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.
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.
Horace Dediu asks this question from the viewpoint of disruption theory, where if you are trying to make better something, that’s good enough from perspective of some customers, you are creating a room for being disrupted.
The clue to this experiment is the presence of a control group. We could test the question of absorbability by by keeping a version of the product which did not improve (or got cheaper) and measuring whether is performs better vs. the “improved” version.
Of course, this is exactly what Apple does with the n-1 generation products. By ranging products which are older and at lower price points it can measure whether the improvements are valued.
MG Siegler for TechCrunch after explaining the meaning of “The Pledge”, “The Turn” and “The Prestige” in the parlance of magic tricks:
Look at the mobile landscape right now. There are two companies that are making any money in smartphones: Apple and Samsung. Or, put another way: Apple and the company Apple just won a billion dollar-plus judgement against for copying their smartphone designs. So while some may find Apple’s trick old hat now, no one else has figured out how to pull it off — except for the company doing a mediocre copy of the trick. I’d argue it’s because everyone is focusing on The Pledge and The Prestige, but Apple is the only one focusing on The Turn.
Via Daring Fireball
As we just passed 5 year anniversary of iPhone going on sale it’s fitting to look back.
So the iPhone seems to be correctly classified as a sustaining innovation. Something that moves the phone market forward and which, except for a temporary misallocation of profits, will entrench the incumbents after they manage to copy it effectively.
However, here is where we have to dig a little deeper.