Apple's New Market
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They have been disrupted in markets where phones compete on price. Their most successful market, by a wide margin, is the one where phones are capped at $200. The comparison to BMW that is often made is laughable. If only BMW sold to dealerships who then turned around and sold the car for the same price as a Toyota. It's a droll-worthy position to be in, that's for sure.
It would be interesting to see how the U.S. market changed if there were no subsidies. My guess is that payment plans would be more common so it wouldn't be such a tremendous blow. But I always wonder if "good enough" Nexus style devices would become more popular and the Galaxy Ses and iPhones a little bit less.
So, I wonder how many people will opt to just buy it up front now, when the subsidy isn't hidden anymore. It could also have a negative impact because some people will find it too complicated, however the widely trusted consumer review and comparison sites all give it a big thumbs up, so I think many will figure out why it's better.
Apparently the seller of an expensive phone like iPhone gets a decent chunk of money at market prices, because it's common for carriers not to take any interest with their financing plans – i.e. the phones costs the same bought upfront as they do over 36 monthly payments. The phone itself is in no way locked to any specific network.
You can also buy unlocked iPhones directly from Apple. I've done it 4 times - 3G, 4S, 5C and now the 6. I bet Apple sells millions of them at full price, even in countries where subsidies are available.
We've heard the tired argument before that Apple won't be able to sell in places like China that don't have a subsidized market. How's that prediction actually working out?
Just not true.. Here's how they're doing in China: http://i.imgur.com/cVKCJmO.png
And their global marketshare is dramatically increasing in spite of nearly ubiquitous dirt-cheap android competition: http://i.imgur.com/QbUmJkk.png
(From Benedict Evans' excellent blog: http://ben-evans.com/benedictevans/2015/1/27/chart-dump-appl...)
http://www.patentlyapple.com/patently-apple/2014/10/apples-c...
Most of Europe doesn't subsidize cellphones, and Apple is doing phenomenally in nearly all of Europe:
http://www.dailytech.com/iPhone+6+Drives+Apple+Market+Share+...
Homekit -- Google Nest with Android Home.
Carplay -- Android Auto, not to mention what crazy things the self driving cars research will provide.
Apple Pay -- Google Wallet
Siri -- Google Now
HealthKit -- Google Fit
EDIT: BTW, I see that his refutation of Christensen hinges on the nebulous "user experience". It is not clear what "user experience" or the often repeated most Apple-like quality "design" actually entails. For a very good analysis of the pitfalls of just using “design” as a strategy to create market-defining products at Path, Dropbox, Square, Medium is by a designer
http://mokriya.com/designer-duds-losing-seat-table/
Why Apple is successful today, when its core principles have remained pretty much constant over the entire history is to be found outside Apple.
Google seems to have an iterative sink or swim approach with many products (often overlapping) and to a lesser extent, so does Amazon.
This is a good example of what I'm talking about. You have redefined user experience to mean something that most people will not think of. Even giving you that, look at the current iPhone setup. Leaving aside the carrier aspect, you can buy worldwide a new
iphone 4s,5c,5s,6,6plus in multiple colors and sizes.
basically 3.5", 4", 4.6" and 5.5" screen for a phone. With prices points from $250 to $1000 in minor increments. In contrast, Google has only one phone currently on sale the Nexus 5. The 'focus', 'handful of products' mantra is repeated but is not true. Frankly, the only thing missing is the stylus and adding it would cover the entire gamut.
Google only has one phone because that phone isn't even supposed to make money. It's a phone meant for Android developers both internally and third-party. Google may not lose focus from all the other handset manufacturers creating the thousands of different Android devices, but they certainly have a difficult time with integration.
EDIT: The way you are talking about 4s it would seem Apple only has a design team, once something is designed everything else happens automatically.
Actually, they are. You think the BOM hasn't changed? You think it's the exact same components being shipped from the exact same suppliers?
The specifications are the same, but the components are newly manufactured. I'm sure the BOM has rev'd. It's a mistake not to consider phones as part of their lineup which you can buy new, just because they have lesser specs and were initially released a few years ago.
I think this is an important part of Apple's strategy, which comes specifically from the way they maintain iOS, which other vendors have largely missed out on.
Basically, he argues that Xiaomi is built around serving a market that neither Apple or Google are serving: young people that are technically savvy but don't have the funds to be early adopters. There's a whole generation of them in China that have grown up during China's boom. There aren't many of them in the US, but that's not the same thing as "outside of China." Xiaomi will probably find a lot of fans in South Asia (particularly India), South America (Brazil) and Africa (Nigeria, South Africa).
The issue you are referring to, the Indian Air Force "warned" the use of Xiaomi devices because they tracked them uploading data to China. Xiaomi responded with an update which had one-click Mi Cloud turn off switch to stop that from happening. They were uploading meta data for their cloud services just like any other company. Xiaomi also announced a new datacentre in India to mitigate this concern. But they never got banned over this.
