Published on December 26th, 2007 | by Tom1
Apple Transformation Biggest Business Story of 2007
It began with a symbolic corporate name change in January, gained mojo with the most-talked about new product of the year and ended with Apple’s achieving a market capitalization higher than IBM and Intel. 2007 was Apple’s year.
While the transformation of Apple from a quirky computer maker serving a loyal, if tiny, following into a world-beating consumer brand has been several years in the making, 2007 was clearly the jump point for the company. With this new status as a mainstream consumer brand comes both enormous opportunities and ominous challenges. My big question: is Apple culturally suited to being a mainstream consumer brand?
When Apple Computer, Inc. settled the longstanding trademark dispute with Apple Corps in January, it signaled the end of any charade about the company’s intentions to maximize the Apple brand. It also showed that the mercurial Steve jobs could suffer fools and stoop to conquer–at least long enough to get a deal struck. Renamed simply Apple, Inc., the company was now ready to control the agenda. This transformation had begun years earlier, of course, with the introduction of the iPod and the iTunes distribution revolution, but that was merely prelude, act one. The name change was quickly followed by the announcement of the iPhone and a year-long domination of the air, Net and blog waves. The months-long anticipation was culminated in a virtual frenzy on launch day. Thousands of people around the country waited in all-night queues (or paid others to do the dirty work) just to earn bragging rights as an early adopter of the sensual iPhone. More a packaging than a technical breakthrough, the premium-priced iPhone mostly satisfied consumers and critics, and if sales fell a bit short, it was still a significant, industry-altering accomplishment.
My big question: is Apple culturally suited to being a mainstream consumer brand?
The fact is, Apple caught the prevailing wave just right. The power of Moore’s Law–Geoffrey Moore’s Law that is–of Crossing the Chasm, has meant that the all-purpose "net device" has gone mainstream. That means that the trailing majority of consumers are now comfortable enough with the idea of connectivity and digitized content and the protocols of the Net, that a seemingly brain-dead simple device like the iPhone can bring the Net to main street in ways no PC or laptop could ever do. With the iPhone–and the other phones it has and will continue to influence, iPhone has ushered in a new pop Net era. For that we owe a debt of gratitude to Apple. We can expect a steady stream of new net devices to continue to open up access to the global economy until we reach the Jump Point in 2011.
For Apple, however, the future is not so simple. Apple spent decades as a too-hip-for-the-room cult brand. The cultural transition to an everyday consumer brand will be dangerous.
For example, Apple’s arrogant superiority complex has required little in the way of customer service culture, at least not to the extent that mainstream consumers have come to expect. After years of dealing only with elites, Apple "experts" will now have to start answering some pretty dumb questions.
More importantly, Apple has spent most of its life providing superior, premium-priced technology to a few rabid evangelists. That has given Apple the luxury of charging higher prices for its computers because, so serious is their dedication, the faithful tend to pay without complaint. And because the iPod so dramatically vanquished Sony and others in the portable media category, Apple consumer products have yet to weather the "price" stage of natural competition. Now things will be different.
Take the imbroglio over the fall price reduction of the iPhone. Needing to boost the early adoption of the iPhone to achieve very public sales goals, in September Apple reduced the price of the iPhone by $200 and phased out the low end version. The hue and cry was riotous as the first wave of consumers complained about the "unfairness" of the move. First shocked by a dynamic they had never seen before, Apple’s initial reaction was to ignore the noise. In short order, the company back-pedaled and offered a $100 credit to appease the fired up blue-light throngs. This was a telling moment. Now Apple is dealing with a new brand of consumer–the price-sensitive and value-conscious buyer. Apple marketing execs will have to actually learn how to market now. I suggest Steve Jobs and team spend some time walking the aisles of Wal-Mart to get a feel for the tastes and expectations of his new minions. If not, it could be a rough ride for this snobby company.
In 2008, gas prices will flatten as shale oil becomes more practical, the short-term housing crisis will stabilize once people again realize the US market is still the world’s best play, and Chinese toys will become much, much safer. The big story for 2008 will be the ongoing popularization of Network Culture and Apple will probably still be a big player in this unfolding revolution.