Lately there have been a couple more press articles than usually that touch upon Apple’s secrecy, especially in relation to the company’s CEO, Steve Jobs. They are accompanied by various leaks of Apple’s PR efforts that either point at cooperation or condemnation of media and reporters.
Jim Goldman’s interview with Steve Jobs was the last fully-fledged interview that Apple’s CEO gave. It was particularly long time ago – in September 2008 after the Let’s Rock conference. Much has changed since that time in the lives of Steve Jobs and Apple.
After a nearly six-month-long leave Steve Jobs came back to work at Apple at the end of June. Despite the fact that he has been quoted twice in Apple’s pres releases since that time, no one from media has managed to get any word out of him until recently when Yukari Iwatani Kane from “Wall Street Journal” has won e-mail reply from Steve Jobs to her questions about the tablet project status. “Much of your information is incorrect”, was the first Steve Jobs’s sentence articulated directly at a media representative since January’s “telephone conversation” with Bloomberg.
Why is it important? Because it seems Yukari Iwatani Kane is a “favourite” journalist of Steve Jobs at the moment. It was her who broke the news that Steve Jobs had had a liver transplant. Her article was full of details about the whole procedure. Moreover, this article was written in an unusual style for such revelations – there were no words like “our informer”, “as we have learnt” and etc. Yukari Iwatani Kane takes up an informative tone about the fact: it was here and there, this and that happened, which is rarity in this kind of reports. It could suggest that Apple (possibly with Steve Jobs’s consent) actually “sold” the news to the WSJ reporter. Judging from previous fuss around Apple’s stock exchange performance at times of uncertainty around Steve Jobs’s health, timing was perfect – Apple had just announced a tremendous sale success of iPhone 3GS and it would be easier to minimise possible negative outcomes to Apple’s stock-exchange performance…
It would be advisable to confront Mrs Yukari Iwatani Kane’s position with what happened around an article in “Sunday Times”. There were not many differences in “facts” that both WSJ and Sunday Times give but reportedly Apple’s PR forces tried twice to block the publication in the English paper. Why? It seems an author of ST article – Bryan Appleydard – lacked a special go-ahead from Steve Jobs.
“Much of your information is incorrect”, writes Steve Jobs in the e-mail to the WSJ reporter that describes in detail an Apple tablet to come. Much of it is incorrect, which means some of it is true. Has Steve Jobs just confirmed the forthcoming debut of the table? If yes, he has done it on his own terms again. Analysis of Yukari Iwatani Kane’s recent articles in “Wall Street Journal” may just confirm this.
A billion downloads and over 35 thousand applications in the App Store - this is what Apple boasted itself with in mid April. Last December statistics showed 300 million downloads and 10 thousand apps in the App Store.
Why to cite this archival data now? There is a new report by Strategy Analytics that points at the fact that Apple won 12% of the mobile software market at the end of 2008 to become its leader. The iPhone producer jumped into this very dynamical computer software market niche that will soon become the driving force of the whole market and will change the business character of telecoms. Repercussions connected with Apple's debut on the mobile software market are far reaching. As the author of the report - David MacQueen - notices, due to the fact that the mobile software market is now densely populated, competition gets really hot. Lower prices are natural consequence of this rivalry, which consequently leads to lower margins of developers. Apple does not make it any easier for developers. The App Store operator did not set clear rules how it promotes applications and developers on the most attractive places in the App Store.
The gravity centre of the mobile software market seems to be changing due to App Store's unprecedented success. Mr MacQueen notices the distribution of mobile applications used to be dominated by telecoms that kept the majority of profits to themselves before the App Store debuted. After App Store's success that was completely independent from telecoms other producers of mobile hardware reacted in the most natural way - they rushed to introduce their own mobile stores. On one hand, they wanted to get their own bite into the mobile software boom and on the other hand, to get independent from mobile operators.
Telecoms do not want to get ousted from this attractive business and try to adjust their tactics in hope to win back developers' attention - explains David Kerr from Strategy Analytics. A couple most important players on the global telecom market have already announced their projects to launch their App Store clones. There are two biggest telecoms in the world among them: T-Mobile and China Mobile - the players with high chances to get their foothold on the mobile software market.
