Apple Killing the Airport Extreme - A Fatal Miscalculation?

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Is the sun setting on the Golden Age of Apple?
Apple is famous for their secrecy.

We don't KNOW their long-term strategy. 
Or even their short-term strategy, most of the time. 

However, all of the recent data points, rumors, and trends point toward one direction: 

Apple intends to drop a number of product lines and "focus on its core competencies" - primarily notebook computers and iOS devices.  

At the MacBook Pro Keynote, we hoped for a 5K Cinema Display. 

We were introduced to new "preferred partner" monitors from LG, instead. 

We hoped for new Mac Minis, Airport routers, even an Alexa/Google Home-style active speaker device.

We got none of that. 

And now, rumors that Apple may be killing the Mac Mini, and ditching the Airport line altogether. 

While the accessory market may be low-margin and low-revenue, Apple cannot afford to walk away from the ecosystem it has created. 

In fact, doing so may be a historic blunder - one we'll talk about for years. 

Accessories Are a Low-Revenue, Low-Margin Business 

Apple makes millions of dollars in revenue on sales of monitors and routers. 

Now, objectively, that's a LOT of money. But those revenue numbers barely move the needle at a giant money-making machine like Apple.

The Mac business in total is only about 12% of Apple's revenue. 
"Other Products" (which also includes Apple Watch) is around 5%. 

Displays and routers are, by definition, only a small fraction of one of those two categories. 

(iPhones are more than 60% of revenue, and iPads another ~10%.)

And, those ancillary business can be problematic for Apple's ROI.  

While those businesses are profitable, they probably don't have great margins. Wall Street is always watching Apple's revenues, and more importantly, their margins. 

It must be tempting to improve Apple's operating margin by doing less work. 

Reducing The Number of Product Lines

Secondly, Apple may believe that trying to develop so many accessory lines causes them to lose focus on their core competency: making the greatest computers (and more importantly, the greatest smartphones) in the world. 

When he returned to Apple, Steve Jobs famously cut the number of Mac models from "dozens" to "four". 

Apple's product line had gotten ridiculously fragmented, with various "Performa" and "LC" lines, with incomprehensible letter/number model codes, often dependent upon the specific retailer. 

This was reduced to, essentially, the "iMac", the "MacBook", and the "Mac Pro".  

This was the correct course of action, and should still be emulated. Apple should never reach the point of consumer confusion it had reached in the 1990s. 

Yes - keep the number of Macs on the market low: The iMac, the Mac Mini, and the Mac Pro for the desktop  - the MacBook, MacBook Air (for now), and the MacBook Pro for notebooks.

But keep selling accessories. Even the lean-and-mean early-2000s Apple kept selling Apple-branded monitors and routers.  

Because every Apple-branded device in a user's ecosystem increased the odds that they'd buy another. 

The Halo Effect

By the end of the 1990s, there weren't a lot of Macs out there, period. 

I could be called an Apple fan, and my last Mac was an LCIII, purchased in 1994.  
It was so awful that it couldn't run the MacPaint software it shipped with, in full screen. 

Windows PCs were offering a better experience, for less money. 

BUT.... like many of you, when iTunes for Windows shipped in October 2003, I purchased an iPod. 

And that was the foot in the door. 

Almost immediately, we started acquiring more Apple products. 

A second iPod, and a third. 

We moved from Motorola RAZR flip phones to the iPhone 3G. 

We moved to an Airport Express as our primary router, and then an Airport Extreme - and added 2 more Airport Expresses to AirPlay our music library. 

We got the first-gen AppleTV, and then the 2nd, 3rd, and 4th gen. 

When we needed a new PC, there was really only one choice - a unibody aluminum iMac. 

It's why I have an Apple Watch. 

And when my wife needed a new laptop, it would have been ridiculous to go outside the Apple ecosystem - on Day 1, her new MacBook could access our music libraries, our iCloud Photo library, and used her AppleID for sign-in. 

It was a turnkey operation. 

From 2003 through this year, every new Apple purchase seemed to unlock some latent functionality in our previous purchases - and the home office was suddenly covered in Apple logos. 

