I have heard a number of people express the opinion recently that Apple has changed the way that it announces products. This comes from the fact that Apple recently pre-announced two products, months in advance before you could even order them. The two products were the AppleTV and the iPhone. This has set the expectation for a number of people that they might learn about the next iPod or the next iMac in a similar pre-release fashion. This post is intended to discourage that expectation.
Let’s back up a bit and look at what this from Apple’s point of view. In general when Apple, or some other hardware company, releases a new product they are going through a product transition. So when they announce a new iPod they are trying to maximize how much money they make. A product transition has some risks for the company.
If they announce a product too soon and the product sounds very good then people may choose to stop buying the current product and wait for the new product. This is called the Osborne Effect after Osborne Computer Corporation which pre-announced a series of new products in 1983. The company went out of business shortly there after and the most common story has been that their sales dried up when they announced these new machines. (Whether this actually caused Osborne to go out of business is not universally accepted in retrospect, no one seems to argue that this was helpful to the company).
If a company still has old units in its warehouse when it ships the new product, these products will have to be sold for less money (or perhaps not sold at all). But, if the company guesses wrong how many of the old product it will sell in this transition and runs out of units in the warehouse then it may lose sales to a competitor. Combine this with a slip in the new product and you get the kind of scenario that can keep executives awake at night.
So why did Apple decide to pre-announce not one, but two products last year? The main reason would seem to be that they were not going through a product transition. They did not have a TV box when they pre-announced the AppleTV nor a cell phone when they pre-announced the iPhone. Why does this make a difference? The big difference here is that customers may in fact not buy some product that they were planning on buying and wait for the Apple product, but in this case it was not an Apple product. So with the iPhone, for example, what Apple wanted was for people to decide not to by that new BlackBerry, Blackjack, Razr, etc but to wait for the iPhone. What Apple did was create F.U.D. (Fear, Uncertainty and Doubt) about their competitor’s products. They did not need people to pre-order the iPhone so much as they wanted them to at least wonder whether they should wait and see. FUD is a very useful marketing tool. If you don’t have something sell, marketeers are trying to at least get you to wait before buying a competing product. Their hope, which worked in the case of the iPhone, is that if you wait long enough they will have a product you will want to buy.
So, will Apple pre-announce the next iMac. That is unlikely. But if they get into yet another consumer product business then it is very likely that they would pre-release that product.