Apple’s Global Dominance

The global dominance has once again been shown by ‘Apple’ as the company made history when its shares hit $600 for the first time on 15th March. Apple’s market capitalization is, at time of writing, $559 billion, according to Yahoo Finance. To highlight the value of wealth of Apple Inc, it is worth more than the rest of the US retail sector, the GDP of Poland and Belgium. But how has Apple brand achieved so much success? How does Apple sustain their success? What is it about their products that appeal to millions of people? These are question that many of us wish to examine in closer detail.

A famous quote of Steve Jobs’, the late CEO of Apple was “… you gotta start with the customer experience and work backwards to the technology.”– a quote central to Apple’s philosophy. The whole Apple ‘package’ encompasses aesthetics, customer service and performance, with each of their products concentrating on consumer experience as a whole which is visible in the Apple stores.

Some critics believe Apple takes customer service too far, pointing how it appears to hand out new iPhones or iPads without fully checking there are no faults aspects. Apple prefers to take the route of trust in its customers rather than legitimacy of the return. Greater trust builds a stronger bond between firm and consumer. Although there may be more cases of illegible returns, the quantity of return for the business is guaranteed by customer loyalty because the benefits of good customer service heavily outweighs the costs of reissuing new phones.

Apple’s aesthetics of its products can be summarised as minimalistic, usually with one colour, such as black or white, for iPads and iPhones and various colours of the rainbow for iPods. The products are very slim, uses gloss finishes and the interfaces are simple. They are not complex, not outdated and do not contain irrelevant switches or buttons. These styles are a reflection of Apple’s pursuit for total perfection. All aspects of Apple’s design is scrutinised to ensure nothing is left mediocre to the extent that the packaging itself is highly aesthetic. For example, imagine HP’s packaging; distasteful, boring and obsolete. Compare this to an Apple’s packaging; vibrant, innovative and fashionable. Clearly, the Apple packaging will make consumers want to be seen with it, especially on Christmas morning when parents are trying to please their children.

Apple’s business plan, radically different to most companies’ approaches, of conducting their operations and teaching of their business schools, is the ideal model for all competitors to follow as well as envy. Most companies expect employees to gradually move up the rank and focus on employee. In contrast, Apple prefers to keep people where they work best. This structure, similar to investment banks, enhances the firm’s productive efficiency and the productivity of workers themselves. To use an example, Apple senior vice president of design, Jonathan Ive; it was wrongly speculated that Ive was being groomed to become the next CEO. However, Ive kept doing what he loved and did best- designing. This organisational structure concentrates and improves on people’s expertise in certain fields rather than just their role in the business as a whole.

iTunes, because it revolutionised the manner music was bought, allowed Apple to dominate the music market for iPod owners. Take this scenario; one has bought an iPod yet one needs music to fill inside it. Sure, one probably has CDs ready to insert but in order to obtain new music one must buy new music. Cue iTunes. When confronted with the choice of either going to the nearest music store to buy a CD or instantly download a whole album from iTunes, one would select second choice since it requires little effort. Indeed there are other online music stores which exist but the convenience of buying music from your iPod managing application, which automatically adds the songs to your library after purchase, outweighs, for the majority of customers, buying from other online retailers and adding the songs by oneself, despite iTunes higher prices. iTunes is now the largest music retailer, a feat achieved only 6 years after its debut in 2003. The Application or, more commonly known, the ‘App’ Store was launched in July 2008 and within 4 years it has celebrated its 25 billionth download. Sneered upon during its opening by its rivals, the App store made the iPhone, iPad and iPod Touch, along with ‘apps’ for all genres, which appealed to the mass market. Gaming, language, news ‘apps’, just to name a few, became so popular amongst the majority of consumers that Apple enjoyed a ‘monopoly’ over iOS apps due to the way they were programmed. The recently opened ‘Mac App’ store has enjoyed the same success with 1 million downloads after the first 24 hours. The Apple stores are also an example of Apple playing on ‘convenience buying’ in which the store offers accessories for the Apple products such as headphones, keyboards, mice and software. Once you buy a product in the store, one feels compelled to buy accessories and is more likely to do so due to the close proximity.

