The Battle for Relevance: Apple and U2 Fight To Regain Their Mojo

The legendary band U2 came on stage at the end of the Apple Extravaganza that introduced the world to a pair of iPhone 6 models (big and freaking huge I think are the product names), Apple Pay and the Apple Watch. The band’s had a rough go of it recently. Their last release, No Line On The Horizon, disappointed both fans and critics and it seemed like they might have lost their relevance.

This is a band that has defied age and found ways to make themselves new again and again. Had time finally caught up with the band? Potentially, and it frightened them. Bono was quoted saying U2 didn’t want to be a heritage act. Being contemporary was much more important, he said. But it wasn’t easy. “To be relevant is a lot harder than to be successful,” he told the Hollywood Reporter. So making money isn’t the way the band judges itself. After all, U2’s latest tour broke records in terms of attendance and revenue, yet they still craved relevancy.

So the band made changes. They holed up with super producer Danger Mouse and poured themselves into the making of the new record. That was almost two years ago.

Why the delay?

The band took time to get the recording right, bringing in One Republic’s Mr. Everything Ryan Tedder and Adele’s producer Paul Epworth to assist in the making of the record.

Just like U2, Apple also has had a great run of success, but it appears they’ve been losing their relevancy. Tim Cook’s company is the richest in the world, and has shown the ability to deliver amazing profits. But that’s not the way he is judged. Tim still stands in the shadow of Steve Jobs as most of the company’s products since he took over the company are just iterations (are they truly improvements?)of the same product line. Meanwhile the world is catching up, and some may argue, passing the company (Samsung anyone?).

Tim’s plan to recapture the Apple magic has centered on the wrist. The company has invested heavily and spent a great deal of time incubating its watch. It has waited until Tim deemed the product was right and a mass number of people would want to wear it before they revealed it to the world. So in the wake of finally seeing the watch on Tim’s arm, how did the company do?

Hip To Be Square

Square is the new round for Apple.
Square is the new round for Apple.

The first visceral reaction to seeing the square-ish watch was one of disappointment. The form factor wasn’t all that different than artist mockups that have been circulating. Jony Ive had reportedly been bragging about how Swiss watchmakers were “fucked” because of the Apple Watch design, but it seems a bit bulky and much more masculine than expected. I have written that one of the musts for the company was to appeal to the female consumer, and the Apple Watch looks like it may overwhelm a woman’s wrist and underwhelm their demand for the timepiece.

What went wrong? Apple certainly made extremely complex technology back in the day. But when it came to showing that to the world, Jobs with without equal. He could find a way to find the few things a product did really well that connected with people. He innately understood desire and insisted the products showcased those. Complexity was hidden underneath the hood in favor of those few items that Steve told us were ‘awesome.’

In stark contrast we were shown the apps screen on the Apple Watch, which looked like a jumble of tiny icons and reeked of “technology” rather than useful features. Later in the demo, VP of Software Kevin Lynch geeked out on a watch face that placed exactly where we were in the solar system. Excuse me for saying this, but that’s fucking stupid. I know there are people who really care about such things, but do you really need that strapped to your wrist? To highlight that in a demo really tells me the company is having a hard time understanding why people need—or even want– the product.

Later, Tim came back on stage and kept referring to the Apple Watch as the most intimate product the company has ever produced. At first I had a hard time understanding Tim’s emphasis on intimacy. After all it’s not really a user benefit. Unless you are talking about massage creams or sex toys, does referring to intimacy really matter?

An Intimate Affair
Most likely the intimacy of the Apple Watch has been the rallying cry within the company. It’s a code word to remind everyone that the watch has to rise to a different level of value and importance if Apple expects people to wear this device on their wrist. It’s very important to product managers—not customers.

And that’s been the fundamental difference with Apple. Before there was simplicity and elegance and now it has been replaced with overwhelming features and options. Yesterday Kevin talked about the options a user had in customizing the watch screen. He showed off different watch faces with different features and colors. That’s very cool, but certainly not something that needed to be presented. Tell me why I need the watch. Not how I can bling the watch.

