10 ms·

Apple's market segmentation strategy

49 points by danilocampos 16y ago

danilocampos 16y ago
"Apple has used its vertical integration of the iPod media player and the iTunes marketplace across all of its devices to create a billing relationship with 160 million consumers..." This is the most interesting part of the modern Apple story, for me. This opportunity for instant purchase is a dramatic force multiplier for Apple in every single avenue they explore. It's an absurd hothouse ecosystem they can just plug into any content-driven product. For me, when other companies decide they want to take on Apple, I couldn't care less about how they rip off the form factor or UI. I'm looking for one thing: a credible answer to Apple's instant billing mojo. Amazon seems to get this, and they have billing relationships they're able to exploit to make it happen. Kindle is a great play in this direction. Funny enough, it looks nothing at all like an iDevice, yet there's that one crucial similarity everyone else is missing. For an interesting counterpoint, look at Android. Google does not have its shit together with regard to billing. As a user, entering your billing info is a clunky pain in the ass. As a developer, you can only get paid if you live in one of ten countries. These realities conspire to keep Android app sales low compared to iOS, and it's a tragic missed opportunity. Amazon's Android store move is brilliant – those guys have the hustle and experience to do the hard work necessary to take on Apple in mobile content. They aren't solving the geographic problem yet, since it's US only, but give them a bit of time and they'll be running circles around Google.
- jonhendry 16y ago
  And consider the pattern: WebObjects -> Apple Online Store -> iTunes store -> Apple TV -> App Store -> iBooks -> ? If Apple invests in a new feature for their app/music/book stores, or in infrastructure, the costs and benefits will often be spread among various businesses. By contrast, a phone competitor setting up an App Store probably doesn't have this. Investment in their App Store just benefits the App Store and whatever portion of their products is able to use the App Store. I think if you look at Apple's business, you'll see several 'virtuous cycles' like this. OS X / iOS is similar. Investment in OS X may eventually be carried over to iOS when the iOS hardware can use it, and features developed for iOS, like Core Animation, can migrate to OS X.
  - danilocampos 16y ago
    Yes, this is a crucially important fact about Apple. They do a bunch of things with independent value that nonetheless integrate to be even more powerful. There was a thread on the last big 37signals troll, about Apple and its competition, that touched on this. Turns out it's a concept called "activity systems." Very interesting stuff. http://news.ycombinator.com/item?id=1736977 http://news.ycombinator.com/item?id=1736977
- rimantas 16y ago
  Very good points. I have bought a few dozen apps for iPhone and a couple dozen of books in Kindle Store (I don't own a Kindle, but do use Kindle apps). The numbers would be much smaller if not for convenience of purchase and instant delivery. Goole just announced that it is expanding Android market to more countries—I wonder, how much this was influenced by Amazon Android store.
- dirtyaura 16y ago
  This opportunity for instant purchase is a dramatic force multiplier for Apple in every single avenue they explore. I fully agree. They also forced iPhone buyers to have credit cards in many countries to even buy iPhone. And they of course forced iPhone buyers to create iTunes account. These would have been totally absurd customer requirements from the perspective of e.g. Nokia, but for Apple it was a super clever way to grow their billing ecosystem. I think their biggest opportunity is still a head. When they create a "Buy"-button for a browser, so that any web page can integrate to iTunes billing, the web economy won't be same anymore. I was really bullish about this already over a year ago ( http://dirtyaura.org/blog/2009/06/16/mobile-startups-and-small-payments-opportunity/ http://dirtyaura.org/blog/2009/06/16/mobile-startups-and-sma... ), but there are tons of problems with this (technical, scalability, fraud detection, legal...). However, I'm pretty sure that it will happen during this decade.
  - danilocampos 16y ago
    Oh, that's fascinating. I hadn't even thought of that. You turn the entirety of the web, at least those who will play by your rules, into an App Store. Wow, with that Apple benevolently takes the entirely world by the balls and starts a whole new gold rush. It's so interesting, it must be inevitable. 30% cut would be a bit rich, though — makes PayPal look downright charitable by comparison.
    - Hoff 16y ago
      And they have real-world experiences and the volumes of data and the programming skills that are necessary to look for purchase patterns indicating fraud, too.
bambax 16y ago
The article is strangely written but full of very insightful observations. I like this one best: "Customers buy outcomes, they don't buy attributes". Endless lists of features are pointless; features that work and are integrated into a predictable, enjoyable user experience are what customers want. But of course the hard part is to build a credible promise; Apple's has been 30 years in the making. Microsoft has one for the enterprise market. I'm not sure Google still knows what it is doing.
- jacobolus 16y ago
  It reads like he wrote it with a thesaurus, and didn’t really know what the chosen words meant. It’s possible to figure out what meaning is intended by each word, but every sentence or two there’s one that doesn’t quite fit. It makes for very tiring reading. But, as you say, the message is otherwise quite interesting, so it’s not the end of the world.
- mechanical_fish 16y ago
  Endless lists of features are pointless It isn't quite that simple. The endless-checklist-of-features sales technique was born for a reason: It comes from corporate sales, incubator of a lot of technology and a place where a lot of salespeople get their experience. In corporate sales feature lists are useful because your customer is a crowd of disparate people. The accounting department wants Feature X, the factory managers need Y and Z, the facilities folks need Q. Being able to tick off all those checkboxes helps to close the sale. And, indeed, Apple has traditionally had trouble in the corporate space relative to the consumer space. What Apple has managed to do is to break free of the paradigm where hardware and software are primarily designed for the business market, then sold to non-business customers as a sideline. With Apple it's the other way around.

