The myth of Apple's impossibly difficult (yet super easy) hardware business

Posted:
in General Discussion edited August 10
Every time Apple has entered a new market segment, the wailing sirens of punditry have scrambled to scream out their logic of how impossible it will be for the company to ever get established, to meaningfully change the rules, and to succeed commercially. And at the same time, those same critics frequently throw out the idea that Apple doesn't even have to try to succeed in hardware, because its audience of raving fans will blindly buy any overpriced, underperforming thing the company releases. In both cases, they're wrong, here's why.

HomePod
HomePod is supposed to be impossible for Apple to sell, just like everything else Apple ever sold


We've seen two decades of this cognitive dissonance posing as analysis with iPod, iPhone, MacBook Air, iPad, Apple Watch and now HomePod. At first, there was supposed to be no way Apple could be successful or even compete in any of these markets. Then, in hindsight, Apple's performance is portrayed as a fait accompli, the result of the company's effortless ability to shovel anything into the market, douse it with marketing, and ignite a bonfire of vanity that attracts simpleton fans who don't know any better.

Apple's hardware business is portrayed as so effortless that the company doesn't even deserve any credit for its success. The obvious corollary to this bizarre flawgic is that rival companies can also just throw out new ideas that will obviously be accepted and embraced by consumers the same way Apple's are, because hardware is easy.

And even more bizarrely, when rival attempts to launch hardware fail (think: Zune, Windows Phone, Android Tablets, Chromebooks, Nexus, Surface, Pixel, Galaxy Watch, Android Wear, etc), the people who fervently believed in them while there was some hope they might take off suddenly spin around and explain that none of these product attempts were really important or should even be considered failures because they were just practice rounds or corporate pantomime exercises designed to signal to licensees how they could best copy Apple on their own, as if they weren't already.

Another logical leap that always comes up short: if Apple's marketing were the main thing driving its sales, why haven't Google and Microsoft been able to sell their brands in commercially significant volumes, given Microsoft's billions devoted to marketing and Google's supposed genius in targeting and reaching buyers with effective advertising messages?

Surface
Microsoft spent billions dancing, and like nobody was watching

Apple and the long hardware struggle

Apple has always ostensibly focused on hardware, where it makes the vast majority of its revenues. Despite an insistent media narrative that all the company does is throw overpriced hardware at an audience of raving fanatics who will buy anything, and/or fools the world with its clever advertising, the reality is that Apple hasn't always been magically successful in introducing new hardware.

After its first two decades focused mainly on desktop computers, Apple expanded into the business of printers, digital cameras, monitors, CD-ROM and PDA devices in the 1990s, all of which failed to establish significant new markets for growth. This all wasn't just due to the departure of Steve Jobs and his magical insight back in 1986; Jobs' own NeXT Computer also failed to succeed commercially in hardware sales.

The fact that Apple and NeXT hardware were both struggling into the 1990s while Microsoft's software was ascending into near total control of personal computing set the stage for a persistent mindset that hardware simply wasn't going to ever make money. The new gospel was that hardware would be nothing more than a commodity product running Windows, or perhaps someday Linux, and that niche OS hardware would never again matter commercially.

In 1994, Apple itself attempted to begin licensing its Mac OS (and later its Newton operating system) to third party hardware makers. The previous year, Jobs had similarly decided to shift NeXT from its original hardware focus to a pure software licensing business. Both efforts failed to work out well.

Somewhat surprisingly (at least to people at the time, who were saturated in the mindset of commodity hardware), when Jobs returned to Apple at the end of 1996 he terminated all of those software licensing deals and returned Apple to a hardware focus, starting with new PowerBooks in 1997 and then the new iMac in 1998.

iMac
Steve Jobs challenged the notion that hardware was a commodity with iMac in 1998


In the 2000s, Apple found incredible success with iPod, then iPhone. But it also failed to find significant interest in some of its other new hardware introductions, including Xserve, Xserve RAID and the Mac mini. All of these products were enthusiastically introduced by Jobs and were expertly marketed, updated and enhanced at regular intervals.

Clearly, the idea that Apple always succeeds without even trying because of its indiscriminate, marketing-fooled fans is total hogwash. There's obviously something else that has fueled Apple's hits, something that was missing in its strikeouts. This factor is also evident in the product introductions by other companies.

