28 Apr 2016

Is Apple on the precipice of going Nokia-wards?

Tim Cook will have woken to the news that Facebook has tripled its advertising revenues.

The news has stunned Wall Street in much the same way that Apple’s revenue-drop news, 24 hours previously, had shocked the media world. The surprise came despite an apparent expectation management exercise, masterminded by mister Cook in January.

Apple soothsayers and naysayers are currently pondering the significance of recent fiscal reports which frame Apple’s fortunes by a 10-million unit drop in iPhone shipments.

In the first analysis it would seem absurd to liken the potentially emerging negative Apple trend to the dystopian destiny of, say Nokia – especially given the Cupertino giant’s cash mountain of $233bn – a little more than Finland’s total GDP.

The reason for the sales slump is widely attributed to the company grappling with the Chinese economy, where the mass market consumer can’t afford a £50 smartphone.

It’s all going to be fine though, according to mister Cook who proclaimed with an Old Testament-like zeal ‘This Too Shall Pass’ – after the company lost over $40 billion in its value.

Flashback to Nokia, it’s 2003 and a 14-strong Nokia account garrison march into a mobile phone operator sales meeting to reveal its worst kept secret, the 18-month product roadmap. It contained the usual kooky Finnish faves: phones that looked like spaceships, phones that aped miss-shaped boxes of chocolates and not one touchscreen phone among them.

When the Espoo troops were asked why they serially resisted the new touchscreen tendency that was showing up in all consumer research across demographics, cultures, ethnicity they dismissed it as a blip. Their research indicated the mobile phone market was still fundamentally about fashion i.e. colour, form, shape – the consumer wanted cameras not touchscreens!

Posturing and denials like this signposted the unravelling of the much-loved Nokia brand. Even though there were short-term heydays ahead, like the launch of the fantastically fast and powerful internet-friendly, N95, Nokia revenues started to decline irretrievably when Steve Jobs heralded the advent of the touchscreen in 2007.

Mediacells’ analysis of the revenue cycle peaks for both Nokia and Apple shows immense growth which, in Nokia’s case at least, culminated in terminal decline in a market where new competitors, like Apple, began to define a new mobile narrative.

Mobile was no longer about fashion and fancy, it was about lifestyle companionship and smartphone behaviours finally evolved to include constant app and internet usage.

The future of the iPhone is to some extent out of Tim Cook’s hands, the strong macro-economic headwinds blowing from the East are impossible for the West, let alone Apple to shield from. But Apple does need to come up with a radical new innovation programme rather than just the current incremental improvements to existing products.

There was a ‘Nokia moment’ when the roadmap rumour started circulating around the iPhone 7. It would include a redesigned home button, proprietary headphone port, and a dust and water-proof jacket. Is this enough for an iPhone 6s customer to upgrade – to change the fundamental way I navigate my iPhone and plug myself into my music even if it will survive a toilet dive?

There’s a step change missing in the Apple product roadmap, somewhere between underwhelming product launches, like the smartwatch, to the Wall Street whispers of life-changing future products, like electric cars and virtual reality hardware.

Facebook, Spotify and YouTube are already delivering content on what some tech pundits and twonks are calling the fourth, even fifth screen. It could be on the dashboard of a car, on a smartwatch, a cooker, a TV or even in a smart shower.

This internet of stuff can’t rely on a piece of hardware – that would make it far too emotional if it were ever to get lost, broken, infected or stolen. Quite literally, the key to our future everyday lives would need to be completely reset.

As Tim Cook promises a product pipeline with ‘amazing innovations in store’, expectations are perhaps being set instead of managed.

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