Do Apple Competitors Make Bad Products?

Ben Bajarin / February 9th, 2012

I often engage in discussions with the financial community on matters related to tech for their portfolio management. One of the things I was asked in a recent conversation intrigued me. The question was around why Apple seems to be dominating their competition with such a limited product portfolio mix.

Tim Cook continues to emphasize with each investor, earnings, and public event that Apple’s laser focus is to continue striving to make the best products on the planet. Given that Apple seems nearly unstoppable, it appears their strategy is working. And it does make you wonder what Tim Cook’s statements about Apple continuing to focus on making the best products and Apple’s dominant position (especially with iPhone and iPad) says about other products on the market.

So the question thrown at me was “Do Apple Competitors Make Bad Products?” In light of Apple’s continual progress forward and other companies’ struggle to keep up, this is an interesting question. The answer is simply that many Apple competitors make very good products. I happen to like quite a few of them. The problem—for competitors—is that Apple makes exceptional products and perhaps more importantly, extraordinary experiences with those products.

To dive into this deeper, three fundamental points need to be established…

Apple Has More Competition Than Anyone—Yet No True Competitors

When you think about Apple’s vertically integrated business strategy of having a dedicated hardware business, software business, and services business, you realize that Apple competes toe-to-toe with almost the entire tech industry. Yet no company competes toe-to-toe with Apple.

What I mean by that is Apple competes directly with hardware companies, meaning people who make notebooks, desktops, all-in-ones, smartphones, tablets, and set-top boxes to a degree.

They also compete with those who make software, particularly in operating systems, but also in core apps. They compete with Microsoft at an OS level and at an Office level with Pages, Keynote, Numbers, etc. They compete with companies who make media management and creation software like Adobe, or ArcSoft etc, with iMovie, iPhoto, etc. They compete with Google with Android. The list could go on.

They also compete with services companies. iTunes and iCloud as a service competes with a host of online services providers from email, to calendar, to movies, music, storage and backup etc. Google and Microsoft again are competitors here along with a long list of others.

They compete to a degree with retailers. Apple retail competes with Best Buy, Wal-Mart, Target, Staples, etc. Note that Apple doesn’t compete on all levels with these retailers, but we have to acknowledge there are some crossovers.

When you look at the sum of their businesses, because of their vertically integrated strategy, it is not quite obvious the large list of competitors Apple has all over the industry. Yet the reality is that no other company has such a tightly integrated vertical strategy as Apple. So my first point is that at a fundamental level, Apple doesn’t actually have any true competitors who compete with them on every level they way they do with the rest of the Industry. This, at its core, is what sets them apart.

Granted we could debate that with Google’s acquisition of Motorola, they have all the parts on paper to compete with Apple toe-to-toe, but for the time being I still consider that a stretch.

Apple’s “Works Better Together” Philosophy

What is truly unique about Apple is the relationship that all their products have with each other. It is as if each product was made for the other, yet alone each one is still a solid standalone product. We call this the “Works Better Together” approach. It means that your products or “consumer end-points” can work fine as standalone products, but work even better as a comprehensive whole. In concept this sounds like a no-brainer, but the reality is that Apple’s vertically integrated approach is essential in executing this strategy.

Too many companies who make consumer products organize their business units to compete for PNL. Sometimes even worse than competing for PNL, they work as a silos and never have a clue what the other business groups are working on. This makes it extremely difficult for a company to create a “works better together” portfolio even if they have all the parts to make it work.

By developing this strategy as a part of the “iDevice” ecosystem, Apple benefits by creating a user experience that is not related to simply one device, but to the entire Apple ecosystem. This and more is what we mean when we talk about the Apple ecosystem being sticky and creating consumer loyalty.

Technology as Art

Lastly, Apple has a culture that is completely unique, which is another part of the reason for its success. Steve Jobs in his many keynotes has pointed out that Apple’s approach to products is that they are at the union of liberal arts and technology. And nobody in the industry so far has been able to match Apple’s eye for design.

