Apple Keynotes Still Matter

It didn’t take long for critics to go after Apple’s recent product event at Steve Jobs Theater. However, the backlash had a dramatically different tone this time around. Instead of focusing on the new products unveiled on stage, much of the criticism was aimed at the event itself.

The New York Times ran an opinion piece calling for the end of Apple keynotes and claiming there is no longer a place for such “pageants” in today’s polarizing world. Others took to Twitter to say how Apple’s dessert offerings suggested the company is tone deaf or to complain about members of the audience becoming too emotional while hearing Apple Watch users tell stories of how the device saved their lives.

While Apple cynicism isn’t new, the preceding opinions represent a new kind of outrage. Apple keynotes remain some of the most valuable marketing events in today’s media landscape. In addition, keynotes provide a number of intangibles that it would be difficult for Apple to communicate any other way. It is in Apple’s best interest to continue hosting keynotes and product events, especially as the company moves into the wearables era.

Odd Criticism

In an opinion piece titled, “The Last Apple Keynote (Let’s Hope),” Charlie Warzel wrote:

But what started as a Steve Jobs TED talk has become a parody — a decadent pageant of Palo Alto executives, clothed in their finest Dad Casual, reading ad copy as lead-ins for vaguely sexual jump-cut videos of brushed aluminum under nightclub lighting. The events are exhausting love letters to consumerism complete with rounds of applause from the laptop-lit faces of the tech blogging audience when executives mention that you (yes you!) can hold the future in your hands for just $24.95 per month or $599 with trade-in.

The entire event is at odds with our current moment — one in which inequality, economic precarity and populist frustration have infiltrated our politics and reshaped our relationships with once-adored tech companies. But it’s not just the tech backlash. When the world feels increasingly volatile and fragile, it feels a little obscene to gather to worship a $1,000 phone. Serving journalists pastries topped with gold leaf doesn’t do much to help either.”

My initial reaction to Warzel’s article was that it must have been some kind of manufactured outrage piece since the “pageant” he describes didn't come close to describing an actual Apple keynote. The media doesn’t “worship” Apple at these events. The rounds of applause aren’t coming from the media / press.

The following screenshot from inside Steve Jobs Theater during the recent Apple event does a good job of showing who attends Apple keynotes at Steve Jobs Theater. Contrary to what some may think, the media and press, denoted by the laptops in use, make up 55% to 60% of the audience. The rest of the crowd is comprised of Apple employees, guests, and VIPs.

Apple’s decision to serve refreshments, which did include delicious desserts, isn’t obscene. Instead, it’s a courtesy extended to guests who wouldn’t otherwise have a chance to eat anything. Many tech writers and reviewers spend up to six hours on Apple event days doing their jobs (shooting videos, taking photographs, getting hands-on time with the products, filing reports by strict deadlines).

After reading Warzel’s piece a few times, the only logical takeaway was that the Apple keynote was a victim of a deeper discontent that he holds towards Apple. Warzel sounded uncomfortable with the idea of Apple having the audacity to sell approachable luxury in a world that is apparently turning against tech companies.

Value

Not surprisingly, Warzel failed to recognize any reason why Apple keynotes still matter and are of immense value in today’s media landscape.

Apple derives three primary benefits from its keynotes:

  1. Earned Media. Apple keynotes command days of media coverage during an era when the news cycle is measured in hours. No other company is able to grab the kind of attention that Apple earns. When taking into account previews published ahead of Apple events and the various reviews in the days that follow, it is conceivable that Apple receives hundreds of millions of dollars of free press from a single keynote.

  2. Theater and Design. Apple events are productions built and designed to provide an experience to those in attendance. This is one reason why Steve Jobs Theater is so important to Apple. The event venue ends up telling guests a little bit about the people who built the products announced on stage. The typical Apple keynote audience will include representatives from various Apple partners, industry leaders, and special guests.

  3. Employee Morale Boost. No one wants the product that they have spent two or more years working on to be unveiled to the world in a press release. Instead, to have that new idea unveiled on stage at an event watched by a few million people provides an amount of satisfaction and accomplishment that goes a long way given the sacrifice that went into making that product a reality.

Any one of those items by themselves would be reason enough for Apple to continue putting on keynotes. With all three factors on display at most keynotes, there is no valid or logical reason for Apple to stop hosting these events. Holding keynotes is a smart and rational business decision for Apple.

