
The Inevitability of Apple's Current Predicament - AlexDStern
https://alexstern.me/daily-insights/the-inevitability-of-apples-current-predicament
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jillesvangurp
I disagree with this article's fatalistic tone.

IMHO the Apple ecosystem was always about getting people hooked on one of
their products and then up-selling them other products and services and thus
set them up for a lifetime of buying the latest and greatest from Apple at
regular intervals.

In the past few years, I've seen many long time Apple users opt for
alternative brands. And not just because of the price points. I have friends
that now have Android phones and windows/linux laptops where just a few years
ago they would have been de-facto iphone and macbook owners as well as own a
whole range of misc apple branded products. Apple had a really nice business
tapping into these people's disposable income and it has been evaporating for
a while now.

By squeezing their iphone and mac book user base too hard, they have started
to bleed users. This is bad news because it means the upselling business is
going to dry up as well. People with an Android phone are not going to want an
iWatch or iCloud subscription. They are also not going to order anything in
the Apple store or sign up for Apple Music. And raising prices there is going
to shrink the user base even harder.

Apple has neglected some of their core product lines and especially their
recent desktops have not gone down well with users. The pattern is the same
across their product lines: sales revenue is up but volumes are down for the
last few years and not just because of the price. They make more money with
fewer users. Except, now they are making not as much money as they hoped with
even less users than they expected. They squeezed too hard and the numbers no
longer add up.

The fix is simple: they need to change course and get volumes up again by
making sure that they have attractive premium products that people can afford.
You don't get service revenues up if your user base keeps shrinking. A few
well positioned products at the right price point could easily bring back lots
of users that have dropped out of the ecosystem. More of the same is not what
is going to make that happen.

~~~
ridgeguy
>and get volumes up again by making sure that they have attractive premium
products that people can afford.

Another thing would be to offer entry-level products that get people into the
ecosystem. Like the iPhone SE - smaller and less capable, but profitable at
lower prices than newer models. Basically, keep a lower step on the ladder -
it makes it easier to get aboard.

~~~
lostgame
Jacking up the price on the Mac Mini the same year as ditching the 5S speaks
volumes about how much they care about creating ‘affordable’ anything.

~~~
donarb
Apple’s hardware is affordable because it lasts so long. The Mac Mini I bought
in 2012 can run the latest OS.

~~~
JohnJamesRambo
I don’t know if you know this but a pc built in 2012 can also run the latest
os...

~~~
zozbot123
Running the latest os is one thing... does it run _well_ , though? Probably
depends on the os!

~~~
dagw
_Running the latest os is one thing... does it run well, though? Probably
depends on the os!_

a decent new PC 2012 has a quad core ivy bridge CPU, a 600 series Nvidia
Geforce card and quite possible an SSD drive. What latest OS won't run well on
that hardware?

------
listenallyall
Doesn't help when manufacturers are raising prices while actively eliminating
features people want. Headphone jack, expandable storage, replaceable battery
(that's been gone for a while, but still), hardware buttons...

My current phone is getting old but it has dual-SIM slots AND microSD. Today's
dual-SIM phones force you to give up the 2nd SIM if you want to use microSD.

As far as headphones, 2 pairs of bluetooth earbuds, fully charged, won't last
a complete trans-Pacific flight. And now you've got 2 additional devices to
charge while on the road with limited chargers/wires/plugs.

~~~
izacus
On the other hand, you still have a Samsung Galaxy S9, which is dual-SIM, has
SD card slot and headphone jack. Did you buy it? (Because according to
Samsung, they didn't sell well.)

~~~
listenallyall
No, not "on the other hand." This phone is exactly what I described. The
microSD uses the 2nd SIM slot, so you can choose either dual-SIM, or a
microSD, but not both.

[https://www.gsmarena.com/samsung_galaxy_s9-8966.php#g960f-ds](https://www.gsmarena.com/samsung_galaxy_s9-8966.php#g960f-ds)

------
bryanlarsen
Yes, their current predicament was inevitable and obvious. Apple's relatively
low P/E ratio means that the market has been predicting this would happen for
a quite a long time. Which makes their failure to diversify unfathomable.

Steve Job's focus on a small number of products executed perfectly made sense
for his time.

But to continue to grow using this strategy borders on impossible. They would
need to enter and dominate a market bigger than smartphones. Self-driving
cars, for example. But that's really hard, as they found out.

