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Friday, 14 September 2012

New Apple iPhone 5 gets an indifferent reception after its presentation. Did the magic of Steve Jobs indeed vanish from Apple, leaving ‘just another brand’ behind?

Over the last ten years Apple (AAPL), the Cupertino, California-based electronics company, has been the brand with the most devoted, almost religiously inspired followers: people that worshipped the design and marketing genius of Steve Jobs and treasured their iPads, iPods and iPhones like it were family jewels.

People also, that were willing to pay more than $700 for a smartphone without contract and $500 for a tablet-computer that generally did the same as a $400 smartphone and a $300 tablet from competitors like HTC, Acer and Samsung. It seemed that Apple had invented the ‘goose with the golden eggs’.

However, already in one of my first blogs Steve Jobs and the ‘cult of personality’ from January 18, 2012, I warned for the dangerous side-effects of the strong dependency from Apple on Steve Jobs:

You could conclude that Steve Jobs and Apple Inc. are both victims of the Cult of Personality: Apple without Jobs is just another electronics firm with fierce competition in all markets where they operate, but with Jobs it is a company with divine status and an unbeatable track record.

And on Thursday, October 6, 2011 I wrote immediately after Steve Jobs passed away:

I’m convinced that the brand will survive this terrible blow. The drop of the exchange rate of 3% yesterday seems to point out that the investors also keep their trust in the brand.

But still the brand will never be the same without its founding father. And the products might have lost a little bit of their uniqueness and charisma, now their creator is not around anymore. Apple will become a brand a little bit more ordinary.

It might be coincidence, but the presentation of the desirously anticipated iPhone 5 on September 12, 2012 was somewhat of a disappointment, to say the least. The iPhone 5, the first new iPhone after the death of Steve Jobs, got an indifferent, not to say disappointed reaction from the professional critics. The Financial Times wrote upon it:

Apple has launched its most important new product since the death of co-founder Steve Jobs with the unveiling of a thinner and lighter iPhone that the tech group hopes will trigger a new wave of sales as demand for its predecessor flags.

The iPhone 5 builds on the legacy of Mr Jobs rather than opening a new chapter in Apple’s long history of innovation.

The iPhone 5 trades heavily on Apple’s powerhouse branding and customer loyalty to its App Store and iTunes services, while its availability in more than 100 countries before the end of the year is likely to guarantee a blockbuster final quarter’s sales.
The hardware specifications of the iPhone 5 are largely in line with what industry experts had expected, and match, rather than exceed, those offered by rivals such as Samsung’s Galaxy SIII, which runs Google’s Android software and has sold 20m units since its launch in the spring.

Yet Mr Cook stressed the value of Apple’s integrated hardware and software, highlighting improvements in the iPhone’s maps and photography features, and the way the device works with other Apple products and services, including an improved iTunes and iPod line-up.

“What places Apple way out in front of the competition is how they work so well together,” Mr Cook said. Almost a year after the death of Mr Jobs, Mr Cook said Apple’s employees “are doing the best work of their lives”.

But analysts said Apple had not succeeded in providing the “one more thing” that some had hoped for. “The surprise was that there was no surprise,” said Adam Leach, analyst at Ovum. “It is an incremental product upgrade, which is showing how mature the product is.”

Although the critical reception has been moderate, I still expect the iPhone 5 to be an immediate sales monster that will probably bring a very good Christmas season for Apple. Apple has wealthly and extremely loyal customers that want to be seen with the latest products from this powerhouse brand. What could go wrong, you would ask?!

Nevertheless, it seems that the true magic in Cupertino has gone. Just like I already predicted in 2011, ‘Apple has become a brand a little bit more ordinary’.

The deadliest remark on the new iPhone 5 was that of Adam Leach: “the surprise was that there was no surprise” (see second red quote). Tim Cook’s desperately optimistic words “What places Apple way out in front of the competition is how they work so well together[…]" (see first red quote), suddenly seem nothing more than cheap marketing babble.

Does this mean that the iPhone 5 is “just another smartphone” and Apple “just another brand”? In a sense, yes. People, to start with the critics, expected a miracle from the new Apple iPhone, but received a beautiful and probably very well-built smartphone with a number of new features. But a miracle?! No way, sir.

I expect the aura of magic to slowly disappear from Apple in the coming years. Tim Cook seems definitely not a magician like Steve Jobs was. The good news is that the brand will survive, without a doubt. The bad news could be that the shareholders might have to accept a lower future stock rate for their $669 Apple shares.

This article reflects my personal opinions and should not be treated as an investment advice!

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