49 points by danilocampos 16y ago

"Apple has used its vertical integration of the iPod media player and the iTunes marketplace across all of its devices to create a billing relationship with 160 million consumers..." This is the most interesting part of the modern Apple story, for me. This opportunity for instant purchase is a dramatic force multiplier for Apple in every single avenue they explore. It's an absurd hothouse ecosystem they can just plug into any content-driven product. For me, when other companies decide they want to take on Apple, I couldn't care less about how they rip off the form factor or UI. I'm looking for one thing: a credible answer to Apple's instant billing mojo. Amazon seems to get this, and they have billing relationships they're able to exploit to make it happen. Kindle is a great play in this direction. Funny enough, it looks nothing at all like an iDevice, yet there's that one crucial similarity everyone else is missing. For an interesting counterpoint, look at Android. Google does not have its shit together with regard to billing. As a user, entering your billing info is a clunky pain in the ass. As a developer, you can only get paid if you live in one of ten countries. These realities conspire to keep Android app sales low compared to iOS, and it's a tragic missed opportunity. Amazon's Android store move is brilliant – those guys have the hustle and experience to do the hard work necessary to take on Apple in mobile content. They aren't solving the geographic problem yet, since it's US only, but give them a bit of time and they'll be running circles around Google.

jonhendry 16y ago
And consider the pattern: WebObjects -> Apple Online Store -> iTunes store -> Apple TV -> App Store -> iBooks -> ? If Apple invests in a new feature for their app/music/book stores, or in infrastructure, the costs and benefits will often be spread among various businesses. By contrast, a phone competitor setting up an App Store probably doesn't have this. Investment in their App Store just benefits the App Store and whatever portion of their products is able to use the App Store. I think if you look at Apple's business, you'll see several 'virtuous cycles' like this. OS X / iOS is similar. Investment in OS X may eventually be carried over to iOS when the iOS hardware can use it, and features developed for iOS, like Core Animation, can migrate to OS X.
- danilocampos 16y ago
  Yes, this is a crucially important fact about Apple. They do a bunch of things with independent value that nonetheless integrate to be even more powerful. There was a thread on the last big 37signals troll, about Apple and its competition, that touched on this. Turns out it's a concept called "activity systems." Very interesting stuff. http://news.ycombinator.com/item?id=1736977 http://news.ycombinator.com/item?id=1736977
rimantas 16y ago
Very good points. I have bought a few dozen apps for iPhone and a couple dozen of books in Kindle Store (I don't own a Kindle, but do use Kindle apps). The numbers would be much smaller if not for convenience of purchase and instant delivery. Goole just announced that it is expanding Android market to more countries—I wonder, how much this was influenced by Amazon Android store.
dirtyaura 16y ago
This opportunity for instant purchase is a dramatic force multiplier for Apple in every single avenue they explore. I fully agree. They also forced iPhone buyers to have credit cards in many countries to even buy iPhone. And they of course forced iPhone buyers to create iTunes account. These would have been totally absurd customer requirements from the perspective of e.g. Nokia, but for Apple it was a super clever way to grow their billing ecosystem. I think their biggest opportunity is still a head. When they create a "Buy"-button for a browser, so that any web page can integrate to iTunes billing, the web economy won't be same anymore. I was really bullish about this already over a year ago ( http://dirtyaura.org/blog/2009/06/16/mobile-startups-and-small-payments-opportunity/ http://dirtyaura.org/blog/2009/06/16/mobile-startups-and-sma... ), but there are tons of problems with this (technical, scalability, fraud detection, legal...). However, I'm pretty sure that it will happen during this decade.
- danilocampos 16y ago
  Oh, that's fascinating. I hadn't even thought of that. You turn the entirety of the web, at least those who will play by your rules, into an App Store. Wow, with that Apple benevolently takes the entirely world by the balls and starts a whole new gold rush. It's so interesting, it must be inevitable. 30% cut would be a bit rich, though — makes PayPal look downright charitable by comparison.
  - Hoff 16y ago
    And they have real-world experiences and the volumes of data and the programming skills that are necessary to look for purchase patterns indicating fraud, too.

bambax 16y ago

The article is strangely written but full of very insightful observations. I like this one best: "Customers buy outcomes, they don't buy attributes". Endless lists of features are pointless; features that work and are integrated into a predictable, enjoyable user experience are what customers want. But of course the hard part is to build a credible promise; Apple's has been 30 years in the making. Microsoft has one for the enterprise market. I'm not sure Google still knows what it is doing.

jacobolus 16y ago
It reads like he wrote it with a thesaurus, and didn’t really know what the chosen words meant. It’s possible to figure out what meaning is intended by each word, but every sentence or two there’s one that doesn’t quite fit. It makes for very tiring reading. But, as you say, the message is otherwise quite interesting, so it’s not the end of the world.
mechanical_fish 16y ago
Endless lists of features are pointless It isn't quite that simple. The endless-checklist-of-features sales technique was born for a reason: It comes from corporate sales, incubator of a lot of technology and a place where a lot of salespeople get their experience. In corporate sales feature lists are useful because your customer is a crowd of disparate people. The accounting department wants Feature X, the factory managers need Y and Z, the facilities folks need Q. Being able to tick off all those checkboxes helps to close the sale. And, indeed, Apple has traditionally had trouble in the corporate space relative to the consumer space. What Apple has managed to do is to break free of the paradigm where hardware and software are primarily designed for the business market, then sold to non-business customers as a sideline. With Apple it's the other way around.