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17 Apr 2015

What Would Tim (Cook) Do?

I was chatting with a friend who has a PhD in Artificial Intelligence when the topic of cloud technology came up.

He made a pretty strong case that current cloud technology has reached a bottleneck, being mainly used for storage and web-based applications with limited technicality.

He predicted that the “next big thing” would be when companies starting to unleash true computing and processing power in the cloud, by offering things like cloud-based operating systems and latency-free full versions of sophisticated software.

This prediction could only spark one thing in my sales-and-marketing attuned brain: would this lead to an evolution or revolution in how people engage with and purchase technology?

And so I started to think WWTD – “What Would Tim (Cook) Do”?

We know that Apple CEO Tim Cook is a sales executive through and through, as opposed to the tech innovator and marketing whiz that was Steve Jobs.

Despite not having the same charisma as Jobs (but let’s face it, does anyone?), Cook’s sales strategies, no matter how cheesy some might have seemed, have boosted Apple to become the most cashed-up company in history.

Although Cook’s achievements are often overlooked compared to Jobs’ saviour-like approach to tech, I’d argue that Apple’s choice of Jobs’ successor was one of the best decisions the company has ever made, and by far the best way to carry on Jobs’ legacy.

Given my prediction that “Cloud Technology 2.0” is coming, and lightning strikes and I suddenly become Tim Cook – a la Ryan Reynolds and Jason Bateman’s characters in “The Change Up” – I’d introduce the following:

Offer Cloud-Based iOS and Mac OS on a subscription basis
Launch an initiative to recycle iOS devices
Resell older versions of iOS devices
Of course this would represent a major change of direction for Apple, given that their modus operandi has long been that the hardware and software are bundled.

They traditionally improve both the hardware – the Mac computer, iPod, iPad or iPhone – and the software that comes installed, making the purchase of the latest and greatest product more attractive.

But all indications are that those quantum leaps that make each new version of each product seem so much better than the last are getting harder and harder to make, suggesting that unless they can launch compelling new products (and I’m yet to be convinced the iWatch is one), hardware sales in existing, saturated markets will slow.

Of course having just made $US18 billion in the quarter to December, at the same time as shipping their one billionth iOS device, it’s clear that Apple is having no issue tapping into new markets, most notably the still rapidly expanding Chinese consumer economy.

(How mind boggling is it that they sell nine iPhones every second!?)

Putting emerging markets aside for this discussion, let’s focus on their most established (and best documented) market, the United States.

According to a CNBC survey completed three years ago, at that stage more than half of all American households owned at least one Apple product and of those with at least one, they averaged more than three devices.

That means if you averaged it out across America, despite nearly half of the households not owning an Apple product, every household owned 1.6. That’s right, there were more than one-and-a-half Apple products per household, with 25% of those surveyed planning to buy (another) one in the ensuing 12 months.

Given the Apple product releases since early 2012, and the loyalty of Apple users (referred to by Roy Morgan Research as the ‘multiplier effect’), it’s pretty safe to say those numbers have trended up since that survey was done.

Regardless, as I inhabit Tim Cook’s body, I believe that Apple should stop playing the hardware game. Sure, keep developing and releasing new versions of the iPhone, iPad and various Macs, but stop relying on people buying a new one if they already have one.

Back in my Alex Lau body, I still use the iPad2 I bought in 2011. For a 4 year-old in tech it is still performing some pretty powerful word-based tasks – I love it for what it is and have no incentive to get a new iPad anytime soon.

Although it came with iOS 4, iOS 8 is available, which shows that this approach leads to greater longevity of devices and – at least in some cases – getting the latest version of the software isn’t enough reason for users to buy new hardware.

Of course right now Apple doesn’t charge for the iOS – not since the release of iOS 4 in 2010 (before that iPod Touch users had to pay for system software updates) – but they could easily start charging on a subscription basis.

This would allow them to revive older devices and then let subscribers install the latest OS from the cloud.

I believe that this would not have a significant impact on sales of new products, but would allow older ones to have a new lease on life, possibly as a hand-me-down to a younger or less-cashed-up relative or friend.

This tactic would help reposition the company to lead the next online revolution, as a hero of Cloud Technology 2.0.

The Genius Bars in Apple stores could be leveraged to assist with the upgrades and sign people up to the subscription service.

Now I’m sure the real Tim Cook can be much more savvy in his approach to boosting software sales, but the crucial point is that while a greater focus on software may come at the expense of hardware, the overall bottom line will benefit.

Before you decide that this is all Apple pie in the sky, consider this: the new Mac OS is reportedly much more hardware friendly to older devices, so the latest software is already being positioned to be more accommodating.

So I believe that the technology required for Cloud Technology 2.0 is available now, meaning it’s just a matter of time before they roll it out.

Like everything Apple has ever done, I suspect they’re just waiting for what they think is the right time to release it.

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