Why should Apple's secrecy matter to anyone?

Yesterday the Wall Street Journal had a page one article, "At Apple, Secrecy Complicates Life But Maintains Buzz."  I was involved in helping the reporter reach some of the sources and actually provided a comment for the report.  I was pleased that it was fair and well written.

Yet the questions occurs to me, "Why does the secrecy that Steve imposes matter to any of us or in fact Apple?"

It your market share is stuck at 2.5%, how many people really care about your next generation products? Still in the enterprise, cutting down on secrecy would have positive benefits.

One of the first reasons always trotted out in secrecy discussions in the technology world is the old Osborne example of when they pre-announced products and went out of business before they could sell their inventory of old product.

That whole scenario no longer exists.  I just ordered a MacBook. Apple made it after I ordered it and paid for it.  It was sent by Fedex from China.  Outside of some channel inventory, most of the Apple's product is made to order.  There is little or no risk of Apple being caught with a bunch of inventory because they have pre-announced new products.

After all, Apple announced the switch to Intel and they haven't gone out of business.  The sales of PowerPC products have slowed to a crawl but I would guess it hasn't mattered much because of the iPod business. Perhaps Xserves which still fill a specific need might even still be selling well.

Another reason often cited is that other companies will copy Apple's innovations. Yet it is harder and harder to copy innovation.  Just look at the iPod. No one has done that successfully because you also have to do the iTunes Music Store.  How do you copy the innovation of a Mac and OS X?  Well you would need to get Microsoft on board. Then all the third party manufacturers and the folks who provide software would have to cooperate.  Still it wouldn't look like a Mac with software which comes from one company, Apple.

Let's be honest Microsoft is having a hard enough time just getting Vista out the door with a credible set of features.  Does anyone think Microsoft is going to start trying to add some new Apple features just to compete with OS X?  I don't think so.

If we dig down deeper, what is the risk to consumer Mac models if Apple were no longer secretive?  My guess is that unless you're living underground in Mongolia, people already have a pretty good idea when Apple is going to announce products. Mostly they buy systems when their old one breaks.  Now in the consumer space, I'll grant you that the secrecy brings excitement and more buzz to Apple's limited marketing dollars.  Whether or not that buzz is critical to Apple's long term success is an entirely different question.

Even the iPod market is relatively immune from leaks unless Apple comes up with some far more disruptive technology.  Let's face the music so to speak, the next advance in MP3 players is hard to see right now and plenty of people are still interested in current technology.  Perhaps those who are always interested in the latest and greatest iPods might have their purchases influenced by leaks, but I don't think they are the majority of the market.

Having said that, I don't think that Apple's secrecy hurts the consumer market at all. It probably helps the marketing. In truth it is nearly a disposable market at this point on iPods and low end computers.  People don't expect to get the latest and greatest computer for a $1,000 or so. So why wait for the next generation product?  It's not like there are very many Mac deals out there because of new products being in the wings.  People who buy Macs are generally happy with their product and keep them for years, but a little buzz probably helps.

So what about potential leaks from partners? That's something Apple has little control over. Could Intel come out with a low end processor that will turn this market on its ear? Obviously Apple has to keep an eye out for that kind of thing but I don't know how big a risk it is now that Apple is just another Intel vendor.  I actually think Intel's openness might even help Apple.

Really only the prosumer market as Apple is fond of calling it might put off purchases because of a leak of upcoming products.  Of course there's also the enterprise market, but as one Apple rep told me when I asked for a list of Apple's Fortune 500 customers, you get that by subtracting Genentech and then listing the other 499 companies.

Again if we're not playing games with ourselves, it might be a little better than just Genentech, but not much.  So mostly we're worried about prosumers.

Well I would guess that the secrecy around the next generation desktops from Apple has kept more people from buying the old systems than it has created interest around the new ones.

Back in the days of MacWeek or MacLeak as the WSJ called it, information slipped out, astute Apple customers held on to their dollars until the new products shipped.  Sometime products rotted in the warehouses unless Apple dropped their prices.  These days Apple just doesn't build the products if customers aren't buying them so that risk has disappeared.

