Did Apple Just Stumble?

The Jobs/Cook Strategy & Implications

Patrick Meyer Oct 9, 2011

Apple has been a rocket ship, from the June 2007 launch thru to Summer 2012. Led by Steve Jobs and now Tim Cook, Apple has used amazing product and smart release timing and marketing to ip the mobile industry on its ear. Yes, Googles Android is blazing the way in 2012 also, yet it is doing it with 30+ Android brands (Motorola, Samsung, HTC, LG, etc.) and 75+ SKUs. Yet the Cupertino based juggernaut has only 3 SKUs (iPhone, iPad, iPod Touch) and they represent the #1 most aspired set of devices on the planet (when carrier plan and price are removed). With the Jobs vision and 4 year plan now going into place, did Apple stumble with its September 2011 release of iOS5? The press and the nancial community wanted the iPhone5 and a continued Apple vs Android frenzy and they were totally disappointed. They thought Apple holds a launch event and it introduces iOS5 and nothing else? The simple answer: No, not even close! Here is the inside scoop as I call it in my two soon to be released books (Steve Jobs & The World of Mobile and Apps: The Inside Scoop) The Starting Point: Jobs Vision: Apples focus is on a superior, game-changing User Experience (UE): The last company on the planet to rush to market with good not great product is Apple. The rest of the smartphone players do the feature/function dance among themselves. Yet Jobs always comes forward with the total USER focused experience and clear life changing benets. Jobs nal chapter and legacy is the iPhone5 and the product pipeline thru 2015. So an impromptu shift in plans to launch an incrementalized iPhone OS would not happen. Here is why?

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Apple CEO Tim Cook now has two objectives: deliver the continued marketplace and nancial performance momentum, and 2) continue to bring amazing product (ie. the 4 year pipeline that Jobs/Apple already has underway). His priorities: 1. Apple Penetration Strategy: The #1 most in-demand product now has to be turned into even broader based sales. As Google Android is making substantial gains, Apple must take their proven value geared approach (ie. used on iPod to decimate the Sony Walkman) and apply it with iPhone. The iPhone OS4 (aka the iPhone4) is already depreciated down as it has delivered substantial volume in the last year. So look for Apple to get to lower price points and their carriers will create value based packages globally. They will use a combo of this phone (below) with the prior OS (iOS4) and the new OS (iOS5)

2. Holiday 2011: First Cook (above) has to get past Jobs passing and then focus the company and the World on Apple Holiday 2011. The 4th quarter should generate massive expansion numbers for iPhone 4/1OS5. There is an unprecedented, pre-ship sign-up of the iOS5 of 200,000 alone. Look for a big iPhone/iPad holiday retail period. And no surprise, given the Apple Summer earnings report that crushed expectations, there will be intense, head to head review of Android vs Apple vs RIM vs Microsoft Windows 7, etc. Overall 2012: Cook will continue with the same Jobs objective, to be the most desired and most protable Brand where it competes. For this to continue, it is about delivering the Jobs pipeline and then sequencing of: expansion with iOS4 phone with iOS5 software; also lower price point iOS4 phones with 1OS4 software. Expand carriers early year. Then enter with iPad 3 and iPhone 5 in total UE form in the rst 3-4 months. Then drive it full year. 3. The iPad 3 in March: Many on Apples senior team believe the iPad is going to ultimately be the long term juggernaut. No one is on the horizon challenging them, yet that us to be conrmed again in Holiday 2011. This Summer, 19 out of 20 tablets were iPad. And it was clear, consumers want iPads not tablets (iPad 2 below):

iPad HD or iPad 3 are on the horizon. I believe IPad HD comes for holiday 2011. iPad 3 comes in March 2012, to cycle on massive numbers in 2011 in the same period (iPad2 was launched March 2011). Mobile Strategy & Implications Page 2

4. iPhone 5 Total UE Offering: This will be a game changer. Look for it with a Jan or February announcement. This will come with the full offering: new form factor design, iOS5, iCloud, NFC reader and then the NFC enhanced Apple world. The total UE will be the focus...not just the phone but the next generation iTunes and iCloud ecosystems (enhanced with NFC deeper engagement and activation feeding the Apple/iTunes linked e.wallet). What would this be? My belief is that Jobs was not a lover of the IOS4 phone design. I have seen bootleg pics of a sleeker, shaped to the hand, larger screen iPhone. This will be coupled with the evolving iOS5 software and will be dazzling. Add in a total iCloud, iTunes and NFC enhanced eco-system and you have an Apple marketplace game changer. See iPhone 5 below:

