The Guardian has a brief analysis centering on things like prestige (Apple products are expensive), ecosystem (Apple’s stuff works well together), and branding (you know what you’re going to get).
These are all true, but somehow, even taken together, they miss a key point: We’ve made Apple the world’s most valuable company because a whole lot of us really want to buy Apple products. This may seem obvious, given the sales data, but think about it for a second. You have lots of choices for smartphones, for example, and a lot of them get great reviews in the tech press. But Apple continues to gain market share, even at their prices, while their sometimes technologically superior competitors lose.
Why?
I’m going to toss out a guess. Deep within Apple, Steve Jobs’ mantra is still alive and well: Insanely great! In other words, there are still enough people who influence product development and who understand the cheng / chi game. As you may recall, this ancient idea — the subject of Chapter 6 of the Sun Tzu text — involves using both the expected and the unexpected in combination to surprise and confuse an opponent and then exploit the situation before the opponent can figure it out. It’s the basis of Boyd’s concept of “operating inside the OODA loop.”
In business, though, it should focus on the customer, not competitors, and becomes something like “it works great but it also delights users with …” It works and it’s super cool! Yeah, I know that sometimes it doesn’t work that awfully great — I remember “MobileMe” and the first iteration of Apple Maps — but so far Apple has been a fast learner and fixes problems before they become fatal. Besides, as Boyd always insisted, you don’t have to be perfect, just better than your competition.
The result of expectation and delight working together is an emotional need, you just feel like buying their products is what you have to do. It’s just the right thing to do.
What’s really amazing is that Apple has kept corporate entropy at bay for so long. What usually happens is that slowly, over time, bean counters take over. Risk taking subsides as profit taking dominates. Nokia could have had the first awesome smartphone, but they didn’t. And putting arbitrary sales targets ahead of making the best products cost Toyota dearly earlier in the millennium.
We’re going to go into this a lot more at the Lean Kanban Conference in Munich in November, particularly in the workshop on the 18th. Hope to see you there.
Slightly East of New 
“The result of expectation and delight working together is an emotional need, you just feel like buying their products is what you have to do. It’s just the right thing to do.”
I think you have captured the two things that get a person up in the morning and gets them to put their pants on and out the door. It is what I call feeling good (kinetic energy) and satisfaction (potential energy).
Our lives rest somewhere between the two, and I think you are correct in stating Apple has found the sweet spot between the two.
Apple users are satisfied in the expectations of their purchase because it makes them feel good in their applications, i.e. they are delighted how the product performs.
As you suggest, other products perform better and perhaps have a better user interface, but people using Apple believe it has an advantage in the environment where it is being used and they feel the orientation has some kind of an advantage in that it gives them satisfaction and makes them feel good about the future.
What that advantage is–who knows?
Is there some kind of trust people still have in Jobs? Sure.
But whatever “it” is, the product, when looking towards the future, a great many people seem to feel somehow satisfied and they feel good as the product is being used. That feeling is feedforward from the past and keeps Apple ahead of all other orientations.
At least ahead in the number of events (winning), and gives them satisfaction (greatest potential) in the magnitude, of what they believe the events represent.
Which seem all very weird to me, as I don’t even own a cell phone. 🙂
Samsung outsells the iPhone globally. This has been the case for 3 years. Apple fans continue to buy Apple products in an unreasoning way. The rest of us make judgments on the technology and then buy. Different orientations? The iPhone and iPad may have been insanely great at their introduction but no longer. Oh and iPad sales are down as well.
Thanks, MC.
So if we’re talking profit, not sales, what would the numbers be?
I think a brand is complex, not complicated. Either way the number go, I think Chet hit the nail on the head with his reference to Jobs. While “Apple fans continue to buy Apple products in an unreasoning war”, it is not too complicated. Apple has built barrier to their product, but not fences, and the people climbing over and under the fences are still a part, and a loyal part, of the Apple brand.
And I think why they, the people who “jailbreak” their ipods, still believe they are a part of the brand is complicated, and that complication is due, to a large part, because of Jobs, i.e. “insanely great” falls inside and outside of the borders (where the barriers are) of the brand.
However, once the Apple brand becomes complicated, I think they will lose their profitability, and become the next Radioshack, if Radioshack can be compared to Apple in any part of this narrative.
