How Does ‘Incremental’ Define Apple?
It’s the question to answer based on comments I received to yesterday’s post about Apple CEO Steve Job’s return from medical leave. Some commenters scolded me—OK, one said I should commit suicide—for the tone of the post. Many others asserted that Apple has always improved products incrementally.
I addressed the tone in an intro added to the post last night. Now, I’d like to discuss how Apple innovates, which I understand very well. I posted about Apple’s incremental product strategy last September at Apple Watch: “Apple Demands a High Price to Be Cool.”
The pattern is consistent: Apple launches a “one more thing” product with modest hardware features but something else nevertheless killer—something people want. During the launch, Steve performs his marketing magic, demonstrating how this “one more thing” product will make peoples’ lives better.
Often the product lacks something compared to competing wares but offers something more elsewhere. That’s merely a function of Apple choosing different priorities. Some examples:
- Original iPhone lacked 3G, video and MMS, but offered better UI, capacitive touchscreen, media playback and better calling features.
- iPhone 3G lacks video and MMS, but added 3G, GPS and other features turning the smartphone into a pocket computer, media player and game console.
- MacBook Pro’s screen resolution is lower than Windows PCs in same price class but offers features like backlit keyboard and non-removable, longer-life battery.
What It Costs to be Cool
Apple’s priorities are often different from competitors, and customers usually benefit from them. But I’ll contend—and this statement will draw flaming comments—that, by comparison, some Apple products offer less hardware capabilities than those from competitors. That’s a changing trend, by the way, and I’ll explain its importance in a few paragraphs.
Once Apple releases that “one more thing,” the company then iterates—incrementally improves—the product over time. The process is essential to Apple maximizing margins. “One more thing” products typically have initial higher selling prices or same as the replaced product. They’re cool. People are willing to pay more, and Apple certainly doesn’t discourage them from doing so.
Apple launched unibody MacBook Pro in October 2008
The Windows PC market trend is about offering faster processors and other features for less money. Apple offers more for more money or about the same, later lowering prices. A recent, good example is the unibody 17-inch MacBook Pro, which in January Apple priced the same, $2799, as its predecessor but added several cool, new features—with long-life, non-removable battery being perhaps the most notable. A month ago, Apple dropped the price by $300.
“One more thing” is very much about selling the coolest thing. Plenty of buyers demand the newest, coolest thing—and they’re willing to pay a premium price to get it. To many of these buyers, the tech gadget is as much an accessory—statement of their coolness, superiority—as useful product.
Apple engages in tried-and-true retail practice. It’s good business. Clothing stores take a similar approach. There are teens who must have the newest wears from Aeropostale, American Eagle, Gap or Hollister at full price; they can’t wait for sales. They want to be cool. Apple sometimes charges more for fashion, just like clothiers. At introduction, the black MacBook cost $150 more than the white model simply for the color.
As a product’s lifecycle progresses and Apple maximizes margins at the front end, incremental improvements begin. The company typically starts by improving the hardware for the same price. Later, Apple adds better hardware or features and cuts the price. Eventually, Apple retires the product and introduces another “one more thing.”
Apple Tweaks the Incremental Model
More recently, Apple adjusted its longstanding product practice of introducing something splashy, maximizing margins at the front end, incrementally improving the product while lowering prices and replacing the product with the new splashy thing. That pattern has been cyclical: “one more thing” followed by “same, only better” leading to another “one more thing.”
iPhone 3GS
Apple didn’t retire the white MacBook when introducing new unibody models in October. The company lowered the MacBook price to $999 and continued to incrementally improve the laptop by iterations. Similarly, Apple didn’t retire the iPhone 3G when releasing the iPhone 3GS. The 8GB 3G is available for $99, or half the cost at introduction.
Apple already has maximized margins on both products. Their continued manufacturing and distribution is fairly cheap compared to their “one more thing” days. For $99 or $999, Apple gives away little while potentially picking up lots more market share. The 13-inch MacBook Pro is absolutely cooler and more desirable than the white MacBook. Many people will pay the $1,199 or $1,499 prices for the smaller MacBook Pro. Others will see $1,000 as a price barrier they won’t cross; for them, Apple has the white MacBook.
