Apple's Secret to Success is Hiding in Plain Sight

There is an American meme that cheaper is better. Who wants to spend more money instead of less money? Who doesn't enjoy Walmart or Costco? However, if a company understands why and when people want to pay more, it can succeed wildly. Like Apple. It's a secret hidden in plain sight.


Earlier this week, there was a news item that intrigued me, so I did some analysis. "Facebook Ads Generate Staggering Profits on iOS, Loss on Android." In that article, I pointed to an interesting quote from Tim Cook:

There’s always a large junk part of the market. We’re not in the junk business ... There's a segment of the market that really wants a product that does a lot for them, [emphasis added] and I want to compete like crazy for those customers. I’m not going to lose sleep over that other market, because it’s just not who we are.

This philosophy is implicit in Apple's product designs. Apple intentionally designs products for people who have money to spend. (Read that again.) I wrote: "Apple does this by virtue of the product design, the confidence the user has in Apple, the ease of getting connected, the pleasure of using (thanks to J. Ive.) and the security of the devices."

This strategy works. It works because Apple products appeal to people who are accustomed to getting what they want by smartly paying for something valuable. Again, I wrote:

Its [Apple's] customers spend more money online because they believe that the products they use and apps they buy and services they engage will serve them in some helpful way. They have a vision of what they want for themselves.

These people are also those who have the means to pay for something that saves them time. They are, so to speak, eager to spend money to avoid the loss of precious time, better targeted for their personal and professional endeavors.

The Android Alternative

Because Android is designed to be more or less free and because it takes a very free-wheeling and relaxed approach, surfacing a lot of options and technology to the user, often by design, it's not possible, in general, to recreate the same user experience that Apple achieves. Accordingly, Android customers are different. Not inferior. Just different.

I think there are two kinds of Android customers. The first is the high-end geek who doesn't want to be part of Apple's ecosystem. The geeks perceive that, at every turn, money may have to be spent. Plus, this personality is a natural tinkerer and has plenty of free time. The reaction to a typical technical problem is, "Hey, I can solve this problem myself. There's no need to cough up money."

The other kind of Android customer, the majority, is the less technical person who isn't sensitive to the nuances and advantages of the Apple ecosystem and is also fearful that they'll be dragged into something expensive, even if the initial down payment to their carrier is the same. They just want a cheap, but fancy looking smartphone. They aren't, however, very good at exploiting it, so they aren't mindful of opportunities -- or technical enough -- to spend money on apps that are helpful -- those that fulfill a personal, technical vision. Their Internet use is sparse.

One analogy I can think of is the person who balks at the idea of buying a BMW 3-series for US$41,000 because they think that after warranty service will be too expensive. So they spend $41,000 on a nicely loaded Subaru sedan. They want to retain immunity from an environment that will cost them additional money, money that will provide a high level of excellence. A Subaru is good enough for a drive to Walmart. (Don't get me wrong. Subarus, especially the all-wheel drive versions that thrive in Colorado, are fine cars. I've owned one before. It's just an analogy.)

Apple's Target

Apple targets the first group above. If a company wants to make a lot of money, it builds products that appeal to people who are willing to spend a little more for perceived value. It's a fool's errand to go after the mass market where there is resistance to that, and, therefore, a fool's errand to go after market share.

There is another meme, but more myth, in America that a company can innovate, seize dominance, and crush the competition. Investing in such a company can make one very wealthy because the company owns the market and can grow without bounds, without much competition to hold it back.

However, as we've seen, through various means, Apple's competitors have been able to make products that look almost as good and operate almost as well. Second best. That aggressive competition, what Tim Cook calls the "junk market" scares investors. It suggests limits to Apple's growth -- and their own investment profits.

Apple, however, doesn't have to care (too much) about the profits investors make. It only has to care about its own success, and so long as it can continue to move forward, innovate, compete with themselves, and make the very best products money can buy that appeal to people with money to spend, a lot of money will flow Apple's way. After all, it's how Apple accumulated US$150 billion in cash and liquid assets.

Apple's marketing supports its philosophy: only the best.

This is not a big secret, but my take is that each and every day, this secret, hidden in plain sight, is missed by people who write about Apple and should know better.


Tech News Debris for the Week of October 14

This week, I collected links to some of the worst articles that don't seem to understand Apple, but I''m not going to skewer the authors or waste your time. Instead, I'm going to stick to things that are worth talking about.

When we think about digital books, we tend to think about how cool they are on our iPads and how old-fashioned books made out of paper are. But, because digital books are big business, we tend to get drawn onto the business-side enthusiasm as if it were our own. But what should our own perspective be? We seldom think about our obligations to future generations. In this essay, "Neil Gaiman explains the worth and value of libraries." I know you'll appreciate his views.

By now, I hope you're regularly reading Jonny Evans over at Computerworld . However, if you missed this one, I'll send you over. "7 power saving tips for iOS 7." Come right back!

Heretofore, we've never heard of Windows Phone Phablets. The problem has been that Windows Phone OS didn't support the larger screens of Phablets, but now Microsoft is fixing that. Windows Phone 8 Update 3 does have support for larger displays, and perhaps this is Microsoft's escape route into small tablets that everyone loves. "Why Windows Phone Needs Phablets." What do you think?

The problem of drivers who become a danger to others by texting while driving (or even reading an eBook -- I have an eyewitness report) is serious. Brian S. Hall thinks that Apple should use its enormous technical capabilities to solve this problem, and I agree. "Holding Apple to a Higher Standard – Solving Texting While Driving."

For starters, Apple could use its mapping and GPS technology to make sure the user is on a roadway and not a train or plane. Then, use the iPhone speaker and microphone to emit ultrasonic pulses and create a sonar map of the interior. Make sure the user is not on a bus. If the user is in a car, on a public roadway, moving more than 10 mph, and is behind the wheel, then disable texting -- in accordance with state law. That's just my half-baked idea. Apple could probably do much better.

Finally, for comic relief and plain old technical satisfaction, I direct you to a wonderful tale of consumer protest and charming revenge against the routine abuses of privacy and dignity. "The retaliation begins: Google profiles get Schmidt-faced."


Secret sharing via Shutterstock.