Why Apple Keeps Winning

Steve Jobs once suggested that Apple exists at the intersection of Technology and Liberal Arts.

Apple scored some headlines earlier this year when it announced the poaching of two executives—Burberry CEO Angela Ahrendts and Yves Saint Laurent CEO Paul Deneve—from the world of fashion. Those hires came just as Apple CEO Tim Cook, in response to a question from a Bloomberg reporter, suggested that his company would never follow its rivals into the ultra-cheap device market: “We’re not in the junk business.”

Over the past several years, Apple has developed and sold several generations of finely engineered, handsome devices at a somewhat affordable price—trafficking in what you might call mass-market luxury. Now it’s poised to enter the wearable-electronics market (a “smartwatch” is the express purpose of Deneve’s hire, if some of the scuttlebutt proves correct), which could make it a full-fledged competitor to ultra-luxury watchmakers and other couture firms.

If Apple does come out with the long-awaited “iWatch,” it will surely sell well. Earlier this year, Citigroup analyst Oliver Chen told Bloomberg that an Apple timepiece could earn as much as $6 billion a year, a sizable fraction of the $60 billion global timepiece market. Even if the analysts turn out to be wrong, the “halo” effect of Apple’s brand should ensure long lines of customers come launch day. A successful iWatch, in turn, would all but guarantee the development of other wearable electronics—maybe not Apple’s version of Google Glass, but certainly other things one could strap to a body.

Other companies have tried to beat Apple in the mobile-device market on price; on extra features (in the wake of the iPad’s release, rival manufacturers touted how their own hastily-assembled tablet offerings had Flash support and extra ports—which gave none of them an advantage in the long run); and even on style. None have succeeded in making Apple a has-been, although the global flood of Android devices has reduced iOS to a minority share of the market. Why does Apple continue to endure and thrive despite competitive pressure from multiple rivals? And on the flip side of that question: what makes it a continuing threat to everything from low-end smartphone builders to luxury brands?

To offer a possible answer, it’s worth taking a short detour down memory lane. In 2009, I sat down with Frank Nuovo, who’d served as Chief of Design at Nokia before jumping into the Principal Designer role at Vertu, to discuss Vertu’s Constellation Ayxta, a hefty bar of a phone crafted from aerospace metal and sapphire crystal. Like all of Vertu’s phones at the time, the device was proudly and defiantly dumb: no apps (unless you counted the Concierge button, which connected the user to an actual human being capable of fulfilling all manner of outlandish requests), no cute icons to tap, no fancy games to download from a convenient online store. “We didn’t rely on trendy inspirations,” he said. “We wanted tested technology.”

Of course, those “trendy inspirations” became enduring elements of the phone landscape, and even Vertu eventually released a smartphone loaded with Android 4.0. (That device, the Vertu Ti, includes a variation of the Concierge button—you need to justify its exorbitant price-point somehow.) Vertu could hand-craft a device out of the finest materials, and charge customers thousands of dollars for the privilege of owning it, but luxury and style wasn’t enough: at a certain point, it needed to embrace the same technology as every other firm in the industry.

But on the other end of the scale, customers also have an aversion to an ugly-but-functional device, unless they’re forced to use one by corporate overlords. People loved their BlackBerry devices and ThinkPad PCs for many reasons, but aesthetics wasn’t one of them.

Apple succeeds because it’s managed to merge sleek design with cutting-edge software in ways that some of its rivals are only beginning to emulate; it lives at the intersection of Technology and Liberal Arts that Steve Jobs so famously espoused. But therein lies the danger: if the company fails to stay cutting-edge, or if its designs leave something to be desired, there’s every likelihood that its audience could begin to turn toward rivals. An iWatch needs to pull off the double hat-trick of looking good and working better if it wants to truly carve out a substantial market for itself—and while the company’s recent hires suggest it’s working hard on the design portion of that equation, big questions remain about what such a device would actually do, and if people will find that functionality useful.

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