Evolution

The Apple keynote isn’t a static entity. What used to be smaller affairs targeting technology writers and gadget reviewers have evolved into global events bringing together people from different continents and diverse backgrounds.

Although it is now difficult to believe, Apple keynotes weren’t even live-streamed as recently as a few years ago. Instead, event live blogs were the only way to find out what Apple was even announcing. Meanwhile, the recent event at Steve Jobs Theater was live-streamed on YouTube for the first time and reportedly had three million viewers.

The now iconic iPod unveiling at Apple’s Town Hall auditorium back in 2001 doesn’t look anything like the modern day Apple keynote.

Apple events used to be targeted toward tech writers and gadget reviewers who would publish the all-important “yes” or “no” decision as to whether or not a new Apple product was worthy of purchase. Walt Mossberg, the dean of gadget reviewers, symbolized this era. Things are dramatically different today. No single reviewer or publication holds enough influence to make or break a new Apple product.

The Apple keynote presentation itself has changed dramatically as well. Fifteen years ago, Apple keynotes consisted primarily of Steve Jobs going through slide after slide with a few demoes here and there. In January 2007, during the iPhone unveiling, Steve Jobs was on stage by himself for 88% of the 103-minute presentation. Much of his focus was spent on making the case for why a certain new Apple product should exist. Apple had a user base that was a fraction of its current size. Steve ended up selling more than just the product announced on stage. Steve was selling Apple.

In contrast, last week’s Apple keynote had nine different presenters, Apple employees who worked on the product being unveiled. Tim Cook, in what has become his usual role of a master of ceremonies, was on stage for approximately 14% of the time.

Leveraging Video

A few years ago, the Apple keynote was thought to be on its last legs. Thanks to the rise of social media, Apple events were expected to have trouble remaining relevant in the news cycle for longer than a few hours. In addition, it wasn’t entirely clear how Apple would handle critical product unveilings, demos, and “one more things” that had been handled by Steve.

As it turned out, the Apple keynote went on to not just maintain its influence, but to actually gain value in today’s media landscape.

What changed?

Apple bet big on video.

Apple keynotes now include a heavy reliance on video for handling many segments of the traditional presentation. Everything from showing off products for the first time to going over the product’s sales pitch is handled by video. It helps that these videos are very well done.

While Apple’s initial move to video was viewed as a way to handle the presentation role that had been given to Steve, the increased usage of videos began to serve other purposes. Videos shown during Apple events now go on to be watched and passed around on social media. In 2007, the iPhone unveiling consisted of six short videos, most of which were just clips of TV shows and movies, representing 2% of stage time. At last week’s Apple event at Steve Jobs Theater, 11 videos were shown, representing nearly 22% of stage time. Three of those videos, some of which went on to be included in ad campaigns, have a collective 55M views on YouTube.

Apple extended this bet on video to include 120-second comical recaps of its keynotes. The videos have been receiving rave reviews after each event. Such recap videos were unimaginable just a few years ago as they would have been looked at as Apple essentially telling people not to bother watching the full presentation. As it turned out, the recap videos have become a great way for Apple to bring the keynotes to life. Recap videos receive four to five times the number of views as the full keynotes. Relatively speaking, few people go back to rewatch a 100-minute Apple keynote. However, people do go back and watch a two-minute recap video of that 100-minute Apple keynote.

Improvement

Apple is in a league of its own when it comes to product unveilings. Amazon’s strategy of shipping duds and failures in an attempt to find something that people will like doesn’t support large-scale product keynotes and events.

Google has tried to get into the hardware event mindset, but the company just doesn’t seem interested in following Apple down the big keynote path. Microsoft and Samsung try to emulate Apple keynotes with both companies going heavy on the theatrical side of things. At the end of the day, keynotes from these companies just aren’t able to generate and sustain the level of buzz and interest that Apple creates.

There are two areas in which Apple can improve the keynote.

  1. Onstage demoes need to be rethought.

  2. Aim for greater secrecy.

Giving previous stage time to game or app demoes is increasingly questionable. This isn’t meant to say that we have moved past demoes altogether and Apple should simply fill the time with more videos. There is a role for demoes to play if showing something in the flesh can prove a point more effectively than a simple video can - not an easy thing to accomplish given how good Apple’s marketing videos have become. However, a balance is needed between the tangible demo and video.

