Blogs and Stories
Will Apple Finally Lose Its Cool?
Cathal McNaughton/AP
Steve Jobs’ leave of absence won’t matter if the company he founded finally goes mass.
Why is Apple so beloved?
Because it’s small.
That remark will probably get me hammered by Apple’s intense, die-hard, unquestioningly loyal fans. But today, an Apple executive not named Steve Jobs—and if it’s not Jobs, do we really care who it is?—will give the keynote at Macworld in San Francisco that could determine the company’s future. If he says anything about $99 iPhones, or selling them at retailers beyond Best Buy and Wal-Mart, start worrying about Apple. Flooding the mass market with iPhones will make Apple huge—and probably send the company into a crisis.
This view comes from my research about a concept I call The Fidelity Swap. The principle behind The Fidelity Swap is relatively simple: it shows how consumers constantly make trade-offs between a product’s fidelity—i.e., how good it is, what its aura is, its cool factor—and the convenience of actually getting that product. Most successful products and services are either high fidelity and low convenience (like a U2 concert) or extremely convenient yet low fidelity (like a U2 song in MP3). Stuff that’s so-so fidelity and so-so convenience (U2 on a CD) meets with a whole lot of consumer apathy.
Apple always had a secret sauce. For most of its existence, the company has been the underdog, fighting the Microsofts and IBMs.
In the 2000s, Steve Jobs rebuilt Apple by making it into the highest-fidelity tech company on the planet. Apple kept prices high, and made hardware and software that was beautifully crafted and undeniably better than its competitors’. But Apple always had a secret sauce. For most of its existence, the company has been the underdog, fighting the Microsofts and IBMs. Apple was creative, rebellious, sexy. The other computer companies were corporate and mindless, selling their products to the unenlightened masses. And for more than 25 years, Apple has played up that image, whether in its “Think Different” billboards or the more recent “Mac vs. PC” commercials.
Above all, Apple conferred identity. If you owned something from Apple, you were one of the elite who knew better. You were smarter, hipper. And Steve Jobs has been a master at keeping that image going.
In 2001, Apple introduced the iPod and iTunes. At first these seemed like typical Apple super-fidelity products – expensive, better than anything else, totally cool. But then something odd happened—something Apple had never before experienced: Its product took off with the masses. So Apple went with it, cutting prices, ramping up production, and creating the iPod Nano to serve even a broader, lower end of the market. At one point Apple had more than 90 percent of the digital music player market. It was the music player to buy when you didn’t want to think about what music player to buy. But somewhere along the way, the iPod became a little boring. It stopped conferring identity. It didn’t make you cool—it only made you fit in.
This could have been a huge problem for Apple. The more mass-market the music products went, the less Apple could be the company of “Think Different.” Steve Jobs understood that. In 2004 he realized high-end cell phones would have enough storage to hold and play digital music. They’d make stand-alone iPods superfluous. Jobs instructed his engineers to create a touch-screen handheld computer that could be a music player, cell phone, and all-around digital device.
The iPhone, unveiled two years ago, immediately recaptured Apple’s super-fidelity position—and its aura and identity. An iPhone made its owner feel cooler and smarter than everyone else. And it’s now Apple’s centerpiece product. If the iPhone had never come along, Apple would just make computers and iPods—neither getting the public all that excited anymore.
Today though, Apple stands at another corporate crossroads. The company has been driving down iPhone prices and selling them at Wal-Mart, making them far more accessible to the mass market. Pundits predict Apple could sell 100 million iPhones—and it probably could. Then Apple would be right back to where it was after the iPod went mass.
The Right Dumps Carrie
Jacob Bernstein is a senior reporter at The Daily Beast. Previously, he was a features writer at WWD and W Magazine. He has also written for New York magazine, Paper, and The Huffington Post.
What's Joe's Problem?
Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.
Geithner's Stock Plummeting
Jeff Madrick is a contributor to the New York Review of Books and a former economics columnist for the New York Times. He is editor of Challenge Magazine, visiting professor of humanities at Cooper Union, and senior fellow at the New School's Schwartz Center for Economic Policy Analysis. He is the author of Taking America, The End of Affluence (Random House) and The Case for Big Government.
This user is no longer registered.
Ah, the trick to capitalism is actually selling *less* products. This oversight must explain the whole depression thing that's getting so much buzz these days. (Being poor is low fidelity, high convince BTW)
Seriously tho, I get the idea here, but really think that maximizing utility (done most efficiently by embracing open source) is at the core of real long-term success.
I totally agree. As a die hard apple fanatic since my stepfather bequested his Mac LC to me, I have always felt I was able to escape the electronically bourgeois. I was first in line for the iphone, even with the $600 price tag, in spite of being a grad student with few extra bucks to spare, I told those that warned me, that no price wouldn't go down. This was apple, what they made, made it worth the $. Now I watch as kids as old as 11, lose, destroy or give theirs away and their parents just buy them another. My niece has had 6 now but decided the sidekick was cooler. Now Apple sold at Walmart? Say it ain't so, Jobs? It makes me ache! Like having Hemmingway write for the New York Post, or Annie Lebowitz do the cover for US magazine. Or Sean Penn staring in a McDonalds commercial. I can't believe what has happened to my beloved company.
Kevin - I'm surprised you didn't mention design more explicitly as a driver of Apple cool. In addition to superior performance, the far greater beauty of Apple computers (remember the first iMac?), phones and iPods have been the real badge among smug owners like, um, me.
