Why you should be proud you didn’t fall for the Apple Watch Hype.

This article originally appeared at The New Daily.

You should be proud you didn’t succumb to hype and buy an Apple Watch. Not only because you saved between $499 and $17,000. (The $17,000 one has rose gold bits. Really).

You should be proud because the watch is a dud, and its failure shows some very good news: sometimes, we humans are smart enough to see through the best marketing in the world.

Apple’s marketing is famous. No. Beyond famous – it’s revered.

The Apple hype machine is what they’ll be teaching in marketing class in 100 years time. Apple’s marketers completely rewrote the rule book and managed to get news organisations to report breathlessly on the fact their new product was coming out.

Their secret recipe for marketing success had the following four parts.

  1. Secrecy + Tantalisation

Apple makes exceedingly few official announcements about what it’s doing next. Then it springs surprises. The shortfall of official information creates riots around every possible leak, every possible hint. First rumours of an Apple watch were way back in 2012. 36 months of headlines ensued as the public salivated over the possible new product.

  1. Reputation

Lots of companies had smartwatches coming out. Only Apple’s had people on tenterhooks. That’s because the California-based juggernaut earned our respect with a series of good products.

  1. Customers who are thought leaders

If you have an effective but ugly product, it will be bought by effective but ugly people. Apple’s products are effective and look cool. Cool people want them, this makes Apple products even more cool. Repeat.

  1. Fake scarcity

On launch day there’s never enough supply. This makes people queue. Then the news organisations show up to interview people queueing. Why can’t Apple sort out its supply chain? Oh, that’s right. It could easily. But lines of excited people are all part of the grand design. (Interestingly, the Apple Watch had an online launch, not in stores. Perhaps Apple sensed the queues might seem disappointingly small?)

This four-part marketing symphony was in perfect tune for the many iPods, iPhones, iPads and MacBooks the California-based company launched between 2004 and 2014.

That decade of glory saw Apple’s share value rise from around $5 to $125. The company sold $800 billion worth of product at amazing profit margins – often over 50 per cent. It has banked so much money (US$194 billion according to recent reports) it could now buy Australia’s biggest bank – Commonwealth – without going into debt. On the same shopping trip it could also pick up Telstra and Macquarie Bank. And still have cash to spare.

But then the marketing machine stumbled.

It turns out brilliant marketing really only works in combination with a brilliant product. We should give ourselves a pat on the back, humanity. Sometimes a dumb product comes along and even the best marketing doesn’t fool us.

Let’s not mince words about the Apple Watch. It’s not good.

Some people put off buying a smart watch for a long time because they expected the Apple version to be a category killer.

Here’s some choice parts of a review written by one of those previously enthusiastic people:

“…A horror to put on…. the requirement to recharge every night very quickly became tedious … I almost never felt the haptic alerts… I decided to return it…. I nominated a courier pickup date and location, and I received a ‘return address’ label to print and attach to the box. Going through the motions of removing the Watch from my wrist, unplugging and coiling th charging cable, and stowing it all carefully back into the layers of excessive packaging, was strangely cathartic.”

And he’s not alone.

There are hundreds of unflattering reviews on the internet.

Given the trend towards bigger screens in smartphones, it’s not clear why people thought a smartwatch was such a good idea.

Historically, there has not been much demand for wearable information technology.

The market starts and ends with the wristwatch. Wristwatches became extremely popular in the west in the 20th century, following their use by aviators in world war one. But it would be easy to over-interpret the importance of a display strapped to your arm.

  • The wristwatch took serious market share from the pocket watch only in the last 100 years.
  • The wristwatch is a thing you glance at, not interact with. Even serious stopwatches are strapless.
  • When mobile phones came out, younger generations mostly gave up wristwatches.

An interactive display strapped to the one body part you can reach with only one hand may come to seem a technological dead end.

Apple is obviously betting that’s not the case. There are already rumours in the wind of a newer, better Apple Watch.

Will brilliant marketing and a brilliant product combine again in the case of Apple Watch 2.0? Apple better hope so. Because its next product launch will have to retrain the brains of consumers who just learned not to trust the hype.

Musiconomics: Why the Macbook is the new Fender Stratocaster

My recent travels through the USA took me to Austin, Texas in the middle of March. At that time Austin is taken over by the festival known as South by Southwest (SXSW). This was no coincidence. We went especially for the music part of this festival and were ready to be blown away.

I wrote in 2013 about my first SXSW experience, and this time was definitely different. The festival had returned to its roots – eschewing big names in favour of exposing new bands. This meant the bills were filled with names we did not know, and gave us more freedom to choose venues at random, without expectations.

The music was often great, and despite never having heard the tracks before, we regularly left gigs with a hook on repeat in our heads.

But there was one surprise. Time and again we found “bands” on stage that were not traditional bands.  Many acts did their show on just a laptop and a microphone. We saw the Apple logo more often than the Fender logo.

That’s fun, but a traditionalist streak lurks within us. So on day four, the desire to actually see a big, proper band letting loose made us seek out an African/Carribean night at a smaller club. It featured acts from Cote d’Ivore, Nigeria, etc, and we expected something in the tradition of Fela Kuti.

But our search did not lead to a big band. Not a cymbal was struck in anger. Once more, we saw multiple acts featuring one microphone and one Macbook.

