Apple: Time To Come Out Swinging

by Steve Wildstrom   |   March 20th, 2013


Portrait of Steve Jobs (Matt Yohe/Wikimedia Commons)

The dominant picture of Apple in the media today is of a company on the ropes: out of ideas, falling behind the competition, stock price battered, doomed. It’s reached the point where the CEO of BlackBerry, of all people, is criticizing the iPhone as stale.

The reality is a company enjoying record sales and earnings, dominant in its most important markets, with products continuing to be the envy of customers and competitors alike.

How did a company that spent so many years successfully managing and polishing its image reach this point? And how does it change a growing perceptions of failure in the face of actual success? These questions matter because over time, perceptions have a way of infiltrating reality, making the negativity surrounding Apple a long-term threat to the company.

Apple has succeeded by figuring out what consumers want before they knew they wanted it and by making superior products. But a little bit of magic has surrounded Apple products for the past 15 years or so and that helped make iPods and MacBooks and iPhones objects of desire. Today, every major Apple product is the top seller in its category, often by a wide margin. But without the perception of magic, that becomes harder to sustain.

This is where Apple misses Steve Jobs. Today’s Apple is run by a highly competent crew of executives. But Jobs was the magician and no one can replace him. A Tim Cook keynote can be interesting and informative, but it will never be the sort of cosmic event that Jobs presided over two or three times a year. This loss is irreplaceable.

But something else has changed. For the first time in many years, and certainly for the first time since the incredible iPhone run began in 2007, Apple has a competitor that truly matters. When Apple entered the phone market in 2007, it gained about 100% of the mindshare before shipping a product. Once the iPhone was a reality, and especially after the iPhone 3G and the App Store debuted a year later, Apple brushed away the incumbent smartphone makers without them putting up much of a fight.

Samsung is different. The company is nowhere close to Apple’s seamless integration from components to software and the dog’s breakfast that was the Galaxy S 4 launch shows it still has a ways to go in its presentation skills. But it is making first-rate products that are more and more Samsung and less and less Android, and backing them with a lot of money behind an effective marketing campaign. If Samsung ever learns how to overcome Google’s tablet cluelessness, it could be a formidable competitor to the iPad too.

If Samsung ever learns how to overcome Google’s tablet cluelessness, it could be a formidable competitor to the iPad too.

With Samsung on the prowl and Apple, fairly or unfairly, getting beaten up daily by both the tech and financial media, the company can no longer afford its long-time strategy of floating serenely about the noise of the tech and financial worlds. Apple never responded to rumors or much of anything else. Routine inquires to PR staff received polite no comments or, often as not, no response at all. Apple was the honey badger of tech companies. That strategy has served it well for more than a decade, but it clearly is not working very well anymore.

One thing Apple should strongly consider is giving the world some sense of its direction. Rampant speculation about Apple products while Cupertino sat in stony silence used to work in Apple’s favor, but now its being interpreted as having a lack of anything to say. Critics will say Jobs would never have considered even giving hints about products in development, but Jobs was against many things–including Apple making a phone–until he found a good reason to be for them. “What would Steve do?” is not a good guide for Apple today. The company should let the world know that it is still on top of its game.

Apple also needs to throw a bone the the financial markets. With a cash hoard is more than $150 billion and growing, Apple is beginning to look a bit like a bond fund with a consumer electronics company attached. It successfully fought off an effort by investor David Einhorn to give a good chunk of the money back to shareholders, but it has given no indication of what it plans to do, but there’s a good argument to be made that all that cash sitting around is doing investors no good whatever. It could, as Brian S. Hall suggested here the other day, set up an endowment for future product development. More realistically, it could pay a much larger dividend or use the cash to buy back its own stock. It could find something worth acquiring (maybe it’s saving up to buy Samsung, but it needs about another $100 billion.) But one way or another, it owes investors some explanation of its intentions if it hopes to win their confidence back.

