Apple is systematically putting many initiatives together in a strategic way. Looked at in isolation, each is nothing for competitors to worry about because it looks like another puzzle piece. Taken as a whole, the effects will be lethal for the competition.
I have been thinking lately about all the bits and pieces of Apple's strategy. If one reads widely and puts into perspective all the items I'm going to look at below, a larger picture emerges. Ultimately, however, this article is part observation and part informed speculation. There are some elements of truth in the list I have created, but there's also a healthy dose of theorizing.
Of course, there is not doubt that Apple does has a long term strategy. Those who suggest that Apple is aimless and drifting and is about to fail based on product release cycles are not looking at the sum of the parts.
Here's my current working list of observations about Apple's strategy.
1. Seize greater PC marketshare. As the PC market implodes thanks to tablet cannibalization, there will be opportunities to exploit that effect. It's not just a matter of selling more iPads. Rather, there are several additional components of a strategy that can lead to a significant increase in Mac market share.
After all, the Mac's market share has been rising for many years now. Why not nudge that tendency along even more?
One of the things that can help is to lower, not raise the price of the entry level MacBook Air. Some thought that Apple would release a Retina MBA at WWDC, but now the strategy seems to be coming into focus. And that's to leverage the quality, thanks to advanced manufacturing techniques, and lower the price of the MBA to entice, via the iOS halo effect, those who still need a notebook computer. A Retina display at this point in the technology would force Apple to raise the MBA price and would be counterproductive.
Now, on to some speculation. Another way to grab a greater part of the PC market would be to launch a 12.x-inch iPad. The curent iPad Air, given its 9.7-inch size and capabilities, can only assume so much of the standard PC workload. However, a larger display iPad along with productivity improvements in iOS 8 could attract those who thought only a PC with a large display could meet their needs.
2. Develop the look and feel of OS X to further distance itself from Windows. This is really an extension of item #1, but deserves a separate entry.
It's been widely analyzed, even by Paul Thurrott, that Microsoft hosed up the Metro interface. This is another opportunity for Apple. One might phrase it this way: Given that Microsoft borked the integration of the PC and the (Surface) tablet, where can Apple, an expert in user interfaces and user experience, take the desktop/laptop interface?
To suggest that Apple change OS X look-and-feel for the sake of market share may be distasteful to some and annoy others. On the other hand, product design is not just about aesthetics. It also involves continued success in some quantitative way. Could this be why we're hearing about an OS X makeover in the style of iOS ?
3. Develop health and fitness monitoring by leveraging Apple's technologies for personal data security. Back in February, Apple published a greatly overlooked document entitled "iOS Security." In it, Apple lays out chapter and verse how it has developed a deep infrastructure for platform security in many areas. Here's the sobering table of contents.
Looking at that document, my thoughts turned to the recent court cases against Samsung. What are the valuable lessons learned from these trials? I surmise, in my own perhaps narrow view, that look-and-feel are easy to copy. Top level functionality is easy to copy. What's really hard to copy is a comprehensive security technology that's been folded into Apple's established ecosystem.
After all, who doesn't want their sensitive personal health information in the hands of, say, Samsung?
Next: Strategy Items 4 through 7
Strategy Items 4 through 7
4. Leverage Sapphire on iPhones. Sapphire is not just for scratch resistance. This material, which Apple has invested heavily in, allows the company to differentiate the iPhone in a market beset with wannabe copiers. This handsome material will make the iPhone feel more valuable to the customer, and that's ultimately what Apple is all about: value.
5. Increase the value of AAPL for shareholders. I don't perceive this as an idle gesture to bump the price of AAPL. There are several good reasons to buy back stock and trigger a 7-1 stock split.
First, make sure the stagnant stock doesn't fester and become a starting point for discussing Apple's failures and dismal outlook. That just causes further ennui. And secondly, it buys time for new product development which will eventually increase the value of the stock further. I think of it as priming the pump just before WWDC.
6. Invest greatly in robot manufacturing technology. There are good reasons to do this. First, in a highly competitive consumer electronics market, there's a race to build products with innovative, functional designs and yet stil make money doing it. (At least in Apple's view.) The company that has the coolest products with high perceived value and makes the most money doing it wins. See, for example, "Apple’s $10.5B on Robots to Lasers Shores Up Supply Chain."
Secondly, advanced manufacturing robots allow more Apple products to be cost effectively made in te U.S., protecting Apple from future global politics. Then supplement the robots with renewable energy to control the cost of and access to energy.
7. Leverage the 800 million iTunes accounts into a mobile, secure payment system. Much has been written about Apple's iBeacon system because Apple has a phenomenal 800 million iTunes accounts, most of which have a credit card associated with them. In my opinion, Apple is boiling the frog of the industry by developing the technology and security systems to enable easy mobile payments, and when the technology is fully baked, the avalanche of credit card holders will be impossible for any competitor to overcome.
Boiling the Competition's Frog
Before you know it, Apple will be gaining even more share in the PC market, creating more valuable, desirable iPhones, expanding its tablet position, building its products with better technology but holding the line on costs and leveraging its security technology in health and mobile payments. I don't see Apple's strategy as a succcession of gee-whiz products rolled out for our amusement. Instead, I see a long- range plan that builds a foundation that's hard to copy by simple patent infringement. More boiled frog is coming to a store near you.
Recently, venture capitalist Fred Wilson opined that "By 2020 Apple Won’t Be A Top-3 Tech Company, Google And Facebook Will" His rationalization was that hardware will become a commodity, and Apple's hardware efforts will fail in the face of software companies like Google and Facebook.
Given the list that I've created above, my reaction is that if Mr. Wilson thinks hardware is becoming just a commodity, he's been using all the wrong hardware and looking at all the wrong aspects of Apple's strategy.