Macs, iPads and Margins…
So as you’re aware Apple talked about Macs recently.
Seeing as this blog is mostly dedicated to talking about Macs, this piqued my interest.
The M3 chip was introduced, and squeezed into the laptops and iMac.
Highlights for me were few and far between, the main positive being that the ‘touch bar’ no longer exists – yay – and the 24” iMac has missed out the M2 and jumped straight to the M3, albeit just the base M3, not the M3 Pro or Max.
The 27” iMac replacement is already here by all accounts.
A very unsubtle hint was dropped – the 24”, 4.5k screen replaces the 21.5” and 27”.
So it’s official- the true replacement for the 27” iMac, is the Mac Mini with Studio Display.
But it was an odd presentation.
At only half an hour or so, it seemed more suited to just a press release, and a lot of pundits have observed this also.
Until the other shoe dropped.
Apple’s earnings report noted a 34% drop in Mac sales and a 10% drop in iPad sales.
Ouch.
So I think this presentation was rushed into place, with a hastily ‘Halloween’ gimmick applied, to goose Mac sales.
But why are sales falling?
Apple has been more active than ever in the Mac market (the iPad not so much), you’d think that all this effort would bear fruit. But it hasn’t.
For me, the blame cannot be applied to a single person, it’s more the way in which Apple seems to currently operate, now that someone with Steve Jobs’ vision and priorities has long gone.
But having said that, I’m not a big fan of Tim.
He’s a numbers guy.
He’s a share holder value guy.
He’s a channel logistics guy.
He’s a spreadsheet guy.
He’s a margins guy.
And although all these things are important, the most important thing that Apple has, is its brand and how that brand is perceived by its customers, its critics and its staff.
While everyone is looking at the details, no one seems to be looking at the bigger picture – what does Apple mean to people.
As my header states, I love the Mac, but Apple as a company? Not so much.
When Jobs first returned to Apple, he launched the Think Different campaign.
A campaign with one purpose, to make people (including those working at Apple) start thinking and caring about Apple again.
To make Apple more than just the products, the numbers, the bottom line and the margin.
To stop the staff worrying about (and leaving) Apple so that they could get on with making great products.
What Apple has become today, is a company that values and cares more about the details than they care about what Apple means in the abstract.
This is solely Tim’s fault – he should be setting the agenda to move forward, instead he’s letting Apple get bogged down in the details with different departments at odds with each other.
This is clearly illustrated by Apple, for all intents and purposes, operating a siloed business model.
I remember working for a company that operated like this.
The idea is that you task each department in your company with a set of goals, and the theory goes, if properly set and managed then each department doesn’t have to worry about the company as a whole, they just need to worry about their little bit of it.
So one department (or silo) is charged with keeping margins at a set rate, another department is set keeping quality control to the agreed level etc.
What this ends up with though is a spreadsheet.
These departments end up obsessing over a single number in their spreadsheet.
In the company I worked for, these departments had this percentage on a white board and OMG were people in trouble if it went above 5%, or below 2% or some other meaningless operator.
Staff only vaguely knew why that was important – even the manager it seemed. All that mattered was the percentage.
This is where Apple is currently.
The decision to keep old hardware around, even if it confuses the marketing message and makes the product line impossible for a customer to understand does not matter.
All that matters is that they keep this old, outdated hardware around so as to maintain the margin.
Look at the iPad, keyboard and pencils – the sole reason it’s such a mess, is because of Apple’s obsession with margin.
The decision to release your entry level Mac’s with 8gb RAM and a 256GB SSD, which will seriously affect negatively your computing experience, is a margin decision.
The reason why Mac’s are stubbornly high in price is because of Apple’s obsession with margin.
The reason why Mac’s upgrade prices are so high (hundreds of pounds for 8gb memory upgrade) is because of margin.
The reason why Apple struggles so hard with getting into gaming, is because they don’t sell enough Macs for game developers to get interested, and this is because of Mac prices being so high and that’s because of margin.
If Apple was serious about gaming then the entire company would be behind it – individuals clearly are, but as a company they’re demonstrably not.
If you’re serious about gaming, you wouldn’t be releasing your base level hardware with 8gb RAM and a 256gb SSD with upgrades being borderline exploitative.
If you’re serious about gaming then your Mac App store wouldn’t be selling Tomb Raider 2013 for £29.99, whilst it’s less than £5 on Steam.
If you’re serious about the education market, then you’d release a comprehensive ecosystem, backed up by rock solid iPads that were competitively priced with Chromebook’s. Apple isn’t and actually can’t do this because of margins.
This obsession with margins is damaging to the company’s growth.
And that is because the siloes in the department don’t care about education, gaming, or selling more Macs, or creating great products – all they care about is their silo and their little spreadsheet.
Tim and the board? Well they don’t care, all they care about is all their little siloes making sure that their spreadsheets are all hitting their targets.
Tim’s job is to steer the ship into uncharted waters, but he’s down in his bolthole, looking at the numbers, because if the numbers add up – he must be doing a good job – right?.
Now, I’m not saying that margin isn’t important, it clearly is, but if your myopic obsession with margin is damaging the brand (and now sales it seems), then Tim needs to seriously stop looking at his spreadsheets, take a long walk and have a good think about what Apple is trying to do.
He’s made Apple employees lose sight of what it all means and what they go to work for.
To create insanely great products that people want to buy.
The Mac at work . . . 