Apple has been riding a high for several years now. It is consistently ranked one of the most valuable brands in the world, beating long time competitor Microsoft by a wide margin. It might seem odd, then, to deep dive into their shortcomings. Healthy brands like Apple are rarely thought of as needing a course correction. But is Apple as healthy as it appears? In the same way that I discovered Harley Davidson was actually better off than people gave it credit for in their brand audit (it was a category problem, not a corporate one), I believe the inverse is true with Apple: they are an ailing brand masquerading as a healthy one. Case in point, Apple just posted its worst quarter in a decade.
Is this the beginning of a major downturn for Apple? And if so, why are consumers shifting away from the popular brand? Some don’t believe there is a problem at all. Forbes contributor Mark Rogowsky posits that, despite the minor downtick in sales, Apple is still “an incredibly successful company.” On the other hand, Apple stocks dropped off a cliff in late April, though it is worth mentioning that the stock market does not have the best track record in tech company valuation. In contrast to Rogowsky, Dan Nathan of Risk Reversal, an influential market analysis site, was quoted in The Guardian as having said: “The jig is up for Apple. The big money’s known that for a while. But people love their iPhones so much, and the tech press are all fanboys, so people haven’t talked about it.” This suggests that many investors feel the same way I do: Apple’s health is somewhat of a façade. So what has us so spooked about Apple?
There are a lot of conflicting theories about Apple’s current, and future, strength. One worry seems to be flagging iPhone sales, especially in Asian markets. Carl Icahn dumped all his Apple holdings over concerns that the Chinese government is impeding Apple’s growth within the country, along with other, unstated, downstream troubles. Another theory is concerned with market penetration. Now that Apple’s most popular products have made huge inroads into the mainstream markets, people aren’t buying Apple widgets because they already have one. Replacement sales will never be as high as launch sales. The final, and most commonly parroted, theory is that Apple isn’t innovating like they used to, and that without the innovation they aren’t getting the steady stream of product launches that boosted their sales beyond “replacement” levels. The easy narrative is that without Jobs’ guiding hands at the wheel, Apple is running itself off the road. I don’t think it’s that simple, though. Apple was already showing signs of flagging innovation, even while Jobs was still alive. Personally, I think the reasons for Apple’s troubles are more root than that. Yes, innovation has been a problem for the company recently. Jobs once said: “Who wants a stylus? You have to get em’, put em’ away. You lose them. Yuck.” And yet, now we have the iPad Pro, with a stylus. Perhaps, however, this gives us insight into what is broken at Apple beyond simply innovation. Apple has lost its way in product design and strategy.
When Jobs returned to the company, he restructured the computer division to make their product lines clear-cut and simple. Whereas companies like Lenovo or Hewlett Packard were producing a myriad of computers at the time, differentiated by impenetrable naming schemes that all followed a similar pattern (HP Pavilion a1320y, Dell Dimension 2400C), Apple would instead produce four computers: a consumer laptop, a professional laptop, a consumer PC, and a professional PC. These became the MacBook, MacBook Pro, iMac, and Mac Pro, respectively. They could be tweaked at point-of-sale to have faster CPUs, more RAM, or more physical memory, but the external designs, product names, and intended market/functionality of the machines were simple and clearly delineated. Compare that with Apple’s offerings today. These days, Apple offers the Macbook, Macbook Air, Macbook Pro, iMac, iMac with 4k Retina Display, iMac with 5k Retina Display, the Mac Mini and the Mac Pro. There are also the iPads, or more specifically the iPad Pro, which, since Apple’s latest keynote, seem even more like a computer and less like a tablet.
Confusion isn’t the only problem with Apple’s product strategy. Overlapping capabilities leads to products that cannibalize Apple’s own markets. The iPad Pros have enough power under the hood that they compete with Apple’s own low-end laptops. They even have a keyboard now. It begs the question why anyone would pay the extra money for a Macbook or Macbook Air. A fully boated out Mac Mini ends up price competitive with a mid level iMac, even factoring in the extra cost of a (non-Apple) monitor. The high-end 4k and 5k Retina Display iMacs are so capable at high processing power tasks like 3D rendering or intensive code compiling, with an UltraHD resolution screen thrown in, that there doesn’t seem to be any point to the Mac Pro at all. Ironically, this is similar to the place Apple’s products were at in 1997 when Jobs returned to the company and saved it from bankruptcy.
