UNDER COOK-ING APPLE

Posted by in Marketing, Media

Today was a BIG day in the life of one of the world’s great companies and brands – Apple. “It’s a beautiful day in Cupertino” was the twitterers’ most frequent comment this afternoon as tension built for Apple‘s “Let’s talk iPhone” event scheduled for 1pm West Coast US time.

Would they? Wouldn’t they (announce the iPhone 5)? Hardware or software focus? How would the largely unknown Tim Cook’s first outing as CEO go down?

For months Apple has been dominating headlines: from Steve Jobs stepping down as CEO to their vying for the spot as the largest company in the world by market capitalization with Exxon to Android signing up 1m activations a day.

The pressure from customers, shareholders, employees and the media was and is immense.

So what was the impact of all this on the brand, reputation and trust that millions of customers, investors, and journalists have in this iconic brand? Well I’m going to go out on a limb, and I don’t get any joy out of this (even though I’m writing this on a PC), that based on today’s presentation there are definite blemishes appearing on the Apple shine. Whether these blemishes turn into rot for the business remains to be seen but they are worth delving into.

Firstly, the good-ish news. The presentation finished with a major flurry which was the announcement of Siri – “a humble personal assistant” – as she/he/it put it themselves. This is a voice activated assistant feature which has the potential to be a major breakthrough in human-machine interactions making life simpler for the many of us who battle with too large thumbs and “how do you do that again” forgetfulness. The demo was impressive and the functionality clearly class leading. The implementation of this technology for human benefit is where Apple is fantastic but the worrying element here was that this technology was gained through their acquisition of Siri in April 2010 for around $200m. It was a smart move to acquire but it’s not a home-grown innovation.

The major issue for Apple which will, I suspect, hammer their share price for the next few days was that they didn’t announce a new iPhone but an upgrade to the iPhone 4 called the iPhone 4s. They called it “a completely new inside” – based on the A5 chip but it looks identical to the iPhone 4. The lack of the iPhone 5 is bad given that they now haven’t launched a truly new model in over 16 months and that pent up demand is massive. Apple’s pace of innovation is slowing and I don’t believe that with the iPhone 4s they will give enough people enough of a reason to upgrade. This means that they are missing growth and market share protection opportunities.

In this first post -Jobs event they relied on software, namely Siri and iOS5 to carry them through. Whilst there are many good features included they are primarily just catching up to features already available on the latest Android handsets. The lack of true innovation here was underlined by the 5 minutes spent talking about a hardly earth shattering feature to send physical greetings cards through the post via Apple to anyone around the world.

These issues were compounded by the presentation being quite boring and more corporate than I’ve ever seen from Apple before (however I was only following it on Engadget and Twitter – maybe it was scintillating in the hall?). For the first 45 minutes from the reporting I read the loudest cheer seemed to be for an iPod nano clock face featuring Mickey Mouse! The now legendary presentation style was polluted – lines such as “integrated clip” as a major feature of the iPod nano made it through the editing process. Slides and slides of the A5 chip in the iPhone 4s dominated with stats such as “26% better this” and “7x better that”. After an hour Twitterers were clamouring for a headline announcement – the 140 character frustration was palpable. What was lacking were any real strides forward in terms of Apple’s core competence which is making technology beautiful and simply to use. I’ve no doubt the iPhone 4s is better than the iPhone 4 but I don’t want one enough to make me switch. That, for Apple, is a problem.

After all is said and done and the yards of coverage are analysed the deeper issue here is whether the Apple brand and organisation can continue in a post-Jobs world to deliver outstanding innovation and design that commands irrational loyalty, trust and price premium. What was delivered today was largely incremental improvement. Steve Jobs was said to have a “reality distortion field” that allowed the organisation space to create whole new paradigms with products such as the iMac, iPod and iPhone. They truly led the market by understanding consumer needs – not at a “focusgroup” level by responding to what is said – but by looking beyond the surface and harnessing this as a driver of wild organisational imagination.

I hope we haven’t seen the beginning of the end of the Apple of old and the beginning of a more “corporate” less outstanding company. Either way the pressure on Tim Cook and his team won’t be any less tomorrow than it was at 12.55pm today. I wish them luck.

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UPDATE: I’ve just been reading the first analyst reactions and they seem positive towards the iPhone 4S but not from an innovation perspective but rather because of increased distribution via the deal that Apple have struck with Sprint. Whilst this undoubtedly increases the addressable market my fear is whether this indicates that going forward Apple’s growth under new CEO Tim Cook will be less about game-changing innovation and more about business tactics. Is this always the way when a numbers led CFO takes over from a visionary founder?

Justin

justin@basini.com