"Apple’s (stores) has won the initial skirmishes but the war is far from over," Mr Kerr concludes. Possibly it's true but Apple will not let it go after this initial success and winning over 12% of the market. A new version of a mobile operational system iPhone 3.0 will introduce extremely important innovation that will surely bring additional hundred millions - micropayments. Not once, not even twice has Apple proved it has a penchant for creating particularly purchase-friendly environments for its products. There is a "buy" link in every little corner in iTunes. You can order print of your calendars or photo albums with a single click in iPhoto. You are able to buy apps from the App Store so effortlessly that you might just not feel you're spending money. It will become even easier now. So far the purchase of app has been a one-time event in the App Store. iPhone OS 3.0 will change this dramatically as developers will be allowed to sell additional content right inside their apps now. The consequences of it are easy to predict and actually Apple has already shown a trace of it to us when Scott Forstall presented a preview of iPhone 3.0 back in March. You play a fancy game; you have just ended the second level and you want the next one? Pay for it without leaving your game. You want to lead a virtual life with an iPhone app? Pay for additional elements of your virtual entertainment without leaving your second life. You want to follow live result of Champions League final? Pay for it. This will boost money flow in the App Store and Apple will cash 30% of any additional dollar taken over from users.
It is almost certain that a highly anticipated new product from Apple - netbook vel. iTablet will be based on the software distribution from the App Store. This way Apple will not only largely develop its numeric distribution (the number of products with access to the App Store) but also weighted distribution (the number of products that bring the bigger chunk of sales).
"BusinessWeek" reports citing NPD's data that iPod sales fell 9% between March and April (year to year) despite the fact that the average selling price dropped 11%. The inevitable process has begun.
Gene Munster from Piper Jaffray, whose record of projecting Apple's results is quite impressive, foresees a yearly decline of between 5 and 14% in the sales of iPods. If it turns out to be true, it will be the first time in history when there will be lower number of Apple's multimedia portable players sold year to year. Mr Munster believes Apple will report between 9.5 million and 10.5 million iPods sold this quarter (ends in June). Apple sold 11.01 million iPods in previous quarter (an increase from 10.64 million a year earlier).
Interestingly enough, the average selling price of the iPod has been on a downward trend lately. This is mainly due to the new iPod shuffle - the latest player in Apple's production cycle that generates a bigger part of iPod revenues now. Average turnover from the sale of one iPod was USD 151 in the second quarter of 2009, which means the average selling price has fallen 20% from USD 171 in just a year. According to Mr Munster's calculations, it will fall 7% more this quarter to about USD 140 dollars. It will give Apple USD 1.47 billion worth of quarterly revenues. A year ago (at the end of June) it was USD 1.68 billion.
The iPod is a product that is already on the right side of a product cycle chart. A marketing name for such products is "cash cows". Their sales dynamics is low but they enjoy high market share, which still makes them attractive. The iPhone is a perfect example of "star". Stars are products that show impressive sales dynamics and consequently increase their low market share.
"Cash cows" and "stars" call for completely different marketing handling. The iPod market defined as mp3 players is shrinking fast. You can see it in analysts' projections and quarterly results presented by Apple. iPod share in Apple's overall turnover structure is lower and lower and the times when the iPod was the only product that kept Apple afloat seem to be fading away. The iPod accounted for 55.6% of Apple's turnover structure yet in the first quarter of 2006. It now accounts for no more than 12 - 13%. Apple can be praised for how skilfully it switched from one-product-based turnover structure to multi-product-based one with the introduction of the iPhone. It was truly a masterstroke. Apple can still successfully develop the iPod line (the iPod is still an integral part of the iPhone) and the company does not seem to be making defensive steps around the iPod, which rarely appeals to investors and media.
What does Apple do with the iPod then? It launches slightly modified versions of iPods in the two cheapest market segments (nano and shuffle) practically without any marketing back-up excluding natural marketing buzz that accompanies the majority of Apple-branded products, which the Cupertino-based company learnt to incite quite skilfully. It is not accidental that Apple upgrades the cheapest iPods because their short-term market potential is higher (clients find it easier to spend a couple dozen dollars than a couple hundred). This results in short-term and possibly one-time jumps of sales. According to NPD's data published shortly after the debut of the new iPod shuffle, its sales soared 50%. Chances that this high sales dynamics would be kept were pretty low, which is reflected in the latest set of data from NPD cited by "BusinessWeek". However, Apple will be likely to minimise sales declines for long months to come with such moves.
The iPhone is a product of high development potential, which calls for high financial layouts for distribution and promotion. ChangeWave Research has recently asked 4292 smartphone users about their future purchases. 30% of them plan to buy the iPhone. This is slightly less than BlackBerry (38%) but much more than highly anticipated Palm Pre (4%) that is to debut on June 6. When asked about a new iPhone OS 3.0, one in five responders found it a decisive factor in their future decision.