Apple's secret Services sauce sells systems.
bakedbananaspropod

Comments

  • Reply 1 of 15
    Formula 1 race drivers make driving around a race track look easy
    NBA players make throwing a ball into a 3 metre high hoop look easy
    Baseball players make hitting a little ball with a fat stick look easy

    Apple makes the design, manufacture and distribution of high end consumer electronics hardware look easy

    If all the above is that easy, then these so called experts should give it a try
    edited August 9 racerhomie3magman1979JWSCraoulduke42baconstangpropodwatto_cobraigohmmmjony0
  • Reply 2 of 15
    Grrrreat article. Rolling. It's amazing how people don't get Apple, even when Tim Cook spells it out. They invest a ton in h/w and s/w integration down into the chip design. That is what drives demand and margin, and keeps the brand strong. Elegant design and branding add a lot but alone they could never sustain Apple. Another thing folks don't get is that Apple says "no" a lot. Steve Jobs touted this as one of his most important roles. Tim Cook carries this on. Hence Apple does not chase after every new product or feature. People see this as a failing. When Apple does introduce a new product, they are all in, from chip to retail training and inventory management, which costs a lot. Compare and contrast Google Glass and AirPod. Glass was a great experiment and a zero business. Google did not invest much into Glass, hence it's high price. But it generated massive enthusiasm. AirPod, whose demand still exceeds supply, required major investments by Apple and it's suppliers because the technology is so far ahead and it's price is accessible. Analysts just see a small white bauble. Guess what? No one else has such a bauble. Very curious to see how long until competitors release an inferior copy cat. And.. Apple Watch and AirPod, both wearables, show Apple crushing two new categories. The rest is the Smart Watch biz is more fragmented than Android. AirPod has no competition as "smart" earbuds.. Both run variants of iOS.
    StrangeDayskevin keemagman1979christopher126radarthekathubbaxigohmmmwatto_cobrabrucemc
  • Reply 3 of 15
    GeorgeBMacGeorgeBMac Posts: 3,048member
    Nah!   The article missed the mark.   Yeh, it's the mantra of many.   But it missed the mark.

    It attributed Apple's ease in introducing new products to either or both of two things:
    1)  Blind, rabid fans who eat up anything Apple barfs up.
    2)  Marketing expertise.

    While both of those ARE TRUE, I would say it is neither!

    Rather I would say it is Apple's reputation and people's confidence that they will get what they want and need.  Neither of those are false or glitzy like the fanboy or marketing explanation of the article.  Instead, they are hard won by years or hard work to produce solid, quality products that enrich people's faith and belief in Apple.  In short:  Quality Products backed by a Quality Organization.

    I think a great analogy is a truism from the 90's:
    "Nobody ever got fired for buying IBM"
    That wasn't because of marketing or false belief.  It was because everybody knew IBM created quality products that did the job and, if there was problem, IBM was standing right there behind the product making it right and insuring the customer's needs were met.

    Sure, in both cases (IBM and Apple) the products were supposedly overpriced and underpowered.   But what the critics ignored was that you got quality products backed by a quality organization.

    In the long run:   Reputation (good or bad) always trumps marketing -- and fanboys are only fans until they aren't.

    After thought:  If you look ONLY at either Apple or IBM hardware, it is easy and logical to come to the conclusion discussed in this article.  But, both Apple and IBM are/were much more than that.   They provided a complete package solution that is hard to describe and is usually missed in media reviews.   In other words:  their "product" cannot be boiled down into a chunk of hardware.  It is far more than that.
    edited August 9 racerhomie3croprmagman1979gregg thurmanJWSCthtmknelsonwatto_cobra
  • Reply 4 of 15
    Calling customers , viewers & voters stupid is some of the weakest arguments used  by the media.
    magman1979watto_cobra
  • Reply 5 of 15
    kevin keekevin kee Posts: 911member
    So true. I might be a fan, but I am neither blind nor stupid.
    magman1979watto_cobra
  • Reply 6 of 15
    radarthekatradarthekat Posts: 2,649moderator
    Political comments and rebuttals to such have been removed.  
    watto_cobra
  • Reply 7 of 15
    The reason I buy all Apple stuff is easy to explain... While my wife and I were in an Apple store buying new iPhones I just happen to ask if they had a replacement battery for my old laptop (about 7 years old at the time). The associate pulled one out of a drawer and rang us up. Shocking my wife since we had just come from ordering a handmade battery for her 3 year old Dell, because Dell no longer supported it.

    In the 15 years I have bought almost exclusively Apple equipment it has always done what it advertised, worked well, and the OS while sometimes restrictive in what you can do, also prevents non-power users from screwing the whole thing up by accident. 

    The way I figure it is I charge about $200/hr for my time. So not screwing around with drivers, compatibility errors, reboot issues, and all the other hardware-software conflict stuff on a PC saves me a huge amount of time, and thus money. If I save 10 minutes a week not having to support my hardware it saves me enough every year to more than pay for the premium for Apple stuff. 
    GeorgeBMacwatto_cobrajony0
  • Reply 8 of 15

    Speaking of anti-Apple bias, I've noticed that PatentlyApple seems to suddenly have a lot of blatantly anti-Apple, click-bait headlines. I never pegged that site for this. It looks like their either have a new columnist or it's the Bizzaro World version of the site. Some samples (without links):

    • On Paper it appears that Apple's Fight with India's Telecom Authority is a Losing Strategy
    • Bloomberg Hammers Apple for Conning the Public into believing that they're Privacy Heroes
    • Apple's iPhone Business in Vietnam is Stuck at 5% while Xiaomi and Huawei have caught up in Dramatic Fashion
    • Apple's CEO takes a few Cheap Shots at Spotify who squarely beat them to the Streaming Music Business


    I didn't bother reading the articles, since the last one (chronologically the first one) definitely seemed like click-bait, since I knew what the article was about and Tim Cook never mentioned Spotify there.

    watto_cobrajony0
  • Reply 9 of 15
    djsherlydjsherly Posts: 992member
    Stumble said:
    The reason I buy all Apple stuff is easy to explain... While my wife and I were in an Apple store buying new iPhones I just happen to ask if they had a replacement battery for my old laptop (about 7 years old at the time). The associate pulled one out of a drawer and rang us up. Shocking my wife since we had just come from ordering a handmade battery for her 3 year old Dell, because Dell no longer supported it.

