The Next Marginal Customer

Being a niche player has led Apple to much success, as resources are funneled into the most profitable and lucrative segments of a market. However, this doesn't mean that Apple isn't focused on new customer acquisition. I suspect some of Apple's recent troubles with software quality over the past two years has been related to tradeoffs created by acquiring the next marginal customer.

Apple is a growth company. Accordingly, marketing takes on a more vital role at Apple than at a mature company where user acquisition is not a primary goal. Apple relies on marketing (and design) in an attempt to appeal to the marginal customer, the next user to buy into the Apple ecosystem. This drive leads to new and exciting software features shown in retail stores and in marketing campaigns. However, because of the tight schedule Apple has adhered to, as well as the sheer volume of change taking place, features are not receiving the needed attention. In this context, core users (the ones likely to use all of these new and exciting features) feel the downside, and become increasingly vocal with their complaints, while new users largely avoid much of the frustration. This dynamic may help explain how management is insulated a bit from some of the backsplash as financial trends depict no major issues. Former early Apple employee Bruce Tognazzini similarly discussed how Apple's user interface also suffers from management's focus on new users at the determent of power users.

What's the solution? Time. Apple's approach to new customer acquisition is correct. Apple knows its next marginal customer very well. Instead, I suspect as we move past the Apple Watch launch, and the first few quarters of sales, Apple will be in a better position to address some of the recent software shortcomings. Apple would then have marketable features that new customers would enjoy, while still appealing to core users with reliable functionality. How can the two groups be satisfied with the same product or feature? Design. This is where Jony Ive's leadership and vision will need to be utilized. I hear some say, "if it just worked, it would be great," referring to Apple software, which tells me Apple is on the right track in terms of design implementation. 

For Apple, the ability to shift directions and funnel resources into a new product is one of the most misunderstood and undervalued aspects of the company. In this context, Apple Watch, and all that remains untold and misunderstood about the device, and Apple's move into personalized hardware, may play a crucial role in understanding what Apple has been planning with its unrealistic pace of development in recent years. The game may have changed, but I suspect Apple wrote the new playbook, and has been away practicing. With the company nearly ready to return, with Apple Watch in tow, the question is will early adopters show up for the game? I suspect the answer may surprise some Apple critics.