Up through early 2016, Apple had a rich and fairly current product line. Several different new and one generation old iPhone were available in addition to the iPhone SE. iPad sizes covered the spectrum from 7.9 to 9.7 to 12.9-inches. MacBook Pros were not yet a year old. New iMacs has just been released the previous October. The latest Mac mini was only 18 months old.
And then something interesting happened deep into 2016.
It almost seemed as if Apple was about the business of rethinking its entire product line. Of course, some of that malaise has been attributed to mismanagement of engineering resources. We learned about that from Mark Gurman here:
Over and above the internal struggles at Apple, this process of rethinking and upgrading the product line got me thinking. One trigger was this slide show from ZDNet, “Seven Apple products that are headed for extinction.” My question is this: which products need to die and which products are all too easy to let slip into history for lack of profitability or interest?
I shall have more questions than answers here.
This brings up a related question about Apple that has intrigued me lately. Namely, should Apple continue with a rich selection of products that appeals to a very broad consumer base? Or does the return on investment analysis (and available engineering talent) suggest that Apple should focus on the one product that generates most of Apple’s revenue, the iPhone?
This chart from January shows the iPhone revenue as a percent of total revenue since the iPhone launched in 2007.
By that standard, one could argue that Apple has morphed into the “iPhone Company,” and not much else matters. And yet, many have pointed out the dangers of that formula.
Will the iPhone last forever, as a concept in personal computing? Will incremental improvements keep it going for a generation? Or will the Next Big Thing come along to completely supplant it? Apple is looking at its services, which are growing, as a hedge against any serious bump or disruption in the iPhone concept. But does that mean forsaking great hardware across the board?
All of this weighs on how Apple thinks about its current product line. For example, iPad sales continue to decline while Mac sales are holding steady. The gentle lapse into history of part of the Mac product line doesn’t seem called for. And yet. More to the point, what strategic changes to the concept of the Mac might be ahead? For example, if a 27-inch iPad isn’t on the drawing boards, why blow up powerful desktop Macs that appeal to creative professionals, then limit the power of MacBooks, and get out of the big display business? Why depend on LG? We’ve seen how rocky a road that has been.
Another factor is the world of education. Microsoft and Google, sensing weakness, are going after Apple in education. Fortunately, at our local college, you can still go to the campus bookstore and buy an introductory level 13-inch MacBook Air loaded with Microsoft Office for US$599. So when Apple thinks about discontinuing the inexpensive, outdated MacBook Air, it also has to think about its commitment to education sales and the average student’s checkbook balance.
Moving on. The iPad mini is another product that seems to be in the edge of extinction and is on ZDNet’s list. One arguments is that people who would buy a 5.5 to 5.8-inch iPhone don’t really need a 7.9-inch iPad mini. One can argue that it was an evolutionary product from the days of small iPhone displays and, perhaps, appealed to only a small market segment. And yet, is it beyond the industrial capacity of Apple to keep it alive as incremental revenue? Is it wise to drop an iPad product when the entire product line is in decline?
The Apple Family of Products … and Us
There was a time when customers felt uncomfortable with the peripheral offerings of Apple’s competitors. These offerings were often not extremely well made, not well designed and not easy to operate. It was a natural thing to have an Apple Cinema display, an Apple Wi-Fi base station (remember those awesome flying saucers?), an Apple computer and an Apple iPhone.
More and more, as Apple has dropped out of some of these markets, hungry competitors have seen an opening and moved in. HP with displays and PCs for the technical and creative professionals. Microsoft with the enterprise cloud and Surface. Google in education. The new Mesh Wi-Fi products. Just to name a few.
And so the question I’ve had lately is this. Where does Apple want to be in our lives? Which products need to survive and be nourished, lest the competition take that market away to our great displeasure and inconvenience? What is the strategy for a coherent line of products that interoperate, that are fundamental to the customer and to Apple’s long term plans?
As we move into 2017, we’ll all continue to observe and try to figure out a product strategy that is both within Apple’s capacity and vision and which serves its customers across the board. Some beloved products may have to die, but will they be replaced by a grand and understandable vision going forward? I think that’s something to watch for in 2017.