With all this said, I don’t believe the Apple Watch will be a bomb. Obviously, it will have its fans. And it’s not like the presentation of the iPhone really made the product a hit. The first generation iPhone came out and people went nuts for it when they saw it in action. It became a must-have device. We’ll see when the first customers start to use it and perhaps find they can’t live without it. But a breakout hit that makes the company the envy of the industry? Not from what we saw yesterday.

A better bet might be Apple Pay, which looks like it could potentially simplify the purchase experience and disrupt mediocre services like PayPal and Square. It does require an iPhone and a battery life, though. So yes, you might need to charge before you can charge.

And what of U2? Can Bono and his mates recapture their glory? Perhaps. But giving away your album (even if you are getting paid big bucks for the privilege) to every iTunes user in the world seems like you are cheating your way to relevancy.

 

Some Of My Favorite Tweets From Yesterday’s Apple Watch Presentation

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Wearing It Well: Can Apple Turn Wearables Mainstream?

A version of this first appeared on Re/Code

By South by Southwest standards, it was early. Obscenely early. But there we were, tromping out of our hotel into the unusually foggy morning, mere hours after falling into bed, ears still ringing from a band that had sounded excruciatingly like all the others we heard for the past 12 hours.

Hugging our coffees close (no Starbucks line at 8 am during SXSW Music!), we marched down the street and queued up outside a venue. Why were we in line so early? The sports giant Nike was taking a huge step forward in the wearables industry with the release of its Nike FuelBand. And we could be some of the first people in the country to purchase one as part of its launch program; the company sold 100 per day at the festival.

We were greeted by our own personal Nike rep, who guided us into a venue that had been transformed into a glitzy FuelBand showroom. He showed us the FuelBand, and helped us set ours up. We then went out into the world to try our hand at the “quantified self” movement, where you collect metrics of everything you do in your life. Nike’s own metric, “Fuel points,” would let us measure our activity and compare it to ourselves and friends.

Get me Jonny Ive now!
Get me Jony Ive now!

Two years later, almost to the day, I recorded my last Fuel point. I had long ago stopped caring about the metric, for a variety of reasons: The band didn’t capture all my activity, it wasn’t very accurate or sensitive to movement, and it wasn’t based on anything that brought meaning to my life.

But the main reason that was my last Fuel point day was that the damn thing had stopped working. I got the dreaded “801” code, which required a trip to the Nike store for replacement. This had happened repeatedly — six times since that day in March.

That was enough for me. I left the device on my desk and never picked it up again. I found that the untracked life wasn’t much different from my tracked life. The only difference was that I didn’t have a watch, which is primarily what I had used on the band.

I wasn’t alone in giving up on the FuelBand. And I’m not just talking about customers churning like me, though my guess is that there are a lot of us. In April, Nike announced that it was discontinuing the device, firing the entire FuelBand team and focusing on “other digital initiatives.”

Even with Nike’s big failure to capture the imagination of the active world, wearable computing is still considered the next huge growth area in technology. Credit Suisse sees it growing from $5 billion in 2013 to $30 billion by 2018. IDC says that companies will sell more than 112 million devices by that year.

It may be the right time in the technology cycle for wearables, too. Sensors of all kinds are smaller, cheaper and much more accurate. Displays are smaller, and even flexible glass looks like a possibility soon. You can imagine that a device with multiple sensors could find ways to track your fitness, as well as providing location-aware features like mapping, shopping and even banking.

Not only would wearables expand a company’s device portfolio, if it sells enough of them, but these firms will have access to all kinds of big data, with enormous amounts of real-time information that could be used for everything from personal communication to advanced location-based commerce. Big, big data.

Wearing out its welcome

So far, though, companies have failed in making wearables something people want to, um, wear. Most of the products have been either for geeky early adopters of new technology, or for hobbyists who absolutely need the data, like triathletes training for an Iron Man event. Sure, there have been technical problems, as well as a couple of health scares with the devices, but the two core issues these gadgets face going mainstream are their design and the product’s value.

Maxwell
Would you believe it’s checking my heartrate?

