Apple’s Grand Strategy

on October 24, 2013
Reading Time: 4 minutes

Grand Strategy

Grand Strategy is not about winning the war, its about winning the peace. It’s not about destroying your competitor, its about preserving who you are. It’s not about moving toward a destination, it’s about knowing what your destination is.

Too many countries and too many companies lose sight of their Grand Strategy in their desire to win the war. They forget why and what they’re fighting for.

The fact that Apple started Tuesday’s event with a repeat of the video shown during their WWDC event clearly demonstrates that they have a Grand Strategy and that they are determined to be guided by that strategy first, and foremost.

Some pundits seemed to miss, dismiss or ignore the importance of that video. In doing so, they’re missed, dismissed and forfeited their chance to understand Apple.

Strategies

— Microsoft makes its money by licensing software to hardware manufacturers.
— Apple makes its money by selling hardware to end users.
— Google makes its money by attracting your attention with free services and then selling your attention to advertisers.

If you were Apple, what could you do to enhance your strengths while weakening or negating your competitor’s strengths?

Strategy #1: Focus on the user experience.

It’s perfectly fine not to care about quality. What’s not perfectly fine is criticize those who do care about quality for seeking it out and enjoying it.

Strategy #2: Give away your software in order to make your hardware more valuable and your competitor’s software less valuable.

AAPL’s business model is hardware. Giving away a free OS is a natural step. Puts even more pressure on MSFT though. ~ Sameer Singh (@sameer_singh17)

Strategy #3: Make your platform so valuable that your competitors will feel compelled to put their services on your platform.

I destroy my enemy when I make him my friend. ~ Abraham Lincoln

Campaign

Apple is very consistent. Worth remembering that in ’01 they bought SoundJam (which was $50), renamed it iTunes and gave it away for *free*. ~ Carl Schlachte, Sr. (@carlsuqupro)

Make Software Free
— Make all Operating System software free.
— Make all Consumer software made by Apple free. (iWork — Pages, Numbers, Keynote — iLife — iPhoto, iMovie, GarageBand — iTunes Movie Trailers, iBooks, Maps, Find my iPhone, Podcasts, Keynote Remote — 20 apps in all.)

I estimate the drop in OSX and iLife/iWork prices means about $450 million foregone software revenues for Q4. ~ Horace Dediu (@asymco)

Folding reporting Software into iTunes now makes sense: Software revenues were going to go to zero. ~ Horace Dediu (@asymco)

Make The Look And The Feel Of The Software The Same
— Update (almost) all Apple consumer software;
— Make (almost) all Apple consumer software available across all screens (iPod Touch, iPhone, iPad, Macs and Apple TV).

Make Online Software Cross-Platform
— Create on-line versions of on-device software;
— Make on-line versions free;
— Make on-line versions of the software look and feel like the on-device software.
— Make on-line software collaborative.

No iCloud account required to open Pages files? Nice! Collaboration? Very nice! ~ Joseph Thornton (@jtjdt)

iWork collaboration means … I’ll never have to open Google Docs again! ~ Rene Ritchie (@reneritchie)

Unify Hardware
Almost all new iPads & Macs are:

— Retina Screen
— 64 bit

“The iPad is 64 bit. Windows is, by and large, still 32 bit. Enough said.” ~ Ben Bajarin (@BenBajarin)

— A7

Apple’s messaging of the A7 in iPad: desktop-class architecture. No desktop needed. ~ Ben Bajarin (@BenBajarin)

— M7
— Lightening Cables (except iPad 2)
— Touch ID

Lack of fingerprint scanner in iPads points against it being an ecosystem play. Convenient in phones, not needed in tablets. ~ Benedict Evans (@BenedictEvans)

I respectfully disagree. There is not a doubt in my mind that the next generation of Apple tablets AND notebooks AND desktops will have Touch ID. Why? Many reasons, but one is that Touch ID is a habit. Once people get used to it, they’ll want it everywhere.

Unify Software

By making the operating systems free, and by extending updates as far back as practicable, Apple is doing its very best to remove fragmentation and consolidate their devices on the latest operating system versions.

Apple’s free software is the ultimate fragmentation fighter. ~ Harry McCracken (@harrymccracken)

Target Usage & Engagement

“Usage share is what’s important to us.” ~ Tim Cook

Apple is not after total share, they’re after meaningful share. If a tablet owner isn’t using their tablet, they’re of no use to the platform. And if they using they’re tablet but not engaged in activities that strengthen the platform, they’re of no use to the platform.

“Tim Cook says Apple has sold 170m iPads and iPad usage is 81%.” ~ Ed Baig (@edbaig)

Eighty-one percent of the usage share. Now THAT’s meaningful share.

Themes

1) Apple showed an incredibly strong commitment to the Mac. While others are looking for a PC exit strategy, Apple is making it clear that they’re all in.

Apple didn’t get the memo that Apple killed the PC market. ~ Jay Yarow (@jyarow)

If you still had doubts that Apple thinks notebooks still have a role to play just look at the line up & the price points they now have. ~ carolina milanesi (@caro_milanesi)

2) Apple made it clear that they are committed to the tablet as a category. They literally mocked those who make tablets that are PCs and PCs that are tablets. Anyone who thinks that the iPad lines and the Mac lines are ever going to unify really need to give the matter another think.

3) Apple made two pricing moves that show that they feel they are totally alone in the premium tablet space.

First, they dropped the iPad Mini by $30 (to $299), rather than the traditional $100 dollars, then they INCREASED the price of the Retina iPad Mini by $70 (to $399).

Second, instead of dropping the price of the iPad 4 to $399, they retained the iPad 2 and at $399.

Apple has a total lock on 10″ tablets. Question is the smaller cheaper space. ~ Benedict Evans (@BenedictEvans)

Those two moves make it abundantly clear that Apple thinks it is dominating that sector and that they don’t need to make price concessions.

Wondering if Apple was thinking about the weakness of the Android tablet offer when it priced the mini. Limited competitive pressure. ~ Benedict Evans (@BenedictEvans)

Further, by offering the iPad 2, instead of the iPad 4, as the low cost large screen iPad, Apple is pushing buyers up market to their higher quality and higher priced iPad Air.

Apple may not have a lock on the 7-8 inch tablet space, but their pricing indicates that they have a lock on the PREMIUM 7-8 inch space and – so far as platforms and profits go – that’t the only space that matters.

Apparently Apple is not worried about the competition. Instead, they think that the competition should be worried about Apple.