Here are four things that Apple believes that explain the unexplainable:
1. Everything Apple sells is an Apple product: Everything Apple offers on iTunes is viewed by Apple in the same way they view music: They’re all Apple products… There’s a great scene in the upcoming movie, “Me and Orson Welles,” in which Welles responds to a fellow actor’s complaint that ‘he is an arrogant, selfish…’ with the line: “I am Orson Welles, and every single one of you stands here as an adjunct to my vision. [If] you don’t like the way I work here, there’s the door.” That, in a nutshell, is Jobs’ view of the relationship between Apple and its developer community.
2. Apple products are disposable: Apple makes high-quality, durable gadgets… But don’t let that fool you into thinking Apple wants those products to enjoy years and years of use. Apple expects you to dump your old product and buy the new one just as soon as it comes out. And they don’t expect you to sell the old one to someone else. There’s no such thing as an old Apple product. There is only the current Apple product, and trash.
3. Nothing exists unless Apple sells it: In Steve Jobs’ world view, nothing exists outside the Appleverse. People don’t read because Apple doesn’t sell a reader. Mark my words, when Apple ships its tablet or some other device that can be used for the serious reading of books, people will read again.
4. Apple doesn’t want to be a successful business: It has no interest in… imperialist expansion. Apple is interested only in surgical strikes into this business or that product category, where they can solve design problems others have failed to solve… Apple’s choices in markets it gets into make no sense, unless you understand that they don’t want to dominate industries, or even maximize revenues. They just want to design and sell better products that will affect user experience in markets where that’s an achievable goal.
Read more in the full article here.
MacDailyNews Take: Apple’s goal isn’t to make money. Our goal is to design and develop and bring to market good products. We trust as a consequence of that, people will like them, and as another consequence we’ll make some money. But we’re really clear about what our goals are… We try not to bring out another product that’s just different. “Different” and “new” is relatively easy. Doing something that’s genuinely better is very hard. – Jonathan Ive, July 2009
[Thanks to MacDailyNews Reader “Robert S.” for the heads up.]
Goof ball…
Computerworld’s Mike Elgan wrote that the Zune “scares Apple to the core” and predicted that Microsoft would “leverage the collective power of Windows XP, Windows Vista, Soapbox (Microsoft’s new ‘YouTube killer’) and the Xbox 360” to steal Apple’s business.
1. Microsoft is hatching a consumer media “perfect storm.”
2. The Zune is social and viral.
3. Zune may have more programming.
4. Zune’s screen is better for movies.
5. Zune is actually pretty cool.
Even if Apple is able to retain its lead, it could still be hurt — badly — by the Zune, which will capture mind share, grab market share and squeeze Apple on pricing.
Apple is scared. And for good reason.
“BUT – Apple could double market share 5% exponentially year-by-year to squash MS by simply cutting profit margins to 20%.”
Prove that that would happen. I worked for an auto manufacturer in the parts marketing department. We did a promotion to dealers every month which did exactly what you wish for.
We accomplished two things by that. 1: We pulled unit sales ahead by a few months, thereby causing a corresponding dip in sales a few months later. Provable dozens of times.
And 2: sold product for 20% less than necessary.
Nearly killed the company because the people marketing the cars were doing the same thing.
Fortunately, intelligent people who understood the the value vs price relationship intervened and slapped down the marketing clowns. Good to see that happening once in a while. The company survived, but just barely.
Apparently, Apple needs a translator, because people just don’t get what they mean when they explain themselves. Ok, I’ll take a swing at it:
1) Apple takes responsibility, to a degree, for everything it sells that it did not make. Not in terms of warrantee, of course, but they understand that people want a certain type of overall experience and Apple is going to try to create that package, not just sell some products and behave like a “middleman” on the third party products it sells. If someone else doesn’t fit into the experience, as Apple sees it, Apple sees no need to include them.
2) This one is the greatest distortion. Apple is interested in innovating its way to success, that is their strategy. That means they don’t/can’t prioritize backwards compatibility as much as others ( eg, MS). Also, they care are more about doing something well than putting in all the features in early versions of a new product, but as a business they need to start selling those early versions. Neither of these does mean that they don’t try to build products that last–witness they higher reale value of Macs compared to other computers.
3) Apple makes judgments about what most people “really” want–sometimes, like video on an iPod they realize they were mistaken, or they figure out how to do it better than others and decide that makes worthwhile, so they decide to create the product.
4) Of course Apple wants to be a successful business, as ONE of its goals, not the only goal. But Apple has decided that the best way for Apple to do that is not by spending their time focusing on how to make money, but by spending their time focusing on how to make great products.
Ok, so am I wrong about any of that?
As a 17 year Apple veteran, now retired, I can tell you that if Mike Elgin is serious in these beliefs then he has no idea what he is talking about.
But, it looks a bit satirical to me.
