In 1995, two years before his return to the company, Steve Jobs gave a characteristically blunt answer when asked why Apple found itself struggling in the early to mid 1990s. The issue, he said, was that Apple had gotten greedy.
What ruined Apple wasn’t growth … They got very greedy. Instead of following the original trajectory of the original vision, which was to make the thing an appliance and get this out there to as many people as possible, they went for profits. They made outlandish profits for about four years… What that cost them was their future. What they should have been doing is making rational profits and going for market share.
Much has changed since then, of course. Apple has a substantial market share in both the personal computer and mobile markets, demonstrating that the two goals – growth and profitability – are not mutually exclusive. This is not an ‘Apple is doomed’ piece, nor anything like it. But I do wonder whether the company is once more putting short-term profits ahead of long-term brand loyalty … ?
Many of us have expressed dismay at the fact that Apple still, in 2015, sells an iPhone with just 16GB of storage. Apple would, of course, argue its corner. It would point to app thinning, enabling apps to take up less storage than they used to. It would point to iCloud, suggesting that much of what we used to store on our phones can now be stored online. Why bother loading up your phone with lots of music, for example, when Apple Music allows you to stream it instead?
These arguments will one day make sense. When we have affordable, ubiquitous, high-speed Internet access, then sure, there’ll be little sense in storing much on the device itself. But we’re not there yet. Most of us aren’t on unlimited data contracts, and even if we are in theory, there are ‘fair use’ provisions in the small-print.
We often don’t have access to data connections on subway systems. There are still areas of the country where LTE is either patchy or non-existent. If planes offer Wi-Fi at all, it’s slow and expensive. I could go on, but the simple reality is that most of us need local storage, and trying to palm people off with 16GB is simply unreasonable. Apple is offering an iPhone which pretty much guarantees frustration down the line, and there’s absolutely no reason to do so when it could offer a 64GB starting point at the cost of a few bucks less profit.
For years, Apple limited iPhones to 1GB RAM. It would argue that tightly integrating the hardware and software meant that it was able to make much more efficient use of that RAM than Android phones, and I don’t doubt that. But at a time when many users were complaining that lack of memory meant inactive tabs refreshing when you returned to them, Apple was risking a poor user experience for the sake of a few dollars. (It has, of course, finally bumped up the RAM to 2GB in the iPhone 6s/Plus.)
And then we have the latest Retina iMacs, where Apple reduced the SSD component of the 1TB Fusion Drive from 128GB to a miserly 24GB. That’s less than the RAM available in some configurations. Effectively, Apple has swapped out a genuine fusion drive – one that really did combine the responsiveness of an SSD with the affordability of a hard drive – for one that is, at the very least, severely compromised. One that is unlikely to deliver the snappiness expected of SSD storage. One which, we might even say, can still be marketed as a fusion drive without genuinely delivering on the promise of the technology.
I am not in any way suggesting that Apple should sacrifice profit for market share. When the company takes home 92% of the entire smartphone industry’s profits, Apple could quite rightly argue that it has all the market share it needs, thanks very much. It would make no sense at all for it to drop prices significantly to put itself in a position where it has to sell more phones to make the same total profit. Its strategy of selling expensive items to the premium end of the market has proven incredibly successful, and I wouldn’t for one moment suggest changing that.
What I am suggesting is far more modest. I’m merely suggesting that if Apple were a little less penny-pinching with its specs, were willing to sacrifice maybe $10-20 of profit on an iPhone, perhaps slightly more on a Mac, that would help it retain its premium positioning.
Customers know they are paying more for an Apple product (though a smaller premium than many imagine). They are happy to do so, knowing they’re getting a premium product. Apple delivers that premium product in a great many ways, The designs are fantastic. The operating systems are great. The customer service is unrivalled. Above all, the ecosystem is way better than anything else available.
But the only constant in the tech industry is change. Take Windows. Microsoft has opted, in essence, to offer a single operating system for all devices, from desktops to phones. It has majored on hybrid devices, that combine tablets and laptops in one. Personally, I’m not convinced that’s the right direction, but it does have one implication. Microsoft can, for the first time, offer an integrated ecosystem. Not one that comes remotely close to rivalling that offered by Apple, but it will improve over time.
Perhaps more worryingly, look at Google. The Google ecosystem comes very close to rivalling that offered by Apple. Its one weakness is that the ecosystem is predominantly geared to mobile. At a time when most Android users have Windows PCs, neither Google nor Microsoft can offer the level of seamless integration between desktop and mobile environments delivered by Apple.
But … Chromebooks are becoming increasingly viable as laptops for the type of things most people do with them. Sure, a Chromebook is no MacBook. Most are weedy, and they have the same issue as that 16GB iPhone I complained about earlier – they are designed for an always-connected world which doesn’t yet exist.
But they have enough power and offline capability for many people, and Chromebooks no longer look like the poor relation. Some of them come close to rivalling the stylishness of a MacBook. Give Google a bit of time, and it’s going to be delivering a complete mobile/desktop ecosystem that genuinely competes with Apple in terms of performance using devices that give Apple a run for its money on the desirability front.
Again, I stress: I am not arguing that Apple is doomed. Nor I am suggesting that the average Apple customer cares about how much RAM their device has, or the size of the SSD component of the fusion drive. But even non-techy Apple customers do care that the company’s products Just Work. And nickel-and-diming customers on specs that impact the degree to which products Just Work is, in my view, not a sensible path for Apple to take.
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