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Published On: Tue, Jan 22nd, 2013

Apple’s code of silence in times of peril

If there is one thing that Apple excels at (among so many), it is the maniacal emphasis on keeping everything in-house, under the wraps and away from the public eye.

This has defined the design aesthetics behind their products as well as the way the company functions in the public gaze.

They are past-masters in the art of building up hype and anticipation, just by keeping mum until the last moment. They are notoriously reticent, and that has added a lot to the public perception about the company in a positive way over the years. We all love a good surprise, and the late Steve Jobs and co. excelled in delivering that to us, time after time.

What goes up must come down

But now, he is no more and the giant he helped raise from the ashes of the past seems to be faltering. Q4 of 2012 and the beginning of 2013 has been rough weather for Apple, with the Apple Maps fiasco, relatively lower sales of the iPod and iPads, and a falling stock price (NASDAQ: AAPL @ 500) that has finally restored our faith in the laws of economics! No, truly, so consistent had been their rise over the last decade been that one could be forgiven for thinking that Apple was beyond market dynamics. But it is not so, and we all know that what goes up must come down, and finally it is happening in the case of the Cupertino based giant as well.

Keeping mum has its costs

And now, with the world waiting for Apple to reveal their 2012 Q4 earnings in the next couple of days, speculation and excitement is rife as usual, although the same aura doesn’t seem apparent. It is nervousness and concern that pervades at the moment, with rumor mills going into high gear about a decline in the company’s profits. That is not the end of the world for world’s most valuable company (sic), but the effect of the news on media and public perception is telling and potentially brand damaging. Silence can do wonders when the going is good and you have flawless products and ever-rising profits. But when it all starts going downhill, keeping a poker face can lead to the situation we are seeing at present.

Hype giveth, and the hype taketh away

But is all this hype and speculation really warranted at present? Let us counter that with another question: was the hype really warranted a year ago, when strong iPhone 4S sales and the big launch of iPhone 5 pushed the share prices over the 700 mark? Honestly, the answer is, it shouldn’t have been. But that is not the way the world works is it? Hype worked for them then, building an image of near invincibility and perfection. Now it is a slightly different story, that’s all.

Is it the end of the road?

Not by a long shot. Sure, the mantle for pioneering innovation that Apple carried so far may have passed on to their competition (Samsung, mostly) but that is not a bad thing necessarily. Sometimes, you need to come down to climb back up and get higher. Apple could do with some soul-searching, since one of the accusations leveled against them from the media these days is a perceived lack of innovation in their products.

In the meantime, they really need to go beyond their comfort zone in the sweet spot of costly and high-end device market. Emerging markets like India and China are the future just due to their sheer size, and Apple really needs to tap into that demographic with lower spec and more budget friendly options. Relatively small fluctuations in demand aside, Apple is still one of the most recognized brands with a very strong and loyal customer base, and that should hold them in  good stead for the foreseeable future.

 

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.

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