Why people won’t switch from Apple products
https://www.businessinsider.com/apple-iphone-macbook-ecosystem-so-good-i-dont-want-iphone-2019-12
The first part of this article talks about Apple’s incredible business model. They mention that to successfully use any one specific product they make, it will only work if you have multiple products. For example, let’s say that you have an Apple iphone, but you have a macintosh windows computer. You won’t be able to back up your phone data such as pictures, music, videos etc to your computer. Thus making your phone more problematic to getting water damage or destroyed because you would have no backup of any of your data. Another example would be their apple watch. If you want to maximize the efficiency and effectiveness of an apple watch, you better own an iphone. This means that most people who own 1 apple product actually own anywhere from 1-5 products with the majority owning 2-3 Apple products.
This in itself is a cluster for each individual person. Let’s say for example that I own an Apple iPhone and an Apple Macbook and I am looking into getting either the apple watch or the samsung watch. Well we can think of each product as a node and there are edges between the nodes where there is a positive outcome if the products are owned by the same company, and the outcome is 0 if the product is owned by different companies. Let’s say that the payoff is the same if both are apple or if both are samsung. Since I already own 2 apple products, if the third product I bought was samsung then my outcome wouldn’t improve. If I bought the apple watch then my outcome would increase because I would have 3 products each owned by same company instead of only 2. That in turn means that I would have the same payoff if I bought the samsung watch and then went out and bought a samsung phone and a samsung computer. The missing information in this problem is the cost. It is obviously better for me to keep my iphone and macbook and just buy the apple watch because my outcome will be the same as if I bought all 3 samsung products, but I will have spent significantly less money. It is too hard for the new product to be introduced to each individual persons cluster when they own even 1 product of the certain company. Let’s say I only owned an iphone and was looking into getting a watch. With the price of having to but both samsung phone and watch vs just the apple watch, it makes more sense for me to buy the apple watch. Especially if I think that both work just as well (both have equal payoffs).
The reason apple has one of the biggest cash reserves in the world is this idea of clusters I just mentioned above. Let’s use the person from above that owns an apple iphone and a macbook. When they have a family, what are they going to buy their children? they are going to buy them apple products so that their products are easier to use with their children’s. This is increasing the cluster. So now this family all uses apple products. What happens when each of the children have families of their own. They also use apple products and the apple cluster grows and grows. It also helps that Apple has one of the best marketing campaigns in the world, so there are millions of people who see positive images of Apple. Also, think about the family example, the amount of people using iphones is increasing and increasing so average joe looking into getting a phone sees millions using iphones around the world, so they will think that these people all had the option of buying wither iphone or another phone and they chose the iphone, so the iphone must then be the better option, so they will be encouraged to buy the iphone, thus increasing the cluster even more.
This is what makes it so hard for a new company to get into the technology world that apple already controls. So many people already own 2-3 apple products, so it makes no sense for them to switch any of their singular products to the new company because although they gain a new product. It won’t work well enough with their existing products. This means that even if the apple product were more expensive (which they normally are) then they would be better off paying the extra money.
Now the apple ecosystem isn’t a complete cascade because the same thing happening with apple happens with other companies such as samsung. It all depends on what the people around you own and what the first product you buy is. That will have the most influence on which cluster you become a part of. Let’s say you were a new company thinking about inventing a new smartphone. Number 1 your phone better have some incredibly huge advantage which makes it significantly better than the apple iphone of the samsung smartphones. We have seen that even a lesser price will not be advantage enough. For sake of argument let’s say that your new smartphone is proven to improve brain function just by using it and this grabs the attention of some people. How can you make your phone the new main phone. Number 1 you have to attack the clusters. It isn’t enough to just attack one family who owns a different product, you need to attack each family member and get them to switch over to your new product. We also know that individuals don’t make independent choices, so you need to get a lot of people on your side and to be using your product to promote social awareness. This is why you need to attack each person in the family, the more people in a certain family using the new product will increase others in the family to switch over to the new phone. As this new company you better also not just come out with a phone, but also tons of other products that work together to help attack the clusters because remember each person owns 2-3 products from a single company. Even if you do all of this it will be virtually impossible to attack the apple clusters just because of the SUPER positive image apple products have on the world. But good luck!!