The knowledge and experience that must have accumulated inside Apple must be
incredible. There must be dozens of proteges of Jobs, Ives & Cook. The CEO
does not need to micromanage every project, as Jobs did. Give that
responsibility to many of these proteges!

If they diversify, some projects will fail and tarnish their brand. But some
won't, and will burnish it. You cannot grow without taking risks.

They may never find "the next iPhone", 500 billion dollar markets are few and
far between. But there are lots of billion+ dollar markets, Apple could enter
and dominate many of them.

People consider the watch or appleTV to be failures, and perhaps they are,
compared to the iPhone. But if they had a lot more of these types of products
it would add up revenue that's more than a blip compared against the iPhone.

A company with > 100,000 employees can focus on more than one thing
successfully.

~~~
chillacy
Lots of articles have been written on this but I wanted to point out that
Apple is unique among the tech companies because it is organized horizontally
instead of vertically: there are divisions for hardware, software, services,
etc instead of product divisions like google maps, google search, Android,
etc. This makes it hard to scale to more products at once but it makes it
easier to integrate across the products.

~~~
dustingetz
Can't shake the feeling that future companies will organize as graph, not tree

~~~
david-gpu
I used to work in a matrix organization. My two VPs had completely different
goals and strategies. Unsurprisingly, they did not cooperate, meaning I was
being pulled in two entirely different directions.

I quit.

------
interlocutor
_" Now, if the market isn’t growing fast enough anymore that means that there
are generally only two ways to continue to grow — either increase your market
share by drawing the customers away from competitors, or raise prices."_

Incorrect. There is a third way: reinvent the smart phone.

Back in 1899 the Commissioner of US patent office stated that "everything that
can be invented has been invented." No doubt there are plenty of people
thinking the same thing about the smart phones we have today. i.e., every
feature that can be added has already been added. They are wrong.

Keep in mind that right before Steve Jobs unveiled the iPhone people thought
the same thing about the mobile phones we had then. Then Jobs reinvented the
phone. Can Apple do it again?

~~~
ken
> Incorrect. There is a third way: reinvent the smart phone.

The name "phone" is mostly an accident of history at this point. Its primary
use for most people is not as a telephone. Starting from a classic telephone,
via incremental improvements, you would never have gotten to the iPhone.

(It's also a compass, a pedometer, a camera, and a dictionary, and you never
would have arrived at iPhone by incrementally improving any of those objects,
either.)

It's a handheld computer. Telephony just happens to be one of its dozens of
features. So what you're really saying is "reinvent computing". Apple has
several products in other areas (Watch, AirPods, HomePod, etc) which may or
may not be successful in the long run but they're definitely trying to take
their computing platforms beyond "Mac" and "iPhone".

The "smart phone" is done. I've seen people trying to "reinvent" that since
2007, and I haven't seen anything promising. We're already at a local maximum.

~~~
abecedarius
In the early 2000s I was excited about the potential of networked handheld
computers. It was disappointing when it became clear they'd be phones,
basically owned by the app stores instead of the user.

~~~
4thaccount
This depresses me too. I think we got off into walled gardens where it's easy
to use time wasting things we don't need like candy crush and Facebook.

A computer on my wrist that ran something like Linux and gave the user control
and had peripherals would be geeky but nice. You can do a lot of this with
various droids, but it is a bit of a shallow experience and not too many
enhancements can be made.

I think the main problem is that hacker news is an echo chamber and few others
could even use such devices. Smart phones are simply made for the least common
denominator.

------
Animats
Well, they got a decade out of a new product. That's not bad. But the glory
days of the iPhone are over. Where's the Next Big Thing?

It's not just Apple. It's consumer electronics generally. There's no Next Big
Thing. 3D TV? Flopped. VR goggles? Niche market. There's nothing in the
pipeline on the scale of the smartphone, the cell phone, the video game
console, the DVD player, the VCR, or the iPod. No "must have" product.

~~~
gizmo686
I think it is still too early to call the market on VR goggles (which I will
bundle with AR). They did find a niche; and that means the technology will
continue to be developed and grow organically. It might never find a place in
the mass consumer market; but if it does, we might look back at today as it
being in the pipeline.

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rossdavidh
I recall discussions with friends about wanting a good wearable computer,
years before good smartphones came out. Innovation has an overlooked
requirement, which is that there has to be an unmet need (or at least an unmet
want). I don't doubt that there are unmet needs/wants still, but they may not
be for a new type or class of hardware. If the next innovative class of
product is, say, something in 3D-printing or a better way to communicate
electronically than email and social networks, then it may not be something
that Apple is well positioned to provide.

Or, you know, maybe it is. But it's not necessarily the case. The Apple Watch
was made because it was within Apple's domain of competence, and it has not
taken off because it wasn't also in the users' domain of need/want. It is
possible that the two don't overlap.