What does Apple do with the iPhone then? It introduces thorough changes to iPhone OS that surely devoured more financial resources and human labour than upgrades of iPods. Apple regularly backs up its "star" with new TV ads in the most attractive advertising blocks. There are press conferences organised when every single detail is neatly discussed to raise PR hype around the iPhone. Every other week Apple informs about the new markets its smartphone is available on. If - what is being suggested more and more often - China and India join the crowd, weighted distribution (presence in places that generate the bigger part of sales) will be close to ideal.
Apple has decided to directly answer Microsoft's advertising provocation in Laptop Hunters series. The Mac producer ridicules PC's faults in the latest ads of Get a Mac campaign using a similar marketing technique to Microsoft. A question arises why Apple launches into this advertising clash putting its meticulously built marketing strategy at stake.
Apple has just released four new TV spots and one of them entitled "Elimination" is in the limelight today. In this spot John Hodgman (PC) invites a couple of his friends to help a shopper named Megan choose a computer. Megan is looking for a computer without viruses, crashes and headaches. This eliminates all the PCs and she's left with the Mac.
Apple might have not reached out from its marketing creation bounders set by Get a Mac series but it is just obvious the Mac producer counterattacks the latest Laptop Hunters ads by Microsoft. Such direct engagement in advertising answers will never have positive outcomes to the brand. Average consumers usually immediately lose track of "what, who, whom and why" and they simply lose interest in it, while both brands engaged in direct advertising clash have their market image harmed.
Apple has been consequently building its marketing message based on a strategic assumption that "Macs are cool and PCs are uncool". Paradoxically, Microsoft legitimized this assumption with its latest anti-Mac ads because it did not ridicule possible faults of Macs but their price based on the uniqueness of Apple logo. An average consumer who has been watching Laptop Hunters ads and who has not been biased against any of the brands must have been made certain that Macs are truly unique - although they charge much for it but in return, they offer some added value that PCs lack.
Apple seems to be wavering from its neatly trodden path that so far has brought tangible effects in building brand awareness. It is definitely thanks to Get a Mac series that Apple successfully promoted the features of Mac brand: reliability, simplicity in use and trouble-freeness. By not answering Microsoft, Apple would prove it is still after the features. Latest Get a Mac advertising spots boil down to answering a question whether Apple hit Windows or not, forgetting about the main brand message - what it really has to offer consumer in opposition to PC.
There were some worrying signals that Apple got involved in Microsoft's play (and it is actually what Microsoft was after as MS Brand Manager David Webster put it) when Apple's spokesperson Billy Evans commented on Redmond's advertising offensive in "BusinessWeek". Apple has never commented its competitors' advertising moves before. Now Apple puts an important argument into Microsoft's hands with the Elimination spot. It is a kind of an invitation to another offensive. This is also the legitimisation of Microsoft's successfulness.
It is quite puzzling whether Steve Jobs accepted this commercial or not. Judging from all available biographical sources, Steve Jobs has always had a last word about commercials. It is generally known he likes to have a decisive stand about strategic parts of advertising spots and often makes changes in the very last moment before their airing (such a CEO is nightmare to marketing people). Mr Jobs is presently out on medical leave and as he informed last January, he takes part only in strategic projects. The question is whether the last four Get a Mac spots were on a list of such projects.
Free access to press resources in the Internet will soon be over. This is because of media mogul Rupert Murdoch who has just announced his company News Corp. would start charging Internet users for access to web issues of press titles. Including the ones available on the iPhone.
It will concern popular and opinion-making titles such as "The New York Post", "The Wall Street Journal" or "The Times", along with the biggest tabloid in the world "The Sun". This is no good news to all 360 thousand iPhone users who have so far downloaded a WSJ app from the App Store that grants access to "The Wall Street Journal's" premium Internet content for free. They will be forced to either remove the WSJ app from iPhone springboard or pay Mr Murdoch a subscription fee. They will most likely be faced with this choice together with the debut of the third version of iPhone OS that will allow for micropayments inside apps.
According to Mr Murdoch, free Internet content is a mistake: "It is obvious to press publishers that the present model of Internet content access is not working". However, it is worth to remember yesterday News Corp. reported a 47% decline in its profits last quarter to USD 775 million.
Despite disastrous financial data presented by Mr Murdoch's conglomerate and a natural impulse to seek an easy and fast way to fix the situation, his decision seems to be… wrong. At times when an imminent end to printed press is more than apparent, monitoring media reprints everything and everyone and blogging/microblogging is developing extremely fast, Mr Murdoch sentences himself to slow transformation into dinosaur. Seemingly still huge and powerful but more and more clumsy and slowly becoming extinct.
