Not All Consumers Are Created Equal

by Ben Bajarin   |   August 31st, 2012

The series John Kirk has been tackling this week as inspired me to add some needed perspective to the platform debate.

Fanatics of products or brands, for example, consistently assume that what they love or feel is superior should be true of everyone. There is a psychological element to all of this where too often people believe that what is true or good for them is true or good for everyone. Yet nothing can be farther from the truth.

When you study the history of nearly every product in consumer markets you see quite a bit of diversity. This is because not all consumers are created equal. The needs, wants, and desires of individuals can differ slightly and also drastically.

There is not a one size fits all model in consumer markets.

The markets for mobile phones, tablets, traditional PCs, etc, is segmenting and opening the door for many possibilities. To see this point all one needs to do is look at the vast variety in design around Windows 8 hardware we are seeing and will see over the next year.

The key to success for all consumer product companies who want to operate within the dynamics of this market is to understand your customer and seek to develop products that meet the needs of that customer. In this scenario you must understand that what you are creating will not appeal to everyone and this is perfectly OK.

We should encourage diversity rather than hope that one product or platform rules the industry. If we did this market would be very boring.

To quote Buddy / Syndrome from the Disney / Pixar’s The Incredibles.

“and when everyone is super, no one will be.”

Let’s hope we are not headed for a technological landscape of the sea of sameness.

Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research. He is a husband, father, gadget enthusiast, trend spotter, early adopter and hobby farmer. Full Bio
  • Lars F. Jørgensen

    Well put.

  • Matang_Lawin

    Ditto.

  • toomanyairmiles

    You have a point, and it’s a good one, but two form factors and one platform have effectively ruled the industry for 20 years, and it’s not been awfully boring – it’s not the device it’s the content.

    Moreover the sudden explosion in tabletesque form factors has more to do with the utter desperation of manufacturers to jump on the new bandwagon and get ANY product into the marketplace in the hope of some market share to build on (look at HP and Dell’s market cap over the last 5 years).

    MS doesn’t really want to make tablets, but since no one has made a decent fist of a windows slate so far, they have had to pull on Apple’s clothes and define the experience or risk loosing the sector entirely.

    And there’s the rub. Apple define the experience then everyone else follows suit, it’s as true in 2012 as it was in 1976. None of the products coming out right now are genuinely innovative. Surface, Kindle Fire, s3, Galaxy Tab, Galaxy Note, Lap-slates, are all variations on a single core experience defined by the iPad (though you can argue that the menu/desktop/widget model Android uses is more Windows than iOS).

    The only place segmentation really comes into play is in the content market (which is where Apple is slaying everyone else outright), and certain hardware basics e.g. removable keyboards, 7″ vs 10.4″, NFC chips, colour choices, finish and price.

    • Grwisher

      @toomanyairmines
      Regarding: “and price.” (the last two words in your comment)

      You saved the best for last.

      A few months ago I was talking to a much younger man (college student) who had a Windows Phone. I, being an Apple Fanboy, was curious about his choice of phones and asked why did he purchase the Windows Phone. He replied: “It cost $50”.

      As I read this article, his words crept into the active part of my brain. There was a time, early in my life, that when I ordered a hamburger, I would have to decide whether to spend the extra 5 cents in order to get cheese on it. Yes, I am that old. Today, many of us, can choose a product where the price is of concern, but not a primary concern.

      We can analyze “The needs, wants, and desires of individuals” and its relation to consumers choices. We can talk about the various form factors, features, etc. and their role in a consumer’s choice as well. But for many consumers the answer is much simpler. For many consumers the price, especially with the current economy, is an obstacle. Or the phone is not as a big deal as it is for some of us and therefore the price is a primary concern. In either case “price” is one of the major reasons that “Not All Consumers Are Created Equal”.

      This also explains why “It requires 20 or 30 s3 handset’s to earn the same profit as a single iPhone.”

