Apple Now Creates Markets Before It Even Enters Them

Apple-iwatch-Render-5

I’ve written a lot about Apple’s ability to create new markets, which may be among its chief contributions to the world.

In several cases, from media players to multi-touch phones to tablets, others in the industry have tried to get a market going without success.Then Apple came along with a bold, killer information appliance and not only dominated the market, but created it.

I’ve notice a new trend lately: Now markets are being created based substantially on nothing more than the expectation that Apple will enter it with a killer product.

For example, Acer, AGENT, Androidly, Cookoo, Dell, EmoPulse, Foxconn, GEAK, Google, I’m Watch, Intel, Kreyos, LG, Martian, Metawatch, Microsoft, Pebble, Qualcomm, Rearden Technology, Samsung, Sonostar, Sony, Toshiba and Vachen are all in, will be in or will probably be in the smartwatch market, which has struggled for years to get off the ground as a mainstream category.

Why the sudden embrace by so many major companies? I think the reason is that everyone expects Apple to enter it, and by doing so create it. You’ll notice that the majority of press about smartwatches is about a rumored “iWatch” from Apple — a phantom product that Apple hasn’t announced or even discussed significantly in public.

It’s telling that a Google search for Apple iWatch (which has not been announced and does not exist) brings back more search results than Sony Smartwatch (which has existed for a long time and is on its second version). Such is the nature of Apple’s reputation.

For expensive items, the expectation that Apple will enter a market slows slows sales down because consumers hold off on buying until they find out what Apple is going to do. For example, Smart TV sales are probably artificially suppressed by the belief that Apple will announce an iTV some time in the next year or two.

In other cases, the demand Apple creates may be driving sales for competitive products. For example, I believe Apple created both the demand and the market for multi-touch tablets with the iPad. They were first to create widespread demand for retina displays with the iPhone. And they helped Android competitors drive demand for the 7-inch tablet with the iPad Mini.

In the minds of consumers, these mostly Apple-generated expectations and desires culminated in a very widespread demand for a Retina-quality iPad Mini, which many believe would be the perfect tablet and the one they really want. And I think that, to some degree, is sending sales of Google’s recently announced Nexus 7 tablet through the roof. (Android fans will scoff at this notion, but I personally know several people who were intending to wait for a Retina iPad mini who jumped ship and bought a Nexus 7).

A similar phenomenon may take place with the upcoming Sony Smartwatch 2, if it’s a better product than the first version. The same goes for other smartwatches that ship before Apple announces the assumed iWatch.

The ability of Apple to create markets before they enter them is a function, by the way, of three phenomena:

1. Apple’s great reputation. We saw this with the iPad. Before anyone had even seen it, people were already lining up to buy it. People expected Apple to ship a solid, elegant, beautiful device because of Apple’s previous products, and Apple delivered on that expectation.

2. The impossibility of keeping secrets. If Apple had it their way, nobody would be talking about the iWatch and iTV. But it’s impossible to build anything at Apple scale without involving numerous partners all over the world. At some point, people are going to leak and speculate, triggering multiple-source rumors.

3. The slow speed that Apple introduces products. I’m not sure if Apple is slower or if competitors are faster, but there’s a disparity. For example, why can Android companies ship retina-quality, 7-inch tablets so long before Apple does? Why is Sony on their second smartwatch when Apple hasn’t even hinted about a first one? Part or all of the answer may be that Apple tends to wait until technologies are fully baked before releasing its 1.0 products (see point #1). Part of the reason could be that Apple tends to ship at a vastly higher scale for 1.0 releases (see point #2). Or — worst case scenario — Apple has just gotten too slow for an accelerating industry.

Regardless, Apple is probably the only company capable of not only creating multiple markets, but creating markets before they even announce products for those markets.

I don’t see it as a problem. I still believe in this company’s ability to dominate with superior consumer products. When the iWatch, iTV and Retina iPad Mini finally ship, I predict they’ll quickly dominate the markets already in existence.

(Picture courtesy of Fuse Chicken.)

Related
  • Steven Quan

    Crappy article. Not the first from Elgan. Apple doesn’t create markets before they enter them and there’s no proof of it. I don’t know what spurred Sony to make a smart watch, but I seriously doubt it was because they heard a rumor years and years ago that Apple might enter the market.

    What people are waiting for is to see what the iWatch, iTV, etc. looks like, what it does, and how it works. Then Microsoft, Google, Samsung, and Sony can copy Apple’s form factor again and try to look innovative.

