Apple Has its Eye on the Ball, but It’s a Different Ball

Like the rest of the tech industry, Apple is a company that is in constant change. Sometimes the change is celebrated, and sometimes the change is uncomfortable. In other wards, Apple always has its eye on the ball. It just may not be the same ball we’re accustomed to watching.

This week, I happened to encounter a myriad of articles that went into some detail about the changing face of Apple. I’ll go into them on page two here.

As a lead off article, I present a two part series from Daniel Eran Dilger.

1. Editorial: The future of Steve Jobs’ iPad vision for Post-PC computing


2. Editorial: The future of Steve Jobs’ iPad vision for Post-PC computing, part 2

Perhaps nothing launches a discussion more powerfully than author Dilger’s opening chart that displays the relative contribution to Apple’s revenue from various products over the years. Here it is.

Apple’s contribution to revenue by product, over time. Image credit: DataVisualizations.

The Guardian of Forever

This chart is most informative and invites one to ask a key question. When the revenues from a product start to decline, is this an outward sign of impending Apple failure? Or is it, in light of the chart above, part of an evolving mix of Apple products? We know the answer of course.

I am mindful that this is not exactly the same question as a decline in a market segment, but they seem related. For example, as I’ll point to on page two, Apple may be losing favor in the education market. However, schools (and students) buy many different Apple products, including Macs and iPads. So it’s harder to analyze the import of a decline in a market segment.

Another factor that comes into play is that a vertical slice in time in the chart above doesn’t reveal Apple’s roadmap for the transitional future. I saw a reference recently about how, if Apple hadn’t developed the iPod, the company might not have pursued the iPhone. (Apple’s market success with that tiny music player, and the manufacturing methods, paved the way for a much more capable but similar device.) For example, a vertical slice through the above chart in 2006 would have never reflected what Steve Jobs was thinking about with the iPhone. Or the consequent drive to negligible iPod sales in 2016.

iPad Evolution

All this is on my mind because we are at another crossroads. Apple’s inattention to the Mac in 2016 combined with the difficulty in seeing how the iPad can evolve to meet all our technical needs is creating angst and frustration. When Apple presents the idea in its advertising that an iPad can replace a complex PC, two things happen. First, the PC owner is intrigued with the proposition and may seriously consider it. +1 for Apple. But the very technical Mac users break out in nervous, laughter. Then derision. -1 for Apple.

Apple doesn’t show us its roadmap. Indeed, Apple executives probably didn’t sense that the end was coming for the iPod until 2009. That informed the company about how to proceed with the iPhone. One can plan, but the course of events, customer acceptance, technology and serendipity can influence and amend a company’s best laid plans.

Against this backdrop, I’ll continue with some of the related articles that I found this last week about change: trends and nervous reaction to change.

Next page: The tech news debris for the week of February 27th. The pain of change.

Page 2 – News Debris for the Week of February 27th

The Pain of Change

Let’s start with a missive by Bob Skelley. “I wish this was fake news for Apple.” Author Skelley, writing on an aging Surface RT, takes a broad brush gander at the landscape, the current mixture of smartphones, tablets, and PCs, and has some interesting observations about how we use our computational devices. One point he makes, to be debated, is that Apple is so focused on the iPhone that it has forgotten how to appeal to any other kind of user. This, in turn, could affect how Apple thinks about The Next Big thing. Apple’s inattentions can go so far that one might ponder a future in which the average user has only an iPhone connected to a large display when at home or in the office. Bleak?

The question to ask, I think, is this. Does this kind of thinking reflect a natural evolution, depicted by the chart back on page one? Or is Apple failing to address certain markets thanks to corporate negligence? The answer may lie in how successful other companies are in seizing certain customers and markets Apple leaves behind.

Next. Another question I have is this. Does Apple’s corporate direction, while profitable, adversely affect its reputations and branding? After all, people are resistant to change and people are the entities that respond to surveys about Apple. Philip Elmer-DeWitt shows us data from the Reputation Institute’s latest report.

Once the world’s No. 2 brand, Apple has fallen off Reputation Institute’s Top Ten list—all the way to No. 20.

This, I think, relates to a common complaint I’ve seen recently. How can Apple, while keeping its roadmap secret, nevertheless lay out a grand, appealing public vision that reassures the customers (and observers) that Apple is conscious of attending to all its customers needs even as it steadfastly works on a graceful transitions to the future? We’re not routinely getting that kind of messaging from Apple, and so we’re nervous.

2016 MacBook Pro, 13 and 15-inch. Image credit: Apple

Apple and the Pros

A reflection of that nervousness comes from Ewan Spence at Forbes. In this case, author Spence is diagnosing Apple’s defintion of what it means to build a MacBook Pro for the pro. This is a good read. “Tim Cook’s Awkward Challenge To Define The MacBook Pro.”

The broader question Author Spence invites is this. If Apple really cares about and wants to cater to the pros, why not meet the needs of the pros across the board: desktop and mobile? With a very high level of effort and excellence. Why must a company with such enormous resources be so steadfastly resistant to the needs of some pros?

Apple and Education

This next item from The New York Times continues the thread of the previous items. “Apple’s Devices Lose Luster in American Classrooms.” Quoting:

Apple is losing its grip on American classrooms, which technology companies have long used to hook students on their brands for life….

The shift toward Google-powered devices is hurting Apple’s revenue. Of the $7.35 billion that schools, colleges and universities spent on mobile and desktop computers in 2016, sales of Apple devices fell to $2.8 billion in 2016, from about $3.2 billion in 2015, according to IDC, a market research firm.

One way to look at this is that 1) Apple’s education sales are declining. 2) Apple’s iPad sales are declining. 3) Apple is doomed because a company never wants to experience declines in any core market.

The other way to look at it is this. A US$400 million drop in education sales is just 0.18 percent of Apple’s total revenues for 2016. Is this a reflection of Apple’s product mix? Does Apple need a cheaper MacBook? Is that a good idea considering Apple’s brand? Would building a cheaper MacBook and iPad reverse the unit and revenue numbers? Are there products on the Apple roadmap that solve the problem? Is the competition making any real money? Will the competition soon tire of the effort because they, themselves, are not investing in the future? Or will the competition, emboldened by Apple’s inability to compete, invest in a long term, permanent capture of the education market?

I don’t have the answers.

The Uncertainty Principle

All of these items I cited above relate to how Apple perceives its opportunities and how it wants to move forward. Product transitions and technology developments for a very large and influential company are a serious challenge. There will be gripes and uncertainties.

Right now. this very moment, Apple has a rich (but mostly aging) line of Macs. The iPhone sales are off the charts and the iPhone 8 will probably break all existing unit and revenue records. Apple continues to work on the formula for the iPad. Its retail stores remain crowded.

Change and transition continue unabated. The chart back on page one will evolve. But we’re nervous. In these uncertain times, Apple could help with that.

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Particle Debris is a generally a mix of John Martellaro’s observations and opinions about a standout event or article of the week (preamble on page one) followed on page two by a discussion of articles that didn’t make the TMO headlines, the technical news debris. The column is published most every Friday except for holidays.

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