02
Jun 14

Apple journalism as entertainment

Apple’s rock-solid sales threatened by Android’s slowing sales!(Reality Distortion Field courtesy of Business Insider)

In times gone by, I’d get a kick out of watching any local band play live.

If they were good, I loved it. If they were bad, well — I also loved it. It was strangely entertaining to watch a group try so hard and sound so terrible.

In much the same way, I got a kick out of a Business Insider article over the weekend with the catchy headline The iPhone 6 Had Better Be Amazing And Cheap, Because Apple Is Losing The War To Android.

I hope you enjoy bad bands too.

Kudos to the Business Insider editor, who, in the site’s well-established tradition, has molded a headline that’s simultaneously brain-dead and inflammatory.

Singing lead is writer Jim Edwards. Do watch closely, because Jim is the guy who will give you the most bang for your entertainment buck.

A few bits of his insight and logic:

Is [Apple] boxed in as a brand and a platform that merely serves the richest 15% of the world, while everyone else uses Android?

Absolutely. Apple is “boxed in” — earning only 60-80% of all smartphone profits.

Can a mobile device that serves such a small minority of the planet stay relevant in the years to come?

Let’s see … the Mac has remained relevant for the last 15 years with a small market share. BMW has remained relevant with only 3% market share. And months before its launch, iPhone 6 is already generating a huge amount of buzz. (Including positive articles written by the same Jim Edwards, as noted further down.) Clearly a device doomed to irrelevancy.

Apple is holding on to a sizeable chunk of the market. But Android is eating the rest.

Oh, so Apple is actually holding onto its share, despite Android’s ravenous appetite. Sound the alarm!

Note that the average Android price is heading toward $200 and the average iPhone price is heading toward $600. Apple is asking the question, do you want to pay three times as much for our phones? Thus far, 80% of the market has answered “no.”

And 20% have answered “yes” — which has been more than enough to give Apple that absurdly large share of the profits.

Branding and quality are important, of course. Apple usually wins there. And Apple’s business model is to only do the most profitable thing, not the most widespread thing. So loss of share may not bother Apple CEO Tim Cook. It may, in fact, be good for both margins and shareholders.

Yes, yes and yes. So, what’s your point again?

But the history of computing has one iron-cast lesson for us all: Devices get cheaper over time, and better over time. The high-priced seller usually loses. This is why nobody uses $8.8 million Cray computers anymore.

Maybe I woke up on the wrong side of the universe today. I could have sworn that the high-priced seller — Apple — didn’t lose with iMac, iPod, iPhone and iPad. In fact, it pretty much beat the crap out of everyone.

Further, Cray is not only still around — it’s doing pretty darn well.

Other than that, I’m with ya.

If this article weren’t enough, we must also deal with Jim’s Multiple Personality Disorder, as presented in his personal production of “Four Days In May.” In four successive days, he ricocheted between the positive and negative view of Apple with these headlines:

May 28: This Smartphone Pricing Chart Shows Apple Is Fighting An Unstoppable Force
May 29: This Simple Statistic Shows How Apple Will Get A Gigantic Boost In Sales From iPhone 6
May 30: Apple Stock Is Going Through The Roof As People Figure Out Just How Massive The iPhone 6 Launch Will Be
May 31: The iPhone 6 Had Better Be Amazing And Cheap, Because Apple Is Losing The War To Android

I know it’s confusing. So let me clarify Jim’s position for you.

Apple, which is fighting an unstoppable Android force, will get a gigantic sales boost from iPhone 6, which will in turn drive the price of AAPL through the roof — but only if Apple heeds Jim’s advice, because clearly it is losing the war.

Heh?

Alright, then for Jim’s benefit, let me clarify Apple’s position:

Market share has never been, and will never be, Apple’s goal. Apple sells a premium product to those who believe that certain things (simplicity, design, quality, ecosystem) are worth the premium. This business model is the reason why Apple rose from the ashes to become the world’s most valuable company. If it ever strays from that approach, I would fear for its future.

I do wonder why Jim chooses to focus on imagined Apple crises when Samsung itself has confirmed its slowing growth and declining profits. Then again, why ruin a perfectly good story with the facts?

I know it can be difficult to see vapid opinions like Jim’s presented as legitimate news. But since you can’t change Jim’s outlook, it might help if you change yours.

Just remember, this isn’t journalism. It’s a badly performed mash-up of news and opinion.

Seen in the right spirit, it can be good for hours of entertainment.

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17 comments

  1. Ken, knowledgable people agree on all this market share vs profit stuff; you are belaboring the obvious but ignoring the elephant in the room – the Beats deal. Time to put your 2 cents in on this. Mine is that at best it will mean nothing and will be forgotten as a mistake; at worst it signals a shift from quality to excessive focus on mass market branding.

  2. Thanks Ken for such a devastating point-by-point demolition of every one of Jim’s embarrassing arguments. Thoroughly enjoyable too! :-)

    ps. As I posted on BI’s pages, it amazes me that everyone fixates on Apple’s supposedly tiny 15% smartphone market share and ignores the fact that Apple will shortly sell its 1 billionth iOS device of which 85% are still active. And Apple is on track to sell another quarter of a billion iOS devices in 2014 up from 238 million last year.

    Also lost in the smoke coming from the altar of the Church of Market Share is the fact that Apple now has over 800 million active user accounts (most credit-card enabled), a far larger a user base than Netflix, Amazon, Spotify, Pandora, eBay and Google Wallet combined.

