The Beginning of the End for Apple?

The story of the iPhone, right from its inception in 2007 has been every product manufacturer’s dream story. It took the world by storm, rejuvenated the snail-paced cellphone industry (thanks to all the non-inventors out there) and touched (ahem, pun intended) the end user in every way possible.

The next chapter logically is the rise of the 'iPhone 4' mammoth - one that squishes the competition and leaps ahead. But well, despite the raving initial reviews, the path to stardom is not so rosy anymore. Infact, it is getting murkier as the days roll.

The 'death grip' antenna issue plaguing Apple’s new baby, the iPhone 4, is sounding the warning bells for Apple in the smartphone kingdom. Apple, touted as the undisputed leader in marketing, has so far completely botched up in handling the issue.

From the beginning

It all started with a user at MacForums posting a video of the brand new iPhone inexplicably dropping signal if held in a certain way. Soon it grew into a viral video campaign with users posting video demonstrating it all over the internet. Most highly technical analysis came to mixed conclusions. They all agreed that the signal attenuation was bigger than seen in a normal cell phone or the previous models, but failed to convincing prove that it was consistently replicable in all phones or that it was a deal-breaker. Almost a month since the release, the latest and the strongest dent comes from ConsumerReports which flipped sides from heaving praises to the devices to calling the ‘death grip’ a dealbreaker and withdrawing its recommendation to buy.

Where Apple failed?

The last time that Apple faced such a strong backlash from its users was the huge price drop of the initial iPhone, just two months after the launch, leaving all the early adopters out in the lurch. But then came in a genius marketing move – an apology letter from Steve with a $100 itunes credit to every early adopter. No company had pulled off a move like that, ever. Overnight Apple became the consumer’s darling.

This time, the response has been completely the opposite. An email from one of the fans to Steve was met with a curt ‘Just don’t hold the phone that way’ response. The sense of arrogance and dictatorship in that statement alarmed ever the most loyal followers. The resulting growing anger over the issue resulted in an unconvincing explanation under the pretext of the iPhone signal calibration. Very un-Apple-like. When ConsumerReport openly withdrew its recommendation of the iPhone 4, it instigated a bigger backlash and discussions over at the Apple board. And all that Apple did was to merely delete those discussions. The mere silence and the failure to communicate to its users is strongly denting the iPhone’s sales and along with it the company’s reputation and stock value.

What's next

For the competitors: For the last few months, many rivals under the Google wagon have released formidable opponents to the iPhone. Still none have so far bettered it in consumer sentiments. Finally, they get to cache in on all the negative sentiments piling up against Apple. In fact, the latest marketing campaign of Droid X, titled ‘Hold the phone any way you like’ does exactly that.

For Apple: This presents a very difficult situation for the company. It need to act fast to stem the negative sentiments and stop losing the loyal followers. And it better get its marketing act together. Of course, the solution may not be simple nor will it be at a cheap price, but it needs to be done to uphold the company’s image.

The solution

I don’t know what the right answer might be. Personally, I don’t think supplying a free bumper is a solution. It is not what I have come to expect from a company like Apple and moreover it is but a meek submission to the real underlying issue. A recall may be only apt solution. Or maybe, there’s a magic software/firmware fix which makes it all disappear. But whatever it is, time is not on Apple’s side. Apple might still sell a ton of iPhone 4s with the death grip and the records will keep tumbling. But in the process, it might lose a huge chunk of the early adopters – those who are the core of the companies success and those who word-of-mouth marketing will have a value of millions of marketing dollars.

So, your call Apple …

iPhone 4.0: My speculation

Speculations are abound for the iPhone 4.0 Software Preview session tomorrow. Every tech enthusiast is out with his/her own wishlist and speculation.

And here's mine (in the order of importance)

1. MultiTasking: If I were to play poker, I am willing to go all-in on this one. My bet is that the next version of the OS will have complete/partial multi-tasking capabilities. Besides the fact that it's high time for Apple to get this sorted, here's my rationale.

a) More than the iPhone, the iPad needs multitasking. I can't imagine having a tablet where I can't chat and read an ebook at the same time. It just spoils the experience.

b) All along, Apple has walked away from MultiTasking on the grounds of reducing the overall performance and draining the battery life. Take a look at the iPad - the battery life is astounding. In-fact, the battery life is more than what Apple claims (10 hours). And typically Apple never underclaims. So my guess is that the iPad is designed to inherently support multitasking and the resulting battery life wouldn't be too far less than their claim.

