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Friday, 02 December 2016 08:47

Has Apple lost its mojo, its saviour? Featured

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Devout Apple users are lamenting the lack of innovation and that “je ne sais quoi” thrill they used to feel when a new product was released.

Apple was once an aspirational brand – Steve Jobs would announce category-creating, innovative products that appealed to all. These — the iPhone, iPod, iPad, iMac, and MacBook — became the must have “IT”ems that people would queue hours to get. Let’s not forget the iconic Apple I/II, Lisa, Newton, and fruity iMacs.

There have been enough mocu/documentaries on this brilliant, flawed man but let’s face it, under Jobs (with a lot of help from Steve Wozniak) during his last reign from 1997 to 2011 Apple released more innovative products, essentially came back from the dead, and cemented its position as the most profitable IT company of all time – take that Microsloth!

But since Jobs' death and subsequent control by chief executive Tim Cook and designer Jony Ives, Apple has gradually declined – that is not opinion, but financial and market share fact. Even Ives reportedly said that Cook favoured the bottom line over his production designs hastening rumours that Ives is on the way out. Apple and its products used to be great with a WOW factor to envy – now they are no better than the competition.

First, let’s get the Apple bashing out of the way. I admire Apple’s business model, and I wish I was a shareholder. I think entering Apple’s walled garden (closed ecosystem) is a choice often made without necessarily contemplating the consequences – tie into Apple hardware, apps, and even accessories all designed to make money for the company. But millions make that choice, and that is not the crux of this article.

The crux of the article is the growing opinion that Apple is now more about business than its users.

The biggest joke is that the best iPhone in 2016 is the iPhone 6. Why? Because the iPhone 6S and 7 were such small updates on the original, larger-sized phone that Apple had to be convinced to make in the first place to meet market needs. The later phones look the same, are slightly better, do the same thing, although losing a headphone jack still riles many. Sure, Apple practises a Tick-Tock cycle, so people expected much more from the 7. If Apple releases a 7S next year, it is truly in trouble.

The real reason for the Tick-tock-tock was simply to screw every last cent out of the manufacturing cycle, making Apple more money out of each unit. Fact – it has the highest average revenue per unit.

Its reintroduction of the iPhone SE, however, has flopped on two fronts. First, not that many people, especially those who used it as a primary Internet access device, wanted a 4” screen (it flopped in China and most countries). Second, it was based on old iPhone 5 tech – no HD screen, 3D Touch, Display Zoom, superseded CPU, old camera, really old selfie camera … Sorry the iPhone SE was not about giving people what they wanted – it was about utilising surplus manufacturing capacity to make a phone at a certain price point. Fact: Cook did not want the SE to cannibalise larger handset sales.

It is telling that global iPhone market share (for five models) has dropped to around 10%, while Android is now nearly 90%. Of course, Apple sells devices that are among the most expensive, putting them out of reach of most people, despite the fact that they cost less to make than comparable flagship phones. Fact: its strategy makes Apple the most profitable smartphone maker on earth. Good for business, not for consumers.

Let’s move to Macs, particularly the MacBook. Cook has stated that the MacBook will never be a touchscreen device. Apple's Core OS kernel team has been reported as saying that the kernel simply won’t support it – the only way to add touch is via a Wacom Cintiq digitiser, and that costs more than the Mac in the first place.

Now if the kernel won’t support it, that is going to require a massive investment in a new macOS kernel and while Apple has iOS it is unlikely to do that. In fact, there are strong suggestions of a merge of iOS and macOS, but given they are based on different architectures — ARM and x86 respectively — that is unlikely. It is more likely that iOS will receive all the development attention to try and make it a desktop quality OS. Fact: Cook is trying to extract maximum value from an investment.

Let’s not even mention the much-needed, but missing updates to Mac mini, Pro, and iMac. What next? Add a touch bar to the keyboard – that is not innovation, that is sad. Now some purists will say that the addition of a touch bar gives touch capabilities to a MacBook.

Patent rubbish. It adds a new, and for the most part, difficult interface to a non-touch product. It does not allow you to move the cursor to where you touch it, nor manipulate the screen, or pinch zoom, etc., – it simply replaces Fn function keys and adds some context sensitive control to a very limited range of apps because most developers will not rewrite apps and software to support a very niche market machine. The touch bar is a clunky, marginally useful interface – a perpetual reminder of Apple’s intransigence. Real innovation like Lenovo’s new touch keyboard-less Yoga Book is what Apple should have invented.