In short, the more Apple products we acquired, the more likely we were to acquire more Apple products. 

From "Preferring Apple" to "Exclusively Apple"

Gradually, and then suddenly, our buying habits changed. 

We went from "shopping for the most innovative third-party devices", to "buying exclusively Apple products", to "actively NOT buying products from competing companies - even if we wanted them - because what if Apple made something along those lines later?" 

That's why we don't have an Amazon Alexa or Google Home.... what if Apple makes a "Siri Home"?

It's why we haven't gone all-in with Works With Nest....what if Apple gets moving on HomeKit? 

I'm not alone in this mindset. 

Apple has lucked into an army of consumers who not only prefer to buy their products, but who will wait to buy ANY tech until it is 100% certain that NO Apple-branded product will be forthcoming. 

Breaking the Halo

But... if Apple announces that the Airport router line is being retired.... I'm going to buy a Google WiFi or Eero mesh wifi system. 

And, we'll probably buy an Alexa or Google Home speaker system. 

If there are no Apple Cinema Displays on the market... the MacBook user won't be looking at an Apple logo in the home office anymore. 

And just like that, the Halo Effect will start to dissipate. 

As we sit here today, in 2016, I can't even conceive of a future in which I'd own an Android phone. 

But, if we have a Google Home, and a ton of Works With Nest home automation accessories... and a Google Pixel offers (say) geofencing capabilities that can't be replicated with the iPhone... well, anything is possible. 

For a more typical consumer with less of a pro-Apple bias... I think it's more than possible. 

Apple's device ecosystem is more than a suite of disparate product lines - the ecosystem is an interconnected product in and of itself. 

If Apple chooses to let third parties become the standard-bearers for any aspect of that ecosystem, than its "product" is diminished. 

The Apple ecosystem is eroded with every product category that goes third-party. 

And I'm not sure how to stop that slide, once it starts. 

A consumer who is forced to go outside of the Apple ecosystem for his router and monitor will be less likely to stay within the ecosystem when his PC needs to be upgraded.

Especially where, hypothetically, Apple hasn't updated his Mac Mini in over two years.  

And customers who move away from Macs can be wooed away from their iPhones, too. 

Ultimately, Apple will lose the iPhone customers "on the margins" - those customers who love their Apple devices, but who are willing to chase after a cheaper, more powerful product - the way we all moved to Windows PCs in the '90s. 

So What Should Apple Do?

Double Down. 

Apple has made noises about branching into new, exciting product lines - but they always seem to employ half-measures. 

Release a new Airport Mesh. It will be a massive success, and will spur sales of Macs, and then iPhones. 

Release an Apple-branded 5K Cinema Display. It's absolutely true that it's just an expensive, pretty aluminum-and-glass shell around the same LG LED. 

That does not matter. It's an Apple Logo directly below your user's eyeline, 100% of the time. 

Release a line of Apple-Branded HomeKit Devices. 

It's almost 2017, and HomeKit has yet to see a single unique, compelling home automation product. 

Third-Party partners have, so far, failed to capture the public imagination. 

For instance, Lutron's Caseta 1) requires a hub, and 2) uses remarkably ugly switches. And it's the best of the bunch!

The iDevices plugs - and, if they're ever released, the Dimmer Switches - are exactly what we've been waiting for... a completely hub-free, beautiful rocker switch which can be automated using Home. 

I'm going to buy a TON of them. If they're ever released. 

iDevices' delays in getting the Switch to market (and lack of updates) has gone from "expected" to "a little worrisome".   

Apple should do everything in their power to help iDevices get the Switch to market - up to and including acquiring the company. 

A line of first-party Apple HomeKit devices would be exactly what the HomeKit ecosystem needs to get off the ground - and a reasonable user base might encourage some of HomeKit's "partners" to get moving on their own devices.  

What Apple CANNOT do is to cede more and more of their ecosystem to third-party hardware manufacturers. 

To do so is to give up. 

It means giving up control over the quality of those devices. 
It means giving up control of the INDUSTRIAL DESIGN of those devices. 
It means giving up mindshare, as various other kit manufacturers' logos invade your ecosystem. 

It means giving up. And Apple simply can't afford that. 

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