Last week, Apple released its Q1 FY2017 earnings and announced its highest quarterly revenue yet as well as all-time revenue records for iPhone, Services, Macs and Apple Watch. During the quarter, Apple sold 78.3 million iPhones prompting, once again, a discussion on Apple’s strong dependency on the iPhone. While this comment is fair and one Apple is well aware of, the comments that Apple has failed to bring to market another product with the same broad appeal of iPhone, commanding the same premium, is less so. It is less fair, not because it is not true but because such commentary fails to account for the fact no other single device is likely to have the impact smartphones have had on technology and, more broadly, on our lives.
Another common argument shared by some Apple critics is that the inability to deliver a killer product rests solely with Tim Cook. When we consider the two new lines of products Apple brought to market under Cook — Apple Watch and AirPods — I struggle to see how people could honestly believe Cook is failing.
Apple Watch and AirPods are very different products that have a lot to offer Apple as a brand, both as standalone products but, even more so, when they come together.
Apple Watch Gives Back What You Put In
I have been wearing an Apple Watch every day since it first came out. Yet, whenever people ask me if I love it, I hesitate to say I do because it is hard to explain why. Apple Watch gives back what you put in. You need to invest some time in setting up your preferences when it comes to notifications, pick your apps, buy into fitness, and add your credit cards. Most importantly, you need to trust Apple Watch to pick up some of the responsibility you have given to your iPhone for so long. When you do so, Apple Watch becomes a trusted companion you will not easily go without.
The problem Apple Watch is facing is that it did not reinvent the smartwatch category — it improved it. And, as consumers remain unclear on what role smartwatches play, it is hard for many to understand the value Apple Watch could bring to their connected life. In a recent study we ran at Creative Strategies, we asked US consumers if there was a tech product they purchased or received as a gift they liked more than they thought they would. When we looked at what device Apple Watch owners mentioned, if any, we found 53% said Apple Watch, proving there is certainly a return on investment in the product. Across all early tech consumers, however, only 9% mentioned Apple Watch as the device they liked more than they thought.
Over the past few months, with the arrival of Apple Watch Series 2 and watchOS 3, we have heard Apple compare Apple Watch’s performance to the watch industry and not just because it makes the numbers look better. Apple understands the real magic is what mainstream consumers find in Apple Watch as an upgrade from a traditional watch rather than what early tech adopters might find in comparing Apple Watch to previously owned wearables as the above data suggest. Data aside, if we consider how Apple is dominating the smartwatch market and how competitors are moving more and more to make their smartwatches look like a traditional watch, it seems natural to use that market as a measure of comparison. As John Gruber said: it is time to consider Apple Watch as a watch.
Apple AirPods, Practically Magic!
This is the slogan of Apple’s AirPod commercial and, if you ask anyone who has tried them, they will agree. The feeling of magic is not because the user is aware of Apple’s unique approach of having two separate streams of music play simultaneously into each AirPod. The magic is delivered as soon as you pair your AirPods by simply taking away any pain previously inflicted by Bluetooth-enabled headphones requiring you to pay attention to flashing colored lights while pressing odd buttons. The initial ease of use carries over into everything you do as you let Siri work its way into your ears.
In the study mentioned earlier, among the early tech adopters who said there was a product they liked more than they thought, 38% mentioned Apple AirPods. This number is even more telling when you consider they refer to early tech buyers where most of the purchases (91%) are occurring today.
While overall performance is great, I do strongly believe most users are buying first and foremost into the magic and will strongly recommend AirPods based on their visceral experience. The AirPods magic is also what has prompted some commentators to say Apple got its groove back and AirPods are the kind of product Steve Jobs would have done. So does magic sell more?
Magic Might Be Short-lived, Usefulness Rarely Is
No, magic does not necessarily sell more products but it makes it easier to sell. Instant magic will make for a product that sells itself but such products might have to be conceptually simpler in the experience it delivers in order for the magic to work. You know how to use headphones. There is very little you need to learn in order to appreciate AirPods and what is appreciated is common across the user base. This helps tremendously with user promotion, something consumers look for more and more when researching what products to buy. Other products, like Apple Watch, are more complex in the value they deliver because users will appreciate different features. What I might see as magic, someone else might not. This makes for a more complex sales process in the store as well as in the marketing message. Yet, the engagement the user will have with the product will not be in any way less meaningful. A way around this complexity could be to focus on a feature with broad appeal and turn that into magic. Apple is currently doing exactly quite successfully with the “depth effect” on iPhone 7. Most iPhone users use it as their main camera and get a visceral gratification from the depth effect.
What is particularly fascinating about Apple Watch and AirPods is that using them together allows them to feed off of each other’s strength to deliver a whole new kind of magic. I strongly believe more and more of Apple’s future success will be built on the magic of devices working together at home, at work or in the car.