The Peter Principle

Wharton marketing professor Peter Fader provides today’s object lesson in why an MBA may be a tremendous waste of your time.

Fader is asked his opinion of the iPhone, the AppleTV and Steve Jobs and manages to get just about everything wrong.

He even breaks out our old friend, Artie MacStrawman.

Pete Mortensen and innerdaemon do a good job of deconstructing much of Fader’s absurd analysis, but the Macalope loves a good piling on, so he’ll try to hit some points they declined to.

I think that when this phone actually hits the market, some of the grand visions of Steve Jobs has as well as some of the Apple zealots are going to be rather disappointed.

Use of the term “Apple zealots” should automatically disqualify you as an impartial judge of the company, let alone passing yourself off as someone competent enough to be teaching marketing to anyone other than members of the Microsoft management training program.

In fairness, it’s quite possible that Fader got his ass kicked by some Mac users back in grade school and has never gotten over it. If that is the case, the Macalope would like to apologize to Fader on behalf of Mac users everywhere.

Asked if $500 is too high for the iPhone, Fader says:

Well it’s not going to be too high for the first few hundred thousand people who just have to have it. You can charge them anything and they’ll pay anything.

Ah, those must be those craaaaazy Apple zealots! Of course we’ll pay anything! We’re Steve Jobs’ butt monkeys!


Please. This kind of childish crap can be refuted with two words: G4 Cube.

Also, while it’s not at the same level, the Macalope would like to point out the time when we came together as a community and stood up and said “No!” to iPod socks.

But for the mass market, if they really want to create something that is anywhere close to what the iPod did, it is very expensive.

Right you are, Petey. Because it’s not like the original iPod was considered too expensive.

Wait, what?

Not to mention that Fader’s concern seems rather foolish with today’s revelation that the $500 will include 18 months of service as AT&T attempts to go for the market share gold. [Scratch that. AT&T sez no. (link via Daring Fireball and Jared Rice in comments).]

And, I think on the feature side, it doesn’t really have that many features.

Are we talking about the same phone? The one that’s an iPod, a phone and a breakthrough internet communications device? The phone with a full web browser? That phone?

Did you see that interface? That’s a feature. A feature you will use every single time you touch the phone. And it’s a feature none of the other phones have.

The problem with Fader’s analysis of “features” is he’s looking at some checklist he’s thrown together of “features” such as “upgradeable memory” and “removable battery” and “FM tuner” and, well, golly, the iPhone don’t got none o’ those.

Well, yes, dumbass, that’s going to happen when you just count “features” of other phones (many of which no one will give a crap about when they see the iPhone’s interface) and don’t count features of the iPhone that are less tangible.

As an example, which of these two features are more important to you?

  1. An FM tuner.
  2. The ability to just guess how something works and be right about 99% of the time.

The Macalope’s thinking #2 is just a tad more important, is not on Fader’s list of “features” and will be one of the big differentiating factors bewteen the iPhone and pretty much every other phone on the market.

On Steve Jobs, Fader says:

He’s a brilliant man but he’s of course very mercurial…

Of course! He must be! Someone wrote it on the bathroom wall at CES!

…he’s unpredictable and he’s very private.

“Unpredictable”? Really? Then why is Fake Steve so dead-on all the time? Jobs is, actually, fairly predictable. If you have enough imagination.

As far as I know there were no announcements about the Mac. That really is the bread and butter of the company.

Actually, no, it’s not really, love chunks. The iPod generated about 48% of the company’s revenue in the last quarter compared to 43% from Mac products.

And it’s a signal that they’re not going to be developing or supporting it as much as they used to.

That is simply a load of crap. While the iPod is overtaking the Mac as Apple’s most prominent product, the fact is that Steve Jobs chose to roll out the iPhone in dramatic fashion and that says nothing about the company’s support for the Mac.

How is it that Microsoft can go five years without a major update to Windows and Jobs fails to devote time to the Mac — after devoting almost all of his WWDC keynote to it just five months ago — and Apple’s suddenly dropping the Mac?

The interview is really an indictment of Wharton’s marketing department and if the Macalope were dean he’d call up Knowledge@Wharton and have them pull the thing immediately.

