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Leaked court docs also show that Phil Schiller expressed displeasure with Apple's ad agency

Apple’s never-ending court battle with Samsung has recently resulted in a treasure trove of internal documents leaking to the internet. The latest round of documents making their way to the public domain include slides that shows Apple’s concerns regarding its lack of affordable smartphones and smartphones with screen larger than 4 inches.
 
The documents also show that Apple’s Phil Schiller was extremely upset with Apple’s advertising agency for not developing an ad campaign worthy of sufficiently promoting the iPhone's virtues.
 
I. Cheaper Smartphones, Screens Larger than 4”… Where Are They?
 
The first of the leaked slides from Cupertino show the incredible boom in smartphone sales over the past three years, and that Apple is completely missing the boat with regards to affordable smartphones (sub $300) and large-screen smartphones (larger than 4 inches):

 
But the most troubling aspect for Apple is the slowing growth rate for its iPhones. Despite the fact that Apple likes to tout during its earning releases that iPhone sales are increasing year-over-year (which is indeed true), the rate of growth in recent years has plummeted:

 
The chart shows that iPhone sales experienced a steady decline in YOY sales growth until fiscal year 2012, when the YOY growth was a still admirable 74 percent. However, the first quarter of fiscal year 2013 saw that YOY growth fall dramatically to 26 percent and then again to 12 percent for fiscal Q2 2013.
 
Apple’s explanation for its slowing sales is precisely what many analysts and tech enthusiasts have been stating for years:
 
 
There’s not much Apple can do about competitors stepping up their game with regards to hardware and software, or even its competitors’ (namely Samsung) willingness to empty their wallets on advertising.
 
However, the company has tried to address the “lower cost” bullet point with the iPhone 5C to less than stellar results — off contract pricing for the smartphone still remains relatively high. Apple is more than likely to address the lack of a large-screen smartphone offering with the launch of the iPhone 6 later this year — another year of stalling on this front seems unimaginable at this point.


iPhone 5C
 
As for its relationship with wireless carriers, Apple is no longer the only game in town when it comes to high-end smartphones that customers love, so playing hardball with subsidies and “unfriendly policies” isn’t going to fly anymore. Apple realizes that its competitors have stepped up their game in the smartphone sector, so Apple will accordingly have to adjust its demands from carriers that today aren’t so dependent on the iPhone anymore.
 
II. Phil Schiller Praises Samsung’s 2013 Super Bowl Commercial, Chastises Apple’s Ad Agency
 
We previously reported that Apple’s Phil Schiller was none to pleased about the Wall Street Journal’s article entitled "Has Apple Lost Its Cool To Samsung?" So naturally, Apple in 2013 turned to its ad agency, TBWA/Media Arts Lab, to provide a return salvo to level the playing field.
 
However, TBWA/Media Arts Labs’ email response didn’t make the situation better; it only inflamed matters.



 
[Image Source: Business Insider] 
 
Comparing Apple’s current situation to its dire straights in 1997 was enough to enrage Schiller, who sent back the following response:
 
 [Image Source: Business Insider]
 

The ad agency tried to smooth things over and apologize for the earlier email, noting that the company feels “100% accountable for our part of this job which is to create great advertising for apple and [its] great products.” The unnamed person communicating with Schiller went on to grovel, stating, “I can see my reason was over-blown and not at all helpful. I’m sorry.”
 
Schiller was still not impressed, and made it clear that he was actually quite fond of Samsung’s 2013 pre-Superbowl commercial.


 
I watched the Samsung pre-superbowl ad that launched today. It's pretty good and I can't help but think 'these guys are feeling it' (like an athlete who can't miss because they are in a zone) while we struggle to nail a compelling brief on iPhone. That's sad because we have much better products. Something drastic has to change. Fast.
 
You can read the rest of the back-and-forth between Phil Schiller and TBWA/Media Arts Labs at Business Insider.

Sources: Scribd, Business Insider





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