The increased complexity of the product line is just the tip of the iceberg. Their design philosophy is questionable as well. For starters, most Apple machines are over engineered, which leads to a surprising number of negative consumer experiences. On the one hand, they aim to have as little “disruptive” fan noise as possible in their machines, cleverly using their aluminum bodies as a heat sink. On the other hand, their otherwise fairly reliable computers often fail due to problems with overheating, and their laptops have the worst reputation for burning your legs (or cooking your testicles, per the State University of New York at Stony Brook study of 2010). On the one hand, their R&D has pushed towards ever thinner and lighter components, making their mobile devices small and their laptops seem as light as air. On the other hand, they made iPod nanos and shuffles so small people kept losing them, and their laptops got so thin by making tradeoffs many consumers don’t love, like having only one USB port. On the one hand, they can come up with clever engineering tricks to make the Mac Mini, iMac, and Mac Pro all incredibly compact. On the other hand, the result is a sealed box design that ensures that none of Apple’s computers are easily upgradable or repairable.
The sealed box design philosophy is a major negative for anyone in the prosumer or professional markets. To clarify what I mean by sealed box, I’m mean that Apple specifically designed their modern machines to discourage opening them up. This is typical and expected for laptops, but is extremely rare and frustrating for the PC market. Without being able to open up your computer, you can only repair failing hardware by taking it to an Apple store and you can only upgrade by buying an entirely new machine at great expense, even if you only want to upgrade one part, like adding more RAM or a more modern graphics card. Having those as your only options is unacceptable for professionals with the basic computer know-how necessary to buy and install upgraded, or replacement, parts. Imagine you are video producer who works on an Apple. You just bought a RED camera and are excited about getting to edit in 4k for the first time, but you also know your computer needs some upgrades to handle the compression tasks of the larger resolution footage. With a Windows machine, you would simply open the tower up, swap out the graphics card for a better one and maybe throw in some extra RAM for good measure. The whole thing might cost you $300-400, depending on parts of course. The same upgrade in Mac requires a new computer, base cost for good specs: $1800.
For the savvy consumers, upgrading Apples used to be as easy, and as common, as it is in the Windows PC world. It was a feature that many owners valued highly. Mac Minis before 2012 were really popular amongst a niche of Apple consumers because they could be opened up and upgraded, but Apple shut that down in the latest iteration by soldering everything in place, hurting the sales of one of their (already) less popular lines. Similarly, the old Mac Pros, the aluminum towers that resembled a cheese grater, were easy to open and upgrade. Multiple drive bays to expand internal storage, upgradable RAM slots, and so on. All the features you’d expect in a professional level machine. This is no longer the case since the launch of the cylindrical Mac Pros. Now their compact, over-engineered design doesn’t allow for easy customization.
On its face, the professional computer market might not seem like that large of a concern, as Apple caters to the hip millennial set more than anything else these days, but part of that hipness came from decades of appealing to the creative prosumer and professional markets with not just their stylish looks, but genuinely good product design as well. Apple computers running Final Cut didn’t become the dominant editing suit in television by accident, it got there because the computers were powerful, reliable, and professionally oriented, and the software package was as amazing as it was cheap, relative to its competition. How long will the young and hip favor Apple, a lifestyle brand as much as a consumer electronics brand, if it is no longer seen as the computer for cool, creative types?
Poor product design doesn’t end with the hardware, though. There is a lot more to love on the software end of things. I still think their operating system is the best one on the market. Unlike Linux, which caters to the 99th percentile of tech savvy, it is user friendly, intuitive and accessible. Unlike Windows, which similarly caters to the average user, it has fewer stability issues and is less prone to viruses. OSX’s only major shortcoming is in software compatibility. That being said, the applications that Apple developed for their OS, and occasionally ported to other platforms, is another matter entirely. Some are perfectly capable, like Pages and Keynote. Some are very popular as cheap alternatives to expensive enterprise solutions, like Logic. Some were once very popular but have taken a PR nose-dive, like Final Cut. In rare cases, they are just outright hated, like iTunes.
iTunes is a mess. What is this ridiculous chimera of a program? It started its life as a basic music player. It was never a brilliant or lightweight music player, like many alternatives preferred by purists, but like all Apple products at the time it was very straight forward, capable, and made interfacing between Apple products, namely the iPod and desktop or laptop, super easy. Eventually, a music store was added, filling a niche that before was really only served by piracy. Next came the iPhone, which expanded the range of things carried on Apple’s mobile devices. To accommodate the new demands, iTunes expanded again. Now it’s a music store, a movie and television store, an app store, a streaming radio service, a cloud storage tool, and a podcasting library. This unfocused hodge-podge design is an increasingly sore point for Apple users.