What this means is that there is an added dimension of design and technology as art that influences the thinking of those who work at Apple. This group is like a passionate team of artists who happen to turn their art into technology.

This is the major reason that Apple emphasizes simplicity. Steve Jobs has in many keynotes and demos said that Apple’s various products “just work.” What we must not forget is that creating technology products that are simple is no trivial task. Simple solutions require sophisticated technologies. Apple knows this better than anyone and it has oriented itself to succeed at just that.

So it is not that Apple competitors make bad products. Their hardware competitors and OS competitors make good products. It is simply because of their vertically integrated model, paired with a works better together product philosophy, coupled with incredible execution, and a hardware as art design strategy, that Apple simply makes exceptional and extraordinary products.

Which is why one can argue that they truly do not have any real competitors.

Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research 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 and he is responsible for studying over 30 countries. Full Bio
  • Authored

    The better question to consider is not whether Apple’s competitors make bad products (the answer to which is a mixed bag — some certainly do, some do not). The better question is: Do Apple’s competitors make original products that define (or redefine) their categories? Or, put simpler: Do Apple’s competitors lead or follow?

    In every significant hardware category in which Apple competes (other than what Steve Jobs called the AppleTV “hobby”), Apple leads and defines that category: laptops, ultralights, tablets, phones, music players, all-in-one desktops. The rest of the industry races to copy the standards Apple has set, which by definition makes those companies followers instead of leaders. Some of the resulting products are indeed bad (Dell Streak, anyone?), but even more of them, while technically good, are nevertheless lame because they carry the unmistakable aura of the copycat late to the table (the unlamented MS Zune being the most obvious example).

    When another tech company steps up and redefines a category in which Apple competes, or brings a new category alive in which no one has yet made a mark – in the same way the iPad has defined the table – then Apple will have a true competitor.

  • Fred Morgenstern

    I am a writer, photographer and documentary producer. I have been using Apple products since 1987. My choice of Apple over everything else is, as the years have gone by, Apple has focused on bringing me higher quality and higher functioning products that serve my needs while all other companies have focused on one thing: more value for their shareholders. The major examples: Micro$oft’s core business is its operating system. It is a dismal disappointment for anyone who has to wrestle with that beast. All other computer makers have to install the MS operating system on whatever fancy box they design thereby removing value for the end user.

    Another example: Hewlett-Packard. In the late 90’s my company had over 300 laser and inkjet printers from HP. They were well-made and mostly reliable. Somewhere in the early 2000s HP decided they could charge just as much for printers that were less-rugged and less-reliable yielding more value for their shareholders. I saw this trend and removed HP from my work environment or I demanded and received extended warranties and overnight drop-ship replacements for the lemons that failed surprisingly fast.

    I also contracted for toner and ink cartridges at half of the going retail price. HP did not care. They were still making a killing. Making a killing, yes, but slowly and steadily, losing my trust in them as an ally to my business. Again, HP did not care. I read a strategic marketing plan that said only 2-5% of all end-users will ever actively challenge a product that is inferior or unsatisfactory. The vast majority will either soldier on or simply buy another model.

    In the tablet and ‘smart’ phone world companies are taking the same approach: push some less-than-fully-realized product out the door adorned with a glitzy marketing campaign in the desperate hope of beating Apple’s iPad. We, as consumers, are not as stupid as these companies believe. The smarter of us are sitting back and watching this chaos unfold. Nothing will draw us out to open our wallets for these inferior products.

    Nokia, Blackberry and many others are paying the price for attempting to maximize shareholder satisfaction at the cost of end-user satisfaction.

    I apologize for the long comment but I, and many of my colleagues, are sick and tired of being played and manipulated by companies who care of nothing more than short-term gain for their executives and their shareholders.

    Thanks for reading.

    • benbajarin

      Great comment Fred. Thanks for articulating so clearly why you value Apple products. I enjoyed your comment and hopefully you enjoyed my column.

