The New Yorker got unprecedented access to Apple’s Jony Ive and we got a small-book-sized article that gives us a glimpse into their design process. Well worth a read.
Apple Watch is not a product from a tech company, and it will not be understood, at all, by the tech world. Apple creates and uses technology in incredible ways. The Apple Watch may prove to be the most technologically advanced product they’ve ever built. But again: Apple is not a tech company, and Apple Watch is not a tech product.
When the prices of the steel and (especially) gold Apple Watches are announced, I expect the tech press to have the biggest collective shit-fit in the history of Apple-versus-the-standard-tech-industry shit-fits. The utilitarian mindset that asks “Why would anyone waste money on a gold watch?” isn’t going to be able to come to grips with what Apple is doing here. They’re going to say that Jony Ive and Tim Cook have lost their minds. They’re going to wear out their keyboards typing “This never would have happened if Steve Jobs were alive.” They’re going to predict utter and humiliating failure. In short, they’re going to mistake Apple for Vertu.
Great commentary by Ben Thompson on the Apple Watch introduction:
The Apple Watch section began with the iconic “One more thing…” at 55:44,1 and these were the extent of Tim Cook’s words before we got our first glimpse of the Apple Watch:
We love to make great products that really enrich people’s lives. We love to integrate hardware, software, and services seamlessly. We love to make technology more personal and allow our users to do things that they could have never imagined. We’ve been working incredibly hard for a long time on an entirely new product. And we believe this product will redefine what people expect from its category. I am so excited and I am so proud to share it with you this morning. It is the next chapter in Apple’s story. And here it is.
Then came the introductory video, and we never got an explanation of why the Apple Watch existed, or what need it is supposed to fill. What is the market? Why does Apple believe it can succeed there? What makes the Apple Watch unique?
For even more Ben’s insight listen to this episode of his podcast.
Apple is going into fashion industry in a big way. I have my doubts about the utility of the watch just yet, but utility may not be the most important job-to-be-done here. It will be interesting to watch the progress of this thing.
Ben Thompson says it:
Utimately, though, Samsung’s fundamental problem is that they have no software-based differentiation, which means in the long run all they can do is compete on price. Perhaps they should ask HP or Dell how that goes.
In fact, it turns out that smartphones really are just like PCs: it’s the hardware maker with its own operating system that is dominating profits, while everyone else eats themselves alive to the benefit of their software master.
I believe the logic for Apple is that usage of the products determines their value and therefore placing powerful software in the hands of more users means they will value the entire system more. This leads to the notion of greater “stickiness” or “lock-in” but also to higher satisfaction and loyalty, rate of upgrades and even more third party purchases and yet more usage.
This is the virtuous cycle platform custodians seek to engender. This is what Apple is trying to build and the transition of apps into the system bundle is part of this re-enforcement.
One wonders how long before Apple’s approach becomes the norm for other platforms.
Well worth a read. To quote:
With the iPhone 5C Apple may well have created what will prove to be the most popular smartphone in the world, based almost entirely on year-old technology, distinguished only by its colorful plastic casing — yet still sold at premium prices compared to the rest of the industry. Not bad.
And this about 5S:
To put that in context, the iPhone 5S beats my 2008 15-inch MacBook Pro by a small measure in the Sunspider benchmark (with the MacBook Pro running the latest Safari 6.1 beta). The iPhone 5S is, in some measures, computationally superior to the top-of-the-line MacBook Pro from just five years ago. In your fucking pocket.
Horace Dediu thinking about the Apple’s M7 chip:
Perhaps this is why Apple chose to describe the iPhone 5s as “forward-thinking”. The M7 and the Touch ID are like research projects whose actual value will be realized at some future time, in probably different contexts. The M series of chips may become Apple’s “low end” microprocessor as the A series climbs the trajectory into core computing tasks (read: phone, tablets, TV, laptops).
M might be the chip for the wearable segment, woven into a whole new fabric of uses and jobs to be done.
The 5C is, effectively, an iPhone 5. Same A6, same camera, same just about everything — except for the most obvious difference, its array of colorful plastic shells.