  • bcastil

    Steven tell me again when smartphones such as the iphone started appearing? Or tablets? Or oh wait then there is the personal computer, I wonder who was responsible for introducing that with a user friendly operating system.

  • nolutheon

    @Steve Quan: ‘Crappy article’ I suppose is a matter of taste. As for your assertion that “Apple doesn’t create markets and there’s no proof of it,” did you read the article? As Mike rightly pointed out, two examples are self-evident: the iPhone and iPad effectively created markets in those categories. And, in fact, showed competitors how to make competitive devices.

    As for Mike writing bad articles, as you assert (“Not the first from Elgan”), I challenge you to examine his track record over the years. His predictive articles about upcoming technology or business moves are spot on far more than they are wrong. And of all the technology writers out there, he is one of the most fair in evaluating technology free from the fanboyism seen by a lot of tech writers who’ve chosen to take a side. For my money, Mike Elgan is one of the best technology reporters and essayists out there. And, once again, I believe that he’s right about Apple in his assessment of their creating markets.

    One last item as food for thought. If other companies don’t wait for, respond, and/or mimic Apple as Mike is outlining here, then why do court documents in multiple IP cases all over the world indicate that it’s true. You really should read the deposition documents from the Samsung trial to see what Samsung thought and how they chose to respond/compete with Apple. As a law student, I’ve read the documents and the story is pretty clear: Samsung (as most other companies in all likelihood) are always looking to Apple, just as companies looked to Sony in the 80s.

  • m3th4mp

    “I’ve notice a new trend lately: Now markets are being created based substantially on nothing more than the expectation that Apple will enter it with a killer product.”

    The only expectations are coming out of recycled tech blog articles that the mainstream consumer does not entertain. Everybody’s grandma with a WordPress password has been talking about this Apple watch, keeping the dream alive. Apple has barely said a word (if any) about your wrist app wet dream. Tech blogs are creating fake markets and smaller tech companies who read them (Hello, Kickstarters!) try to make it happen. Apple has so much liquid cash, it can build any market it wants right now. This isn’t new(s).

  • jrupp873

    So, Tim Cook’s greatest achievement prior to being CEO was that he leveraged supply-chains in China to reduce manufacturing costs. Now, the same supply-chains are leaking Apple’s trade secrets to the extent that Apple is losing first-mover advantages in multiple markets. I don’t like the sound of this at all for Apple from a competitive standpoint.

  • Market_Mayhem

    For a relatively small company with such a few number of products, Apple really does take a long time to do everything. One would think that a company with Apple’s cash resources could easily lead the pack but I guess Apple takes a lot of time making decisions on a product since they’re going to rely so heavily upon it. I find it really amazing how Samsung can put out a half a dozen smartphones before Apple can put out one iPhone. I’d truly like to see how efficiently Samsung’s smartphone design team works to accomplish these feats. Samsung must have a hundred people working on these projects. I think that if Apple were to come out with one iWatch, Samsung could come out with six different smartwatch models at six different price-points within a month of Apple’s offering and sell them for a lot less than Apple can.

  • DarinSimmer

    Tough room. I think the article is great. Force the market to mature, then revolutionize it. That’s why Apple is a 21st Century business.

  • rammo123

    For a relatively small company with such a few number of products, Apple really does take a long time to do everything. One would think that a company with Apple’s cash resources could easily lead the pack but I guess Apple takes a lot of time making decisions on a product since they’re going to rely so heavily upon it. I find it really amazing how Samsung can put out a half a dozen smartphones before Apple can put out one iPhone. I’d truly like to see how efficiently Samsung’s smartphone design team works to accomplish these feats. Samsung must have a hundred people working on these projects. I think that if Apple were to come out with one iWatch, Samsung could come out with six different smartwatch models at six different price-points within a month of Apple’s offering and sell them for a lot less than Apple can.

    You make it sound like the ability to rush half-baked copies of Apple products to market is a good thing. Apple products take a long time because the engineers and designers craft and refine every element of the device before it is released. The “Apple Magic” that makes their products sell isn’t sorcery, but the result of this pure craftsmanship.

    If Samsung put the same level of effort and attention to detail into their devices they would be vastly improved.

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Mike ElganMike Elgan writes about technology and culture for a wide variety of publications. Follow Mike on Google+, Facebook and Twitter.

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