Designs have reflected the technical bent of products. Most look more like what you’d expect in “Minority Report” than what you’ve ever seen in a high-end watch store. And the generally bulky form factor lacks appeal for women, who have been underserved by most wearables so far. While the FuelBand may have been a bit different, it’s kinda just a souped-up Livestrong bracelet. In my informal and nonscientific customer reviews of wearables, most of them aren’t something an average customer wants. And don’t get me started on Google Glass.

Outside of the design — and maybe even more core to the problem — there doesn’t seem to be much demand for the features touted by the wearables manufacturers. If you start with the standard product-manager mantra of “What problem does the product solve?” there’s not much you can pinpoint. Most wearable devices track activity, but not really uniformly or correctly. Some, but not all, track sleep. The Samsung devices combine some fitness tracking with phone connectivity, but they’re cumbersome. And ugly.

You want to attract the attention and the interest of mainstream consumers? It had better be something people really want. And no company has been better at turning technology into desire than the big one: Apple.

Apple’s wearable moment

It’s clear that Tim Cook is betting big on a suite of wearable products. Bloomberg reports that the company has more than 100 designers working on a device. They’ve hired professionals from the fashion industry, the medical industry, the fitness industry and watch brands, as well as sensor experts by the dozens. All to work on what has been described as a luxury, high-fashion wearable device that will allow customers to communicate and track their vital information, including location and health-and-fitness metrics.

This isn’t the first time that Apple is entering a field where many companies have tried and failed. There were many MP3 players before the iPod, millions of phones before the iPhone, and even tablets before the iPad. It’s an Apple specialty to create something really valuable out of others’ failures by picking the right time, and creating an ecosystem that didn’t exist before. Apple doesn’t invent as much as it perfects.

Wearables pose a bigger challenge. Instead of a single strong compelling value (think “1,000 songs in your pocket”), the iWatch looks like it will package an assortment of features. And unlike the iPhone, which replaced three devices (phone, music player and Internet portal) with a single unit, it’s unclear if the iWatch will replace anything customers already use. At its core, the main purpose of the iWatch appears to be that it will gather data and work well with the iPhone. That will have value to some, but will it be enough to drive the industry to the estimated numbers? I can’t say that it’s a slam-dunk.

Five musts for the iWatch to be “ready to wear”

So, what would it take to make the upcoming device the breakthrough hit that Tim Cook craves? Forgive the impudence, but here are a few categories that Apple must nail if they expect to build the market:

  • It must be fashion-forward. Outside of the Nike FuelBand — and, some might argue, the Misfit Shine (I wouldn’t — I think it looks like it was issued by the CIA) — most wearables are terribly designed, at least if you consider reaching a mass audience. Apple is clearly investing in talent here, but the company needs to deliver the goods on a stylish watch that men and women wouldn’t be embarrassed to wear. This isn’t like any market Apple has entered, as the watch will be compared to classic brands like Tag Heuer, Rolex and Swatch. Jony Ive had better bring his “A” game.
  • The user benefits need to be clear, concise and limited. It has to be instantly clear why you need this device and what its main purpose is. Over the past few years, Apple has gotten away from the simplicity of its marketing pitches. There has also been an annoying habit of throwing in a bunch of half-baked products (Passbook, anyone?) well before they were ready for prime time. The watch can’t have any of these issues. My product-manager adage of “How do you want users to describe your product?” applies here. It must be crystal clear.
  • It has to work. Consumers will forgive many issues. But inaccurate recording or even fine-tuning of the algorithm will drive users nuts. In retrospect, the FuelBand’s problems with activity spelled its doom. After all, if Nike couldn’t monitor activity correctly, what the hell could it do? Apple will be held to a much higher standard than Nike. So what it tracks, and the way it tracks that data, must be baked by the time it ships.
  • Apple must be very careful with the information it tracks. Let’s face it. People hate Google Glass. Part of the hatred is because the device is extraordinary dorkified (see the first “must” on this list), but there are also privacy concerns with tons of people walking around with a camera on their head. The iWatch apparently will gather quite a bit of personal and sensitive information. It goes without saying that keeping that information private and secure will be incredibly important. But it’s also paramount that assuring customers that the rules of engagement around health data in particular are clear, and will primarily benefit users.
  • It has to appeal to an influencer community. Who will lead the adoption of the product? Apple has reportedly been targeting athletes, which sounds like a page right out of Nike’s FuelBand playbook. Somehow that didn’t work for Nike, which could be blamed on product issues just as much as marketing. Making sure that the company targets the right kind of influencers will be just as important as its marketing pitch. I’m not quite sure that tapping only pro athletes will give Apple the vast appeal it seeks. Apple will need to reach into popular culture — like that Steven P. Jobs wannabe and Louis Vuitton designer Kanye West, as well as others who lead cultural trends.

