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Apple's Competitive Advantage

By Rob Enderle
Mar 8, 2004 8:29 AM PT

I sit on a lot of PC company advisory boards, and, while this may surprise you, I actually point out Apple's competitive advantages on a regular basis. The problem for me is Apple's market share, which is at a tiny and stable 2.6 percent of the PC marketplace.

Apple's Competitive Advantage

Don't get me wrong, Dell is where Apple once was at the top of the PC stack. But Dell got there by specializing in cost control, controlling the customer experience and being the first to do direct-PC purchasing right. Both companies are profitable. And while some people do, in fact, lust after Dell PCs, generally Dell boxes are utilitarian. Dell has learned one thing that Apple hasn't, and that is to choose powerful partners to leverage. No other company leverages Microsoft and Intel as well as Dell does.

Motorola, BSD and IBM are no match for Intel and Microsoft. If it weren't for the powerful advantages Apple brings to the table, the company would be gone by now. Let's revisit some of those advantages.

Apple Hardware Design

Apple's designs are, well, elegant. There is no better word for it. Sony and Toshiba can come close at times, but, on average, Apple has the best-designed hardware from an aesthetics point of view of any vendor. It is amazing that, after several years, no one has been able to design a better hard-drive-based MP3 player than Apple did with the iPod. Even Toshiba's design, which used many of the same components, sucked.

Have you noticed that Apple doesn't live by the version-three rule? In the PC industry, there is this rule that some of the branded vendors take three tries to get something right. Apple often gets it in one try. The first iteration might not be perfect, but it is often so close to the ideal that the difference is insignificant. I'm clearly one of those folks who wish this rule didn't apply so well to companies other than Apple.

Sometimes it's the little things. For instance, if you look at the laptop hinges on the new PowerBooks and iBooks, you'll see the way screens should be attached to laptops. The screen opens out and down, minimizing the height of the open laptop and making it much more practical for airplane use. The hinge itself is not only robust, but also protected, so it would be difficult to break. The end result is like a Porsche design in a good year: clean, understated and elegant.

On the desktop side, Apple has done little things like the placement of the power button on the iMac into the screen, where it is both easy to access and provides an experience not unlike that with the start button on a Honda S2000. Apple also has turned desktop keyboards into hubs for easier cable management, although I still think the iMac should have a wireless keyboard and mouse.

Even though it is several years old, and I'd still prefer black or gray over white, the design of the iMac looks more advanced than any of the other all-in-one products out there, including the Sony W600 and Intel-codesigned Gateway 610 Media Center.

Even the company's tower computer, the G5, takes what has become an increasingly boring form factor and makes it look trendy. It looks exclusive, which -- given its cost -- it is. But it is a stunning design. On the PC side, you typically have to go to Voodoo or Alienware for anything that even comes close to an Apple design, although you have to admit Sony's RS products are rather close.

Apple Marketing

Where Apple really stands out is in marketing. The company simply seems to understand what will get people excited about its products, and then it executes on that vision. You don't see the company mainly talking about features or technology, but about how the computer will make your life better. The iPod ads actually won an award from AdWeek and, if it hadn't been for an even more stunning campaign from Citibank, they might have won best ad overall for 2003 as opposed to just being in the top 10.

Apple also has not been afraid of in-your-face campaigns. The company has run campaigns that have shown Intel-based laptops catching fire and getting flattened by steamrollers. Contrast this with IBM, which has backed away from connecting Dell's "Dude" to the dropped laptop in its new campaign for fear of upsetting Dell, even though Dell abandoned "the Dude" some time ago.

Simply look at where Apple puts its logo on its products. On the laptops, the logo is right side up when the screen is open. Many vendors don't understand the power of walking into an office and seeing a large number of logos advertising their products to everyone in the office and everyone else who comes into it. The logo even lights up on most Apple laptops. Apple understood that the logo is not for the person who bought the computer but for the person who is in the market for one. It is good advertising placement -- not a throw-away design element.

Of the PC companies, Apple definitely does best placement in TV shows -- which really showcases that logo. If you didn't know better and expected TV shows to represent real life, you would assume that few people use Windows machines and that almost everyone has an Apple notebook or iMac. Dell has started to show up as well in TV shows, but Apple is king when it comes to placement in the PC space. Even when the other vendors get a spot, their logos are so hard to see, I'll bet they are generally missed.

Apple's Steve Jobs

The guy just flat-out gets marketing. He can show up on stage at a Macworld event, give his talk, and it can be days before anyone realizes he had nothing new to sell. With Jobs' backing, Apple outspends almost every other hardware vendor in the space on marketing personal technology. It seems to be more focused as well.

This natural competency goes a long way toward overcoming the serious disadvantage of being the existing minority player when a new minority player, Linux, seems to have an even broader -- and more rapidly growing -- following. Clearly, and I doubt many would disagree, if it weren't for Steve Jobs, Apple would have vanished several years ago.

An Apple 'What If'

I still think, given the massive success of the iPod, that Apple could have done wonderful things by using its UI and hardware design skills on a Wintel platform product. What if Apple, in conjunction with HP, had built an iTunes PC to go with the HP-branded iPod?

What if this PC had an Apple hardware design and used a skin to give Windows XP an Apple-like user interface, and if the application load were similar to what you would get with an Apple?

And what if, like the Ferrari laptop from Acer, Apple played a visible role in insuring the user experience? Consumer Reports consistently rates Apple at the top in terms of customer satisfaction.

I wonder how well the product would sell. It would be an interesting test, regardless, and one we'll likely never see. But who knows? Both Apple and HP have a history of surprising us, and we can only wonder what their next surprise will be. Maybe the HP iPod will, in fact, be the beginning of a beautiful friendship.

Rob Enderle, a TechNewsWorld columnist, is the Principal Analyst for the Enderle Group, a company founded on the concept of providing a unique perspective on personal technology products and trends.

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