Xiaomi sold less than 2 million devices in India in 4-ish months. But to put things in perspective, they sold 8-9 times more than Google's Android One phones, another program targeting the same market. They sold the flagship Mi3 only for a couple weeks and then continued selling lower end device. They are launching Mi4 here this month, so that number will now probably go higher.
But I'll be happy to be proven wrong with other examples for Thompsons theory.
User experience is a differentiator. It's not the only thing.
Apple is top heavy, the ones in charge are the ones that scraped to the top and didn't retire or leave. They have with them the ideas that came about and pioneered in the 60's and 70's and are only finally now being in the position and getting around to implementing them.
Underneath them is a cadre of management that grew up and holding on to ideas from the 80's and 90's and only are now in a position to suggesting them to someone else with more power and abilities and getting the okay to try them.
Apple is really a stack of computing ideas from the 50's, 60's, 70's, 80's, and 90's. Starting with the Macintosh derived from the mother of all demos to now we're finally getting around to implementing the idea of a central mainframe with diskless devices accessing it.
A "cloud" with black mirrors everywhere giving you value? Oh, my, that sounds like what Larry Ellison saw as the future with the Network Computer back in 1996.
I'm old though. Accepting this new reality that this red-headed stepchild of a computer we used to argue about during elementary school recess about which is better turns out to become the most valuable company in a world and is finally in a position to push through something as magical as instant access to computing everywhere.
That is freakin' amazing.
Sony wasn't the biggest company in the world I think, and the game was a lot more primitive back then, but I remember owning a walkman with a Cybershot, a Sony music compo and at the end a matching laptop because all of there where integrated. If I had the money at the time I'd bought a Handicam and a matching TV in a heartbeat.
Sony seemed unstoppable, until the pieces just crumbled; there would be way better laptops, the camera market evolved and there were far from keeping in touch with the best players in the field, then the music industry moved on, and keeping the integration going on becomes more and more compromising.
With today's Apple, while they are spreading, the same cracks seem to appear to me.
They still have very competitive products on each market, but these are more and more compromised as deep design decisions are made and the competition is getting better.
As an anecdote, a year ago I broke my iPhone and decided to go android for a few month waiting for the iPhone 6, and surprisingly to me it didn't really matter much in my day to day use, except for the artificial limitations (no iCloud, no iMessage) on the integration. But these limitations instead of being a deal breaker, really forced me to go into Google/third party centric services on my laptop/ipad/other family members devices. In a Apple heavy household there is now one device that forces the others to change service providers for central things like email, messaging, calendar, online storage, and the thing is it's not really difficult nor handicapping, the pros and cons balance very well.
Interestingly enough, with Apple Pay, Apple is starting to step on the feet of the new Sony who've been investing in payment processing and ecosystem for so many years now.
TLDR; I think Apple has started playing a game that put them in a position where they have to be better than everyone else at basically everything. Right now I don't think they are at the top of their game, especially in giving options to their customers or software quality/reliability. So, while they have a ton of money and are super successful, I think there is even bigger pitfalls waiting for them ahead. Hope they don't fall.
They decided to use smaller, more expensive storage, with no discernible reason to choose their players over existing ones that used standard storage like SD cards.
I worked for an electronics retailler around the time that the iPod came out (our store didnt sell Apple products at all) but it was obvious that Sony would burn out their loyal customer base just from the number of people we had coming in complaining about their memory costing 2-3x for the exact same storage size.
People got turned off the brand due to bad experiences
I've been reminded of these when I has to sync to my computer to load arbitrary mp3 in the iOS library. The tracks are on a NAS, I could get them through dropbox as well, or any other way, really. But I have to go through iTunes if I want to add it to the library and listem to them through the main music player (and since at the start every app duplicating existing fonctionnality were refused, there's just no compelling, high quality alternative player not relying on the song library)
This is a single bit of annoyance, but then you still have to juggle with the libraries' respective itunes accounts, getting your tracks randomly deleted while syncing to a new computer etc.
It's still somewhat better than what I had to deal with when I was using a Sony MD with digital tracks. But for comparison I don't have these music related pbs on android.
Apple's analog is web services, which, to their credit they have tried harder to figure out then Sony ever did with open ecosystems, but which they likely will never be able to compete with Google.
That said, I'm still not seeing the cracks yet since their software/hardware integration UX combo and ongoing mindshare with creatives is setting a bar that no one else has the vertical integration to approach. Google's services are clearly superior to Apple, but that only puts Android on equal footing with iPhone, it's a long way from a knockout blow.
The thing is, their skills aren't worthless, I often wonder how they managed to design and ship things that would work right away without the ability to fix it later at low-cost like a software patch. Also, I kinda miss dedicated physical interfaces. As amazing as speaking to your phone is, I think that touching stuff is valuable for mammals.
They did it with Playstation, they would have been in a better shape if they went this way from the start.
About the cracks in Apple's integration, I think even the most vocal people only have mild complaints for now. But it seems money and power and mindshare are not enough for Apple to get the resources to fix these, and there are obviously planning to spread even thinner.
