The first of GAFA to take a hit

If I were to envision a future in which of the “big four” were to decline, my instinctive choice would be Apple. That is not to say that I think it is possible for any of the four to fail completely or go bankrupt, but moreso speaking of their prominence. It is Apple’s influence that I predict will decline from its current dominance, similarly to how Microsoft and Blackberry’s brand presence has lost its visibility and popularity.

At the end of December 2017, it was confirmed that Apple purposefully slows down its older models of iPhones.  Apple’s purpose for slowing down iPhones was because the batteries of older devices simply could not keep up with the updates to the latest operating system (iOS). To summarize, what Apple essentially did was slow down the phone to extend the phone’s useful lifespan. If they did not do so, the older models would not run out of battery much quicker. What was once just speculation, is now official.

But what Apple did wrong was make the mistake of not being open and honest about their policy. This news sparked disappointment, outrage, and distrust from Apple’s customers. It became a collective wakeup call for Apple’s extremely loyal fanbase since there is nothing they can say to defend Apple in this case. Apple essentially made their customers out to be the fools the whole time, making them think that it was not the battery that had to be replaced but the entire device. Ultimately, Apple consciously made this decision to drive the sales of its latest models, and deceived their customers to thinking they need to upgrade their device.

However, it is not only customer loyalty backlash that Apple faces. Apple is now faced with over 26 lawsuits over slowing down their older models.  One of the most notable is from France, where a criminal lawsuit is filed against Apple. France being a country where planned obsolescence is against French law. These lawsuits negatively affect or disrupt Apple’s business operations because of the potential compensatory damages or class action lawsuits that could set Apple on the decline. I recognize that all the bad press that Apple is garnering is also going influence consumers to sway away from Apple, and no longer making Apple their go-to brand for the latest in hardware.

Update #1: I do recognize that Apple has very deep pockets, with over $250 billion in foreign banks, I want to reiterate that I do not think that Apple will fail solely because of  the  several worldwide class-action lawsuits against them. I also do not think that it’s so easy to say that only because of how wealthy a company is, that they are outside of litigation being a threat to their company.

Overall, it is the larger implication that Apple misled their customers about their iPhones. Therefore, causing customer backlash and disbelief in their product. Already, there is news reporting that Apple’s efforts to gain back their customer loyalty by slashing the price of replacement batteries is also garnering backlash. Additionally, the iPhone generates almost 70% of its revenue in comparison to all of their other products, so I also recognize that this is a signal of Apple’s potential decline from their prominence in comparison to other GAFA companies who do not have such backlash against them. Apple’s stocks are reported to have declined 6% in two weeks, and iPhones reportedly may have lost $10.29 billion in revenue.

Apple has made a huge mistake, with potential major consequences. It is the first major backlash out of the “big four,” that those other companies can learn from so they do not make the same mistakes as Apple. Out of this is where I see consumer choices and the underlying conditions starting to change. Apple will lose its loyal consumers, and those consumers consider other options. Especially now that their newer models have a high price tag (iPhone 8 starting at at $929 USD, and iPhone X starting at $1319), it’s becoming less affordable to stay with the iPhone smartphones.

Edited: Paragraph moved

Blackberry was once considered one of the top smartphone brands in the world, but fell due to it’s the consistent service outage problems for BlackBerry Messenger and not being able to stay competitive in the market. Similarly, I think that Apple’s current problems parallel Blackberry’s decline: customer dissatisfaction, and a gradual decline in their sales is a hit that Apple may not be able to recover from to stay on top.

Apple’s old models will keep being slowed down too, making their “backlist” of models obsolete. Competitors like Xiaomi, OnePlus Huawei are fast growing smartphone brands, and more affordable than iPhones. Overall, what I predict coming out of this are consumers making better, smarter, and more informed choices when purchasing their next upgrade and diverging away from Apple and starting to consider other brands.

