AP­PLE The deals with Ama­zon and Google only point to one thing: slid­ing sales, writes

Andy Pem­ber­ton

Campaign Middle East - - NEWS -

As I write this, The New York Times is re­port­ing Ap­ple was worth more than $1 tril­lion at the start of Novem­ber. To­day, it’s val­ued at $880bn.

But it is not this plunge in value of $120bn in 21 days that has led me to this re­al­i­sa­tion.

In­stead, it was the news way back on Novem­ber 9 that Ap­ple will make its prod­ucts avail­able on Ama­zon. (It used to be the case that only Ap­ple TV prod­ucts, along­side some ac­ces­sories, were avail­able on the e-com­merce be­he­moth.) That is big news. His­tor­i­cally, lux­ury prod­ucts have re­fused to al­low their prod­ucts on Ama­zon – and with good rea­son. Distri­bu­tion has a big im­pact on a cus­tomer’s at­ti­tude to a brand. That’s why Her­mès doesn’t dis­trib­ute via Wal­mart, for ex­am­ple.

But now Ap­ple, whose brand is ar­guably the ul­ti­mate ex­pres­sion of lux­ury and sta­tus, is al­low­ing its prod­ucts to be flogged on Ama­zon.

The ben­e­fit to Jeff Be­zos is clear: he wants Ama­zon to be the store that sells ev­ery­thing. And, as oth­ers have noted, when Ama­zon part­ners a brand, the re­la­tion­ship is less part­ner­ship than virus and host, with all the ben­e­fit head­ing in one di­rec­tion only – to Ama­zon.

So, for Ap­ple, the deal is not all good news. That whirring sound? That’s Steve Jobs spin­ning in his grave.

Un­der the deal with Ama­zon, Ap­ple will now get to con­trol the price of its prod­ucts in a sec­ondary mar­ket, with in­de­pen­dent re­sellers no longer able to sell Ap­ple prod­ucts on the site in the new year. (How­ever, it is worth re­mem­ber­ing that Nike tried this same gam­bit and could not stop the so-called “grey mar­ket” for its goods on Ama­zon.) Ap­ple can also ben­e­fit from Ama­zon’s huge mar­ket­ing push as Christ­mas ap­proaches.

But few would deny that this is a non-as­pi­ra­tional set­ting for Ap­ple – a brand that fa­mously took bil­lions out of broad­cast ad­ver­tis­ing and spent that money on glass tem­ples called Ap­ple stores. Ap­ple holds up to $8bn in store leases and, as one critic said, “Ap­ple stores are so great I’d like to live in one”.

The fact that Ap­ple is now selling on Ama­zon un­ques­tion­ably den­i­grates the brand and un­der­cuts its ef­forts to make iPhones a lux­ury sta­tus item that, in some cases, com­mands profit mar­gins of up to 71 per cent. Those mar­gins have al­ready slipped to 55 per cent and, if Ap­ple isn’t care­ful, that could slip even more.

A month after giv­ing Google a shel­lack­ing for its hoard­ing of in­dus­trial amounts of per­sonal data, Ap­ple’s chief ex­ec­u­tive, Tim “pri­vacy is a hu­man right” Cook, inked a deal worth $9bn a year to make Google the de­fault search en­gine on Ap­ple’s iPhones.

Why would Ap­ple do this? There can be but one rea­son: sales are slip­ping.

All the peo­ple who have bought an iPhone X have al­ready bought one; no-one would doubt that Ap­ple’s in­no­va­tive edge has been blunted (Jobs was an in­no­va­tor; Cook is a man­ager, as the late roll-out of the un­der­whelm­ing Ap­ple Watch proved); a trade war with China is tak­ing its toll; Cook has ad­mit­ted that he thinks US gov­ern­ment reg­u­la­tion of the tech sec­tor is an in­evitabil­ity.

The prob­lem for the rest of us is that as Ap­ple falls – in Septem­ber, it was the US’s first tril­lion-dol­lar com­pany – so does the stock mar­ket. The New York Times re­ports that the re­cent tum­ble in tech stocks has pushed ma­jor stock mar­ket in­dices into nega­tive ter­ri­tory, “leav­ing in­vestors cling­ing to a gain of less than 1 per cent for the year”.

Don’t get me wrong; I am sad for Ap­ple. It turned it­self from a stylish but not too suc­cess­ful com­puter com­pany into a re­tailer’s dream: a lux­ury brand with mass-mar­ket sales. That is a stag­ger­ing achieve­ment.

But the signs are clear. It’s past high noon for this once un­stop­pable com­pany. Ap­ple has, as US crit­ics have al­ready stated, jumped the shark. Andy Pem­ber­ton is di­rec­tor at Furthr

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