Mike Elgin just needs to learn to articulate his thoughts and expand his ability and vocabulary to describe, describe or summarize philosophies. Wouldn’t hurt if he knew how to write too.
kenh
“BUT – Apple could double market share 5% exponentially year-by-year to squash MS by simply cutting profit margins to 20%.”
Prove that that would happen. I worked for an auto manufacturer in the parts marketing department. We did a promotion to dealers every month which did exactly what you wish for.”
Speculation is only verified by action, then facts. Apple produces the most highly desired computer products (the iPhone is essentially a computer) in the world, arguably. A price cut would drive demand. The problem, question is, could Apple prepare to keep up with demand. If so, then I believe such a reduction would demand. The move would have to be coupled with an outright admission on Apple’s part that the reduction is made with the goal of gaining market share to give buyers and businesses a true CHOICE of computing capability. OSX versus Windows. Which is the better experience, the most productive and the most secure? In ten years MS would be history, a small version of itself, producing only its Office products. We all know MS would abandon any legacy version of its OS.
“We accomplished two things by that. 1: We pulled unit sales ahead by a few months, thereby causing a corresponding dip in sales a few months later. Provable dozens of times.”
MS’s sales are also in a corresponding dip when compared to its long term dominance. All companies experience ups and downs, ultimately few surviving to be its original essence. Economic times also dictate success. But so far, Apple has thrived in the current downturn. I believe if Apple wanted to dominate in computers (its OS, actually) as it does with the iPhone (still a computer), it could by true competitive pricing.
Period.
Then if you don’t care about money, give some of the 36 billion bucks you are sitting on with nothing to buy back to the frigging shareholders.
Never read such a bunch of bullshit in my life.
” I believe if Apple wanted to dominate in computers (its OS, actually) as it does with the iPhone (still a computer), it could by true competitive pricing.
“
It dominates where it wants to dominate. It does not care if it dominates in terms of unit sales, but in the value vs. cost relationship which means that the customers who buy them are satisfied with the value for the price paid. As a result, Apple makes a profit, which makes the whole cycle sustainable and repeatable. Sustainable and repeatable, if you want to extend it to unit sales, creates its own kind of volume.
Period
“Oh! Missing comma. People don’t read, because Apple doesn’t sell a reader.”
People, don’t read because Apple doesn’t sell a reader.
Now it’s correct.
Mike Elgan is a carbuncle on the world.
He may be changing tack – but it’s too little, too late… and cynical.
He wouldn’t if he didn’t have to.
“Nothing exists unless Apple sells it”
Sorry, but the “everything must be made by Apple” philosophy went out the door when Jobs came back.
Steve’s done more to bring industry standards to the Appleverse than Scully ever did.
Belief #5. Apple will take care that your experience when using Apple products is as elegant and hassle free as possible. Third party entrepreneurs are only invited to the part if they don’t violate rule #5.
Shareholders want you to either make money or get the hell out of the way. We do not give a shit if you call it making great products, the Age of Aquarius or if you put dumbass, clueless clowns like Al Gore on your Board.
Its all OK … but make money or get fired. Period.
There’s always an ulterior motive to such articles, and so it’s important to recognize where they’re coming from. In this case the author is writing for IDG, which owns Macworld and PCworld, both of which–for differing reasons–have a love-hate relationship with Apple. Macworld got stiffed last year when Apple pulled out of their showcase conference, and PCworld is, well PCworld.
And remember, IDG does the “For Dummies” series…
If it wasn’t for attempting to be salacious, it’d probably have hit the mark quite handily. However they go over the top in order to achieve clickworthyness. However, you can find well written information everywhere. I bookmarked a good read I found awhile back.
http://www.makentosh.com/tipsfromtheiceberg/Blog/Entries/2008/6/18_The_Grandest_Understanding.html
Daniel Dilger wrote a scathing piece about Mike Elgan and the hate he harbors for Apple…
#2 is BS.
I’ve worked in computer service PC/Mac and see far more people using older Macs than PCs. Sure, new Apple products are cool and exciting, but people *do* hang on to and use the old Apple products for a really, really long time.
I’m still using my MacBook Pro from 2006. Meanwhile others from the office are on their 2nd or 3rd PC. I know that’s only anecdotal, but it’s my experience pretty much everywhere I go.
For non-anecdotal evidence in regards to #2, take a look at prices for used Apple equipment. Apple computers, iPods and iPhones have always held their value…actually annoyingly so. It would be nice if used Apple products dropped in price more for those of us looking to buy used equipment that would still meet our needs.
“kenh
[Apple] dominates where it wants to dominate. It does not care if it dominates in terms of unit sales, but in the value vs. cost relationship which means that the customers who buy them are satisfied with the value for the price paid. As a result, Apple makes a profit, which makes the whole cycle sustainable and repeatable. Sustainable and repeatable, if you want to extend it to unit sales, creates its own kind of volume.
Period”
No argument there. Part of my post was about the arrogance and snobbishness of Jobs and the real reason he doesn’t really want to spread the wealth of OSX superiority or Apple computers. That would be too “common.” He wants to be the Mercedes to Gates Yugo.
