At a time when prices are being driven down across the spectrum of electronics, one company clearly has avoided this trap: Apple. While others struggle to squeeze profits from a market that is becoming increasingly commoditized (sub-$200 netbooks anyone?), Apple maintains its edge and its hefty profit margin. It got me wondering just how Apple continues to charge prices far above the rest of the market and not only get away with it, but thrive.
Design
First of all, you have to start with quality. If you are going to charge a hefty amount for your products, you better make damn sure you make good ones. I know that critics will say that Apple's proprietary propensity is one reason it maintains control of its market, yet it doesn't seem to bother its loyal legion of customers as much as it does its critics. As I wrote in Apple's Value is so Much More Than Skin Deep, after using PCs for more than 20 years, I didn't come out of the womb as an Apple fan boy (see my missive: The Myth of the Apple Fan Boy):
I used the product and I fell in love with it...It is a gorgeous piece of engineering and I paid a lot of money for it, a lot more than I would have had I bought a comparable PC, but when you get down to it, in my long experience, there simply is no comparable PC.
Marketing
Apple is genius at marketing its products. It creates a mystique around them. It builds up interest and excitement. People look forward to their product announcements.
Part of the reason is the design, but part of it is Apple's expertise at creating desire. This is not minimize the importance of the design because mystique can only take you so far. At some point you have to deliver quality goods and Apple for the most part has done that.
Service
The best tech support I ever received was from WordPerfect back in the DOS days. It was free, they knew the product inside-out and they would take the time to help you. Apple Care is a close second. It's not free (except for the first year), but I've called them many times and I find mostly quality people who know what they're talking about.
Just last weekend, the WiFi connector stopped working on my son's iPod Touch. I called Apple Care. The tech had me try a couple of things. They didn't work and he arranged for me to ship back the current unit and send me a new one. No fussing. They just did it and even shipped me a box to return it in.
Apple has been criticized for not getting into the Netbook market, and for not substantially lowering its prices in the midst of a recession. Yet what is their motivation to drive down their own prices? It would only force them toward the commodity trap that they have so successfully avoided and why would they do that?