  • Spike Ennis

    To Fred M. You are so right on.

    Apples approach to pleasing the customer has kept me “locked” into their product line for some time. I took in an out of warrantee Mac Book( 4 years old) white unit that had a power cable to the screen light going bad. Not only did they fix the cable, but they tested the power source for it and declared it fine (so no need to replace) and while there they replaced the keyboard top of the computer (because older units can get chips in edges) and there was no charge. Cost for the flex cable and repair, about $ 60.00.

    The pundits do not get Apple. The Market Analysts do not get Apple. The competition does not get Apple.

    The customers ….. love Apple.

    nuff said.

    • benbajarin

      I agree with you but would clarify not all pundits and not all market analysts get Apple. Since I fall into those categories 🙂 I’d like to think my column speaks for itself 🙂 Thanks for reading and commenting I appreciate it.

  • Most articles are a re-hash of the news. Occasionally, an article goes in a new direction and offers a glimmer of insight.

    This article was both original and insightful. Apple directly competes with (almost) all tech companies but no one tech company directly competes with Apple’s vertical business model. I had never thought of it that way and I’m pretty sure that if I hadn’t read this article I may have never thought of it that way.

    Thank you, Tim, for the original insight. Much appreciated.

  • Ash

    I ripped out an entire Dell network at my hospital and replaced it with various mac mini’s virtualizing windows.

    I used 3 mac mini servers at around $1200 a pop instead of 3 Dell Servers at $8000. I kept 1 mini in reserve for a critical failure
    I used a Raid 5 thunderbolt raid $1000
    I used 25 mac mini’s, I kept 3 as spares for critical failure.

    What I found was
    Our power consumption went down dramatically, we could measure this when testing our diesel generator, it was being taxed before and was no longer. Think 200 to 300 watts per dell to 70 watts per mini, running at a 24/7 facility.
    Our “bizarre” random virus calls dropped by 40% or 50%
    Our “uptime” was significanly higher, mainly due to being able to use a raid to redeploy windows xp images (licensed) in a matter of minutes. (We would just delete a problematic windows install)
    Happier employees
    Our patients though the place looked classier.

    All in all I replaced well over 30 computers for around $35,000. The dell servers would of cost $24,000 by them selves. I’ll admit this isn’t conventinal thinking though. The one time we did have a problem with a server we used the space and were up and running in 30 minutes, I then took that mini to apple and they gave me a new one that afternoon, I reinstalled the settings and now it’s on the shelf again incase we have a problem. a

    How is that for value?

  • neutrino23

    I find the slide Steve made placing Apple at the intersection of Technology and Liberal Arts is one of the most important and telling slides he used.

    Companies can succeed for a while because they are good at one thing. Dell was good at making inexpensive PCs and they grew quickly based on that model. But that very model also limited their success and made them vulnerable to changing times.

    This is what makes Apple so difficult to pin down. They use a lot of technology but they are not, strictly speaking, a technology company. They do excellent design but they are not unaware of high tech.

    Apple has been able to bridge the gap between the two worlds of Liberal Arts and Technology by somehow fusing those two worlds in a way that respects both worlds and in way that has each world informing the other.

    Because Apple is based on this sort of very big idea they are able to adapt and grow and they are unlikely to lose their way anytime soon.

  • There is a related, and IMO dark, side to Apple’s “works better together” strategy though, Ben. For many Apple products (not all, but many), if you want product X, you can only have it in the context of an entire Apple suite. That is, Apple doesn’t have to be best at *each* category (software, hardware, cloud, OS), just at the one that makes a decision tipping point. With Apple, it truly is “All or Nuthin'” as the old song says.

    Does this bring them more market or less? I don’t know. I know plenty of people who would try Apple products if their favorite or required software would run on iOS or MacOS. I myself might have tried a few (at least bought a used one off an upgrading fanboy) if I would be able to use them without iTunes which does not impress me at all.