Serge Beynaud of Cote d'Ivoire
Serge Beynaud of Cote d’Ivoire. (It may look like there is a band on stage but those guys are roadies/photographers/loitering.)

It sounded great, the crowd was into it and we had a good time. But it got me thinking. In Cote d’Ivoire, how is a band starting out going to buy instruments? In Australia, people who are in bands work hard in traditional jobs to get the money to buy a bass, a guitar, and a drumkit, each of which can cost over $1000.

My friend the trumpet player, for example, is a vet.

It’s common knowledge that a band doesn’t make money in 2015. Not for the first few years, anyway. So they need a revenue stream. With the economic situation in Cote d’Ivoire, it’s probably not as simple as working in a bookshop to save for a new amp or some pedals. It makes sense most acts will be lean, streamlined, cheap to run. Expecting a full band is like expecting a grand piano. Not realistic.

That idea stewed in my mind for a while until I realised that it wasn’t just relevant to impoverished West Africa. It would apply in the rich world too.

Instrument choice could even explain success and longevity. Longevity and success are going to be linked in both directions. Because a good band will last, but a band needs to last to get good.

In the Western world, assume a share of bands start up with a traditional four or five-piece set up – more EADGBE than QWERTY, and a share of bands start up with a macbook they had anyway and a pirated copy of a music making program.

Who is more likely to get the 10,000 hours of practice they need before they crack?

iLoveMakonnen is a two piece - microphone and DJ.
iLoveMakonnen: A two piece featuring an MC and a DJ (who hasn’t touched an actual ‘disc’ in years).

While all bands suffer from entropy and slowly disappear, the effect will be more pronounced for larger bands with more expensive equipment. There are plenty of reasons for bands to split. But money-making is not the least of them.

If a big band does make a bit of revenue, the musicians will find it divided among many people, and soaked up by depreciation of the band’s material. They will start to see the band as an ongoing expense, not a money maker.

Perhaps in the 1980 and 1990s, bands endured this period with a little more hope of cashing in eventually. But in 2015 the idea of selling records is something of a joke. (Side note: at SXSW, the streets were littered with thousands and thousands of CDs that enterprising bands were trying to give away and punters couldn’t be bothered carrying home.)

In this scenario, bands with an upright bass and a trumpet are disappearing fast, while the number of bands using pirated software and a macbook shrinks at a lower rate. That means by year four or five, when all the skills are finally in place to write a song that’s genuinely awesome, the bigger, more traditional band’s songwriters are back at university, while the smaller acts are still plugging away.

It may be hard to justify a full band when you can make all those sounds through a computer. The main advantage of a proper band could be the richer stream of ideas that come with a meeting of minds.

Happily, there is still evidence of that happening.

Quality still wins out and the occasional seven-piece does make it through the cracks to become a viable band. Below is the Mowgli’s, who sounded great. Sure they’re white people from LA – one of the richest cities in the world – but at least that swirling moneypool is splashing some cash in the direction of old-fashioned music making.


Wearables: more like social networks or hoverboards?

Apple is going to release its highly-anticipated iWatch this October. It will have a 2.5 inch rectangular display. I’m pretty skeptical that anyone will want one. But I could, I suppose, be wrong. iWatch could turn out to be the next facebook. let me explain:

Apple’s chance of first-mover advantage is zero. The smart watch market is already quite busy. Samsung and Google have products out. So do others.

smash misses.
smash misses.

None is making much of a splash.

We have a vision of tech breakthroughs as being radical new inventions. But really they stand on the shoulders of others.

Here’s a little extract from an email I got in April 2005, when facebook was still mainly for ivy league students and working on attracting early stage investors.

“I actually don’t know what this Bebo service does, but it looks like some of you are ‘existing members’ so I’m assuming it’s a good thing I need to get on the band wagon with.”

I joined Bebo. I can’t remember if I joined Hi5. I definitely didn’t join MySpace. But I thought about all of them and dismissed their usefulness long before I …

Joined facebookApple is betting that its smartwatch will be like facebook. That it will enter a market that has been a graveyard for competitors and make them look foolish. You wouldn’t bet on any company that wasn’t Apple being successful. And the Apple of 2009 might have been able to make a smartwatch into a runaway smash hit. But is 2014 Apple equally savvy?

There are clues that the magic began to evaporate when Steve Jobs passed away:

Why Apple no longer innovates.

Apple Inc. (AAPL) No Longer The King Of “Cool Tech”

There’s No Way Around It: Apple Is In ‘Reset,’

Although there are clues that the backlash is mainly clickbait and the magic is still there.

Source: Google
Source: Google

Investors are betting that the combination of fitness monitors and mini-notifications in the smartwatch will be just right. That it will click with the zeitgeist and zoom away until tehre are two types of people. Those who have an iWatch, and those planning to get one.

But when a product already exists in the market, you have to really nail your version to capture the market. That’s an art, not a science, it requires judgment in the 99th percentile, not the 98th. There is evidence a company like Apple can continue to be good for a long time. But can it be very very good? I doubt it.

The iWatch may not turn out not to be a facebook. It could be a hoverboard.

Something from science fiction that is possible to produce, but turns out to have severe limitations.

Not like this.
Not like this.

If that turns out to be the case, the iWatch will be a niche product and eager investors will lose a lot of money on Apple stock.