Apple’s obsessive secrecy helps generate big sales

“Apple Computer Inc. generates buzz for its new products by obsessively enforcing a strict secrecy policy. But the policy can sometimes leave partners, big customers and even employees in the dark,” Nick Wingfield reports for The Wall Street Journal.

“Apple, based in Cupertino, mostly keeps its plans for new products to itself. It rigidly compartmentalizes itself so that even its own employees do not find out about coming products. It has fired and later sued workers who leaked information about unannounced products. More recently, it has filed suits against Apple-enthusiast Web sites that publish tidbits about the company,” Wingfield reports.

“While many tech companies assign internal code names to products, Apple goes a step further. It often gives different departments dissimilar code names for the same product, current and former employees say. If a code name leaks, Apple can more easily track down the department from which the leak originated,” Wingfield reports.

“This closed-lips approach is a key underpinning of Apple’s marketing strategy. To the envy of many in the tech industry, co-founder and Chief Executive Steve Jobs uses secrecy expertly to amplify interest in Apple’s products. Regis McKenna, a veteran Silicon Valley marketing executive who worked on some of Apple’s earliest product introductions, says he marvels at how Apple continues to stimulate so much public curiosity about its coming products,” Wingfield reports. “‘There’s a great deal of mystery and speculation about what it will be,’ said McKenna. ‘That’s created a marketing aura for them.'”

Wingfield reports, “The mystery helps Apple attract crowds at its retail stores and generally garner much more visibility than its relatively modest advertising budget would suggest. Apple spent $287 million on advertising last fiscal year, compared with $995 million for Microsoft and $1.1 billion for HP, according to the companies’ filings with securities regulators. While new wares from Dell Inc. or HP rarely get front-page treatment, Jobs has repeatedly appeared on the covers of Time, Newsweek and Fortune showing off a new iPod or Macintosh computer.”

Full article, including behind-the-scenes info on the “Apple iPod by HP” fiasco, how Apple’s secrecy negatively impacts corporate customers and other big technology purchasers, and much more, here.

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Related article:
Apple acknowledges corporate IT workers’ frustration over secretive product roadmap – June 20, 2006

27 Comments

  1. “Apple spent $287 million on advertising last fiscal year, compared with $995 million for Microsoft and $1.1 billion for HP”

    Apple needs to be spending $1.1 billion in advertising each year! They’ve got over $8 billion in the bank and are a totally debt-free company. Come on! What are you waiting for?!?!

  2. Apple’s current strategy is brilliant and has generated huge sales thus far. However, unless Apple changes, it will never see significant gains in computer sales. Big businesses simply put cannot work with a company that announces everything last minute. it’s just bad business

  3. Ford is taking the heat for promised R&D and innovation on the hybrid front because of broken promises.

    Microsoft does the same thing. They think they have this bitchin idea, they get all excited, and then they figure out, no one cares, it can’t be done (idea exceeds reality and enginereeing posibilities) and there is no market – hence Vaporware.

    If you never say anything peoples expections are lower and are always exceeded at the time the magical words exit his Steveness’ lips:”Available today”

  4. Furthermore, Pennypacker is right. Correctly setting people’s expectations is a great way to do business, and especially for Apple when you consider there may be no group that has loftier (and many times unreasonable) expectations than Mac users.

  5. Apple gets so much free publicity because its products surprise, and don’t disappoint. They arrive on time, because their arrival was never pre-announced.

    Apple does the exact same thing during its earnings conference calls. For the past 8 quarters Apple has exceeded earnings estimates 8 times (sometimes by as much as 50%).

    Management’s revenue guidance for this quarter is virtually the same as Apple reported last quarter. Yet, Apple didn’t have a full lineup (excepting PowerMacs) of Intel powered computers last quarter. One of the computers that wasn’t Intel powered last quarter was the MacBook, Apple’s highest volume computer.

    Look for Apple to soundly beat the Street’s earnings estimateswhen they report on July 19.

    Secrecy is good.

  6. I agree with what’s been said already, but don’t forget about announcements affecting sales. For instance, who would pay three or four hundred dollars for a 5G iPod if Apple announced it was coming out with the new 6G true video iPod in sixty days? Otherwise, Apple would have to markdown the prior revisions across the board, not just at the refurbed section at the apple store website. Apple’s secrecy ensures that people are buying its existing products right up to the time that Steve tells an audience that there is ‘one more thing’.

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