What would Apple do?

27 jul 2010

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A year and a half ago, Jeff Jarvis described Google’s success formula in his book ‘What Would Google Do?’ The book prompts readers to think in the same enterprising way as the multi-billion-dollar company of Larry Page and Sergey Brin. Now that Apple has managed to exceed software giant Microsoft in size, it’s only logical to ask the same question about Apple.

The pre-sale of the Apple iPhone 4 started this week and Apple sold 600,000 units on the first day, even though buyers hadn’t even seen the mobile device. In the United States, it brought down the servers of AT&T, and in Japan long queues of people stood outside the shop in the rain. A familiar sight at yet another successful product introduction by the Californian company. But how on earth does Apple do it?

Google

First of all, let’s start with a comparison between Apple and Google. In his book ‘What Would Google Do?’, Jeff Jarvis describes a number of principles that form the basis of Google’s success:

Small is the new big
Manage abundance (not scarcity)
Join the open-source, gift economy
The mass market is dead—long live the mass of niches
Middlemen are doomed
Free is a business model
Decide what business you’re in

What’s striking is that Apple does not comply with the rules of the Google economy. If anything, Apple consciously ignores a number of the principles that made Google big. Take, for example, the premise that ‘the mass market is dead – long live the mass of niches’. The iPhone is a mass-market product par excellence. Because there is only one iPhone model, in the colours black or white. Just one colour more than the Model T-Ford when it was put on the market, but considerably less than Apple’s competitors such as HTC, with 29 models, and Microsoft, which is available in 54 models.

Middlemen are doomed

In all sectors, middlemen are being eliminated and products are increasing sold directly to the consumer. Not with Apple. In the past, all Apple products have been available through the Apple Store, but this was not the case with the successful iPhone. In the Netherlands, the device was at first exclusively available through an intermediate channel, T-Mobile. Every effort has been made to prevent sales through other channels.

The last, but certainly not the most unimportant point is that Apple software is anything but open source. Apple software can only be used with Apple hardware, and for the development of the iPhone and iPad apps, obscure admission requirements were enforced.

Apple’s success

So what is it that we can actually learn from Apple? That you can be very successful by ignoring Google’s rules. The power of Apple lies in the fact that the entire company is focused on one model and a few variations. Because several models also means several production lines, several manuals, several packaging lines, etc. etc. Thanks to its product focus, Apple achieves huge economies of scale and greater returns than its competitors.

These economies of scale can be observed in all areas. Mike Elgan lists six additional ones on internet.com:

1. Shelf space

Apple can use all of its shelf space for one single device. Competitors have just as must shelf space, but they have to divide it to accommodate several models, as a result of which they get lost in a visual chaos.

2. Name awareness

Apple’s brand simplicity – everyone is familiar with Apple and the iPhone – substantially reduces marketing costs.

3. Hardware compatibility

With the exception of the iPod 4, all devices are identical with regard to form and connection points. This gives suppliers of peripherals a sense of security, which has resulted in a huge amount of product-improving peripheral devices and services.

4. Software compatibility

For software developers, the scale of operations means the assurance of being able to develop for a large audience. Unlike with Android, for example, it is not necessary to factor in the different screen sizes and functions of the more than 60 devices that run Android.

5. Designer focus

What’s more, Apple designers only have to focus their attention on one device. A major reason why the iPhone is so particularly user-friendly. At Apple, the best designer is not immediately put in charge of a new device, but is given the opportunity to personally keep improving his/her work.

6. Clarity for the consumer

Altogether, this way of working ensures that the consumer perceives Apple as predictable and reliable. In fact, so reliable that consumers are willing to queue up in the rain to buy a product which they have never seen.

So, what would Apple do?

What can we learn from that? First of all, that more than one road leads to Rome. And that in a world of individualism and hypersegmentation, where established religious and socio-political barriers have been broken down, there is not only room for the Google economy, but also for traditional mass marketing. During the strategy process, it is advisable to look not only at the latest visions and trends, but to also ask oneself from time to time ‘What would Apple do?’