What makes apple different

What Really Makes Apple Different?

“Under the most strictly held conditions of temperature, pressure and humidity, the organism will do as it damn well pleases.”

— Legendary science joke

“Move electrons, not atoms”

— Nicholas Negroponte

Friends often ask me, «What makes Apple so different? Aren’t they just another company that makes expensive computers?» Today, I ran across an example, just one of many, that explains how Apple thinks. Follow me along.

Focus on the Customer, not Money to Exclusion

Indeed, some would like us to believe that Apple is merely a premium brand for the well-heeled. It’s a red herring that comforts other companies. But after years and years of experience, Apple has learned a few things that other companies still fail to implement. The current ruckus over Redbox provides an instructive example.

To understand how Redbox came to file suit against Warner Home Video, 20th Century Fox Home Entertainment and Universal Studios Home Entertainment, we have to look at Hollywood’s video distribution strategy. Believing that many different customers want to acquire video in many different ways, Hollywood has embarked on a dual pronged strategy: lots of different distribution channels plus total control over each.

What this means is that Hollywood is all too willing to distribute movies to theaters, sell DVD discs, Blu-Ray discs, license streaming (via, for example, Netflix), license Video on Demand (VOD) to cable and satellite companies, and allow Apple and others to sell or rent digital versions, even in high definition. But on their schedule.

However, because Hollywood movie studios take the risk, foot the bill, and own the content, they feel justified, compelled really, to dictate every detail of the distribution. That might work until too many channels get out of control.

Notably, along came Redbox and started a very successful business renting movies for a buck at their 15,000 famous red kiosks. That, of course, depends on contractual access, the ability to purchase the latest movies from intermediate distributors.

The studios mentioned above took an immediate dislike to this entrepreneurial spirit because it undermined other channels, so they instituted a blackout period to keep hot movies out of the hands of Redbox until other channels provided appropriately pleasing profits.

What this boils down to is a matter of vision and judgment. When you put physical media out there, some enterprising people are going to figure out a way to give customers something they weren’t getting before. In this case, easy $1 rentals without a late fee.

The lesson here is that when your primary motive is to maximize profit, you take a path that doesn’t always put the customer first. Think about it. Apple has worked hard to convert a rather plain-faced, dowdy BSD Unix into a beautiful, graceful star. It took a boatload of passion and devotion to excellence to do that. The effort was not a mass market approach.

Technical Complexity Requires Simplicity of Vision

The outward manifestation of that devotion to excellence is to do the very best job you can delivering the best possible technology. That means not being everything to everyone, and it means paring away, not adding too. That’s Steve Jobs’ enduring vision, and it will be his legacy.

Apple is highly focused on the Internet delivery of video. That’s a conscious decision based on an understanding of technology and how it develops — even though, for now, «packaged media» has 88 percent of consumer dollars. Just looking at the dollars, one would think that Apple would be all over Blu-ray like suds on beer. Apple is looking farther down the road.

Accordingly, Apple is providing one channel for the delivery of video and managing it through iTunes, focusing on the user experience. Essentially, when a company focuses on the UE rather than a shotgun approach, designed to maximize profits via brute force, they tend to make money naturally instead of doing it in a way that annoys the customer. Thats how Apple achieves those long lines and crowded retail stores.

Redbox is also trying to improve the UE of renting a movie. They were able to do so because the movie studio policies combined strict control with scatter gun distribution and left a giant hole in the customer experience. Redbox is making making money because they filled that need.

Customers do as they damn well please.

Apple doesn’t leave too many holes either. Apple thinks about the consequences of its approach, in general. It works to predict undesirable outcomes and steer clear. Often, the customer has no choice but to go along for the ride. It’s like going into a grocery store and finding that there’s only one brand of organic chicken. You can complain about the higher price and lack of selection, but your body will be happier for it.

What’s also interesting is that when a company engages in too many products with too many features, it’s hard to develop improvements. Conflicts arise. In the case of Redbox, the studios have instituted that stopgap blackout period that has earned a lawsuit. It’s a finger in the dike, and, sooner or later, one runs out of fingers.

It’s hard to lay out a long term plan when the basis of your business is a broad, complex approach to the market. Having a vision for a single way of doing things makes it easier for technology to evolve. For example, consider the following sequence:

1. iTunes. Rip, mix, burn
2. iPod
3. iTunes video
4. iPod touch
5. iPhone
6. iPad/iTablet

If Apple had not developed a simple foundation and built on it, the company would not be be in a good position to move smartly to mobile video. For example, suppose Apple had gotten envious and delved into selling Blu-ray players. Then executives in the (hypothetical) «home video» division at Apple would now be whining about the proposed iTablet putting their division out of business. Powerful VPs who squabble and have turf to protect can sink the best of companies.

