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Summary:

Oftentimes Apple has been referred to as the BMW of the computer world – high quality, stylish, and expensive. And for anyone that’s ever unpacked an Apple product, dealt with Apple technical support, or even visited an Apple retail store, it’s blatantly obvious that Apple wants […]

Oftentimes Apple has been referred to as the BMW of the computer world – high quality, stylish, and expensive. And for anyone that’s ever unpacked an Apple product, dealt with Apple technical support, or even visited an Apple retail store, it’s blatantly obvious that Apple wants you to feel like it’s products are worth every cent. From pre-purchase through support, Apple treats its customers very well, and makes you feel like you really have gotten your money’s worth.

With the recent introduction of more budget conscious items (I’m looking at you, Mac mini and iPod shuffle), it’s easy to wonder if Apple is about to loose some of it’s luxurious sheen. As both the shuffle and the mini are likely to quickly become the best selling iPod and Mac, simply because of their price, is the Apple brand about to become a commodity? Don’t bet on it.

For one thing, AppleInsider is reporting that Apple will launch their most extravagant retail store yet, right on New York’s upscale Fifth Avenue:

sources say Apple will turn the 21,000-square-foot space into a retail store that will ‘rival anything seen so far’ from the company’s retail division.

Specifics are lacking, but one source claims Apple will give the exterior of the store a look similar to the glass Pyramid found in the Louvre’s cour Napoléon, only in cube form.

Such a store would be a departure from traditionally stylish-yet-functional Apple retail stores, and the even more economically expedient mini stores, popping up in malls and airports.

Rather, I think Apple’s release of truly low-end iPods and Macs is the completion of a long-standing plan to verticalize their brand. If you look hard, all major Apple products come in three flavors: budget/consumer, midprice/prosumer, and luxe/professional. This is now true for Macs (Mac mini, iMac/iBook, Power Mac/Power Book), iPods (shuffle, mini/white iPod, white iPod/photo), as well as software (iLife, “Express” products, “Pro” products), and now even retail stores (mini store, Retail, Fifth Avenue).

Making such clear delineations, and providing three levels of products across the board gives Apple several advantages over more complex product schemes. First of all, it makes it incredibly simple to choose a product. Just getting started with video editing? Use iMovie. Need a graphics workstation? Buy a Power Mac. In addition, it can make upgrading just as simple. Love your iPod mini but need more storage space? How about a 20GB white iPod? Did your band just book a tour? Maybe it’s time for Logic Express.

Most importantly, this vertical market, encompassing everything from a music player you’d give a ten-year-old to the boxes that power some of the fastest supercomputers in the world, allows even those of us without trust funds to feel like we’re playing in the same league as Paris Hilton. Sure, my iPod may not have Swarovski crystals on it, but it does all the same things as any celebrity’s. In recent years, there’s been a huge surge in semi-luxe products – things which don’t cost that much more than the standard fare, but make you feel like you’re buying something fancy and elitist. This stems from the huge growth in single-digit millionaires in the last decade; these are people who certainly are wealthy, but not insanely so. Their purchasing habits have trickled down to the rest of us, and now you can’t walk into a drugstore without encountering “luxury” shampoo.

Ever since the return of Jobs, Apple has done a good job of making its customers feel like they’re flying first class. Now that there really are iPods and Macs “for the rest of us,” it’s also enabling the most budget-conscious computer users to feel like they’ve bought into something special. This is an important part of the Steve Jobs “reality distortion field” – buying Apple products makes us feel good, and powerful, and important. Now that even grandma can afford the BMW of computers, and people like me can afford to have two in the garage, it makes it that much harder for your run-of-the mill Wintel computer to compete.

An unsubstantiated end-note:
At the moment the iPod line seems the most confused. You could easily argue that the iPod mini constitutes a more luxe product than the white iPod (based on gigabytes per dollar), and the white iPod seems to inhabit a space between the mid- and high-end. Based on this, I’d predict that all 5G white iPods will likely be photos, pushing them to the high-end category, planting the mini in the mid-range, and keeping the shuffle at the bottom. This makes the most sense to me, and fits squarely with Apple’s pricing for other products.

UPDATE:
As Gary points out in the comments, the new store will be in the GM building, where the famous FAO Schwartz lives.

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  1. FIrst time comment here … great take on the marketing of Apple … i think you nailed it.

  2. yeah – great write-up Adam. really hit some good points…things I’d not even thought about.
    thanks!

  3. From what I hear, the 5th Ave NYC store may be in the old GM building (FAO Schwart Flagship toy store has been there for years). Most of the store will below grade behind a sunken plaza that never worked as a public space. So some kind of inviting glass enclosed entry-way is probably key to making the location work as an Apple store.

    PS. I like the BMW/Mini MAC/Mini parallel.

  4. The Apple Blog » Apple de Luxe Thursday, February 10, 2005

    squarely with Apple’s pricing for other products. UPDATE: As Gary points out in the comments, the new store will be in the GM building, where the famous FAO Schwar [...]

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