In marketing, what looks new is new.
This is the first year when last year’s specs remain good enough to serve as the mass market new iPhone. Take a look at apple.com today and note which new iPhone appears first: the 5C, not the 5S. Which phone did they show a commercial for during the event? The 5C.
In summary I’d say that the C signals the beginning of the “good enough” phase which was also evidenced by the increasing mix of the older models during the last year. Financially it shows up as lower ASP, which, as the graph above implies, I expect to drop to $600 and lower during the next year. Margins may not be affected much as the C is still very highly priced relative to its cost of production.
Finally, if the good enough alternative is being “pinned” by Apple as the mid-range it also begs the question of why there isn’t a specific “low end” version. It took six years for Apple to fork the product into two variants. Maybe it will take another year for it to stretch to a third.
As I wrote last week, strategy is about making choices, and Apple has decided to not even pretend to pursue market share, but instead embrace their up-market status. As long as they retain their app advantage, this will obviously be a profitable choice.
More importantly, it’s Apple doubling-down on what they are best at. I have railed against Blackberry and Nokia for trying to compete in areas they weren’t great at (OSs), instead of focusing on their strengths. Apple is doing just the opposite. They are avoiding a market share fight, which is ultimately about price and compromise, and are instead focusing on the experience of using their products and the advantages accrued by being fully integrated from the chipset to iTunes.
Love how he starts his “bicycle for our mind” schtik again to tell it better. Marketer through and through.
I find it fascinating that almost 25 years later we are still in the process of integrating computers to our lives and business and that’s even when the right vision was there. Some things just take time because people have to change their thinking and that’s most effectively done by generation change. Also, the vision has far deeper implications than we thought.
The interviewer is woefully unprepared unfortunately. I am surprised Steve put up with him for so long. Well, he was in the wilderness back then.
But in reality – and this touches on many of the themes of this blog – an overt focus on product similarities misses many crucial factors that, in my opinion, make iPhones and iPads very different. In fact, I believe the business we should be looking at to understand where Apple might take the iPad is the iPod, not the iPhone.
If you are interested in business thinking at all, read it.
Ben Thompson over at stratēchery:
The truth about the greatest commercial of all time – Think Different – is that the intended audience was Apple itself. Jobs took over a demoralized company on the precipice of bankruptcy, and reminded them them that they were special, and, that Jobs was special. It was the beginning of a new chapter.
“Designed in California” should absolutely be seen in the same light. This is a commercial for Apple on the occasion of a new chapter; we just get to see it.
See also, the beautiful web page for this mission statement by Apple.
Another great episode of The Critical Path.
Horace is pointing out the BS news write about Apple and then thinks loud about possibilities in car manufacturing disruption.
Asymco says 45% and adds:
The real problem for the PC vendors is not that they have such low margins–they’ve had low margins for decades. It’s that the volumes which “made up for” low margins are disappearing.
One of the guys who works on Windows Azure Mobile Services gave me a demo of its support for iOS.
What? Microsoft supporting iOS? What? That isn’t the Microsoft (I thought) I knew.
Once I got over the shock, I expected that I’d have to write code in C# (a Microsoft language), that services would run behind IIS (a Microsoft webserver), and that I’d have to use Visual Studio (a Microsoft developer tool) on Windows, which I don’t have. That would be typical Microsoft, right?
(Microsoft? Hello, are you feeling okay?)
In other words, Microsoft noticed the world outside Redmond, and it likes it.
And I like them for liking it. And it doesn’t even hurt.
What I see is Microsoft being scared shitless that they are losing developer minds, that there are now thriving ecosystems that Microsoft does not control and their own attempts of building new fortresses is going nowhere slow. So now they are willing to bend over backwards to look good again. See also all the marketing around IE10 targeted to developers.
I like to see Microsoft doing this, but I don’t view it as “look we are the good ones now”, but as a “look how scared we are”. They have to prove they are actually also good at the new services they offer. We’ll see.
Via Daring Fireball