Not unlike problems Apple had with Final Cut Pro X, there are some smart features, like easy metadata tagging, beautifully designed cover art integration, and a reasonably clever sort and search system for navigating your library, but all those great additions are lost in a sea of bloated and unintuitive features. Among the chief complaints of users, as outlined in Quartz’s article “iTunes is 13 years old—and it’s still awful,“ is an ugly interface, a lack of intuitive design, sluggish performance, a space-sucking size caused by a terrible backend and unnecessary bloatware, and a sense that music isn’t its priority anymore. Which, of course, it isn’t. One of my personal complaints is the passive-aggressive Apple account integration. Why am I asked to log into my Apple account every time I launch the program and every time the computer comes back from sleep with iTunes already open? I don’t have an Apple account; I don’t want an Apple account… I just want to use iTunes as my primary music player with music I archived from CDs I own. Why can’t I tell it in the settings somewhere that I don’t plan to ever attach an Apple account and be left alone?
Apple has proven in the past that they are really good at writing software packages that all talk to each other, like Final Cut Studio or iWork/iLife, so why can’t they spin each of the separate functional components off of iTunes, give them a new name, and work towards making a great stand-alone user experience for each function (player, store, radio) without sacrificing the benefits of a hardware/software ecosystem that connects the iPhone, iPad, iPod, and Mac desktops and laptops? Partly, they don’t do this because they have looked at user forecasts that point to music streaming services, like Pandora, Spotify, or Apple’s own Apple Music, surging past the “ownership” model of iTunes sales, let alone the even older CD purchasing and archiving model of my youth. Apple appears to be doubling down on this future view, like they did on the iTunes store when they ditched spinning optical drives from all their computers, preventing consumers from playing/ripping CDs or DVDs on their Macs without an additional, third-party USB attachment. Why waste development money on “the past?”
They did something similar with the iPod, as well. The iPod Classic was the best MP3 player on the market for most of my life. It was always the best combination of high capacity and long battery life of any of the offerings out there, including Apple’s other models after they expanded their line. It also had the most intuitive user interface of any major MP3 player on the market. There is a reason the Zune was almost immediately forgotten. When Apple began expanding its line, the iPod Classic garnered a reputation as the player for audiophiles, since it could carry thousands more songs, at a higher quality compression, and could play them for hours more. Apple decided to discontinue the line without any plans for something new to fill its niche. I have over 60gbs of music and my collection continues to grow. Which of the remaining iPods is going to get the job done for me?
Taking a guess at Apple’s thought process, they are probably thinking that cloud music services and streaming apps will make high capacity music players obsolete, but those only work if you have access to the internet all the time. What if I’m backpacking deep in the mountains and I want to take some music with me? My iPod Classic has enough battery to last me a whole weekend of hiking on a single charge. My smartphone dies in one day and I only get music if I’m on 3g or better the whole hike. The same goes for driving in remote areas. Or travelling to foreign countries where I might not want to pay for a local SIM card. I haven’t seen Apple’s internal sales numbers; for all I know they might have been losing money on every iPod Classic. But the demand is there. Other companies are still manufacturing high capacity MP3 players so I have to imagine that the concept of a big battery, big hard drive player doesn’t have to be a money loser. Apple could rethink their design, perhaps trading some base memory for expansion through SD cards, as competitors have done, while finding a way to still make it “Apple.” But again, it seems like Apple has decided they know where the trends are headed, away from MP3 players and towards multipurpose smartphones, and are abandoning the old way.
