Apple's Competitive Advantage: Multiple Products That Integrate as One

COLUMN: Doing the Apple Math: iPhone + iPad + Mac = Market Dominance

 
on July 21 2011 2:03 PM

When analysts and tech industry experts try to gauge the lasting strength of Apple's burgeoning smartphone dominance, they usually take the obvious route, comparing suspected advancements with the iPhone against competitors including Android and Blackberry.

The compare smartphone to smartphone, trying to pick the winner.

But they are missing Apple's secret weapon in comparing Apples to Apples, so to speak. The comparison of smartphone to smartphone is only one reason Apple is pulling away in the smartphone market, with roughly 120 million units sold since the iPhone first went on sale in 2007.

The iPhone is obviously popular on its own merits, a touch-screen, app-based product that clearly has advantages over the clunkier, more dated Blackberry made by Research in Motion. But so many experts suggesting that Apple's competitive advantage may wane in the near future in the face of new smartphones from Blackberry and others like Google's Android miss the point.

Apple recently reached third place in personal computer sales in the U.S., selling more Macs the past few quarters than analysts expected. Also, Apple is the leader in the tablet space with its popular iPad. In its most recent quarter, for example, Apple sold 9.52 million iPads, and the product has only been available for roughly a year.

Many iPad buyers are first-time Apple customers. Just as many of the nearly four million buyers who purchased Mac computers in the most recent quarter are first time Apple customers. The reason for Apple's compounding, growing success is a simple multiplier factor involving customers. Once they buy one product, like an iPad, Apple's other products like the iPhone or a laptop computer become a natural.

Because the company has focused over the years on seamlessly tyings its hardware and applications together with an integrated operating system, one works very much like the other. And many apps run on one product just as they run on the other.

To date, no company has as effectively corraled customers to other seemingly different products by getting them to purchase just one. Before Apple, mobile communication devices were made by one company and laptop computers were made by another company. The products had very little in common.

But now, Apple customers can barely tell the difference except for the size of the product. The laptop is big, the tablet is smaller and the smartphone is even smaller. Otherwise, how the products operate, and how they share functionality and information seamlessly through connectivity, continuously updating customer's lives through simple plug-in, is very much the same.

That's why the Blackberry and manufacturer Research in Motion have a decided disadvantage going forward. The company talks about how it will update product, with new exciting offerings in the near future, but unless it works with Apple to make it happen, success may be hard to find.

Just two years ago that wasn't the case. Apple had Mac customers. Apple had iPod customers. Apple had iPhone customers. But now, with each advance, particularly in regard to the iPhone's evolution and the iPad's launch, Apple moves closer to market domination across all three spaces like we've never seen from one company before.

The unilateral strengh is the difference-maker, and some analysts don't yet seem to know how to factor that in.

Sure, it wouldn't happen if customers did not like the iPhone on its own merits. It would not happen if customers did not like the iPad for its own merits. And, it would not happen if customers did not like the Mac computer for its own merits.

But put the three together, as millions of more consumers are doing with every passing quarter, and Apple has advantage that may be hard for competitors to touch anytime soon.

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