Update #2: I have asked many solely Apple users, who swear by their products (their choice of laptop is a Macbook, smartphone is the iPhone, etc.), and their easy answer is that each product is compatible with one another and conveniently synced across all devices. I am not going to attempt to argue against this point, as it is surely a mark of Apple’s success that I will not devalue for their customers. However, I also think that there are many ways which Apple limits or holds back their technological features with each product in such ways that it does not make sense to buy an overpriced Apple product when another comparable device is cheaper, and has the same specifications or better.  For example, iMac desktops, and Macbooks still do not have touchscreens when all other laptop brands have had it as a feature for years now. (Just looking at a Best Buy flyer will tell me this.) They have the iPad which is touchscreen, so they have the touch-screen technology but still choose not to move that to their desktop and laptop product. Apple products are also regarded as an industry norm for professional artists. If Apple were to release an iMac with touch screen features, similar to the Microsoft Surface Studio released a couple years ago, it would have the potential to breathe new life into their products. But, still they choose not to. To align myself with the argument I in my last paragraph, out of the companies of GAFA, Apple’s customers will start to realize other brands as an option. 

 

 

 

Innovate, or die on the vine: the decline of Apple?

The aphorism “nothing lasts forever” may seem naive when talking about the seemingly ubiquitous reach and influence of the companies Google, Apple, Facebook or Amazon, increasingly lumped together into the monolith GAFA. But empires have been known to rise and fall. Viral epidemics have been seen to burn up and eventually burn out. And so too, rationally, at least one of these giants will decline. For better or for worse, I’d put my money on Apple (or, rather, not put money on it) going down first.

The main differentiating factor from GOOG, AMZN and FB is that Apple is primarily a product-based company: one whose relevance and worth comes from consumer demand. It’s indisputable that Apple products have revolutionized the device market and society’s interaction with technology (most notably with the release of the iPhone in 2007), but the challenge in today’s consumer market is to continually innovate with the next better, game-changing product. Apple’s innovation has markedly not made the same world-shaking moves since its “visionary” founder Steve Jobs passed away in 2011. Frequent re-releases of the iPhone and MacBook, marketed as upgrades, have included changes that aren’t so much innovative as unnecessary and inconvenient (the removal of seemingly every port, on every product, for example).  On the latest, the iPhoneX “is” its OLED screen– which is, in Apple’s own words, “similar to Samsung phones.” 

With a thousand-dollar price tag, and an OLED screen not just similar but actually manufactured by Samsung, is the iPhone’s OS enough to keep users engaged and loyal to the iPhone? Analysts believe that iPhoneX sales have been slower than expected since its release Fall 2017.  True, Apple’s stock recovered after a dip in December and now is almost as high as it’s ever beenbut if the company continues on its trajectory of improvements for improvement’s sake, consumers will lose faith in the product, especially if there are many other less expensive and equally innovative devices coming out of Asia, Europe or Google. 

It’s no surprise that most commercial tech products are designed and built with a measure of planned obsolescence in mind: the competitive landscape means that companies’ priority is to sell more products more often, not one great product that will last decades. However, when legislative bodies start to push back against product flaws designed for financial gain, Apple’s credibility and consumer trust will again falter. Planned obsolescence can not be a sustainable business model. Shrinking mineral resources will mean that constantly “upgraded” models will increase beyond reasonable consumer prices; the consumer will seek the products they believe will give them the best mileage for their money, and the last few years of iPhone and MacBook models have shown Apple to have an unsatisfactory track record on this front. 

With the competition in tech products fierce, it makes sense that Apple has been putting its energy into other avenues, notably research and development for self-driving cars. However, critics suspect that investments into an Apple smartcar have been scaled back to focusing on the smart automation, the technology under the hood– a subtle but not insignificant signal that Apple may not be the innovation driver it once was. 

Altogether, as long as Apple relies on consumer trust and interest as its revenue stream while continuing its current trajectory, it will not sustain its place among the tech quadrumvirate. There is too much strong competition and growing consumer dissatisfaction to assume that Apple will always stay on top.

GAFA isn’t going anywhere

I would like to preface my post by proclaiming that I do not think any of the “big four” will decline. Perhaps once upon a time this was a possibility, but by now they are so entrenched in society that they will never deflate. Although they compete with each other, GAFA is a starfish: there are many arms, but if one is cleaved from the body, it will eventually grow back. Google, Amazon, Facebook, and Apple are entwined and in many ways they depend heavily on one another.

