Apple Evolution: Which premium market next?

covent-garden-market-apple-market-57_bigWhile Apple has enjoyed a very loyal customer base for many years, it was the move to premium products that brought mammoth economic success.

The challenge is to continue to evolve, find new product or customer bases, while staying ‘premium‘.

The cracks have now started to emerge with a previous prime customer base now starting to feel ignored as the company releases more and more products for an new alternative customer base. How many types of Apple customers can the company manage to juggle, while remaining as a premium brand that attracts the loyalty and profits is a key factor for the future further growth of the company.

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HP: A comparison customer evolution

I suggest HP is an example of a company which moved from specialised markets to the mainstream, but in doing so largely lost their premium product image and passion within their customer base. Apple still has to be careful to protect against the same fate.

Hi Quality Technology For Professional Organisations

900px-hp9100a-img_03931725a_frontHP has origins in technology for professional organisations, not the products for consumers the company sells today. The first products were test and measuring equipment, generally for use in electronics labs. These products were extremely high quality (premium products) and the professionals who used this equipment derived enjoyment for using quality technology, In the late 1960s and 1970s, HP was a reference standard for Oscilloscopes, other test equipment, and programmable calculator/ personal computers. If your work really depended on such equipment, then additional cost for a premium product was generally justified. NASA even had astronauts use HP technology products in space.

hp65_shuttle
HP-65 in space

Premium Technology for Professionals

“The HP 35 was probably HP’s number one product winner of its 6 business decades. It captivated our technical customers. It raised HP’s already high prestige. It brought untold computing power to the fingertips of the common engineer, and they worshiped HP for the innovation. Finally, it sparked a long succession of more and more powerful machines, the magnetic-strip programmable HP 65, 35v43qfinancial versions, and many more.”

Hp programmable calculators move HP from the professional organisation marketplace, to the individual professional consumer market place. These devices were a hybrid of a computer and a calculator and were even described as personal computers, long before the IBM PC. While the photo of the HP 65 is in space, the photo appears in advertisement to sell the brand to consumers on Earth. Before what we now call the ‘PC’, ‘geeks’ the world over could have their own programmable device, and HP was the most desirable product.

Even in the psychedelic ’60s, HP was out in front of the pack. The company helped invent the language that would become part of today’s technology lexicon. Take the term “personal computer,” for example.
According to Yale Law School librarian Fred Shapiro, the phrase was first documented in a 1968 Science magazine ad for the Hewlett-Packard 9100A personal computer. That’s eight years before the term made its first appearance in the venerable Oxford English Dictionary.

Technology for Consumers (Losing the premium)

As technology and computers moved mainstream, so did HP. But rather than remain a premium brand for professionals and enthusiasts, HP focused on features/ price ratio to maximise the market. The company grew, but the premium aspect did not remain and the company, while focusing on a much larger product range than Apple, ultimately became a much smaller company than apple.

Hp was valued at just under 30Billion in 2005, and just over 35 billion in 2017.

Apple has also reached a valuation of around 30 billion in 2005, but in 2017 Apple has passed a valuation of 900 billion and is headed for 1 trillion.

Apple Origins: Low Cost Enthusiast Technology

Initial production of the original Apple computer was financed by Steve Jobs selling his computer and Steve Wozniak selling his HP-65 calculator. This first computer project was driven by passion, but at the time the target market was enthusiasts. The project was about building something that worked for an affordable budget, and anything but a premium product. However, Apple products moved rapidly and the company grew quickly, until they were a little derailed by the IBM PC.

By 1985, when Steve Jobs left, the company started on the road to premium, together with great marketing, but at this stage of the strategy, there were failures, and the reality was that the real income for the company was still coming from new versions of the Apple 2. The Apple 3 had been basically ugly and unreliable the Apple Lisa did not do well in the market, and the Macintosh computer line had failed to compete with the IBM PC, and had its own failures including Mackintosh Office.

Steve Jobs Departs.

Mixed success and failure followed the departure of Steve Jobs in 1985, but the seeds of future success were already in place despite the company having lost management focus.

The move into the consumer market was signalled by the Apple Newton, but the execution was a failure in the marketplace.450px-apple_powerbook_g3_500_pismo-2763

Apple Macintosh products had gain a strong following with professionals.

But if you consider the PowerBook G3, the design was still ‘geek’ rather than premium.

Rebirth: The move to Premium Products

300px-powerbook_redjarFollowing the return of Steve Jobs to Apple in the 1997, Apply began a rebirth with products being repositioned as premium, together with a move into technology for consumers. The contrast of the design of the PowerBook G4.

The move to premium products repositioned Apple from a company to for those with an interest in technology, to Apple becoming simply a premium brand.

Premium Products for Professionals

Prior to the return of Steve Jobs, Apply had already become a brand with strong acceptance by professionals. Premium technology for professionals is a well established path, as if you derive your revenue from a tool, it can be very advisable to use a high quality premium tool.

Premium Technology for Consumers

The big new innovation was the iPod. Looking at MP3 players, which provide amazing value for money compared to previous Walkman or compact disc technologies, and realising that even a premium MP3 player would still be affordable to the mass market.

The iPod brought premium technology to the mass market. A truly premium product that everyone could afford, and for which almost everyone had a use.

The iPhone followed the same path. The mobile phone had become indispensable technology and Moore’s law had already ensured that the actual cost had already fallen well below the equivalent price point that was sufficiently affordable to drive mass adoption. Every one who could afford a mobile device just a few years earlier, could now afford a premium mobile device.

Where Next?

Having found the holy grail of a product that can be premium, affordable by most people and useful for most people, and having found that at least arguably twice, where does Apple go next?

Robots? Driverless car?

The problem with these is that in neither case is a premium product actually affordable. Computers and more specifically phones, had already dropped to a small fraction of their price just a few years earlier when almost everyone could already afford one.

Robots may radically drop in price, but they are not currently a point where even very wealthy people can afford a useful one. A premium, useful robot at a price within reach of all of us just does not seem feasible anytime soon.

Driverless cars doesn’t really decrease the cost of a car. For commercial vehicles, saving the cost of a driver is absolutely disruptive, but not for our own cars. Even driverless, it is hard to see how cars as a product can reach a point where a premium car is affordable by everyone.

However, access to a premium car as a taxi service could certainly become affordable to the masses. An Uber competitor? Perhaps, but does using a service have the same brand attachment as owning a product. Time may answer that.

What is left? ….more to come.

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