    With those sorts of figures and growth rates, one wonders how they can argue that Apple’s iOS platform is somehow shrinking with a straight face?

  3. Fine they are troll bait links but the elephant in the room is growth
    not profit.

    Rich people usually ask for 20% rate of return on investment
    to fight of Inflation.

    Apple @ 20% growth has to double 3.8 years.
    @ 15% growth has to double 4.95 years.
    @ 10 % growth has to double 7.27 years.

    So you can’t have it both ways. Apple could grow simply
    by playing accounting games just like Microsoft has done.
    BMW is not a top most valued company in the world.
    but I am sure you get my point.

  4. It should be seen as last ditch effort by Music Industry to
    squeeze blood from stone. Apple just paid the ransom.
    Same industry was asking for ipod profit just few years back.
    Iovine was the talking head of this movement.

  5. Why does everyone assume that the executives who have been with Apple since they were days away from bankruptcy to its present position as the worlds most valuable company, have simply decided to buy a headphone company. I give them a little more credit.

  6. Ken, are you the Macalope? ;) An entertaining article, but be careful of going down this road – commentary on bad Apple journalism could easily be a full time job! I’m more interested in your take on the growing ‘Verse’ campaign by Apple (I like it, though find it hit-and-miss here and there), your thoughts on Beats and the branding issues that throws up, and the latest WWDC!

  7. Check this out: “Tim Cook Just Ripped Android To Shreds”, by JIM EDWARDS. LOL
    http://www.businessinsider.com/apples-tim-cook-just-ripped-android-to-shreds-2014-6

  8. I don’t think Beats is that big an elephant in the room.

    What’s making it seem so is the fact that Apple is always under the microscope, and legions of fans and critics are so quick to judge — even when they don’t know all the facts.

    I think it’s way up in the air what will come of this deal, and the only way to judge it is to see how it unfolds.

    I do know this: after creating the digital music revolution, Apple hasn’t seemed quite as revolutionary in this area anymore. Its energy seems to have dissipated, and other music services have moved ahead. In that respect, Beats could be a good acquisition — a little shock treatment for the Apple music effort, bringing in new blood and new technology.

    I agree with the idea that big companies can’t do everything alone. Buying other companies to acquire technology and/or talent is often a faster and better way. Apple is not new to this. It could have created its own pro video editing software from scratch; instead, it bought Final Cut from Macromedia, getting its code and talent. A faster and better way to get into a market.

    I admit that when I first heard of the Beats deal, it was a head-scratcher for me. However, I also know that Apple’s is big on smarts and strategy. Its executive team and board are not idiots, and it’s hard to imagine them agreeing to something like this without good reason.

    So, yes, it’s possible that buying Beats is some horrible mistake. But a year from now, we could just as easily be talking about the genius of it. The money paid for Beats is virtually nothing for Apple. If the result is that they get the talent and connections, or use Beats streaming technology to shave months off development time, or just use Beats to get to more Android customers, the acquisition could be worth it.

    I don’t feel comfortable praising or condemning without knowing Apple’s plan. Let’s meet back here again in a year…

  9. See thoughts on Beats in another comment.

    I’m not a huge fan of Verses. It’s beautifully shot and produced, and resulting ads are gorgeous. But the idea that people all around the world are doing amazing things with iPad strikes me as very soft — the kind of ad that make iPad owners feel great about their purchase, but doesn’t create nearly the buzz that the Mac vs. PC campaign did. Especially since you can do pretty much all those things on an Android tablet as well.

    I love Apple most when it takes chances and surprises us with its ads. To me, Verses doesn’t have that Apple-esque edge — the concept is more expected. I get that something like Mac vs. PC is a rare achievement in ad land, but I do find myself wishing that we’d see an iPad campaign that brought together humor, humanity and technology.

  10. These blokes are a bit like that genre of TV commercials. Make them so outrageous or annoying that you remember them despite your best efforts to forget or ignore. From OZ TV:

    http://www.youtube.com/watch?v=8qb4n8yc2so

    http://www.youtube.com/watch?v=153hBzKPnGc

    http://www.youtube.com/watch?v=GU59Vq-nxjg

    And they were some of the better ones…

  11. Agree. Soft, warm and fuzzy for those who have already been convinced by Apple, rather than reaching out to those who have not. They seem to have lost their edge a bit lately and could use a more energetic, high impact campaign to regain some cool. I imagine Beats will help with that, and hopefully the iPhone 6 launch will bring something new too – right now they’re in a bit of a feel good holding pattern.

    Have you seen this – http://www.imore.com/apple-building-their-own-house-1000-member-advertising-team-while-casting-wider-net-outside-firms ?

  12. Hi from Oz
    Do you have any thoughts that you are willing to share about the ‘Apple internal ad agency’ news doing the rounds?
    Greg

  13. Coming soon!

  14. Thank you so much for this article! I do have one thing you could add under the part where you correct this: “Note that the average Android price is heading toward $200 and the average iPhone price is heading toward $600. Apple is asking the question, do you want to pay three times as much for our phones? Thus far, 80% of the market has answered “no.””

    He’s comparing the average price of Android phones, many of which are free or very cheap. He is also comparing the Androids with a contract, while the iPhones unlocked. If you compare a popular Android phone (such as the Galaxy S5) unlocked, it adds up to about the same amount. People would just rather have an iPhone.

    Great article though!

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