5. Apple NFC Roll-out: Cook will come with NFC when the timing and offering is right with near eld communication functionality. Their priority will be to undercut the early Android NFC activity thru a total, well thought out Apple NFC User Experience. There will be at least 5+ Android/NFC (Google Wallet) smartphone brands in the marketplace by the 1st quarter. Brand/status: Motorola/now; Samsung/now; HTC/now; Blackberry/now; Nokia/1st quarter; Windows 7/1st or 2nd quarter; LG/now. This is Googles #1 priority (Android with NFC) and they are trying to beat the the other e.wallet providers (Isis, Amazon.com, etc.) and also Apple, RIM, Windows 7, etc. to the marketplace. Importantly, there is no/low consumer awareness and demand at present; and initial awareness build needs to take place. See e.wallets below (Google, Isis, Microsoft)

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Note: Apple wont come with the singular function of an e.wallet. They will bring a total NFC integrated approach. This includes iTunes linked system with the option to turn on your Apple NFC with a click (no credit card entry) , via your iTunes credit card on le. Apple NFC will come in their advertising (print, transit, all) at retail (Apple stores will come to life) and conceivably Apple packaging (touch & reveal video), etc. This will also include an Apple NFC SDK kit for developers to build their apps with NFC linkage (including iTunes/ App store integration). Note: One added piece dropped into the iOS5 operating system by Steve Jobs that reects his vision of the future: Voice-to-Interaction/Transaction. From a noted NFC source: Apple's Voice-Control feature/app entitled Siri is a nice addition and only the tip of the iceberg of what we will begin to see regarding voice interface and the mobile phone. With Siri, for example, one can ask everything from the weather to dictionary terms and receive answers from the phone. Cool, yes; but the real point-to-watch is how voice interface will expand business transaction. I believe Jobs was setting up the total iPhone5 User Experience to come: NFC and voice interaction to enable total commerce solutions in 2012 (thru Apple or iTunes related e.wallet).

6. Thinaire...An Important Component for Android/Google & iPhone5 e.wallet. The marketers and consumers are going to want more than e.wallet function...looking for total engagement and activation that happens separate from the transaction activity. Thinaire is the emerging leader in NFC with marketing/media/product/ retail etc. system. This companys patented, end-to-end solutions also are the complement for all the the smartphone players coming: (Google, Apple, Microsoft, RIM, etc. ) and also the e.wallets entering (Isis, Amazon.com, Paypal, American Express, etc).

The Thinaire leadership partners ( select 20 leaders from Fortune 500, mega-agency, media partners, causes), their tools and 4th quarter pilots, all set-up a broad based 2012 roll-out, starting in the rst quarter. The fractional adoption rates for NFC now will ramp up as carriers deliver the major brand smartphones with NFC. Google media, PR and roll-out support will assure a rising prole as

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Google takes it mainstream. Then in comes Apple with their iPhone 5 with full NFC integration in the rst Quarter. Thinaire then brings the initial mega-brands, causes and retailers that interact, on-Thinaire, with the millions of phones with NFC software (estimated to be 40% of smartphone users by Sept. 2012). ----------------------------------------------------------------------------Marketer Implications: --Mobile is not a media channel, it is a business building component. Build this into your 2012/2013 plans and link it to all marketing activity and particularly social and retail. At minimum, have a Mobile/Social Roadmap that links emerging tech solutions coming to the marketplace with your core strategies. --Deck up NFC pilot and roll-out activity and budget for the next 16 months. --Assure your retail/e.commerce direction has emerging mobile and NFC/Thinaire solutions built into your retail and customer tech efforts. --Plan for dynamic content formats and new live video that can be running thru these new platforms and NFC enhanced pipes and channels --Lastly, recruit/hire the tech savvy, young adults and emerging/recent graduates to raise your social/mobile/app skill sets and to educate the balance of your organization. I hope this viewpoint is helpful. Let me know if you have questions or I can assist in any way. Patrick Meyer 646-620-6618 patrickfmeyer@me.com www.patrickmeyer.com

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