Monday, 10 June 2013 11:41

Apple Tries to Spin Its Way Out Of Thier Troubles...

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Apple has been having a rough time during the first few months of 2013. So far they have been taken to court over their eBook pricing efforts, their tax plans and have even had some older models of their iPhone and iPad banned from import into the US. This all happened to a company that was set to hit $1,000 a share in the latter half of 2012. Sadly for Apple many things have changed since then including their campaign to stomp out competition through the use of patents instead of innovation. Apple’s image and mythology has taken a huge blow while rival companies like Samsung, LG and even HTC and Motorola are working to push new technologies into their products (even if they might not make sense).

Unfortunately for the market and the consumer Apple is not choosing to combat this by developing better products. Instead all indications are that they are embarking on a new marketing and PR campaign. As we near the WWDC (World Wide Developers’ Conference) we are seeing more articles talking about how badly Samsung is doing in the market. While it is true that Samsung took a fairly by 6% single day hit this does not indicate that they are going away. By comparison Apple has dropped from 52 week high of $705.07 to a $444.73 opening price (as of 6-10-2013) this is only in a few months and their stock still shows a general decline with the occasional upswing depending on other market factors. So to claim a single 6% drop is a massive hit is not being entirely accurate.

However, there are some that are willing to report it this way and that have a vested interest in doing so. Looking over the analysts’ reports they are somewhat interesting. What we are finding in them is a general statement of “Samsung bad, Apple good”. As an example one analyst claimed that there is a significant drop in Galaxy S4 orders, but failed to mention the sales number of other Samsung mobile products. By contrast this same analyst talked up the possibility of a cheaper iPhone and a proposed trade-in program from Apple. Guys the cheaper iPhone and trade-in program are not here and might never actually make it, this is not a reason to talk up a stock… well that is; it is not a reason unless you own some yourself.

To put it bluntly: Apple sales are falling for all devices, there is little enthusiasm heading into WWDC and in the meantime Samsung is the leading seller of Android based smartphones and tablets. Right now many in the technical press are starting to put together lists of features they wish Apple would copy from Android, not a list of expected features or exciting new possibilities. This trend has not been lost on Apple as they have ramped up their spin machine and reach out to some of the usual suspects in the press. Over the weekend a large number of article sprang up defending Apple for their eBook pricing, their tax policies and of course talking up the “new” iPhone and what to expect at WWDC.

Of particular interest were the defensive articles about Apple’s eBook trial. They range from the merely boring to the kind of article that makes you scratch your head and wonder what the author was talking about. The focus appears to be on the Most Favored Nation clause in Apple’s contract with five publishers. This was signed before Apple launched the iPad 2 and the iBooks store. Now MFNs are not illegal (although they are borderline unethical) and no one is trying to claim they are, not even the DoJ (despite what some of the articles are claiming). The importance of the MFN is that it established a price guide for Apple and the five publishers and gave Apple the upper hand. Apple negotiated this with the five in separate negotiations, but they did hit to the each that there were deals pending across the board. Apple also acted as the mediator to help these publishers establish a new pricing structure which was very different from the market standard. It does not matter that Apple was new to the market, it does not matter that Amazon had the majority of market share. Apple colluded with publishing companies to artificially set prices higher than the market standard. They used their dominant position in other areas of the market (iTunes, App Store Etc.) to convince all parties that the consumers would be willing to pay the increased prices; you really cannot spin that one into anything other than what it is.

Apple is going to have a bad year and no PR campaign is going to help them. They have to pull back to their core and truly develop a new and interesting product. From all accounts the next iPhone will not be much of an improvement and might even be smaller with a smaller font. If this is the case then Apple is going in the wrong direction as other companies are responding to consumer demand for larger and higher resolution screens. Unless Apple can pull a magic rabbit out of their hat at WWDC then they are only going to slip further. The days when Apple can get a standing ovation for brining older features to their flagship products are long gone as consumers have many other options. In fact, they might have too many options which could be one of the issues as a whole.

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Read 2255 times Last modified on Monday, 10 June 2013 11:48

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