Please ensure Javascript is enabled for purposes of website accessibility

Apple Inc.'s Marketing Team May Be Making a Huge Mistake

By Ashraf Eassa - May 2, 2016 at 9:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After hyping up the merits of thinner and lighter devices, Apple may be planning no material industrial design changes with the iPhone 7.

Image source: Apple. 

The marketing divisions at major technology companies are often underappreciated by the general public. These teams aren't just there to try to push whatever product the engineering teams have managed to craft, but it is their jobs to figure out what customers want to buy.

Put simply, it's up to marketing to decide what the next big thing is, and it's up to the various hardware/engineering teams to turn that vision into reality.

Based on the rumors that have hit the web regarding Apple's (AAPL 1.62%) upcoming iPhone 7 series of smartphones, I am starting to wonder if the company's marketing team is in the process of making a huge mistake.

No major industrial design change?
Apple has spent years trying to convince potential customers that thinner and lighter is the way to go. In fact, take this excerpt from Apple marketing chief Phil Schiller from the iPhone 5 launch event as irrefutable evidence of this claim:

So, before we get into it, this is the monumental challenge the team had: Can you make a phone that has everything the iPhone 4s has before even talking about new features in a design that's thinner, lighter, and smaller than the previous product?

It is really easy to make a new product that's bigger; everyone does that. That's not the challenge. The challenge is to make it better and smaller.

Interestingly, although Apple was able to make the iPhone 6 series of smartphones thinner than the iPhone 5 series (though they were much larger overall), Apple actually had to increase the thickness and weight of its iPhone 6s series of devices. Presumably, these compromises were done in order to accommodate 3D Touch functionality.

Early rumors/leaks around the iPhone 7 suggested that it would be substantially thinner than the iPhone 6/6s. Ming-Chi Kuo with KGI Securities, for example, said that the iPhone 7 would be between 6.0 and 6.5 millimeters thick, a significant reduction from the 7.1 millimeters of the iPhone 6s. Recently, however, rumors have begun to circulate that the iPhone 7 series devices will have virtually identical dimensions to their iPhone 6s counterparts.

If true, iPhone sales and average selling prices could take a hit
If Apple is banking solely on internal changes to the iPhone 7, then the iDevice maker may be set to face yet another cycle of year-over-year declines. The iPhone 6s represented a significant internal update to the iPhone 6 and yet it wasn't enough to spark a significant upgrade cycle.

To make matters worse, Apple reported a slight degradation in iPhone average selling prices in the most recent quarter as a result of "very popular mid-tier and entry offerings." In other words, many iPhone buyers likely thought that the iPhone 6s series didn't offer much of value over the iPhone 6 and ultimately went with the cheaper 6.

If the iPhone 7 looks virtually identical to the iPhone 6s, and if the iPhone 6s sees a price reduction to current iPhone 6 levels once the iPhone 7 launches, Apple could see a further weakening of its product mix.

When it comes to smartphones, industrial design is critical, no doubt due to the fact that Apple has spent years hyping up its industrial design and elevating industrial designers like Jony Ive virtually to rock star status. Not changing things up here with iPhone 7 would likely be a huge mistake on Apple's part and shareholders will be the ones who ultimately pay the price.


 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$138.93 (1.62%) $2.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.