The $99 iPhone 3G will be a deal maker for many people pining for an iPhone. Meanwhile, those buyers looking for the coolest new features can get an iPhone 3GS, with better features and more storage capacity than its predecessors, for the same $199 price. Apple loses little in margins, but opens up sales to more budget buyers while offering something cooler to people willing to spend about the same as the older iPhone.
Something else really important about Apple’s cyclical, incremental product strategy: SKUs. The company’s product lines are surprisingly trim compared to Windows PC competitors or even retailers in other markets. Fewer choices works well for Apple. For example: MacBook, MacBook Pro and MacBook Air. MacBook has one configuration and MacBook Air two. MacBook Pro: 13-inch, two configs; 15-inch, three, 17-inch, one.
Apple’s streamlined product family approach helps reduce manufacturing and marketing costs, maximize margins and make easier and clearer to potential buyers incremental improvements over time. It’s a well thought out and implemented strategy.
Do you have an Apple story that you’d like told? Please email Joe Wilcox: oddlytogether at gmail dot com.
This is a test comment
While i’m one of the people who criticised your previous article for coming across arrogantly in the form of a comment, and still disagree with much of the content, i too feel pretty ashamed about some of those comments.
Particularly because contrary to popular opinion i have found the mac community actually more accepting and pragmatic than say your average MVP / enthusiast group – and i have spent enough time in both camps…
However I find you show tremendous integrity and honesty (as you have in the past – which is one reason why i’ve been coming back and reading / commenting regularly) by not deleting those posts, not editing the original article and by responding to the more sane ones. Well done for that! Respect.
Anyone reading your writing during the last year would come to the conclusion that you feel Windows 7 is terrific, that Apple products are overpriced for what you get, and that you are smart enough not to buy a Mazda Miata when a Dodge Caravan will do.
Why, then, did you get a MacBook Pro?
Spot on analysis, Joe. And what’s the result of all this? Apple is a marketing company, not a technology company. And that’s why it will never be dominant in its field.
The premium for the brand name is the only thing keeping Apple in business. Don’t get me wrong – the competition is good for the whole industry; but Apple’s entire business model is based on superficial perception. And the 5% that fall for the marketing wonder why the rest of the world is so stupid.
Want a Mac or an iPhone? Fine. More power to ya. But stow the superiority complex. That glowing Apple doesn’t impress people any more than the insecure teenager strutting down the street with Nikes.
Thanks, whatever,
I did consider deleting some comments, not for personal offense, but because they made the commenters look bad. In the end, I decided to let everything stand. I wrote the intro at suggestion of a friend. I would have let it stand, taking my lumps.
I just got a new 13-inch MacBook Pro on Saturday. I told another friend yesterday that I felt like returning it and just leaving behind this rabid community. I felt more ashamed at the comments’ reflection on the Mac community than hurt by what people wrote. I’m a big boy. I can take it.
Thanks,
Joe
Mr. Anonymous, I had to approve your post, because the number of links tripped the spam filter. Apologies for the delay.
Could you please tell us who you are, and by doing so show everyone your integrity. It’s easy to throw stones from behind a tree. Please, come out into the open?
I had forgotten about the Primax suit There is an update in the post after I spoke with someone at the company, or what was supposed to be.
I detect some anger in your comment. What did I ever do to you? Maybe your gripe is not being heard at Microsoft Watch. I warned commenters repeatedly that the spam filter, over which I had no control, would junk comments with links. Obviously, I have control over my own site. Comments with links are held for approval, and I approved yours as soon as seeing the automatic e-mail about it.
My financial plans are my own. But I have no plans to put ads on this site. I haven’t decided on how, or if, this site will generate revenue. But running banner or other splashy ads isn’t it.
As for integrity, I don’t see where I’ve been boasting. So on what basis do you make the claim that I “shouldn’t over-estimate [my own] own integrity?”
I’ll keep the Mac, of course. But I did feel like walking away, and for the reasons already stated.
You say it’s 66 people out of millions (you counted the comments?) of Mac users. But those comments are the ones that can be so easily found on the Internet. They do reflect badly on the Mac community.
Again, I ask: Why hide? Maybe we can open a dialog that helps others and even brings understanding between us. I’m offering a handshake. Will you accept it?
Hey Joe, does her indoors feel cheated out of her Mac now – or the new one for her?