It is commonly known that printed press does not live off sales to readers but advertisements. However, the former would not exist without the latter and the prices of ads depend on range and affinity for a given target. Proceeds from the sales of press cover the costs in best cases. You earn on how many and for how much you can sell ads. It is quite strange that the biggest player on the press market deliberately lowers its range and consequently the prices of advertisements. Internet users are spoiled because they have everything for free and probably only a small percentage of them will invest in Mr Murdoch's subscription. Consequently 360 thousand WSJ downloads on the iPhone will soon melt into some 3 thousand active apps.
There has recently been a massive press offensive in Poland against Apple’s discrimination against Polish clients. Despite the fact that Poland has been EU member since 2004, Polish clients are still unable to legally buy media files in iTunes. Unfortunately, it seems nothing is likely to change soon.
The biggest daily in Poland “Gazeta Wyborcza” has recently run a series of articles pointing at the lack of iTunes Store in Poland. Poland is part of the European Union market and therefore, Polish clients should have access to the same offers like their German or French pals. There are more clear examples of how Apple unfairly treats Polish clients. Despite the fact that Polish iPhone and iPod touch clients are able to register themselves and buy apps in the App Store boosting its phenomenal results, they were excluded from the Billion App promotion Apple staged when nearing the one billionth download.
It is quite difficult to be a Mac user in Poland, too. Although there is an official Apple representation in Poland, Apple does not sell its products on its own. There are no Apple Stores, only a couple authorised resellers whose prices are – mildly speaking – outrageous. After-purchase service is a struggle, too. You need to be really determined to fully enjoy using “the best software locked in the best hardware” in Poland.
“Gazeta Wyborcza” inspired Polish EU MPs to inquire at the European Commission about the unfair treatment of Polish clients by Apple. EU Commissioner Neelie Kroes acknowledged the fact and promised Polish Apple clients would be able to buy mp3 files in iTunes Store in May. This was in mid March. May has come and we know this will not happen anywhere soon. Two days ago “Gazeta Wyborza” published an interview with another EU Commissioner Vivienne Reading who admitted there was no chance to finish legislation that would force Apple to open its services to all EU member states until the end of this term of the European Parliament’s office. Legislative procedures in the European Union are usually quite protracted and in this particular moment largely dependent on imminent elections that will possibly change the political landscape of the European Union. This, in turn, will surely put the EU digital market regulation to some undefined future time.
As it might be easily predicted, Apple is almost mute about the issue. In their response to EU query, Apple’s PR forces explain the Polish market is not big enough to fully respond to the cost and labour of launching the machinery in Poland. This is probably true – although there are 38 million people in Poland, which makes it the sixth or seventh biggest EU market, numbers are pretty low. The highly elevated level of Internet piracy and social assent to intangible assets’ thefts are two big problems of Polish society. However, it needs to be clarified the prices of CDs and DVDs, which are usually similar to the ones in other EU regions, are too high for an average Polish consumer.
Anyway, that is not the case. Poland is part of the European Union and should enjoy the same rights as any other EU member states. To paraphrase the often used argument by the leading Polish opposition party, the Law and Justice (PiS) – we did not fight against the communism in this part of the world for such a long time to be left out again now when we are finally free…
There is no hope for imminent changes in law that would force Apple to stop discriminating against Polish consumers. However, there could be an alternative way. Polish clients could easily open Apple’s eyes with increased sales of legal music and video files. No company in the world will ever ignore a market with a couple dozen million potential clients. To do this we need to have the most obvious homework done, possibly with help from Apple and other global vendors. What we need is a successful crusade against Internet piracy, along with sound author – publisher regulations and a massive educational campaign over security in the Internet.
* picture taken from the biggest Polish Mac blog - AppleBlog.pl
Apple is sixth in the latest prestigious BrandZ ranking of the 100 most valuable global brands prepared by Millward Brown. This is one place higher than a year ago. The value of Apple brand has been up from USD 55 to 63 billion.
Like a year ago Google heads the ranking. The brand value of the most popular web browser in the world has crossed the psychological threshold of 100 billion dollars. Microsoft is up one place to number two. The Redmond-based company managed to increase its value by 8%. New technology brands (including mobile telephony) dominate the top ten of this year's ranking. Big loosers (not only of the 2009 ranking) are the brands of Western financial institutions.
BrandZ is one of a few globally recognisable rankings of brands whose results are acknowledged by top publicists and market analyst all over the world. Apple has been present in the ranking's top ten (top 7 actually) for two years in a row trailing only two other giants of new technologies - Microsoft and IBM. The fact is, however, that Apple isn't a market leader on any - apart from portable multimedia players - most important sectors of the new technology market. It supplies only 3% of the global PC market and just a tiny 1% in mobile telephony. Despite this Steve Jobs's company brand is worth more than bigger market players.
The picture comes from the Polish daily "Rzeczpospolita".
