Donovan’s views: Taking care of corporate business, part I
Posted by Dennis Sellers 
Jan 21, 2008 at 4:37am
By Gaurang Donovan
The first quarter results of Apple for fiscal year 2008 will confirm results of an outstanding quarter (despite what whispers analysts and others talk of). Congratulations to Apple, Inc the entity and all of its contributing employees. Though executing at the high levels of growth and achievements it has lately, management still needs to take the same approach as the Apple TV version 2 development outlined recently in the keynote speech and ask questions of itself; that is, what are the areas to be improved upon, what are what are they overlooking and what are they missing in their corporate development.
Apple retail stores
Six international stores opened in 2007.
They were all in the United Kingdom.
Need I say anything more?
The retail store coverage doesn’t begin to reflect the importance of international sales in Apple revenues. What could their market share be if a direct retail presence existed in some of these countries markets and they made just as big a effort to repeat their successful US retail expansion through the Apple Stores model?
I believe Apple generally forfeits some lost revenue by not having Apple Stores in other countries that English is not the official language. It may also forfeit the opportunity to expand its overall market share in all of its product lines as a result too. Product exposure to consumers and product trial leading to uptake suffers as well.
The strengthening Euro, the launch of the iPhone in two European countries using the Euro and the “Vista upgrade-halo for Apple” were taking place since last January, and more retail stores in just the two of the European countries would have assisted at least in attracting more switchers taking up Apple products by their purchases.
I realize more Apple Stores located outside the US will open in 2008 but the number has to grow at a much faster pace than evidence shows. It seems that that current efforts are insufficient and management is not coping with the location and development of stores outside of the US they are perhaps limited in familiarity with. It is imperative to improve dramatically in this area and I advise assistance be sought if the expertise does not exist within Apple.
More below on Japan, Australia, France and China.
Pricing strategy: price parity no longer? Apple TV price reduction
The US dollar currency lost ground (9.5 percent to 11.5 percent) against the Euro, Yen and Australian dollar currencies.
I guess the Apple managers are relying consumers in those countries to “feel” Apple products are cheaper now as a result?
Despite the US$70 announced price reduction of the Apple TV at MacWorld for the basic model, the Apple TV remains at the same price of its introduction a year earlier at the online AppleStores for Spain, Germany and France in Europe, Australia and Hong Kong. What conclusions on pricing strategy can we draw here?
The Hong Kong dollar has been pegged to the US dollar since the mid 1980s so there is no currency depreciation in the last 20 years against the US dollar. The Apple TV stayed at the same level of its introduction and did not receive the US$70 reduction.
Conclusion: no price reductions for Apple TV version 2 internationally. Question: Why?
I also checked the latest Xserve and Mac Pro prices in the Australian AppleStore the day there were announced and the basic Xserve configuration was about $640 higher than the US Store using the exchange rate of the day of announcement and that was subtracting the retail taxes out of the comparison. International Mac users have been conditioned to expect some difference but gouging in these two products is beyond what is acceptable. I have delayed my purchase as a result as I can’t endorse the practice to this level and will just wait longer. Unlike the Apple TV, the mac Pro and Xserve in Hong Kong shows it selling at the equivalent announced US dollar price. I might have to wait until the next touchdown in Hong Kong and carry the Mac Pro back. It won’t be the first time I have done that type of thing.
iTunes Store and content
The last album by the Beatles was released in May 1970. Sir Paul McCartney had some recent public comments on the time it took the EMI management to handle some of his newer works. I am wondering if they are applying to the iTunes Store management.
Since there is not a TV Shows nor Movies sub category in the Australian iTunes Store after two years and three months of opening it, I guess they have given up ever having movies and TV shows either for purchase or rental.
The keynote speech spoke of re-thinking the Apple TV v. 1 and the need for movies rental capability. People want to rent movies, watch TV shows and sometimes buy movies/shows for their kids to play over and over without having to go over the monthly iTunes movie rental budget. It appears efforts for extending even locally produced TV shows and movies to the existing iTunes Stores have been abandoned.
Perhaps a push in an unexpected direction could assist the process.
I have often thought there is enough of a body of “good and watchable” English language Australian movie and television content that it could support a dedicated channel on a US cable carrier with 24 hours of content and probably attract enough viewers. The question would really be the pricing and not one of how many attracted viewers as no ads are involved. Since these shows were produced for the small viewing market of Australia, any chance for a crack at a large market might be welcomed by the creators here.
Apple and Steve Jobs are trying to convince US-based studios and TV channels that they can distribute digital content through the iTunes Store in the US, that viewers will pay for it and they as creators will profit from it.
Perhaps now is the time to introduce more competition for those creators as the writer’s strike cuts down on content production in the US. Extend that deal to overseas English language content producers. They can offer their productions in the US iTunes Store, get a push from Apple’s featuring them, possibly gaining a whole new audience and maybe they can also seek to repeat the distribution on the local iTunes Store as well.
Good storytelling, acting and production is not limited by national boundaries but it seems distribution deals limit the entertainment viewing experience. There is no writer’s strike “here” and plenty of good content to watch. Why can’t you buy it in the US? Why can’t I buy your productions here? So much for the well-publicize free trade deals in our viewing reality.
iTunes rental period – as a new market entrant, it is important to make a friendly entrance given the alternatives of your film rental options. I too sometimes take more than 24 hours to finish watching a movie rental as interruptions prevail to deny me a continual watching. It is not intentional but it is a pattern of life. With digital delivery there is no need to physically return the disc on a digital download as you are not denying the store from renting it out to another consumer. With some shops in the past, if you can return the disc by the close of tomorrow’s operating hours of the store, there is no extra charge. Perhaps the studios and Apple could extend the rental period to a more accommodating one that could include two evenings of viewing. What I don’t want to see by iTunes (and they will blame Apple and not the studios) is no option except another full 24 hour rental charge as one would then be forced to stay up late and finish viewing the film and wake up with less sleep the next morning feeling grumpy about the iTunes movie rental “experience.”
We’ll finish this analysis tomorrow.
(Columnist Gaurang Donovan is a “mystery man” who wishes to keep his identify secret for personal and business reasons—Dennis)
The “Macsimum MWSF 2007 Coupon Book” is available for download. You can find it here and print it as a PDF. It has discounts, special offers and promotions in conjunction with the upcoming Macworld Conference & Expo in San Francisco.
Article Information
Comment on this Article Print this Article Email this Article Digg This
Contributor
Dennis Sellers
Dennis has been a newspaper editor/reporter (seven years) and teacher (seven years). He has over 4,000 magazine, newspaper and online articles to his credit. He has also covered the Mac and tech industries for over a decade for such online publications as MacCentral, MacMinute and now MacsimumNews.
