US activist investor Carl Icahn revealed last week that he has “a large position” (ie investment) in the company and he believes it is “extremely undervalued”. His stake is large enough for him to have direct conversations with Apple chief executive Tim Cook, who took the reins after the death of founder Steve Jobs in October 2011.
Icahn’s arrival puts extra pressure on Cook as he prepares to take a few gambles with the Apple brand. The smartphone business has come under tremendous strain since rivals such as Samsung have caught up in terms of technology and functionality and Apple is losing market share.
What the rivals do not have, though, is the Apple brand magic that makes its devices aspirational, covetable and a badge of cool among tech geeks and urban trendsetters. It is this brand value that places Apple at the top of the Millward Brown BrandZ 100 Most Valuable Global Brands list.
One strategy apparently under consideration by Apple to regain market share is the launch of a cheap, entry-level iPhone. There is sound reasoning behind this strategy, if it does materialise. It introduces people to the brand who might not normally have considered it, with the hope that as their incomes rise they will graduate to the more expensive models.
Launching budget or entry price offerings has benefited many a brand, from supermarket own-brand ranges to cosmetics and shampoos. But it is different for premium or luxury brands. Burberry made itself accessible to the mass market with lower priced products but there is a general consensus that the move brought image problems that it has had to fight hard to overcome.
Is there the danger that those fierce lovers of the Apple brand will be somewhat disgruntled when every other commuter, mum on the school run or pub habitué pulls out an iPhone? Will the cool factor evaporate? Or are the Apple aficionados true evangelists that want everyone on board?
Cook needs to be careful in managing the brand in future or Apple could succumb to Newton’s law of gravity and fall from its lofty aspirational perch.