One —- but only one —- reason for Apple’s appeal is that Apple products are luxury goods. (I’ll get to the second reason in a moment.) Apple products compete on design, not price. The Apple stores, with their hardwood floors and wide open spaces, are modeled after a luxury car showroom, and don’t share the convenience store layout and shelving of other computer stores.
Focusing on the high end of the market is a reasonable strategy1. (Sony is trying it with the VAIO.) In an area that depends on third parties to create programs and peripherals, this strategy has a benefit beyond high profit margins. Hardware and software makers are disproportionately interested in Apple’s customers, because these customers have shown themselves to be disproportionately willing to spend money on computer products. This is why Apple can have 1% of the desktop market but —- unlike Linux in 2004 —- command compatability from web sites and large software vendors. Selling to Apple customers is like opening a store in Beverly Hills; if the products are good enough to sell there, it’s worth the real estate cost. read more »