Trackbacks Comments
  • Alan Graham:

    I’d like to point out that the first 4 generations of the iPod had models at the $499 price point…and they sold…oh…millions of them. Millions and millions and millions of them. Crazy amounts…totally off the chart sales…

    Whoaaaaa! Those crazy crazy Apple zealots…oh wait…by the second generation they were Windows compatible…

    wait…this doesn’t make sense…who do I believe…?

    Peter Fader…Wikipedia is the enemy of those with short memories…and small intellect.

  • Macalope,
    Since hearing about this site on Macbreak, I love it! Great commentary on everything, and keep telling it like it is.


  • Not to be a jerk, but his name is Pete Fader. That is all.

  • Thanks, Scott. The Macalope must have had Apple’s Tony Fadell on the brain.

    Either that or he’s developing a Japanese accent.

  • Church of Apple:

    Oh ye of little faith. Thy name is Fader.

    Such a misguided, spiteful little man you are. The title of “Apple Zealot” is not bestowed so lightly as you appear to think. It is not for the faint of heart nor weak of spirit, such as yourself. They are of the order that turns to Apple for enlightenment and seeks completeness in the grand vision of Jobs.

    Their belief does not falter when His grand vision is limited by the physical laws and cellular contracts that govern this world! They find solace in the realization of the perfectly designed world in which Jobs will lead us, crushing in His wake the pitiful derivatives of products that aspire to Apple’s engineering glory.

    They are patent. They wait, unabated, as Jobs reveals these marvels unto them, not as final products, no, no, silly man. They are Solutions in His grand vision into which Apple will continuously build the advances of technology.

    Jobs will lead the Apple Zealots and the army of Apple faithful into the future of intuitive technology, crushing you under His perfectly designed heel.

  • Peter:

    Funny how you mention the PowerMac G4 Cube…

    The Cube was an awesome device. “Fast” G4 (for the time), super quiet, sexy enclosure. However, the expandability was limited and the price was too high. It sold very well at first, but difficulties with the on/off button and alleged problems with the enclosure pretty much caused people to stay away. Eventually, Apple dropped the price in order to clear out inventory. That said, most of the R&D that went into cooling the Cube went into the iMac G4 and the Mac mini.

    Personally, I could see a similar situation with the iPhone. There are those who will buy it as soon as it’s available. But will it go on to convince the masses? For those who bring up the original iPod, I’d remind you that iPod sales didn’t hit 10 million for almost 4 years. And in those four years, Apple released quite a few revisions of the iPod including lower priced models! I don’t think Apple will hit it’s 10 million number in 18 months without releasing lower-priced models.

    That said, do I think the iPhone will suffer the same fate as the Cube? Nope. I think you’ll see iPhone stay at the same price. But you might see the iPhone get a hard-drive or new high-capacity Flash memory for the same price. I think you’ll see a third price-point at $399 which will allow Apple hit it’s 10 million. So you might see 4GB at $399, 8GB or 30GB at $499 and 16GB or 80GB at $599.

    Like the R&D for the Cube, you’ll also see the iPod–and possibly the iPod nano–end up with multitouch and the larger screen. You’ll see WiFi support in the iPod for sharing music and, possibly, making the iPod an “Internet Communicator.”

  • This ivory tower ass-hat just helps the Three MS Stooges (Enderle, Thurott, Dvorak) lull Apple’s competitors into a false and complacent sense of of safety. While they’re napping, His Steveness can beat them up and take their milk money.

    While we should by no means resort to adult behavior – by which I mean we should certainly continue to jeer and snicker and call them names– we should rejoice that Apple stands only to benefit from their addled gibberish.

  • Peter, the mac mini is no more upgradeable than the cube. Not in anyway that counts. Sometimes things are not right for the time period. The mini is selling well (ASFAIK) and is a great product in a portfolio of products.

    Sure the iPhone will come out with models that are cheaper and different. I think that’s a smart product strategy. But you have to start a product portfolio (as the macs and ipods now have somewhere). I don’t think anyone really expects the 2007 iPhone to be the same as the 2009 iPhone or the 2011 iPhone. That doesn’t mean the 2007 iPhone is anything less of a phone or any less of a step change from even the good phones that are in the market (not every current phone is a p.o.c., but the iPhone still is a step above even them)

    I’ve very much doubt Jobs, Apple and co don’t have a strategic plan of where they see their product lines going, but all products start at version 1 and move up from there.

