The headline about the drop in iPhone sales and Apple stock is great for selling newspapers and get people to click on an article, but actually, this drop is not surprising at all.
Every news outlet squeezed this subject again and again, from MSN to Bloomberg. The fact Apple is cutting iPhone sales projections is not as surprising as the media makes it, actually, the writing was on the wall for a long time, in pretty big font.
When something happens in business we try to rationalize it in business terms. The reason for the decline in iPhone sales, as the experts portray it, is China, mainly local smartphone brands that are eating iPhone's market share. But this is not the real reason for a drop in iPhone sales.
People in general and business people, in particular, want tangible reasons. If something is happening there must be a reason we can wrap our heads around, a reason that will make us say "ahhh, OK I understand, this makes sense."
Humans need to hold on to something, they will rather use something clear and well-known, a reason they have used before, than a new one, or an intangible one.
For the American people, China has been the reason for many bad things for decades, but this time China is not the real reason, the real reason for the drop in iPhone sales is the iPhone brand. It is difficult to grasp, but a lot of the times, the reason for a decline in sales is a problem with the brand and not with the sales team, or the territory, or the time of year.
iPhone the brand is so 2000's and we are pretty much in 2020 now! How can you expect sales of an old concept to continue a positive trend in an industry that is all about innovation?!
Apple as a brand, with its one wonderboy since 2007 - the iPhone - is having brand problems. Apple is still one of the biggest, strongest brands in the world, but the iPhone was introduced eleven years ago, and when taking into account the acceleration in the pace of change, eleven years is a long time, let alone in tech, an industry based on innovation and early adopters.
Let's recap for a moment: since the debut of the first iPhone, we had a black president, another president who is the complete opposite, huge revolutions around the world were broadcasted live over smartphones for the whole world to watch, around 70% of internet use (and sales) is now made on mobile devices, we have cars that don't drive on gas, cars that don't even have a driver, we are on our way to Mars, and you are surprised sales of a product that was introduced more than a decade ago are declining?
Ten years ago iPhone was all the hype, but who cares about iPhone today? Apple was all the hype for longer than the iPhone, but it is not anymore. Some of the most memorable TV ads of all times are Apple's. A new iPhone model release used to be a global media event....
And then Apple made one step that started this whole thing, one step that shows no innovation at all - they relocated the headphones jack on the iPhone.
For the "most innovative company in the world" to do something like that is just reckless. It is not a case of wrong reading of the market, it is looking at it through a black thick vale.
This is when you know something is wrong with the brand.
A brand personality has to be aligned with its customers'. A brand must deliver on its promise. You can't be the coolest, innovative brand and tell your early adopters, tech-oriented core customers, that relocating the headphones jack (to a very uncomfortable location on the device) is about innovation and awesomeness.
I am sure there is no news to Apple here, but by coming up with yet another model of iPhone you can't fix this problem. It is still an iPhone, and that's where the problem is.
There is a whole new generation out there who couldn't care less about the iPhone as a brand. The Millenials are old news, so many of them are now parents! An iPhone is not innovative or revolutionary for GenZ or iGen, call them what you will, or for Millenials, GenX, and even Baby Boomers who are now using iPhone to live chat with their grandkids.
Instead of continually focusing on a product, Apple should have focused on the content consumed using the product.
Over the last few years, we are witnessing a revolution in TV content. Netflix, Hulu, and Amazon Prime "the software" to consume the content are part of it, the fact that people are watching content on the go and on small screens is the other part of this revolution. This shows that at the moment, content is the growth engine, not the hardware.
Apple knows it, but they are late to the game.
Spotify, the music app, is a thorn on iTunes side. Another example indicating Apple should have pressed harder on using its assets in an innovative way, and much sooner.
Apple has both iTunes (the software) and iPhone (the hardware), they should add a third ingredient: high-quality content.
What Apple should have done a few good years ago, and hopefully will, is drive funds for content creation from the product division, and create the best content possible, to be viewed only on iTunes. Following what HBO has done in the past when if you wanted to watch the best TV, you had to have HBO, you had to pay for it. Having HBO was a status symbol, just like ten years ago having an iPhone was.
Everything that goes up must come down, hubris is a cause for downfalls since the dawn of times. Netflix does not have the best content, nor the size and power Apple has, but Netflix is the brand that has innovation in content reach at its core. If you want tons of TV content no matter where you are or what screen size you use, you need Netflix - this is Netflix's promise to the customers.
What is Apple's promise and to whom?