Why You Spend So Much Money At Apple

[Applause] [Music] it feels like everyone has apple products from oprah to billy eilish to your dad apple which is the largest market cap company in the world at over 2.2 trillion with 271 stores across the united states apple brought in 274.5 billion dollars in revenue in fiscal year 2020. whether you like it or not apple has revolutionized technology as we know it the apple experience is all about simplicity elegance great design and emotion fans love how all of the products from the hardware to the software work seamlessly together in apple's ecosystem from concierge-like customer service to high-quality sleek products apple has cultivated an obsessive customer base that said apple has come under fire in recent years for alleged unfair labor practices claims it's slowing down old iphones and restricting developers from the app store though profits initially declined as a result of the pandemic profits have steadily increased thanks to remote learning and remote work here's how apple gets its customers hooked founded in 1976 by steve wozniak and steve jobs apple started out as the silicon valley competitor to ibm and microsoft with the rise of the imac in 1998 and the ipod and itunes in 2001 apple started staking its claim as the front runner in the tech game modern apple you see now the two trillion dollar company came with the launch of the iphone in 2007 and then the app store after that eventually the ipad and continuing sales of macs and other products but the iphone i think was the primary driver in recent years though competitors samsung huawei and xiaomi eclipse apple's global phone sales the iphone is still apple's top product even a decade after its launch [Music] i'm a big fan of apple and i have been for quite a while i think apple has a rabid fan base of almost like a cult so you could say apple as a cult you could say apple's just like a religion huge apple store opening up yeah in uh in the famed grand central terminal i went to the grand central opening in manhattan it was the grand central apple store several years ago and it almost felt like i was in a religious ceremony or mass sort of with everybody cheering like every millennial i love apple and sometimes not so much millennials and jen and disease especially aren't completely slaves to apple and it's kind of like you can't quite really criticize your overlords it's like saying something negative about kim jong-un living in north korea apple as a brand just like a political leader or a religion has really tapped into values and emotion to hook themselves into the identities and the lifestyles of consumers and so it's really become a brand that's very much embedded in the daily life of its buyers as much as it is in their values and their identity for me the church is apple store right i go there i will never visit a neighborhood where there is not an apple store because after all you want that kind of a spirituality in your neighborhood right i currently have only the iphone 10 and a macbook an ipod touch from back in the day and an ipad the iphone apple has worked meticulously to create this loyalty hello i'm a mac hello i'm a pc you might remember the uh mac versus pc ads they were just an all-white backdrop and you had a person a guy representing mac he was very cool he's casually dressed and then a guy representing pc and he was in this nerdy brown business suit and he was always like stumbling over stuff and having viruses and what was beautiful about this was that it created this kind of dichotomy in the world for buyers i had him then we lost him i'm gonna go get it keep an eye on him you're either with apple and you're cool and you are against this legacy business computing nonsense that nobody wants to be part of or you're part of that crew what started with mac versus pc evolved into iphone versus android apple music versus spotify airpods versus well all those other competitors as a result apple sold 26.4 billion dollars in iphones 14.5 billion dollars in services and 9 billion dollars in max that's one profitable cult apple has always been pushing that they are the way forward they are the innovators and they lived up to that promise for decades now that's why you have people who are such loyal apple fans for generations in fact apple didn't invent the smartphone or the personal computer or headphones what it did do is redesign and streamline all those products to work together the reason apple's designs are phenomenal its approach to marketing is phenomenal is it is reductionistic in nature steve jobs was maniacal about it can you do it in one step instead of three right can you do it in one instead of five so he was maniacal about the minimalist approach to everything as apple continues to innovate it also encourages its customers to buy its latest models and products headphone jack maybe they didn't have to get rid of it maybe they did but it ended up helping them sell a lot more airpods post steve jobs they've just become this hungry kind of capitalist ridiculous machine that i cannot trust you just spend more money on buying products that you don't need like i thought the idea of moving to the future was minimalism and simplicity not over complicating your life with dumbbells apples it's like eye candy it looks very beautiful and it's just very simple on how it works and i don't like that i like having the customizability i want to be able to you know use apps that aren't on the apple app store even though there is a higher price point i you know you find that it's it's something it's like an investment fans rally around apple's products because they're high-end and apple was sort of the only one that really was using metal phones and beveled edges and they just looked like luxury and premium products and when people spend a lot of money on something they sort of defend it or like what they're buying there is that whole ecosystem integration which is really good you have say imessage on your iphone and then you can access the messages on your ipad on your watch on your mac computer fans love the apple ecosystem both its software and hardware work seamlessly together you can airdrop from one device to the other so it's just very very easy to use within the same kind of family apple's also pretty good at keeping people in their ecosystem by locking other things out or locking people in everything they do is proprietary they don't really support usbc i mean they're starting to on their laptops but you know for having the lightning cable and they don't even include the adapters