This article is going to discuss “how Apple thinks” and Apple’s product design philosophy. It sounds important, yes. Very important!
Not many company has core competence of design philosophy and has executive-level decision and power in company. However, Apple does.
Market must exist
Apple won’t launch a product that no one expects to exist, which is why Apple’s products always don’t lose money. It must first make money before discussing how much money it makes.
At the end of 2-1 in the book “The Rules of Super Growth Stocks Investing”, I once emphasized that the predecessors of venture capital, Kleiner Perkins founder Eugene Kleiner once said a famous saying in the venture capital world: “Make sure the dog wants to eat the dog food. No matter how ground-breaking a new technology, how large a potential market, make certain customers actually want it.” “There are two types of early adopters. Those who buy and those who want the product given to them.” A product without a market is useless after all.
So far, all venture capitalists around the world will have a deep understanding of the marketability of the startup’s product when deciding to invest in a company. Because most startups are always self-righteous, and develop products with seemingly attractive functions in the laboratory, but the vast majority of products will not have marketability. Useless, there is no market for something, no one will buy it, how can the company survive? This goes against the fundamental logic of capitalism.
Most companies, whether startups or public companies, don’t have a very thorough understanding of “the market must exist.”
For Apple, a hardware device company, there are many fixed costs to pay. This is much more important than the asset-light software industry, when software companies run out of money and all software engineers are gone, that’s it . Go back and look at the history of Amazon’s 2014 failure to eliminate the huge inventory scrapping loss of the failed product Fire phone, which I mentioned in 4-4 of the book “The Rules of Super Growth Stocks Investing”, and you will know that very few companies can afford to lose money.
Not pursue market share
Apple is a rare listed company in the commercial market, because it has never made more than half of the market as its primary goal, at least the results and facts that the world has seen and proven (see my long time ago “How does Apple make money?“)
As I mentioned in 3-2 of the book “The Rules of Super Growth Stocks Investing”, the iPhone accounted for 66% of the profits of the entire smartphone industry in 2019, 83% in 2017, and 103.6% in 2016 (It’s more than 100% because many smartphone manufacturers are losing money), and it reached 91% in 2015. However, the global market share of the iPhone over the years has only been between 13% and 18%.
It’s not just the iPhone, the same situation applies to Apple AirPods and the Apple Watch.
No need to be first-mover
But for the reasons we discuss in this article, Apple does not have to rush to launch products with the same functions ahead of its peers. You can take a look at the analysis of my previous article “Why Apple’s New Features Always Come Out Later?”
It rarely for Apple to have product that own more than half of the market share. But as long as a small number of loyal customer fans renew their purchases on an annual or regular basis, the profits can continue.
“Sustainability” is the primary consideration for all investors when investing in stocks. This point I listed on page 79 of 2-1 in my book “The Rules of Super Growth Stocks Investing”, which was listed as the main filter criteria for a stock with moats. Buffett has repeatedly and publicly stated this (Sustainability) when he acquires or invests in companies.
Preference for subscription
In addition to the mobile programs in the App Store, there are basically many softwares that are subscription-based in installments, which can be paid in installments to reduce the financial pressure of customers. Apple actually intends to take a longer-term strategy and design all products or services as subscription-based as much as possible.
In 2021, Apple launches Apple One, which bundles all Apple services and products to customers. Earlier, Apple actually introduced installment payments, allowing customers who couldn’t afford a phone to pay in installments.
In 2022, Apple will launch its own “Apple Pay Later” instalment financial service. For the introduction to buy first, pay later, please see my previous article “BNPL, the most popular new credit method“.
Apple product design philosophy
Apple’s design philosophy rooted in all product designers in comany and become part of company culture. Not only company’s business competitive, but also a key difference to rivals.
Pay attention to usage scenarios
Apple rarely invents new things, and what Apple is best at is actually “finding good user scenarios for technology.”It is good at integrating technology into its products to bring substantial benefits to users ─ ─ Apple cares about the acceptance of users, which is very different from most companies.
I wonder if everyone noticed? Why do even people who have never used an iPhone use it as soon as they get it without a manual? Jobs once set a rule in Apple’s user interface design: all functions cannot allow users to click more than three layers. Seems simple, but has a big impact.
Unique Apple Design Team
In the tech world, you shouldn’t be able to find a device from any company, you don’t need to look at the Apple logo on the device, and you can tell it’s a product of the Apple family at a glance. This is because of its outstanding industrial design team, electronic devices in the technology world. No company’s industrial design team has a executive-level decision-making power within the company, except Apple.
Why are most of Apple’s products in white? With round corners? Do you remember how shocked the world was when Jobs pulled out the first-generation Mac Air ultra-thin laptop from an A4-sized paper bag on stage? Tablet PCs have been around for more than ten years. Why did Jobs bring out the first generation of iPads to start a craze for people to start using a tablet? When the recently discontinued iPod hit the market that year, it changed the way the people listened to music, and the way music publishing was licensed. It’s all about the charm of Apple’s design.
Not conform to the crowd, less exposure
Apple’s strict culture of confidentiality
Everyone knows that Apple has a strict culture of confidentiality. Jobs was more strict than now when he was alive, especially the products under development are top secret. That’s the main reason why Jobs made a splash when he pulled the original Mac Air out of a kraft paper bag.
Now, because the company is so large, not only the company’s employees, but also the suppliers are not exempted. Once they are not violated, this rule is still in place. Just to prevent random disclosures and damage to the company’s image, Apple has slightly relaxed the restrictions, before the press conference, will disclose the general direction of the product to a very few reliable people Apple trusted before the product is confirmed to be launched.
Did you notice? Every year, there are three major exhibitions in the world for technology. The United States, Taiwan, and Germany, which one did Apple ever participate in?
Even at MWC, the largest telecom exhibition held every year, Apple has never set up a booth to fight for the exposure of the iPhone or conduct any marketing activities, which Apple considers unnecessary at all.
Rarely participate in industry forums
In June 2022, companies such as Nvidia, Meta, and Microsoft formulated the Metaverse industry forum, but Apple did not participate. Everyone must think it’s strange that Apple is also an important participant in the metaverse industry. Why not fit in and not participate? This is not the first time that Apple has made such a statement. Apple usually does not participate in such a forum formed by the industry, unless it must participate–for example, it involves the formulation of the lowest-level technical agreement or specification.
Apple is a leader in the industry in many fields and has a significant competitive advantage. It is not necessary to meet industry peers and engage in conformity; this is Apple, and it does not need to participate in such industry activities to highlight its importance, because unnecessary.
These behaviors of Apple are actually part of the company’s culture, and they can focus on what they think is right and reduce their negative influence from industry peers. What the majority is doing isn’t necessarily right, and averaging and conformity only creates mediocrity.
Just like in investing, you don’t have to be influenced by most people, and you have to stick to the right things for a long time.
- “How does Apple make money?“
- “Apple’s upcoming products, services, and technologies“
- “Apple’s product design philosophy, How does Apple think?“
- “Steve Jobs’s Apple innovation gone with him?“
- “Apple’s small privacy change caused US stocks evaporate 200 billion U.S. dollars in one day“
- “Did Apple really lose the lawsuit with Epic Games?“
- “The importance of the App Store legal battle between Apple and Epic Games“
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