In other words, Apple doesn’t try to blanket the whole market. That creates too many product conflicts. Instead, it focuses on the customer experience, limits choices, pursues excellence, has a long term plan, and keeps things simple and focused enough that natural technical evolution can take place. That’s the true basis for innovation.

Apple’s Vision

What if the Hollywood studios had a similar vision? Perhaps they would work together to obtain better control of the video pipe into the home. Then slowly dispense with all forms of physical media, create a fabulous user interface, and deliver movies directly into living rooms, cutting out all the middlemen: Redbox, Apple, Netflix, Blockbuster and Amazon. Regrettably, they’re still on this «packaged media» binge, a short term fetish, fueled by the lingering success of the last century’s success, the DVD. If that’s a vision, it’s one looking backwards.

So, once again, it appears, just as iTunes brought the needed coherence that the music labels couldn’t muster, Apple is going to do the same thing to the movie studios with a new data center and a mobile video tablet. The vision, if you will, is video entertainment (and newspapers, magazines and books by the way), direct from the data center to the iTablet. What could be simpler?

But first, Apple has to build a bigger data center.

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What Makes Apple Different?

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NASDAQ: AAPL

Apple Inc.

It isn’t just the products that make Apple what it is; it’s the process.

One of the most remarkable things about Apple‘s (Nasdaq: AAPL) rise to greatness has been the relatively small number of people who have driven its success. Steve Jobs was obviously the mastermind, but those directly beneath him hold an unusual amount of control over product design.

The secrecy-laden process Apple uses is one of the things responsible for its success and also what makes it so unique in the product world.

A peak inside the beast
The process of how a company innovates is often just as important as what a company innovates. The process allows innovation to take place year to year, generation to generation. In most companies, the ideas, innovations, and inventions come from within the organization, especially after they reach a size where executives are less hands-on in day-to-day lab work.

For instance, at 3M (NYSE: MMM) , where I worked as an engineer in all levels of the lab, the process for innovation came from the ground up. An idea came from the lab or marketing, and if it was technically feasible, prototypes were made and it was discussed among multiple groups to develop an idea of market size, project budget, timeline, etc. Once these things were defined, it could be brought before a director or vice president for approval to move forward. This is the same way Google (Nasdaq: GOOG) has developed products including Gmail, Google Maps, and Android.

In my experience, (good) ideas didn’t come from the top down, and we spent more time fighting to keep promising projects alive than getting help to make them better. Look up any history of the Post-It Note and you’ll see that management tried to kill the project multiple times.

Apple is completely opposite, and very unique, in its approach. Low-level workers rarely know the details of the products they’re working on until after they’re released. The trade secrets and innovation happen at higher levels, all the way up to the CEO.

The level of secrecy at Apple impacts how things are done. At 3M, if I had a problem, I could go talk to another group about it and find a solution. As Fortune recently pointed out, when Apple employees are outside of work, discussing work is discouraged.

The impact
This innovation process allows those in charge at Apple to view the whole picture when developing products. The App Store was developed alongside the iPhone, features from the iOS operating system can migrate to Mac, and the iCloud can work across Apple’s products. This would be much harder to do without the stringent controls that push information up to the highest levels.

As a result, Apple can line up critical partners before products are finished, shortening launch times and ensuring that critical services will be available at launch. In a bottom-up product development, the product would come first and things like third-party apps, wireless partners, and even integrated apps would come after most of the development was done.

With the iPhone, Apple was able to sign a lucrative contract with AT&T (NYSE: T) before it even showed AT&T a product, giving an unknown product legitimacy from one of the largest wireless carriers. Netflix and The New York Times both had applications at the launch of the iPad, giving it a launching point when some were skeptical it could be a success.

Apple’s product development process also ensures a level of consistency and quality across products. But what works for Apple won’t necessarily translate to other companies. For a company like 3M, which has tens of thousands of products, the same consistency is impossible.

Meanwhile, Apple makes only a handful of products, even after all of its expansion. So a small number of people can have the bandwidth to be involved with design and building a strategic plan. If Apple made more products, the same level of involvement wouldn’t be possible.

The danger
While wildly successful over the past decade, the danger for Apple is that too much power and intellectual property reside in a few people at the top of the organization. Steve Jobs was known to tinker over everything from color to the type of screw used in products, and that worked when he had control of everything Apple did. Tim Cook is a different personality; he’s a supply chain expert, not an innovative designer. That responsibility now falls to Jonathan Ive, Scott Forstall, Eddy Cue, and the whole management team.

