Friday, September 7, 2007

Summer of Discontent

Apple is now busy apologizing to iPhone owners over a price cut from $599 to $399 in 2 months. People who had rushed to buy the phone are chagrined about forking out $200 because of their eagerness to try the product out. Apple is trying to ease the situation by offering $100 store credit to early adopters. Yesterday an associate mentioned he'd bought a TomTom GPS navigation system last year for $700. Today its price is $399 and he is shaken by the price drop of almost 50 percent. A few months ago a sales trainer at our company gave us a lecture about early adopters of technology in the case of consumer electronics. He gave us his personal example. Being an enthusiast for all things electronic he is the kind of guy who would rush to buy a product when it hits the stands. Very possibly he has the iPhone but I will check and confirm with him. At the extreme end of this spectrum are the guys who wait and wait and wait until it has become so mature that it would be ludicrous to be without it. In this category falls this sales trainer's dad. Both these categories of extremes represent a small portion of the market for vendors. There are different categorizations in between them, but the overwhelming majority come in right after the early adopters who are willing to take some risks. Immediately after this, another large category that leans more to the later adopters' side but still more eager to buy than that miniscule category of sales-dampeners. I fall in that catgory, I think. The middle two broad categories are the product's mainstay. In the earlier adopters of the two the product is gaining acceptance and is growing in market share. In the later adopters the product is mature and stable and slowly begins to decline towards the end.

Of course all of this seems to imply that there is a long life cycle for a product. Today the last category of very late adopters and possibly even my category of later than average adopters would seem to be irrelevant, given the pace of innovation and competition. By the time the prices decline it has been 1 year and the market is competitive, fractious and another 'car that flies' begins to peep ominously from the horizon.

This article on the Apple set me thinking: It's Official: Apple is the New Microsoft

The author, Mike Elgan of Computerworld, whose family of 4 owns 12 iPods laments about Apple's unfair business practices such as bundling iTunes with iPod and iPod software, and the consequences it brings when you uninstall the clunky iTunes. In addition he laments that with the iPhone new monopolistics tendencies from Apple have manifested themselves- charging double the price for ringtones, non-portability of tunes from iPods to other players, needing the user-unfriendly iTunes for all downloads- for songs, videos and ringtones. He compares Apple to Microsoft's early reputation as a bully, and claims that Microsoft was better still as you could reformat your computer and install Linux in it, but you can't do that with an iPod. He further laments that where Apple's Mac O/S was the innovator and Microsoft Windows the copycat, today Microsoft's Zune came up with innovations like Wi-Fi 1 year before the iPod did.

It hurts me to say this, but Mike, you should have known this from the very beginning. Contrary to my nature I downloaded iTunes in early 2004 although I did not have an iPod (and still do not have one, much less do I intend to buy one). I paid up the money required to burn 3 CDs full of songs and uninstalled the application right away because it does not let the songs play on Windows Media Player. Besides the iTunes application was clumsy, clunky, unfriendly and automatically assigned default player privileges to Quicktime. I do not miss those songs- I rarely listen to them anyway except in my car.

It's true that competition makes an economy run and enthusiastic customers are needed, but to be contended is a great thing. Apple is a pampered company because people first lapped up its simple concept of putting music into a hard drive that you can walk around with. Is that such a great concept? An MP3 player did this a long time ago, albeit with fewer songs. Today there are so many features associated with portal digital music players that these are truly products that stand out, compared to iPod version 1.0. Especially with the iPhone hitting the market it is a product that one cannot ignore. My gripe though is this: other equally innovative products hardly get a second glance, such as Zune and Sansa, thus further perpetutating the myth of Apple superiority. Today NBC crawls and begs at Apple's door to have flexibility on pricing its shows in iPod because of Apple's dominant status in music players. To date any success that can achieved by media companies in the portable media market is on iPods. This is sad and will continue unless the market gets back to its senses and teach Apple a thing about the other fish in the sea.

If not, simply be contended being trend-agnostic as I try to be. Eventually Apple will get to be less haughty and price its products more reasonably. Am I the only one who is silly enough to resist the great Steve Jobs juggernaut? Apparently not. Here is Jonathan Weinberg writing from the UK in this excellent article: Are We Not Clever Enough to Withstand Apple's Spin ? In this he asks a question that has always hounded me; in capital letters, no less- DO YOU REALLY NEED IT? Good question.

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