Innovation

Why does Apple rise while the rest fall?

Apple Inc.'s recent successful results are causing debate about the reasons behind it. John M McKee, leadership and business coach, considers both sides of the issue in this article.

"Apple's products are over-priced. They have an undeserved reputation for high quality and low failure rates."

And with those comments, the conversation became more animated. It took place over dinner last weekend. My companion was with a guy who runs a moderate sized IT firm in Southern California. And, as is often the case with those who sell services using PC-based applications to other companies, he has a strong bias against Apple products. Actually, he really doesn't like Apple. At all.

He told me that "Apple's products are over-priced." Going further, he noted that much of the so-called "coolness" and "class" that the company promotes is little more than "marketing BS". Clearly, it frustrates him that so many individuals opt to pay a premium for products that he thinks are often not as good as similar products being made by other manufacturers across a wide field of services

He'd just seen a video that reinforced his opinion. It supposedly announces the launch of a new product called the MacBook Wheel. You can see it here on The Onion.

No doubt that it's a funny piece. But it, and the guy I had dinner with, are kind of missing a key point - this is business.

Regardless of whether or not one likes Apple, it's clear that many people and organizations do. And, their numbers are growing, while the manufacturers of other brands of PCs, phones and/or music players are suffering. What's the reason for Apple's continued growth in a market that's got key retailers collapsing and key manufacturers looking for companies to fill their production lines? Is it simply, "BS marketing"?

I don't think so. Although marketing does play a big part in the equation of many business successes, I believe that Apple's ability to thrive is mostly due to its design philosophy. Ask people who use their products, and they immediately start to sound like owners of BMW cars while they talk about "the feel" or "company philosophy" as well as performance. Like BMW, which also has a few models with service records that are worse than some competitors' products, Apple positions its goods on the higher-end of prices for their products. (Interestingly, Apple and BMW have similar levels of market share in their respective business segments.)

In their recent quarterly report of April 22, Apple reported earnings up 15% year over year. While other organizations' CEOs are saying that nothing can be done to stop the layoffs, the office / plant closings, and the bleeding; here's Apple saying that things are expected to continue to improve. Even though consumer spending is slowing each month and is now below last year each month for 3 months in a row; Apple has sales up 9% over last year. Those results are not due to marketing alone.

Not all the news was good: Computer sales were down 3%, apparently impacted by school budgets cutbacks. (Overall, the personal computer industry was 7%.) But mostly their results surprised investors and the market with 3.8m IPhones sold (+123%, and according to other reports, helping AT&T's results significantly as their sole wireless partner), and 11m IPods sold, up about 3%.

Apple Inc's leadership has shown vision, guts, and determination. They created a clear business plan and executed it without any outwardly visible hesitation.

Recent product launches from Microsoft, Dell, HP, Samsung, Motorola, Nokia, and Sprint which were extremely marketing-driven seem to have done little to stem the losses of those organizations. The leaders of those entities would be wise to spend more time talking to their customers, and learning the long term benefits of design before they have to shut more factory lines and let go more employees. If they don't, the stock market will continue to spank them and at some point they'll find themselves out of work, too.

john

Leadership Coach

About

John M. McKee is the founder and CEO of BusinessSuccessCoach.net, an international consulting and coaching practice with subscribers in 43 countries. One of the founding senior executives of DIRECTV, his hands-on experience includes leading billion d...

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