At university I did a dissertation. Yes Dad I actually did do some work there, in between the exams, lectures, parties and sports.
It was on Audi, and how the launch of the new A3 model would impact a brand, which back them was associated with large family estate cars, and rallying, than lifestyle based BMW challengers. In the 90’s entering the market ruled by the golf and focus was a bold manoeuvre.
Look how Audi have done since then. They now have the number 1 selling premium car in the UK, the A4, and their ties with the past, while still present have moved on significantly. But Audi were in trouble before this.
Now look at the similarities with Apple. Since 2001, when the first iPod launched, their market appeal and audience suddenly changed in an arguably unprecedented way.
Let me be frank. I’ve made a lot of money from not selling Apple, haven’t been a fan of their MP3 products, don’t use their Macs, and find changing to use a Mac a real PITA. I remember the first time I had to find the browser………safari…..are you kidding , who called it that? (without telling me!)
Share prices have moved $8.90 or so, to now trading at a Microsoft worrying $270+, with its first fiscal quarter of 2010 showing a quarterly profit of $3.38 billion on sales of $15.68bn.
Of that Europe accounts for $5bn in revenue.
IPod now accounts for $3.4bn, and iPhone $5.578bn.
Contrast that with a company which in 1992 was foundering, on the back of having lawsuits dismissed against Microsoft and HP. In fact for most the 90’s, the uncertainty, changes of direction, Apple breaking tradition by licensing its technology to outside firms had nearly brought it to its knees.
Bizarrely enough in 95 Apple had £$1bn worth of unfulfilled orders, after failing to appreciate how popular it’s latest PowerBook laptop would prove!
Debts by 1996 had reached $816m, a familiar figure for most Man United fans, and like Man Utd debts increased, as it was soon $1bn by 1997.
Having said that 97 was to prove a good year for Apple. Steve Jobs, initial Apple founder, iThing launcher and keynote speech giver extraordinaire came back on board as a “special advisor” – now when you think about the word special, in business or management, Jose Mourinho stands out. Steve Jobs was to become Apples “special one”.
With a surgical approach, Jobs cut 15 of Apples 19 products, discontinued the licensing agreements (that had spawned many Apple clones) and withdrew Apples involvement in printers, scanners, portable digital assistants, and peripherals, re-focusing on the core business of desktops and laptops.
Wider reaching measure included shutting plants, laying off staff, selling shares to rival Microsoft for a $150m cash injection.
By 98, Apple sales had dropped from $11.5bn in 95, to $5.9bn, however they were making money again. A profit of $309m was soon increased to $601m in 1999, and with it the share price leapt like a salmon by 140% to $99 per share.
Key dates for Apple;
1976: With $1,300, Steve Jobs and Steve Wozniak found Apple Computer, Inc.
1980: Apple converts to public ownership.
1982: Apple becomes the first personal computer company to reach $1 billion in annual sales.
1985: John Sculley assumes the helm after a management shakeup that causes the departure of Jobs and several other Apple executives.
1991: PowerBook line of notebook computers is released.
1994: Power Macintosh line is released.
1996: Acquisition of NeXT brings Steve Jobs back to Apple as a special advisor.
1997: Steve Jobs is named interim chief executive officer.
1998: The all-in-one iMac is released.
2000: Jobs, now firmly in command as CEO, oversees a leaner, more tightly focused Apple.
Now enough of the history lesson, most of us are familiar with the stark contrast in fortunes that the iPod range brought in 2001. Having battled through the computer wars, re-focused, and re-aligned the strategic direction of the company, the iPod was Apples soon to be Golden Goose, and armed with the Jonathan Ive inspired designs for iMac.
The brand was now sexier than ever, with every note book and desktop iMac looking sexier than the last, the early iPods made way for their later models, the movement in to Nano, the price points were bringing Apple products in to an age group of consumer that previously would have only seen an Apple product in an office.
They had a product that was now touching an entirely new customer demographic, and revolutionising the music industry. ITunes by 2008 has more than 5bn downloads.
I remember being told once that Apple retailers had been told that the iPod was really the reward for them selling the Apple brand, such was the breadth and depth of the new customer footfall that would subsequently be beating a path to their door. The “icing on the cake” as it were.
I was surprised in 2005 to be invited to meet with Apple, near Heathrow. I was awarded with the first iPod only reseller contract in the UK.
It was a bizarre meeting, where my fruity counterparts displayed such genuine enthusiasm for their product that they wanted to sit and see me “open” an iPod. The depth of thought and analysis from such a simple task was evident, although I didn’t want to break their hearts by telling them I had 100 imported ones sitting in my warehouse! Not for long, demand was crazy.
