Kathryn Cave (Global) - Can Apple Keep it Up?
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Posted by Kathryn Cave
In the 1980s everyone wanted a Sony Walkman, and ‘Walkman’ quickly became the byword for any portable cassette player. In the 1990s the product du jour was a Nokia mobile handset. Next it was Apple’s turn: first the iPod, then the iPhone, now the iPad. There is no doubt that Apple’s brand hegemony has been truly incredible, but for how long can it realistically stay ahead?
Our recent research on iPad use amongst worldwide IT and business professionals appeared to show an almost indestructible brand loyalty to Apple, even outside the consumer space. When we asked the question “would you consider buying a different tablet device next time?” the response was unequivocal, with an overwhelming 83% answering “no”. The only continent which seemed even vaguely receptive to the possibilities brought by other vendors was South America, where 39% would consider purchasing a different tablet next time. However, this was a real anomaly with “yes” percentages otherwise ranging between 11% (Asia) and 22% (Europe).
We also asked iPad users why they chose this tablet over other rival devices, and the results were quite fascinating. The global majority did say they favoured the iPad for its functionality (54%). However, large volumes (23% globally, rising to 58% in Australia/ New Zealand) stated that they simply always buy Apple products. I wonder what reasons Walkman enthusiasts, or the Nokia fans would have given in their heyday?
To be honest, the brand passion elicited by Apple never ceases to amaze me. There are those who love it, and those who hate it, but it always gets a reaction. You hear heated discussions on buses, it is the subject of numerous online argument, and when we ran an opinion piece on the iPhone 4S on this blog, we gained 29 comments, some almost as long as the article itself.
Steve Jobs is also guaranteed to get people interested. When his death was announced, Twitter actually struggled to keep up with the volume of comments. Last year’s Amazon bestseller list was topped by Walter Isaacson’s biography, and when we ran a Steve Jobs themed newsletter at the end of December we achieved our highest response since we sent out salary reports back in April.
Now the question on everyone’s lips appears to be whether or not Apple can retain its market stronghold without Jobs at the helm. Yet surely Apple’s continued success cannot purely be a question of leadership, or even products, but will in the end come down to the laws of sustainability. I don’t see how fervour on this scale can last. Surely Apple must eventually become a victim of its own success.
Android is already creeping up as a rival platform, and the recent attempts to sue Samsung for copying its devices seem almost ludicrous. From the middle of last year onwards different tablets have begun to flood the market, and with iPad coming in at more than twice the price of many others, it is hard to see how Apple can possibly keep it up. But I think the real lesson here is history. Today “Sony Walkman” says bubble perm, bad denim and Duran Duran. Apple is part of the iconography of now - does that mean tomorrow it can only be “retro”?
The full global research paper can be found here, which includes case study tabs for each continent. Please add your comments below, or drop me a note at Kathryn_cave@idg.com.
By Kathryn Cave, e-Editor at IDG Connect
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Comments
steveJ on January 21 2012
Apple isn't going away anytime soon, with or without Steve Jobs. Can it succeed 'forever'? That depends on your definition. Many companies have lasted 50 yrs, a lot 100 yrs and some ~500 yrs. Think of the Industrial giants of 1875: Steel, Railroad and Oil. Standard Oil, once Esso, now Exxon, is still around and prospering. The two giant American automotive companies of the 1920's are still around, but not thriving. Long-term success isn't dependant on company size or market position. Apple is likely to follow the trajectory of Eastman Kodak (or Xerox): become an Iconic brand and leading innovator for decades on end, trade on its success, then take decades to die a slow and lingering death. Kodak's downfall was, in the end, a combination of poor management and a lack of CEO insight and preparedness to enter new markets, to only trade on established products. [Inventing the Digital Camera in 1975 and then not aggressively pursing it.] A symptom, I believe, of the CEO-as-employee malaise: demanding all the upside of ownership and accepting none of the downside. [Jobs, Gates, Ballmer, Ellison, Page/Brin are all owners first, driving the business, not coasting and willing to bet their personal wealth on their decisions.] The Kodak board is equally culpable, over the last 15 years they allowed $31B of shareholder value to be destroyed. Should shareholders sue? A question for elsewhere. Back to Apple: In the near-term, they must face the limits of their business model - a complete, locked-in ecosystem. The majority of current consumers can live within the Apple Ecosystem as they are high-end consumers. iPhone/iPad are 'premium' products, so owners can afford the costs, though may grumble about