Apple

Plenty of trees...no Apples by Mark Izatt

I was excited when I realized that being in San Fransisco for the Financial Times 'Business of Luxury meant I was also going to see the new Apple Store concept a day after it opened.

I needn't have been.

To quote one friend this is "same old, same old" albeit with the twist of bringing the outdoors inside.     It's Scandanavian airport meets hotel lobby - and, my biggest bugbear about the current format, it does nothing to absorb people or noise, remains.  It's still a scrum not conducive to spending a relatively large sum of money.

The sheer scale of this environment belittles the product to the point it's hard to find it.  Tucked into shelves amongst acres of light wood.

The plus points are, without doubt the outdoor terrace, and the massive 'hanger doors' which were wide open to Union Square - but that's not going to be replicable  on many of their sites around the world for both space and climate reasons.  Without this feature I'm not entirely sure what much has changed.

I had hoped for more.   

 

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Angela Ahrendts - MIA by Mark Izatt

I have had 3 Apple iphone 6S 'purchase' experiences in the last month.

The first was a gift to me, the second was a purchase by me via a UK airtime supplier (Vodafone) and the last and worst was a purchase by me in an Apple retail store.

For obvious reasons the gift was the most pleasurable experience - it was a surprise, I didn't pay for it and it shipped direct to me from the recipient.   That was an exceptional experience - the way that all gifting should be personal or corporate.

The Vodafone transaction - online and then store collect was smooth, efficient with a personal, focused, non-hurried handover in the store of my choosing.

The Apple Retail experience, despite me reserving and turning up at the beginning of my allotted time slot was miserable. In one of their stores in Central London, it was a mix between Ellis Island (circa 1910) and a large airport when every flight has been cancelled.   Think security, rope lines and a myriad of queuing options.   Lot's of people checking you in with iPads and very few people doing anything.

Apple makes fantastic products, their performance and profitability is beyond question but their retail experience continues to deteriorate as their price points go up and up.

What was once cool - the white, spare aesthetic, now comes over as little more than a large, functional clearing house.   All about the transaction and nothing about the experience.

It's fine when you are going into purchase a charging lead (you know, the ones that cost about $20 and don't quite last 3 months) and use the Apple Shop app on your phone - you walk in and serve yourself and leave, but what about purchases costing upwards of $1000.   The whole experience leaves you feeling violated.

When Angela Ahrendts joined Apple 18 months ago (that's right she's hardly new in post) much was made of what she would bring to the retail experience.   Beyond some tinkering with the size of the logo on employee shirts I don't see what she has brought to the table.

This is neither efficient or immersive.

Coincidentally, a few hours later, I received an Apple survey via email.   I hope someone reads my comments.  Better still call me, I bet I'm less expensive than Angela.

 


Cash rich, time poor - Apple Watch by heathrowkennedy

I'll start, upfront, by stating that I believe that the Apple Watch will be a commercial success.  They will sell huge volumes at all price points. The Apple juggernaut will continue to speed along. Now that's out of the way what do I really think ?

Firstly, there can be zero doubt that Apple is now a fully fledged luxury brand.  Back in September 2013 after Apple launched the iPhone 5c and 5s I wrote that "Apple should have gone for a wider price point range accelerating growth in new markets (getting more users) and doing more to create a genuinely more luxurious top offering with real material differentiation, commanding a much higher price (retaining HWI and opinion formers)."    I didn't get everything spot on in that blog post but I've been proven right with my thinking on Apple becoming a more luxurious brand with bold vertical range expansion.

That vertical expansion came alive yesterday in San Francisco.   It raises revenue, expands appeal and enhances the entire brand proposition at the moment when it seemed that everyone owned an iPhone.  There can be no doubt that Apple is now a luxury brand.

Up until now their pricing could become stratospheric but this was based on tangible and rationale things - screen size, memory size, speed.   With the Apple Watch Edition Collection and an model priced at $10,000 Apple have made it clear that they are determined to win a share of very discretionary spending.

Over the coming days and weeks there will be many reviews of the Apple Watch from people with much more technical insights than me but I would like to address what I see is the principle weakness of Apple Watch.   Battery life.

Battery life is the curse which bedevils all of Apple's smaller devices.   Take the iPhone 6.   A slightly improved battery performance but sill nowhere near to meeting the needs of a busy professional.   I defy anyone to take it off the charger at 6am and still be going strong at 6pm.   And for many people there is still another 6 hours before they get home.

My work around ?

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A suite of external battery packs which I select depending on what my plans are for the day / evening.   In actual fact what that really means is I now don't let my new Anker pack out of my sight.  It's heavy and wieldy but with 10 full iPhone 6 charges in it I can relax and come to the assistance of lesser mortals when the need arises.

