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NY Times Looks At Apple's Backwards Marketing Strategy

NY Times Looks At Apple's Backwards Marketing Strategy

by , 11:00 AM EST, January 20th, 2004

Here's a story that takes a different tack; John Markoff, of the New York Times, has posted an interesting article that examines Apple's marketing strategy, which, along with everything else Apple does, seems to fly in the face of convention. Apple gives away (or nearly so) software to get people to buy hardware. Mr. Markoff says that's a bass-ackwards marketing strategy that somehow seems to work for Apple. And if Apple can do it...

Here's and excerpt from the article, Can Hardware Rise Above Software?:

Common Silicon Valley wisdom has hewed for decades to the business adage that to establish a successful business in consumer products, you must be willing to lose money on the razors and look for profits from selling the blades. A notable example has been Microsoft's money-losing Xbox video game business. By hemorrhaging money on each video game console (razor) sold and hoping someday to make it up on game software (razor blades), Microsoft's home and entertainment division reported losses of almost $1 billion last year.

Now, along comes Mr. Jobs, the chief executive of Apple Computer, who once again is standing the common wisdom on its head. For its fiscal first quarter of 2004, Apple sold nearly 750,000 of its palm-sized iPod digital music players (razors) for an average price of $400, while selling 30 million songs (blades) for about 99 cents each. While Mr. Jobs has repeatedly said that Apple makes little or no profit from each song downloaded, the company said last week that its iPod sales were crucial to Apple's financial resurgence.

The article is an interesting look at Apple's marketing strategy. Stop by the New York Times for the full article.

The Mac Observer Spin:

While Apple has been widely acknowledged as the leader in computer design and innovation, others, such as Dell, have been seen as having the marketing know-how. Dell sells easily 10x the volume Apple does, thus making hardware a commodity, (the razors in Mr. Markoff example). Apple's contrary view of marketing may, indeed, be the wave of the future, even as it looks to the past, where the value is placed on the hardware. Apple is, after all, a hardware company, and much of the software Apple creates enhances the appeal of the hardware it creates, which is why you'll likely never see Apple market OS X to PC users.

So, it seems that, once again, Apple is leading the industry. We wonder what Michael Dell thinks of this?

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