them. Apple deeply understands two critical market factors and has shown its willingness to cannibalise its own businesses serving them: - Real (disruptive) innovation means providing more affordable substitutes for all existing products, including your own. There is an inherent conflict between being a disruptor/innovator and dominant market player. Organisational Politics & Culture decide which side wins. - As products become popular, the high-end of the market is saturated and imitators release competitive substitutes. For product lines to survive and thrive in the long-term, they have to evolve down market into high-volume/low-cost commodities. The iPod, now 10 years old, is still a strong market force - though current versions are much simpler, smaller and affordable whilst still making good margins and maintaining market share. Sales of OS/X desktops and laptops were notionally impacted by tablet sales, iPad or not. [4Q-2011 global PC sales are down because tablets are replacing notebooks (12% of PC sales)] Apple took a massive gamble and allowed new products to directly challenge its existing OS/X product lines. The nett result is OS/X sales are increasing whilst general PC sales are in decline... Maybe people get introduced to the Apple brand and ecosystem, like what they see and this then converts into an "upsell" to OS/X. The mid-term challenge to Apple is surviving disruptive new products from more innovative, more open frameworks. No business can outthink and out-invent all competitors, all the time - there will be someone/something that disrupts Apple's business, forcing them to react or retreat.
Caroline on January 22 2012
I never was quite of an Apple user. Thought it was nice, but too expensive. Then at a certain point I got hold of an iPhone... Well, this was functionality combined with quality. So my story continued, the iPad followed, great device, always works, no "blue screens of death, man have I seen them often with another OS". And than also the Macbook Pro followed. I was expensive, but... it it just quality why I buy Apple. The scenario is easy. Build something qualitatively good and at a certain point everyone will see and understand this. Android is also beautiful, but Apple is just quality.
John Simmons on January 23 2012
I think the "safety shell" provided by Apple is a very powerful attractor for business people. They want something that is simple, reliable and easy to use. They don't want to be tech heads. They certainly don't want to deal with tech quagmire that is Windows. They want technology to give them an edge to support and build their business interests. What the iPad does do it does brilliantly. Sure, there is stuff it can't do, but as long as Apple keeps doing lots of things simply and reliably, it will continue to build loyal users.
Glenn Gruber on January 26 2012
Kathryn, The positioning of your question shows bias. Can anyone sustain a 90%+ market share over a long period of time? The obvious answer is no. Can the iPad even keep a majority share over the long haul? Even that is a maybe. But as with mobile phones, if you look at profit share, where Apple is killing it with a minority market share, then yes I expect to see that continue over a 5 year horizon. After that anything is pure speculation, especially in markets that see such rapid product introductions. I do want to take exception with one thing you said. I don't think that Apple's lawsuits against Samsung are 'ludicrous'. Many other companies have sued other companies for knock-offs of their products. It's just in this case that Samsung is not using lead paint and cheap plastic (well maybe a little on the second part). But they have created awfully similar products in a market where Apple has differentiated itself on the experience they deliver to their customers. They may appear to be trivial to some, but it was Steve Jobs' attention to all the details that has allowed Apple to create "magical" products in the first place. OK, time to hop off the soap box.
J.R. on January 26 2012
Although coming into play late in the game, PC users who have an iPad may switch back when Windows 8 is released. Tablets in general are great devices but you still need to go back to your computer do most of your work. Windows 8 will help keep a single device because it will provide the same capabilities of your PC. Let's see what devices come out, especially using the ARM processor family.
arden on January 26 2012
All flavors of tablets are good primarily at supporting online content consumption -- eReader, Audio and Video Playing, eMail, etc. With onscreen keyboards, they are lousy at content creation. I bought Asus because of Flash, external SD chip and USB support -- so I can bulk download and store locally a large amount of media to be consumed offline. I also bought a keyboard to give me a better content creation enviornment. Will Apple survive -- a key factor is dependent on their ability to fully implement the eTextbook plan announced recently based on using only the iPad for all "thru grade 12" studennt in the country, not to mention the rest of the world. To do this they many have to provide iPads and steep discounts in the context of giving away the camera and charging for the film (content).
