Mark Ritson: Apple is still the big daddy in phoneland because it avoids pointless innovation

Forget about bendy screens and AI, Apple is the true winner in the smartphone market because of its unrelenting focus on brand and marketing.

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I can still remember the moment. I was in the final year of studies when my oldest mate came back up north from his flash job in the City to visit me and brought with him, would you believe it, a mobile phone. I’d seen them before in cars but the little, two-foot long Nokia he laid before me in the bar that night was a wonder to behold. We pondered it for several long seconds and then tried to think of who we might want to call on it.

A quarter of a century later I am old and exhausted. But I’m not half as knackered as the smartphone category. The intervening years saw some triumphant moments of ‘Applescent’ innovation but these are all now consigned to ancient history to be replaced by incrementalism you can measure by the millimetre. Visitors to Apple’s annual Cupertino fantasia these days must ‘oooh’ and ‘aaah’ to slightly larger screens and a camera that can focus on you and the background simultaneously.

And that’s Apple! Move down the league table of the 300-odd smartphone manufacturers and the innovation quest becomes increasingly futile and prosaic. Samsung, for example, is leading the charge this year with a phone that won’t set your pants on fire (a big new development for them). But it’s the promise of their next smartphone launch that has everyone excited in techland.

Called the Galaxy X (wherever did that naming idea come from?) Samsung’s 2018 phone is expected to come with foldable screen technology. The head of Samsung’s mobile business has confirmed that his company is on track to launch the world’s first bendy screen at some point next year.

Over the years, I cannot tell you how much of a struggle I’ve found it to operate my phone and watch videos with a rigid, unbending screen. The number of times I’ve looked up to the sky and railed against the inconvenience of a flat surface and square viewing area. Thank God, then, that Samsung has finally decided to do something about it and enable me to twist and bend my phone as and when I need to. Thank God.

Who cares about unit sales? Who cares about market share? It’s always been about the profit pool and Apple has sat its fat, Californian ass in the middle of it

Even further down the league table is Chinese manufacturer Huawei. Its boffins are about to launch a smartphone that might not be bendable (only Samsung can do that) but does have artificial intelligence thanks to its new Kirin 970 processor.

Online magazine Digital Trends recently tested the new AI functionality on some of the company’s demonstration phones and was “impressed with how quickly it could identify simple objects from chairs to birds”. Unfortunately, however, the magazine also reported that “when shown a thumb, it didn’t know what appendage it was seeing, but did know it was attached to a person”.

Next to the Turing test, “the thumb or cock challenge” is one of the simpler assessments for artificial intelligence. Bad news on that front, but the new Kirin 970 chip also enables the Huawei to process images four times faster than an iPhone. That’s important because that means its phones can now recognise 2,000 images a second. Again, that will come in very handy when you find yourself with 10,000 images to sort through in five seconds. That happens to me all the time. Nearly as much as wanting to read my email on a screen bent into the shape of a boomerang.

Avoid innovation for innovation’s sake

It seems clear the smartphone market has hit what marketers usually call the “maturity” stage of the product life cycle. The life cycle model has been given a big hammering over recent years, justifiably in part, for its often-incorrect prediction of unavoidable product death. But where the old model still has a lot of merit is charting the gradual slowing of a market as it enters the maturity phase. We all get old and even the great tech innovations of the early 21st Century encounter the sad parabola of decay eventually.

And then there is the equally deadening impact on product innovation. After the heady leaps in tech in the smartphone category in its first few years, the impact of new features and subsequent consumer value is now in freefall, almost to the point of ridiculousness. Shorn of any innovations that consumers want or need, many second-tier manufacturers are engaged in masturbatory quests for features devoid of benefits and resonant only for their futility. Innovation for the sake of innovation. Tech for tech’s sake.

Of course, the product life cycle would tell us that the only winning strategy in a mature, bordering on senile, category is to lock things down, squeeze hard and cash out. At first sight the fact that 39% of global smartphone unit sales are spread across almost 300 manufacturers suggests that the market might be fragmenting already. Samsung’s dominant lead of 23%, according to IDC data for the second quarter, would similarly suggest they remain the top player while Huawei’s growing share of 11% puts them less than 1% behind Apple. Is the market commodifying?

Is it hell. While tech journalists continue to bang on about bendy screens and AI in your pocket, Apple is still the big daddy in phoneland. Despite recording only 12% market share so far in 2017, according to IDC, the company still managed to secure about 91% of global profits according to analysts.

Who cares about unit sales? Who cares about market share? It’s always been about the profit pool and Apple has sat its fat, Californian ass in the middle of it and no one else is getting more than a few splashes.

For every dollar of profit Huawei will generate this year, Apple will make 30 more. You want to talk about innovation and disruption? Forget about bendy screens and AI and look at brand and marketing. Apple built the brand. It gloried in its target segment while gleefully ignoring the other 90% of the market. It held the line on price. It remains imperious as a result.

If you must choose between brand and marketing expertise or proper, customer oriented product innovation, you know what I would choose? I’d follow Apple’s lead. And have both.

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Comments
  • Michael Marketing 27 Sep 2017 at 8:09 am

    “Apple built the brand. It gloried in its target segment while gleefully ignoring the other 90% of the market.” I don’t think this holds nowadays. To me it seems that Apple products are bought by a much broader segment – all category buyers perhaps?