I also think the competition doesn't have to be absolutely better than Apple, just bring unmatched features that would tip the balance for specific consumers. Like the digitizer in the MS surface, or waterproof android phones, etc. Once one of the device is a non Apple one, it brings the potential value of the whole ecosystem way down.
The values couldn't and didn't align.
The idea is the synergy of Sony electronics and Sony entertainment would create something amazing but the reality was Sony electronics and Sony entertainment couldn't, wouldn't, and didn't play together.
Whatever the electronics side made, even if technically better than anything on market, had to be locked down to appease the entertainment side.
But the entertainment side didn't get big enough to be making such demands.
Sony also didn't make the jump to digital as fast as it could so upstarts were able to come in. I remember the transition from minidisc to MP3 player. THAT WAS PAINFUL and did not need to happen. Nor the subsequent jumps of oh hey, buy content again and again as different formats to fit into your playstation or your TV or your walkman.
There's a massive treasure chest, massive inertia, massive momentum, and again... it's freakin' amazing to me how much we clutch our little black mirrors and how central everything has been.
I'm rooting for a Wintel underdog comback.
Yes, if only because Wintel has a history of relative openness and backward compatibility.
However, the new Microsoft board is going in a different direction, prioritizing cloud and cross-platform over Windows. Hence Win10 will be cheap/free and continually updated by the cloud without notice, i.e. it becomes a non-deterministic magic box. Businesses will have to pay for Windows not to change.
Where sony lost me was the abyssimal software quality of their products. Ignore the DRM, ignore the licensing limitations. Their music management software was clunky, limited, slow, had critical bugs and barely had enough functionnalities to be usable. I was loosing my time clicking and dragging everywhere to transfer my music, the NetMD went to a drawer and I bought an ipod. I just seems so hard for traditional big japanese companies to benefit from talented developpers.
Their laptop line has/had good specs, but the windows integration is perfectible at best. I can't imagine trying to update the drivers or doing anything non sanctionned on them. One of my relatives has one, and my MBA performs better 4 years down the line while it went out roughly at the same time for the same price. I don't see wintel becoming an underdog anytime soon, but I'd love ubuntu in this role.
Or this one, linked a few paragraphs later: http://stratechery.com/2013/obsoletive/
Here's another one, for good measure: http://stratechery.com/2014/best/
So actually, I have. Mush indeed.
I just checked a few dictionary definitions of 'archaic' and none of them say anything about no longer being correct.
> Belonging to an earlier period, no longer in common use,
> though still retained either by individuals, or
> generally, for special purposes, poetical, liturgical
It might be why a lot of techies buy the phone (though I'm still loyal to my Lumia :)) but surely the primary reason remains the fact that the iPhone is a premier fashion item and/or has most of the apps?
But what does that mean? _Why_ is the iPhone a fashion item and other phones are not? Why does the iPhone command such a high degree of customer loyalty compared to its competitors?
Perhaps it's not what you meant, but when I read the argument that the iPhone is only/primarily successful because it's a fashion item, I feels like what is implied is that the iPhone as a product is similar to it's competitors and is only differentiated by better marketing. Which I think is BS. But if it were true, it would be even more astounding, considering Apple spends only a fraction of the amount Samsung does on marketing.
The competition hasn't stood still since then though, the difference between a Lumia a Samsung and an iPhone much.
So why do people continue to pay a large premium for a small increase (if any) in functionality?
Once your sold on their product its not simple to leave, let alone the simple fact that their products just work and do not require of you much to continue to do so.
Apple doesn't need to spend that much on marketing when it has an army of fanboys with blogs.
Most people, I would assume, don't go out and decide between the phones based on which has the best performance or interface merits. They just go out and get an iPhone.
Especially now that screen sizes are in the same ballpark, the iPhone and its interface don't look markedly different from competing Samsung/HTC/Nexus phones. People like how iPhones work.
They foresee a dystopian future with driverless cars, intelligent ads, perfect synergy and communication between our brains through implants. It's dystopic not because of what it promises, but how much control these providers will get over public services. Pure Philip K. Dick.
Welcome Google, Apple and Amazon, the companies of the future, the companies that help us on our most mundane and daily tasks. From waking up, drinking coffee, conmuting, working and going to bed. Of course, this keeps their stock value high, not doing it, but reaching for it. Cannot really blame them.
Apple has built a unified SDK for iOS and OSX that has been used in the Photos app. This means that going forward we could see a single development platform across all Apple devices. When you combine this with Continuity and iCloud and it's a pretty big deal.
Seamless movement between devices that of course only works with the Apple ecosystem.
I think the important point about modularizing was about Apple Pay, HomeKit, etc. Apple's interfaces with 3rd party components are modular. Apple is setting up the modular infrastructure for other people to take advantage, not necessarily being modular about how you develop apps for their platform.
http://blog.benwen.com/opinion/product/2015/01/29/apple-pock...