Oli on January 27 2012
I bought the iPad 2 because the competiton has not matched or exceeded this product as of yet. However, I begrugingly supported Apple in their bussiness while believing that this is a "Corporation beaving badly!" when it comes to dictating prices to merchants and other conditions of business. All of their products are severly overpriced, which means that they are ripping the consumer off. Since Apple is now one of the ritches companies, it beggs the question "Wen enough money is enough?" Other companies need to come to the plate and give Apple the run for their money by offering better and cheeper producs to consumers.
Mark on January 30 2012
Living in Australia and being blocked from the US iTunes store limits movies I can purchase. Eventually there will be content I want that Apple don't seem to be willing to sell me and I will go elsewhere - maybe it will mean I'll have two (or - shudder - more) devices for a while. But for now my iPad is very much part of my lifestyle.
TomR on January 31 2012
Yes, you can get the components used in Apple products in cheaper devices but that fails to take into account the enhanced user experience and TRUE customer support one gets with Apple products. Once people have a problem solved quickly and personally, they keep going back to those devices. Also, my Apple products last much longer than my Dell or HP products.
steveJ on January 21 2012
Apple isn't going away anytime soon, with or without Steve Jobs. Can it succeed 'forever'? That depends on your definition. Many companies have lasted 50 yrs, a lot 100 yrs and some ~500 yrs. Think of the Industrial giants of 1875: Steel, Railroad and Oil. Standard Oil, once Esso, now Exxon, is still around and prospering. The two giant American automotive companies of the 1920's are still around, but not thriving. Long-term success isn't dependant on company size or market position. Apple is likely to follow the trajectory of Eastman Kodak (or Xerox): become an Iconic brand and leading innovator for decades on end, trade on its success, then take decades to die a slow and lingering death. Kodak's downfall was, in the end, a combination of poor management and a lack of CEO insight and preparedness to enter new markets, to only trade on established products. [Inventing the Digital Camera in 1975 and then not aggressively pursing it.] A symptom, I believe, of the CEO-as-employee malaise: demanding all the upside of ownership and accepting none of the downside. [Jobs, Gates, Ballmer, Ellison, Page/Brin are all owners first, driving the business, not coasting and willing to bet their personal wealth on their decisions.] The Kodak board is equally culpable, over the last 15 years they allowed $31B of shareholder value to be destroyed. Should shareholders sue? A question for elsewhere. Back to Apple: In the near-term, they must face the limits of their business model - a complete, locked-in ecosystem. The majority of current consumers can live within the Apple Ecosystem as they are high-end consumers. iPhone/iPad are 'premium' products, so owners can afford the costs, though may grumble about them. Apple deeply understands two critical market factors and has shown its willingness to cannibalise its own businesses serving them: - Real (disruptive) innovation means providing more affordable substitutes for all existing products, including your own. There is an inherent conflict between being a disruptor/innovator and dominant market player. Organisational Politics & Culture decide which side wins. - As products become popular, the high-end of the market is saturated and imitators release competitive substitutes. For product lines to survive and thrive in the long-term, they have to evolve down market into high-volume/low-cost commodities. The iPod, now 10 years old, is still a strong market force - though current versions are much simpler, smaller and affordable whilst still making good margins and maintaining market share. Sales of OS/X desktops and laptops were notionally impacted by tablet sales, iPad or not. [4Q-2011 global PC sales are down because tablets are replacing notebooks (12% of PC sales)] Apple took a massive gamble and allowed new products to directly challenge its existing OS/X product lines. The nett result is OS/X sales are increasing whilst general PC sales are in decline... Maybe people get introduced to the Apple brand and ecosystem, like what they see and this then converts into an "upsell" to OS/X. The mid-term challenge to Apple is surviving disruptive new products from more innovative, more open frameworks. No business can outthink and out-invent all competitors, all the time - there will be someone/something that disrupts Apple's business, forcing them to react or retreat.