It’s been a while since there has been a memorable demo at an Apple keynote. One example that jumps out at me is from 20 years ago when Phil Schiller, Apple’s SVP marketing, jumped off a 20-foot ledge.

Another example is the Steve Jobs’ hula hoop demo. In both cases, the demoes were a clever way of highlighting the “freedom” associated with Wi-Fi on an iBook.

One reason the preceding demos worked so well was that they were performed in front of a massive audience of developers. Even today, Apple’s WWDC keynotes have a different vibe than events at Steve Jobs Theater given the 5,000 developers in the audience.

With on stage demos come risks, and it is understandable that Apple would want to de-risk its keynotes as much as possible. Two years ago, a minor mishap with a Face ID demo ended up being one of the most talked about items from Apple’s event with some going so far as to say the demo failure meant the feature wasn’t ready for prime time. Such a demo failure probably wouldn’t have been made into as big of a deal ten years earlier.

Well-done demos can give keynotes a certain amount of soul. During Apple’s Services event this past March, the “demo” involving Hollywood celebrities played out well from the perspective of being in the audience. Apple had a message that it wanted to push forward - it had the ability to grab the biggest names in Hollywood for Apple TV+, and the “demo” effectively reflected that message.

As we move further into the wearables era, Apple demoes involving smart glasses could prove to be a great way of unveiling new ideas and concepts to the world. The recent string of AR demoes at Apple keynotes have left much to be desired as people simply run around empty tables or desks with iPads in hand.

The other area that can always be improved upon is secrecy. There is something about seeing or learning about a product for the first time when it is announced on stage. Google’s decision to soft unveil the Pixel 4 removes much of the oxygen from its upcoming Pixel hardware event. While it’s not easy for Apple to maintain secrecy around unannounced products, the company has seen more success on the secrecy front recently. Last week, Apple was able to surprise the world by positioning an always-on display as a key feature of the Apple Watch Series 5. The feature didn’t leak beforehand.

Products

Apple keynotes end up reminding me a lot of Apple retail stores. The success found with each item ultimately depends on the product being sold. If Apple doesn’t have compelling products that people are interested in, the keynotes used to demonstrate such products will fall flat.

While some may hold cynicism towards a trillion dollar company unveiling $1,400 Apple Watches and $1,100 iPhones in an underground theater that cost more than $100M to build, such a stance ignores the impact Apple products are having on people’s lives. Apple keynotes end up being a way for the people building these tools to tell the world why such products should exist and how they can be used to improve the lives of a billion people. There is still a role for the Apple keynote to play in today’s always-changing world.

Receive my analysis and perspective on Apple throughout the week via exclusive daily updates (2-3 stories per day, 10-12 stories per week). Available to Above Avalon members. To sign up and for more information on membership, visit the membership page.

Above Avalon Podcast Episode 154: Which iPhone Is That?

Naming iPhones is more art than science. In episode 154, Neil shares his thoughts on Apple’s iPhone naming strategy. The episode includes an oral history of iPhone nomenclature followed by a discussion of where Apple can bring iPhone naming in the future. Neil also goes over why the art of naming iPhones even matters when looking at the big picture.

To listen to episode 154, go here

The complete Above Avalon podcast episode archive is available here

Naming iPhones

Over the years, iPhone naming has had its ups and downs. There were the awkward names like iPhone 3GS and iPhone XS Max, and then there were strong industry-defining names like iPhone X. Based on the latest rumors, Apple appears to be in the early stages of moving away from an annual iPhone naming cadence altogether.

History

Most iPhones have an interesting story when it comes to nomenclature.

iPhone (2007). By going with “iPhone,” Apple relied heavily on consumers making the mental connection between a “breakthrough internet communications device” and a traditional cell phone. By relying on existing connotations, the iPhone sales pitch was made that much easier. Apple went on to use a similar naming strategy with Apple Watch.

iPhone 3G (2008). In retrospect, this may have been the most surprising iPhone name to date. Apple called the first update of its breakthrough mobile product after an industry term: 3G. The decision also spoke volumes about what drove iPhone adoption out of the gate. An iPhone with faster cellular connectivity was positioned as a key factor in customers' purchase decisions.

