Sunday, February 22, 2015

Apple's attempt to do good

Apple has made pledges and commitments in many areas.
I knew Tim Cook had pledged support for working conditions.  I did not know Jeff Williams had expressed support so strongly.  2014 Techcrunch Apple BBC response - Mr. Williams made the statement that if Apple stops using problematic tin sources, other companies will just snap up the sources and nothing will change.  It takes conviction to take a harder road, take the heat, and change things and stay involved.

For me this rings very true to how Apple operates.

Sunday, February 1, 2015

Some thoughts on Apple Watch and expected profitability

I'm thinking about what I'm hearing about Apple, Apple Watch, and fashion.  Apple has the people and product to get into and stay profitably in fashion, and the strategy to protect and enhance the brand.

HBR had an article in October: Apple: Luxury Brand or Mass Marketer?  Cult of Mac had one just a couple of days ago: Why Apple Watch will wrap up luxury market in China.  What I am hearing and reading is that people are saving up to buy Apple products.  Apple sales are not fitting historical stereotypes for consumer electronics, and thus the idea that Apple must make a cheaper product at this time has been proven wrong.

We also know that Apple has hired many fashion executives - from my blog post last September, What is going on with Apple hires and acquihires in 2014? I see that Apple hired:

  • Angela Ahrendts - former CEO of Burberry
  • Paul Devenve - former CEO of Yves Saint Laurent
  • Catherine Monier - former European President, head of retail, Yves Saint Laurent
  • Patrick Pruniaux - former VP Sales, Tag Heuer
  • Marc Newson - famed designer
Apple is clearly pushing into fashion.

On thoughts of price and revenues...  At $350 to start, it takes nearly 3 million to bring in 1 billion.  It has been rumored (at Apple Insider) that the high end gold model could be priced at $5,000.  Only 200,000 units would bring in 1 billion at that price.  Apple has proven time and again that they can manufacture, deliver, and sell mass quantities of product.  To my way of thinking, $1B+ of sales the first year is well within the realm of possibility.  I also suspect that the profit margin on the Apple Watch may be higher than Apple's general product.  If it were to be, say, 50%, then that would mean another $0.5B+ of profits.  It might not be a massive profit-changer for a profitability juggernaut like Apple, but it is certainly substantial in an absolute sense.

Some people who have disposable income will buy an expensive model as a gift for someone.  Apple makes attractive watch bands and some people will buy two or three, and they can also be expensive.  With a fashion product, Apple will adjust the look over time both of the watch and of the bands.  People may collect Apple Watch, and various watch bands.  Complete-ist collectors will attempt to have one of each band and watch; there are some of them out there.  I can imagine that one or more may make the news some time after Apple Watch is rolled out.

Assuming Apple Watch makes it into fashion stores, Apple brand exposure and value should increase nicely.  You can also bet that any such stores will support Apple Pay.

I have an original black Starbucks card.  People have greatly surprised me by oooh-ing over it many times.  "I had never seen one of those before." is something I hear.  That is something that will be happening years from now with Apple Watch.

There are some folks, as in an article last September in John Gruber's Daring Fireball, thinking about the upgradeability of the electronic components inside Apple Watch.  If indeed this were to be made possible, I think it is quite clear that Apple's product would be in a category all its own pretty much across the history of electronics.

Now about what Apple Watch is for besides fashion:

  • Notifications and communications - don't even pull out your phone.  Intimately communicate with taptic feedback
  • Apple Pay - even simpler to use than an iPhone 6 or 6+!  Not even a finger scan is needed.
  • Health monitoring - It will be with you even when you leave your iPhone somewhere, so step tracking will be better.  Heart rate monitoring is already available with other products, but not with other fashionable products, and some that are out (fitbit) are intentionally not compatible with Apple HealthKit.
  • Other apps - Siri and Maps, again to keep your iPhone in your pocket.
Is this enough?  What will 3rd party applications bring?  We will have to wait until it is released to see.