Apple cares about the Mac, an exclusive interview with Phil Schiller

Following the release of the MacBook Pro 2016 and the “comments” storm that followed its release, I wanted to have a quick review of Apple’s ecosystem, as the Mac is directly linked to the iPhone and iPad.

First of all, I must confess that the Mac has had a terrific run for the last couple of years. Based on the success of the first iMac in 1998 and the iPod in 2001, Mac sales have had a strong performance:

Note that those numbers are based on Apple’s fiscal year (which goes from October 1st to September 30th).

From less than 5 million machines sold per year before 2005, Apple has managed to sell more than 20 million machines in 2015. This massive increase has enabled the company to enter the world’s top 5 or 6 computer manufacturers. From a revenue perspective, Apple made around USD 6 billion in 2005 from its computer division and an outstanding USD 25 billion in 2015, or “only” 11% of Apple’s revenue in 2015! Now, this nice run did have two hiccups: in 2013 and 2016. So, how does it compare to the rest of the industry?

In order to make the graphic easy to read, I divided the worldwide PC sales by 10. Even if the 2016 numbers are not final, there will be no miracle for the PC, and worldwide shipment is roughly down 25% from its high in 2011. On the other hand, Mac shipment is down 10% from its high in 2015, but is it the end?

Last October, Apple invited all of the media to a Mac event with a little card saying, “Hello again”. For those who haven’t followed Apple since the beginning, this ‘Hello’ is very famous as it was used with the first Macintosh in 1984. This short sentence created a lot of expectations because, fundamentally, the Mac portfolio was kind of dead, as some of the 6 models, like the Mac Pro, didn’t receive any kind of update for a thousand days! That’s almost 3 years… an eternity in the IT world.

But the surprise was short-lived, as Apple presented only one new laptop – the MacBook Pro (2016). Worse still, this fell short in terms of connectivity, as previous generations had 6 different connectors, but the new one, only 2:

MacBook Pro 2015MacBook Pro 2016
USB2 (USB 3.0)4 (USB Type-C)
MagSafe 21
SD card reader1
Audio jack11
(not compatible with iPhone 7)

As a consequence of this radical change, Apple also introduced 200 new adapters or cables (maybe less). For many, this release was seen as too little too late and, more importantly, as a rip-off because all of the accessories came with a high price tag. In order to calm the community down a bit, Apple gave customers a 50% discount on accessories just a few days after the announcement and made this valid until December 31st 2016… then they extended this offer until the end of March 2017.

Will this be enough for Mac sales to climb again in 2017? The first quarter will be probably good because a lot of people are waiting for a renewal, but in the long term, I doubt it if the portfolio will stay as dead as it is. Of course, laptops probably account for more than 60% or 70% of sales and Apple is right to focus on this family of product. However, it looks like the MacBook Air is dead too, and all that is left in this segment is the most basic MacBook, which means the portfolio has gone from 3 models to 2.

And what about the desktop range? It is dead too! The iMac is more than a year old, the Mac mini is more than 2 years old and the Mac Pro is slowly but surely approaching 3 years of life. Who else in this industry can wait that long without an update? Does Apple still care about the Mac?

After an avalanche of critiques that asked if this “Hello again” party was a joke, the company’s top management came to the rescue. It all started less than 5 days after the event when Phil Schiller, Apple VP Worldwide Marketing, declared to The Independent:

“We love the Mac and are as committed to it, in both desktops and notebooks, as we ever have been.”

Good to know, but how can he say that when Apple has not updated one single machine, even with a simple processor upgrade? From a supply chain point of view, one even wonders if such old processors could be found on the market to equip these machines! But then, Tim Cook sent an email to employees in December that said:

“Some folks in the media have raised the question about whether we’re committed to desktops. If there’s any doubt about that with our teams, let me be very clear: we have great desktops in our roadmap. Nobody should worry about that.”

To be honest, a lot of people do worry about that and they are very frustrated by this lack of commitment between what the management says and the products’ lifecycle. Back in 2000, the Mac made up 86% of all sales and the company updated some Mac models up to 2 or 3 times per year.

Today, as the Mac accounts for only 11% of the company’s 2015 revenues, even if sales were multiplied by 4, there are more important priorities. For example, iPad sales peaked in 2013 with 71 million devices and “only” 46 million devices were sold in 2015, that’s a 35% decrease. The same goes for the iPhone. After the record sales of 231 million devices in 2014, the company sold “only” 212 million devices in 2015, an 8% decrease. The iPad and iPhone accounted for 10% and 66% respectively of revenue in 2015. In other words, 76% of the USD 233 billion made in 2015 came from two families of product that are now slowing down.

However, there is great frustration and I was able to get in touch with Phil Shiller to ask him some questions.