iPhone 3GS (2009). This is when things got weird with iPhone nomenclature. As explained by Apple’s Phil Schiller at the time, the “S” in iPhone 3GS stood for speed. The naming decision demonstrated how something that is now viewed as trivial - processor speed - was positioned as a key selling point for an early iPhone.

iPhone 4 (2010). Apple entered an iPhone naming scheme that would go on to last for years: a whole number characterized by a cosmetic redesign was followed by an “S” version the following year with more in the way of internal upgrades.

iPhone 4s (2011). An iPhone 4 with internal improvements. The “S” cycle provided Apple a few benefits. By sticking with the same overall iPhone design for more than a year, Apple was able to ramp up iPhone production quickly, and at a lower price, for “S” launches. The “S” cycle also reflected how consumers bought iPhones at the time. In the U.S., mobile carriers subsidized iPhones for $199 with the purchase of two-year contracts. The remaining price of the iPhone was recouped through higher monthly charges for data, texts, and service. This led to a two-year iPhone upgrade cycle and people choosing to either be on the whole number or “S” upgrade path.

iPhone 5 (2012). Arguably, this was the least noteworthy naming decision as Apple simply followed the existing pattern of using a whole number following the “S” model to denote a major cosmetic change. The iPhone 5 was the first iPhone to have a 4-inch screen.

iPhone 5c / 5s (2013). Apple faced its first major naming dilemma. In an effort to boost iPhone 5s sales and to maintain iPhone margins, Apple chose to replace the iPhone 5’s outer shell with lower cost colorful polycarbonate shells. Apple called this new model the iPhone 5c, and “c” presumably stood for color. Pundits ended up looking at the “c” as standing for cheap given the iPhone 5c’s lower price relative to iPhone 5s.

iPhone 6 / 6 Plus (2014). For the first time, Apple introduced two new flagship iPhones simultaneously - one with a 4.7-inch screen and the other with a 5.5-inch screen. Apple went with “Plus” for the model with the larger screen. The name worked as there was no other major difference between the two iPhone models aside from screen size (and battery life).

iPhone 6s / 6s Plus / SE (2015). This is where the iPhone “S” cycle began to lose much of its meaning from a feature and product development perspective. While the market would continue to look at “S” years as refinement years, Apple began to shift iPhone development so that every iPhone update contained a handful of useful new technologies and features. As for iPhone SE, Apple introduced a new model containing components from a few prior flagship iPhones in March 2016 with “SE” meaning special edition.

iPhone 7 / 7 Plus (2016). As was the year of iPhone 5, this was another uneventful year for iPhone naming. Apple followed the logical next step in an iPhone naming scheme that had been used for the previous six years.

iPhone X / 8 / 8 Plus (2017). iPhone naming seemed to cross the point of no return. Apple decided to call the first iPhone lacking a front-facing home button, something that had been rumored for years, iPhone X. For iPhone 8 and 8 Plus, instead of sticking with the “S” cycle, Apple skipped ahead to the next whole number. The decision was meant to have the new models be perceived as more advanced than what may have been implied with an “S” nomenclature.

iPhone XS / XS Max / XR (2018). Last year’s flagships were the most confusing from an iPhone naming perspective. Apple followed three general guidelines:

  1. Apple reverted back to the “S” playbook to denote the model after a major redesign (iPhone X). Instead of this decision implying the return of the “S” cycle, in my view, Apple simply wanted to stick with the X branding for one more year.

  2. “Max” was used to distinguish the larger iPhone model from its smaller XS sibling.

  3. “R” was used for the lower cost alternative to the two iPhone XS flagships. According to Schiller, the “R” didn’t stand for anything, although some thought it stood for the model having a Retina display while “S” stood for Super Retina. Schiller mentioned that the letters R and S are used in the auto space to highlight special models.

The 2019 Lineup

Given Apple’s decision to go with the iPhone X naming scheme in 2017 and 2018, there aren’t too many logical paths that iPhone naming could follow unless Apple wants to try something completely new. There are two obvious choices:

  • iPhone XI (continue using roman numerals). Apple would say it’s pronounced “iPhone eleven” but everyone would call it “iPhone ex I.” While roman numerals could work if Apple were selling one flagship model, the fact that Apple has three flagships in the line would produce some confusion. Names like XI Max, XI Pro, or XIR aren’t as strong as the powerful iPhone X.

