Apple faced a problem – how could they reach new customers without tarnishing the Apple brand, which commands a huge premium that has driven Apple’s growth?

Answer #1: Launch a cheaper, more colorful iPhone! Call it the iPhone 5c. Give people different color cases to let them express themselves and personalize Apple devices more than ever before.

Once the product is ready, advertise the 5c using a different message (“for the colorful”) and channels, hoping that a new generation of young customers flock to the 5c the same way the Apple faithful flock to every new version of their products.

But 8 months later sales of the iPhone 5c have been lackluster. It turns out that people preferred the 5s to the 5c. It could have been the price, it could have been the product, but either way Cook & Co. were forced to revisit their strategy to grow Apple not via new products, but via new markets.

What now?

Answer #2: Buy Beats

It’s the brand, stupid!

Apple learned from the 5c that they needed to rethink the pros and cons (yes, cons!) of their premium brand as they tried to expand their customer base.

Beats is an edgier, mass-market brand that appeals to a younger crowd. Their products were marketed using savvy product placement in music videos and major sporting events. I’d guess that Beats appeals to teenagers more than Apple does.

Best of all, Beats commands a big brand pricing premium just like Apple. Meaning that applying Apple’s operational know-how and scale to Beats would result in not just revenue growth, but high-margin revenue growth! The type that Apple investors are used to.

And one last prediction – the next generation of the iPhone 5c will be rebranded Beats (as suggested by @investomundo). There won’t be a number after the phone either, perhaps it’ll be called the Beats Phone. We might see Beats by Apple in small letters on the back.

But I’d venture to guess that Apple keeps the brands separate. Because in this case 2 premium brands are better than 1.


Twitter is Dead. Long Live Twitter.

by Ian Rosenwach 5.6.2014

Twitter has had a lot of explaining to do of late. They need to onboard and activate new users while keeping existing users happy. They have to help Wall Street and the media understand Twitter’s business. Last but not least, they have to ensure advertisers see the value in Twitter as an ad platform. How is […]

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Your Move, New York Times Company

by Ian Rosenwach 3.24.2014

Last week the Washington Post announced a program for partner newspapers to provide their subscribers with access to paid digital Washington Post content. Initial partner companies will be local papers like the Dallas Morning News and Honolulu Star-Advertiser. It’s an ambitious first move of the Post under Jeff Bezos, and provides a window into his long-term strategy […]

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by Ian Rosenwach 3.12.2014

Summary: Apple’s achilles heel is fast becoming it’s software and services layer. If something is not done quickly, Apple is at risk of falling behind in software just like Microsoft did in hardware via it’s OPM partners.  Today Apple is the dominant force in hardware + software integration. But they’re at risk of losing their […]

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Disrupting cable TV will take a team effort

by Ian Rosenwach 2.22.2014

Bottom line: Cable is a huge entrenched industry. Innovation and disruption will take a team effort.  The proposed Comcast Time Warner merger cements the fact that the cable industry is not open to disruptive partnerships. If approved, the company would maintain the status quo by providing consumers with fewer choices; not innovation. See Paul Krugman’s Op-Ed […]

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Who will become the Operating System of Things?

by Ian Rosenwach 2.12.2014

The sprawling web of interconnected products that has resulted now thoroughly dominates our experience of consumer technology: if you own a Google Chromebook, your life will be much easier if you use Android and Chromecast and Google Drive, and much more painful if you try to use Windows Phone, Apple TV, and Dropbox. (Matt Buchanan, […]

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With Paper, Facebook thinks like a Media Company

by Ian Rosenwach 2.4.2014

Yesterday Facebook released Paper, a new stand-alone app to browse content. Paper represents a dramatic departure from Facebook as a place to connect with your friends. Paper aims to connect you users with the rest of the world. It’s also the first step towards Facebook becoming a media company. Your Friends – Just a Channel […]

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Is the Internet a public utility?

by Ian Rosenwach 2.3.2014

The question is, Has the Internet become so fundamental to our lives that it is, in essence, a utility that should be subject to regulation? (NYT) Nick Bilton poses the above question today on the New York Times’ website. It’s a question that is at the heart of the net neutrality debate. Net neutrality refers […]

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Apple on the defensive?

by Ian Rosenwach 1.20.2014

Instead of the round-the-block lines that have greeted Apple product introductions in China and other countries in the past, only about a dozen customers showed up to buy iPhones at the opening of a store in Beijing – despite the presence of a special guest, the Apple chief executive, Timothy D. Cook. (NYT) I admire […]

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by Ian Rosenwach 1.12.2014

Aereo has also gotten legal backing from a Silicon Valley consortium that represents companies including Google, Yahoo, Facebook and Pandora, who have argued that a loss for Aereo could threaten cloud computing in general. (re/code) This past Friday the Supreme Court agreed to consider the legality of online-video service Aereo. This case has far-reaching implications for […]

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