Apple’s weak product strategy is exacerbated by their terrible pricing structure. Back four or five years ago, Apples were an OK value proposition. They were expensive, yes. You paid a premium for design, yes. But you were, metaphorically, paying BMW prices for a BMW car. In other words, the guts of the machine (CPU speed, RAM, rendering-focused graphics cards) were comparable to similarly priced pre-built Windows computers. Now you pay BMW prices for a Ford Fiesta. From a custom builder like IBuyPower you can get a gaming computer that equals or tops low end iMacs for approximately $400 cheaper. In defense of Apple, as an all-in-one it comes with the screen built in. I would argue that is more than balanced out by the fact that, as an all-in-one, an iMac is costly to repair and nearly impossible to upgrade. It doesn’t end there, though. Apple takes advantage of their sealed box designs to gouge consumers at the point of sale. For example: you can’t upgrade your RAM after you’ve bought your computer, so you have to be smart about how much you include in your initial purchase. Apple uses this to their advantage to overcharge you for parts. Despite the fact that two 16gb sticks of DDR4 SD-RAM costs around $150-200 on the open market, Apple charges you $600 for the same 32gbs of RAM, but in DDR3 SD-RAM, which is last generation technology.
This faulty pricing strategy starts to really stink if you look at specifics. I’ll use, as an example, the current Mac Pro. The Mac Pro ought to be a dream machine for a video editor, with its dual graphics cards and super quick CPU that could tear through 3D rendering projects like so much tissue paper. However, if you take even a half second to look beyond the marketing hype, it’s actually a terrible purchase. For starters, the modern Mac Pro, whose design aesthetic is somewhere between an oversized ashtray and an undersized trashcan, hasn’t been revised since it was initially launched 2013. As a result, its guts are hopelessly out of date. The CPU and dual graphics cards, two of its largest selling features on launch, have been well outstripped by the rest of the market. And yet, Apple still expects consumers to pay $3000+ for it. That $3000, of course, also comes with a series of hidden costs. Its over-engineered cleverness left no room for a high capacity hard drive, so its maximum onboard storage is a paltry 256g in PCIe-based flash storage. As a result, anyone doing serious video work, who likely deals with high definition video in the hundreds of gigabytes, has to spend another thousand or so on RAID, or other networked storage, for their working video files. It also needs a monitor, which if bought from Apple is another thousand per monitor. Though you are probably better off buying from a third party and paying for an adaptor because, as you may have guessed, Apple’s 27in Thunderbolt display technology is getting quite long in the tooth. The Mac Pro, like every other computer in Apple’s line these days, also doesn’t come with a CD/DVD drive so you have to pay for another accessory if you want to cut DVDs for your clients.
These days, there are two circulating rumors about the Mac Pro: one that they are about to announce a new version of the computer this year, the other that they are going to kill the line. If all you are going off of is sales alone then killing the line makes sense. According to articles in the tech press, the Mac Pro has been a flop. Not surprisingly, it’s been hard to move units on an overpriced, ugly specialty machine that is far too handicapped to be considered a true professional computer. Does that mean they should kill the line? Or just rethink the design? The pre-2012 cheese grater Mac Pros are still a beloved machine. In many ways, they are still competitive with the trashcan Mac Pros in specs, too. They have slightly slower CPUs but many more cores. They have only one graphics card, but they are easily upgradable. They have a multitude of hard drive bays for easy expansion, supporting both HDD and SSD drives. They have a traditional tower design that, while “bigger,” makes it easier to perform routine maintenance, like dusting, as well as troubleshooting hardware issues. “Bigger” is in quotes because while the old Mac Pro’s footprint alone is bigger, the number of extensions the new Mac Pros require to be usable greatly inflates their footprint to similar levels and often in a more disorganized and difficult to manage way.
So finally, let’s play a little game. I’m a late twenties working creative professional that’s looking for the ability to handle Final Cut, Motion, Adobe Creative Suite, and some light gaming. What computer should I buy if I want to buy an Apple? I could get a laptop, but they are underpowered, more prone to part failure, and expensive due to the design constraints of being portable. I could get a Mac Mini, but they have an integrated graphics chip rather than a graphics card, so their ability to munch render tasks and/or play games isn’t up to the level I need. iMacs meet a lot of my requirements, like the screen and graphics card, but they’re designed like a laptop on a pedestal, locked up tight and unsafe to upgrade or repair. What I really want is a box tower computer with the ability to fiddle as much or as little with the inside as I need to get the most out of my computer, both for work and for pleasure. A Mac Pro! Of course! It just has to be one from four or more years ago…
This seems to be a recurring theme: the products were better before 2012. Mac Minis before 2012 were prized for their great value as well as their ability, albeit limited, to upgrade things like the RAM. Owners of Mac Minis before 2012 are loyal to their machines and continue to cling to them, dreading the day they die. Mac Pros before 2012, with their tower design, are beloved by video professionals and other top end users around the world. Owners of these cheese grater Mac Pros cling to them, dreading the day they die. This plagues Apple’s mobile markets as well. Apple is struggling with new iPhone sales, as users cling to their preferred older models, dreading the day they die. Since they discontinued the iPod Classic, owners like myself cling to what they consider the best MP3 player ever built, also dreading the day that they will inevitable die. Even in my earlier blog post about Final Cut Pro X, I mentioned how many editors who were fed up with X, rather than switching to Premiere or Avid, simply stubbornly stuck with Final Cut Pro 7 because they loved it so much.
