The Curious Incident of Apple and the iPhone 5c pre-orders

Sep 18, 2013

Apple has never been a company to hide its light under a bushel or be backward in coming forward. Indeed its is infamous for trumpeting its successes from the rooftops and, in the past, we have all been stunned by the stentorian bellowing announcing the 'pre-order' sales figures for successive versions of the iPhone. But not this time around. The silence surrounding the new 'low-cost' iPhone 5c is deafening and a likely indication that demand for the smartphone is well below what Cupertino was expecting.

The pre-order period started last Friday, September 13, (yes it was Friday the 13th), and the device itself (together with the determinedly expensive iPhone 5s) goes on sale this Friday (September 20). What is interesting is how uncharacteristically quiet Apple has been since last Friday. Indeed, it is the first time since 2009 and the launch of the iPhone3GS that Apple has failed to provide any data about pre-sales - and the silence speaks volumes.

Last year Apple was bombarding the media with the news that it had two million pre-orders for the iPhone 5 within 24 hours of the device being announced.

Key to Apple's unusual reticence this time could well be that, despite the Cupertino hype machine being cranked into overdrive, the Chinese have not been as bowled over by an "unapologetically plastic" and really quite expensive iPhone (especially in what is still a developing market), as Apple would have liked and would have us all believe. In the US an unsubsidised 16GBN iPhone 5c costs US$550 but analysts had been expecting the plastic model to come in around a hundred bucks cheaper.

So, what can we conclude from this? Well, perhaps that Apple has turned against the opportunity to capture market share in favour of maintaining margins and it has been using the good old Mobius media loop one more time to ensure maximum publicity for what is, after all, not an innovative new product but an updated iteration of an old one.

The late Steve Jobs might have been an arrogant bully but, by George, he was also an innovator par excellence. Never mind the initial and early successes with the Apple Mac, just look at his late run with the iPod, the iPhone and the iPad. He changed the world with them.

And since his death? True innovation has stalled. The company is focused on the tweaking and refinement of existing products and the maximisation of profits. That is what most other players have always done, but it's something Apple never did - or never used to do.

The change is there for anyone to see. Apple has cut back on research and development. It used to devote some 8 per cent of revenues to R&D, now it is closer to 3 per cent. Meanwhile the likes of Microsoft continues to plough 10 per cent of sale revenues into researching the next big thing. Meanwhile Apple spends more and more on marketing the last big thing.

The latest rumour is that the next big announcement from Apple CEO Tim Cook will be an update of the iMac! For goodness sake!

Apple used to make most of its devices in the US. Now it doesn't and this money-saving outsourcing to more than 150 outside companies could well be having an effect on the company. It must be difficult for current US employees to be the super-keen 24/7 evangelists committed to a noble cause in the way their predecessors used to be when the physical manifestations of said noble cause are being manufactured on the other side of the world. Today Apple is another retail company concentrating on driving up revenues and profits by outsourcing much of its operation to low wage countries.

And, then, to top it all off, what are we to make of the fact that Apple has instituted a massive share buy-back programme? In every other case of every other technology company that has gone down this road it has signaled a slow down, paucity of imagination, a loss of originality and an evolution inr to a more timid creature in thrall to the financial markets and the dreaded analysts rather than an innovative, engineering-led iconoclast with an undentable self-belief and an "up yours" attitude to the Wall Street suits.

"Is there any point to which you would wish to draw my attention?"

"To the curious incident of the iPhone 5c pre-order announcement."

"There was no iPhone 5c pre-order announcement."

"That was the curious incident," remarked Sherlock Holmes.

(Pace Sir Arthur Conan Doyle)

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