Why Competing with Apple Is So Difficult

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Ben Bajarin is the Director of Consumer Technology Analysis and Research at Creative Strategies, Inc, a technology industry analysis and market intelligence firm located in Silicon Valley.

The desire to compete with Apple is widespread among many companies in the tech sector. The problem is that very few, if any at all, are well equipped as businesses to compete head on with Apple as very few have the same kind entrepreneurial culture as Apple.

Around 2005, our firm, Creative Strategies, began receiving more in-depth questions about why Apple is so successful. We were asked to do more specific analysis on Apple’s strategy to shed light upon what some refer to as the “secret sauce” that drives the company. Much of this was because the success of the iPod was bringing Apple new customers in droves. And when the iPhone was launched, interest in Apple skyrocketed even higher.

Vertical Integration

But competing with Apple is difficult because Apple, Inc. is actually four diverse and thriving companies all wrapped up into one. It’s a hardware company, a software company, a services company, and a retail company. Most technology companies in the world can manage one or two of these disciplines, but only Apple has all four entities working in harmony.

Apple, as we say, is vertically integrated. It controls all the major critical parts of the chain used to make and sell products. Apple builds great hardware, owns the core software experience, optimizes its software for that hardware, equips it with web services (iTunes and iCloud), and finally controls the selling experience through its own retail stores.

(MORE: How to Sell a Tablet: Apps and Price First, Tech Specs Second)

In contrast, most other PC, smartphone and tablet vendors make the hardware (Dell, Toshiba, Motorola, Samsung, etc), put someone else’s software on it (Windows and Android), add third party services (Google, carrier services, etc.) and then sell it through someone else’s store (carrier retail stores, Best Buy, etc.)

Competing with a company as vertically integrated as Apple means that PC and consumer electronics companies can, at best, compete with Apple in only one or two disciplines. While they might be able to create similar hardware, their lack of control of the operating systems as well as the services that are tied to these operating systems gives them little control over their markets. And no vendor has shown so far that it can compete with Apple in retail.

The only company that has even come close to being in a position to compete with more than two of Apple’s core business strengths is HP. Its acquisition of WebOS is the primary reason, because now it can make hardware and the operating system software, and ultimately have more control of the user experience.

(MORE: HP Is Committed to Its ‘WebOS’ Platform (and It Should Be))

Even then competing Apple is difficult, because the company has proven to be a viable force to be reckoned with across all the areas within which it competes. In fact, if we take a hard look at the consumer and personal electronics landscape, we would be hard pressed to find a better hardware, software, services, and retail combination in the marketplace.

Technology as Art

Beyond that, Apple also has a culture that is completely unique, which is another part of the reason for its success. Steve Jobs in his many keynotes has pointed out that Apple’s approach to products is that they are at the union of liberal arts and technology. And nobody in the industry so far has been able to match Apple’s eye for design.

What this means is that there is an added dimension of design and technology as art that influences the thinking of those who work at Apple. This group is like a passionate team of artists who happen to turn their art into technology.

This is the major reason that Apple emphasizes simplicity. Steve Jobs has in many keynotes and demos said that Apple’s various products “just work.” What we must not forget, though, is that creating technology products that are simple is no trivial task. Simple solutions require sophisticated technologies. Apple knows this better than anyone and it has oriented itself to succeed at just that.

The advice we give to our clients is to pick their battles. They simply aren’t oriented to compete on every single playing field as Apple.

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