Why Apple doesn’t care about its competition

October 24, 2012

The world divides into people who think of Apple as a company, and people who think of Apple as a brand. The former group includes all stock analysts, of course, but it also includes most technology journalists. The latter group is, well, most of the people who buy Apple products.

The difference between the two can be seen quite clearly this morning, in reactions to the launch of the iPad mini. The WSJ — which naturally skews to the Apple-is-a-company view of the world — runs its story under the headline “Apple Drops an iPad Mini on Rivals”, and leads by saying that by announcing this new product, Apple was “seeking to blunt an advance by rivals”. They even have a “Tablet Wars” interactive graphic, which is based on the implicit assumption that consumers are hyper-rational shoppers, carefully comparing the iPad to various alternatives (Nook HD+, Kindle Fire HD, Galaxy Note 10.1, Google Nexus 7, Microsoft Surface) who are likely to then buy the option which hits their sweet spot when it comes to price and features.

The NYT coverage, from Brian Chen, takes a similar tack, under the headline “Apple, Facing Competition, Introduces a Smaller iPad”:

With all the action in the tablet market lately, smaller models have become impossible to ignore. Google, Apple’s fiercest competitor, recently released its 7-inch Nexus 7 tablet for $200. Amazon recently introduced seven new Kindles, including a 7-inch tablet for $160 and an 8.9-inch tablet for $300. Barnes & Noble’s Nook tablet, which starts at $200, has also sold well. Combined, the three companies have sold about 15 million of these smaller, cheaper tablets.

But if you look at what actual consumers are asking, it turns out that only an ultra-geeky minority is out there weighing up the relative merits of the iPad mini and the Galaxy Note. Note Nick Bilton, today:

Now that the Apple iPad Mini is here, I’m fielding one particular question from friends, family and readers: Which model should I buy?

The point here is that Apple has already done the work of persuading people to buy the iPad mini — it’s done it through many years of creating products which are a pleasure to use.

Which is why the bellyaching about the iPad mini’s pricing is very weird to me. Apple’s job, when it developed this device, was not to create something to compete with the Nook HD+. Rather, it was to build something which fit easily into the existing lineup, right between the iPod Touch and the iPad, and which would delight its customers as much as those two products do. The iPod Touch starts at $300; the iPad starts at $400. And the iPad mini, at $330, is right in between, where it belongs.

Apple, famously, has the same pricing philosophy as Louis Vuitton: it sells premium products at premium prices, and it never discounts. That philosophy has made it an aspirational brand worldwide: you don’t see vendors in China selling fake Google Nexus 7s. Sometimes, as with the iPhone and iPad, the world beats a path to the company’s door in any case. Other times, as in the case of wireless routers or external displays, Apple’s products are so much more expensive than the competition that only the rich Apple faithful tend to buy them. But that uncompromising devotion to the fundamental philosophy is what has made Apple such a powerful global brand.

The result is that most of the millions of people who buy an iPad mini will never seriously consider any of the alternatives. They know what works for them, and they trust Apple to deliver. That’s the power of the Apple brand. Amazon also has that power — as a retailer, just not, yet, as a hardware manufacturer. Most Amazon customers don’t bother checking prices elsewhere any more: they’ve happily locked themselves in to the relationship.

There are three questions, then, which real people will ask about the iPad mini. Do I want it, can I afford it, and which model should I get. The answers to those questions will determine how many iPad minis Apple manages to sell. But the question which most of the press concentrates on — how does the iPad mini compare to its non-Apple competitors — is one which gets asked much less often than the Apple-as-company people tend to think.


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