A Blog by Jonathan Low

 

Dec 19, 2019

Face It: Apple May Never Again Make Anything As Important As the iPhone

And maybe that's ok from a revenue generation perspective.

But sustaining it's brand halo requires that it be more innovative, better designed and revolutionary than anyone else. Which necessitates a breakthrough in the arena for which it has achieved its most iconic success - physical products. JL


Walt Mossberg reports in The Verge:

Apple remains what it has been for years: the most important consumer tech hardware company, a force not only in its industry but in society at large. And now, it is huge and rich to boot. Cook’s biggest forays have been into revenue-generating services, not devices. Apple's 2019 revenues were six times the revenues in fiscal 2009. Its new headquarters is larger than the Pentagon. Each of its five business segments would be a Fortune 500 company on its own. But it’s still unclear if it can be anybody’s favorite music provider, TV network, or news service.
How do you replace a legend like Steve Jobs and, at the same time, adapt to the slow decline of your most important, most iconic product? Those were the twin challenges Apple faced in the 2010s. Under CEO Tim Cook, the company has found some answers and flourished financially, but it hasn’t been without a few wrong turns and big changes to the very nature of its business.
But what about its products? Its culture?
When the decade began, Jobs was still in charge (albeit, in obviously failing health). In January 2010, he introduced the iPad, the last item in his parade of big, game-changing hardware products that started in 1998. It sold like hotcakes right out of the gate.
But a year later, Jobs took medical leave. He resigned as Apple’s CEO on August 24th, 2011, and died six weeks later, leaving Cook as his hand-picked successor.
Cook, Apple’s savvy head of global operations, knew the company inside out. But he isn’t a product guy, and he lacked Jobs’ close relationship with Apple’s design wizard, Jony Ive. So he turned over most hardware and software decisions to Ive.
The pressure was on for Cook’s Apple to bring out the next beautiful, premium, innovative product to maintain Apple’s streak, its margins, and its growing ecosystem of devoted users. The big speculation back then was on reinventing the
television, based on Jobs telling his biographer, Walter Isaacson, that he’d “finally cracked” the notoriously difficult category. Cook spent almost a full year hinting that Apple would do something big in TV, only to pull back when those plans didn’t crystallize.
The first memorable Apple products of the decade were still Jobs-era productions: the much-copied MacBook Air redesign of 2010 and the gorgeous iPhone 4 from that same year.
Cook’s first big all-new product was the Apple Watch, which was released in 2015. But it took until the third generation of the Watch in 2017 for Apple to find the right hardware, software, and functionality. It was essentially a reboot.
The other major hardware success under the Cook regime has been AirPods, the wireless earbuds released in 2016 that seem to be everywhere, looking like white plastic earrings.
Apple hasn’t said how many Watches and AirPods it’s sold, but they’re widely believed to be the dominant players in each of their categories and, in the grand Apple tradition, the envy of competitors that scramble to ape them.
Both of these Cook-era hardware innovations made the top 10 in The Verge’s list of the 100 top gadgets of the decade. In fact, Apple not only took first place, but placed a total of four products in the top 10, the only company with more than one product in that tier.
Still, neither of these hardware successes has matched the impact or scale of Jobs’ greatest hits. Even the iPad, despite annual unit sales that are sharply down from its heyday, generated almost as much revenue by itself in fiscal 2019 as the entire category of “wearables, home and accessories” where the Apple Watch and AirPods are slotted by Apple.
This wasn’t entirely Cook’s fault. Industries go through secular phases, and this hasn’t been a decade of new blockbuster consumer gadgets on the scale of the iPhone for any company. The closest thing may be Amazon’s Echo smart speaker and Alexa voice assistant, but they’re no match for the smartphone in sales or impact — at least, not yet.
But Cook does bear the responsibility for a series of actions that screwed up the Macintosh for years. The beloved mainstream MacBook Air was ignored for five years. At the other
end of the scale, the Mac Pro, the mainstay of professional audio, graphics, and video producers, was first neglected then reissued in 2013 in a way that put form so far ahead of function that it enraged its customer base.
Some insiders think Cook allowed Ive’s design team far too much power and that the balance Jobs was able to strike between the designers and the engineers was gone, at least until Ive left the company earlier this year.
The design-first culture that took root under Cook struck again with the MacBook Pro, yielding new laptops so thin their keyboards were awful and featuring USB-C ports that required sleek Macs to be used with ugly dongles. Apple has only recently retreated back to decent keyboards on the latest MacBook Pro, and it issued a much more promising Mac Pro. But dongles are still a part of the Apple experience across its product lines.
Cook’s other success this decade was to nurture the iPhone along as smartphone sales first plateaued and then began to decline. The biggest change he made came in 2014, before the dip, when Apple introduced two new iPhone 6 models, which belatedly adopted big screens that Android phones had pioneered. Sales took off like a rocket, and there’s been a big iPhone option every year since.
Still, Apple has seen declines in iPhone sales, and it has chosen to offset them with higher prices and to report its product line sales only by revenue, not units sold. This from a company that once bragged about huge unit sales at the drop of a hat.
Though Apple is said to be working on augmented reality glasses and some aspect of self-driving cars, Cook’s biggest forays have been into revenue-generating services, not devices. The list seems to grow every year: Apple Music, Apple Pay, Apple News Plus, an Apple credit card, Apple Arcade, and, most recently, a video streaming service called Apple TV Plus. This has put Apple into businesses that were undreamed of in the Jobs era but were considered essential to bolster its ecosystem. Most are gambles.
The company has also made a big bet on privacy, trying to separate itself from heavily criticized tech companies like Facebook and Google. Jobs was a privacy hawk, but Cook has turned both the policy and rhetoric up to 11, calling privacy a “human right.” He even famously took on the FBI in 2016 to preserve iPhone encryption in a terrorism case. (At the same time, Apple has been criticized for storing some data in China.)
Apple remains what it has been for many years: the single most important consumer tech hardware company, a major force not only in its industry but in society at large. And now, it is huge and rich to boot. But it’s still unclear if it can be anybody’s favorite music provider, TV network, or news service.
Or if it can launch another blockbuster device.

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