Usability and addictive qualities are two of Apple's biggest strengths......and weaknesses.   They, and the developer community, have created game changing apps and functionality which result in high usage.

A few years ago, in a different guise, I can clearly recall a spirited discussion with a product manager when I asked about the battery life of a pending new product.  He kept quoting the 'standby' stat and I kept asking what that meant in terms of real use.   If a device is not switched on or used it has a battery life you can measure in days and weeks !   But that's not the point.

You switch it on and use it.

Which makes Apple's heavily caveat-ed Apple Watch Battery page deeply concerning.    The phrase "actual results may vary" is applied to every statistic. That combined with personal experience makes me sceptical of the published "18 hour" battery life - which is based on a minimum of usage.    So let's be generous and say that with moderate use the life is 12 hours.    Your busy entrepreneurial high net worth will hit the gym at 6am - which means by dinner time, just the moment he or she might want a discrete communication and information device on their wrist (more subtle than checking your phone during a business dinner) the battery makes the thing as useful their first Timex.

People put on a watch in the morning and they take if off at night.   They are not in the habit of charging it during the day.   And, remember a tethered Apple Watch to an iPhone will also drain the iPhone battery.   So now your busy wearer has to worry about charging two devices at some point.    I just don't think the world is ready to see $10,000 gold watches hanging from a spare mains outlet in a bar, restaurant or airport lounge.

As I said at the beginning I do believe they will sell a lot.  I just reckon that a lot of them will end up discarded in the bedroom drawer after a few months.

Although there is one solution.   You can buy two and swap them over during the day. Maybe that is the plan all along.  Why spend $10,000 when you can spend $20,000 ?!

Apple - missed opportunity ? by heathrowkennedy

Just as Apple were unveiling their latest iterations of the iPhone I was sitting listening to a piano recital.   I include that detail because the accomplished concert pianist was playing on an upright piano.  It's a perfectly good piano but it wasn't a grand piano.   It was a 'fit for purpose' piano and the critical factor in the experience was the pianist.   The thought that all this triggered to the music of Debussy was it's really not the instrument that counts, it's what you do with it. We have become very attached to our smartphones or, more accurately, what they allow us to do - we are drawn fleetingly to their design and brand but more and more it's what they facilitate.   All of this is being accelerated with a category release cycle which has a shorter and shorter half-life.   That is making it increasingly difficult for a company such as Apple to dominate in the way that they once did especially when new products released contain only marginal improvements in functionality.

The big news expected from Apple was a change to their pricing strategy and a vertical expansion of what is a very "democratic" offering into a wider range embracing a "budget" iPhone at one end and a "luxury" offering at the other.   The sound logic being that a lower priced and physically differentiated product would allow Apple to compete more effectively in advancing economies such as China and India (where phones are not subsidized by the network provider) and the higher-end offering would protect brand equity and ensure the brand still appeals to those who crave being a little different.

Apple seem to have had a failure of nerve.

What they did launch was a slighter cheaper iPhone 5C in a range of colourful polycarbonate shells and a slightly more expensive iPhone 5S which comes in more 'luxurious' colours of gold, silver and dark grey with the technological enhancement of a finger print scanner on the home key.

In terms of differentiation this is dancing on the head of a pin.   Apple should have gone for a wider price point range accelerating growth in new markets (getting more users) and doing more to create a genuinely more luxurious top offering with real material differentiation, commanding a much higher pice (retaining HWI and opinion formers).

Survey work in the UK post the launch announcement has shown that about 1/3 of people in the marketplace who were waiting on the announcement before changing their phone will actually go ahead and chose one of the new phones.

Add in the fact that the popular media reaction has been less than the usual slavish adulation, a 5% drop in stock price and you can see that Apple is looking a lot less invulnerable than usual.   All is not lost but the smart phone market is only going to become more competitive and tougher for Apple to justify their prices without a serious "wow" factor.

Apple need more people using iOS I'm not sure this week's news will help much.

 

 

 

Apple part II by heathrowkennedy

Last weekend when I blogged about the latest Apple above-the-line campaign I was being a little disingenuous in that I was judging the new campaign on Apple's current positioning without looking forward to a direction of travel which I believe this brand is potentially (and must in my view) embarking upon - that of premiumisation even beyond their current premium level. So why do I say this ?    Well the harsh reality of satisfying an investor community which will always demand more growth.  That growth can obviously come from expanding the product offering (iWatch ?), expanding the base of their business (increased competition from the likes of Samsung is a threat here), increasing price points AND creating a more discernible range of price points.

5 year share price

Apple has always been a very "democratic" brand.   Look at the iPhone - it is available in two colours (black or white) and in three memory sizes.   It used to be an item, which in the hands of the owner communicated differentiation from the masses but now it is the preferred choice of the masses.   People aspire to the brand a little less but that does represent a huge opportunity for Apple to start to stretch the offering to recapture the imagination using say material differentiation, limited editions (with caution) to support a higher price point.