There are some signs that Apple understands it is in a new environment. It has come up with a new section of its web site, going after the competition saying: “There’s iPhone. And then there’s everything else.” Marking chief Phil Schiller took on Samsung in an interview on the eve of the Galaxy S 4 launch (though he diluted its impact with an incorrect claim that the phone used a year-old version of Android.) Such steps are a good start, but Apple will have to do more. It’s a difference, and much more competitive world out there.

Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.
  • Defendor

    Advertising:

    Even recent Apple Advertising is sub par. I see an iPad advert that is just shouty noise, it is more like a Microsoft advert than typical classy Apple advertising. Stop doing this and go back to classy. But that is just one ad. Place the occasional jab, but make sure you are right and do it with some style.

    Product: Apple needs to get a little more aggressive, it can afford to take a few more chances, this is no longer a company on the brink of bankruptcy where one extra SKU will put them out of business.

    iOS:
    Unlock some advanced features for power users: A file system would be nice. Check what is popular in the jailbreak community.

    Phones:
    The low end end phone for emerging markets might please some wall street analysts, but it does little for mindshare.

    While it is often debated. IMO Apple NEEDS to build a superphone (5″+ phone). It is no drain on the most profitable corporation in the world to have 2 models. My local Carriers have a category they place above smartphone, and that is the 5″+ superphone.

    The one-handed argument only goes so far. It makes it look like Apple is ceding the new high end of the smartphone market with a massive case of NIH syndrome. IMO this is their largest failing on the product side at this time. They are sitting out the creation of a new higher end segment.

    iPad:
    Retina Mini ASAP. It looks like there will soon be 300dpi mini competitors.
    Full size iPad. What can be done to make this relevant in the face of Retina Mini? Perhaps and even larger screen, higher resolution version?

    Laptops:
    One area they seem to have the best in the industry. A slightly lower end machine would never hurt.

    Desktops:
    This one is personal. I hate All in ones. What does Apple have for the Headless computer users: Dog turds.

    • http://search.websonar.com:8080/ Duane Bemister

      Have you tried the new mac mini with the fast processor and fusion drive?

    • TheEternalEmperor

      There you have it folks. Apple’s slide into irrelevance solved! Bigger, cheaper phones that appeal to a minority of jailbreakers with a few lower-end laptops to boot.

    • AdamChew

      Isn’t it amazing we have all the answers and the good folks at Cupertino are brain dead…../s

      • Defendor

        When we have Phil Schiller making plaintive and incorrect jabs at Samsung, I really have to question what is going on at Apple.

        It really comes across as someone resting on their laurels weakly criticizing someone who is eating into their business, rather than make products to counter that loss.

  • Rich

    Okay, Steve Jobs is gone. But Apple’s success in the past was driven partly by its products – the introduction of the iPod, then the iPhone, then the iPad – and partly by ads – “Think different,” then “I’m a PC, I’m a Mac.” Going forward, we don’t know what captivating new products the company may introduce. Apple hasn’t said anything about that, but they didn’t say anything when Steve was around, either; they just surprised everybody. For ads, they only need the right kind of advertising for today and it will counteract the declining perceptions this article mentions. I would only suggest that bashing the competition is never a good strategy. It’s best to talk about what you’re doing right, not what others are doing wrong.

  • FalKirk

    “… perceptions have a way of infiltrating reality, making the negativity surrounding Apple a long-term threat to the company.”

    Apple should be very, very careful to focus on long-term success and be very, very leery of taking short-term actions that may positively affect perception in the short-run but negatively affect their success in the long-run.

    • tz

      This brings up my view that Apple needs to be Apple. Their relationship to their customers is paramount. Their relationship to their investors is a separate arena entirely. The investors are all in a collective greed motivated hysteria and are putting bad pressures on Apple.
      On a website dedicated to market investment somebody made cogent argument to me that shareholders indeed do have and should have influence and power on how a (Apple) company is run. I consider this a danger to Apple. Pursuant to that concern I think stock buyback to diminish the influence of investors might be a smart move.

