Joe's Stow

Apple has to walk a very fine rope between pleasing current customers and wooing future ones.  Apple’s problem in simple terms is their future customers are their current customer’s customers.     

For the past five years, Apple competed against non-consumption more than a direct competitor, and they made out like bandits.  Carriers lined up to pay Apple $700 per phone, knowing their consumers would take a subsidy in exchange for a long-term, top-dollar contract.  And despite Apple’s other successes, nothing comes closes to the impact of the iPhone on Apple’s valuation.   Customers like AT&T and Verizon account for 70% of Apple’s profits.  The Beatles in iTunes really isn’t that big of a deal.  

Any disruptions in sales or relationships with their key customers hit meaningfully on Apple’s financials and stock price.  This creates a classic “Innovator’s Dilemma” problem at Apple.  How do you capture the next wave of growth and customers while eating from the hand that got you so far?   

The mobile world is changing fast.  Google has finally arrived as a direct threat to Apple’s cash cow.  Google is well known for their cloud-based search, email, maps, and calendaring.  Now they have an iTunes competitor in Google Play and a direct IOS alternative in Android.  Apple vs. Google is a battle for control of the user-experience.  

Google has two advantages.  The first, is that Google does not sell to carriers.  Carriers need Android as a viable alternative to IOS for leverage and bargaining power.  So Google is free to focus on winning the customer experience.  Android-based services will be more open and less expensive (see republic wireless as an example) and Google can target end-user with services free of carrier-lock in.  

The second advantage is the Android stack is far more open than IOS, giving developers and carriers more controls and features.  So far dismissed as a weak impostor, Android 4.2 seems to have caught up faster than Apple wants to let on.  The Samsung Nexus with Jellybean is selling for $350, half the price of an iPhone.  Is the iPhone twice as good?  No way.  Jellybean is really good, especially for those that use Google web services extensively.  The progress will only continue.  

Apple will face increasing pressure against a feature-rich, less-expensive competitor.  Apple has a knack for staying way out in front of the competition because of their incredible innovations.  But the carriers could create significant drag on that process.  So far Apple has had all the leverage and kept the carriers locked in a corner.  Android could change that dynamic.  If so, Apple’s pot of gold could be at risk.  

Just reviewed some tips from Guy Kawasaki: 

1- Focus on making meaning, not money.  

2- Dump the mission statement, adopt a 3 word mantra 

• FedEx: “Peace of mind”, Nike: “Authentic athletic performance”, Wendy’s: “Healthy fast food”

3- Jump to the next curve: polarize people (be bold), kill the cash-cow, reboot (re-think) 

4- Get going:don’t worry, be crappy… no powerpoint is not a killer app for new ventures… find a soulmate. 

5- Niche Thyself: 

• High value, low uniqueness: You compete on price
• Low value, high uniqueness: “stupid quadrant” 
• Low value, low uniqueness: online dog food
• High value, high uniqueness: make money, margin, and meaning

6- Let a hundred flowers blossom: 

• Sow fields, not window boxes: niched positioning is important but spread the word as wide as possible. 
• Look for agnostics, not atheists: get good customers first, then think about “marquee”
• Don’t be proud: Why are people really buying? 

7- Follow the 10/20/30 rule: 10 slides, 20 minutes, 30 point font 

8- Hire infected people: A players hire A+, B players hire C players 

9- Lower barriers to adoption: flatten the learning curve (no manual), embrace your evangelists

10- Don’t let the bozos get you down

“We’ve found that PayPal has failed to innovate around the user experience,” he says. “These platforms really care about the user experience they offer their customers, and they can’t deliver the user experience they want with PayPal. So they rip out PayPal.”