Let’s get this straight: No matter what Apple announces Tuesday, if you’ve bought Apple devices before, you’re going to buy this one, too.
That choir of the converted, though, isn’t enough for Apple anymore.As Business Insider’sJay Yarow points out, Apple’s iPad sales have been consistently falling for several quarters, and growth has been slowing for years.
But you’re still going to buy this new thing.
Why? Because you don’t really have a choice.
Apple Unveils Have Become Ho-Hum Events
My household is an Apple family. Scattered throughout the house we have a handful of iPods of various vintages, five iPhones, five Macs and even an Apple TV. At one time we were an Apple family because Apple made dramatically better devices.
As various media outlets try to guess what Apple will reveal next, it’s telling that the most exciting thing anyone can come up with is fingerprint security and a new Retina display for the iPad Mini 2.
Actually, that’s not quite true. The UK’s Daily Telegraph also suggests one thing that actually would be exciting: a lower price. As I’ve argued before, Apple is propping up profits but losing market share with its premium pricing strategy. Given that platforms like iOS depend upon market share to attract developers, over the long term, Apple risks losing its App Store advantage as developers look to build on bigger platforms.
Let’s Revisit The App Store Lock-In
Indeed, it’s the App Store that keeps us firmly rooted in Apple’s no-longer-magical kingdom. We have a host of apps, music and movies that we’ve built up through Apple’s iTunes Store and the App Store. We have little interest in replicating it on another platform. This is the “app-level lock-in” I wrote about in 2011, and it’s even more potent today.
Due to this inherent app lock-in, Apple device buyers also much more likely to buy apps, with a 30% cut going to Apple, and to spend around $40 per year on iTunes media purchases, as Asymco notes. This is why Apple’s market share today will still be worth billions tomorrow, even as its share of the device market slides.
But it’s also why the top feature Apple could introduce is a lower-cost iPad.
Yes, that’s what the $349 Mini was supposed to do, and it helped. But it simply entered a crowded field of “mini” competitors, all of which have since improved their game. A better screen resolution and fingerprint security simply aren’t going to be hugely compelling “must buy” features.
Innovate Or Drop Prices
Apple’s in a tough position. When it launched the first iPad, it was a much more polished tablet than others on the market. Today, it’s hard to argue that Apple’s iPad is any sleeker than, say, Microsoft’s Surface or a host of Android tablets. So Apple can’t really play the innovation card, which helped it to prop up prices for years.
Following its iPhone 5S release, Apple is going to release a slightly better/faster device that won’t wow anyone, but will capture upgrades from those that are still a few versions back (like me). Maybe it’s enough for Apple to get people upgrading every other year on its devices, but that’s not a growth plan, and in the tablet market, what Apple needs is growth to match Android.
Over time, whatever Apple may say about Android fragmentation, user experience, etc., we’re going to be looking at Windows all over again, with Android heading towards 95% market share. At that point, it simply won’t matter that Apple’s products are a little bit better. Today Apple can count on app lock-in to get me and others to upgrade old devices. In a year or two that won’t be enough if the market goes firmly to Android. As apps become cross-platform and our data and services head to the cloud, operating systems don’t matter. If you have Spotify, you don’t have to worry about whether you’ve downloaded music from iTunes or Google Play.
Which leaves Apple with the choice to drop prices today, making its increasingly minor upgrades worth what we pay for them.