Even though I do not believe GAFA is going anywhere,  I would like to speculate on what would happen if one of its members shrivels up. Let’s go back to high school physics class and recall what the Law of Conservation of Energy says: “energy can neither be created nor destroyed; rather, it can only be transformed from one form to another” (Wikipedia 2018). If we lose one starfish arm of GAFA, it will not die. Google, Amazon, Facebook, and Apple each have enough capital (physical, economical, geographical, social, etc.) that it has to go somewhere. My prediction is that if one member dies, its clout would be bought or otherwise absorbed somewhere else. I assume that it would be immediately snatched up by the one or more of the remaining members (strengthening them even more) or by one of the many companies watching from the bushes, just waiting for one of big guys to falter so something new can swoop in; take over; and profit, profit, profit.

Again, although I doubt it will happen, I still want to hypothesize on how the wheels of a GAFA decline might be put into motion. Privacy becoming more important to us is my biggest guess, although it still seems quite unlikely. As we saw in our class discussion, the majority of us aren’t too worried about what happens with our personal information gathered by big corporations. Even though our perspectives on this topic are shifting to be more complacent, there are obviously still people who oppose the blind signing away of our privacy rights as we are persuaded to do with websites such as Facebook. In 2012, “the Supreme Court of Canada [gave] the go-ahead to a class-action lawsuit against Facebook over privacy rights” (Fine 2017). If the government decides to get involved with how these websites prey on our privacy, we may see their demise, although it isn’t easy for the government to get involved in the first place. In Emerging Challenges in Privacy Law: Comparative Perspectives, the editors tell us

the core principles of data privacy law, which are aimed at limiting the collection and processing of personal data (including across national borders), are incompatible with the ‘open’ logic of the Internet. These tensions are especially apparent in Europe, where data protection is regarded as a fundamental right. It is therefore unsurprising that the current EU reform process, which is generally intended to strengthen EU data privacy law, has exposed the structural challenges applying the data privacy paradigm to the Internet, especially in relation to the definition of ‘personal data’ and the potential extraterritorial application of EU law (Witzleb, Lindsay, Paterson, and Rodrick 2014).

If we all decide that our privacy is more important than GAFA members allow for, I can see a potential uprising on the horizon as more and more people balk at what are currently typical privacy agreements. However, an uprising of this sort would have to be just that, an entire uprising, and with the attitude towards our online privacy leaning more to indifference, I don’t see anything radical happening anytime soon.


Further Reading/Articles Referenced

“Conservation of energy.” Wikipedia. January 24, 2018. Accessed January 25, 2018. https://en.wikipedia.org/wiki/Conservation_of_energy.

Fine, Sean. “Supreme Court gives thumbs-up to privacy lawsuit against Facebook.” The Globe and Mail. June 23, 2017. Accessed January 25, 2018. https://www.theglobeandmail.com/news/national/supreme-court-gives-thumbs-up-to-privacy-lawsuit-against-facebook/article35444477/.

Ryan, Doug. “The Fall of the Titans: Why GAFA is Not Here to Stay.” The Huffington Post. July 20, 2017. Accessed January 25, 2018. https://www.huffingtonpost.com/entry/the-fall-of-the-titans-why-gafa-is-not-here-to-stay_us_59711ae6e4b0545a5c30fead.

Witzleb, Normann, David Lindsay, Moira Paterson, and Sharon Rodrick, eds. 2014. Emerging Challenges in Privacy Law: Comparative Perspectives. Cambridge Intellectual Property and Information Law. Cambridge: Cambridge University Press. Accessed January 25, 2018. doi:10.1017/CBO9781107300491.

Apple: The First to Fall?

After much deliberation and moderate amounts of research, I have selected Apple as the first to fall.