Caroline on January 22 2012
I never was quite of an Apple user. Thought it was nice, but too expensive. Then at a certain point I got hold of an iPhone... Well, this was functionality combined with quality. So my story continued, the iPad followed, great device, always works, no "blue screens of death, man have I seen them often with another OS". And than also the Macbook Pro followed. I was expensive, but... it it just quality why I buy Apple. The scenario is easy. Build something qualitatively good and at a certain point everyone will see and understand this. Android is also beautiful, but Apple is just quality.
John Simmons on January 23 2012
I think the "safety shell" provided by Apple is a very powerful attractor for business people. They want something that is simple, reliable and easy to use. They don't want to be tech heads. They certainly don't want to deal with tech quagmire that is Windows. They want technology to give them an edge to support and build their business interests. What the iPad does do it does brilliantly. Sure, there is stuff it can't do, but as long as Apple keeps doing lots of things simply and reliably, it will continue to build loyal users.
Glenn Gruber on January 26 2012
Kathryn, The positioning of your question shows bias. Can anyone sustain a 90%+ market share over a long period of time? The obvious answer is no. Can the iPad even keep a majority share over the long haul? Even that is a maybe. But as with mobile phones, if you look at profit share, where Apple is killing it with a minority market share, then yes I expect to see that continue over a 5 year horizon. After that anything is pure speculation, especially in markets that see such rapid product introductions. I do want to take exception with one thing you said. I don't think that Apple's lawsuits against Samsung are 'ludicrous'. Many other companies have sued other companies for knock-offs of their products. It's just in this case that Samsung is not using lead paint and cheap plastic (well maybe a little on the second part). But they have created awfully similar products in a market where Apple has differentiated itself on the experience they deliver to their customers. They may appear to be trivial to some, but it was Steve Jobs' attention to all the details that has allowed Apple to create "magical" products in the first place. OK, time to hop off the soap box.
J.R. on January 26 2012
Although coming into play late in the game, PC users who have an iPad may switch back when Windows 8 is released. Tablets in general are great devices but you still need to go back to your computer do most of your work. Windows 8 will help keep a single device because it will provide the same capabilities of your PC. Let's see what devices come out, especially using the ARM processor family.
arden on January 26 2012
All flavors of tablets are good primarily at supporting online content consumption -- eReader, Audio and Video Playing, eMail, etc. With onscreen keyboards, they are lousy at content creation. I bought Asus because of Flash, external SD chip and USB support -- so I can bulk download and store locally a large amount of media to be consumed offline. I also bought a keyboard to give me a better content creation enviornment. Will Apple survive -- a key factor is dependent on their ability to fully implement the eTextbook plan announced recently based on using only the iPad for all "thru grade 12" studennt in the country, not to mention the rest of the world. To do this they many have to provide iPads and steep discounts in the context of giving away the camera and charging for the film (content).
Oli on January 27 2012
I bought the iPad 2 because the competiton has not matched or exceeded this product as of yet. However, I begrugingly supported Apple in their bussiness while believing that this is a "Corporation beaving badly!" when it comes to dictating prices to merchants and other conditions of business. All of their products are severly overpriced, which means that they are ripping the consumer off. Since Apple is now one of the ritches companies, it beggs the question "Wen enough money is enough?" Other companies need to come to the plate and give Apple the run for their money by offering better and cheeper producs to consumers.
Mark on January 30 2012
Living in Australia and being blocked from the US iTunes store limits movies I can purchase. Eventually there will be content I want that Apple don't seem to be willing to sell me and I will go elsewhere - maybe it will mean I'll have two (or - shudder - more) devices for a while. But for now my iPad is very much part of my lifestyle.
TomR on January 31 2012
Yes, you can get the components used in Apple products in cheaper devices but that fails to take into account the enhanced user experience and TRUE customer support one gets with Apple products. Once people have a problem solved quickly and personally, they keep going back to those devices. Also, my Apple products last much longer than my Dell or HP products.