'Apple' has become a common consumer brand here. According to the report by CNBC more than 50% household in United States own at least one Apple product. What a penetration!
When I look at 5 years back almost everyone in my friend circle said, "Apple is a niche product. It sells its products at a higher price band. Who would buy Apple if already devices are available at more than 50% cheaper rates". People also speculated that Apple can't grow beyond a few percentage of the entire market. So what happened? Apple sold 35 million phones last quarter (Q1 2012). More precisely Apple is the 3rd largest Mobile Phone maker in the world according to IDC. Find the detailed report here.
Some say that Apple does a good marketing. But then why can't others? Well I agree that marketing is essential however there is more towards product making. Here are some of my points.
A wow product
Every product company says that they must make a wow product. Apple told them how to make it. Falling prices of semiconductor memories suddenly made MP3 players affordable. The market saw a surge of large number of mp3/ mp4 players available at affordable rates. Apple entered the market with iPod. Sold it at a very high price. However the iPod had a hard disk of much higher capacity in 50GB range (now at 160GB!). The iPod also had a very unique touch based circular wheel input as well as a very fast UI. One can scroll songs nicely by making a circular gesture.
People liked it because of iTunes (simple way of purchasing and transferring music), unique interface (circular), fast music scroll (powerful hardware).
If you closely look at it, to make such a product a very careful hardware and software design needs to be done which can fully utilize the hardware response as well as tune the UI effects seamlessly. The processor needs to be chosen suitably.
The point is Apple never compromised on design be it hardware or software when offering the end use case scenario. It includes choosing the right Processor, memory configuration, Graphics hardware, software stack. All are rightly placed to get fast user interaction and fluid style user interface (magical touch).
Since then iPod has undergone several phases (iPod classic, iPod Nano, iPod Touch etc). Apple also positioned each iPod into a different category and marketed them well.
iPod Classic - High data intensive user
iPod Nano - For Joggers and Travelers (Any generation)
iPod Touch - For Gamer (Younger generation mostly)
The Best iPod is the iPhone.
The iPhone
Apple was never interested to make a device for common man at a very low cost. Instead they chose a product which does things in a simpler manner and whatever it does, it does them with the best performance. When first generation iPhone was launched in 2007 almost every mobile phone felt slow compared to it. Why? Because the processor was rightly chosen with a CPU frequency higher than other Mobiles' and it had one of the most powerful graphics hardware available at that point in time.
No Fragmentation across iPad, iPhone, iPod Touch
Apple never fragmented its platform by venturing into Low cost hardware, different screen resolution, multiple form factor products (slide screen, flip etc.). Absence of fragmentation makes designing the software extremely well. The API offering is good due to single product platform portfolio and guaranteed response time of the Applications which the competitors could not match.
So in reality Apple attracted the developers.
Ecosystem (App Store, iTunes)
Developers always wanted things simple and wanted many ways to handle the devices
e.g. getting the device GPS position, getting current device 3D state in space
a good Development environment, a good developer support system etc.
and more precisely a good way to make money
The App Store gave them all. Apple made sure that the developers make money by launching their Apps in the Apple App store. In principle Apple also made a huge profit out of it by splitting the revenue with the developers.
Small companies made a fortune out of it (e.g. Rovio/ Angry Birds). They liked Apple and continued developing their Apps for Apple products.
At the same time Nokia/Symbian and Java developers also moved towards Apple by seeing slower growth in the respective products.
It was a cycle basically.
Apple always made sure that API offering is consistent across its device portfolio and that made the App design easier and also consistency across products like iPad, iPhone and iPod Touch.
This strategy internally made sure that the App developer has a higher reach across different segments thereby increasing profit and also it offered customers a seamless experience across multiple usage points. Customers felt they are interacting with same device be it their iPods or iMac. This reduced their paint points of sharing digital contents across devices they own. Credit goes to iTunes and iCloud.
Reduced pain points means customer delight and more device purchase.
Apple has now created a massive ecosystem.
In addition to is due to its standard connector across multiple devices it has a number of hardware accessories available viz. car accessories, music docks, backup battery dock, blood pressure docks, radar detection systems, heart rate monitor, Sports kit with Nike Shoes etc. This has delivered the customers an integrated user experience at multiple points of their lifestyle.
A Standard connector facilitates wide reach of product portfolio (iPad, iPod, iPhone etc) and ensures that the manufactures sell them profitably by investing once on development and selling for multiple devices.
Unfortunately its competitors could almost never made their interfaces standard across their devices portfolio in older days. However now a lot of competitors are also adapting the same strategy using USB interface.
According to a recent report Apple has almost 73% of industry profit share while having 8% market share.
Apple taught the world how a large ecosystem drives more profit.
The next challenge for Apple to penetrate its brand across developing markets. In china Apple already has grabbed a large portion of Smart phone market share.
Can they do it for other markets as well? Lets wait and watch.
