So for the longest time, Apple has had a reputation for being different, when you think of Apple you think of this secretive organization who just keeps quiet and does their own thing, who doesn’t care or respond to the competition, who doesn’t post a thing while their competitors are dropping 20 updates a day. This elite club who if almost exists in their parallel universe separated from every other normal tech company. But, it’s changing two key things that have happened that mean that apple now is kind of having to ditch the company they once took all their weapons and battle.
Okay, let us give you an example of what we are talking about here, have you noticed that just in the last few years Apple has gone from being ultra-selective from making just one or two exclusive high-end phones to well building a phone for almost everyone. Apple released five different models just this year, ranging from $1099 to just $399 from one of the biggest phones you can buy to one of the smallest from a firm with a cutting-edge design like iPhone 12 to a phone that looks like something out of 2015 like iPhone SE.
Now, isn’t that kind of a strange move from a company who used to pride themselves on creating only the finest luxury products, okay another example do you remember when iPhones were considered the smartphone for rich people, but if you look at the iPhone 12 pro max the most expensive one they’ve ever released it’s now outpriced by Samsung, Oppo, Huawei even Sony and probably some more too, in fact, while almost every other company has added at least a $100 onto the prices of their phones this year, thanks in part to 5G. Apple didn’t, the average price of iPhones is falling in 2018 it was $950, in 2019 it was $933 and in 2020 it is $800, like who would have thought a few years ago that Apple would be the one winning awards for the best budget phone.
Something’s going on and it’s not just the number of models and the pricing apple has transitioned from a company who pretended that others don’t exist, to a company who now actively draws comparisons at every possible opportunity, they didn’t compare to anybody else but, then even as android phones started catching up for the longest time apple had this strange insistence on barely, even acknowledging them every time they launched a new chip it would just be compared to their last chip, every time they launched the phone they would just say it takes better photos than the last iPhone and this is clever this concept of existing in your little world, it generally means that your existing customers follow suit, they watch your events and they become so caught up in how one iPhone compares to the last, that they also stopped considering outside options.
Apple’s not like this anymore, now apple compares more than they’ve ever compared before, they had this new a14 bionic chipset right, but in the event for that, they didn’t just say that oh, it’s faster than our last iPhone but, also very clearly stated that this is 50x faster than any other smartphone chip. When they announced the iPhone 12 they didn’t just say that this is the best iPhone camera we’ve ever made, they said this takes the highest quality video of any smartphone. The new apple has no chill, a couple of years ago they announced an entire campaign titled switch to iPhone where they basically just opened fire on android, we have never seen the company this aggressive in their marketing before, and on top of all that you know how apple’s building their own chipsets now right, for their upcoming MacBooks well for the entirety of the launch event of those chips, it was basically just apple saying look our software is better than windows and our hardware is better than intel’s, everything they said was backed up with some sort of graph or comparison admittedly not very useful graphs or comparisons but, the point is Apple isn’t sitting in their own bubble anymore apple is competing.
Our favorite example of the new apple is, their approach to social media so, up until about three years ago apples kept social media at arm’s length because, fundamentally they didn’t need it and we think the way that apple saw social media getting involved with it just risked creating negative impressions, let’s say the apple did post a tweet but, then the top comment to that tweet became someone complaining about one of their customer service experiences, how dave and the apple store just accidentally bricked their laptop, that’s going to create negative impressions for other people so, given that Apple was already so popular, we think that they just decided well we’d rather have a bit less reach if it means we can control the impression people have of us but, this is changing too slowly but surely apple is transitioning from that to more how do we get as much conversation and as much engagement as possible. For example, they started working with influencers with the iPhone 10 in 2017, the first people allowed to publish videos about their new phone before even traditional media were allowed were YouTubers.
Apple now uses carefully selected tags and keywords in their youtube videos so, they can get views from search compared to before, when they would just use the tag ‘Apple’ or nothing at all and they do now actually post proper content, the first four years of Apple’s youtube channel was pretty much just keynotes but, they now use it from everything from camera tests to testimonials to behind the scenes videos, they work with twitter to integrate special animations, when you like apple themed tweets to boost engagement and they now even tell people to retweet their event posts to get updates about upcoming products, and speaking of events does it not feel like all we’ve heard about in the tech world for the last few months is apple, and that’s because even their attitude towards announcements seems to have shifted instead of keeping things simple and elegant and just having one announcement every three months or so, this year we’ve had three consecutive events in three consecutive months, they had the time flies event in september where they announced the latest watch and the ipad, the high speed event which was the new phones, and then they had that one more thing event which was apple’s new max powered by their own chipsets and like even within these events there were multiple products coming out at multiple dates, like for the iphones the iPhone 12 and iPhone12 pro came out a month apart from the iPhone12 mini and the iPhone12 pro max.