That would be a totally understandable reaction… But please please please don’t stop covering the Apple world!!
Especially with regards to reporting and writing about Apple there’s only the blind lovers and the blind bashers of the company and you’re one of the few (if not only) that properly looks at Apple without either of these two traits and with exposure and knowledge beyond just what happens in Cupertino.
In short – we need you!
There are well over 25 million in the ‘Mac community’. Your blog got less than 70 comments. It’s good to keep things in perspective.
Before you wax eloquent on integrity, consider this case. While at Microsoft Watch, Joe wrote a treatise on Microsoft for not knowing who they are suing – apparently, his “research” didn’t find Primax and so they couldn’t exist:
http://www.microsoft-watch.com/content/corporate/primax_of_mice_and_mysteries.html
Shortly afterwards, Microsoft reached a settlement with Primax and I “encouraged” Joe to visit his older article and make a commentary on the settlement (http://news.cnet.com/8301-13578_3-10125936-38.html).
Sure enough, my comment never made it through – not once, but three separate times (while other comments kept appearing – so the comment system was not broken).
I think Joe shouldn’t over-estimate his own integrity. Drama, yes, he is good at it; he is good at “explaining” technical stuff for the world; he is good at “encouraging” huge companies on doing what he thinks they should be doing; he is good at being a “big boy” while throwing a sissy-fit about returning a Mac because 66 out of several millions in the Mac community called him names; he is good at pretending he doesn’t need the site traffic since it doesn’t have any advertising (you need traffic even if you don’t advertise for several reasons (techmeme, page-rank being two) – and clearly Joe has been planning for ads on this site for a while). But integrity, hmm, I have to think about this one.
Maybe his wife and daughter threatened to kill him if he didn’t? After yesterday, the last thing he needs is more death threats, especially from people who know where he sleeps.
Thanks for the response, billybob,
Actually people do look for products. Otherwise, why are product reviews so common? They do search to see what other people have written, too. That’s one reason why companies like Amazon and Apple encourage user reviews. Another example: New tech site GDGT is really a recommendation engine.
I added the introduction because there was such depth of misunderstanding about tone. By the way, that was after the commenting died down. All this clearly started from John Gruber’s post linking to mine and designating me his Jackass of the Week. Based on the traffic and comment pattern, most of the hostile commenters are most likely his regular readers. Hostile commenting stopped about three hours after his post, after it fell off the front page and presumably lower down the RSS list.
As for Microsoft Watch, there were nasty comments, too, as you point out. I had to argue with my bosses about keeping comments that called me a cunt or told me to fuck off. They stayed. I had a no censorship policy. Granted, I had no control over automatic spam filtering.
As for the difference in my reaction to the Mac community versus the Windows community negative comments. Three reasons:
1) I see the Mac community as more of a community. The older community, the people I assume read Daring Fireball, have clearly defined cultural characteristics.
2) I expect more from the Mac community than the Windows community, for many reasons that might be worth a separate blog post.
3) The remarks about losing my job at eWEEK stung some. I was laid off because I was too expense an employee and the company was shifting Microsoft news and analysis from the blog to the main eWEEK site. I could have stayed to write just news, by agreeing to a 36% pay cut. Instead, I accepted the layoff. I chose to preserve whatever brand I had built up around by blogging. Also, I felt that based on my personal limitations that I couldn’t put the kind of heart into the extra volume of work eWEEK needed for so much less salary; it would have been unfair to my bosses. Had eWEEK chosen to let me continue Apple Watch and Microsoft Watch, I probably would have accepted the pay cut. I was never fired.
Joe
They have an unusually high ratio of developers and engineers employed for a marketing company but O.K.
You are right that their consumer products are pitched using superficial perception – i’d hope though someone presumably technically inclined like you would not be blinded by their ’superficial’ marketing and actually see the technical side of the products. A good starting point would be http://developer.apple.com , http://www.kernelthread.com has good details and sample code about the core OS workings, there’s many other good resources of course depending on where your interests lie.
One thing interests me – in all seriousness – how do you suppose Apple built this premium brand name? Or a loyal mac following for that matter? Are these so called MacHeads just born that way? Are the Apple stores like little scientology churches that measure passers-by computing happiness? Is it the placement in movies and TV shows? Did Apple build it’s computer business and reputation purely on a mix of marketing and crappy products?