  • iPhone 11. This is a much simpler naming track. It makes more sense for Apple to use 11 than 12 as the implication is that the new iPhones are follow-ups to the iPhone X series. However, there is precedent for Apple to skip whole numbers as seen with the lack of iPhone 2 and iPhone 9.

The latest rumors point to Apple unveiling three new iPhones next week:

  • iPhone 11 Pro Max (successor to iPhone XS Max)

  • iPhone 11 Pro (successor to iPhone XS)

  • iPhone 11 (successor to iPhone XR)

The “Pro” would signal Apple wanting to draw attention to the differentiation between the two high-end flagship models and the lowest cost flagship. Apple has typically liked to use “Pro” to reflect models with greater specifications and capability as seen with iPad Pro, MacBook Pro, iMac Pro, and Mac Pro. In order to distinguish between the two “Pro” models, Apple would continue to use “Max” to denote the model with the largest screen.

Observations

Naming iPhones is more art than science. For example, the “R” in iPhone XR likely was chosen simply because it looked and sounded better than other letters. Meanwhile, Apple’s decision to go with “X” was likely heavily based on marketing, both in terms of marking the iPhone’s tenth anniversary and the fact that it looks cool and powerful from a branding perspective.

However, there is no question that iPhone nomenclature has been losing some of its usefulness and utility. Consumers are now routinely mispronouncing or misidentifying iPhone names and it’s easy to see why: iPhone XS Max doesn't exactly roll off one’s tongue. A similar issue will be seen if Apple ends up going with “iPhone 11 Pro Max.” People are increasingly saying “the new iPhone” or “the biggest one” when referring to the latest flagships.

It’s difficult to say if these changes have had a negative impact on iPhone sales. The iPhone business is being impacted by a number of developments including a longer upgrade cycle as people become content with what they currently have. It’s doubtful that a particular letter or number in the name would entice users to upgrade en masse to a certain iPhone model.

Future Considerations

Based on my calculations regarding the iPhone upgrade cycle, the next marginal iPhone buyer will likely hold on to his or her iPhone for a little over four years before upgrading. As the iPhone upgrade cycle continues to extend, the case for coming up with new iPhone naming every year declines.

There are subtle clues that suggest we may be approaching the point when Apple will do away with the annual iPhone naming cadence altogether. This wouldn’t mean that Apple would just go with “iPhone.” Instead, Apple would still need a way to distinguish iPhone models with different sizes and capabilities. In such a case, one likely option would be:

  • iPhone Pro (iPhones containing the most capability)

  • iPhone (the middle of the road option for the masses)

  • iPhone mini (the iPhone containing the smallest screen and fewest features)

One possibility is that Apple will expand the iPhone line to include more than three flagship models. For example, an updated iPhone SE would be a prime candidate for “iPhone mini.” Meanwhile, a larger model in the $699 to $799 range would make sense for “iPhone” while Apple would have more than one “Pro” model at the high end of the line. This naming strategy would be similar to how Apple currently names iPads: two “Pro” models, iPad mini, and iPad. (The iPad Air is positioned as a lower-cost iPad Pro.)

As for timing, 2021 may be a good bet for the earliest point when Apple would use this iPhone nomenclature. Consider the following:

  1. By 2021, “Pro” will have likely been used in iPhone nomenclature for two years.

  2. The latest rumors have Apple unveiling both a flagship iPhone with a smaller screen and an updated iPhone SE in 2020. These models would make it easier for Apple to use a simpler iPhone naming scheme. As it stands now, it would be difficult for Apple to position the middle-priced $999 model as just “iPhone.” Instead, the iPhone XR has been the best-selling model.

  3. In the event that Apple plans on sticking with whole numbers for iPhone naming, the 2021 iPhones would potentially be called iPhone 13 - one of the more superstitious numbers in existence. Apple could use that occasion as a way of moving past numbers and letters altogether.

Receive my analysis and perspective on Apple throughout the week via exclusive daily updates (2-3 stories per day, 10-12 stories per week). Available to Above Avalon members. To sign up and for more information on membership, visit the membership page.

Above Avalon Podcast Episode 153: The Bundler of Bundles

In episode 153, Neil discusses the strategy behind Apple TV+. Additional topics include the Apple TV app, five fundamental issues plaguing the paid video streaming market, Netflix’s business model, and what success in paid video streaming looks like for Apple.

To listen to episode 153, go here

The complete Above Avalon podcast episode archive is available here