But to address your point, no matter the value versus the price, only an IDIOT doesn’t want to pay less for equal value. Apple has seen declines in its iPod sales as penetration reaches peak-point. It will have to migrate iTouch functionality to lower end products to continue or improve those sales and continued dominance in the MP market. Profit margins being what they are, my argument has always been lower the prices and increase the volume. This doesn’t affect profitability, but does increase stress on production, and demand for lower prices (see the slim margins for the PC producers) as penetration increases. But if Apple were to gain 95% market share, the wealth created to get to that point dwarfs a predictable decline.
What’s funny is, that MS could squash Apple by reducing the cost of Windows OS to a simple flat rate comparable to Apple’s, get rid of all those various and expensive versions. Of course, computer makers might not like that since it might slow the upgrade cycle. But businesses that need to upgrade wouldn’t give a second thought to Apple because of the dramatic differences. x said it best:
“Shareholders want you to either make money or get the hell out of the way. We do not give a shit if you call it making great products, the Age of Aquarius or if you put dumbass, clueless clowns like Al Gore on your Board.
Its all OK … but make money or get fired. Period.”
@Cubert
I’m sure I don’t speak for the masses. But I will say, I find watching movies on a small screen (iPhone/iPod Touch) extremely wearisome.
I love me iPhone I just don’t think it’s a movie platform. Methinks the rumored tablet with a larger screen may make watching a movie on this device tolerable.
PS: Me comment at the top was in support of the idea that Apple usually does it right. If someone can make a reader that appeals to the masses it probably will be Apple. Not just because it’s a reader though. It will be a “do all” device, games, internet, communications (wave), navigation, blah blah blah, etc. You get the drift. Mr. Jobs has an uncanny vision for seeing what we do not.
I think Apple are concerned about making money, the $36 billion is kept in case of a rainy day dont forget Apple nearly went banckrupt 12 years ago.
Or they could just be saving to buy Nvidia or a large part of Intel then get these companies to design special chips just for Mac’s this would turn the comptuer industry upside down
This article was as much a waste of time as the usual flamebait subjeccts. I realized that at #4 (remember it’s on a business site.)
You seriously don’t think that Steve Jobs cares about profits and margins? About eclipsing Google in market cap and overtaking MS?
No… SJ’s ideas about business are the same as his about design… cleaner next level thinking. SJ thinks he can run a MORE successful business that way. And he’s right.
Clearly the author has no idea what it means to be a successful business.
@ smitty
BUT – Apple could double market share 5% exponentially year-by-year to squash MS by simply cutting profit margins to 20%. There would be no loss in market value – it would skyrocket, actually – because the increase in volume would negate the loss in profit margin. Volume volume volume. Look at Wal-mart. McDonald’s.”
i almost agree, but not quite. even though apple has a superior product, people dont like change. they have to want it, and when they decide they want it, they will be willing to pay the premiums to get it. i believe apple will cut its margins to increase share but it will be done slowly but surely. apple’s steadily growing share will encourage more people to convert. that way the gains will come naturally. and that is how the capitalists-who-think-they-are-socialists that run my favorite company will come to dominate the world!
IDG, now thats an outfit with little or no credibility.
“Profit margins being what they are, my argument has always been lower the prices and increase the volume. This doesn’t affect profitability, but does increase stress on production, and demand for lower prices (see the slim margins for the PC producers) as penetration increases. But if Apple were to gain 95% market share, the wealth created to get to that point dwarfs a predictable decline.”
Too many if’s.
Do you really increase market share? In my experience, you can get a short-term bump followed by the corresponding dip that I talked about. And you paid for it with less revenue.
I found that to be true in 3 different industries.
The competition just matches you in lowered price, (or appears to depending on the real value) What happens is that both of you lower and lower prices to the point that neither of you survive.
Without profit, none of us will have a job to go to.
There won’t even be a federal stimulus money to cover your butt, since ALL government revenue comes from taxed profits. I know you know that, but a frightening percentage of people do not know that.
Hate to get political, but when asked where stimulus money came from a recipient said (exact quote) : “Well, I guess it came from Obamas’ stash!” Then she laughed. Tragic.
We all know where it comes from, really, The printing presses, and if we keep going it will not be worth any more than Monopoly money.
No wait, Monopoly money is cheaper to print.
Large marketshare what does that acchive? More money!!!!
Well no if Apple halfed their profit on one mac from 30% to 15% they would have to sell 2 macs to make the same profit as they currently sell with 1.
This is crap business sense look what happened to GM cheap cars low profit margins and large marketshare no wonder it went Bankrupt!!!!!!!
Apple should stick to its current pricing structure and business model the same as other companies like Audi, Prada, Bang & Oulofsen
Also large marketshare also means more people have that item and more common it becomes.
As a result it becomes less desirable you can see an example of this with Calvin klein the designer brand expanded into everything and sold eveywhere now the brand is not worth much as it has lost the factor of being desirable