Viewpoints



What to make of the Apple announcements today..

Sep 10, 2015

What stood out:

  1. Apple Ipad Pro:  There is clearly an opportunity in the enterprise markets that Apple has yet to make significant headway into.  Microsoft did enjoy some early success with its Surface line of products.  It was however not able to build a very powerful portfolio of customized applications to extract the full potential of this product category.  Apple backed by strong partnerships with Microsoft, Adobe, Cisco and others have a better chance to develop this segment.  It will bring back some much needed growth to the IPad category.  It has surely given many a reason to upgrade their Ipad.  
  2. Apple TV:  This has the potential to be wildly disruptive.  While IOS products have less than 20 percent share of the overall smart phones / tablet ecosystem, they have a significantly higher share (about 70 percent) of the content revenues in the same ecosystem. This has been possible because of  Apple's focused strategy in building the content ecosystem as well as its positioning as a luxury brand.  By creating a new TVOS, it is making a strong play in disrupting the television industry.  Earlier in the year, there were reports on Apple being more flexible on revenue share with television content providers and for IN-App subscriptions.  Success here will largely depend on adoption by the application and content providers.  
  3. Apple Upgrade plan:  This is super powerful as consumers now have the ability to automatically upgrade their phones once a year in a direct relationship with Apple for a fixed payment starting at US$32 per month in the US.  In what is a very bold move, Apple will have direct recurring relationships with consumers.  Telecom service providers better watch this space.  If Apple has its way, the device plan may well exceed the connectivity plan in many markets soon.  

What was below expectations is the announcements around the Apple Watch:  It is supposed to be the growth category.  We would have thought more would have been done to stimulate the growth of this segment.  It is a challenging one given the constraints of the size of the device, the battery and the connectivity.    

In summary, Apple has provided a good product line up across all its product categories - Watch, Ipad, Iphone, Macbook retina and the TV - as it prepares for the holiday season.  It may not have provided enough reason for you to replace your Iphone 6 with the Iphone 6s.  But it clearly will continue to retain and hold its position amongst buyers in the market looking for a new smartphone or upgrading their Iphone 4 or 5.  Approximately 40 percent of all smart phone shipments happen in the last quarter of the year.  The uncertain economic climate also means Apple will eat into the share of other luxury and fashion brands in the final quarter of the calendar year 2015.  


Manoj Menon

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