Usable Insight – Apple’s Formula for Success
Like many of you who are wishing to make back what you lost in 2008, I’m kicking myself for not buying Apple Computer stock when it was much lower than its 12/24/09 record high of $209.04 up a massive 145% year to date after plunging 57% in the market meltdown of 2008
And like you, I’m of course also saying to myself now, “Too high to buy.” The next best thing for me is to try to figure out how Apple does what they do. That may not put money in my bank, but at least it’s a satisfying intellectual exercise.
This is a work in progress, but here are some preliminary thoughts, observations and hypotheses. I have long viewed Apple as the visionary company of the last decade with the creation and release of Macbooks, iMacs, iPods, iTunes, iPhones. What is great about being a visionary vs. opportunistic (think Microsoft) company is the following. If your vision is correct and you can develop products that are so superior in design and function to the competition and successfully keep it under wraps until release date, when you do finally announce it, all would be competitors will see you as too far ahead to compete against. That advantage becomes your barrier to entry.
I then realized that Apple may not be so purely visionary as I thought. Apple’s breakthrough roots go back to its grabbing the original optical/mouse interface from Xerox when that company saw it as too far from their core business to be of use (that must be the ultimate silo induced failure in financial history). I think part of Apple’s modus operandi is seeing other companies develop a technology to a certain point, but that are unable to take advantage of its full market potential.
For instance, if the rumored “iTablet” comes out, part of its development will be caused by seeing how paper publishing (from magazines to newspapers to books) is crossing over to digital acceptance. That means that people who previously much preferred the real feel of an actual newspaper or book will increasingly get used to and prefer a “kindle like” or even “iPhone” especially if it has all the technologically neat features that an Apple product will have.
Although the kindle is improving its quality, if Apple does release a tablet, it will blow away any competitors with color, graphics, cross platform inter-connectivity and iTablet applications that will be user friendly and awe inspiring, not to mention that will spawn many companies to develop them.
If any of the above comes to pass there is a take home for companies that would like to be the “Apple of their industry’s eye.” Central to Apple’s products are the capacity to produce products that satisfy (work well and smoothly, think Macbooks that are virus free), delight (think iPod’s that enable you to tune out the chaos in the world) and excite (think touching the screen of an iPhone for the first time).
By satisfying, delighting and exciting us with its products, Apple has found a way to tap into our neurochemistry and addict us. Satisfaction (and well being) is mediated through endorphins; delight is mediated through dopamine (ironically, when someone or something is referred to as “dope” little did people using that term know how apt a designation that is); excitement is mediated through adrenaline (the well known “adrenaline rush” that the entire Millenial generation is addicted to). What Apple intuitively understands is that for every experience of satisfaction (endorphin), delight (dopamine) and excitement (adrenaline) there is a crash when they go away. It is that crash that increases the addictive need for another “fix.” That is why spacing out the introduction of new products (similar to the spacing out of American Idol competitions) helps increase the anticipatory hunger and the chances of a successful launch.
And if Apple produces an iTablet, look for it to announce the release with an ad that satisfies, delights and excites akin to the famous Apple Macintosh 1984 commercial. (BTW, if I were designing one, I would have the ad showing people either throwing away or shredding all paper published products — from newspapers to magazines to books — in favor of an all-in-one iTablet.)
All this said, I still wish I had bought Apple stock at its low last year.