Apple Inc.'s Marketing Team May Be Making a Huge Mistake

By Markets Fool.com

Image source: Apple.

Continue Reading Below

The marketing divisions at major technology companies are often underappreciated by the general public. These teams aren't just there to try to push whatever product the engineering teams have managed to craft, but it is their jobs to figure out what customers want to buy.

Put simply, it's up to marketing to decide what the next big thing is, and it's up to the various hardware/engineering teams to turn that vision into reality.

Based on the rumors that have hit the web regarding Apple's upcoming iPhone 7 series of smartphones, I am starting to wonder if the company's marketing team is in the process of making a huge mistake.

No major industrial design change?
Apple has spent years trying to convince potential customers that thinner and lighter is the way to go. In fact, take this excerpt from Apple marketing chief Phil Schiller from the iPhone 5 launch event as irrefutable evidence of this claim:

So, before we get into it, this is the monumental challenge the team had: Can you make a phone that has everything the iPhone 4s has before even talking about new features in a design that's thinner, lighter, and smaller than the previous product?

It is really easy to make a new product that's bigger; everyone does that. That's not the challenge. The challenge is to make it better and smaller.

Continue Reading Below

Interestingly, although Apple was able to make the iPhone 6 series of smartphones thinner than the iPhone 5 series (though they were much larger overall), Apple actually had to increase the thickness and weight of its iPhone 6s series of devices. Presumably, these compromises were done in order to accommodate 3D Touch functionality.

Early rumors/leaks around the iPhone 7 suggested that it would be substantially thinner than the iPhone 6/6s. Ming-Chi Kuo with KGI Securities, for example, said that the iPhone 7 would be between 6.0 and 6.5 millimeters thick, a significant reduction from the 7.1 millimeters of the iPhone 6s. Recently, however, rumors have begun to circulate that the iPhone 7 series devices will have virtually identical dimensions to their iPhone 6s counterparts.

If true, iPhone sales and average selling prices could take a hit
If Apple is banking solely on internal changes to the iPhone 7, then the iDevice maker may be set to face yet another cycle of year-over-year declines. The iPhone 6s represented a significant internal update to the iPhone 6 and yet it wasn't enough to spark a significant upgrade cycle.

To make matters worse, Apple reported a slight degradation in iPhone average selling prices in the most recent quarter as a result of "very popular mid-tier and entry offerings." In other words, many iPhone buyers likely thought that the iPhone 6s series didn't offer much of value over the iPhone 6 and ultimately went with the cheaper 6.

If the iPhone 7 looks virtually identical to the iPhone 6s, and if the iPhone 6s sees a price reduction to current iPhone 6 levels once the iPhone 7 launches, Apple could see a further weakening of its product mix.

When it comes to smartphones, industrial design is critical, no doubt due to the fact that Apple has spent years hyping up its industrial design and elevating industrial designers like Jony Ive virtually to rock star status. Not changing things up here with iPhone 7 would likely be a huge mistake on Apple's part and shareholders will be the ones who ultimately pay the price.

The article Apple Inc.'s Marketing Team May Be Making a Huge Mistake originally appeared on Fool.com.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.