Why is Apple spreading everything out like this, well we think more than ever they’re hungry for coverage, we think they’re trying to occupy the new cycle as much as possible to drown out the noise of the competitors. There’s probably no better example of this than the one more thing event, see one more thing is one of apple’s iconic phrases it’s always reserved for the end of a reveal event when you think it’s all done but, it’s not instead of here’s something extra for you but, this year instead of being a 15 minute announcement attached onto the end of another event, apple made one more thing an entirely different event in its own right because why not a higher volume of coverage, okay you get the idea, the apple that you probably knew was this silent corporation creating luxury products for the elite but, they seem to be transitioning to a scrappier company who’s making noise, who’s fighting to beat their competitors to deliver better value so why, well there’s two big things happening in the smartphone market right now, and the first one is that more and more people are buying their phones online, this is a transition that was already kind of happening over the last few years but, the COVID-19 virus has catapulted it, because for a lot of people you can’t go to a store now, and see online is an arena in which apple’s traditional advantages these beautiful storefronts packed with friendly well-trained staff and really spaced out expensive looking products don’t really help them, in fact one of apple’s strongest sales channels was word of mouth this aspirational effect, this kind of oh, i see my friends using iphones i want an iphone this doesn’t really work as well online.
When you’re online, you can’t just welcome people into your store, and then act like competitors don’t exist. Competitors are now a single click away and so while past Apple could get away with comparing each iphone just to the last iPhone, current apple is having to shout about their advantages over samsung and over xiaomi, and online is also an area where luxury doesn’t sell as well because, you can’t create that whole end-to-end in-person luxury experience, and so online what matters more is showing that you look good on paper, to try and prove that you have the most powerful phone, and that it’s actually good value for money, you can even tell that their latest ios 14 software was just built to fill in the gaps to offer a lot of the features that iphones were previously lacking, versus android like home screen customization, picture-in-picture mode to sort of multitask, it’s saying to customers, hey don’t dismiss us because, we can now do those things too so, this online transition is is a part of it but the second big thing is that people are now upgrading their phones less, this is the single biggest catalyst to the change that you see in apple because, if users are swapping their phones less that also means that those users are stickier or in other words any user you can convince to buy an iphone will now most likely be an iphone user for at least three to four years, before they consider buying another phone compared to the two years you might have had with them before, and so as this transition happens Apple is now making more money than ever off subscription-based services, like apple music and cloud, and proportionately less from selling physical devices, the goal now is less about making sure that you buy the latest and greatest iphone and more about making sure that you’re just using an iphone and consuming these apple services, like who would have thought five years ago that apple would be effectively baking ads and offers into their software pushing users towards them, and if we assume that in the future this upgrade window is going to get even larger, let’s say people start upgrading once every five years then it becomes more important than ever to get those users Apple platforms now before it’s too late, while consumers are still somewhat open to switching platforms so, this is why Apple is now trying to be price competitive, this is why apple is now offering a product for every type of user, even if it does somewhat impact their reputation as a company who only makes top class products.
This is why apple just announced a MacBook which they’re saying has a 3.5X times faster CPU, a 5X times faster GPU, a 9X times faster machine learning all with twice the battery for the same price, this is why Apple is on the offensive, why they’re taking other companies now and trying to pull their pants down make fun of them their past strategy of pretending other companies didn’t exist, it was great in terms of building loyalty with existing customers but, Apple is changing because they realize now they want to build that base Apple wants new customers, and once they get those customers they have a pretty good way of keeping them.
you’ve probably heard of apple’s walled garden, this idea that when you get into the Apple ecosystem it’s beautiful it’s stunning on the inside but, that the walls are so high it’s really hard to climb your way out well we would describe what Apple has done this year is handing people a ladder to get in really easily you’ve seen this new Homepod mini right, it’s their latest smart speaker and it’s a third of the price of their last home pod, this new apple watch series 6 is faster and brighter than series 5 but cheaper why, well fundamentally is the fact that these products work terribly with android phones, so if you want to buy a Homepod mini or you want to buy an apple watch series 6 you kind of need to also buy an iPhone, and then when you do eventually buy a Homepod or an apple watch you pretty much can’t switch away from that iPhone because, you know you’d have to ditch them their apple’s lock-in mechanism.
Okay so to summarize the smartphone market is changing and probably no smartphone company has changed more with that than Apple, they have become less elusive, a little less mystical, much more competitive and we would argue a little more normal.