How is it that analysts continue to misunderstand Apple’s overarching global strategy? It’s a VIRTUOUS CIRCLE, PEOPLE!
Apple’s strategy is to combine product and services, mix these with EMOTIONS AND VALUES…to be the leading cultural-retail-cultural-retail-cultural-retail agent for the world’s 10%.
Let us count the ways.
Tim Cook holds what the vast majority of the 10% view as all the right social, cultural and political positions.
And that’s where it gets interesting.
Because what happens when their values change?
Time to examine Apple weaknesses!
Apple is the world’s richest corporation. It has the world’s second greatest moneymaker, after oil — iPhone.
Yet, it has certain obvious potential weaknesses that could cut deep into its profit-making wherewithal. These include the fact that all its money comes from hardware, and inevitably the business cycle will snap back and the money will then flow into cloud services, software, all the bits inside the hardware.
Another possible weakness: Apple is set to make more profit from China than from anywhere else. I do not want to think what Apple must do to satisfy China’s rapacious need for money and control. This is the very same country that keeps out Twitter, Facebook, Google and others over data sharing and access — yet they manufacture every single one of our iPhones, the very device that generates, archives and throws off more personal data about us than anything ever.
Tim Cook may be spending billions in China, spreading money around to everyone who can throw up a roadblock, but there are fundamental personal privacy concerns and geopolitics at stake that Apple may ultimately be unable to successfully traverse.
Still another weakness: Apple is utterly screen dependent. While it’s easy to say Apple makes all its money from hardware, or all its profit from flash memory, these are secondary to the truth: Apple makes all its money from screens. This limits where the company focuses its talents.
There are nearly infinite paths for Apple to explore. For example, I am a big believer in the potential of voice-based non-screen devices, such as the Amazon Echo, or even better, what I term “beacons,” ear buds that are fully connected to the “Internet” and which guide us, educate us, remind us, soothe us.
Apple could have leapt into this revolutionary technology, but companies focus their efforts on what brings in the profits. For Apple, it’s screens. That’s their strength, only, it’s also a possible weakness. It limits what they do. Perhaps the future is not screen-based, as we presume, but a combination of AI, crowdsourced knowledge, and our past words and deeds, mixed together and speaking into our ear moment after moment, leading us forward.
There are other potential weaknesses for Apple, of course, but I suspect the primary weakness is that management has very purposefully linked the company to the values of the world’s 10%. Lucrative, yes. But there’s always the possibility that values shift — and Apple is suddenly seen as a betrayer. Or, more likely, the world’s 90% claw their way through the muck and mire and change the world — then reward the companies long on their side.
This is not so far-fetched.
Very large companies have historically found profit growth by linking their products to emotion.
I’d like to buy the world a Coke…
Baseball, hot dogs, apple pie, and Chevrolet…
This no longer works, certainly not as well. In today’s world, we can get nearly anything we want, from anyone, from anywhere, at anytime, and with minimal research, at the very best price available.
Consumers are empowered as never before.
Plays on our emotion, therefore, are now limited. I’m all for Chevy’s patriotism, for example, but I can now go onto eBay, review 100s of cars in my area, find a Honda instead of a Chevrolet, say, research costs, profit margins, get the best price, examine scores of quality ratings, user reviews, and discover that nearly as many Honda parts are made in the US as Chevrolet.
When I can get what I want, when I want, at the best price, even order it while literally standing inside a competitor’s store, there must be a *compelling* reason for me to choose *your* product.
That reason is values.
I bought your product because following a quick scan of Yelp or Foursquare or Google or Amazon reviews, I learned that unlike the competition, you are eco-friendly, give 1% of your profits to peace, embrace diversity, teach girls to code…
YOU BELIEVE AS I BELIEVE!
That’s what sets your company and your products apart from everyone else!
Apple is at the forefront of this corporate change.
Apple overtly integrates hardware, software, and services, with emotions *and* values.
Apple does this extremely well. So well, in fact, that you believe — truly believe, and this is so whether you are an Apple “fanboy” or a “hater” — that Apple’s values, its values re diversity and the environment and the culture and the confederate flag, etc. are absolutely the future, no questions asked.
THE RIGHT SIDE OF HISTORY!
WE ARE THE WINNERS!
But values do shift and sometimes values shift quickly.
Should that happen, Apple probably won’t be able to move quickly enough to get the word out that…oh, they’ve always believed in X.
Make no mistake, I am not being fully cynical about Apple’s efforts. I am generally in agreement with most of Apple’s publicly stated values. I likewise assume most of Apple’s employees are mostly in agreement with most of Apple’s publicly stated values.
But not all.
Example: I am for gay marriage and religious freedom. To me, these are the same thing — individual empowerment, freedom and choice.
What is Apple’s stand on religious freedom?
The company doesn’t say.
Of course it’s wonderful that Project Red, which Apple supports, contributes to eradicating AIDS. But if I ran Apple, other causes would receive more attention, more publicity, more money; likely, these would be causes that the 10% rarely focus on.
Apple has gone from a company whose strength was creating computing products to a company whose strength is in growing an ecosystem of computing products and services — not the same thing — to a company whose strength is making massive profits through an ecosystem of computing products, services, emotions and values.
This is a sea change that no one else has yet figured out.
Now you know.
Problem: in a vertically integrated corporation, where everyone and everything must align in near-perfect agreement, an obvious *potential* weakness is if the rest of the world’s values shift markedly or the values of the target market shift.
Will this happen? In less than a generation?
Probably not. Think Different rarely happens, particularly among cohorts. Still, if I were a Apple competitor, I would aggressively promote not only my differences on price or availability or quality, but my value differences as well.