In just a few years, the technology industry’s most revolutionary company has become its most conventional.
The Apple Inc. that late CEO Steve Jobs set on a course of domination a decade ago had every reason to think in revolutionary, even dangerous, terms. Far from the world’s most valuable company, that Apple was a niche player, only a few years removed from a flirtation with bankruptcy. It could afford to bet the farm on products such as the iPod and iPhone – products that at first received mixed reviews in large part because nobody understood yet why they wanted them. Those bets, audacious as they were, paid off in ways even Mr. Jobs couldn’t have imagined.
A decade later, and now boasting some of the most impressive profit margins in the technology industry, Apple has no choice but to play it safe. Gone are the days of groundbreaking, genre-redefining products. The company is now in the business of tweaking its products, echoing the transition of other technology titans. The new iPhone 5 hitting the market later this month is destined to be a best seller, despite lacking any major innovations.
Today, Apple is run by a numbers man. Tim Cook’s expertise is in the meticulous, unsexy work of maximizing profit, using tough contract terms and making incremental improvements to Apple’s product line.
Apple may be best known as a company that puts the customer experience first, but, increasingly, management’s focus is on the bottom line – best illustrated by the carefully calibrated timing of the iPhone 5 launch date.
The iPhone 5 begins shipping in key markets such as the U.S., Canada and the U.K. next Friday, and in 22 more countries a week later, positioning it perfectly for the holiday shopping season. But more significantly, that big global launch – one of the most aggressive in the company’s history – will come just before Apple’s fiscal year ends, meaning that all the millions of phones the company will ship in the first days of the iPhone 5 frenzy will show up in its next earnings results. In other words, the timing of the rollout isn’t random; it’s a calculated move to make sure the new phone results in as massive a quarterly profit as possible.
In order to squeeze out additional profit, Apple is imposing a new restriction on some of its carrier partners, prohibiting them from selling an iPhone 5 in their stores without also activating the phone. New activations automatically trigger a fee to Apple from the carriers, but also keep consumers from buying unactivated phones and then reselling them at a premium or shipping them to other countries.
Given how loyal and reliable Apple’s customer base is, it is a perfectly reasonable strategy that will almost certainly keep the company atop the industry – at least until someone else comes up with the next revolutionary product. In film terms, the Apple that brought the world the iPhone in 2007 was a maker of risky, unorthodox movies that went on to become blockbusters. The Apple of today makes sequels – movies that make a lot of money, but feel very familiar.
The Apple ecosystem
Less than 24 hours after Apple unveiled the iPhone 5 in San Francisco, Samsung Electronics Co. Ltd. issued a blunt press release.
Samsung’s statement came in the form of a contrast-and-compare chart showing the various differences between the new iPhone and Samsung’s own Galaxy S III smartphone – the iPhone’s most formidable competition in the marketplace today. The chart went through myriad criteria, such as screen size, processing power and battery life, and was intended to make the argument that, over all, the Galaxy S III was simply a better phone than the iPhone 5.
Samsung is, for the most part, correct, and Nokia Corp. and Research in Motion Ltd. will likely be able to make the same claim.
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