Yes, you can buy less expensive personal computers, smartphones, and tablets than Apple sells, but the difference between cheap vs. premium is not lost on most of Apple’s customers. We like good quality, superior usability, and better treatment and we’re willing to pay for the privilege. Why?
The Car Dealer Analogy
Take a moment to think about how automobiles were sold in the U.S. just a few years ago. Only members of congress had lower favorability ratings than car salesmen and dealers.
That began to change a few decades ago when premium car brands began to treat customers as human beings and their automobiles improved in reliability, quality, and luxury.
In other words, the automobile ecosystem began to change. Premium brands separated themselves, their dealers, their sales methods, and their cars from the average.
Today, premium brand dealers provide loaner cars or shuttles for customers whose cars need repair or service.
Gone from those dealers are the gruff talking salesmen of yesteryear, the cigar chomping, white tie, white belt, white shoes, slicked down hair, cologne wreaking customer nemesis.
Indeed, many premium dealers more resemble banks inside than car dealers of just a few decades ago. The result? Premium car makers have a growing number of customers who prefer– and are willing to pay for– the new ecosystem of pleasant treatment combined with luxury performance.
Apple’s ecosystem is even better. Apple’s retail stores have become a single location for training, customer support and product repairs.
Apple’s products, from Mac to iPhone to iPad, have operating systems which work on older devices and machines, which keep a larger proportion of the customer base upgraded to the latest versions.
Apple’s app stores– for iPhone, iPad, and Mac– make it easy to find, purchase, download and install, and then upgrade apps. In fact, with the right settings, all you need to do is press the Buy button. Download and install is handled automatically, as are future updates and upgrades.
Apple’s critics often say the company is doomed because, just as Windows PCs crushed the Mac in the marketshare game, Google’s Android is doing the same to Apple’s iPhone and iPad. Ipso facto, Apple cannot survive.
There’s just one thing wrong with that perspective. It’s wrong. The math doesn’t fit because Apple’s ecosystem thrives with loyal customers who are not easily herded into cheaper products. Remember, Windows won the desktop operating system war over Mac OS, but the Mac owns 50-percent of the PC industry’s profits.
Android may have won the mobile device operating system war over all comers, including iOS, but Apple’s products command nearly 90-percent of the industry’s profits. Those profits allow Apple the option to improve the ecosystem, to innovate products in ways that benefit customers, and to drive down costs while maintaining profitable margins.
That positioning makes it very difficult for competitors to match the quality of products and depth of the ecosystem and still make a profit.
Keep it simple, stupid, indeed.