How Apple handles the transition of responsibility will determine its success.

For more companies that will win from Apple’s success, check out our free report, «3 Hidden Winners of the iPhone, iPad, and Android Revolution.» The report is free while it lasts, so click here to check it out.

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How Did Apple Get So Big?

The Story Behind Apple’s Success

On August 2, 2018, Apple made history by becoming the first publicly traded U.S. company to be valued at $1 trillion, as measured by market capitalization.   In August of 2020, the company broke records again by becoming the first U.S. company to reach a $2 trillion market cap.   Apple (AAPL) hovered just below that level as of early October 2020.

Since 2010, Apple has been one of the most valuable companies in the world.   It stayed at or near the top for many years after that.   The reason Apple is so highly valued is simple on the surface: the company makes popular products with generous margins. However, a curious reader who digs a little deeper will find mistakes, overthrown CEOs, and much more. In this article, we’ll look at the story behind Apple’s success.

Key Takeaways

• Steve Jobs and Steve Wozniak co-founded Apple in 1977, introducing first the Apple I and then the Apple II.
• Apple went public in 1980, but Jobs eventually left—only to triumphantly return several years later.
• Apple’s success lies in a strategic vision that transcended simple desktop computing to include mobile devices and wearables.
• Both performance and design are key drivers of the Apple brand and its ongoing success.

From Apple I to Steve Jobs 2.0

Understanding why Apple became so successful requires looking back at its origins and history. From the first Apple computer (the Apple I, which was just a motherboard without a monitor or keyboard) to the latest iWatch, here is a brief overview of the chronology of Apple’s innovative products.

Apple, founded by Steve Jobs and Steve Wozniak, started out in the business of kit computers with the Apple I.   This initial production run is popular as a collectible now. However, it will mainly be remembered for helping the company get enough capital to build the Apple II in 1977—the same year Apple officially incorporated.   Wozniak primarily built both these computers, and Jobs handled the marketing side. 

The Apple II drove the company’s revenue until the mid-1980s, despite the hardware remaining largely the same. Apple attempted updates like the Apple III and the Apple Lisa, but these failed to catch on commercially. Although the Apple II was still selling, Apple as a company was in trouble when the 1980s began.

The 1984 release of the Macintosh was a leap forward for Apple. However, in the intervening years between the Apple II and the Macintosh, IBM had caught up. Disappointing revenues from the Macintosh and internal struggles for control led to Apple’s board dismissing Jobs in favor of John Sculley (some sources say Jobs decided to leave). 

In any case, Jobs worked on NeXT Inc. after leaving Apple. Under Sculley, Apple started growing its product lines.

Sculley served as Apple’s CEO until 1993.   During those years, Apple enjoyed strong growth. It created new products, including laser printers, Macintosh Portable, PowerBooks, the Newton, and much more. Apple products continued to sell at a premium, so the margins were generous for Apple and led to strong financial results. During the same period, however, cheaper computers running Windows were serving a far larger middle market, while Windows also benefited from powerful Intel processors. By comparison, Apple seemed to be stalling.

Two CEOs, Michael Spindler and Gil Amelio, failed to turn the tide against the relentless spread of systems running Microsoft operating systems.   Microsoft’s new operating system, Windows, was becoming the industry standard, and the Apple Macintosh was showing signs of age. Amelio eventually set about addressing some of these issues by buying NeXT Inc.—the company run by none other than Apple founder Steve Jobs.

The Second Chance CEO

From the Macintosh onward, Apple has either been a reflection of or a reaction to Steve Jobs. In the Macintosh, Apple was trying to create a machine that made computing simple and enjoyable. In particular, Jobs was out to create a user experience that would convince everyone to buy a Mac.

Jobs believed a truly revolutionary product couldn’t depend on customers’ needs and wants. He thought customers could not understand the value of a product until they were actually using it. Unfortunately, Jobs was ahead of his time in 1985—precisely 12 years ahead of his time.

When Jobs overthrew Amelio and took Apple’s reins once more in 1997, the hardware had caught up to his vision for all things digital. He launched the iMac with a strong marketing campaign featuring the «Think Different» slogan. Although Jobs is often given credit for spending the money and time on marketing, excellent marketing and branding have always been key to Apple’s growth. The real difference between the iMac and all the products preceding it was the beauty and design.