And I wonder if the hiring this week of Paul Deneve provides a little support for this view. An alumnus of Apple in the 1990's he has had a career in fashion and luxury culminating as the CEO of Yves Saint Laurent. His new title of "Special Projects"* suggests a pivotal role - certainly the Apple retail experience is now growing tired -   it is like walking into a school gymnasium, if you don't time your visit well it's a crush and an environment which has stopped communicating Apple's values - potentially a starting point for him linked closely to new products ? Time will tell.

It is merely an opinion but sometimes when you are cornered the only way is up !

*NB The use of the phrase "Special Projects" is masterful in the corporate world. Used in relation to a new hire it really does suggest this new blood is going to have a great influence. In relation to an existing employee it usually means they no longer have a productive role and the special project scope is...their exit.

An Apple which has fallen far from the tree ? by heathrowkennedy

I'm happy to declare that I am neither an Apple zealot nor an Apple hater.  They make great products which have, in so many respects, revolutionised the way we interact with the digital world and each other.   I've never given into the slavish worshiping of their design - both the iPhone 4 and 5 fail in my opinion on a number of fronts - not least their ability to scratch and break during normal use but, when it comes to my iPad it has become a constant companion. As a marketer I take an interest in how they talk about their products and their brand and usually it is the former which gets the focus in a very utilitarian, functional way which nonetheless works in communicating the Apple brand values.    So it has been very interesting to see them flipping this approach with their latest TV and print campaign. Although their products can be seen they are fleeting and the emphasis is overwhelmingly on their philosophy and vision.

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It is a clever approach at a time when the brand needs to put some clear water between it and the competition, especially Samsung.     The marketplace has become cluttered with competitors who are now delivering some exceptional products and they need to defend and justify their price points, erase the memories of tax avoidance and continue to push Californian design as opposed to Chinese manufacturing.Apple_California_advert_500

It does all of this but at what cost ?      It probably plays well internally, what's not to love if you are an employee, this is a feel good message - your daily work is almost deified but what about the consumer ?     After a few viewings it feels self-indulgent - potentially objectifing products which are, after all, consumer tech which needs to be replaced on a regular basis if it is to remain relevant to the needs of the customer.

As a campaign it has luxurious cues but I'm not sure that's what Apple needs.  I want to love this campaign but my head keeps over ruling my heart.  We shall see.

 

Retail matters by heathrowkennedy

My reading this morning has been dominated by retail. First up, an article on Forbes.com by Kenneth Rapoza in which he quotes an article in China Daily reporting that Bernard Arnault plans to "adjust" the Chinese expansion plans of LVMH. The article suggests that the rapid expansion into second and third tier Chinese cities may cease because people prefer travelling to the larger cities to shop. I think this is 50% accurate. I suspect another driving reason is the need to reduce risk of economic turndown and brand rejection through saturation. Just as many other luxury brands follow where LVMH stores go (arguing over mall adjacencies) they would be wise to follow LVMH where they so not go !

Just as the Chinese government continues to manage a gentle landing and a more sustainable growth pattern Luxury brands need to do the same. For some, it will be too late.

But focusing back on the concept of "destination flagship stores", pulling consumers into large cities to have a differentiated retail experience - this is as true now as it was for the last 100 years. That once or twice yearly pilgrimage to "the capital city" to seek goods not available elsewhere. eCommerce naturally allows a brand to hedge it's bets, comprehensive availability of purchase with the perfect retail experience focused on a lesser number of stores.

Which takes me neatly to the second article. An excellent summary in today's FT by Barney Jopson on the whole Ron Johnson / JC Penney debacle. It's worth spending some time reading this and other reports (all this week) about the hubristic like qualities of Mr Johnson who was the very successful head of retail at Apple before heading over to JC Penney as CEO to 'repeat the magic' (my words).

Except the magic was perhaps not so much to do with Mr Johnson and more to do with Apple's products or, as the article quotes Ken Favaro (an analyst at Booz & Co) "What made the difference for Apple Stores was the power of products. It wasn't retailing expertise."

And that's what JC Penny and Mr Johnson found out. On one hand an innovative tech / lifestyle brand and the other a 112 year old department store chain.

What's so surprising is why anyone is surprised !

So as I drink my third espresso what are the conclusions and the killer question ?

- a brand is only as strong as the product

- don't overextend the retail footprint just to grow sales - make existing stores work harder

- people come to buy products not have a retail experience (that's still important but fundamentally it HAS to have a great product at the centre)

- when you are hiring are you hiring a person or the successful brand they last worked on ?