Finally, at a purely factual level the Apple logo is noteworthy because it’s one of the few logos out there that directly translates to the company name, unlike say the Nike swish or McDonald’s arches. Not exactly relevant, but true…
@Anonymous:
I’ll vouch for Joe on the link issue. I could never get a comment passed eWeek that included a link, while others posted links, seemingly at will. That pissed me off. The rest of your argument is between you and Joe.
When you buy a car do you check out what the drivers (aka community) are like on forums and blogs? I wonder what the difference is with computer hardware?
Joe, do you not remember the ‘Windows community’ swarming the Microsoft Watch site with inflammatory and junk comments, they were all using fake and random names, even resorting to impersonating other users. Did that make you think twice about installing Windows 7?
Is it only people who insult you, or is it people that act childish and loud? I expect that all products and software have their devoted fans who are childish. The difference was that you seemed to attack their weakened leader so you probably sparked some extra venom. I think you agree or you wouldn’t have amended the post.
Dave, I think > 2 links gets filtered. Maybe because you use a link in your name, that probably counts as your link so anything in the post will get deleted/filtered. Also, adding a website to your name might make the spam filter act differently for you since I expect 100% of spammers add a link there.
You can make a long treasty on how Apple markets itself. It is actually almost evangelical (there are numerous parallels to cults), though it is unrelated to the technology. Apple is a very strong technological company, up in the leagues of Hewlett Packard, IBM and (yes!) Microsoft
wharever, I do see the technical side of the products – and the technology is not sufficiently compelling for the price premium. That’s why I choose PC. Plus, I want my third-party hardware and software to actually run on my computer.
Why does Apple have a following? Same reason that Nike has one – smart marketing. All the factors you list are part of that (especially the Scientology mentality
). That’s not to say that either Macs or Nikes are bad products. Just overblown.
haha, thanks for the answer.
I knew they were born this way, poor machead’ey fools addicted to their marketing and crappy products…
I doubt you are thanking me for that comment (even if it is partly true), please answer Chips in another post.
The problem I have with your reason for not judging Windows by the Windows community is that they are all internal and not objective. The first 2 reasons are just based on your opinion, I can understand the 3rd but you have to remember that the Windows fanbois could not have attacked you about being fired from eWeek because at the time you were still working for them. They only attacked you like that because they knew it would sting, like you stung them, don’t feed the trolls.
I think most of the negative comments were related to the fact that you seemed to be demanding that Steve works more, even though you do not have any real authority to demand that and the fact that he is already making good recovery. You have never made such comments about Bill Gates or Steve Ballmer, yet you got a similar amount of abuse and childish behaviour. In that respect Windows fans are worse because it takes less for them to become uncivil.
I know they all came from the same place, but you still can’t tell which ones were rabid Apple fans and which were moderate Apple users who were personally offended by your post. It all raises the question of how do you become part of a community and how can you tell who is part of which community?
P.S. Link baiting is nothing to do with ad revenue, it is to do with links (hence the name link bait). I bet you got hundreds of links to the post which is the goal of link bait. Not having ads is no excuse for link bait.
Do I really seem like like a linkbaiter to you, billybob? I never intentionally link bait. Ever. That applied to Microsoft Watch, too. I write what I hope will offer a different perspective–that is interesting to read. I write titles/headlines that I find clever or interesting, and they often violate good search engine optimization practices.
Why? Because I assume that most of my readers come through RSS (site data confirms this). They’re regular subscribers, like those getting (and paying for) newspapers or magazines. In that context, link baiting is a bad customer practice. I would rather have regular readers like yourself than linkbait for others. Sure, pageviews spiked more than usual for the one day. I don’t want that kind of traffic.
I’m considering changing blogging platforms, which will likely break all the incoming links anyway. I’m not sure if I can carry comments forward either. I’m still reading up on options. I’ll blog on that soon as I figure out things.
I wouldn’t get too hung up about the link bait allegations. There is a very fine line between writing good titles and link bait.
I was just pointing out that not having ads would not excuse you from link baiting, personally I don’t even think it is a crime. There is nothing wrong with getting links, it is the content of the message that counts. Otherwise TMZ would have been accused of link baiting for breaking Michael Jackson’s death.