Has Apple lost touch with the needs of consumers?

15/10/08 08:09
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To most people the Apple event yesterday was a non-event. People who currently have Mac Books are not going to go out and buy a new one and a $999 price point is a tough nut to crack in this market. A growing body of statistical and anecdotal evidence suggests that demand for televisions, computers, cameras and other electronics is falling sharply — portending extra discounts for customers in coming months but a very unhappy holiday season for retailers, electronics makers and component suppliers.

MasterCard reported last week that spending on consumer electronics and home appliances dropped 13.8 percent in September compared with a year ago. That number is by far the largest recorded since MasterCard began tracking the category in 2003, and twice the largest previous monthly drop in such spending.

“September was a dramatic pullback in terms of spending on consumer electronics,” said Kamalesh Roa, director of economic research for MasterCard SpendingPulse. In particular, “people are pulling back from buying big-ticket items.” Make no mistake about it a $999 laptop is a big ticket item to most people.

The street was expecting Apple to launch a laptop at the $899 price point but Apple has a history of launching with high prices then coming down if needed to meet sales projections. Although most Apple followers have been largely immune to the economy Apple's growth has been coming from people who are switching to Mac's from Windows. That growth will indeed slow down now.

On the iPod front even former Apple executives are saying that the iPod has had a good run and now maybe nearing its decline in the product life cycle. With so many iPods out there I could see this happening but the classic marketing of tech products says that when this happens you find new uses for the product. Although the iPod is great for music it still leaves a lot to be desired when watching movies.

So what's up with Apple and where do they go from here? Well first let's be clear about something, the economic downturn happened well after Apple's product plans were finalized. It takes a long time to bring new computers to market and along with the sales and economic models there are contracts that have to agreed upon with suppliers. Given the economic downturn Apple also has to ask itself if it wants to trade market share for profit dollars? We saw what happens when companies like Dell have done that. I am sure Apple would be glad to see its share decline while they continue to rake in the money and stay extremely profitable.

But what about the new products that drive people into Apple stores saying "I want one!". Well in this economy that is going to be hard to do with ANY new product. However knowing Apple like I think I do I can assure you that in the coming years you will see new products that will knock your socks off. There is no reason to change the iMac interface as it is a great product. You'll probably see some speed bumps but I don't see any major design changes for quite awhile. I do see some new keyboards for the iMac, either LED or with built in track pads. I also think we'll eventually see the addition of Blue Ray drives as prices come down and HD DVD's increase penetration.

On the iPod front I expect Apple to merge the iPod and Mac into some sort of personal digital assistant. There currently is a gaping hole for a decent screen sized video iPod but in order to attract people to the product it has to do more than just play movies and music. I also see some possible high-end iPods entering the market with enhanced audio qualities for audiophiles. On the laptop front I believe Apple will enter the tablet PC market but rather than follow they will lead with new features, like a touch screen, that will set standards. Of course the iPhone will continue to get better and better as well.

Anyone that bets against Apple is making a huge mistake but in order to stay on top the expectations get higher and the competition more fierce. Apple has proved people wrong before and I believe they will do it again when the time is right.
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