The Challenge of Competing With Apple

on May 14, 2012

One of the more interesting questions I get asked as an industry analyst, that has followed Apple since 1981, is why Apple is so successful? And another question I often get is, why Apple’s competitors can’t make any headway against them? These are honest questions and to those really not familiar with Apple, the companies rise and current dominance in non-PC devices is somewhat puzzling.

There are many books out about Apple these days that talk about everything from Jobs’s history, tenets of Apple’s business models, to secrets about Apple’s internal management ideas. And most know that they differentiate themselves through great industrial design, incredible software and a rich ecosystem of software and services. However, after years of watching Apple close up and personal and having dealt with every one of their CEO’s from the beginning, as well as interacting with various Apple execs over the years, I would like to suggest that the reason Apple is hard to catch is that there are five additional principles, that guide Apple, that makes competing with Apple so difficult.

For any products that Apple creates, the people who create them have to want it themselves.

So many times, in projects I do with other tech companies, the goal is almost always based around the technology first and then if people really want to use it second. Geeky engineers are dazzled by the technology at their disposal and often create something because they can. But Apple’s approach is quite different. The engineers who are creating Apple products actually make them for themselves. And Jobs was the chief “user” of Apple products when he was alive. All of their products are based on his intuition that represented the real customer. And his engineers had to come to grips that in designing a product, it has to be something that they personally would have “technolust” for and could not live without.

The products have to be easy to use

Steve Jobs was a stickler on this point. While industrial design is a critical component of any product they make, if it is not easy to use, it is considered worthless to the consumer. This is what drove their user interface designs from day one and is still the mantra pushed to their software and hardware engineers every day they come to work. All of the products they create have to be intuitive, easy to understand, and learn. As technology has become more intricate and users want more features, the task of keeping things simple is sometimes difficult. And Apple creates tools for power users to rookies, which can mean a broad range of ease-of-use issues. But even with that, Apple is the only company I deal with where ease of use is more important then the product itself and Apple makes this a critical goal of their approach to creating anything for the market.

Keep things simple

I was in Paris for the last two weeks and had talks with various French telecommunication officials on many mobile computing issues. But one conversation I had in particular emphasizes this keep-it-simple point. We were discussing how to compete with Apple, a major pastime for all Apple competitors and carriers these days, when the question of why Apple is really successful came up. And one exec nailed it when it when he said he felt that the real reason Apple is successful is because they have one product, in this case the iPhone, and minimize the decision making process for the consumer by making things simple. The person speaking was with a carrier in France and he said that in their stores, they have to have as many as 25 different models of phones available. That makes it hard for his staff to be really knowledgeable about all of them all of the time and their customers just have too many options to choose from.

But Apple only has one iPhone model and anyone who has gone into an Apple store understands that every staff member there knows a great deal about each of the four major products they carry in their stores. They don’t have 5 iPhone models to choose from; they have only one. While this may seem limiting given the amount of smartphones available to users, the truth is the reverse. Our company has done consumer research for over 30 years and consumers constantly tell us that while choice is nice, in reality they want the process of choosing a tech product to be simple and easy to do and not complicated by a plethora of choices.

Yes, there are tech savvy people who like more choices and sometimes even like complexity, but from years of experience as a market researcher, I can tell you that in the end, the majority of users are not tech savvy and keeping things simple for them is a plus. Apple understands this and is never tempted to add multiple versions of an iPhone, iPad or even more then one or two types of iPods to make buying an Apple product simple. And consumers seem to appreciate this considering the huge number of iDevices they are selling each year. I know the tech media and techies are the most vocal about this issue of choice, but in the end, while choice is good for competitive pricing, what non-techie consumers really want is simplicity.

Offer great customer service and in-store experiences

Steve Jobs understood one of the major conundrums of technology. That conundrum is that even if you create products that are easy to use, the variety of things people want to use their technologies for often creates complexity, and because of this, consumers at all levels may need some hand holding from time to time. I was one of the most vocal critics of Apple when they introduced their first retail store in Tokyo in 2002 and thought it was crazy for them to try and go into retail. At the time, and even today, tech retail stores are in decline and big box stores like Costco and Walmart sell products on price and nothing else. I thought that if price were the issue, an upscale retail store would be DOA. Wow, was I and other naysayers on Apple’s store strategy wrong about this.

Apple uses this conundrum to their advantage. Because they keep product SKU’s simple, the salespeople inside their stores know their products really well. Notice that when you go into an Apple store and are greeted by one of their sales staff, you are not asked “how can I help you?” Instead they ask “What would you like to do today.” They go right to the heart of any technology users question that is always related to what they want or need to do with the technology they are interested in.

And once you explain your needs, in most cases they can take care of it on the spot. Or if you need more hand holding, they turn you over to the Apple Geniuses. No wonder 50% of people buying Apple products are new to Apple. Apple’s products are simple to understand and use but if you do have a problem, Apple can take care of it at their stores or over the phone quickly.

Apple only makes a product if they can do it better

Apple normally doesn’t invent a new product or product category. Sure, they did invent the first commercial PC with the Apple II and the Mac improved on PC’s with a graphical UI and the mouse input. But since these were introduced in the late 1970s and early 1980’s, all of their other products were recreations of existing products. They did not invent the MP3 player-they reinvented and made it better. They did not invent the smartphone-they reinvented it. And they did not invent the tablet-they reinvented it. Or in essence, they made it better.

As Apple designer Johnny Ives said recently, “Our goals are very simple – to design and make better products. If we can’t make something that is better, we won’t do it. Clearly, Apple applied that thinking first to iPods, smartphones and more recently, to the iPad.

Apple stays at least two years ahead of their competitors.

This is the one that scares Apple’s competitors the most. While those competing with Apple are just getting products to market that are competitive with a current Apple product, Apple is already working on the products at least two years out. For example, the new iPhone that will most likely go to market in Oct, was designed and signed off two years ago. And the iPhone they are working on now is for the fall of 2014. The same goes for the iPad. The new iPad that we will most likely see next March was signed off two years ago. The one they are working on now we will probably see in 2015. This is a nightmare for Apple’s competitors and will continue to be for some time. Besides having geniuses in design, software and retail, they also have the cash to invent components, manufacturing processes, etc., which almost makes it impossible for the competition to make any real headway against Apple. And don’t let the fact that Android has become the #1 smartphone OS make you think that it is the big winner. Yes, Android has gained ground by the sheer numbers of companies and products pushing Android. But the real measure of success is in the profits and Apple is making as much as 70% of all the profits in smartphones and about 85% of the profits in Tablets. Just ask any Android competitor which they would like more, market share or profits and you get the answer to the real measure of success in this market.

These five principles may seem a bit simplistic given the fact that they also have great software, industrial design and a powerful eco system of content, apps and services as part of their success equation. However, I can tell you that from my three decades of following them, that it is these five key principles that are what really makes them successful. And as long as they adhere to them, it is pretty likely that Apple will continue to grow and command a relatively large share of the market in the product categories where they compete and continue to give their competitors real headaches for some time to come.