    But my point is that your argument on competing with multiple industries is only half true. Apple’s iOS competes with Android, sure…but iOS will only work on iPhones and iPads…is it the hardware or the OS people are choosing? Pages competes with MS Office? I don’t even like Office and I don’t buy that. While there’s a version of Office for the Mac, there is no Pages for the PC. If anything, the existence of Office for Mac suggests that Apple’s office products do *not* compete particularly successfully.

    A more reasonable analogy is whether Apple’s totalitarian society competes successfully with the rest of the IT world’s sloppy, messy democracy. And for a minority, it does.

    • jfutral

      While I don’t completely agree that Apple is “All or Nuthin'” and I am still trying to figure out which Apple product is available only in the context of an entire suite (I am sure you are correct and the issue may come in our differing definitions of “entire Apple suite”), I think you counter your own argument when you started out with “works better together”.

      And that is the issue. Apple’s products, while you don’t need to use _all_ their products, they certainly do work better together, at least for the product lines they have chosen to develop. And the point of the article is no one else has developed a fully fleshed out coherent vertical solution and no one is willing to partner up enough with others to create something potent.

      Microsoft tried in as much as they could wield licensing power over PC makers. But when it came to phones WinMo just couldn’t push things further than the hardware maker could deal with the carrier.

      Google is trying, but the lack of traction for tablets, and, again, the lack of pull they have regarding both handset makers and carriers is proving difficult. And the Chromebook, if that concept has a future is too far ahead of its time.

      I dont know if this gives Apple _more_ market, but it certainly gives them a deeper market. With the rest of the industry working in markets that depend on too many people and no one willing to throw everything behind one company or another, that gives Apple a huge advantage. That’s why I think the Nokia/MS alliance can prove beneficial for both companies if they truly do go into it 100%. But the minute MS feels it needs to placate another handset/hardware maker or Nokia needs to placate another software vender their potential is diluted.

      That’s why, at one point, Autodesk had to just go full on Windows and drop every other platform. Trying to make too many people happy takes a lot of resources and dilutes innovation.

      Google may try to do something similar with Motorola, but they risk pissing off too many other hardware makers. If they just don’t care about that, they could make huge inroads together.

      In other words because most tech companies make only one or two things, essentially, they keep hedging their bets. Sorry to take so long getting around to this conclusion.

      Joe

      • To clarify, Joe: let us say a customer really likes Apple Pages (having seen my kids use it, I can’t imagine why, but I’ll go with it). They can’t buy Pages for the PC (Windows OR Linux), so if they’re going to use Pages, they’ve gotta use it on Mac hardware and OS. In this case, it isn’t the hardware or OS that are successfully competing against like products, it’s Pages. iTunes is another example. If you’re going to make an ipod work, you have to use iTunes. Having messed with it I’m not impressed with iTunes’ ability to rip my existing CDs (the sound comes out choppy), so I don’t care for it. But for my son to use the iPod somebody gave him, he’s stuck with iTunes for that element of his music.

        In other words, when Ben stated that Apple competes in all these dissimilar spaces, I disagree because Apple products are so environment-specific that the only market choice is “to Apple or not to Apple.” After that, whatever drove you there, you are stuck with whatever the Apple politburo has decided is best for you. This is not head-to-head competition of the individual products.

        • jfutral

          I got you. You’re kind of making the point and missing the point at the same time.

          Pages competes with other word processing programs on the Mac OS/iOS platforms. iTunes is not the only way to rip CDs (as someone who deals with audio regularly, I have several products for ripping and burning CDs). So, Apple is going head-to-head in hardware and software with many competitors in _varying_ markets. But because there are benefits to using Apple’s solutions beyond the direct feature list of a particular product, that is why they say they offer integrated solutions.

