Apple’s strategy for the future was clearly defined during the presentations at this year’s World Wide Developers Conference in San Francisco (WWDC). Two words: Market share. Remember when the Mac’s market share was around 2-percent? The success of the iPod and iTunes Store changed Apple’s perception about market share. Profits are important, yes. After all, there needs to be a way to fund market share growth. Apple is flush with cash, flush with success, and aims to increase market share for the Mac and the iPhone. What does that mean? Lower prices.
It’s The Software, Stupid!
Yes, Apple is a hardware company. Yes, Apple is a software company. That’s the history of the Mac, right? It’s also the history of the iPod, and now the iPhone.
In other words, Apple makes great hardware so they can run even greater software.
Witness the explosion of applications for the Mac and OS X in recent years. Whatever is greater than an explosion is what has happened to software applications, utilities, and games on the iPhone platform.
People buy computers to do things and that requires software. For many years Mac software was a second class citizen to the variety of choices for Windows PCs. That was then, this is now.
The Mac, as a hardware device, is pretty much capable of running any popular software, because the Mac runs Mac OS X, Windows, and Linux. It’s now easier to list what the Mac does not run.
It’s all about software. And profits. And critical mass.
It’s almost as if the iPod’s success was unexpected; a surprise for Steve Jobs and company. The iPod was a hardware hit, yes, but it was driven by very easy to use software in iTunes, Mac or PC.
Add to that combination another piece of software, the iTunes Store, and Apple found itself in totally uncharted territory. A market share leader.
That lesson provided Apple with an incentive to protect their iPod and iTunes Store market share with the iPhone. After all, smart cell phones killed the PDA, so the iPod eco system—market share and profitability—was in danger from a business Apple wasn’t a part of.
Or, was it? Cell phones run on—here it comes—software. Apple is very good at software.
You Say You Want A Revolution?
The iPhone is really an iPod and a Mac with a cell phone inside. It’s the Mac in your pocket.
150-million customers loved their iPods and due to the halo effect found increased love for the Mac. Again. When it came time to protect the iPods’s market share turf, Apple created another revolution.
It wasn’t just a smart phone. Those have been around for years. The iPhone is a smart phone you can actually use. But Apple didn’t stop and continued to skate to where the puck will be. Somewhere in the future.
iPhone applications, utilities, and games have now surpassed 50,000, making it the largest software platform for any popular cell phone. But it isn’t just a cell phone. It’s a whole ecosystem not unlike the iPod and iTunes Store.
Today, Apple did the unthinkable. They lowered prices on the hottest selling segment of the Mac line, the MacBooks.
There’s more battery life, faster CPUs, lower prices, all within just months of the last MacBook line update. That’s unprecedented. Wait. There’s more.
Apple showed off Snow Leopard, the successor to Leopard. You know, the update without any new features visible to users. True, there’s lots of new software changes under the hood, but not enough eye candy software features to justify a typical $129 price tag for an OS X update.
What did Apple do? Snow Leopard goes for $29. The family pack for households with multiple Macs is a mere $49. If you have an Intel Mac, there’s no excuse not to upgrade.
Lower priced Macs, lower priced software in OS X Snow Leopard, and the strategy of the future is clear. Apple wants a larger market share of everything. Mac. iPod. Music. iPhone. And that’s just the tip of the iceberg.
If Apple is really a software company that builds hardware so there’s a place to park the software they build, what’s lurking under the tip of the iceberg?
More iceburg, right?
Looking at Engadget’s coverage of the WWDC I was struck by two things. The first is software. Not only is the Mac a great platform for developers, but the iPhone even more so. Why? The numbers. The platform.
There are over 40-million mobile OS X devices in the world (includes the iPhone, iPhone 3G, and various versions of the iPod touch). That’s a huge opportunity for software developers, and it’s a rich variety of software which drives device sales.
Look at what Apple has wrought for the iPhone OS platform. GPS. Accelerometer. Games. Utilities. Ease of use. Specifically new in iPhone 3.0 is a hardware connection, better application and utility integration, not to mention more languages, better security, PC tethering, turn-by-turn GPS navigation—a mind boggling list.
Just as Apple went for market share and mind share dominance with the iPod, we’re seeing the same thing with the iPhone. How? iPhone 3.0 will be available June 17th. Free (except to iPod touch uses).
Yes, the Mac is back, but it’s in your pocket. Remember Palm’s Pre? It was developed by a bunch of former Apple engineers and launched last week. Anybody still standing in line?
In just two years Palm has fallen from market leader to an asterisk while Apple has become the market leader for smart phones and hand held devices. How does Apple respond to the Pre? With the iPhone GS.
The new iPhone has a 3 megapixel autofocus camera. Good for photos, low light and macro photography. Oh, did I mention movies? The iPhone 3GS does movies. There’s voice dialing from within any iPhone application. Some voice recognition, too. A digital compass. Hardware encryption. Secure wipe. Better battery life. Greener.
Got the picture? Not only does Apple own mind share and market share for portable media players, they’ve staked a huge claim for future market share gains with the iPhone.
Lower, but competitive prices. The 8GB iPhone 3G is now $99 (half the price of the Pre). The 3GS is $199 for 16GB (same price as the 8GB Pre). $299 for 32GB version. Both available on June 19th, a couple of days after iPhone 3.0 ships.
Steadily, almost stealthily, Apple is positioning their current darling product for market share growth.