Compared to the other three tech giants (Google, Amazon, and Facebook), Apple, while still exceptionally innovative, is not as ahead of the curve as they used to be. Once known for boundary-pushing products consumers didn’t know they needed, they now maintain the status quo by releasing new iPhones and Macs every year. Compared to the other major tech companies, they are much more stagnant.

Apple is valued at $869bn and was founded in 1976 (a full 18 years before Amazon, valued at $566bn), and so their early starter position has been of benefit to them, notably in terms of value of their company (the richest in the world) and in consumer loyalty. So while they have some advantages that will sustain them if business begins to falter, I believe that they are still very susceptible to changes brought about by the more innovative competition and changing consumer behaviours.

The Competition
Unlike Amazon (the e-commerce company), Google (the knowledge internet company), and Facebook (the social internet company), Apple does not have a monopoly on the smartphone or computer industry. Phone brands, such as Samsung and Nexus, or laptop brands, such as Lenovo and Dell, are catching up to Apple in terms of product quality and still have a significant share of the markets (while Apple has stuck to their corner of the market doing what they do best). With Steve Jobs at the helm, Apple was didn’t just make the best products, they made products no one had ever seen before. In recent years, it could be argued that they are no longer the visionary company they once were. Instead, they make small tweaks to their products to make them even more exclusive to the Apple brand, such as different jacks for chargers and headphones.

Meanwhile, Google, Amazon, and Facebook are doing everything they can to stay at the forefront of innovation. Google has all sorts of projects going on, from self-driving cars to artificial intelligence. Amazon plans on piloting cashier-less stores and drone home delivery. And Facebook buys up the competition—including the very popular Instagram and WhatsApp companies. Instagram is more popular than the original Facebook platform with Gen Z, and WhatsApp is popular in countries outside of North America. By acquiring the competition, Facebook is not only eliminating the competition but also capitalizing on multiple growing markets.

And similarly, Amazon is also slowly encroaching on Apple’s products. As Scott Galloway said in an article about how he expects all of the four companies will disappear within 50 years, “The most innovative tech hardware of 2016, it wasn’t the Apple Watch or it wasn’t the Apple Pods, it was the Amazon Echo. If you look at where they are competing against Apple in voice, Siri versus Alexa, Alexa is putting a serious beat on Siri.”

The Customers
Younger generations, namely Gen Z and Millennials, are known for valuing personalized experiences over products. Amazon, Google, and Facebook offer exceptionally personalized services, and so long as there is not a dramatic change in consumer values, there is a good chance they will win out over Apple. Their products offer a portal to the personalized services the other companies offer, but are not personalized in themselves.

As much as Apple has cultivated a very loyal customer base (who is growing older), they have done so through their consistently reliable products—not their exceptional knowledge of their customers (rather, they tell people what they want and need). Additionally, younger generations are more price sensitive, as they struggle to balance the increased cost of living alongside jobs with little security. If there is a cheap, comparable, and unique product on the market, it will not be hard to sell to Gen Z and the Millennials (who now make up 50% of the population).

Apple is no longer doing what they do best, nor are they innovating or catering to their customers. In today’s cutthroat tech industry, there is only so long they can rely on their bank account and their loyal customers before they begin to fall.

Nosy Crow: Lessons Learned From Children’s Book Apps

Nosy Crow has some of the best book apps on the Apple App Store today and they have continued to improve upon their past successes. They have successfully translated some of their picture books into apps. They have also published a line of books exclusively for the iPad that won a multitude of awards for their interactivity and innovative apps. Their Little Red Riding Hood by Nosy Crow app alone has won App Store’s Best Apps of 2013, Parents’ Choice Gold Award, Children’s Technology Review Editor’s Choice Award, and was on The Observer’s 50 Best Apps of 2013 list. But what can other publishers, even non-children’s publishers, learn from this company’s success with book apps? Electronic books are a new and evolving form of reading. Their final form is still unknown. Book apps offer a freedom for creativity and innovation that many of the other electronic book platforms do not allow. Apps allow for room to explore the content with added features to enhance the reading while remaining in a format that is widely available to and trusted by buyers. All publishers can learn from book app creators like Nosy Crow to innovate and test the boundaries of digital books.

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