~~~
pm90
There are many reasons why the watch hasn't taken off, but I don't think they
have to do with the product itself, but with the market. Digital watches are
only recently catching up and most folks prefer the cheaper fitbits than
forking out > $200 for a "watch".

Compare that to iPad. When it came out, it was an instant hit. It wasn't
replacing an analog iPad. The competitors just didn't match up.

~~~
MarkMc
Actually I think Apple's decision to have a rectangular watch face was a major
unforced error.

Here are two smart watches from almost 4 years ago:
[https://m.imgur.com/V9YZ5Kz](https://m.imgur.com/V9YZ5Kz)

The Moto 360 looks beautiful and classy while the Apple watch looks like a
cheap casio from the 80s

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joejerryronnie
I feel like the real problem at Apple is a lack of vision. Apple's current
management is very adept at execution at scale and incremental product
improvements. But I don't see anyone at Apple who can sell me a version of the
future like Jobs could.

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crb002
1) Take the dev market seriously again. Ship with stock Linux containers out
of the box. Stop breaking Mach linker ABIs etc.

2) Durable version of the MacBook. Like you can pour sand over the keyboard,
swap a cracked display by hand. Comes with a backup hard drive appliance.

3) Apple cloud. Wordpress/Shopify product, AWS S3 clone, AWS Lambda clone, AWS
SQS clone, AWS RDS clone, Siri API. Make it all run on localhost too for edge
and testing. Cross compile out of the box to Apple hosted GCP/Azure/AWS
instances. Extend and embrace :)

~~~
saagarjha
I doubt any of these would happen soon (I’d say “ever”, but that’s a dangerous
thing to say about a technology company). Apple might do a mild version of
some of these: make their development tools better, have more durable
computers, or improve iCloud. But I don’t see them becoming the next
Microsoft.

------
zepto
This piece is pretty circular. It talks about the maturing hardware being a
reason people don’t upgrade, but at the same time doesn’t accept a lack of
innovation as a criticism.

People buy new iPhones when they offer something new and meaningful they they
are going to appreciate.

The iPhone XS simply doesn’t offer a significantly better experience than the
iPhone X.

It is better, for sure, but not in any way that the iPhone X doesn’t already
excel.

In previous years, even S models had significant new features. And speed used
to really matter to how the device felt.

Both of these seem like rectifiable conditions.

~~~
chongli
_doesn’t accept a lack of innovation as a criticism_

It's really hard to fault a company for not innovating when nobody else is
innovating either. It's a mature product category which means all the low-
hanging fruit is gone.

For Apple to really innovate their way back into massive growth they're going
to need to find another new product category. I have a really hard time seeing
what that may be, as do most observers, I would imagine.

~~~
ahartmetz
An Apple electric car would have ridiculous earning potential. Real estate and
cars are (I think) the two biggest expenses that most consumers have and one
of the few ways to earn much more money than with an expensive, great selling
smartphone brand. Apple reportedly tried but somehow didn't pull it off. If I
were Apple, I'd put all my energy into it.

~~~
chongli
I don't see Apple being able to build a car. Look at all the struggles Tesla
has had. I don't see Apple as a fundamentally more innovative company than
Tesla. I don't see what advantage Apple would have in automobile
manufacturing. Apple doesn't even manufacture their own products right now.

~~~
enitihas
The biggest advantage Apple would have over Tesla is "cold, hard cash". They
have far too much money to throw at problems than Tesla. Even if they are 2x
less efficient than Tesla in setting up infrastructure to manufacture Cars,
they have more than enough cash to make up for it.

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qpotlpus
Much as the gap between Windows and MacOS has narrrowed in recent years, for a
user there just isn’t a meaningful difference between Apple and more
commoditized competitors to justify a massive price point. I pay it because a
few hundred dollars every 3 years is less pain than spending a few days
migrating my life off the Apple ecosystem (like Photos and Music) but at some
price differential it becomes compelling. Apple has failed to extend the
ecosystem. The Watch is a very limited use product. There hasn’t been a must
have software or service introduced in how many years?

~~~
zozbot123
> Much as the gap between Windows and MacOS has narrrowed in recent years

Except that it hasn't - if anything, it has _widened_ with Windows 10 being
such a massive dumpster fire. And most computer users have no idea that you
can wipe Windows 10 completely if you want, and run a free Linux distro on
your PC.