2. Folders: This is basic. I need to save files (music/doc/pdf) on my device and be able to access it offline. Also finally the iPhone will now double-up as a USB device!

3. Integrated and Improved Mailbox: El Jobso himself replied to a fan email than an improved and integrated mailbox is coming soon.

4. Better facebook integration

5. Tethering: Well, this was promised way back and no word yet. And hopefully, they have an on-the-go no contract tethering plan.

In the past, on many occasions, the announcements have fallen short of expectations. However, with Android and WM7 catching up, it's time for Apple to extend the lead again. Honestly, if you look at the wishlist, Apple could have long done them. Their gameplan is simple: once the radical innovation is ready, innovate only as far as the competition pushes you. Pretty smart, huh!

And if all goes well, we'll also see a new Advertising Platform - iAd - being released morrow.

The iPad: My thoughts

The iPad is here... and well, it is here to stay!

After having played with the iPad for a short time (like a kid at a candy shop), I stepped out impressed. I have my own reservations, but hey, this thing rocks.

So instead of harping over the same stuff which a lot of reviews would, I wanted to stress on three unique things that struck out the most regarding the iPad

1. Potentially, The Third Segment

For many year, there has been a big debate - is there a middle segment of devices, one that exist between the phone and the computer? And if so, what does that segment best do? At first, it looks like the MID (Mobile Internet Device). For the last couple of years, it seemed as if netbooks defined that segment. But well, there was always this lingering doubt - why do people buy netbooks? what does it do better than a pc? does it redefine the experience? My view is that besides the smaller form factor, the only reason why netbooks are good is the 'price point'!

Finally with the Apply iPad, it looks like this void might be filled. The Apple iPad defines the middle segment as the productivity segment - things that you do often, like browsing web, listening to music, watching movies and reading books and magazines. The key here is that the iPad redefines the experience, making it more personal and more accessible.

2. Building the device ground-up

One thing that instantly astonished me is the raw speed - the device is blazingly fast. Things just happen naturally, there's no lag. What's even more surprising is the horsepower (the engine) that drives it. All it has is an underwhelming 1Ghz Apple A4 chip with a mere 256 MB ram. So what's the secret sauce - the ground up approach to building the device. Instead of just taking the existng hardware and software and slamming them together to make the iPad, Apple rethought everything. Every hardware is fine-tuned and devised as to best do the core activities on the iPad. That's amazing.

All this makes me very suspect of the new HP Slate due to be released shortly. The specs of the HP Slate are far better (1.6 GHz Atom processor and a 512MB/1GB ram). But then it has the standard netbook processor, not one fine-tuned for a tablet experience. What's more, it runs the clunky Windows 7 Home Series. Well, I can safely bet that despite the faster processor, the HP Slate will be very sluggish compared to the iPad

3. The App World Ecosystem

When Apple first release the iPhone, it had no third party apps. The reason was that the core functions of the device were already built in - phone, browser, ipod, photos. Everything else is secondary. But with the iPad, the core functionality is not clearly defined. In fact, that's the strength of the device. You define the core functionality. For me, the core functionality would be social networking and productivity tools (like word). For someone else, it could be reading books and watching movies. What this means is that the App World defines the core utility of the device. And Apple realized it right from the beginning. That's why, in addition to making the iPad being able to upscale and run the thousands of existing iPhone apps, Apple ensured that there's more than 3000+ iPad only apps available at launch. These apps, besides taking advantage of the iPad large display space, also illustrate how the iPad apps are so different and better than those for the iPhone.

Of course, the device has its own drawbacks - no camera for teleconferencing, no usb ports, no flash connection and most importantly no multitasking. Well, here's my strong bet: from the beginning, iPad has been designed to support multitasking. The only reason it has been waiting so long is for the official release of the iPhone 4 Software Platform (since both iPad and iPhone run on the same product platform).

In all, I no longer see the device as a giant iPod touch. There's more to it than what meets the eye. Well done Apple!

MBA Talk: Need an aim... a goal... Here's mine - an orange one!

Often, at times, we are spurred by the weirdest of goals and dreams.

