This year it waited until October, amid speculation that it was having trouble getting the parts it needed to manufacture the new version of the phone.
This was the first center-stage presentation for Tim Cook, who replaced Apple co-founder Steve Jobs as CEO on August 24 amid reports of Jobs' ailing health. Cook is notably less outgoing and charismatic than Jobs, and the company's presenters Tuesday took their time getting to the meat of the event -- the iPhone 4S announcement.
When the iPhone 3GS debuted in 2009, critics were similarly unimpressed. Maybe that has something to do with the name. Many people expected Apple to announce a completely redesigned iPhone 5. iPhone 4S sounds much more like a facelift of a current product.
This is perhaps the biggest reason people aren't wowed by the iPhone 4S: It has exactly the same shell as the iPhone 4. The rumor mill wanted to see a phone with a "teardrop" shaped back and a bigger screen. No such luck. All of the new features of the iPhone 4S are essentially invisible.
Wunker of Forbes rejoinder:
Yet while we pop the champagne and queue to use the service, pause to think a moment about Apple’s strategy. The company has minted money through marrying device and interface in a way that stand-alone hardware and software companies never did. The Mac, iPod, and iPhone all succeeded through integrating radical hardware and software innovations to stand out from crowded markets. With today’s announcement, we are seeing a shift. The hardware unveiled in the iPhone 4S is more advanced than in the previous generation, to be sure, but it is hardly exciting. Apple now seems to be betting on the software to drive the sales. With Siri, iCloud, and innumerable less prominent systems, the company is ingraining its systems into users’ lives in an unprecedented way.
If Apple transforms into being largely a software company, what are the potential implications?
1. New Revenue Streams – Siri could be the ultimate “freemium” play. Once a person is using the system regularly for appointments and contacts, it would be so tempting to use it look up restaurants, get traffic reports, and take care of life’s impromptu essentials. How much is that worth? What about all the hyper-targeted advertising this makes possible? Apple would understand an individual like no other company — not even Google — and it could match ads to very specific occasions. Existing Internet players target pieces of the puzzle, but Apple would have unparalleled power due to both its data analytics and its ownership of the voice interface.
2. Commoditize the Hardware – As Google’s Android has shown, first-class software can attract hordes of device makers eager to bring the platform to the masses. Apple today may make two-third of the profits in the mobile handset industry, but Android has become a very credible challenger to the iPhone’s market share. So Apple faces a choice — does it continue to make its money predominantly from selling an expensive device to a relatively small segment of the market (the iPhone’s global market share of handsets is about 5%), or does it let others make cheaper devices and enable access to its services from any suitably powerful phone? Even people who may shy from a pricey iPhone might be tempted to try an Apple service, and then pay to try it some more, and gradually become enmeshed in Apple’s world.
3. Global Relevance – If Apple does make its services available to all comers, it will be a much more important player in emerging markets. The iPhone 4 and 3GS live on, and they may make more of a dent in developing countries through price discounting. But what would really make Apple’s market share explode would be to make Siri, iCloud, and other offerings easily available on any handset. To the extent that some of these services benefit from network effects (one might imagine Siri finding a mutually convenient meeting time, for instance), ubiquity would super-charge Apple’s already powerful proposition.
Ultimately, Apple faces a business model choice. It can continue to try to build handsets so amazing that they lead us to buy devices we didn’t think we needed. As the lack of an iPhone 5 announcement today showed, that is no small feat. Or, Apple can use its incredibly sticky services to bring new users into its franchise, gradually leading them to pay more money for software than they ever dreamed possible. The transition would not happen overnight — imagine the annoyance of people who just waited in line for 2 days to get the latest handset — but an eventual shift would open huge new markets for the company, making today’s colossus seem positively small.
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