      • steve_wildstrom

        Apple, fortunately, does not have to worry about its stock price in any direct way. The company rarely makes large acquisitions and if it wanted to do so, I has tons of cash and wouldn’t need to use stock. Wall Street’s opinion doe smatter in two indirect ways:
        1) A sinking stock price hurts employees with options and can damage morale (although any options issued more than a year ago are still so deep in the money that this probably is not too big a deal) and
        2) it contributes to the generally negativity.

        • AdamChew

          Perception of the products make by Apple is far more important than what Wall Street think of Apple.

          Imagine they come out with very underwhelming iPhone it will damage the reputation of the company far more than the perception of the analysts and pundits.

          I believe they should concentrate on coming out with great products and let them speak on behalf of Apple.

          I believe Tim Cook also mentioned if he were to address every criticism he would have no time to do any thing else and it will never end.

          The CEO of RIM should have a good look at their latest offering it looks suspiciously like the iPhone 5.

    • Rich

      As long as Apple remains Apple, no problem, and Steve did build a company in his image. His memory is so strong that if Apple veered in the wrong direction, a lot of people would notice it and would raise an alarm.

    • Grwisher

      Sorry Falkirk, but whenever anyone says “Apple should” it is a sign of stupidity. Apple is doing just fine. Only the players at Apple know what they should do. I guess I am just sick and tired of every SOB thinking that Apple needs their advice about how to run this magnificent company. This is especially true of a “recovering attorney” or a person who used to sell accounting software to attorneys (me). :-)

      • http://twitter.com/sjsterling Scott Sterling

        Actually, Falkirk is simply saying Apple should be Apple.

        So I think your generalization about stupidity is just that…

  • mhikl

    These are all good points, from Steve to commentors. As noted in Steve’s article, Apple has the money to spend so it does not have to rely upon all its products to bring in high profits. A very simple inexpensive almost-Smart Phone for those who just want a phone and some apps, would address the low end (dollar challenged) user; such a phone might even come under the banner of a ‘jPhone’, AKA a Kiddy phone, for parents who what their children to have lower costing phones for safety, easy contact, for whatever reason. A larger iPhone supreme phone for the heavy user who doesn’t want to carry round a pad would feed the heavy user. Other products that tie in with Apple’s superb integration certainly would help spread the word to those who may not want a full featured pad or phone but have a computer.

    An inspired presenter, a voice for Apple is very important. Surely there is someone in the mix of talents at Apple who has a presents and intelligence to voice the magic on Apple’s behalf who meets regularly with the ‘talent’ and knows the mind of, dare I say ‘Steve’ and Apple, can be found, and possibly put on the Apple Board to further legitimacy?

    And where are the great advertising companies Apple used before? Surely it wasn’t Steve who came up with the skinny iPod dancers of yore?

    And extra features that high end users want to use, that they elect to turn on, is mandatory.

    I say, take the crumbs Samsung feeds on and Bob’s your uncle, guess who’s on the ropes in a nasty struggle for air? FacsimileSam comeuppance, that’s who.

    Kirk ‘n Rich are correct. No low blows (just hints in a positive way) regarding the opposition. Keep it Apple clean and shiny. And I like the Apple surprise, the quite attire, and the colour that comes when a product is presented. It is all part of the magic.

  • stevesup

    Noticed today: the idea that iOS would become a purchasing device using fingerprinting and whatever. The iOS devices need to be made super secure, given what info we put on them these days. It’s not a big jump to replacing my visa card and wallet entirely. Noticed yesterday: the suggested designs for a world, unlocked iPhone, thin and light as a Touch. Put security on one of these and, for me, the deal is done and dusted.

  • Jon T

    The one single thing Apple will continue to do – as under Jobs – is to ignore the short-term, populist, headline garnering, reactionary and often time-proving-useless suggestions from bloggers, journalists and other ragtags with opinions.

