Comment by joez | Hacker News Reader

Comment by joez | Hacker News Reader

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I'm not sure if I can agree 100% with this statement. While Apple is long touted as a company built on innovation, they can probably extract profits without any new innovations for a while. (A while being 2-3 years, doesn't mean to stop trying though.) And it's true that iPod sales decreased 8% over last year's Q3, they expected this because of increasing iPhone sales.

I believe while other hardware companies are racing to the bottom in prices, Apple is able to extract premium on its hardware and this is really reflected in the gross margin and bottom line.

Could Apple produce a 600$ laptop? Sure. But it is not worth the temporary gains they'd see. A low end line would cannibalize the margins of their other computers. The quality would probably suffer and it would hurt their brand equity. Apple could introduce an economy line of computers and take over way more of the market, probably grow their sales by 25-40% in a year. To me, that is a strong statement... in that they could but they don't.

I think one thing that Apple will have to contend with is the image. As iPhone's and Macbooks become more and more mainstream, the elitism behind it is decreasing. They will need to do some kind of segmentation (and price discrimination). I wouldn't be surprised if they came out with a higher end Pro series priced around 2500.

Full disclose, I do own a few shares of AAPL. So I believe the future is bright for Apple.

It's never been about elitism for Apple, that's just the way the people who don't buy Apple perceive it.

Apple has used a slogan like the following for several of their products: "X for the rest of us", where X is some product or service that they deemed were previously too difficult to use. That's not elitism, it's the opposite of it.

The elitism charge doesn't really vibe with the other general charges that Apple products are toys, either, nor that their users are stupid and need dumbed-down devices.

I also believe the future could be bright for Apple. Even if they've peaked, or soon will peak, they'll be profitable for a good, long time. That's not my point. My point is that they can keep on the upward side of the peak by coming out with another game changer.

I fully expect them to.

As iPhone's and Macbooks become more and more mainstream, the elitism behind it is decreasing. They will need to do some kind of segmentation (and price discrimination).

Elitism is easy to maintain. Just make the packaging fancy and charge lots of money! The ability to charge a premium also enables innovation, however. You can charge more for your new, different thing, and if it's truly different then it probably does cost more since economies of scale aren't fully in play. Also your new thing can be truly new and different -- this enhances the caché and lets you tap into status-seeking early adopters.

Apple seems to be in the space where Mercedes used to be -- able to charge a premium for well engineered and truly (though conservatively) innovative high-quality products. The danger is in too much power in the marketing arm. If the company succumbs to the temptation to sacrifice quality and innovation for better marketing, then it is done for. If that happens, Apple will become a vacuous status symbol, and the real engineering innovation will come from someone else. A clear and present danger! (Many would say it has already happened.)

Yep. The day Apple is fully ran by MBA's and the Marketing department is the day it peaks. This will probably be around the same time it comes out with an low end laptop. The power right now is Apple's marketing arm is backed up by technology and it is really in the pricing sweet spot.

The incentive structure of the marketing department is almost designed to produce short term thinking. So of course marketdroids have a bad name. They're basically incentivized to kill the goose that lays the golden eggs.

I wonder if there's a better way we could structure this?

You could base bonuses on overall sales and product quality over a 3-5 year horizon. Otherwise it's easy for a hardware company to suicide by pushing crap (coughRCA Thompsoncough)

Apple is currently run by 'marketing department.' It's just a good one.

'Marketing department' doesn't mean the advertisers that have nothing to do with anything else any more then 'engineers' doesn't mean techies in the back room that have never seen a user and only work when you can tell them exactly what to do. That's just what they seem like when they don't do a great job.

Deciding not to have any competitor below the 30-40th price percentile. Deciding to always have a coherent product line. The decision to focus on users wiling to pay outright for things instead of focusing on companies. These are all marketing decisions more then they are engineering ones.

What I've observed is that a lot of marketing departments are killing or at least slowly poisoning their company. I suspect that you have to get to somewhere between "good" and "great" to escape this.

Hmm. It seems that I've never been in a company that had even a good marketing department! (Until now.)

Hve you observed engineering departments, research departments, IT, Accounting, HR, Comms, legal... doing a bad job? Usually, most of these are not critical enough to "poison" a business, crappy HR or IT is annoying, but usually doesn't kill a company. Anything bad enough can, but if a department is far away from how the company makes money, good enough is usually good enough. Sometimes Marketing isn't important enough to kill a company either. Often it is though.

The types of companies that get discussed on HN are usually the kind where both marketing & engineering are important enough to do a lot of damage and important enough for everyone to have an opinion about them.

You can top that up with the fact that the stuff that usually gets praise or abuse (eg product development) can often be claimed or pawned off by both engineering and marketing.

Who is responsible for the ipod nano video camera thing? Engineers?

Sometimes things are obvious. Google has awesome marketing, but the original dynamite was creating the awesome search engine and the momentum caused by gmail & maps & such. Facebook is, as far as I can tell, a marketing achievement. In both cases it was important that the non dominant factor didn't mess things, but it was a hurdle.

Apple or MSFT? You could argue both or neither. If you wanted to teach how to be like them, the classes would probably be called things like 'strategy' or 'leadership.' I'm not sure that any department has a monopoly here.

If you have to choose between company A with lousy engineering but good marketing and company B with great engineering and lousy marketing, history shows company A is a no-brainer.

"The day Apple is fully ran by MBA's and the Marketing department is the day it peaks."

And that day was sometime in the early nineties. Fortunately their descent from that peak was reversed before too late.

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