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Apple Should Do This 1 Basic Thing to Overcome the Legacy of Steve Jobs’s Greatest Weakness

Jobs thought that market research was for dummies. But without market research Apple’s rivals have taken the lead.

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BY Peter Cohan - 09 Jan 2019

steve job's weakness

PHOTO CREDIT: Getty Images

It must have been wonderful to be Steve Jobs -- especially when he returned to Apple in 1997 after being fired by John Sculley in 1985. During his second time as Apple CEO, Jobs was able to invent new products targeting large existing markets -- MP3 players, smartphones, and tablets. Enough people liked the iPod, iPhone, and iPad that Apple did spectacularly well until his tragic death in October 2011.

But Jobs was not a perfect person. In addition to his jaw-dropping cruelty to people including his daughter Lisa -- as described in her spectacular book Small Fry -- Jobs disdained market research. Instead, he believed that he knew better than customers what they ought to want and made it his life's work to give it to them.

Jobs was right about market research -- as long as he was CEO. But since then, Apple has been run by a CEO who lacks Jobs's innovation talent. To be sure, market research will not make up for what Tim Cook lacks, but it would sure help Apple avoid the blunders that have led to its current woes.

What woes? Apple's stock has plunged 36 percent from its high and its revenues for the most recent quarter are expected to decline sharply. Since early October 2018, Apple has lost a whopping $400 billion in stock market value, according to YahooFinance.

And on January 2 Cook published a letter to investors admitting that Apple was poised to report a 5 percent drop in revenue for the quarter ending in December 2018 -- well-below what investors expected.

Cook predicted that Apple would generate $84 billion in revenue for the quarter ending December 29 -- 5 percent below the $88.3 billion in revenue Apple generated the year before, according to Morningstar.

He pinned the blame on weak iPhone sales in China. "Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance," according to Cook.

What does this have to do with Steve Jobs and his contempt for market research? If Apple had done any market research, it would have realized that its products are simply not competitive in the minds of consumers.

More specifically, consumers buy products because they perform better than competing products do on factors -- such as quality, service, and price -- that I call customer purchase criteria (CPC).

And based on two mini-case studies we'll examine below, it's pretty clear to me that Apple is losing the CPC battle for the consumer because it does not do market research.

1. Apple is not competitive in China.

Apple seems to realize that its products are over-priced. Cook noted that "iPhone upgrades were not as strong as we thought they would be." He attributed the disappointment to higher prices due to "fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements."

Apple is not competitive in China where domestic brands supply smartphones with "new features and products that take into account what Chinese users want, for a small fraction of the price while Apple has mostly failed to localize itself," according to the New York Times.

Apple clearly lost the CPC battle with Chinese rivals like Xiaomi and Huawei. Apple's product was much more expensive and instead of providing users with what they wanted -- a big screen and a dual SIM card (to save consumers money on watching videos) -- Apple made a gold version for China's show-off nouveau riche, noted the Times.

Good market research would have left Apple less vulnerable to these rivals.

2. Apple's latest versions are over-priced in the U.S.

In the U.S., typical iPhone consumers are happy to keep using their older versions.

One Ohio housewife is hanging on to her three year old iPhone 6S. As she told the New York Times, "The phone I have does just about everything I need. Why pay $800 for a new one just to be up to date? My needs aren't that complicated."

Market research would have revealed to Apple that most people just view these expensive versions as over-priced.

The reason that Jobs's disdain for market research worked was that he could innovate in ways that delighted consumers -- and that competitors could not copy.

Apple is being managed as if that were still true. As Cook wrote to investors: "We are confident and excited about our pipeline of future products and services. Apple innovates like no other company on earth, and we are not taking our foot off the gas."

It's been 12 years since Apple did that successfully -- the iPhone launched in 2007 -- and if that future had any real products, we would not still be waiting.

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