~~~
Marsymars
It's really a matter of opinion, not ignorance.

I run macOS, Windows and Linux on a daily basis, and find macOS and Windows
very much equivalent in use. (Linux less so for my particular use, I find
Linux desktop environments ugly, so I'm CLI only.)

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talkingtab
It is all to easy to call some result inevitable but doing so simply obscures
the road(s) not taken. Apple was an innovative company. It is no longer
innovative it is exploitative. It is trying to optimize its current market and
product without doing the hard work required to innovate. The iPod was a
remarkable innovation that few people could understand even after seeing it.
(Here's looking at you Zune). Tim Cook is not an innovator, Steve Jobs was. It
would be interesting to discuss the why and how of Apple not finding or
developing another Steve Jobs.

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enitihas
With growth slowing in hardware sales, more and more of Apple revenue might
come from services in the future. Services are currently a minuscule amount
compared to hardware for Apple, but might become huge one day. Would Apple be
able to resist giving in to the same "Data Industrial Complex" Tim Cook was
talking about sometime back. It would be interesting to watch what direction
Apple takes from here.

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p1necone
Apple has pretty hugely increased prices on their biggest product (the iphone)
in the last few years without adding anything to justify the price increase.
Is it really a surprise to anyone that sales are down? What did they expect to
happen?

Anecdotally stores near me were heavily advertising the iphone 6 still during
the christmas/new years period as it seems to be the only model with a sane
price.

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ohiovr
Imagine someone somewhere has the big and great new plan that will be as big
as the iPhone. How does he convince a 500 billion dollar mega Corp that his
way is “the way”?

Not to mention he would be smart enough to form his own company....

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SllX
There was nothing inevitable about Apple’s dilemma. A lot of this boils down
to the choices they made and their own vision in the company.

Definitely the biggest most recent disappointment was the HomePod which has
the technical potential to be a pillar of their home and business market.

It’s a nice speaker. It’s a nice speakerphone. It has most of the hardware
necessary to serve as a WiFi router. It could _replace_ Apple TV, or serve as
a higher end version of the Apple TV.

What it is lacking is good I/O options and the ability to integrate into, even
become the centerpiece of peoples’ existing A.V. systems. Not to mention
there’s entire classes of Apps that don’t entirely need a GUI front end to be
operated and used (podcasts, music, VoIP, meditation, metronomes, et cetera).

With just a bit more vision and a voice lock, you could have a nice
speaker/mesh router/home automation hub/conference speaker/personal assistant
and hell, game console. If they played their cards right, you’re potentially
talking several HomePod products (higher end and lower end models) per
customer.

The Apple TV, which has all the requisite hardware and software to be an
excellent game console, and upgrade path, but a blindingly stupid set of
policies which inhibit its appeal as a game console to both developers and
gamers. This is a big market of potential customers that Apple could get a
nice slice of, but intentionally choose not to target. They don’t bundle a
game controller, they don’t have a SKU which bundles a game controller, they
don’t market it towards gamers, they actually require developers to support
the Siri remote which is anemic even by remote standards, let alone game
controller standards. There’s no Apple Game Studio, there’s no attempt to
build relationships with large game studios and publishers beyond just being
appealing enough of a platform to have a few games ported to iOS, and maybe a
few free to play spinoffs of some IP.

In short, the only reason the Apple TV isn’t a powerhouse gaming platform is
because Apple has no interest in owning a segment of a lucrative market.

The whole deal with their desktop Mac lineup, and their professional Mac
lineup has been a shit sandwich. The fact they eventually had something to
show isn’t an excuse for the years of _not_ communicating to a set of
customers willing to pay a lot of money for professional Apple hardware and
professional Apple software. Now we know a Mac Pro is coming. Now we have the
iMac Pro. Now we have an updated Mac Mini. Now, where is the roadmap? The sign
of commitment to maintaining an up to date lineup so professionals, the ones
that didn’t leave for greener pastures, might have a sense that there is some
commitment from Apple to keep their Pro line going?

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julienfr112
Apple is not only iphones. What about the i-watch / i-echo / desktop, laptop,
siri, appstore etc ... Obviously, none of them are as succefull as iphone, but
maybe together with other new lines of productrs, they can add up.