Regarding the struggle for mass appeal while holding on to one's cool factor, it has been done successfully. Ducati sells the shit out of a lower-priced model called the Monster, while worshipful nerds like, um, me lust for their hard-to-find high-end models. Also, numerous fashion designers make product for Target while holding onto their Fashion Week cred.
All in all, an interesting article. Funny how often these "Apple at the crossroads" articles are followed by the release of a devastatingly cool product. I hope so.
I'm afraid I totally disagree with your theory. As a longtime supporter of Apple and someone whose tried other mfgs. electronic tools and toys, Apple's core belief of making thing right the first time as well as elegant will not go away soon. And in the coming economy this is what people will crave. How many people will be buying Zunes after last weeks mass failure. I'm certain that will never happen with an Apple product.
For years the masses have always said that "Oh, Macs are just toys" but the new younger generation that has grown up with ipods and iphones won't want to plug their's into a sketchy PC that only tech nerds can use with success.
Apple has never sacrificed selling to the masses over quality so now sit back and watch as the masses slowly come to Apple.
If all consumer companies had this worldview maybe we wouldn't be where we are today.
My first computer was a Macintosh - As a Berkeley student in the 1980s, I couldn't help but idolize Woniak and Jobs, and they had a deal for Cal students that actually made Macs cheaper than PCs. As an adult I went the other direction, admiring the iPod for its design but rebelling against its poor sound quality, poor battery life, and attempt at Global Domination via iTunes. I have gone through 10 years of owning non-iPod options and PCs, happy throughout. I agree with the article, that "small and cool" has fueled Apple, or at least kept it in the game all these years. But what made Apple cool hasn't always made Apple great. Their MP3 player was the prettiest and most fun to use, but not the best product. All of that said, I got myself a Touch (AKA iPhone minu the phone) last week to watch video on the subway. And what makes it great is the combination of design and the maturity of the iTunes product, maturity driven by growth and economies of scale. I watched the nightly news this morning, downloaded as a podcast, and it didn't cost me anything beyond the purchase of an excellent machine. Bigger has actually made Apple better, at least in my eyes. And less focus on cool and more focus on product, an inevitability when the company moves more and more towards mass distribution, might just benefit us all.
tavallai's comments are spot on. Nothing to add except that more from Mr. Maney would be great.
Kevin here. Terrific comments and great points. Worth noting what EastCoastBias is getting at: Apple doesn't always make the best products, even if it almost always makes the most beautiful products. If Apple becomes less well-liked, that will bite it in the butt.
And about designers doing Target and maintaining their cred: Actually, have to disagree. Most find their cred shredded.
Thanks again!
Bah. Saying Apple products are appreciated because the company is small is akin to those who say there are no Mac OS viruses because its marketshare is too small. Apple's appeal is because of the quality and innovation of its products and services. Period.
Quality never goes out of style or loses its appeal. As long as they hang onto that core value, it doesn't matter if they sell iphones out of the trunk of a station wagon in the Walmart parking lot.
In terms of computers, I've used Apple, Windows, and Linux based systems and have to say that I've never understood where Apple fanatics are coming from. For a comparable price, a PC outperforms a Mac by a long shot. If you ever look at advertisements between the two, it is easy to find out the technical qualifications of a PC, but Mac doesn't list them. Yet Mac now has to use those same components since their own hardware was outperformed by so much. Say what you will about Macs, but they are now run on the same hardware as PCs with a different packaging and a horrendous price markup. If you truly want the best performance, buy a PC and install a Linux system such as Ubuntu on it. Not only are there fewer viruses for Linux than Apple (if you are concerned about that) since it has an even smaller market share, but it is cheaper (free, and when the newest version of the Operating system comes out, that's free too) and there are a legion of programmers working on any problems found, so they are corrected more quickly than for Apples or Windows.
I've never used an MP3 player, but if I did I wouldn't use a system that needs a company controlled file format. Apple is doing the things that annoyed people about Microsoft in the 90's: they are trying to force people to use their products across the board for optimal efficiency. Use whatever system you want, but please don't repeat Apple advertisements and expect people to agree with you. If Apple stuff worked all the time there would not be sites such as www.macfixit.com or a troubleshooting section on apple.com focusing on technical solutions.
Something has already gone wrong with Apple: on the 4th gen iPod nano they changed the plug connector such that the power pin is moved! So.... if you had a car with the "cool" iPod charger built in, guess what: it won't work anymore !
They have plenty good engineers over there, and no smart engineer would make such a DUMB mistake! This was marketing getting involved.... Something has definitely gone wrong with Apple cause no sane marketing person would ON PURPOSE make it's new model not compatible with approved 3rd party accessories that work well with previous models! You can just guess the negotiations that probably went on behind closed doors "say... we are losing on margin cause we have to lower this price, but if we force all new users to buy new accessories, we can make up some of that margin off of our 3rd party agreements...".
Evil. Pure evil....
You make this key point without supporting it. I don't think it's correct:
...maintain the iPhone as a high-end, exclusive niche product--or drive it through to the mass market...(apple) can't have both. That never works.
Thank you.
As a first time user, your comment has been submitted for review. It can take anywhere from a few hours to a day or two for your comment to be reviewed, depending on the time of week and the volume of comments we receive.
Please log in to leave comments.