      • toomanyairmiles

        It’s quite common, where feature phones used to be cheap or free on a contract you now find basic and middle ground Android phones. Several friends recently turned up with Windows powered Nokia’s – all got them free.

  • Grwisher

    Regarding:

    “We should encourage diversity rather than hope that one product or platform rules the industry. If we did this market would be very boring.

    ……

    Let’s hope we are not headed for a technological landscape of the sea of sameness.”

    We really don’t have to worry about this. Diversity will happen naturally.

    The reality is that Apple is not, as many believe, determined to put the other phone makers out of business and therefore be the only smart phone in the world. They just don’t have any interest in doing so. The reason for this ties into my earlier comment @toomanyairmines regarding price being a major concern to many, many consumers. Apple couldn’t even provide all of the smart phones in the world, even if it wanted to. Apple doesn’t want all of the smart phone business, Apple just wants the most profitable smart phone business.

    Therefore, there is plenty of room for diversity and it will happen without any encouragement. IMHO, the creation of a copy phone, by definition, does not create diversity.

    • Jeremy Taco Patterson

      Ahhhhh, I think you hit the true nail on the head: “Apple doesn’t want all of the smartphone business, Apple just wants the most profitable smartphone business.”

      This is one of those “moments of defining clarity” for me. I’ve always KNOWN this, I just couldn’t put it into words quite so succinctly and accurately.

      Apple WILL sell their products at a high margin. That’s their model, and something they are not straying from. This means Apple’s target market is those with more disposable income, and those who place a premium on Apple’s build quality and environment integration.

      This leaves, for other phone makers, everybody else. “Everybody else” is a MASSIVE number of consumers, but they’re also going to be looking for cheaper. Therein lies the reason Apple makes all the money, while Android sells SOOOOOO many more phones.

      • Grwisher

        I think it is important to keep this “most profitable business” idea in mind as you read the various articles and comments (Apple hater comments especially) in order to maintain your sanity. The Apple hater rhetoric is becoming way beyond the pale as the law suit articles are a lightning rod for this hate. IMHO, it is possible that a lot of these comments are being generated in mass by a much smaller number of contributors than the number of comments would indicate. You would think that almost every Apple fanboy was going to defect to Samsung by the Apple hate activity being generated.

        Just keep thinking (1) “most profitable business” and (2) “time will be the best analyst” as you wade through the various articles and comments.

  • def4

    The theory sounds compelling but the chosen examples betray a disappointing misunderstanding of what diversity is supposed to deliver.

    PC manufacturers have and continue to engage in what can best be described as diworsification.
    Microsoft’s iron fisted dominance has incentivised the lazy and resigned attitude of the PC makers’ oligopoly. Being commoditised by the software, they resigned themselves to their comfortable share of profit from what is a rather low margin business.
    The result is not diversification, but a paradoxical explosion in models with spec variation, but almost no diversity in the target use case. On the contrary, a strong bandwagonning effect is felt because of the race to the bottom that pushes everyone towards uniformity of design to enjoy the benefits of economies of scale.

    Case in point, I’ll remember for a good long time the enraging frustration I felt trying to find a laptop suitable for productivity and software development. Everyone had transitioned to glossy, low resolution, stupidly wide 16:9 screens. It was by far and away my worst buying experience.

    What we’ve seen in PCs and phones and starting to see in tablets is not any useful diversification, but just different variations and amputations of useful products built to hit a price target and squeeze an extra buck out of the market.
    What has happened to the physical QWERTY phone market after the iPhone? That is a great example of non-gimmicky, useful diversity.
    Android OEMs gave up on it because they are simply to lazy too put in the work to make it a great experience when it’s much easier to copy and follow in the footsteps of the iPhone.
    What about dual-SIM?
    Well, that doesn’t require too much effort to make it compelling so dual SIM touchscreen smartphones and feature phones have finally arrived.

    There’s plenty to choose from out there, but very little diversity, which is exactly the opposite of what we want and what we should be cheerleading for.