The Challenge of Competing With Apple

Tim Bajarin / May 14th, 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.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • Theo

    Good post. I think the last one is one of the most critical principles. So often, early adopters grouse about how Apple’s products and software lack this feature or that feature found in other products. But Apple is patient. Rather than cram everything possible into the new release, leaving it scrambling for the next one, Apple realizes that no edition of any of its products is definitive; they are all incremental — and there will be, must be, another update in a few short months. That leads them to focus on getting the next iteration right, refining the one after that, and dreaming up the one after that. It’s a smart approach, and requires a much longer-term approach than any company I’ve ever seen up close.

  • FalKirk

    Usually when I see these “Why Apple is Successful” type articles, I am disappointed with the results. The proposed reasons seem obvious or are irrelevant or they lack depth. Not so this article. Each of Mr. Bajarin’s suggestions is thoughtful and thought provoking.

  • BillC

    Astute and to the point. One area I think is in Apple’s favor is the entire product offerings, Sony once had the envious position that you had faith in their products and they almost seemed “bullet-proof” but we see they have lost favor due to many reasons.
    Hopefully Apple will adhere to the same principles that Steve Jobs set in place, you would not sell your home simply because you saw a new home that had a few different gadgets well the same is true with Apple you are confident in the product, comfortable with it so you stick with it until it let’s you down.

  • James Thiele

    One factor you leave out is economy of scale. This (http://www.electronista.com/articles/12/01/06/analyst.says.apple.uses.flash.to.its.profit.edge/) estimates that Apple buys 23 percent of all flash memory in the world. You can be sure Apple is able to squeeze its suppliers on pricing more than anyone else can.

    • FalKirk

      I agree that economy of scale is important but I, personally, am less interested in this very important business advantage since it is not unique to Apple. Economy of scale was a factor in making Apple big and great…but it’s not what made them great.

      • Steve Wildstrom

        But it helps keep them great. Apple is in the extremely enviable–and as far as I know, unique–position of being both the premium producer and the low-cost producer. This helps explain Apple’s phenomenal profitability.

        Also, saying Apple “squeezes” its suppliers is not quite fair. Yres, they demand a good price, but the reward is a vast, guaranteed market. Walmat demands very low prices, too, and the supplies line up in Bentonville to sell to Walmart because access to that market is good business.

  • Nevermark

    Unlike competitors who create multiple products for multiple price points (mid-range phone, high-end phone, …) Apple simply uses last years iPhone as this years low/mid-range phone. This keeps the product line extremely simple, lets every function of the company focus on only one phone, and even drives their margins higher as last years parts cost so much less than this years and require no retooling of factories to produce.

    Does anyone know of a single company besides Apple that uses this tactic?

    • Group

      Sony – specifically the Playstation 2 and 3.

      • Nevermark

        You are right! That makes two.

        Where Sony is dropping the ball is in their slow upgrade cycle compared to phones, tablets, PCs, GPUs, and just about everything else. They could be raking in more dollars if they gave customers a reason to upgrade every year or two instead of every several years. GPU technology, which is their main feature, is moving forward fast enough to justify more frequent improvements.

  • Arthur Morrone

    All great comments and more the reason for anybody with a few dollars gaining dust in a bank account to invest there hard earned shackels in AAPL.

  • Tim Woods

    This article may have been true 10 years ago, but it isn’t true anymore.

    In case you haven’t noticed, PCs are just as easy to work with as Macs. Unless you really want to, you can pretty much do everything you want in the UI. Even installing new hardware is a piece of cake – plug and play works and has worked for years now. Even if you are an uber-geek and want to use Linux, it isn’t hard to use that either and it’s easy to configure it if you want making your “old” PC work as good as new. Further, PCs offer high end graphics capabilities like their Mac counterparts and composing music with them is just as good if not better.

    If you want pretty, you can get a PC that looks like anything you want — try that with a Mac — and if you buy a PC from a vendor like Lenovo, they’ll bend over backwards to make you happy without the typical Mac user attitude.

    Apple is still at least a generation or two behind Android, is proprietary and is a closed ended ecosystem.

    Long story short, give me a PC. Macs are nice toys and pretty to look at, but I want to work – not spend a premium on hardware and search endlessly for software that may not have been ported yet.

    • Samrod

      Talk about dated arguments, I haven’t heard the “Macs are nice toys and pretty to look at, but I want to work” case in years. People still think that? Seriously? The number of hardcore developers I’ve seen coding on PCs in the past year: 0. The number coding on Macs: dozens. Unless you’re target platform is Windows itself, PCs are irrelevant in the web app design and development world.