  • pawhite524

    Am I wrong or Apple’s Board of Directors start making themselves a bit more, or a lot more, public in a PR way about Apple to shut up or at least oppose the naysayers on Wall St and those bloggers/analysts allegedly getting payola from Samsung? I would think Al Gore and some of the other All-Stars on Apple’s board would rate a listen to if they provided a pep talk or rumor control once in a while, no?

    • steve_wildstrom

      First, I have seen zero evidence that anyone writing anything public about Apple is being paid to do so by Samsung or any other interested party. That would be an extraordinarily foolish thing for Samsung to do, and illegal besides.

      Second, I don’t think speaking up for Apple is really the board’s job. This falls on management.

      • pawhite524

        Steve,
        Thanks for taking the time to reply.
        I really have no idea what a Board of Directors role is but figured they might be people import in the sense that if one or two spoke up others might listen. Apple has been amazingly passive about the unwarranted negative publicity that has spiked more so lately. I realize the risk of appearing too defensive but as you so thoroughly point out in this article it is time to address the BS.

      • mhikl

        Steve, Check out http://daringfireball.net, Gruber’s “Journalism at Its Best” for an interesting take on Samsung:

        “Added Value is a subsidiary of WPP. WPP is Samsung’s ad agency. No mention of this in the story. Just reported as a legitimate unbiased survey. Stay classy, BBC News”

        • steve_wildstrom

          This suggests that the BBC got snookered, not that they are on the take, which was the allegation I was objecting to.

          Also, it’s a considerable leap to conclude that Samsung had anything to do with the consumer survey, whatever you think of it. WPP is a vast media conglomerate and it is one of Samsung’ s many agencies handling its b-to-b account. (Ad Age). WPP competitor Publicis is the agency of record for the Galaxy account.

  • diddler

    I sold all my Apple shares for Bitcoins last year so I have nothing vested here anymore, but as an S2 and S3 owner I would argue that Samsung has far bigger problems. For the past 2 years they were building the best Android smartphones, but the competition has caught up rapidly and as the recent S4 launch shows they have very little to differentiate themselves that does not come across as gimmicky. I may buy another Android, but it is unlikely to be a Samsung. It will be very interesting to see how the S4 sells outside South Korea.

  • http://twitter.com/mjh483 Jun Hyeon

    Can’t you guys stop being so childish? Apple has already given us three revolutionary products that have change our lives for the better. Other companies have created NOTHING, but have only been copying, copying and copying. Can’t you just wait? Do you think creating a revolutionary product THAT REALLY MATTERS TO US is easy???

  • the Ugly Truth

    Samedungs’ strategy to dethrone AAPL is very very simple….

    1. Copy without shame.
    2. Flood the market with good enough cheap alternatives.
    3. spread rumours, half truths and lies via the media.
    4. “buy” talking heads to bash AAPL consistently
    5. start the rumours in Asia and use Samedungs’ brokerage arm to short AAPL

    The impact?
    1. crappy AAPL stock leads to frustration. this leads to shareholders questioning leadership. leadership capitulating wrecks LT plans.
    2. Lies and half truths will win over the the willful ignorant consumers and change their brand perception

    If both of the above is done consistently over time…
    the “premium” brand will erode and will be forced to compete at lower price points.

    Risk to Samedung?
    - being sued (all bark and no teeth patent system is worth the risk)
    - money (which they have lots of).

    What should AAPL do to combat the above? So far, it has taken the high ground and has refused to take the bait to battle it out in the open.

    The S4, without Samedung seeing AAPL’s upcoming phone plans have been considered a bust. It will not be a surprise if they end up paying big money for intel info or hmmm…hiring Forstall?

    • steve_wildstrom

      Accusing Samsung of manipulating Apple’s stock price is a heavy charge. Do you have some evidence for it? (By the way, there is very little short interest in Apple and the decline of the stock price was not caused by pressure from shorts.)