Be Unbeatable

Farhad Manjoo, writing for Slate: Imagine you run a large technology company not named Apple. … How are you feeling today, a day after Apple CEO Tim Cook unveiled the new iPad? … For your sake, my hypothetical CEO friend, I hope you’re frightened. … It’s the iPod model. In this story, Apple begins by … Continue reading “Be Unbeatable”

Farhad Manjoo, writing for Slate:

Imagine you run a large technology company not named Apple.

How are you feeling today, a day after Apple CEO Tim Cook unveiled the new iPad?

For your sake, my hypothetical CEO friend, I hope you’re frightened.

It’s the iPod model. In this story, Apple begins by releasing a novel, category-defining product. Then, as rivals scramble for some way to respond, Apple relentlessly puts out slightly better versions every year, each time remaining just out of reach of the competition.

In the tradition of the best armchair CEOs, I’ll post my thesis here. If you want to compete with Apple, you have to:

  1. Buy Low, Sell High – Apple does this by being confident it can sell gasquillions of devices and so they make big orders and suppliers are not only hesitant to hedge bets and lose big orders to competitors but they’re willing to make steep discounts to a big order that pays in advance. By dipping a toe in the water, you will never hit the economies of scale needed to compete with Apple. And when Apple enters a market, you can be sure they’ll be looking for 33% margins or better so take that into account.
  2. Own Your Destiny – this is one of the issues with developing on Apple’s platform; you don’t own your destiny, Apple does. But at least developing for Apple,you know you have a partner who wants you to make money. It’s not quite so cut and dried when dealing with other platforms. If your OS vendor isn’t bothered about whether you meet your profit targets, then you should worry. And if you’re developing software for that platform and they seem disinterested, you need to take stock. Whether it’s Apple or Google or even the FLOSS zealots – be careful who you get in bed with.
  3. Respect the Customer – Apple spends millions on marketing, especially recently, showing off the capabilities of the customer when using their hardware and software and the apps produced by third parties. Customers love this, so do the Developers. It makes them compete to get included. In contrast, too many competitors ads focus on the customer, deriding Apple’s customers as deluded by marketing or suckers for wearing white earbuds. The Apple demographic are willing to spend their hard-earned on high end devices, accessories and software. What’s your demographic?
  4. Make the Buy Impulse Easy – Simplify your product lines like Apple did when they axed the entire line to consumer and portable, desktop and laptop. Don’t release three competing devices at once. Apple released one device: iPad which had three choices: Colour, Capacity, Cellular. If you make me wonder whether I want the 5″ or the 7″ or the 7.7″ or the 10.1″ and only some of them come with a Stylus and not all of them ship with the latest version of the software (4.0), some of them still ship with old versions (2.3) and every one of them has a different interface, then my hesitation is making me wonder if I’m making the right decision.
  5. Be Courageous – Don’t wait for Apple to define a market. Go out and take one. In two years, Apple has created a brand new market from nothing and imbued it with the graphics prowess of the leading consoles. And they managed it while also making the “optical plastic disk” market look archaic. Apple re-invented music players, phones, watches, micro-laptops, media players, PDAs and tablets. They’ll do it again unless you do it better. They entered these markets because no-one was doing them well. And especially not for Mac users. People who buy expensive computers when they can buy cheap ones.

So, consider some of these and see if you can do better. I’m pretty sure that Apple won’t enter the TV market (just look at the margins), white goods (look at the margins) or legacy CE (do I need to say it again?). I do have a few ideas about where I think they won’t enter which still has decent margins, but I’m not going to blab. You can figure that out for yourself, probably.

0 thoughts on “Be Unbeatable”

  1. “I’m pretty sure that Apple won’t enter the TV market (just look at the margins), white goods (look at the margins) or legacy CE (do I need to say it again?)”

    I think you might be eating your words within the next 5 years. As you said Apple have a habit of entering an existing market and not doing it well, but doing it better than the competition.

    They will not enter the TV market as we know it, they will bring out a product that redefines the TV market and consolidates their market place amongst personal and family entertainment.

    It wouldn’t take much for Apple to take the Apple TV box and combine it with one of their larger monitors into one single device that hangs on a wall or sits in the corner of a room in the house. This single device, just like the Apple TV, will allow media to be fed through out the house to any of the existing/future Apple devices. In addition it will allow access to a huge amount of the families’ own data stored in the cloud (family photographs, videos etc) plus personal documents that they store on the device’s internal hard drive.

    Now add the facility to be able to record/watch live TV programmes (similar to SKY+HD or a Freeview HD recorder), plus a multiple disc DVD player and you have the perfect solution for a family.

    Oh yes, then add in the ability for the device to recognise what it is you are actually watching and offers you the chance to discuss with others (via Twitter or something similar) what is happening in the film/show etc. via your ipad.

    Alternatively you could interact with live TV shows via the TV show maker’s app for ipad/iphone.

    Now this is the bit that would really clinch it – the ability to play multi player games on it – like the xbox and the wii.

    Take a family of two adults & two teenage children living in the UK.

    Dad wants to watch the football match live on TV, Mum wants to watch a recording of her favourite drama, one of the teenagers called Jack, wants to watch a DVD, the other teenager, Jim wants to watch the last 3 episodes of an American TV show.

    Conventionally to achieve the above, Mum and Dad would need a TV each, Jack would either need a TV with a DVD player or a PC with a DVD, Jim would need a PC with internet connection.

    Hardware cost of the above – Mum and Dads TVs – £700 (£500 + £200), Jacks TV with built in DVD – £150, Jim – £250 for a laptop (the family also have a PC – £400).

    Total hardware cost – just over £1500 (including family pc).

    Now if Apple had a family multi meida package – Family TV and 4 Ipads – total cost say £1,600 it would mean the family would not need the following.

    The family PC
    The family laptop
    Three TVs
    A dvd player

    Plus the family will have access to the complete Apple multi media library of music, video and TV for one monthly fee.

    Then of course there are the games that can be played together on this new single device. Using ipads / iphones as game controllers.

    This is the future – Apple are fortunate that they have the distribution models for the media in place, they have the hardware they just need one single device to bring everything together into one family friendly system.

    If Apple don’t do it somebody else will.

  2. Look at these margins:

    I don’t think Apple will enter the dumb display market. They’re already figuring shizzle out with the Apple TV. Imagine, for example, if they built some Kinect-like cameras into the front of the unit (which has to be visible due to the IR controller).

    AppleTV v3 (on sale this week) already does 1080p and has Bluetooth 4.0. I reckon there’s stuff that can be done easily now. Wait and see. I don’t think they’ll ever enter the TV market directly.

  3. I completely agree they will not produce a TV as we know it – they will produce what is basically a computer with a monitor that resembles a TV.

    After all that is what they do best high res-monitors and good computers.

    Have you thought why the profit margins for TV manufacturers has shrunk so much? People can watch TV/video on devices like the ipad or their pcs.

    I was on a plane from London to Belfast yesterday evening – the guy sitting next to me was watching an American TV show on his mac notebook. The quality of the picture was amazing especially since I was looking at it from an angle of about 50-60 degrees.

    In my opinion Apple are in the right place at the right time, with the right devices already in the marketplace to make a single product that combines multi media in the home for each individual family member to view separately.

    That one single device is required to conquer the home entertainment/media market. It will also allow Mums and Dads to carefully control exactly what their children watch on their devices ( a worrying issue facing parents at the moment).

    What better way to get nearly every household to own not one ipad but 4 ipads! Then there is the constant revenue stream from Apple’s share of all the downloaded apps, ibooks, itunes, itv etc.

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