Again though I don't think it hurts Apple to hide its plans from the prosumers. The buzz helps.

There are a couple of markets where secrecy is hurting Apple.  The first is the Enterprise market.  These customers absolutely need to hear what Apple has in store for them.

Why would anyone risk their reputation and switch their company to Apple without some idea of where Apple is taking the hardware and software.  It's not like Apple is known for being mild and meek and never changing their direction. "Trust me" doesn't work in the enterprise.  Change also isn't good in the enterprise, and unfortunately Apple is synonymous with extreme change. I consider government, corporations, higher education and even K-12 to a certain extent enterprise customers so the potential impact on changing to a more open-to-customers company is huge.  These (higher ed being the exception) are the markets where Apple isn't doing very well.  Secrecy isn't the only problem in these markets, but fixing it is a good start at getting back into a competitive position in these areas.

I think if Apple implemented an ironclad non-disclosure agreement and followed up with true NDA information, customers would respect the trust that Apple has shown in them and respond accordingly.  However, I have my doubts as to Apple doing something so logical.

The other market that desperately needs NDA information is the VAR community.  It's hard to get an integrated product out if you have to wait for the product you design around to ship.  With technology cycles shortening, being a real VAR becomes very challenging if you can't find out anything from your partner.  Apple's refusal to talk about future server technology has basically shut the company out of the large Xserve VAR business that developed around Navy submarines.

My suspicion is that there is already one class of Apple partner that receives at least short term NDA information.  That would be the large resellers and catalog merchants.  They seem to get those catalogs out awfully quick.  Yet all they're getting is pictures and pricing. In reality even that is more than Apple is willing to give its best enterprise customers.

Of course eliminating some of the secrecy at Apple has one huge risk, Steve could feel like he is losing control.  He then might lose interest in Apple since the company would no longer be feeding his need to have all the decisions in just his hands.   Apple without Steve is inconceivable.

So actually unless you're an enterprise customer that sees some advantage in Apple's products or a stockholder who believes these markets are good for Apple, there's little reason to care about how much secrecy Steve imposes.  We can all fantasize about the problems that a widespread beta of the new version of OS X could solve, but the love of secrecy and the need to be the king of control will prevent Steve from letting it happen.

I have a few more thoughts on Apple's secrecy in another post, "On being part of a WSJ article."

Comments

[OS11]

The main reason is Steve gets a certain "high" from coming on stage and announcing to the world... a "new apple product". Chiat once said, "Steve" likes to do "Whoa!"... so that's reason enough alone to keep everything completely secret.

2nd reason is simply it provides MASSIVE free advertising, the buzz surrounding new apple stuff is worth 10's of millions if not 100's of millions. Early Apple was quite small so they were into "Event Marketing" at the time to get maximum exposure by the press, this formula is still with them and it works well.

And that's about it... all the above in this article probably reads too much into it, when it all boils down to a maximum BUZZ or "High" for Steve and for the Marketing of Apple.

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[Todd]

Well I get a high off the secrecy too - I get the joy of surprise, like the bluetooth mighty mouse the other day. As a product manager, I know that one benefit of developing in secret is that you don't need to deal with the suggestions for how to do your job 'right' by people who have none of the background, source data or design sessions that go into that product.

But ultimately, Apple has the right to keep product development secret, and I salute them for doing so.

[Small Paul]

> "Just look at the iPod. No one has done that successfully because you also have to do the iTunes Music Store."

Do you? I bought my iPod long before the iTunes Music Store came around. As did plenty of people in England, and around the world, who waited a lot longer for the iTMS than American customers.

Everyone I know with an iPod has a bunch of songs on it from their CDs. I really don't think the iPod relies on the iTunes Music Store. Given the number of failed and not-setting-the-world-on-fire online music stores we've seen in the past few years, I'd suggest it's the other way around.