Andrew Cunningham, writing for Ars Technica:
Apple's past growth has been driven mostly by entering entirely new product categories, like it did when it introduced the iPod in 2001, the iPhone in 2007, and the iPad in 2010. The most persistent rumors involve TV (whether a new Apple TV set-top box or an entire television set) and wearable computing devices (the perennially imminent "iWatch"), but calls for larger and cheaper iPhones also continue.
The last couple years have seen much reporting that focused on when Apple would enter the next big market. It defined the PC, it defined the Smartphone and it defined the Tablet. When will it define the Smartwatch and the SmartTV?
The problem is that neither of these two markets could come anywhere close to the sales volume that any of their past market entries have produced.
People replace their phones every 2 years. Tablets will likely last longer, but still only 3-4 years. PCs last 3-5 years.
Watches generally fall into one of two categories. First is the $20 and below segment, with massive volumes, relatively short lifespan and nearly zero margins. Apple doesn't play in the price sensitive end of the market. At the other end of the spectrum, you hve the $1,000+ watch, which nails the margin variable but entirely fails at that regular replacement as these are heirloom products, meant to be bequeathed to your grandkids.
Neither of these segments are a place Apple wants to be. Maybe there is a place in the middle, where Apple can charge $200, but they will once again be forced to make an entire new product category out of thin air. You can only go to this well so many times and expect to win. With people generally dropping watches for the digital clocks on their smartphones, its hard to see how anything resembling what we've traditionally thought of as a watch succeeding in the marketplace.
TVs face different, yet equally similar issues. People replace their TVs every 5-7 years (or if you're me, I've had them last 15+). Yes, they're high ticket priced items, but the margins are razor thin even with that high price. Slow replacement times combined with thin margins isn't an Apple market.
Obviously they already have a TV product, the Apple TV, but its a $99 device that they refer to as a 'hobby.' It clearly isn't what they see as the future; you can tell that just by how infrequently it is updated. Morphing this product from a set-top box into a product with an actual screen will not make it better.
Once again, we find ourself with the thought that Apple must be charting a new course to create a new market segmet. Its no less problematic here than it is in the watch space.
Yes, the people at Apple are likely far smarter and understand their ability to create new markets far better than I. This is not in doubt. Yet, the tablet market was obvious to most of us, even if the specific solution was not. No analysis I've seen, even by the best of Apple pundits, have even come close to a solution for how you could create blockbuster products in either of these categories.
We are all left scratching or proverbial heads... but should be we be? Is it not so far fetched to think Apple might be changing its strategy more than it is building two new blockbuster markets?
What if Apple is taking a platform approach to extend their existing product lines, namely iOS, into and onto other categories of devices, then making the devices integrate with one another so seamlessly that customers crave not any specific product, but the union of them all.
In this scenario, Apple could make smaller bets on a larger number of products, leveraging that single, unified platform. It could reuse hardware investments it owns inside multiple devices, moving older generation technology into lesser devices to make its margins look amazing.
It sells fewer of any new individual product than it ever did of the iPhone or iPad, yet it makes up for that in total volume across all product lines.
This doesn't sound like the Apple we knew, but we're failing to see one thing... the CEO. Steve Jobs probably couldn't have pulled this off. He was all about experience, but he's not with us any more, Tim Cook, supply chain extraordinaire, is. If you want someone who can unify a bunch of different platforms and produce it at a cost that gives you such great margins, yeah, you want Cook on the job.
I may be entirely wrong. Apple may have the playbook written out for how to build multiple new massive market segments in the next couple years. If so, I'll eat this tasty claim chowder.
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