Let’s look at other MacBooks – many still use 5th generation Intel Haswell Core CPUs when the latest is 7th generation Kaby Lake (sure, it is not readily available yet). But there was no refresh to 6th generation Skylake even though Haswell was a three-legged dog by comparison.

But Cook’s predictable business-driven, scrooge-like mantra justifies the use of the same manufacturing line, the same dies, and largely the same internals for the past four years. Mac sales are down a further 5.2% to 12% market share, but the reality is that only represents 1.74% of desktop operating systems in use. Windows is growing!

Let’s look at iPad, once a must-have device (largely because Apple told us so) used to command 90% of tablet market share in 2010 – it has languished. Cook refused to acknowledge the growing need for hybrids, and Microsoft Surface-like devices are experiencing 91% year-on-year growth while iPad is in its 11th straight quarter of a deep dive and only commanded 12% of the Australian Q3 market share. iPad Pro has become a very expensive, marginalised product trying to be more than its iOS heritage allows.

And what about the humble EarPod – that $45 plug-in, expensive yet reasonably effective, set of buds? Sorry, you now must buy AirPods at $229 – great business decision to cut out all those cheap $10 knock-off buds that worked so well.

To leave no stone unturned, the new Apple TV may be a little faster, but it has not cured the basic issues – poor app support, poor remote trackpad, patchy and laggy Siri voice control, and it is bigger and more expensive than past models. Sorry, I forgot that Apple sheep blindly follow and will be fleeced.

Oh, what happened to iPod? Perhaps that morphed into the Watch that only lives in the Apple walled garden but at a price ranging from $529 to $1799. The Apple Watch Series 2 may be water-resistant and have GPS otherwise; it is the same old Watch. It does not fix any of the problems of the first-generation model, like battery life, or the relatively useless digital crown, or its dependence on the iPhone.

Conclusion

I hope you noticed a trend here – Apple’s new products are barely incremental improvements over the old ones, ad nauseam. Apple started as hip and cool, minimalist and perfectionist but it has gentrified to a company focused on me-too cost effectiveness. There is not one category that it is leading in market share or innovation. We want, hell, no, we expect more from Apple!

Since Cook took over he has achieved one major thing – where Apple’s return on net sales had been average at under 10%, Cook has taken this to a high of 27% by making it a well-oiled, money-making machine focused on shareholders. It is a well-run company only lacking the imagination and daring of old. Apple stock has ranged from US$89.47-119.86 this year. Fact: Apple stock reached $705 in 2012 (before a stock split), and the equivalent high is $133.

Analysts are split – some see a lacklustre few years as a precursor for growth and some see it as a continuance of a steady decline as other tech stocks like Microsoft and Oracle are once again growing.

Some analysts see the danger in the steeply declining market share of iPad and iPhone and negative growth of Mac products. Oppenheimer’s Andrew Uerkwitz has been sounding near apocalyptic warnings. In a recent research report, he noted: “The risks to the company have never been greater. We believe Apple is about to embark on a decade-long malaise.”

But some say Apple has a sustainable moat, bolstered by a premium global brand, extensive logistics system, an ecosystem of developers and partners and a retail footprint. It also controls both the device and software. The result? Apple — for many years — could charge premium prices, which it still commands today. Many add that they hope Apple has something planned for the 10th-anniversary edition of the iPhone next year.

If you follow Apple Stock, read the Time article here.

Rivals Microsoft, Samsung and Google, are, in fact, leading the way, spending more on R&D and innovative “gambles.” Samsung is now the number one tech company for R&D, jumping over Intel (3), Microsoft (4), Amazon (7), Google (9), and Apple which is now 18th.

Whereas Apple was usually at the top of the Forbes Most Innovative Company list it is now Tesla at the top, with Apple not even showing in the top 50. Mind you a lot of Chinese tech companies have found their way into that list as well as a few software companies.

Look, buy Apple products, but know that there is a whole new, more open, less costly, world outside its walled garden.

Apple mojo poll

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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