Indications are that Apple–long admired for setting the bar high when it comes to beautifully-designed, innovative, game-changing consumer products–may be facing some stiff competition. According to Forrester Research analyst James McQuivey: “Apple is under threat on the brand front in a way they haven’t been in recent years.”
A recent Brandweek article: “Amid Transition, Rivals Are Descending on Apple,” questions whether the company’s competitors are finally launching products that might take a bite out of Apple. Apple’s response doesn’t seem reassuring, either. New ads have gone away from its core message about product strengths to a defensive posture concerning competitors’ products.
Okay. No more Apple puns…I promise.
The gist: Microsoft ads are spoofing Apple’s Mac spots with tongue-in-cheek take-offs on the “Mac vs PC” campaigns. It seems the nerdy PC might be ready to turn the tables on the hip, contemporary Mac. Microsoft’s new Windows 7, unlike the problem-ridden Vista operating system, is so Mac-like it’s going to be tough–if not downright impossible–to poke fun at it.
Some point to Apple’s response via its own ads as “a bit defensive,” as a harbinger of this slowing momentum. “Industry watchers say there’s a sense that the company’s marketing momentum is stalling as it faces tougher new competition,” according to Brandweek. Apple’s current ads depicting our loveable PC nerd praising every version of Windows operating systems over the years obviously points to the deficiencies of past Windows incarnations and seems defensive to some industry analysts.
This may be an even bigger headache for Apple: quality perception among consumers is running neck and neck between Apple and Microsoft now, according to Brandindex. Amazingly, it is even suggested that “Microsoft is getting more bang for their (advertising) buck” than Apple is. Even as the Mac vs PC battles continue to rage, a new ad campaign has hit the airwaves for Verizon’s new Droid cell phone, based on Google’s Android operating system.
Ads cleverly lampooning iPhone’s “There’s an app for that,” while running the features the Droid offers that are unavailable on the iPhone are getting a lot of attention. It’s too early to tell how the Droid will impact iPhone sales. But it’s about to get very interesting in the cell phone market.
Even with increased competitive threats on these fronts, Apple posted a huge fourth quarter that ended on September 26th, beating both its guidance and Wall Street analysts’ over-inflated consensus. Sales increases in the fourth quarter of this year versus last year showed healthy increases. Macintosh computer unit sales increased by 17% and iPhone sales by 7%.
However, iPod sales fell 8% in the past quarter versus the same quarter one year ago. Of course part of this is due to “cannibalization from the iPhone, but still spells change,” according to IDC senior analyst Danielle Levitas.
But you can bet Apple has already moved on; which is not to say the company doesn’t continue to innovate the products it already has. In October, new iMacs With 21.5 and 27-inch displays were unveiled. The MacBook was updated with an LED-backlit display. In early November, it was announced that over 100,000 apps are now available on the App Store.
Still, daring new ideas fuel companies with innovative cultures like Apple. They never rest on their successes, and never stop pushing the envelope until they’ve created the next game changer. Currently, Apple fans are all abuzz about a rumored new tablet PC. It’s being touted as the next potential product revolution from one of the world’s hottest brands.
This raises some questions for me. And they’re not about launching potentially expensive new consumer products in the midst of an economic downturn, either. Recession or not, consumers always seem to be able to pony up some cash for game changers.
Here are my questions, and I’d love to get feedback from HBR readers on these. Please feel free to jump in:
- Do you think Apple’s innovation-driven culture may stall over time? That they just might run out of ideas?
- Do you think it matters whether Steve Jobs’ team stays in place or not when it comes to innovation?
- Do you think it’s just a matter of time before a smaller, hungrier company comes along and outmaneuvers Apple with game changing products?
- Do you think consumer product companies can be innovative without integrating designers directly into their organizations? If so, how?
- Do you think if a company like Apple continues to produce quality products but loses the edge on being first to market with game changers they can still be a viable company?
- If that happened, what would it do to consumer and financial industry perceptions about the Apple brand?
I’d love to hear from you.
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Some great questions there, Ted, on a very interesting and potentially controversial topic. (You run the risk of having the Apple “fanboys” run over here and tear you up!
Has there ever been a brand that got received such excess mindshare relative to its market share? But that of course is the beauty of what Apple has been able to accomplish with all facets of its marketing – with a big emphasis on the “P” of product.
