Is the iPhone Xr a sign of fundamental problems at Apple?

Justin Daab Marketing Strategy & Planning

Product proliferation has a dark history at Apple.

Before Steve Jobs returned to Apple, the company lost $1 billion on $7 billion in revenue in fiscal 1996. A look at Apple’s product lineup at the time reveals a dizzying array of desktops, Powerbooks, Newtons, printers, servers, et al—not to mention some of the worst industrial design in the company’s history.

Apple industrial design in the mid 90’s—less Dieter Rams, more Robert Matthew Van Winkle.

1996 Apple Product Lineup

Power Macintosh 7215
Power Macintosh 8515
Performa 6290CD
Performa 6310CD
Apple Network Server 500
Apple Network Server 700/150
Power Macintosh 5400
Color StyleWriter 1500
Color StyleWriter 2500
Workgroup Server 7250
Workgroup Server 8550
Performa 5260 / 5300
Performa 5400
Power Macintosh 7600
Power Macintosh 5260
Performa 5260CD, 5270CD
Power Macintosh 7200/120 PC Compatible
Power Macintosh 8200
Performa 6320CD
Performa 5400CD, 5410CD, 5420CD
LaserWriter 12/640PS
Performa 6260CD
Power Macintosh 6300
Performa 5400/160, 5400/180 (DE)
Performa 6400/180, 6400/200, 6400/200 VEE
Power Macintosh 6400
Color LaserWriter 12/660 PS
Apple Network Server 700/200
Performa 6300CD
Performa 6360
Performa 6400
Performa 5280
Performa 6410, 6420
Performa 5430, 5440
Power Macintosh 4400
PowerBook 1400

Source Wikipedia

In the process of making a product for every niche, the company created a series of uninspired products that appealed to few, with the exception of a diminishing number of stalwart Apple customers. Further, the bewildering number of SKUs left consumers with little to no understanding of what the company stood for, other than its “mac-ishness.”  In other words, it was a dire time to be an Apple fan.

1997: Jobs Cleans House.

According to an anecdote in Walter Isaacson’s biography, Jobs basically lost it in a meeting with his product leads as they were trying to explain and/or justify their work. At one point, according to Isaacson, Jobs screamed something to the effect of, “This is crazy!” and walked to a nearby whiteboard and drew a simple 2 x 2 matrix, something like this:

I’ve mentioned Hick’s law a number of times in blog posts, and I think it certainly applies here as well. Hick’s law states that as the number of choices increases for a consumer, the time required to make a decision increases exponentially. That dynamic does not pair well with the emotionally driven experience of purchasing luxury items. And, yes, despite the great litany of rationales we create in our heads, for most of us, buying/upgrading an iPhone is an indulgence. What I think Jobs understood, is that the more clearly Apple could define the path to emotional satisfaction, the more likely a consumer is to travel that path to the nearest retail glass cube.

To that point, Jobs’ radical simplification of the product lineup in 1997 afforded Apple, and its customers, a number of benefits. First, it gave Apple’s industrial design team the ability to focus on making a small number of great designs. Second, it simplified inventory and supply chain management. And thirdly, it allowed Apple to simplify messaging and create more compelling advertising and promotions—a.k.a. more clearly defining the path between urge and indulgence. And throughout his tenure as CEO, Jobs maintained strict discipline in the Apple product lineup. In the year of Jobs’ death, 2011, the Apple main product lineup looked like this.

2011 Lineup

MacBook Pro
Mac Pro
iMac
MacBook Air
Mac Mini
iPhone 4, 4s
iPod Shuffle, Nano, Classic & Touch
iPad 2
Apple TV

And, one should note, the fact that there are two iPhones in the lineup stems from the fact that the iPhone 4 and 4S were actually both launched in 2011, an uncharacteristic upgrade cycle for Apple.

Declining iPhone sales are a victim of Hick’s Law (and poor SKU rationalization).

If you look at the Apple product lineup today, there are almost as many distinct iPhone models as there were products in general at the time of Jobs death. When assessing the reason for each model to exist, it’s tough to rationalize the existence of the poster child for declining iPhone sales, the Xr. The model doesn’t satisfy those who seek the coveted, “best,” status that the flagship iPhone Xs or Xs Max models deliver. It’s priced too high for the deal-seeking emotional requirements needed to satisfy bargain hunters, like the iPhone 7 or 8 models can.

And, thanks to the insights of Mr. Hick, we can be confident that this SKU proliferation and complexity could be impeding impulse upgrading altogether. Speak to almost anyone selling luxury items in a retail environment (or a car salesman, for that matter) and they can tell you, the longer the decision process draws out, the more likely the consumer is to abandon the transaction. It’s why the car salesman never wants to let you leave the showroom. If you give yourself time to think rationally, you might talk yourself out of the purchase, or at least the upgraded leather interior.

And it seems Apple is not limiting its lineup extension fever to the iPhone. There is a confusing overlap among laptops, desktops and accessories as well. It’s a strategy (or lack thereof) that will cause Apple to leave money (not to mention the emotional satisfaction of its customers) on the table.

2019 Lineup

iPhone 7
iPhone 7 Plus
iPhone 8
iPhone 8 Plus
iPhone Xr
iPhone Xs
iPhone Xs Max
Macbook
Macbook Air
Macbook Pro (touchbar)
Macbook Pro (no touchbar)
Apple Watch series 3, series 4, Hermès, Nike +
iMac
iIMac Pro
Mac Mini
Mac Pro
iPad
iPad Mini
iPad Pro 10.7”
iPad Pro 12.9” & 11”
Apple TV
Apple TV 4K

A modest proposal.

Apple would be well served to thin the herd and, by proxy, shorten the path between consumers’ emotional impulses and a satisfying purchase. Are you listening Tim Cook?

Proposed 2019 Optimized Lineup

iPhone 8
iPhone Xs
iPhone Xs Max
Macbook Air
Macbook Pro
Apple Watch series 4
iIMac
Mac Pro (modular/expandable)
iPad
iPad Pro 11”
Apple TV 4K

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