in the phones that you buy now and apple users say they're okay with it i don't think i would switch to android mostly because at this point using apple products is like muscle memory and i'm too old to retrain kind of a stickler for habit i am really really used to iphones that used to using them and i really like the way they look and just kind of the general interface most apple products work best with other apple products so an apple watch works best with an iphone not an android phone every time you're in a group chat you have the one android user that always ruins the tap back so instead of just like having this organic interaction it's just this like weird green bubble and they can't do all those like emojis and audio recordings and things that are just like part of the imessage system honestly who who cares about green bubbles and blue bubbles you know you're trying to communicate apple has created a world of technology you can live in from apple carplay to airplay to home pods it intrinsically keeps you loyal and as apple continues to innovate it's reaching into new areas of life like credit cards and physical fitness we're continuing to see apple's innovation not just in this campus but in products and how cool are they going to be are they going to be cool enough to pay a thousand dollars and to upgrade yeah the cool factor i'm not worried about when you think about hype when you think about buzz no one comes to mind for a launch like apple steve jobs was absolutely famous for creating this hype cycle leading up to when he was going to launch whatever was next and all of what he was going to announce was shrouded in secrecy you felt like royalty if you were a journalist invited to san francisco to sit in that big box room where they had a very private event security they did a ton to create the impression that this was the most important news you were ever going to read that day i think it contributes to sort of like mystery aura like oh how do i get into this apple event or or who's getting the new stuff first that sense of urgency is why you see massive lines on product launch days it creates urgency it creates uh scarcity and all of those just tap into the human emotion to want more there is a kind of natural inclination to have the newest one or the best one it makes apple look god-like and it makes apple look like they can do no wrong and truly the halo effect in action means that you start to look at every single apple product as this extraordinary thing every time you have a good impression of one product all the rest look better by comparison because of that halo effect this could explain why apple can charge a premium i think apple charges the prices they do because they know they can in america having any apple product it's kind of a satisfy and it's more about status than actually being the better appliance they're extremely expensive some of the features that you get you can get a equivalent you know pc or build something yourself for significantly cheaper it's price gouging is what it is exclusivity comes at a cost apple manufactured the iphone 10 for 357.50 and it sold the phone for 999 dollars in 2017. that's a 64 profit margin the profit margin for the iphone 12 pro is down slightly at 48.5 though apple does not disclose the keys to its high profit margins the company has been accused of exploiting working conditions in its affiliate china factories pegatron and foxconn labor abroad is typically cheaper than domestic labor i am freaked out by apple's planned obsolescence and the big um lawsuit that they had recently where they were deliberately making batteries or phones older phone models slow down and they actually that was the lawsuit that they lost i believe apple settled a 500 million lawsuit alleging that it was slowing down older iphone models through ios updates with the recent launch of the iphone 12 and the m1 processor apple shows no signs of slowing that's largely due to the success of its retail experience when you go to an apple store instantly you can visualize right this all-white almost alter like experience where you are at the altar of mac it really is an emotional feeling you're not just walking into a department store you are experiencing what apple is grand high windows right light from everywhere and a smiling retail employee ready to solve your problem we designed stores from day one that were all about the experience we had genius bars in theaters and and offered free access to the internet in those early stores and they've gotten better and better the retail employees are hired based on their emotional intelligence right they're hired based on their ability to be able to have empathy for what you need that's like a hospitality industry mindset that's what you get when you walk into the lobby of a five-star hotel people know they can go to the apple store and get something fixed usually the same day where other brands don't always offer that kind of support that convenience is worth a lot when a company treats you well you begin to trust it and you continue to invest in it and spend your dollars there that's the key to apple's success steve jobs famously said a lot of people don't know what they want until you show it to them people look forward to going to an apple store because the experience is designed to be just like everything else apple does simple intuitive memorable i don't think i can see where older apple doesn't exist mostly because they've been so influential unfortunately you can't really go back you know people are already used to apple products and for apple it's just like they're printing money it's hard to say i can see a world without apple but if you'd asked me in 2007 2008 if i saw a world without rim at the time which became blackberry i probably would have said no that company wasn't as successful as apple it wasn't ever a two trillion dollar company nobody else lived up to the hype that apple was able to create i don't think ever will truly not in this world

Channel: CNBC Make It

Views: 458,536

Keywords: CNBC Make It, Make It, CNBC, How To Make It, Entrepreneurs, Starting A Small Business, Business Success, Small Businesses, Finance Tips, Career Tips, Work Hacks, Lifehacks, Money Management, Career Management, Managing Business, apple, apple watch, apple stock, apple store, Apple Watch series, apple tv, iphone, apple stock price, apple revenue, apple earnings call, aapl price, aapl chart, apple airpods pro, AirPods Pro, AirPods Max headphones

Id: uz2hH9M07K4

Length: 13min 41sec (821 seconds)

Published: Tue Dec 08 2020