Kids had the brand, adults were being pestered over the Xmas rush with the must have gift being an IPod. In 2005 the demand was so strong that going through December I had £1.1m of them on backorder with Apple. Supply was the challenge as the phenomenon took effect. The value of the Apple brand was growing almost daily, and a whole new customer base was making its way out in to the world. Converted by the sheer genius of the simple design.
Those that tried to challenge have all but failed, or had to appeal to niche markets to survive.
Iriver lost sight of their “strengths” to try and make a Nano rival, the H10. They wrote some colossal cheques, had billboards with some lady taking a bite out of an Apple, and what happened? They nearly folded. Brand loyalty was just too strong.
They went with colour screen, they made the battery replicable, it sounded as good if not better, and it even had its own dock, more file format support, and drag and drop functionality on the computer for music file transfer, but despite all of this, the consumer voted with their feet, and Apples market share strengthened further. Design over function? There was clearly more to the new generation of post Walkman music devices than simply sound quality.
The Apple mantra or design ethos of making products that were the “peoples”, and designed for people with little technical knowledge ensure that with the user interface wizardry of iPod it became the industry standard.
How many calls I fielded during this time from other manufacturers wanting to know quite why every single review of their Mp3 products, was featured against the IPod. Didn’t the journalists know there were other products out there? They did, but they all owned IPods.
Well the “anything but iPod” message was out there, quite literally;
http://www.anythingbutipod.com/
As people flocked to see the competitors’ products, waited for Sony to do something, anything, and considered the audio genius and ease of use of iRiver and Cowon.
However, Apple, with its by now iconic iPod, one stop shop in iTunes, Apple Stores opening up in every locale, was on a roll.
Upon visiting their first store in Glasgow I remember realising that HUGE investment they were making, the fact that their technical support team numbers more than the entire John Lewis electronics department staff nearby, and the design…….damn them. Flawless, minimalist, typically Apple.
IPod peripherals, a market to tread carefully in for the reseller, but by 2006 worth in excess of $1bn.
With no warnings about iPod revisions, your stock could be worth a fraction of its value within 24 hours if you didn’t heed the signs;
1. Supply eased
2. Supply vanished
3. Lead-times increased dramatically
4. A rumour surfaced
Simple then???????????????
iPod accessories had now become such big business, companies were springing up everywhere, and attending dear old Steve’s keynote speeches to be first to get the dimensions, aligned meant of the iPod connection socket, and get them on the phone to the factory, typically in China, to get the deigns re-worked and the product shipped.
The arrival of iTouch and iPhone simply blew the remaining competitors further of the sales charts! Wow. Apps followed, and a new word/term/gaming/monetisation opportunity was born. Apps became their own phenomenon, with the best bit being this;
An App is only limited by your imagination – I’d love to run a campaign with one of the Nationals, and see what ideas come up. T3 this has some good articles on Apps this month, and even tells you about the chap that designed the first Tube App.
A call with my then 12 year old cousin Kirsty confirmed the world of MP3 had again moved with Apple.
Unfortunately her iTouch had got water damaged, and a replacement was needed. What do you want it for I asked? Please list in order of importance what you will use your MP3 player for. Here are the answers;
1. Email
2. Apps
3. Games
4. Video
5. Music
Apple had now, in the iTouch and iPhone, done that thing that marketer’s dream of - Excluded 95% of the competition at a stroke, by taking its consumer/customer through the decision making process from blissfully unaware. I.e. before the customer is aware that the need for this functionality even exists, and no-one else has a product that can do it, so pricing is now irrelevant for approx 90%.
In fact you could argue that has been part of the key to Apples utter dominance of the portable music market and iTouch and iPhone has given it this chance again.
Now the iPad has landed. It’s done it again! People are buying them because they hear the hype and think they are missing out. With the promise of the touch pad PC for years, Apple once again have simplified the concept, in some ways reduced the functionality from the traditional PC or laptop, and in the process they sold 3m units in a staggering 80 days!
I recall chatting to some industry people when looking at the basic stats of the iPad and the consensus being that at that price, with that spec, it wasn’t going to do that well. I didn’t know the PC market, although I should have realised how this was closer to an iPod boom about to start again!
Then in a break from tradition, I bought one.
Wow.
It’s now the second Apple thing I use, along with my iPhone. Damn their ease of use, perfect interface and apps. They tend to travel with me now, the iPad I have even taken to using for presentations – and guess what – every time I present on it, the presentee then wants an iPad!
Steve, let it be said, you are still on fire.
I may hate your keynote speeches, apart from when you can’t get connected, and you always look like you couldnt be bothered coming in your badly fitted jeans and black polo neck. I may have sworn at you a few times since the last firmware upgrade made my iPhone run with the speed of a ZX Spectrum, and I may tremble with fear at the post speech stock value of parts of my warehouse, but what a transformation!
