The movie “Jobs” takes a look back at Apple’s earlier years under Steve Jobs (played by Ashton Kutcher), but it’s the company’s future that seems to be on the forefront of most people’s minds. Can Tim Cook return Apple to its former glory after stumbling badly in the post-Jobs era? What steps should Apple take?
Most tech analysts shy away from such questions, perhaps fearing that the criticism would paint a bulls-eye on their back for all the Apple zealots to take dead aim. Tech analyst Rob Enderle, however, is the exception. He doesn’t fear the slings and arrows that almost always come his way after making sweeping suggestions.
Here are the top changes Enderle says he’d make at Apple:
What We’ve Got Here Is Failure to Innovate
Nearly every Apple pundit is heralding the coming of a low-end iPhone to compete with Samsung, and it’s a good bet Apple will deliver one—but it shouldn’t.
A cheap, plastic iPhone coming the fall was “confirmed” after a China Labor Watch report on labor practices last month said Apple is assembling such a device.
The report states: “How does a prosperous company like Apple produce a discounted version of its phones? At this moment, in Shanghai, China, workers in Apple’s supplier factory Pegatron are monotonously working long overtime hours to turn out a scaled-back, less expensive version of the iPhone.”
But a cheap iPhone goes against Apple’s storied legacy of playing in the high-end of markets and its willingness to forego volume sales and market share on the low-end.
A Forbes story earlier this year said that such a product goes against Steve Jobs’ four-pillar strategy to offer a small number of products; focus on the high end; give priority to profits over market share; and create a halo effect that makes people starve for new Apple products.
“Kill the efforts for a low-cost anything and look at an even more expensive halo product to re-establish the firm as a Porsche-like consumer electronics company,” Enderle says.
Along these lines, Enderle also says Apple should pump even more dollars into the marketing budget. Apple is engaged in a high-stakes game for mindshare with Microsoft and Samsung, and Apple can’t afford to pinch pennies here. Samsung, for instance, spent a whopping $400 million last year on Galaxy ads.
Apple is the king of advertising. Its sleek-yet-simple marketing messages consistently hit a cord with high-end buyers; a recent Consumer Intelligence Research Partners survey found that iPhone owners in the United States tend to be richer and better educated than Samsung smartphone owners. Apple television advertisements are some of the best of the business, and Apple needs to do more to offset the damage done by Samsung to its brand, Enderle says.
Wanted: Foot Traffic in Apple Stores
Finally, Enderle says Apple can do more on the retail stores front.
In its latest quarterly earnings call, Apple reported that the average store sales were $10.1 million, down from $11.1 million in the same quarter last year. Part of the problem is that store traffic and the famous Apple halo effect slow considerably between product launches, and Apple is already midway through the year without a new product.
While Apple should be lauded for redefining the retail stores, the dearth of traffic between product launches can be fixed. Apple can keep energy high by expanding shelf space to third-party, Apple-related products with the specific goal of increasing store traffic during lag periods.
“I’d look at 3D printers in particular,” Enderle says.
If you called the shots in Cupertino, what would you do?
Tom Kaneshige has been covering business and technology in Silicon Valley for two decades. As senior online writer at CIO.com, Tom covers Silicon Valley culture, BYOD and consumer tech in the enterprise.