I don’t think any one thing changed at Apple in 2012, however coincident, that brought on a wave of inferior products. Still, something is clearly different. As I mentioned at the beginning, many analysts assume the change has to do with a lack of innovation. They see that Apple isn’t pushing out new and exciting products every year, and will jump to the conclusion that this is the reason that Apple isn’t what it used to be. They will express fears, as Wozniak did in his Reddit AMA, that Apple is no longer leading the market but are stuck following it like most everyone else. They may even claim that Apple is boring now. But I think this is a total misread of what is happening at Apple. Apple was never truly the cutting edge of product innovation.
The iPod wasn’t the first MP3 player. The Archos Jukebox hit the market a year earlier with a larger capacity hard drive. The iPad wasn’t the first tablet. Microsoft launched the Tablet PC in 2002, eight years before pre-orders for the first iPad began. Even Apple’s best contender for product innovation, the iPhone, was technically beat to the punch by IBM Simon, a PDA/phone hybrid thought to be the first touch screen phone ever built. What Apple does best is taking the cutting edge and funneling it through Apple’s amazing design and technology teams to produce a version of that technology that people would actually want to buy. Intuitive interfaces, attractive designs, and high end products sold at high-end prices; these are what Apple has done well.
I think Apple has either forgotten, or never truly understood (without Jobs at the reign) that this is their specialty and it shows in their current business strategy, which reeks of short-term vision. Apple is hot right now. According to Interbrand’s rankings, Apple is the number one brand, of any type, in the whole world. It’s defined new consumer electronics markets. It’s built up legions of massively loyal fans who eagerly await their every move and announcement. If all you want is cash fast, then selling overpriced products to this captive audience is great. They buy it because it has your name on it and they trust you. But historically, this won’t last long. People will catch on to the fact that they are getting ripped off. You will lose their loyalty, and with it their devotion to your brand. First it will ruin the company’s reputation, then its sales, and finally its market cap. I love editing on Final Cut. But, really, the cost of a Windows machine, an Adobe Creative Cloud account, and some learning curve might be worth it if Apple’s value continues to be so poor.
It doesn’t have to be that way, of course. A return to the pre-2012 way of thinking could turn things around. Expensive, but good value. Making sure it’s an ideas-focused company that still listens to its consumers. A more focused approach to design and branding: limited number of offerings, each one designed with a specific purpose or user profile in mind. Chasing new markets doesn’t mean leaving your loyal base behind, especially if it costs you very little to keep both around. Apple should do what Intel’s CEO did years ago when they hit a similar snag: step back and reassess what their company is about. I don’t think it is about the cult-like pursuit of bleeding edge, or about innovation for innovation’s sake. Lately, Apple’s attempts at giving people what they want, not what they asked for, have failed. Final Cut Pro X was a black eye. Feature creep in phones isn’t pushing units. Apple isn’t a fashion company either, even if people buy the products because they are fashionable. The Apple Watch is not the future of the company. Apple is about taking the esoteric, but powerful, and making it consumer friendly. If you can’t pick up an Apple product, or fire up an Apple application, and understand, in minutes, the basic functions of the thing, Apple has failed, in my opinion.
Perhaps that is why iTunes is such a sore point for both fans and haters of the Apple way of things. It is the antithesis of everything that makes Apple a great company. It’s bloated and slow. Its design is arcane and unintuitive. It seems purpose-designed to make it harder for users to do what they want. In a Reddit thread on iTunes’ legacy, the posts quickly shot into the thousands full of complaints about the platform. It is the canary in Apple’s cave of brand equity. As long as it remains a five-headed beast with three legs and two butts, Apple is in trouble.