  • Chris Blythe 27 Sep 2017 at 8:45 am

    That’s why Apple’s introduction of a $999 price tag for its ‘elite’ model is so smart – building cachet into the brand again by making at least part of its range accessible to only the lucky few

  • Julian Pratt 27 Sep 2017 at 8:54 am

    They are recalling the revolution days. iPhone X is intended to tale Apple back to the original iPhone – massively niche and totally overpriced, offering capabilities no-one wants to use – yet.

    While we are not seeing groundbreaking, VR hints at a future of wearable screens and 3d scanning is the next step for 3d printing.

    Apple get criticised for their profit margins, but there aren’t many objects that last as well. 5-year software support and features like fingerprint scanners that actually work are the key to the consumer wallets.

    A brand is a promise – and that little  still says that it will still be worth something after you have finished paying for it.

  • Mark Ritson 27 Sep 2017 at 10:14 am

    Michael, I appreciate you must love Byron Sharp but clearly when you have 12% market share of smartphone users (and 90% of profits) you aren’t appealing to everyone in the category. Just 12%.

    I know it’s annoying but Apple decided to write a different book on How Brands Grow.

    • Paul Burke 27 Sep 2017 at 6:10 pm

      Hmmm, I’m not a Sharp disciple but i think you’re misreading him and Michael deliberately.
      The fact that Apple has 12% market share doesn’t necessarily mean they are only targeting 12% of phone buyers.
      But, agree with your overall premise that a lot of innovation is engineering-driven rather than user-driven.

  • Lee Gaul 27 Sep 2017 at 2:08 pm

    This sort of pointless proclamation is very much indicative of the shortsighted viewpoint that some consumers in more affluent markets. “Pointless innovation” is an oxymoron in its truest sense and, please explain to me how Apple is the big daddy of phoneland when Google’s Android commands 85% of the world smartphone market share? … I’ll wait.

    • Mark Ritson 28 Sep 2017 at 2:33 am

      Lee you have to read the column before you critique it. Just looking at the headline and then writing a comment wont work.

      You say “Explain to me how Apple is the big daddy of phoneland when Google’s Android commands 85% of the workd snartphone market sahre?…I’ll wait”

      You did not have to wait for even a second because the answer to you excellent question was in paragraph 10 in the column, specifically:
      “Who cares about market share? It’s always been about the profit pool and Apple has sat its fat, Californian ass in the middle of it and no one else is getting more than a few splashes’.

      Apple has more than 90% of the profits, how cares about the share? Does this answer your question. I’ll wait…

  • Lee Grunnell 27 Sep 2017 at 7:12 pm

    Because despite someone else having an 85% share of the user market, Apple manages to capture 90% of the profit market. And the only thing that matters at the end of the day is profit.

  • Mark Ritson 27 Sep 2017 at 10:08 pm

    I think it’s a testament to Byron’s work that a brand with 12% share for many years is assumed to be targeting everyone because that’s what the book says.

  • Mark Ritson 28 Sep 2017 at 2:35 am

    Lee you have to read the column before you critique it. Just looking at the headline and then writing a comment just wont do it…

    You say “Explain to me how Apple is the big daddy of phoneland when Google’s Android commands 85% of the world smartphone market share?…I’ll wait”

    You did not have to wait for even a second because the answer to your excellent question was in paragraph 10 in the column, specifically:
    “Who cares about market share? It’s always been about the profit pool and Apple has sat its fat, Californian ass in the middle of it and no one else is getting more than a few splashes’.

    Apple has more than 90% of the profits, Google gets <10% – who cares about the market share?

    Does this answer your question. I'll wait…

  • Andy Oliver 28 Sep 2017 at 7:32 am

    Mark I’m meeting Samsung this morning, will point this out to them…

  • Joseph Talcott 29 Sep 2017 at 1:50 am

    Hi Mark. Apple certainly won this past decade. But they are still vulnerable, as is any company. Pre iPhone, Apple did indulge in occasional “pointless innovation”. I know, because I purchased some of those products. The November 2007 cover of Fobes asked, “Nokia. Can anyone catch the cell phone king?’. We know the answer. Perhaps there is a company today who, rather than working on incremental tweaks to the hand-held mobile computer/camera, will, like Apple did in 2007, leapfrog the current technology and dazzle us again.

  • Matthew Robinson 2 Oct 2017 at 11:25 am

    Danger with the lack of technical innovation is why bother to upgrade at all? The iPhone X looks good, but is really only a marginal upgrade on iPhone 7. It’s being price at over £1,000 and nearer £1,200 for the model with decent storage (256gb).

    I note that Apple has included in the new phones some pointless software innovation – namely the Emoji feature – which even got announced at the launch. Does anyone actually want/need this feature?!

  • Giulio Leccisotti 5 Oct 2017 at 10:56 am

    Hi Mark, good to read from you, I was one of your students at LBS. Kudos to Apple for achieving such customer loyalty. People who “criticise their profit margins” should listen to themselves talk. I would not dismiss the bendy phone idea though; as you know, Apple got there first, but not on purpose. Having people queue around the block at every single launch of a product, which costs $1000up and whose only defining features/benefits are “it’s Apple and it’s new” is the holy Grail of marketing. Roaring applause from me. Oh, and I don’t buy their products.

  • Giulio Leccisotti 5 Oct 2017 at 5:36 pm

    https://anacanhoto.com/2017/10/05/huawei-customers-more-likely-to-endorse-the-brand-than-apple-ones-so-what/ here’s an article from a fellow LBSer showing that Apple smartphones cost less to make but command higher prices in the market than other brands. Tells you something about which phones, and which shares, are a more attractive proposition.

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