Innovation at the Core

by Colin Berkshire

I gripe a lot about Apple’s lack of innovation and a friend recently challenged me on this. Every company that suffers from a dearth of innovation has opportunities under the right leader. Disney at the brink of bankruptcy found Frank Wells in 1984. Microsoft found Nadella after the board finally wrenched the company out of Ballmer’s talons.

Today, nobody has any ideas about Apple. It just looks like they are in a maturing industry that is plateauing.

I am no Steve Jobs, but I have some thoughts on this.

Phones for Real life
I would estimate that about half of all smartphones are used by kids. Yet, smartphones are designed as executive fashion statements. We should design smartphones for people who drop and abuse phones.

I think there is an enormous market for smartphones that can be repeatedly dropped from 6 feet and not break. Bumpers on the corners and thicker cases would be a start. I don’t care about saving two ounces. I care about having a phone that can be used tomorrow. I think a great looking iPhone can be designed that can also live through the real world without breaking and looking like crap.

iPad for people on the go
I use a MacBook laptop. The screen on the MacBook looks a lot like an iPad. Why can’t I detach the screen from my MacBook and use it like an iPad. Then, I can reattach it and transfer stuff between the devices. That is, why isn’t a MacBook just an iPad with a clamshell base that runs MacOS?

Mac Gateway Drug
The Mac is a great PC. It’s consistently a great experience. Granted, under the Tim Cook, it has become buggy and inconsistent and gimmicky. The Mini is a forgotten stepchild, but it is still something pretty special.

Apple should re-think the purpose of the Mac mini and should view this product as a gateway drug to get people into the Apple ecosystem. Even if they make zero dollars from the product itself, it would grow the overall Apple market because Apple stuff talks better to other Apple stuff.

If I ran Apple I would launch a $399 Mac mini with 8GB RAM and a $499 model that had 16GB/256 GB SSD. Yes the margins wouldn’t be Apple’s exotic 40% margins. But sometimes you look at gross numbers not at margins.

Get back to $500 smartphones
Apple needs a $500 well equipped smartphone. Not a crippled bastard, but a GREAT product. I would rather sell a $500 iPhone to somebody than to sell nothing. It’s OK to then offer any number of higher-end phones as long as the $500 model is reasonable.

^%#&& the Cellular Carriers
The cellular carriers mean smartphone manufacturers no good. &*^#@# them. Make smart phones that work on every network, accept multiple SIMs. And help promote MVNOs. I would go to the extreme of offering a product similar to Google’s Project Fi. That is, offer $15 a month service and sell gigabytes as you need them for $5 each. No unlimited plans, no roll-over, no buckets. Just $5 a gigabyte. And, make the $5 gigabyte work anywhere in the world. (Overseas gigabytes sell for cheap, so this isn’t an expensive thing to do.)

I think Apple can easily make their 15% margins on these prices, and I think that carriers will also be willing to sell bandwidth to Apple at these prices. Apple could be a big aggregator. Carriers could cancel all of their national advertising, quit worrying about churn, and sit back and clip coupons all day long.

Frankly, Apple should be the one purchasing Sprint and Dish, but that’s a long story.

If Services are Apple’s Future, then so is Windows and Android
If Services are the future for Apple as far as market opportunities, then Windows and Android must be an integral part of that plan. The MacOS operating system is down to about 12% marketshare. In just two years Tim Cook has crashed the iPhone market share from 18% to 12%, a 30% drop. Apple is simply becoming marginalized and irrelevant. If the future at Apple is Service Revenue, then they have no choice but to become platform agnostic.

Beyond 20 somethings
Apple needs to intensely focus on the needs of groups of customers besides then 30 year old young executive. Right now, Apple produces 7+ models of iPhones and all of them are targeting the same fashion driven executive with their fragile cases.

There is an enormous opportunity if Apple targeted large groups of users. The device needs of a 3~5 year old is different than the current iPhone lineup. And, the 3~5 year old market is enormous and just waiting to be tapped . It’s being completed ignored today. The 5~12 year old market may need a different model. The 16~28 year old market needs different features than what is now offered. Let me skip to the 70+ year old market. My mother needs an Apple iPhone-like product. But her needs are completely unfulfilled by Apple. There is no big HELP button. There is nothing that checks in on her (such as a wrist band that monitors for activity. She cannot easily call the grandchildren. Let me put this crudely: My mother had a lot of money and should wouldn’t hesitate to purchase an overpriced Apple product if she could get something that met her needs. And, sorry Apple, her needs include big buttons with pictures on them.

My entire point is that Apple has so narrowed who they are and what they do that they are risking extinction. Over specialization leads to extinction.