Here’s how our conversation went:

Phil, first of all, thanks for your time in this busy season. As you know by now, people were quite upset with your last announcement as they were expecting a refresh across the whole Mac portfolio and not just one model. Can you provide some information about what is coming up next for Mac users?

Sure. We’ll announce some new products early next year and not only some component update. Some products will even come with a new form factor and new ports all around.

But will you kill some products off like the MacBook Air and propose to have even fewer products in future?

First of all, we didn’t kill the MacBook Air, it is still on sale.

Come on Phil, this machine is almost 2 years old and you didn’t update it. Nobody will buy it, but our readers are interested in the desktop offer, which – and you can’t say the opposite – is totally outdated. Right now, 3 machines are available, will you provide less choice?

I can’t go into details, but we will provide the right amount of machines that will fit every user’s needs. May I remind you that in 10 years, we managed to sell 4 times more machines, but with almost the same amount of models? In 2005, we had 5 machines and in 2015, we had 6 models in our portfolio. This simple strategy made Apple the fourth largest computer maker around the world in terms of volume.

It is a great achievement and as you are talking about your competitors, do you know how many models HP or Dell are proposing?

Probably too many. We have no plans to extend our Mac models. Remember: less is more.

I know that slogan, but as the number of users increases around the world, don’t you think you’ll need more models in order to sustain this growth and address specific customers’ needs? Look at the iPhone, you went from one model to at least 3 different models and shapes.

No, our mantra is to keep a very clear strategy and a simple choice for the users. Do you know how many models HP proposes? I did take a look the other day, out of curiosity, when I wanted to buy something for my mother-in-law and guess what, on the desktop side, there are more than 9 models and on the laptop side, more than 10 models, which allow you to configure more than 193 machines! At this stage, I asked Siri where I could get painkillers at 2am!

Did Siri find the answer?

No, you know that at this stage, you can’t rely on this thing. I simply asked my wife Kim what she used last time she heard something from Donald Trump and that was it.

Fine then, but you made some weird changes with the last MacBook Pro. Should desktop users start to be worried?

It was not about weird changes, it was about courage! These new USB ports are the future and not even Einstein’s or Hawking’s theories will change that fact. Now, on the general philosophy of our portfolio, Ive and his team can’t design 10 or 20 new machines per year. Our suppliers already go crazy with the requirements and drawings that are coming out of his lab, so imagine if we multiply that by 10. It’s best to keep things minimalistic even if, from time to time, this is frustrating for our clients.

Yes, but you explained the motivation for these choices by saying that you abandoned some of the ports because of physical constraints, but the MagSafe port and SD card reader were both very thin. Why did you move away from those solutions?

You are right and we could have fitted those ports into the new chassis. However, it was not the solution because our market studies proved that the market no longer needed such features. First, regarding the MagSafe, we introduced it in 2006 when Apple was a small company and our clients around the world were not very smart. In 10 years, we became so great and our clients so smart with our products that we clearly saw a smart power supply connector like the MagSafe 2 was no longer needed, even if MagSafe 5 was ready to go live. Today’s clients are so smart with our products that they don’t come inadvertently across the power supply cable. Instead, they feel it and never pull it out by accident. Secondly, the SD card. That was a joke from day one because there were more than 6 card formats and we sincerely didn’t know which one to take. Then, while I was on vacation, I lost my card reader and I asked our engineering team to provide an MBP with an SD reader integrated and they did just that. Now, as I only use my iPhone to take pictures, I simply asked our engineers to remove it and photographers that are not happy can use WiFi.

But Phil, an integrated SD card reader is much faster than any WiFi connection when a photographer needs to transfer huge amounts of data. For example, the previous MBP can easily achieve a transfer rate of 480 Mbit/s with the SD reader, while a WiFi connection will rarely provide a better speed. So why abandon it when the new MBP had adopted the ultra-fast PCI Express?

That’s a good question but nobody uses it at the management level, so we didn’t really see any need and the future of photography is the iPhone. Ask Canon and Nikon how their sales are going.

I will and I have one final question: historically, Apple didn’t have the classic structure with divisions per product or service. As Apple grows and gets into more sectors, won’t the actual structure of the company become a limitation? Typically, is this lack of attention for Mac products the direct result of this current management, which got caught into a sales slowdown regarding the iPad and more recently, the iPhone?

No, we do such nice products because we all care. If the Mac was run by a different division, they would make stuff that is incompatible with the rest of our products.

But Phil, your last MacBook Pro features an audio jack that is not compatible with the iPhone 7, which was presented just two months earlier! How do you explain that?

Come on, it looks like you don’t like our last product. What’s wrong with you? Would you prefer to spend 5 hours on the HP store and try to select one of the 193 machines available? You better go to first and order a full truck of painkillers!

Thanks Phil, I’ll wait for your next Mac announcement and analyse if you are really committed to it.

PS: before Apple’s Legal department calls me, this interview was completely fictional…

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