A two hour Keynote by Apple at WWDC 14,... and no new hardware. To some this was a big disappointment. Wall Street reacted (as they always do) by sending AAPL stock down on Monday, but on Tuesday they had reconsidered and sent Apple’s stock to another 52-week high. Along with Wall Street others had eagerly anticipated at least a new iPhone or were hoping for something else, something big — like a new category product (iWatch or a new form-factor Apple TV). But a new hardware announcement did not happen, and there are some good reasons why.
1. Apple Knows
Apple is very good at understanding its audience. A majority of those in attendance at WWDC 14 were software developers — not hardware developers. Matter of fact, Apple in a sense discourages the later. They want to be the hardware manufacturer that uses all the software. Now that doesn’t mean there isn’t room for 3rd party hardware manufacturers in the Apple eco-system; it’s just that hardware providers aren’t the main focus. Therefore Apple spent time on software development with a myriad of new tools and even announced a new programming language, Swift. While the development tools were presented during the last quarter of the Keynote, these are the things that got the audience in attendance really, really excited — especially as the developers discover the details as WWDC continues this week.
2. Tim’s Special Events Steady As You Go Approach
|Year||WWDC||Special Event||Special Event|
Under Tim Cook, the schedule of Apple’s Special Events has shifted from being random occurrence into a more predictable pattern as seen in the table above.
It is interesting to note that it is during these Special Events where Apple likes announces new hardware.
- September 2012: iPhone 5
- October 2012: iPad mini
- September 2013: iPhone 5s, iPhone 5c
- October 2013: iPad mini with retina display, Mac Pro
If Apple is to follow the same schedule for 2014, save your excitement concerning new hardware announcements for the ninth and tenth month of this year.
3. Two Year Contract Cycle
Apple knows most people purchase new iPhones every two years. This is due to the contracts and payment plans (in the U.S.) that amortize the actual phone cost over 18-24 months. When the amortization is complete, it doesn’t make any sense not to buy a new phone. Plus after two years, battery life starts waning, wear and tear have taken their toll, plus there is a very cool new iPhone available — just waiting to be purchased.
When launching a new product it is very important to see a steep climb in the demand curve immediately. It is bad business practice to launch a product and then have demand climb to its peak 3-6 months later. Why? Because a lot can happen in 3-6 months that the manufacturer can not control. Competitors can react by adjusting advertising and pricing, bad PR spin stating the latest widget is a dud, etc. —all which can negatively effect sales.
Therefore by Apple waiting until September 2014 to launch a new iPhone, Apple ensures demand will be strong, and immediate because many who purchased an iPhone 5 in September 2012, are finished with their contracts and will be ready to buy again.
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