Here's one for me.
Did you know T-Mobile owns a trademark for Magenta? Well, yes, the color 'magenta'. That gives them exclusive rights to use the color in their industry sector (telecommunications, digital media, phones, maybe even internet!).

But hey, how cool is that! To own your own color. So there goes my dream - to own 'orange' or at least a specific shade of it.

So how do I do it? Here is the gameplan.

• Decide on a flavor of orange, say burnsque orange, misky musky orange, blah blah orange.
• Start a company and build it big. I mean really really big.
• Every aspect of the company should reflect the shade of orange - the walls, the computers, the products, the ink. Maybe even paint the employees orange.
• Make the company and the products ubiquitous. So much that when people look at the misky musky shade of orange anywhere, anytime, they just think of one product and one company - MINE!
• And then, my boy, the court would grant me ownership of 'Orange'. All Mine!

Well, I never say it was easy. But hey, it's possible!
As for the rest of you out there, may hay while the sun shines. Orange shall soon be mine...

MBA Talk: Is it really a Bargain?

"Buy 2, Get 1 Free", "Buy 2, Get 20% off" - well, all of us have see such promotions while walking through the aisle in our local retail store. Sure, they are lucrative and sound impressive. More often than not, I have fallen for them.

Have you ever thought - "Why do companies discount their products so much? Aren't they making a loss or atleast cutting into their profits?". The truth behind it all is that the real discount is very minimal, if any. It just looks like a fallout bargain! It is a bigger DEAL for the company, than for you.

Let's take a simple example and try to understand. A couple of weeks back, I went to Walmart to buy a refill filter for my Brita Water Pitcher.
And here were my available options

• 1 Pack: $9
• 3 Pack: $19

Well, when I walked in, I intended to buy just one. And I walked out with the 3-pack box. And why? It's an awesome deal. I get three filters for a little more than the price of two!

So, let's take a look at why a company like Brita would do this. The most important concept behind this is 'Time Value of Money'. If I get $1 today, it ain't the same as me getting $1 same time next year. If I get $1 today, I can invest at a bank at 10% interest and make it $1.1 by next year. So in other words, the $1 next year is only valued at $1/1.1 = $0.909 today!

Now let's do the math for the case of Brita. Let's assume that a typical Brita filter would last 1 year. Next let's assume that Joe (a customer) would buy Brita 1-Pack today and for the next 2-years. This would bring in a total revenue of 3*$9=$27 over the 2-year period.

But what's the current value of the revenue for Brita. Here we go.

Year	Revenue	Present Value of Revenue
0	$9	$9.000
1	$9	$9/1.1 = $8.182
2	$9	$9/(1.1)2 = $7.438

So the $27 that Brita would earn over the 2-year period actually amounts to only $24.62 right now (i.e. $9+$8.182+$7.438)

Let's add the second twist to this equation. Let's assume that every year Brita retains only 80% of it's customer base. The rest may leave due to dissatisfaction or due to better products from competitors. This means that there's only a 80% probability that Joe will still be a Brita water filter user and will buy the replacement filter next year. Even more, there's only a 64% probability (0.8*0.8=0.64) that Joe will still be a Brita water filter user in two years and hence will buy a second replacement filter in year 2.

Now let's use this additional data to calculate the expected present value of revenue for Brita from Joe over the next two years.

Year	Present Value of Revenue (from above)	Retention Probability	Expected Value
0	$9.000	100% (buying currently)	$9.000
1	$8.182	80%	$6.545
2	$7.438	64%	$4.760

Total Expected Present Value of Revenue from Joe = $20.305 ($9 + $6.545 + $4.760)
Cost of 3-Pack Brita Replacement Filter = $19
So the real discount is $1.3 (or 6.4% of revenue) for Brita!

In face, I think it ain't a discount at all for Brita. Here's why?
1. Think over the inventory cost of storing the future filters. The future replacements were already stored and sold along with the current replacement. So there's savings in future individual transportation and storage of the filter
2. Over the 2 year span, it is probable that you may lose one of the filter. In that case, you'll buy one more anyway.
3. What about technological advancements? Say, Brita came up with an advanced filter (a faucet one) in a year and you fall for it. The replacement are a waste, but Brita already made money out of it!

So well, the next time you see a bargain, you just need to realize that the company selling the product is getting a bigger bargain!