apple-value-proposition

Apple Value Proposition In A Nutshell

Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized, among consumers. The three fundamental value propositions of Apple’s brand leverage the “Think Different” motto; reliable tech devices for mass markets; and starting in 2019, Apple also started to emphasize more and more privacy to differentiate itself from other tech giants.

Background story

What is Apple’s value proposition? What do they really sell?

Apple is maybe the brand that is the most frequently mentioned by marketers. For many, it is a live case study.

And the truth is that Apple’s value proposition has changed a lot over the last few years.

As the author of the recently-published innovation book, The Value Mix, I’ve designed and gathered a range of tools that product managers and entrepreneurs can use to create new products and services.

In this article, I want to focus on the value proposition of Apple and how it has changed over time.

Many people see Apple as being the inventor of the iPhone. But the brand has more to offer.

Value Proposition n°1: “Think different”

Apple started to build a name for itself when Steve Jobs released one of the most famous TV ads, Apple’s Think different.

At the time, Apple was selling the MacIntosh, a simple personal computer.

It positioned itself as an alternative to the status quo led by IBM.

The ad itself was a response to IBM’s slogan: “Think.”

Apple was speaking to creatives–the people who want to think differently. For years, the brand followed through. It gained traction among professional designers and movie makers. Every advertising agency was equipped with Apple products.

Obviously, the tech and its software were good. But it wasn’t just about the technology.

Apple was selling something else:

A signal that if you were using Apple products, you were part of the cool kids. This is why every advertising agency had to have an Apple computer. It was a signal they were sending to their clients (we’re creatives and have cool ideas) as well as their employees (here’s a cool place for work).

In many cases, it’s also interesting to define your audience by who you aren’t targeting. In the case of Apple, they weren’t interested in the laggards.

At this time you would never see an Apple product in an investment bank or a law firm. These people stand for serious and old-fashion. IBM was perfect for them.

Value Proposition n°2: Tech that works

The releases of the iPod and iPhone were a tipping point for Apple.

The brand moved from appealing to Early Adopters to addressing the mass market. At this time, we started seeing more and more people adopting Apple products. And in many cases, the iPod and iPhone became entry products to sell more laptops.

Apple started standing for something else.

It wasn’t about being and thinking different. It became about choosing technology that would just work.

Apple was just a better alternative to Microsoft + Intel (for laptops) and Samsung or HTC (for smartphones).

Yes. By choosing Apple, you chose less customization. But what you were saying about yourself was that you didn’t care about the freedom to set up your phone or laptop. You just wanted something that worked.

This really fits with Apple’s recent release of its mission statement:

The Company is committed to bringing the best user experience to its customers through its innovative hardware, software and services.

It’s all about providing a seamless experience, i.e., a technology that works.

Value Proposition n°3: Your privacy is safe with us

Over the last couple of years, we’ve become more knowledgeable about what happens to our data.

Many consumers are now worried about the amount of data that Facebook, Amazon, and Google have about them.

And Apple now aspires to be a safer alternative.

They demonstrated that during the CES 2019 with a massive ad displayed in Las Vegas and the apple.com/privacy webpage.

apple-privacy

As Ben Evans put it:

“The old Apple promise was that you don’t have to worry if the tech works. The new promise is you don’t have to worry if the tech is scamming you.”

Apple’s main products today are the iPhone and iPad.

They make most of their money when you subscribe to one of their services (such as iCloud or the new Apple News), buy a new piece of hardware, or download a paid app.

They want to create a safe, reassuring ecosystem that makes users want to remain part of it. Now that Apple has a more significant market share, they focus on growing its customer share.

So today, Apple’s most recent value proposition seemed to be geared towards privacy protection and being part of a safe ecosystem.

Breaking down Apple’s platform strategy 

Apple’s value proposition is built thanks to its ecosystem.

In short, Apple’s “implicit promise” is to create a smooth experience, as long as you are within Apple’s ecosystem.

This is what enabled Apple to become a multi-trillion-dollar company.

apple-business-model
Apple has a business model that is broken down between products and services. Apple generated over $365 billion in revenues in 2021, of which $191.9 came from the iPhone sales, $35.2 came from Mac sales, $38.3 came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $31.86 billion came from iPad sales, and $68.4 billion came from services.

In fact, also when you look at the iPhone, that is way more than a device, that’s the physical platform, powering up the App Store: 

how-does-apple-make-money
Apple’s made over $365.8 billion in revenues in 2021, of which over $191.9 billion or over 52% of its total revenues came from the iPhone. Yet, the iPhone isn’t just a hardware product; it’s a business platform that combines hardware (iPhone), operating system (iOS), and a marketplace (the App Store). Thus, the company still makes most of its money around a single product which powers up an entrepreneurial ecosystem.

Indeed, when Apple launched the iPhone in 2007, it was a revolutionary device, a leap frog, many times over, with respect to existing devices, at the time.

Yet, the most important, a bit more silent revolution (developers instead understood the importance of it from the first day) was the launch of the App Store. 

As Steve Jobs, explained at the time, in 2008, as he launched the App Store: 

So you’re a developer and you’ve just spent two weeks or maybe a little bit longer writing this amazing app.

And what is your dream? Your dream is to get it in front of every iPhone user and hopefully they love it and buy it, right?

That’s not possible today, most developers don’t have those kinds of

resources.

Even the big developers would have a hard time getting their app in front of every iPhone user well we’re going to solve that problem for every developer big to small and the way we’re going to do it is what we call the app store.

This is an application we’ve written to deliver apps to the iPhone and we’re going to put it on every single iPhone.

With the next release of the software and so our developers are going to be able to reach every iPhone user through the App Store.

Another key ingredient, to make sure, the iPhone could become the physical platform, to power up and be powered up by the App Store, was Apple’s distribution strategy

apple-distribution-strategy
In 2021, most of Apple’s sales (64%) came from indirect channels (comprising third-party cellular networks, wholesalers/retailers, and resellers). These channels are critical for sales amplification, scale, and subsidies (to enable the iPhone to be purchased by a larger number of people). While the direct channel represented 36% of the total revenues. Stores are critical for customer experience, to enable to provide the service business, and for branding at scale.

In fact, Apple has masterfully leveraged indirect distribution channels, to enable the iPhone to become a mass-adopted device. 

Not by chance, still today, the iPhone makes up more than 50% of Apple’s revenues. 

apple-revenue-streams

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