Apple is stuck between a rock and a hard place with the launch of the iPhone 5C

Apple iPhone 5C

Would Steve Jobs have launched iPhone 5C (does C = China)? Does this mark the end of Apple as a brand-led organisation? As an avid Apple user, unofficial brand advocate and ex Samsung user, the news of the 5C immediately gave me a slightly discomforting feeling. Without any conscious consideration, it immediately felt like a small part of why I love being associated with the Apple brand had been taken away from me. This is the aspirational place that all brands critically strive to occupy in the minds of their customers.

Apple is in an unenviable predicament. On the one hand they’re the world’s most successful company based on financial measures, and on the other hand the most valuable brand according to 2013 BrandZ Top 100 Most Valuable Global Brands ranking. Nice place to be. Or is it?

Their latest product offering, the iPhone 5C is a lower cost (cheap?) phone targeted at the massive and untapped Chinese market. Grabbing a decent slice of the Chinese market will generate huge mountains of cash for them, as if the $120b isn’t enough. The reality is that it isn’t enough for hungry corporate shareholders and venture funds. They want more of everything. Generating a healthy financial return is a key responsibility of public corporations, but at what stage does unbridled greed overpower the intrinsic value proposition of the brand? As a brand and marketing strategist this distresses me greatly.

When is share price the best measure of a brands success, relevance and importance? Apple is chasing their nemesis Samsung, but is that a worthy crusade or a zero sum game? Samsung is a very astute player and has positioned themselves in a different space to Apple. Despite their fabulous success in consumer electronics, they simply don’t have the brand aura or market position that Apple does. Nor do Samsung and competing electronics brands have the ability to extract large profits from their customers, unlike Apple users who are happy to part with lots of their hard-earned cash.

Apple has been sucked into playing the Koreans at their own ‘market share’ game, one that they are masters at. Why is Apple forgetting what turned them around from near bankruptcy to market dominance? Apple is also trying to stay the pace with Google’s Android operating system, a race they simply cannot win. So long as Android is open source and available to all mobile device manufacturers, and Apple’s IOS remains proprietary, Google will always win that race. So why compete in a race you know you can’t win. Find one you can win. As I say in my new book, Smart Marketing, find a profitable hill that you can own and then defend it with your life. You simply cannot be all things to all people.

The future looks uncertain for Apple, and as market commentators questioned after the passing of Steve Jobs; were will Apple go under it’s new (visionless) leadership? Will it be a repeat of when John Sculley almost sank the ship before Jobs came back to resurrect Apple from the grave? Perhaps we’re witnessing a repeat of the same mistake that Apple made under Sculley–chasing the tail of Microsoft in the quest for market share and dominance, rather than long-term profitability and long-term brand leadership through product innovation (the iPhone 5C is not exactly an innovative device, with numerous new features copied from older competing products).

The thing that Steve Jobs realised was that it was futile (and impossible) to chase Microsoft in the desktop environment. His response was to create a desirable brand, one that users sought out and were prepared to pay a premium to be part of. Microsoft had the largest market share of desktop operating systems by a country mile, and still do. But look at the financial position and brand equity of Apple compared to Microsoft. Apple dwarfs Microsoft (and Google) in revenues and profits. This did not come about by chasing market share, but by seeking out profitable markets where the Apple brand and value proposition could create relevance in the minds of the user/consumer, and thereby command premium prices and generate embarrassingly large profits.

Samsung is just another good electronics brand with some great products; Apple is THE brand. Brand leadership ensures long-term profit; market share ensures short-term revenues. These are not necessarily the same thing and can be mutually exclusive.

Reading the latest commentaries since the iPhone 5C launch, it’s interesting to see the opposing points of view. Financial analysts are applauding Apple for opening up massive revenue opportunities, but marketing and brand thinkers see it less optimistically. In the short-term the share price is likely to move upwards, as will revenues and profits. However, in the longer term there is deep concern for the damage to the intrinsic value of the Apple brand and it’s continued ability to command premium prices and profits. Only time will tell how this will impact Apple in its core markets that it currently enjoys such strong (and profitable) leadership in.

I suspect that we’re seeing the first glimpse into the new Apple under the stewardship of new CEO, Tim Cook. Who knows, perhaps there may still be a position at Apple for John Sculley.

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1 Comment

  1. Apple needs to abandon the iPhone brand. The product is no longer a phone and still calling it that sounds archaic. Others like Samsung brand their products with a more amorphous “Galaxy.”

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