    Apple will hit 10 million iPhones world wide, easy. Because the market for phones now is different to what the market for iPods was when it was released. And people are particularly hung up about this $500, although it’s no more expensive than buying a nano and a phone nor is it remarkable more expensive than other smart phones on the market.

  • I still agree with your analysis, but the news coming in on my feeder (go see,,, etc) report a denial of the whole 18 months of free service thing. It sounded far-fetched anyway – I think they’re more likely to offer free “service” in the form of discounted/free addons to the basic voice/data plan.

  • Nick:

    Church of Apple:

    “They are patent (sic).”

    Oh, yes, I’m sure they’ve taken out plenty of those. 🙂

    Mind you, the whole patent edifice is badly broken–particularly when it comes to ludicrous software patents. As a professor in business matters–amazing that there really is such a thing!–perhaps Wharton should have turned his attention to that and left the slanted product “reviews” to the Enderles of this world.

  • Gord Echlin:

    I just walked through O’Hare airport. Gift shops full of ear buds retailing for $200+. iPhone is not too expensive.

  • Follower:

    I’ve been explaining this “cult” label to people — yes, I know, it’s a car analogy and those usually suck — by telling them to substitute the name “Toyota” for the word “Apple.” As in: I said I liked my car and someone exclaimed, “Toyota zealot! You’ve been drinking the kool-aid that comes out of Aichi! I have a Ford, like everyone else — what’s the matter with you!?!?” This actually seems to get through to a lot of people.

    P.S. Yes, Macalope, you rule.

  • Church of Apple:

    We are working on a PATENT for a better grammar checker. Please be PATIENT.

  • Peter:

    Adrian, that’s sort of the point.

    I agree with most of the people who complain about the iPhone. I don’t like the slow network. I don’t like the amount of storage space on the phone. I don’t like that Apple is closing it to third-parties (as a developer, I especially don’t like that).

    But the technologies in the phone are outstanding–just like the Cube. And while the Cube may not have been a success, the R&D that went into developing it will go into other products and make them even more successful. For example, I wouldn’t be surprised to discover that AppleTV (or perhaps the next generation of AppleTV) is running OS X.

    As I said, unlike the Cube, Apple will keep developing phones. And I don’t think the price points will change (Apple doesn’t usually do that), but I think you’ll see a new phone added at $399. And I think they’ll do that before the end of 2008–their timeframe for selling 10 million phones. So, will Apple sell 10 million iPhones before the end of 2008? I can believe it. Will they be the same iPhones at the same price points as now? Nope.

    By the way, the Cube was more expandable than the mini or the iMac in that you could also swap out the graphics card–assuming someone made one which would fit.

  • Dan:

    I purchased the 1st gen iPod when it came out (which I have used almost everyday since then, and it only stopped working this year!). In Canada the 10GB was $699 plus tax so my total bill was about $800. I still consider it one of the best purchases I have ever made when you look at volume of joy/dollar ratio.

  • Quix:

    Anyone who feels compelled to use the word “zealot” or “fanboy” in any product critique instantly loses all credibility.

    They’re simply words used by those who have nothing objective or intelligent to contribute to the discussion.

    Funny how Microsoft has massive 90% market share, yet no one ever uses the term “zealot” to describe their customers…

  • Bergamot:

    The two main problems with the cube were that it cost $500 more than an equivalently-specced PowerMac, and its rats-nest of cables (conveniently left out of the promotional photos) ruined any aesthetic appeal.

    The iPhone has no equivalent rivals, costs at least in the ballpark of the non-equivalent rivals, and only needs one cord.

  • Andy:

    This is *the guy* who chaired the committee to design a horse and produced a camel…
    Enderle co-chaired.

    I work with twits like this daily (taken care of, thanks, I’m resigning…anybody need an old Mac engineer?)

    They, collectively and personally, just don’t get it!!
    They cannot understand how silicon valley can be so productive or imaginative.
    They are the Cingular prez. The difference is obvious to those who do get it.

    Further, this explains why their IT depts all face Redmond and bow. Why books like “The Inmates Are Running the Asylum” are written. Why pop music sux…

    1984 is real and now….

  • This is why business schools drive me nuts. The man clearly has no idea what he’s talking about, but he and other MBA’s will go on to make gobbles of cash and always be hired to manage the people who actually do know what they’re talking about and make like 1/3 of his salary.