It was not a tower and monitor setup like every other PC on the market. The iMac almost looked like a racer’s helmet photographed at speed, a colorful blur sweeping back from the screen. In 1998, the iMac was the most aesthetically pleasing machine on the market. It was the computer no one knew they wanted until they saw it. It was elegant and, thanks to the OS upgrade, it was user-friendly.

The iEcosystem

The iMac was just the start as Apple released a string of hit products that reflected the new focus on elegance and user experience. These included the iBook, the iPod, the iPhone, the MacBook Air, and the iPad. The iPod became the category killer in MP3 players, and the iPhone essentially launched and then dominated the smartphone market. The iPad then somehow convinced millions of people that they needed yet another screen to consume content.

All these devices were perceived as being better in quality—and certainly in design—than competing products. Jobs was relentless on design and indoctrinated the entire culture of Apple into the art of design.

The other point he brought Apple back to in his second tenure is the ease of use. After a few minutes of using the wheel on an iPod or tapping icons on an iPad, these new forms of control became part of the simplicity that makes Apple appealing. Now every product update from Apple is anticipated by the media and the general public, in addition to the fans that the company had from the start.

More importantly, all of these products moved Apple into a new business model of creating a tight ecosystem of hardware, software, and content. Apple didn’t create iTunes to be a simple program for users to transfer MP3s onto iPods, as was the case with many other manufacturers’ offerings. Instead, the company attacked the concept of an album by breaking them into songs that would be sold individually at a fraction of the whole album’s price.

The same process took place with software. Many popular computer functions could be done on Apple’s mobile devices using stripped-down apps—available, of course, on Apple’s App Store.

Being the first big mover into many of these markets, Apple built the stadium and set the rules for the game. When you pay for books, movies, apps, or music on an Apple device, Apple gets a cut. Of course, this business doesn’t generate as much revenue as selling an iPhone or an iPad, where the markup is much more generous.

That said, it is the content you buy through Apple that locks many people into buying Apple again when their i-devices get old. So the content part of the ecosystem pays off for Apple in the short-term and the long-term. Once you migrate to Apple because of the design or the simplicity, it is the integration with your content that keeps you there.

The Post-Jobs Era

Steve Jobs died in 2011 of pancreatic cancer.   Serving as CEO until shortly before his death, Steve Jobs turned the reins of the company over to Tim Cook.   The post-Jobs era at Apple has nonetheless been a success by most measures. Apple continued to be the dominant tech company in both market share and stock price.

Some analysts feel that without Jobs as the creative force, Apple has become solely iterative in its tech releases rather than transformative. The major release of the post-Jobs era has been the Apple Watch. The firm also created Apple TV devices and launched the Apple TV+ streaming video-on-demand service to go with it.

In the absence of a groundbreaking new product, Apple is heavily reliant on the iPhone’s production cycle to power its financial success. Critics say that without Steve Jobs at the helm, Apple has lost its innovative edge in recent years and is riding on its brand to drive sales.

The company still produced some of the best products with the most integrated ecosystem. However, the gap between Apple and competitors like Samsung and Google was no longer as pronounced as it once was. Indeed, companies like Samsung were increasingly poised to take the lead when it comes to product innovation in some categories.

Apple in the 20s

Apple’s market capitalization reached new highs in 2020, as the company enjoyed some successes and set new goals for the future. The company’s revenue from wearable technology, such as the Apple Watch, set new records. Apple’s revenue from services also rose to record highs during the 2020 crisis, as contactless payment options like Apple Pay became more popular.

Apple also announced two major changes to the Mac in 2020. First, Apple is transitioning the Mac away from Intel processors to its own custom-designed chips. Apple’s new processors are based on the ones used in iPhones and iPads, making them more energy-efficient. The new chips have the potential to give Apple’s laptops longer battery life and more processing power than PCs.

Secondly, Apple is changing the macOS so that developers can make iOS and iPadOS apps run on the Mac without modifications. That will dramatically expand the number of apps available on the Mac and make it more competitive with PCs.

The Bottom Line

There is a fairly good chance that you are reading this article either on an Apple device or with one near you. Maybe you are doing it on a MacBook Air while listening to an iPod touch and occasionally glancing at the newest Apple Watch for alerts from your iPhone. The reason behind that—and behind Apple’s success—is that its devices are beautiful to look at and a pleasure to use. That’s why the company has such a powerful brand and lofty stock valuation.

The marketing helps, and the media and fan frenzy never hurt. However, it is the quality of the products that drive Apple’s success. Add to this the iEcosystem that makes it much easier to stay with Apple than try something new, and you have a company with what Warren Buffett called an economic moat. It should not be surprising that Buffett invested heavily in Apple.

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