      And to equate the Windows UI with the Mac UI, or even think that they’re close in usability is just misguided. Win7 may be a massive improvement over Vista, but it’s still a disaster. A blue UI for adults, to work on? Seriously? Sure, Windows may be fluid for advanced users, but the Mac is that way for much less advanced users.

      I’ve been dealing with PC fans for years. They religiously bash Macs, paralyzed by price tags and spec lists, and have a lack of understanding of UX/UI. I’m bored.

      But thanks for showing me that people still use that tired toy/work line. I honestly thought it’s been dead. Apparently I was wrong.

  • Zark00

    Clearly an Apple fan touting what he believes to be the strengths of Apple.
    Keep it Simple and Make it Easy are the same thing by the way.
    Apple is, hands down, the most expensive platform to operate across form-factors.
    Content is a premium, hardware is at a premium, nothing is free, and everything will cost you from a buck to your first born.
    Apple makes the most profit because non-tech-savvy users with lots of disposable income flock to it – it’s easy as you said.
    Apple makes all the $$’s – not doubt – they make a machine FOR spending money on content.

    Anyone ever notice how apps that are $1, $2, $3+ on iStore are free on Android Market – they’re ad supported, which may annoy you to no end, but you have the option typically to buy a version, for less than IOS version usually. Yes yes some of the same on IOS, but far less often.

    Comparison’s between the Playstation product line and Apple’s entire company are ridiculous.

    Giving the BOD that Keep it simple refers to the product offerings I think “keep it simple” really means “lock it down”

    All UI designers try to keep it simple, Apple is better than most, but the iOS UI is so dated right now – metro makes it look like a dog, and even Anroid’s UI is just superior at this point.
    Argue all you want, but until you carry all three as your main phone for more than the time it takes to start Angry Birds at the T-Mobile store – you have zero idea.
    IOS is SO simple it’s frustrating to someone who has moved beyond their “My First Smartphone” phase.

  • Apple, over the past decade, simply has not done things by the books (or theories). If anything, Jobs and Apple have done almost everything possible to go by their own rules and go against the stuff that’d be taught at the Harvard Business School and similar institutions. I’m quite certain that this is why Apple continues to stump the competition and baffles the observers who’ve learned to do things the “proper” way – i.e., do what everyone else does.

    Jobs was an eccentric maverick who always challenged the conventional ways of doing things. And he has ingrained this quality and character into the very culture and spirit that drives Apple. Sure Apple must adopt certain management principles to run a company that is fast approaching $200 billion in annual sales, but as Adam Lashinsky pointed out, Apple still operates like a startup and must do so to maintain its edge in innovation.

    This zen-like spirit that drives Apple is embedded like DNA in its culture. This is not something that can be taught in business schools or emulated by the vast majority of companies in any industry. There is instinct, intuition, and all kinds of intangibles involved here. Apple doesn’t operate in a textbook manner and Tim Cook himself has said that he doesn’t want to share that secret sauce with anyone else. Apple is simply extremely unique.

    I believe that one of the qualities that makes Apple unique is its artistic and creative background that Jobs inoculated within the company’s culture. I work in the music industry so this is something I can easily relate to. Apple’s products and services have a certain “feel” to them that is very hard to quantify. Obviously, that evolved from Jobs’ profound love of the arts and especially music. Apple has an artistic spirit that I’ve never seen in any other company, not even in the music industry I work in.

    Music is a very abstract art form. You can’t quantify or judge music in absolute terms that are used to evaluate or grade technology. So much of music is subjective but we know what is good, bad, and truly great. And even what can be considered “great” can be “bad” depending on one’s taste and sensibilities. For instance, some people don’t like the Beatles or Beethoven or Jobs’ favorite Bob Dylan.

    Apple is very much like a musical artist that composes a new piece of music and introduces it to the world to adoring fans. People lining up to buy new Apple products are like hardcore fans of certain artists and bands lining up to buy their new CDs or to buy concert tickets. There is a deep emotional attachment there and the purpose of art is to evoke emotions in various ways and inspire people’s spirit. What other company can do this or has *ever* done this?

    Apple needs to maintain and continue fostering this creative and innovative spirit. If this spirit is shaken, then I’d be very worried about Apple as well. But I feel confident that Jobs crafted and nurtured Apple in his image and spirit. I wholeheartedly agree with Al Gore who said that Jobs’ greatest creation was Apple itself. But like anything else, Apple does have to adapt to change – like being a huge corporation with the responsibilities that come with it. And Tim Cook is the right man for the job of taking Apple to the next level in the early years of the post-Jobs era.

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