For the most part, and I think for most Americans, people like living on the fringe between barriers (where the barrier is and isn’t).
Perhaps Jobs simply knew how to work the fringes.
Chet
I focused on sales because your post asked why people continue to buy Apple products. Sales is a direct metric of buying behavior. For Q2 2015, according to IDC, Samsung had 21.4% market share for smart phones, while Apple had 13.9%. If we look at profit, Apple blows Samsung away. Apple’s margin per sale, regardless of device, leads the industry. Apple has done a great job getting buyers to not look at the value for money equation for their products but instead to be willing to pay a big premium for an affiliation with the brand itself. I believe this goes back to Jobs and when the first iterations of say the iPhone or iPad were introduced. Those products were insanely great, even if the iPad was a product in search of an application. I remember the joke at the time was that people were buying the product to find out what it was. What Apple is insanely great at now is marketing the uniqueness of the brand itself apart from any individual product. If Jobs were still alive, they could put his nail clippings in Apple packaging with a logo and people would line up to buy it. There would be blog posts speculating on the content of the forthcoming Clippings 2.0. Apple has the most loyal customer base of any industry I can think of, but it has evolved to the point where it transcends the product line. I’m happy to be a shareholder, but I own no Apple products as the value for money equation always dramatically favors the competition.
Mike Myers
Mike,
Thanks. I think you may be confusing what people ought to do, as you see it, with what they actually do. Obviously lots of people are interpreting the “value for money” equation differently than you do.
So why is this? Are there that many stupid but rich people in the world?
I’m suggesting the answer is that Apple continues to employ the cheng / chi concept better than its competitors. Coming up with new chi — new “insanely great’ — though is a real challenge. The jury is still out on the Apple Watch, for example. One the other hand (wrist?) it might be a mistake to write it off too soon. This from a July analysis by CNBC back in July:
As I noted, though, entropy always wins in the end, so how much longer Apple can keep it up I cannot say.
Chet
Actually the market share figures support my position. More people, after comparing the Samsung phone to the iPhone are buying the Samsung. If we broaden our focus to all Android phones, perhaps not as fair to Apple, Android blows Apple away. So more people apparently agree with my value for money proposition than don’t, though perhaps there’s a different calculation they’re making in their buying decision.
I don’t think Apple buyers are stupid. I do believe there is a core group that will buy anything that says Apple without regard to any cost/benefit analysis, so strong is their desire to affiliate with the brand. Surrounding that core of lemmings is the group that is loyal because their value for money analysis is not at the product level but the brand level. It is important to them both personally and professionally to be seen using the Apple product and they will (over) pay to accomplish that. This will catch up with Apple eventually unless they continue to introduce insanely great new products and this issue is of course the top concern of Apple watchers. While I admire the new CEO, he’s certainly no Steve Jobs and he may well be impossible to replace.
Re the Apple Watch (talk about a product in search of an application), the sales numbers we’ve seen so far are the lemmings and whether a more mainstream market will adopt a product that has largely redundant functions to other devices they already own remains to be seen. The relative lack of promotion by Apple tells me they’re evaluating a change in direction. I think the “wow” factor that surrounded the introductions of the iPhone and iPad is missing.
I couldn’t agree more with your points on chi and entropy.
Mike
Mike,
Good point, but think of how many more Androids they could sell if they just gave the things away. This is the downside of focusing on market share.
That core of lemmings is spending an awful lot of money to pump up Apple’s earnings to $18 BN on $75 BN in sales for 3Q2015 (the best quarter in corporate history, by anybody). To paraphrase Churchill, some core, some lemmings.
Chet
Chet
Even when merely paraphrased, Sir Winston is one of the most articulate guys out there. One can only be in awe of what Apple has accomplished financially. I’m just a humble marketing guy who thinks he’s figured out what Apple is doing. If I could figure out HOW they do it, I could be a rich and humble marketing guy. In the meantime, I’m happy with my Apple stock and my Samsung phone. Thanks for the fun and stimulating exchange.
Mike
Mike,
Cut the BS. I’m a retired marketing guy myself, and there’s no such thing as an humble one.
Look forward to your comments on future posts!
Chet