    In the 15 years I have bought almost exclusively Apple equipment it has always done what it advertised, worked well, and the OS while sometimes restrictive in what you can do, also prevents non-power users from screwing the whole thing up by accident. 

    The way I figure it is I charge about $200/hr for my time. So not screwing around with drivers, compatibility errors, reboot issues, and all the other hardware-software conflict stuff on a PC saves me a huge amount of time, and thus money. If I save 10 minutes a week not having to support my hardware it saves me enough every year to more than pay for the premium for Apple stuff. 
    I get what youre saying but ive always thought that the “I charge <insert figure> for my time” argument conveniently assumes that *all* ones time has that value. This is rarely, if ever, the case. 

    All you have to see is value in the proposition, like i do. on the other hand, i see little value in having the plumber come over and replace my washers (legally we cant touch any plumbing here). So i do that. 
    watto_cobra
  • Reply 10 of 15
    dewmedewme Posts: 1,749member
    You should warn us ahead of time when you're going to show snapshots of Microsoft advertising campaigns. Disturbing, very disturbing.
    hubbaxwatto_cobra
  • Reply 11 of 15
    Apple is not in the hardware business. They are in the product business. They even say so: „great products“. 

    Products these days consist very much of hard- and software. 

    As for myself: As much as I like the iPhone hardware. There is other great hardware, too. But the product is the combination of the two. Same goes for the Mac. 

    Sometimes Apple fails, and folks don’t buy the products. End of „droves of fanboys“-myth. 

    Apple took very long to get Apple TV right. I think, they still didn‘t get the product „right“, just „better“ than previous incarnations. 

    Likewise: Mac Pro. Apple even publically acknowledged that. 

    And also: MacBook Pro or more generally the MacBook lineup. There‘s something in it for some. But some folks who care about flexibility, repairability more than about ultraportability are left out. 
  • Reply 12 of 15
    Does anyone still care about the critics? Donkey's years since I last did...
    edited August 10 watto_cobra
  • Reply 13 of 15
    larryalarrya Posts: 524member
    I stopped reading after comments about how the media said Apple could not succeed in wearables or smart speakers.  I don’t remember reading anything like that. They were both new or immature markets and such sentiments would be nonsensical. Sure, there was plenty about Apple being late to the game, but never anything like what the author poses (the iPhone was a different case). Straw man argument. Next.
  • Reply 14 of 15
    larrya said:
    I stopped reading after comments about how the media said Apple could not succeed in wearables or smart speakers.  I don’t remember reading anything like that. They were both new or immature markets and such sentiments would be nonsensical. Sure, there was plenty about Apple being late to the game, but never anything like what the author poses (the iPhone was a different case). Straw man argument. Next.
    I on the other hand do remember this very well, since I would cover the Watch quite a lot as it rolled out back in the day. Moreover, the rhetoric hasn’t died off yet. The most persistent click-baiters still (try to) argue along its lines. 
    edited August 11
  • Reply 15 of 15
    larrya said:
    I stopped reading after comments about how the media said Apple could not succeed in wearables or smart speakers.  I don’t remember reading anything like that. They were both new or immature markets and such sentiments would be nonsensical. Sure, there was plenty about Apple being late to the game, but never anything like what the author poses (the iPhone was a different case). Straw man argument. Next.
    With both Apple Watch and HomePod, there was (and still remains for HP) a strong media narrative that said Apple's competitors were too entrenched and got started too much earlier--years before Apple! Both were far too expensive because you could find wearables and wifi mics for $50 or less. 

    Android Wear was not new, and Samsung was on its ~ third revision. Look up reports on the first couple years of Apple Watch, where IDC is stating that Apple is "about tied" with Xiaomi because both were selling similar numbers (Apple of $350 Watches, and Xiaomi of $12 bands). It was far more insane than what was said about the iPhone a year or two after its release. OF course, it has died down now that Apple Watch has flattened the entire landscape for smartwatches.

    HomePod is still being denigrated as too late/too expansive to compete with Amazon. And until the last week, everyone was imagining out loud how important it was for Amazon to have launched Echo because it was the future of shopping and had such an important impact on Amazon's business in automatic, effortless orders. At least until it was revealed that nobody at all (2%) was using Echo to order anything from Amazon and that 90% who did never tried again. 

    That's the nature of bullshit. It ends at some point. Don't imagine it never happened, just do some research on your own to see how bad it was. 
    tmay
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