Apple has reinvested majority of its money into research in order to stay ahead of its competitors with regards to its cutting edge technology and products. Innovation is rife inside Apple and everyone is encouraged and open to share their ideas. Designers are paid around 50% more than their counterparts working in other technology companies and coupled with the respect they have for the company and rewards and credit they receive for their job, they are really motivated to work hard. Apple organises workshops where engineers and designers are encouraged to think freely and allow others to pinpoint the best parts of their creations. Staying ahead of competitors is essential and the majority of people have probably now experienced that “wow” reaction to a new feature of a new Apple product which people have never seen before.

The Apple Inc has been compared to religion in the way that they operate some parts of their company. Their store openings and product in-store releases are famous due to their fans who queue up for hours and even days, along the streets in order to be the first to get into the new store and get their hands on the new product. In a BBC program, named ‘Secrets of the Superbrands’, journalist Alex Riley likened the store opening to ‘an evangelical prayer meeting’, as staff riled up the crowd with cheers and ‘Hi-5s’ akin to spiritual music. Apple has managed to strike a chord inside its customers which Microsoft or Google has not managed to do. These customers are not just consumers of Apple, they are devotees which ensures these customers will conduct repeated business with Apple in the near. In addition on the BBC program, an MRI scan of the brain of an Apple fan showed that his brain had the same reactions to Apple products that devoted Christians have to pictures of Jesus. Although this experiment has only been done on a very small group of people, it is not hard to believe this seeing the reactions of many after the death of Steve Jobs with footage of people crying and messages of their condolences. The reaction from people who never met the man shows that Apple is able to create more than just a business-customer bond. Apple is well known for being a very secretive organisation, which is well documented in Adam Lashinsky’s book, with employees kept in the dark about things not related to their division. This has two benefits; 1) no competition can know everything about new products if someone was to leak anything and 2) this mystery builds hype as nobody knows about the product and everybody wants to be the first to know everything about and own the product on launch day. Apple makes employees sign agreements acknowledging that you will never reveal information to anyone, and they can take legal action if you do, and it is said that since many employees are so committed and passionate, they will not hesitate to report a colleague if they feel they are damaging the company. Lockdown rooms with tinted windows are reported to be the only place where the next product can be discussed.

These recent milestones suggest Apple still has plenty of capacity to grow to the extent that it could become the first trillion dollar company, in terms of market capitalisation. But is its stranglehold on the market coming to an end? The iPhone 4S was not radically different iPhone 5, which surprised many, but simply an iPhone 4 with some extra features such as Siri. Apple has always tried to under-promise and over-provide but with the iPhone 4S it over promised and under-provided. In terms of hardware and product specification, the iPhone 4S didn’t lead the pack, but settled in amongst the herd, despite boasting a dual-core processor on release. However, Android phones such as the Samsung Galaxy SII were using these for quite a bit before- is it a sign of competition closing in? The camera was exaggerated – Facetime with 8MP camera and 1080p filming being highlights of the 4S, again the default of many Android phones at the time. The detail on ‘Retina’ screens took everyone’s breath away when announced, but now when placed side by side to a Super AMOLED screen, Samsung receives the most praise. This is likely to be a wakeup call for Apple that they cannot rely solely on their brand to make sales. Yet one can be sure they will be investing most of their $100 billion cash reserves into R&D. Apple will not lose their global dominance without a fight.

Contributed by Mark Kelly

One thought on “Apple’s Global Dominance

  1. The root of your writing while sounding agreeable originally, did not sit perfectly with me after some time. Someplace within the paragraphs you actually were able to make me a believer unfortunately only for a very short while. I nevertheless have a problem with your jumps in logic and one would do nicely to help fill in those breaks. If you can accomplish that, I will certainly be amazed.

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