With inflation raging, supply chains broken, and a tech workforce unsettled by the COVID-19 pandemic aftermath, what’s a smart company to do? We already know what Apple will do – it will follow the maxim of founder Steve Jobs, put its figurative head down and “innovate” its way through uncertain times.
When the going gets tough…
Speaking to CNN many years ago, Jobs explained his approach:
“We’ve had one of these before, when the dot-com bubble burst. What I told our company was that we were just going to invest our way through the downturn, that we weren’t going to lay off people, that we’d taken a tremendous amount of effort to get them into Apple in the first place — the last thing we were going to do is lay them off. And we were going to keep funding. In fact we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time.”
So, now that we know what Apple will do, here’s a quick rundown of some approaches it may take.
Rethink the walled garden
Apple’s walled garden is under attack. The company will be forced to make some changes, but it will attempt to set a line around customer privacy and the right for customers to choose security above competitive convenience.
While regulators don’t seem too convinced just yet, the argument has numerous strengths and I’m in little doubt that while compromises will take place, concessions will be made.
Apple will simply rebalance its business proposals to work within what’s left. But it won’t do so without a fight.
We’ve all heard about how Apple’s pivot to services income means that segment of its business is now a bigger company (in revenue terms) than IBM.
We’ve also heard persistent speculation the company intends to extend its iPhone Upgrade Program with some form of consumer-focused Apple-as-a-Service proposition. Under this, you’ll rent, not own, your devices for a set monthly fee. The idea is that Apple’s kit should become more available to more people, and the scheme will help Apple boost device recycling as EOL products are returned and consumers upgrade.
This transition to services makes the company more resilient and provides a predictable, recurring income to help it weather unpredictable economic challenge.
Research and Development
Apple’s Research and Development (R&D) spending keeps growing. It grew 10-fold between 1999 and 2012, when it hit $3 billion. Apple in 2021 spent $21.91 billion on R&D.
The investment continues to generate results, everything from iOS and macOS improvements, new hardware, and forthcoming new hardware families such as AR glasses and Apple Car arethe fruit of this. But Apple is a child of its time, and I’m confident that part of what the company will be exploring will be solutions that answer tomorrow’s questions: How can tech boost CSR? How do you create a closed-loop manufacturing process? What about augmented and remote healthcare?
And don’t forget the processors, software, and services that can provide all of that.
Recruit to innovate
Apple is known to purchase smaller companies from time-to-time. Sometimes it does so to acquire the inherent technology the purchased entity provides, while at other times the company likes to invest to recruit the teams for the expertise they hold.
We don’t always know which companies Apple has bought until later (sometimes much later), but we do know this much: Apple has around $200 billion in cash, which means it has the kind of financial muscle it takes to acquire innovative firms, while economic instability means potential acquisition targets now exist in a buyer’s market. Cash goes further when no one else has any, as VMware/Broadcom can attest.
Reveal what’s coming
Apple is always working very, very hard on new products it has never confirmed. We think the company recently demonstrated prototypes of its AR Glasses to its board members.
We also think the company continues to make big investments in Apple Car and is now putting in place the manufacturing and supply chains for such vehicles.
The company spends a lot of time discussing health, and we know it continues to research elsewhere, such as in wireless energy supply, ePaper, 6G and many other building blocks required for future product design.
We can easily predict iterations in existing products, including radical redesigns over time, but we can also anticipate brand new product families, enabled by proprietary technologies such as Apple Silicon and the looming Apple 5G modem.
[Also read: 11 business lessons from iPod father Tony Fadell]
Redesign for the future
What is the future? Apple wasn’t looking backwards when it introduced the ‘digital hub’ concept at the beginning of the century.
That hub reflected the then prevailing optimistic consumer philosophy of independence and autonomy; but tomorrow’s consumer is far more likely to be dedicated to sharing and collective responsibility.
So, what are the appropriate paradigms for that outlook, and how can Apple (or anyone) articulate that philosophy into new products designed to reflect the world of tomorrow, rather than the planet we plundered yesterday?
We know Apple spends time thinking about this — just look at the work it is doing. Despite reactionary criticism of these commitments, the research shows tomorrow’s consumers care deeply about such things and will reject brands that don’t share those values. Think about the criticism Nike endured when it featured NFL quarterback and civil rights activist Colin Kaepernick in a marketing campaign. The critics may have made a huge noise, but the reality was consumer sentiment around the brand increased dramatically and sales grew 31%.
That is why striking the right philosophical message and evidencing it is important.
What about you?
How can you position your firm to meet the needs of tomorrow’s transformed reality? How can you rethink and redesign your products and services? When it comes to technology, at least, Jobs may have dropped a hint of an approach when he told CNN:
“Things happen fairly slowly, you know. They do. These waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you’re going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely it actually unfolds fairly slowly. It takes years. One of our biggest insights [years ago] was that we didn’t want to get into any business where we didn’t own or control the primary technology because you’ll get your head handed to you.”
For a better tomorrow, look forward, not back, though don’t neglect history, which is always a useful guide.
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