What do Apple Customers Need in this Economy?

At this time of year, there is often a tendency to fantasize about what new product or service Apple might introduce at Macworld in January. However, in this economy, perhaps a better question is, all things considered, what do Apple customers need?

Apple is well known for giving its customers things that they need, but didn't know they needed, until the product shipped. In that spirit, Apple is in a unique position to make further gains with that philosophy, especially as other companies pull back, reduce R&D, or get out of some markets completely.

I written before about how Apple's financial position gives it a unique competitive advantage over the competition. That discussion pointed to how Apple can pay cash for components, get to the front of supplier delivery schedules, then through volume, drive prices down, putting extreme price pressure on the competition while they develop the next generation with R&D dollars.

Even as Apple does this, they are mindful of their brand. Selling cheap products doesn't sit well with Apple, and they definitely don't want to undercut or cannibalize other product lines.

So if one asks the question about what Apple can deliver in a time when customers are watching every penny, it's silly to envision a cheaper, stripped down version of a product that's already doing well. Instead, as Apple ponders how to deliver new products to cost conscious customers, the company tends to think about holes in the market that can be exploited with their technology -- but which don't undercut current products.

There are other considerations as well. For example, the iPod touch doesn't have a camera or an FM radio. Other than the CPU, it doesn't radiate and can therefore be used in corporate or government environments that would otherwise forbid a device that could be a security concern. Our fantasies often neglect to consider such things. Because people expect to use their iPhone anywhere, that device has a different set of design constraints.

So here are the criteria for any new device to be introduced at Macworld:

  • Appeals to price conscious customers.
  • Doesn't undercut a current or planned evolution of a current product.
  • Is something we need but didn't know how to express it.

I might add that not everything we need is a candidate for Apple. There are some markets Apple just doesn't want to explore. Perhaps they would distract Apple or diminish its brand. For example, I'd love to eliminate the USB wire required to upload my camera photos, but there are already storage cards with built-in Wi-Fi transmitters. That's neat, but not a major market for Apple.

Where Macs and iPods Meet

When I think about netbooks, my first reaction is, if I already have a Mac notebook computer, why would I want to add another computer? Keeping a notebook small and light means yanking a lot of useful features, and then having a headache keeping track of files on two computers, MobileMe notwithstanding. I do like the idea of 1.8 lb, 9-inch screen MacBook Air-lite, but that's evolutionary, not revolutionary. Anyway, keyboards tend to become cramped at that size.

On the other hand, a larger iPod "supertouch" with a 5-inch screen would get into a realm where battery power for the larger screen becomes a problem, and it's no longer something that fits into a shirt pocket or waist holster.

As a result, it would seem that Apple's current Mac and iPod lines has room for technological development, better performance, and slightly lower prices, but don't really have elbow room for a slate-like competitor.

Another Realm

Where Apple can really gain some ground is with the Apple TV. That product has barely reached its potential. The existence of the Boxee project suggests that many people yearn for more flexibility and aren't happy to buy a box and find themselves limited or channeled into specific content.

The proliferation of content from various different sources is an emerging problem. One can watch Heros live on NBC, TiVo it, search for it on Apple TV commercial free or watch it with commercials on hulu.com. It's getting to be insane when it comes to trading off time, HD vs SD, cost, and optimum choice of various available set-top boxes vs. using a Mac. This market fragmentation seems like a perfect task for Apple to tackle -- in a way that doesn't step on the toes of the content creators.

It's the Software Stupid

What Apple customers really need is the hardware and developer tools that enable imaginative solutions. Apple has provided that -- 10,000 iPhone apps have proven it. It's hard to imagine how new hardware, caught in the twilight zone between a MacBook Air and an iPhone can offer something more compelling to the mass market, and that's why I believe Mr. Jobs was been coy about pocket slates and netbooks.

Would I travel with an 8-inch MacBook touch and a virtual keyboard? No. I'd probably still take my MacBook Pro. Would I leave my iPhone at home? No chance. Would such a new product make a big splash? Yes. Would Apple sell millions? Probably not.

In this economy, software can solve a lot of problems, even problems that have been bubbling just below our consciousness. The price is often right. I expect to see a lot more of it, imaginative stuff, in 2009 as Apple seeks to beat up on the competition, not invest in low volume experimental hardware.