About Me

John Fahy is the Professor of Marketing in the University of Limerick and Adjunct Professor of Marketing at the University of Adelaide. He is an award winning author and speaker on marketing issues around the world.

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Entries in Apple (2)


Who Will Be the Next Star?

It has been a bad few weeks for Apple. Despite being launched in September with a similar level of razzmatazz as its predecessors, the iPhone 5 has received many underwhelming reviews and its faulty Maps app has been one of the company’s first major fiascos. That said, its market performance continues to be unrivalled. Its share price is up three quarters year-on-year and it is now the largest company by market capitalisation that there has ever been. But if history is anything to go by its days in the spotlight are numbered.



Apple has now largely gone through the kind of scrutiny that many other firms have had in the past. It has been held up as a corporate mould breaker. Countless feature articles and leaders have been written on it and it has been discussed, dissected and diagnosed in the media and management training rooms around the world. Analysts have hung on every word of its former leader, Steve Jobs and when his biography was published in 2011, it immediately shot to the top of the best-seller lists despite (or maybe because of) its 656 pages in length. Has all of this happened before? Sure, many times.


Remember Microsoft, the company that nearly decimated Apple in the 1990s and its founder Bill Gates. They too were once ubiquitous in the media and management consulting rooms as businesspeople and scholars tried to learn the lessons of their unprecedented successes. Or what about Dell – a company whose share price trajectory in the 1990s would easily rival Apple’s today? Before them in the 1980s, telling it straight from the gut and answering business’ toughest questions was Jack Welch, CEO of General Electric who went on to become Fortune magazine’s ‘manager of the century’, no less. Those with longer memories will recall IBM’s heyday in the 1970s when Big Blue was the firm that was held up as the corporate shining light. Go back even further still and the most feted company in the world was General Motors and the memoirs of its chief executive, Alfred Sloan Jr. influenced a generation of management leaders and thinkers.


Is it time to stop analysing Apple? It probably is. All these mould breaking firms and corporate leaders have had much to teach us at particular points in time. Once those lessons are absorbed, the competitive climate throws up new challenges and it is time to look to the new innovators. So who is going to be the next star?


Create Value, But Capture It Too!

In the world of manufacturing if you are to listen to all the media hype, you would be likely to come to the view that China is where all the action happens these days. To some extent that is true, but it is not the full story. This was brought home by an article published in Forbes (forbes.com) at the back end of last year, which gives a breakdown of who makes what from two of the world’s powerhouse brands, the iPhone and the iPad.




Both are made in China from locally sourced components but are Chinese companies and employees getting rich on the back of their global success? Not so it would seem. Chinese labour accounts for a mere 1.8 per cent of the final price of an iPhone while a further 22 per cent is accounted for by the cost of inputs and materials. But contrast these numbers with Apple's profits which reach 30 per cent for the iPad and soar to almost double that for the iPhone.


These numbers demonstrate the very important distinction between value creation and value capture. Through the use of good, reliable materials which are well put together, Apple's products are functionally strong and do the jobs that they are supposed to do. High levels of performance value are being created but the companies that are creating it are making relatively little money. Apple controls product design, software development, marketing and retailing and this is where the money is! The lesson in this is clear. Always examine the full supply chain and figure out where the value is being added and where the costs are being incurred. If you are operating in a high cost, low value part of the industry life is not going to be easy!