Apple's segmentation strategy and why it works
Sigal's point with all of this is that when Apple is doing what it does best -- targeting a specific market and overtaking it with quality -- the old rules of horizontal marketing and sales just don't apply. Apple is fine with not having the market share on smartphones, because it's not chasing those old goals. Apple doesn't add features or change products in a panic -- it added a camera to the iPod touch only when it was ready, and even then, it was careful not to make it better than the iPhone 4's camera and all of its selling points.
At any rate, Sigal's piece is a very interesting read. It's a little heavy for the weekend, maybe, but well worth going through to provide some insight on just why Apple remains so popular and profitable, even when other factors seem to rise against it.
[via MacStories]
Share
Here's a little interesting weekend reading from Mark Sigal on O'Reilly about "Apple's segmentation strategy." Sigal does a huge overview...
Add a Comment
I'm a relative tech novice, and a relative investor novice, but I'm a medical doctor with multiple phones and multiple computers that I replace and upgrade frequently. So, I'm probably the most aggressively sought after customer for any tech company. I was always a committed windows user and even made fun of iphone owners for their dedication to their phones.
Finally, a year ago, I got my first macBook laptop. A week ago I stood in line to get my first iphone... I didn't buy either of these as a result of apple's advertising, PR, image, salesmanship etc... I bought them on the recommendations of people I know personally and on trying their devices myself. I test-drove and made a decision to buy based on those friends before anyone from any tech company ever had a chance to have a conversation with me. The competition for me as a customer was decided by the devices in my hands before any of the device makers ever had access to me.
Both of these devices do everything I want them to do without glitches or hassle. As the end user with no other stake in the discussion, here's my perspective on what apple does right: They focus almost all their effort on making the most reliable and user friendly devices. Once that's been accomplished, the owners of those devices become the advertising and their performance secures the product loyalty. As a result, they gain market share in varying increments, but they never lose it.
I never meet an 'ex-apple user'... My exposure to tech is mostly medical industry and the other people in it. Has anyone from other industries met an ex-apple user?
Technically, I could be considered an ex-Apple individual. My dad gave me an Macintosh SE/30 when I was six. I didn't get another mac until I received a G3 iMac (the colored ones) as a hand me down back in 2001 when I was in middle school, and I loved it. Unfortunately, when that went out, I couldn't afford to get a newer Mac until college. So in a sense, I spent several intermittent years as an ex-Apple user.
I do know of a few individuals who have had bad experiences with their older iPhones and have sworn off Apple. Not really good grounds I say, as the other Apple products are of much better quality. But like you, my purchase of Apple products has been solely through recommendations and personal experience rather than it "being cool" or through Apple's slick advertising.
First, let me say it was most interesting to hear from someone with your background. Second let me say that I enjoyed your insights into Apple. Third, and finally, let me try to answer, as best I can, your question regarding "ex-Apple users."
I cannot recall actually having met too many ex-Apple users, but I do read about them in the comments of the many articles I read. For the most part, I believe the common theme is that Apple products are too restrictive for them. Apple often refuses to release a product or feature until the technology supporting it is mature. This can drive even people like me crazy and for those who live on the cutting edge, it is intolerable. I think their position is quite understandable but I do not share their need to tinker with the latest tech feature set.
I do not think this in any way weakens your original proposition. No company has 100% customer loyalty. However, Apple is remarkably close to that unreachable pinnacle. We've been spending our time talking about what Apple does right. They do many things right and here's one of them. Apple knows that they are not going to make everybody happy. When you target everyone, you target no one. So Apple targets the people who matter and Apple refuses to broaden their feature set or lower their prices to extend their sales to additional audiences at the price of diluting their core strengths (simplicity, elegance, design, ease of use, usefulness, etc.)
Lance, I enjoyed your post. I hope you continue to contribute from your unique perspective.
One of your worst statements ever, and that is saying a lot. As others have pointed out, they don't sacrifice profits/margins for marketshare. Not licensing Mac OS X is a good one. As for their PR, they constantly brag about selling more and more Macs, opening more stores, as well as the number of apps in the app store so your remark is totally off. Jordan, give up the constant trolling already, will you?
October 02 2010 at 4:45 PM Report abuse Permalink rate up rate down ReplyThere is a lot of BS offered up in this report to the point I'd suggest that he doesn't know what he is talking about. An iPhone is a reader? Come on everybody and their brother knows it is more than that. Products that don't overlap, how about the Mac Book and the MBP. More so the Touch can be seen as an iPhone without the cell hardware.
Apples big problem these days is the high expectations its high stock price generates. Apple will have to greatly expand its product line up to meet those expectations. This throughout its portfolio of current products and via new concepts. Apple doesn't need to get fat horizontally but they have a lot of unplugged holes in the line up. Personally I think Apple is grossly over priced right now, considering past development history.
It will certainly be interesting to see what Apple will do to try to maintain its market value. New Macs and iPads come to mind first. But the big question is will Apple move into TVs and other consummer electronics. Simply put they will have to do something or risk a stock price colapse
Marketshare and an empty sack, is worth the sack.
October 02 2010 at 3:09 PM Report abuse Permalink rate up rate down ReplyIf Apple was interested in market share they would have licensed out Mac OS X ages ago. Its about profits.
October 02 2010 at 12:59 PM Report abuse Permalink rate up rate down ReplyI don't actually think that argument is true any more. Apple used to strip everything away that wasn't vital to the function and created easy-to-use products.
With the iOS ecosystem the whole sales argument of the device is that you can do so much more than just that one thing the used to do .. like have apps on your phone, games on the iPod Touch or iPad.
Nobody in their right mind would limit the iPad to a reader, it is so much more than that .. or the other way around .. it is not even particularly good at being a reader. The value comes from the variety.
T.
Uh....they don't have to "spew out" PR. They simply point to their earnings. That speaks for itself.
October 02 2010 at 11:48 AM Report abuse Permalink rate up rate down ReplyMore succinctly, Apple won't sacrifice *margins* for marketshare. They might be the only tech company today that gets it.
The rest continually chase marketshare at any cost -- and their earnings reflect it.
"...creating one product for a particular use case -- an iPad for reading, an iPod for listening, and an iPhone for apps..."
Huh? This isn't at all how Apple has been marketing these products; just judging by the commercials. (The iPhone isn't distinct for having "apps")
Exactly! I think that there is a little over-simplifying on Sigal's part so that he himself can come across like a business guru.
Just look at the image used in this article with Star Trek on the iPad from Apple's website. I guess, technically, you can read the credits at the end of the movie. ;-)
"(creating one product for a particular use case -- an iPad for reading, an iPod for listening, and an iPhone for apps)"
Agreed. Shouldn't that read "an iPad for videos, an iPod touch for apps with occasional music, and an iPhone for calling people"?
Deals of the Day
more deals- Cases for New iPad at HandHeldItems: Extra 20% off, $2 credit, from $3 + $3 s&h
- $15 Apple iTunes Gift Card for $8 for new Saveology customers
- Retro 80's Case for iPhone for $11 + $2 s&h
- HHI 360 Dual-View Stand Case for new iPad w/ $2 credit for $12 + $3 s&h
- HHI ReElegant Smart Cover Companion Case for new iPad from $5 + $3 s&h
- Used Apple iPad 64GB WiFi + 3G for $240 + free shipping
Software Updates
more updatesFeatured Stories
more stories
Popular Stories
TUAW (or The Unofficial Apple Weblog) is a website devoted to tips, reviews, news, analysis and opinion on everything Apple.
16 Comments