Overpriced best-sellers: how does Apple do it?

There are PC users, but Mac enthusiasts. I’m one of them. I’ve owned Apple computers since the mid 1980s with my first used Apple IIC desktop (see left). So on August 24, 1995, when Bill Gates unveiled Microsoft’s 32-bit operating system for PCs called Windows 95, (remember the Rolling Stones singing “Start Me Up” over images of their new Start Button?) we Apple fans just yawned:

“Click and drag? Oh, whoop-de-doo. We’ve been doing that for years…”

Windows 95 was like Mac 84. And today, Fortune magazine’s annual list of Most-Admired Companies – for the fourth year in a row – is topped by Apple. It’s a company on a roll.  How do they do it? 

In 1984, Apple launched its first Macintosh computer, and began building a  reputation as a group of outsiders. Creative people thinking outside the box. In a world dominated by boring IBM clones and big DOS-boxes, the Mac was radically different than practically anything on the market at the time.

With this iconic “1984” television commercial (launched during the third quarter of the Super Bowl XVIII broadcast), Apple began to market their Macintosh brand, appealing to customers who appreciated the cool graphical touches and artistic details that the monospaced text of DOS could not provide.

The Mac was definitely a breakthrough, according to tech journalist Kevin Maney:

“It made computing simple for non-techies. It compares with the first jet airliner, the Boeing 707, which revolutionized air transport and influenced the entire range of jets we fly today. The Mac made computing truly personal. It made an inaccessible process human. It was, perhaps, more like the arrival of the telephone in an era when communications happened by Morse Code tapped over telegraph lines. Or the first Kodak camera in 1888, bringing photography to the masses at a time when the art required fragile equipment and harsh chemicals.”

And even when the popularity of Windows began overshadowing their market share, Apple chose to strategically simplify their machines and begin marketing to users, stressing easy setup and simple, attractive – even colourful – design. Today of course, even though many people may still consider the Windows and Mac operating systems to be either/or options, a growing number are like me, choosing to run both on our Macs.

Even PC World staff writers Narasu Rebbapragada and Alan Stafford raved:

“Most computers look like they were designed by manufacturers of low-end office furniture, but Macs are so beautiful that they’d probably be fixtures in movies and on TV even if product placement didn’t exist. And Apple is so basically innovative an organization that it essentially serves as the R&D arm of the entire technology industry.”

They added that the Mac’s operating system “will make Windows users jealous.” And what’s not to love about the fact that, if you’re on a Mac, you’re safe from real-world viruses, worms, Trojans, and most other baddies? (They do warn, of course, not to run Windows via Boot Camp or Parallels, and who can forget those iPods shipped a few years back that did contain a nasty worm? But generally, it seems that malware writers seem to be focusing their evil attention elsewhere.)

As management consultant and former editor of the Harvard Business Review Thomas A. Stewart explained this month in BNet News, a company on a roll like Apple gathers investors, groupies, and explainers.

“The company’s blistering pace of new product releases has continued to set the bar high for tech companies across the board.”

And that was published even before the iPad 2 was unveiled.

Wired magazine observed that Apple’s retail stores seem to exert what they called a  “gravitational pull” on shoppers. Nearly 30% of shoppers who pass within 25 feet of an Apple Store are drawn inside, according to a survey by analyst Gene Munster at the investment bank Piper Jaffray.  Is this because visiting one of Apple’s 170 worldwide locations, like the gorgeous 24-hour Fifth Avenue glass cube store in New York City, is such a memorable experience?

Apple stores are unbelievably profitable, say the pundits at Wired. These stores average $4,000 per square foot in sales, compared to the North American retail sales average which is a little over $300 per square foot. Gary Allen, who runs ifoAppleStore, which closely tracks Apple’s retail chain, explains:

“They are way off the scale from other retailers. Apple sells small, high-priced goods, but they are still selling a lot of product for the retail space they have.”

Allen adds that Apple’s total sales last year topped $65.22 billion, of which over $14 billion was net profit.

UPDATE: May 3, 2011:  Apple today announced record fiscal 2011 second quarter revenue of $24.67 billion and record second quarter net profit of $5.99 billion. These results compare to revenue of $13.50 billion and net quarterly profit of $3.07 billion in the year-ago quarter. Apple’s CEO Steve Jobs said:

“With quarterly revenue growth of 83% and profit growth of 95%, we’re firing on all cylinders. We will continue to innovate on all fronts throughout the remainder of the year.”

Over the years, like many other Mac “enthusiasts”, I’ve done my bit to help Apple’s bottom line by upgrading on memorable occasions throughout my writing/PR working life, including my darling Bondi Blue turquoise iMac desktop in the 90s, and last year’s MacBook Pro, my first-ever laptop.

The love affair continues…

THE NAG’S DISCLAIMER:

Unfortunately, I have not received any financial incentives or free computers from Apple despite writing such nice things about their products.

NEWS UPDATE: October 5, 2011 – Apple founder Steve Jobs Dies“We are here to put a dent in the universe”.  Here’s how MacWorld described his legacy:

  • The Apple II, the world’s first mass-produced personal computer.
  • The Macintosh, the basis for almost every single personal computer interface on the planet today.
  • Pixar, one of the most successful movie studios of all time.
  • The iPod and iTunes, which transformed the music industry and changed how we listen to music.
  • The iPhone, which upended the stagnant cellphone industry and created the concept of a modern smartphone.
  • And the iPad, which defines a category and pays off the original Mac’s promise of being a “computer for the rest of us.”

5 thoughts on “Overpriced best-sellers: how does Apple do it?

  1. I too am one of those Mac “enthusiasts”. I think those
    “I’m a PC” ads somehow got it right. Macs are cool to use, let’s face it… 😉

    Like

  2. I don’t get it. For half the price you could get a perfectly good laptop that does the job. Only difference, the PC doesn’t have the “cool” factor that seems so important to so many.

    Like

  3. My first Mac was a second hand 512k with a dot matrix printer which cost a grand total of $2,500. Mac is essential for anyone in publishing but I can’t imagine using anything else, even though the hard drive on my iMac desktop recently crashed.

    I think a big part of the attraction, apart from design and ease of use, is brilliant customer service. If you have a problem you can go in and get it assessed at no charge and when you buy a new product you get one-on-one help to set it up.

    Like

    • I’ve had the same experience with Mac customer service here, Kate. My local guys seem to live, breathe, eat and sleep Macs, unfailingly curious and generous.

      Like

  4. Apple is reportedly planning to shepherd its existing iTunes subscribers into the company’s upcoming iCloud service, by initially offering them to make the online pilgrimage at no cost.

    Like

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