Why Does Apple Dominate (and a Story About Rare Milk)

I’m a lucky guy. Yesterday I went to the store to buy some milk. As I walked back to the milk cooler, I noticed something different. One of the milk gallons was bright yellow. Amidst a sea of banal white milk gallons, this gallon really stood out.?

I got closer and realized that the price was exactly double all the other gallons. But this gallon has a special label which proudly boasted: “Limited Edition! Go for the Gold!”

Of course I bought the gallon and brought it home. My kids gathered around the kitchen table and took numerous photos of our rare milk, sharing it with the world via Instagram and TikTok.?

I was reluctant to even open the gallon - no doubt that could hurt the resale value. Then again, given the shelf life of milk, keeping the actual milk for more than a couple of weeks would be a yucky experience. So, instead, I plan to drink the milk and then frame the special gallon, hanging it proudly over our fireplace.

You may be thinking: “why haven’t I come across special edition milk in my grocery store?” Well, the answer is not that you are unlucky. The answer is, it doesn’t exist. I made the whole story up.

Indeed, doesn’t the idea of paying extra for milk in a gold jug seem ridiculous? If anything, shouldn’t you pay extra for better milk (organic, grass-fed, local, humanely farmed) rather than a colorful piece of plastic?

It Was All Yellow

And yet, over the last few months, I’ve seen dozens of Apple billboards in the Bay Area proudly announcing the launch of Apple’s latest, amazing phone. A phone so new, so innovative that . . . oh wait, it’s just a yellow iPhone.

That’s right, Apple is spending millions of dollars to advertise their existing phone, but in the color yellow.

My first thought upon seeing these ads: Apple is a dying company. Ever since Steve Jobs passed away, they have been unable to develop innovative products. Instead, they have basically iterated on what was already built when Steve was alive. Some of these iterations have been technically impressive (faster processing power, better cameras, clearer screens), but I’d describe most of what Apple has built in the last 15 years as evolutionary, not revolutionary.

Most companies that don’t disrupt their own business end up getting disrupted by another company. Think Kmart being disrupted by Target (and perhaps Target eventually getting disrupted by Amazon), or newspapers being disrupted by the Internet. So the fact that Apple seems to be largely resting on its laurels should be evidence that it is a company that is in decline.

Instead, Apple continues its dominance. In the US, Apple owns 57% of the smartphone market. This, by the way, is up from 45% in 2013.

And Apple’s revenue and profit have been on a steady march for over a decade.

Brand Beats Product

So what’s going on here? The answer comes down to one thing: branding. Apple has convinced the world that their iPhone (and many of their other products) are simply the best products out there. Apple can do virtually anything and a large part of the public will conclude that it was an incredible decision.?

Over the last 15 years, Apple has built really small iPhones and convinced consumers that smaller is better, and then launched really big iPhones and convinced those same consumers that bigger is better. They have added features and sunset features. They launch new phones with minimal new benefits and millions of consumers excitedly rush to the store to have the latest iPhone.

The yellow iPhone (which was preceded by other limited edition color launches like the Rose Gold iPhone) to me feels like Apple giving their competitors the middle finger: “Hey Samsung! While you are working overtime to create futuristic features, hoping to convince consumers to buy your phone, we just made a billion dollars by adding some paint to our phone.”

I used to think that a great product would always trump a great brand. Indeed, I put up a survey on LinkedIn a few months ago asking this question: would you prefer to run a business with a better brand or a better product? I assumed the answer would be a better product. I was wrong!

A few sage comment from respondents:?

Ha Nguyen : “A great product is useless unless people know about it. -Signed, a former product leader veteran (w/ a lot of scar tissue ?? ) “

Laurent OPPENHEIM : “Brand of course, a brand inspires, it should be the North Star, ? the why ? consumer can adhere to… When you believe…you buy anything.”

John T. Shea : “Brand > Product. Easier to copy a good product. Hard to copy a brand.”

David Neugebauer : “While there's really no one right answer, I'd have to say brand. There are a lot of great products that never make it. Humans' primary driver of decision is emotion (and we/many rationalize that decisions are all based on rationality).”

What’s next for Apple? Have you heard of the iMilk? Rumor has it they may be releasing a few gallons in exclusive, limited edition colors. Camp out at your favorite grocery store now to get one for yourself.