apple-luxury-tech

Is Apple Completing Its Transition To Becoming The Luxury Tech Leader?

Apple is among the key tech companies (FAANG) that managed to influence our culture and capture our imagination. Each company has internal processes that are defined by its culture and Apple is no different. Indeed, the company founded by Steve Jobs is focused on design and aesthetics as much as to the technological aspects of the products they build.

While many might think of Apple as a company that builds products which have innovative featured and functionalities. To understand the importance of designers at Apple it is sufficient to look at its Job description page, where the company describes how design integrates into the overall development process:

At Apple, the Industrial Design team plays a pivotal role at every stage of the product development process, from the preliminary concept to the production of the painstakingly crafted final product. This team is world-renowned for their meticulous attention to detail and the high-quality standards they use to select materials, manufacturing processes, and final colors and finishes. Their projects extend further than product categories to also support the design of accessories, packaging, and the Apple retail experience.

Of course, design, in Apple’s perspective isn’t just about aesthetics, but as much as about usefulness and functionality:

This team conceptualizes, designs, and creates the user experience for all Apple products, services, and accessories. They consider each human interaction — including every visual, audible, and haptic experience — to create products that are not only beautiful, but also intuitive and useful.

Thus, my argument is that Apple is transitioning even more toward becoming a Luxury Tech company. Indeed, Apple has been the first and most successful company able to sell its phone at very high price points.

That has helped the company thrive for over a decade. And while Apple is also transitioning toward becoming a service company, by looking at its last financial statements it is interesting to notice, how other segments (that of wearables, home, and accessories) is growing substantially:

apple-financials-q3-2019

Source: Apple Q2 Statement

This segment includes products like the AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and other third-party accessories. As pointed out in Apple Business Strategy they are helping the company keep its pace, while its iPhone sales are slowing down.

Why is this important at all? 

Luxury business models (like Kering Group, LVMH, and Prada) had figured out already in the 2000s – when Apple didn’t even come up with the iPhone yet – that the real cash cow was in the accessories sales. That is what it led to the Gucci war and the consolidation of the luxury industry. Luxury companies craved for years to consolidated their accessory business, because that is their real cash cow.

It seems that Apple is making the same transition toward embracing its status as the Luxury Tech leader!

Key takeaways

  • Apple is a company that focuses on design and aesthetics
  • The company’s segments related to accessories is growing very quickly
  • Luxury companies have figured out back in the 1990s that the real cash cow was in the accessories
  • Apple seems to be embracing its complete transition toward becoming a Luxury Tech leader!

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which he brought to reach over half a million business students, professionals, and entrepreneurs in the last year | Gennaro is also Head of Business Development at a tech startup, he helped reach over six figures and become profitable in a year and a half | International MBA with emphasis on Corporate Finance | Subscribe to the FourWeekMBA Newsletter | Or Get in touch with Gennaro here

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