How Apple Innovated In The Last Recession--And Why You Should Too.

Posted by: Bruce Nussbaum on November 29, 2007

Todd Walker sent me another great insight into how Apple continued to innovate in the previous recession—it launched its retail stores. Lots of folks thought it was a mistake at the time, including Business Week.

Here’s a great quote from the 2001 piece:
“The way Jobs sees it, the stores look to be a sure thing. But even if they attain a measure of success, few outsiders think new stores, no matter how well-conceived, will get Apple back on the hot-growth path. Jobs’s focus on selling just a few consumer Macs has helped boost profits, but it is keeping Apple from exploring potential new markets. And his perfectionist attention to aesthetics has resulted in beautiful but pricey products with limited appeal outside the faithful: Apple’s market share is a measly 2.8%. “Apple’s problem is it still believes the way to grow is serving caviar in a world that seems pretty content with cheese and crackers,” gripes former Chief Financial Officer Joseph Graziano.”

Wow. Good thing Jobs continued to sell caviar, right? On the other hand, do you think the iPod and iPhone are “caviar” because of price or design/innovation? The later, certainly. And the world seems content with them.

Another quote:
“Indeed, rather than taking on the retailers who ought to be its partners, Apple would do better improving how it works with them. A good step would be to end the “think secret” approach that shrouds every new-product announcement. Covert operations worked beautifully when Jobs first arrived on the scene; his charismatic stage presence and Apple’s eye-popping designs created priceless buzz. Now, retailers complain that the secrecy prevents them from doing advance advertising to hype sales and clear out inventory. “They are the most secretive company I’ve ever done business with,” says one top retailer. “They should let the news leak out, to convince the world how exciting their stuff is. That’s how everyone else does it.” Maybe it’s time Steve Jobs stopped thinking quite so differently.”

More wow here. Apple stores tend to generate as much revenue per square foot as jewelry stores—not retail stores, like Best Buy or Wal-Mart. Think about that.

In the last economic slowdown, Apple innovated its product line and its business model (stores). It poured MORE into innovation, not less.

Reader Comments

nicelogo

December 1, 2007 5:45 PM

Let the renaissance start here - again. I'm sure I speak for the thousands of design and branding minions, "Why can't our brand think like this?" As a long time Apple maven and brand design so-and-so I'm proud to be part of the what's left of the Apple cult and I'll continue to pray for Apple's quality and innovation prowess to continue under their mysterious and shiny new facade. I've never bought product at an Apple B&M store - they already own me. Welcome the masses and be thankful for the cheese and crackers that fulfill the hungry's needs and leave room for the new guy with his own brand of caviar.

hardmanb

December 18, 2007 3:15 AM

Very complimentary article for Apple and Steve Jobs.

Jobs had vision, faith and perserverance in his mission to do something different and better. He also was fortunate in his timing, which may be the result of good planning.

But all companies cannot be Apple, and all CEOs cannot be Steve Jobs. Few can, in fact. Most have to live in the "make it cheaper" and "go along with the group" mentality and culture.

We are lucky to have Apple and Jobs for the rest of us to follow and emulate, and to have their products.

philip

January 29, 2008 9:57 AM

i think with the recent walloping aapl got in this month of Jan.08 it really needs to start to think of itself as no longer a niche player. With almost 9%(is this the right %?) market share for personal computers, it has to appease its share holders as a unit shifting company. bring on small form factor (not mini form factor - these are just too freaky for the average joe) computers at a price of $450-$500 without a monitor... add the option of a monitor but at dell monitor prices (not apple monitor prices). iMac will still have it's market as a premium product.

I am an apple consumer and can spunk out prices they ask as I feel they are reasonable and value for money. however, apple was at the end of dec. 07 the largest computer manufacturer in the world by market capitilization. they need to concentrate on unit shifting, it is important the gain ground in the markets they are missing out on, the more expensive niche products have built the brand, now it is time to further reap the rewards.

GeorgeS

March 21, 2011 1:49 PM

Phillip:

Let us know when you are running a multi-billion-dollar company. Apparently, Apple's doing well, as sales of Macs have grown considerably faster than overall PC sales for several years.

The Mini's form factor isn't "freaky." A lot of people I know with WIndows PCs complain about how big their computers are, how the hot enclosures are uncomfortable to be around (except in winter!), how noisy they are, and what a pain they are to clean around, especially with the rat's nest of cables.

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About

Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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