That analysis and situation favors those companies that commoditize industries. You know, like Walmart and Google; both brokers of the lowest common denominator. The only problem with that perspective is that it ignores an axiom of business.
Differentiation Is Key
The common wisdom these days seems to be that Apple cannot prosper much longer because competition is too intense, and the perceived differences between Apple products and competitors is nominal and diminishing.
Is that so? Obviously, Apple has done great work differentiating the Mac from common Windows PCs which are being eaten alive by new generation netbooks in the form of Chrome notebooks.
Macs sell at a premium because they do more, they last longer, they’re more powerful, yet not as complicated to use as a traditional Windows PC.
Apple’s iPads and iPhones command higher prices for similar reasons, all while Samsung, the tech copycat extraordinaire, which cannot match Apple’s differentiation despite years of trying, is being eaten alive by low end smartphones which run the same Android OS.
If differentiation is a key element of successful product marketing, Apple has managed to do it better than others for many years, even as hardware has become a commodity.
So, why is Apple doomed?
Doom Me Baby, One More Time
Let’s look at the definition of commodity.
commodity |kəˈmäditē| noun (pl. commodities)
a raw material or primary agricultural product that can be bought and sold, such as copper or coffee.
• a useful or valuable thing, such as water or time.
That doesn’t quite fit Apple, does it? Wikipedia defines commodity differently, and perhaps more appropriately.
In economics, a commodity is a marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services
That’s a general definition that fits any product or service which is similar. Let’s look at a more granular view of commodity.
The exact definition of the term commodity is specifically used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market. A commodity has full or partial fungibility; that is, the market treats its instances as equivalent or nearly so with no regard to who produced them.
Now we’re making some progress. For the most part a commodity is not distinguishable regardless of where it is made, grown, manufactured. Oil is oil. Wheat is wheat. Water is water. Chicken parts are chicken parts.
That seems to be the argument Wall Street charlatans and the technorati elite make when discussing Apple. Smartphone and tablet hardware are commodity items not easily differentiated. Software, as in the case of iOS vs. Android OS, is a commodity; it all looks and works the same, therefore the premium end of the market segment spectrum– where Apple resides– is doomed.
Reality Bites Bytes
The reality of our existence is usually a bit different than what we think it is or say it is or what doomsayers predict it will be.
Let me put it bluntly. There is no such thing as a pure commodity. Oil is differentiated and priced accordingly. Wheat and corn are differentiated and priced accordingly. Ditto for cars, furniture, houses, and virtually every electronic device you can think of from refrigerators to toilets.
Differentiation thrives. Some products are commodity-like, but differentiation not only exits, it’s everywhere where commodities seem to be prevalent. Walmart may be the world’s largest retailer, but not online (Apple is #2; Amazon is #1). Retail competitors that differentiate their wares from Walmart continue to thrive.
Google may be the largest online advertiser, but competitors who can differentiate themselves thrive. Why? Differentiation is key. We humans may act like sheep sometimes, but we live and buy and use products differently than each other.
Any member of the technorati elite that says Apple is doomed to obscurity because it cannot differentiate the company’s products from commodity hardware and software does not fully understand human nature. We thrive on differentiation. We applaud differentiation. We value differentiation.
Apple’s history is of a company that has Think Different™ embedded in corporate DNA, so if the company fails in the future, it fails because it stopped being Apple, not because hardware and software are the same all over the world.