    I makes me so mad…I just wanna…grr…ack! I need to get some tea….I’m gonna go lie down.

  • The critique of the Cube is always interesting. It was the only computer you could purchase at the time that was quiet. That’s why I bought one and used it for about three years. It still had good resale value. I was able to fill to the brink with memory (2 GB, I think), and later upgrade its hard drive and video card. I think it was actually more a pricing issue: it had a huge differential against the quick cheap Power Mac G4 models introduced at the same time.

    I now own two Mac minis, but one is in a server room (headless, cold, and in the dark — how sad), and the other is a home entertainment controller.

  • Mark:


    iSocks are awesome. One of the best examples of an Apple product ever. Everyone else makes complicated folding / slot opening / clear plastic / uglifying covers for an iPod, Apple realise that all you really need to do is slide out your iPod every now and again to change a song.

    Of course, if you’re a step ahead you use a real sock folded over. Have for 2 years now and it’s never failed me.

  • terceiro:

    I bought a Cube back in the day. In the day they were discontinued and highly discounted. It was the cheapest G4 available at the time. And what a workhorse. It’s still running.

    And iPod socks? Yeah, I’ve got one of those. I didn’t buy one, but somone I know bought six of them (because, you know, they came in packs of six) and gave me one. It was a rather tight fit on my first gen iPod. And my other iPod. Not my nano, tho.

    Oh, and I’ve bought (for personal use) sixteen macs in the past twelve years. I think I’m somewhat of a Mac fanboy. And I have no intention of buying a iPhone. Because I don’t buy crap just because it has a fruit logo; I buy what fits my needs and budget. I have no need for a smart phone or new iPod.

    And you know what? I have read reviews of Vista with an idea that I’d buy a license if it were any good. I’d plunk down the cash for a Dell and turn in my MacBook and not feel even a tinge of remorse. Because I don’t have sex with my Mac. It has borne me no children. Unsurprisingly, Vista appears to be roughly on par with Tiger (though I think there’s a few areas where Vista beats 10.4). I expect that Leopard when it ships will remove Vista’s small edge over the Mac OS. So I don’t upgrade. Er, downgrade. Whatever.

    The point is that one can spend quite a lot of dough on Mac stuff and still use their brain. I mean, since I can afford to spend the premium for higher-end goods, and I can choose what will best meet my needs, why not use a Mac, or an iPhone, or a pair of good headphones?

  • David S.:

    Re Fader’s (and several others) comments on the lack of Mac announcements at MW – anyone who watched the KN *heard* Jobs say Apple have some “awesome” Mac products coming out this year, “but today’s not about that”, and then later he said he would be “seeing you all again very soon” (or words to that effect). How does this show Apple’s losing interest in the Mac? We *know* OS X 10.5’s coming, we *know* iWork ’07 (and presumably iLife ’07 too) is coming. It’s London to a brick that an 8 core Mac Pro (and 8 core X Serve?) is coming any week now. Surely a C2D Mac Mini can’t be far off either. And that’s just the Mac stuff we know has to be near, only SJ knows what else in the Mac area will come out later in the year, say during WWDC or other special events.

    This year is likely to see the largest number of new Mac models and Mac-related add-ons ever (with the possible exception of ’06 which was a special year due to the Intel migration, every Mac model got refreshed).

  • Erik:

    I think some people just get confused about what the word “zealot” means. To those used to computing *in spite of Windows*, anyone who is really enthusiastic about computing must be a complete whack job. Thus, people who enjoy using their Macs must inherently be zealots.

    Perhaps this explains why many long-term Windows users who switch to Macintosh are astounded at how much more pleasant it is to work with Macs. For so long they’ve believed that the Mac zealots were all just high on the Reality Distortion Field. When they actually make the switch, the realize it is actually possible to really enjoy the experience of working with a computer. Many of these folks become the biggest Mac proponents.

  • I’ve been using both systems for 20 years. Windows at work, Mac at home. I don’t understand how anyone can prefer Windows.

    I haven’t seen a single feature in Windows EVER that made me think I’d be better off using it at home. Every Mac I’ve ever owned has been a useful machine for at least four years. The only reason a three-year old Windows box isn’t obsolete is because Microsoft hasn’t issued an update to their bloatware operating system in five years.

    Tiger will still run, with all the features, on a G4 with 2 Gb of RAM. Will Vista run on a 6-year old computer? At all?

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