Why get an apple

6 Reasons Apple Is So Successful

Apple’s iPads and iPhones are displayed inside an Apple store in New York City on Dec. 7, 2011

One of the more interesting questions I get asked about as an industry analyst who’s followed Apple since 1981 is why Apple is so successful. It’s an honest question because to those unfamiliar with Apple, the company’s rise and current dominance in non-PC devices is somewhat puzzling.

Most people have a working understanding of the fact that Apple lost the PC wars to Microsoft, and only nominally understand that when Apple created the iPod and then the iPhone, the company started to go in a new direction. And anyone who’s gone into an Apple store knows full well that Apple’s customer service and stores represent the gold standard for selling and supporting tech gadgets. But beyond that, the reasons why Apple is really successful are still a mystery to many.

There are plenty of books about Apple that talk about everything from Steve Jobs’ history to tenets of Apple’s business models to secrets about Apple’s internal-management ideas. However, after years of watching Apple up close and personal and having to deal with every one of their CEOs, as well as interacting with various Apple execs over the years, I would like to suggest that the reasons the company is successful can be boiled down to six key principles that make it very hard for competitors to compete with Apple.

1. For any product that Apple creates, the people who create it have to want it themselves
So many times with projects I do with other tech companies, the goal is almost always based around the technology first, followed by whether or not people really want to use it. Geeky engineers are dazzled by the technology at their disposal and often create something because they can. But Apple’s approach is quite different. The engineers who are creating Apple products actually make them for themselves. And Jobs was the chief “user” of Apple products when he was alive. All of Apple’s products are based on the fact that Jobs represented the real customer. And his engineers had to come to grips with that when designing a product. It has to be something that they personally couldn’t live without.

2. The products have to be easy to use
Jobs was a stickler on this point. While industrial design is a critical component of any product Apple makes, if it is not easy to use, it is considered worthless to the consumer. This is what drove the company’s user-interface designs from Day 1 and is still the mantra pushed to the software and hardware engineers every day they go to work. All of the products they create have to be intuitive and easy to understand and learn. As technology has become more intricate and users want more features, the task of keeping things simple is sometimes difficult. And Apple creates tools for power users and rookies, which can mean a broad range of ease-of-use issues. But even with that, Apple is the only company I deal with where ease of use is more important than the product itself. Apple makes this a critical goal of its approach to creating anything for the market.

3. Keep things simple
I was in Paris in the past two weeks and had talks with various French telecommunications officials about many mobile-computing issues. But one conversation I had in particular emphasizes this keep-it-simple point. We were discussing how to compete with Apple — a major pastime for all Apple competitors and carriers these days — when the question of why Apple is really successful came up. And one exec nailed it when he said he felt that the real reason Apple is successful is because it has one product; in this case the iPhone. It minimizes the decisionmaking process for the consumer by making things simple. The person speaking was with a carrier in France, and he said that in their stores, they have to have as many as 25 different models of phones available. That makes it hard for his staff to be really knowledgeable about all of them all of the time, and their customers just have too many options to choose from.

But Apple only has one iPhone model, and anyone who has gone into an Apple store understands that every staff member there knows a great deal about each of the four major products carried in its stores. Apple doesn’t have five iPhone models to choose from; it has only one. While this may seem limiting given the amount of smart phones available to users, the truth is the reverse. Our company has done consumer research for over 30 years, and consumers constantly tell us that while choice is nice, in reality they want the process of choosing a tech product to be simple and not complicated by a plethora of choices.

Yes, there are tech-savvy people who like more choices and sometimes even like complexity, but from years of experience as a market researcher, I can tell you that in the end, the majority of users are not tech-savvy, and keeping things simple for them is a plus. Apple understands this in spades and is never tempted to add multiple versions of an iPhone, iPad or even more than one or two types of iPods. This makes buying an Apple product simple. And consumers seem to appreciate this considering the huge number of iDevices that are sold each year. I know the tech media and techies are the most vocal about this issue of choice, but in the end, while choice is good for competitive pricing, what nontechie consumers really want is simplicity.

4. Offer great customer service and in-store experiences
Jobs understood one of the major conundrums of technology: even if you create products that are easy to use, the variety of things that people want to use technology for often creates complexity. Because of this, consumers at all levels may need some hand holding from time to time. I was one of the most vocal critics of Apple when it introduced its first retail store in Tokyo in 2002. I thought it was crazy for Apple to try and go into retail. At the time, and even today, tech retail stores are in decline while big-box stores like Costco and Walmart sell products on price and nothing else. I thought that if price were the issue, an upscale retail store would be DOA. Wow, were other naysayers and I wrong about Apple’s retail strategy.

Apple uses this conundrum to its advantage. Because it keeps product SKUs simple, the salespeople inside the stores know the products really well. Notice that when you go into an Apple store and are greeted by one of the sales staff, you’re not asked, “How can I help you?” Instead they ask, “What would you like to do today?” They go right to the heart of any technology user’s question, a question that’s always related to what they want to do with the technology the user is interested in.

And once you explain your needs, they take care of it on the spot in most cases. Or if you need more hand holding, they turn you over to the Apple Geniuses. No wonder 50% of people buying Apple products are new to Apple. Apple’s products are simple to understand and use, but if you do have a problem, Apple can take care of it at their stores or over the phone quickly.

5. Apple only makes a product if Apple can do it better
Apple normally doesn’t invent a new product or product category. Sure, the company did invent the first commercial PC with the Apple II, and the Mac improved on PCs with a graphical user interface and mouse input. But since then, all of Apple’s other products have been recreations of existing products. Apple did not invent the MP3 player; Apple reinvented it and made it better. Apple did not invent the smart phone; Apple reinvented it and made it better. And Apple did not invent the tablet; Apple reinvented it and made it better.

As Apple designer Jonathan Ive said recently, “Our goals are very simple — to design and make better products. If we can’t make something that is better, we won’t do it.” Clearly, Apple applied that thinking first to iPods, then smart phones and more recently, to the iPad.

6. Apple stays at least two years ahead of its competitors
This is the one that scares Apple’s competitors the most. While those competing with Apple are just getting products to market that are competitive, Apple is already working on the products at least two years out. For example, the new iPhone that will most likely go to market in October was designed and signed off on two years ago. And the iPhone the company is working on now is for the fall of 2014. The same goes for the iPad. The new iPad that we will most likely see next March was signed off on two years ago. The one that’s being worked on now we will probably see in 2015. This is a nightmare for Apple’s competitors and will continue to be for some time.

Besides having geniuses in design, software and retail, Apple also has the cash to invent components, manufacturing processes and things like that, which almost makes it impossible for the competition to make any real headway against Apple. And don’t let the fact that Android has become the No. 1 smart-phone operating system make you think that it’s the big winner. Yes, Android has gained ground by the sheer numbers of companies and products pushing Android. But the real measure of success is in the profits, and Apple is making as much as 70% of all the profits in smart phones and about 85% of the profits in tablets. Just ask any Android competitor which they would like more, market share or profits. You’ll get the answer relating to the real measure of success in this market.

These six principles may seem a bit simplistic given the fact that Apple also has great software, industrial design and a powerful ecosystem of content, apps and services as part of the company’s success equation. However, I can tell you that from my three decades of following Apple, it’s these six key principles that are what really makes it successful. And as long as it adheres to them, it’s pretty likely that Apple will continue to grow and command a relatively large share of the market in the company’s product categories where it competes.

Bajarin is the president of Creative Strategies Inc., a technology-industry-analysis and market-intelligence firm in Silicon Valley.

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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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