Far from the competition, but the risk that Apple faces is complacency

Far from the competition, but the risk that Apple faces is complacency


2022-06-20 05:05:59

During the “Peek Performance” event in February, Apple not only announced the all-new Mac line (Mac Studio) but also introduced upgraded versions of the iPhone SE and iPad Air. Everything was perfectly arranged in the 57-minute show.

The mark of “Peek Performance” is not in a specific product. Instead, it impresses because of the range of products launched. Within 18 months, Apple held 7 product launch events, covering new hardware, software and services. Other tech companies only host about one or two such shows a year. No other company is on the same level as Apple when it comes to maintaining and upgrading such a broad and comprehensive ecosystem of devices and services. The speed of Apple’s product announcement plays an important role in breaking out from the competition.

Power comes from a comprehensive ecosystem

Just looking at the quarterly financial statements can gauge the strength of Apple’s ecosystem. However, those strong numbers do not tell the whole story of the “missing apple”. With nearly 80% of revenue coming from hardware, Apple’s finances still depend on user upgrade trends. Measures of revenue, operating income, and cash flow have not yet shown Apple’s performance in the market from the perspective of new users.

According to estimates by Above Avalon, every year Apple “accepts” 60 million new iPhone users, 30 million new Apple Watch users, 30 million new iPad users, 15 million new Mac users. All are record highs in recent years.

To understand what Apple is doing and why Apple is doing so well, we need to go back to 2017 and 2018. Apple started adopting a new strategy, pushing all product categories forward. simultaneous. Before that, the company adhered to the one product principle, which meant that it attacked the most personal products.

Imagine tethering all of your Apple products on a single cord in a personalized order from bottom to top. As such, Apple Watch and iPhone will receive the most attention, and Mac computers will be “estranged” the most. Similarly, the iPad is also indifferent.

Far from the competition, but the risk that Apple faces is complacency - Photo 2.

Currently, Apple uses a system of pushing all products at once. As a result, iPad and especially Mac are equally prioritized as iPhone or Apple Watch. Apple also quickly expanded the products available and offered more price ranges and features for customers to choose from.

Far from the competition, but the risk that Apple faces is complacency - Photo 3.

At the heart of Apple’s strategic shift is increasing autonomy in the product development process. With the speed and scale of operations as large as Apple, no one can control or operate the machines by themselves. Apple wouldn’t be able to push through an entire product line if every decision had to go through a single gatekeeper. Instead, the Apple machine is designed to achieve a certain degree of autonomy in order to instill the Apple culture in each employee. Designers from different fields have a bigger say in user experience.

Leave the opponent far

While Apple has changed its strategy, the competition in the technology market has become more chaotic. More and more poor quality products appear and are shunned by users. Sales of folding screen smartphones are also not too impressive. Apple’s competitors are all struggling to attract users’ attention and money in the issue of smartphone upgrades.

It seems that Apple is on another level, where there is no competitor that can compete with them. For example, the number of Apple’s paying subscribers grows by about 170 million per year. Google wants to compete with Apple in the hardware market but has not achieved outstanding success. Google’s leadership does not seem to have put all its heart into the device segment. Meanwhile, Amazon and Microsoft have greater momentum in hardware but lack design thinking. Meta may have the highest level of recognition, but the company’s culture and heritage is not suitable for driving in the product market. Snap, Spotify, Sonos, or a long line of other small businesses all lack a big ecosystem.

When thinking about competition outside of the US, more and more consumers are looking for an “entry point” into a holistic ecosystem. Apple is selling quality smartphones, services, and tools. The percentage of Android users switching to iPhone is increasing, while Apple knows how to “lock” hundreds of millions of iPhone users into its ecosystem.

At this point, the risk that Apple faces is complacency. Apple’s biggest rival is itself. However, the fact that the Apple ecosystem is accelerating faster than the rest of the market is a potential sign that the “defective apple” won’t make this mistake.

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