          In that regard you are correct and that is the point of the article when the writer says “Apple Has More Competition Than Anyone—Yet No True Competitors”. Toshiba is making an ultrabook to compete with Macbook Air (and if you don’t think they think they are competing with Apple, look at their request to Intel to help offset cpu pricing so they _can_ compete with Apple). But if all Toshiba wants to sell is the ultrabook, then they aren’t _really_ competing with Apple. They are abdicating the rest of the computing experience and ecosystem to other players.

          And the author’s point has often been _ecosystem_, not individual products. And to date, no one has successfully competed with Apple. Amazon is trying, and will probably do better than Google. But time will tell, and quite frankly I think there is always a chance of any player being out done, including Apple.

          Joe

          • But by your definition I’m not sure anyone except maybe Google is actually *trying* to compete with Apple. Even Microsoft in their most aggressive heyday, never tried to market the hardware as well as the software for the closed-environment “experience.” In fact I would suggest that by making the “experience” the issue you’ve decided the question by the way you ask it.

            To use a completely different (and hopefully less-emotional) analogy, it’s like asking whether an all-inclusive resort (say Sandals) competes with a plain ticket, a rental car, and a follow-your-nose hostel experience in Jamaica. Both are nominally going to the same place, and both are nominally about vacations. But the approach of each is so diametrically opposed to the other that they can hardly be described as occupying the same space. In fact, those most likely to be pleased by the one are highly likely to be repulsed by the very thought of the other. Is one or the other “better?” Well, that question depends as much on who *you* are, as it does on the relative merits of the products.

            Apple provides an integrated environment that is perfect for those who like Apple’s integrated environment. It provides a complete, packaged solution for those who like having packaged solutions handed to them…and for them, (and even for some oddballs like me), that solution has a certain aesthetic beauty to it. But for those who like what *they* want without what they *don’t* want mixed in, Apple provides little to attract. To that extent, Apple can’t really be said to compete with Linux, or Microsoft, or Toshiba, or anybody else, in part because everybody else is responding to different requirement sets.

            Sure, Toshiba’s (and Acer’s) new thin-and-light PCs are in some ways a response to Apple. Anyone with eyes can see that. But Toshiba is marketing its notebooks to people like me who don’t want a prepackaged, uncustomizable ecosystem in the first place. To that extent, the new Portege provides what I like about the MacBook air–the thin-and-light form factor–without what I *don’t* like, to wit the Mac OS and hermetically sealed environment. Funny enough, it’s back-to-the future for Toshiba…thirteen years ago I had a Portege 3000CT and loved it—during a time when there wasn’t a MacBook smaller than the New York phone book. Why Toshiba abandoned that form factor I never understood.

            So to return to Ben’s point…as a consumer I don’t see Apple competing realistically in any space I inhabit, while at the same time they *do* compete to some degree in a variety of product areas I use. From a corporate analysis point of view, I do see that a Venn diagram describing Apple’s market space would involve a lot of peripheral overlaps with different spaces…software, hardware, OS…that don’t themselves overlap with each other in the space of any of the other potential competitors. The challenge from a corporate point of view, to build a customer base and brand-ubiquity as far reaching as Apple’s, is one few have attempted. I think Microsoft toyed with it, but were thwarted partially by overreach and partially by unimpressive product offerings at the wrong times. Sony did it in a different way with the consumer electronics space for a while, and I would actually be interested on Ben’s take as to how they fell from their high perch in that regard.

            But that’s not the only corporate model that makes for insane growth. I rather like Gillette’s philosophy: “Do a common thing uncommonly well.” There are others. The next big success is likely to copy none of its predecessors, Apple included.

          • jfutral

            I absolutely agree with this, “The next big success is likely to copy none of its predecessors, Apple included.” That’s who I am looking for. That’s where I think most tech companies, particularly in the consumer side of things, are fighting an uphill battle trying to beat Apple at their own game, at least in the way they are trying to accomplish that. The way to beat Apple at their own game is to come up with a new game. That’s how Apple did it.

            Joe

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