Doing Things the Apple Way!

The people who are crazy enough to think they can change the world are the ones who do. 

Such a simple yet impactful statement, isn’t it?

Apple over the years have come up with products that have both dazzled and confused the world. Dazzled because of the love that they have received from people across the globe. That has grown the company by leaps and bounds. Apple is worth a little over a trillion dollars and just to put things in perspective 1 Trillion = 1,000,000,000,000 and this is what the company is worth.

They have brought to the world some revolutionary products which have challenged the status quo and that has confused many of the business gurus worldwide. No one in their right mind would buy a phone without the 3.5mm audio jack. But we are all testimony to the fact that Apple not only brought this and many other innovations but have been successful as well.

Another question that has popped up after the Apple's Event on September 12 where they introduced to the world iPhone XS, iPhone XS Max and iPhone XR. Why anyone in their right minds would buy a phone which costs as high as these?

Even if from the below lot we take iPhone XR 64GB version which is the cheapest of all, and just to do a fun comparison, instead of buying an iPhone XR 64GB for INR 76,900 we can buy Petrol for close to 16 months in Delhi (average consumption of 2 liters/day @ INR 81) Why then Apple would not play with the price point and make it something that everyone is comfortable with?

The answer is simple, and this is where an Apple differentiates itself from others. Apple doesn’t care whether people upgrade their iPhones to the latest version available.

There are 2 reasons which I feel lead to this. Point number 1 Apple has a niche customer base and they would feel alienated if Apple becomes the Samsung of the world and cater to the lower price range as well. The Pareto rule works well for Apple where they get 80% of their revenues from that 20% niche segment.

Point number 2, Apple is not in the business of selling products. It is in the business of making customers. So, when someone buys and iPhone, any model of it, Apple gains a customer.

Now, there is a segment who is ultra-rich and would happily upgrade to the latest version even if it costed $5,000, let’s remove them from the equation. For the rest of us, we would probably use the device and hold on to it for a longer period. The second possibility is that we would purchase a newer model and pass the current model to someone in the family. Apple wins again.

This is because Apple gained a new customer even with an older model and that opened the possibility of other purchase happening, it may be some other Apple device or some content from the digital stores. So, even a simple thing like multiple users over the lifetime of an iPhone is beneficial to Apple as they without worrying about the market share or dropping their prices to increase their customers exposes people to iOS, digital stores, its hardware etc.

In the words of Horace Dediu who has been called as the “King of Apple Analysts”

An iPhone at $1200 may be less expensive than an iPhone at $600 if the $1200 version lasts twice as long as is used twice as much each day. The $1200 phone delivers 4x the utility at twice the price, making it half the price. By making more durable products, both in terms of hardware and software, the customer base is satisfied and preserved.

Apple has over 1 billion iPhone users globally and in the 2017 fiscal year, Apple sold 216.76 million iPhones. This means that without making in huge effort to convince people to upgrade to the latest version Apple still has huge takers of the new phones it launches. Apple's ecosystem remains unrivaled. And even if someone buys the cheapest version available in the global market which as of today is iPhone 7, Apple again gains a new customer and Wins! The phone is durable and is expected to receive the latest updates for at least some time in the near future. So, the person can happily use the above phone and then pass it on.

Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can't do is ignore them. Because they change things. Because the people who are crazy enough to think they can change the world, are the ones who do.

PS: For everyone not interested in buying Apple products buy their stocks ??