To your first question – will it stall vis-a-vis innovation? I vote an enthusiastic no (and i’m not even an Apple fanboy). To me the bigger tell will be what markets Apple goes after each time it rolls out a new “thingie.” It’s quite intuitive, but the more it goes mass rather than niche or focus, the more attention it draws from competitors.
If Apple truly ever takes a run at the business/ enterprise sector, this Droid stuff will look like child’s play.
Another great post.
Hi Kevin,
” Kevin, I am an Apple “fanboy”. Love all things Apple. I’m the principal of a design consultancy, remember? Love and use the iMac. My iPhone is one of my favorite possessions.
Thanks for weighing in here. Had to laugh at your admonishment: “(You run the risk of having the Apple “fanboys” run over here and tear you up!
Having said that, I expect Apple to respond to increased competition very well. I know it’s typical for highly innovative brands to eventually lose steam. Many in the marketplace likely think Apple will eventually become a victim of its own success. I don’t agree. The entire culture at Apple is so entrenched with innovative design sensibilities that I think you’d literally have to cut the core out of the company to slow down their momentum. But that’s just me, “fanboy” here!
Your insights are always appreciated, Kevin. Keep on thinking. And thanks for the kind words.
Great questions:
1. Given enough time, no doubt, nothing lasts forever. Next 10 years, NO.
2. Apple would be in big trouble if they lost their full Team. However they can succeed without Steve. Culture would be the big thing to keep an eye on if Steve J isnt there.
3. Competition is always there. Apple competes on many fronts. Could a small company beat them in one area? Sure! Out maneuver the entire company, no.
4. Emphatically NO!
5. Sure, being first to market isn’t the end all be all. They weren’t first with MP3 player and they wont be with ebook readers.
6. I dont think they have to be first to market, just innovative.
Apple is the Worlds premiere UI/OS designers. They are also one of the best marketing companies, period. The only immediate(next 10yrs) threat to Apple is Apple itself. Failure to be more “open”, failure to buy into more “cloud based” architecture/apps, failure to evolve/expand products faster (i.e. iphone is essentially same 3 years later and still only 1 model really), failure to understand TV/Internet merge- Apple TV has been tough going.
Those are the types of things that will be the downfall of Apple.
Thanks for the post
Hi Rich,
Thanks for the enthusiasm! Love it. I personally find it hard to disagree with most of your assessments. This statement is great: “The only immediate(next 10yrs) threat to Apple is Apple itself”. You’ve hit on a very important point about Apple needing to recognize trends and capitalize on them even if they don’t come to the table first on some of these developing technologies.
Remember when IBM, aka “Big Blue” was considered invincible? And then the company made the decision to stick with main frames, avoiding the budding PC market? What a fiasco. It took years for the company to reinvent itself after that.
Thanks back at you, Rich, for adding much more dimension to my post.
Ted, three phrases in my mind that signify continued success for Apple:
1) “Culture of innovation” (as Rich points out) So critical and so rare
2) “Pulse on customer needs/wants” (hard to be innovative if you don’t have this -or at least financially successful based on innovation)
3) “Steve Jobs”. Yes, sometimes he misses: i.e NeXT, Apple Cube. But when he hits it, it’s a bulls-eye.
Hi Paul,
You’ve summed it up neatly, and I agree. Especially liked your third point. Even the most innovative companies don’t always hit the ball out of the park, do they? The point: smart companies learn from their failures and continue to innovate. Worrying about the misses usually takes energy from creating the hits. Great point.
Thanks, Paul, for sharing your thoughts with us.
Ted, it seems like Apple is such a strong brand that no one else can topple its success. On the other hand, who knows what’s going to come out in the next few years. Technology changes so rapidly that some obscure or nonexistent company today, can develop something so innovative tomorrow that it will have a huge impact on Apple’s market share. Until the next big thing…
Hi Elaine,
I think Rich was right when he said: “The only immediate(next 10yrs) threat to Apple is Apple itself.” That’s not to say another smart, innovative company could come out of nowhere to steal some of Apple’s thunder at some point. But my feeling is that any company that wants to build an enduring, powerful brand would do well to emulate Apple’s culture. Can it be replicated? It can if founders pull designers, marketers and managers together in an environment that feeds on ideas.
Thanks for weighing in, Elaine. Your insights are always terrific.