The stakes are high for Apple and Tim Cook. The iWatch will be the first foray into a category outside of its core offerings since the Jobs era ended. But it remains an open question as to whether the company has the intestinal fortitude to ship the right product, or — if it doesn’t live up to the exacting standards of consumers — to cancel the project and do something else with its billions in the bank.

The Magic Numbers: How Apple Beats The Demise of Music Downloads

There are two numbers that you need to pay attention to in order to make sense of Apple’s breathtaking acquisition of Beats Electronics. Neither of them is the rumored $3.2 billion price. They are 13.3 and 800 million.

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Apple’s saint Steven P. Jobs  said customers wanted to own their music. Not anymore.

The first number is the percentage that music downloads have decreased in Q1 of this year compared with 2013. This is on the heels of a 5% decrease last year, so it’s looking like the decline is picking up speed. It’s pretty clear that the download era is waning and Apple knows this better than anyone. I’m sure the company has a phalanx of data analysts poring over projections and understand that the rate that customers buy downloads might not be in a freefall, but it could be coming quicker than anyone expects.

It’s pretty clear when it comes to the choice between buying downloads or using a streaming service, customers are beginning to choose streaming. But so far, Apple has sat out of the subscription music trend. After all, the Book of Jobs says that customers wanted to own rather than rent music.

Those days have passed. Apple needed to hedge their bets and get into streaming. But instead of building another bolt-on to iTunes as the company did with their underperforming radio service, Apple decided to speed their way to market by purchasing a hot new service that had a lot of buzz, but hadn’t scaled so much that it was prohibitively expensive. Beats is the most viable of all acquisition targets.

While music purchases may be falling, it’s still a big business for Apple. So instead of creating another option in iTunes that would potentially cannibalize download sales, why not just buy a service and keep it separate? Streaming blows up: Apple wins. Streaming doesn’t pan out, well, it will still have the iTunes store chugging along.

In The Cards

The second number refers to the 800 million iTunes accounts, most with credit cards on file.  Those credit cards are the keys to the kingdom for anyone who wants to sell something in the store. Apple charges a 30 percent premium for companies to use their in-app purchasing system, where a customer can subscribe directly from the native app.

After Beats Music’s troubled launch period didn’t produce many subscribers from the 7-day trial, company executives were calling around to see how other firms dealt with the 30 percent Apple tax (answer—you eat the $3 per customer a month).  In late April, Beats launched in-app purchase and the results were stunning. Their iOS app became the number one overall free app.

Just as important as in-app purchase is getting featured in the iTunes store. Placement in the iTunes store can make a hit out of an app and can mean hundreds of thousands of downloads. Combined with in-app purchase, the store is a kingmaker that can make or break a company. So once Apple integrates the Beats app, it wouldn’t be surprising that the app will get a permanent featured position in the store. Cha-ching.

Oh, and that $3.2 billion price tag? With Beats Electronics’ hardware business already creating significant profits, Apple’s purchase price could be covered within a couple years. So in essence the company is getting into streaming music for a song.

More Acquiring Minds

FT: Apple In Talks to Acquire Beats

Re/Code: Why Apple Is Betting Big On Beats

Om.co: On Streaming: Apple, Beats & Spotify

Apple Insider: Jimmy Iovine Set To Join Apple?