Apple introduced two upgraded smartphones this week, the iPhone 5S and the iPhone 5C. The media performed its expected role in hyping the anticipation of the new products, breathlessly speculating on the most trivial rumors and dutifully referring to the “special event” that Apple would host on its Cupertino campus. Other companies have news conferences or product introductions; Apple has “events.”
Long-time Apple watchers know that the relatively small Cupertino campus venue is reserved for relatively smaller product launches, and that truly special “special events” are held in bigger venues, like the Moscone Convention Center in downtown San Francisco. With the notable exception of the iPod — Cupertino, surprise! — most of Apple’s heavy announcements take place in the Big City: Mac OS X, the shift to Intel processors, iTunes, Safari, the iPhone, the iPad. The iPhone, its successor the iPhone 3G, the iPhone 4, the iPhone 5? All San Francisco.
The iPhone 4S, a half-step, incremental upgrade of the iPhone 4, was also unveiled at the Cupertino campus venue, an event I’ll always associate with the death of Steve Jobs. The iPhone 4S introduction was a joyless affair, because many of the presenters that day knew that Jobs, the co-founder, soul and driving force of the company, was gravely ill. He died the next day. This week’s introduction of the 5S and 5C was the first “special event” at the Cupertino site since then.
Some critics say that Elvis has left the Apple building, meaning that the magic and innovation of Steve Jobs is gone. Perhaps to counter that argument, Apple hired Elvis Costello to perform live for the crowd in Cupertino.
Even so, Apple investors and Wall Street analysts were gloomy. Shares of AAPL got hammered brutally as soon as Apple disclosed the prices for the new handsets, in particular, the $549 tag on the “unlocked” version of the 5C. For some reason, people were expecting that the “C” in 5C meant “cheap.” Others assumed the “C” meant “China.” (I assumed that the “C” meant “color,” and yes, the 5C comes in white, pink, green, blue and yellow.) One thing for sure: Under Steve Jobs, the C would never stand for “compromise.” If the $549 pricetag indicates that Mr. C — Tim Cook, Apple’s CEO — is staying true to Jobs’s refusal to pander to analysts, and that he refuses to seek market share at the expense of quality or profit margins, it’s a very good sign.)
The price is too high, the analysts say, because consumers in India and China are accustomed to cheap Android phones and will not (or cannot) pay such a premium for Apple products. By sticking to its historic pricing margins, the analysts say, Apple is doomed to be an also-ran in the two fastest-growing markets on the planet. What Apple needs to do, the analysts say, is to make a really cheap phone. (And, one presumes, a really cheap iPad, and a really cheap iMac, and a really cheap MacBook, etc.)
To repeat a phrase that Jobs employed often, “That’s the stupidest f***ing thing I’ve ever heard.” That’s like saying BMW needs to make really cheap cars to compete with Indian Tatas and Chinese Cherys.
There’s a reason that there is a steady stream of smugglers crossing to Shenzhou from Hong Kong every day with iPhones and iPads taped to their bodies: Apple is perceived as a superior product, and people want the best. When Apple eventually announces its deal with China Mobile, the world’s biggest telecom carrier, it will sell plenty of iPhones, as long as the iPhones are viewed as superior to and cooler than the Androids.
What Apple really needs to do is to create products that justify the profit margins. It needs to get Elvis back into the building — the good Elvis, the hip-swinging Elvis, not the fat and bloated Elvis, and not the “other” Elvis, as much as I like and admire Mr. Costello. Apple needs to get all shook up again. It needs to show that it can still be shockingly and scandalously brilliant in the post-Jobs era.
It can’t afford to be an Elvis impersonator.
We all saw what happened to Nokia when it decided to go for market share at the expense of innovation and profit margins: It wound up being bought by Microsoft.
UPDATE 23 SEPT: Apple said today it sold 9 million new iPhones over the weekend, making this the most successful launch ever, and easily topping even the most optimistic analyst estimates.