How do you measure the success of a company? Is it the press that it gets? Is it the stock price? Is it the cool factor of the products. What role does employee satisfaction play? Do their products need to be something which adds real value to the world?
“More competition just elevates Apple's brand to another seductive, unquantifiable, cool-factor level that consumers are willing to pay for.”
Why Apple keeps on shining By Bambi Francisco, CBS.MarketWatch.com
Apple as you can see from the above partial quotation is getting fabulous press. Their stock is at an all time high. The products are definitely cool. I am not going to hazard a guess as to Apple employee satisfaction, but I know enough to understand that many Apple employees are focused on computers at time when most of Apple's success seems to be coming from the iPod. In fact Apple's already low computer market share recently declined further according to some recent press. I suppose an argument could also be made that the iPod along with the iTunes Music Store have improved the world by reducing the number of music cds that are bought.
“More competition just elevates Apple's brand to another seductive, unquantifiable, cool-factor level that consumers are willing to pay for.”
“Apple's the new status symbol of the generation. Kids may not care which brand of jeans they're wearing these days, but it's absolutely not cool if you don't have an Apple.”
“And when it comes to consumers -- image can be everything. When image is everything, it's harder for companies to compete on price and features.”
“That seems to be the market today. There are competing products that are cheaper and offer more features. But Apple's brand is just too strong to sway anyone.”
Why Apple keeps on shining By Bambi Francisco, CBS.MarketWatch.com
To me real success is setting out to do something and actually accomplishing it by putting in place the resources, management and support to make it happen. Could it be that while Apple is very good at this with new markets, the company has a tragic weakness when dealing with more established markets?
Without really knowing what is happening internally at Apple, my guess would be that the computer sales force might not be completely enjoying Apple’s new found shine considering Apple's continuing drop in computer market share. One might guess that this is a tough position for a sales force especially considering Apple’s computer products have recently gotten high marks by the press. Of course if the products are great and your CEO, Steve Jobs, is universally hailed as great, which means his strategies and tactics are beyond reproach, then there are only a few places that you can lay the blame for failure to grow computer sales.
One place would be product marketing. Of course most folks know that Apple’s product marketing is driven one way or the other by Steve Jobs so obviously popular sentiment would have a hard time laying the blame on Steve. That leaves only sales management and the field sales people to take the blame.
Anyone who has been in a corporate sales force knows who will win that battle. For those of you who have not had the experience of corporate sales, I can assure you the field sales people are likely the ones in the hot seat at Apple. Corporate sales managers are experts at covering their rears and with Apple's well known penchant for top down management, there is little doubt the field sales force is the group on the hot seat.
However, should the field sales force really be the one to blame for Apple’s disappointing market share?
Anyone who has been in sales knows that there is only so much even the best sales person can do for a product. A lot has to be done by the product and the company behind the product. This could be a long discussion, but I ask you to try to remember the last time you saw an ad for one of Apple’s computers. Then count how long it has been since you have seen an iPod ad?
The problem gets even worse if you are an Apple field sales person selling Apple’s very competitive Xserve 1U server. The odds are you have never seen a television ad or print ad for Apple’s Xserve. I certainly have never seen a television one though I have seen plenty of ads for competing products from IBM, HP, and Dell. Now you probably have to sell a lots of iPods to make the margin that you make on one Apple Xserve so why would Apple focus on iPods other than that’s where they have found success without a sales force.
I think the answer to this is actually rather simple. Steve Jobs’ genius is in defining new markets and creating new products for those markets. His Achilles heel is going after established markets like the Windows monopoly. Now if the new Mac mini and the supposed halo effect of the iPod do end up unseating Windows, I will be glad to eat my words. Even then I believe it will be the result more of chance than planning.
The reality is that Dell is better at selling computers than Apple. My guess is that part of the reason for this is because Steve Jobs and his managers really do not know how to run a sales force. They also have not put their wood behind computers or their sales people because it's too hard. The iPod is the easy way out for Apple. I give Steve and his team all the credit in the world for coming up with the iPod and the market defining iTunes Music Store. They created a new market. There is no question that Steve and by association Apple are really good at new markets.
On the other hand they do a really bad job at attacking existing markets which really requires understanding customers at a level that does not work for Apple’s new market focus. Steve Jobs was recently quoted in Investor’s Business Daily as saying, “You can't just ask customer’s what they want, and then try to give that to them. By the time you get it built, they’ll want something new.”
What Steve misses, that Michael Dell understands so well is that if you ask customers what they want and give it to them, they will likely buy it and also the next new thing which if you are smart like Dell you will also build. If you understand Steve, you know many of his products are certainly as close to perfection as a technology guru can deliver so why would you want to mess up perfection with customer requests.
Sales forces thrive on providing customer feedback to product marketing and then delivering those new modified products back to those customers. Providing a customer with a product that really meets their needs is the greatest way that a sales force can provide value to customers. That model is a win-win solution which Dell understands well and Apple under Steve completely misses.
None of this means that Apple makes bad computers. They make really great computer products if your need for a computer matches what is in Apple’s product line. The odds are you will not have all the options you have on a Dell, but then again you will not have to worry about worms and viruses very much if you buy a Mac.
What this does mean is that as large computer customers continue to drive the market, Apple's computer customers will be limited to those who needs are met by whatever Apple happens to have in the pipeline. If you are an enterprise customer, trying to get Apple to meet your needs will likely be a frustrating experience. While Dell might guarantee you a product with a long life so you do not have to have a mix of products on your desktops, what you will get from Apple is whatever Steve feels like delivering.
That lack of consideration for customer needs not the sales force is the real reason why Apple will likely be soundly beaten by Linux in spite of having great products with even better software. Of course the even bigger questions is will Apple turn into an pod company and give up on computers?
If Steve set out to win share on the desktop with his computers, he has done a really poor job at that. Of course it is pretty easy to argue that certainly in his second coming Steve has had no delusions about winning any significant market share. Of course that is another story.
I continue to own Apple stock, a very little Red Hat stock, but no
Dell stock. I use Windows P Professional, SUES Linux, and Mac OS X
and find all of them very useful operating systems. I love Apple
products and hope Apple or some other company will continue to produce
them. I believe
customer driven products like Linux and Windows since even MS does
listen to customers eventually will continue to outshine Apple in spite
of Apple's wonderful OS X. Unfortunately Steve's control of the
hardware may be at the core of this problem.
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