Will Apple outgrow its reputation as an elitist brand?

Will Apple outgrow its reputation as an elitist brand?

Summary: Apple has developed a reputation as a premium brand with an elitist bent. The company wants to transcend that. Here's a look at whether it's working.

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During the past year, Apple's ascent to becoming the world's largest technology company has raised a number of important questions about the current state of the tech world and its future trajectory. But, the most prescient question for 2011 is whether Apple has committed to moving beyond its stronghold as a premium technology brand to become a computing vendor for the masses.

There is new evidence that Apple is moving toward lower-priced products and prepaid wireless data (for its mobile products) in order to make Apple devices more affordable for more people and businesses. On Monday, Research Analyst Toni Sacconaghi published a research note (read the summary on Forbes) following a recent meeting with Apple COO Tim Cook and CFO Peter Oppenheimer. Sacconaghi reported that the Apple executives have plans to put Apple's mobile devices within the reach of a lot more buyers.

Here are some of the highlights of the report:

  • Cook said Apple does not want its technologies to be "just for the rich"
  • Apple is likely to develop a lower priced version of the iPhone, Cook indicated
  • Cook said Apple was planning "clever things" to get the iPhone into the prepaid cellular market, including China where Apple is investing "huge energy" according to Cook
  • Expanding to more global wireless carriers is a priority for Apple, according to Oppenheimer, who also noted that Apple has deals with 175 carriers today versus 550 for Research in Motion (BlackBerry)
  • Apple is "not ceding any market" to its rivals in the mobile space, Cook declared

Apple prepares to unveil iPad 2 on March 2, 2011. Photo credit: James Martin | CNET

Those are strong words from two of Apple's most influential behind-the-scenes executives. However, there have been previous signs that Apple was moving beyond its established niche of well-heeled artisans, thinkers, and entrepreneurs, who have dominated the Mac ecosystem for two decades.

In fact, I don't think Apple ever intended to build a premium brand in the first place and I don't think the company has ever been totally comfortable being pigeonholed into that market. That's simply the group that bought into Apple's vision and was willing to pay a premium for it.

The original vision for the Mac

Don't forget that the Macintosh project started out with a very populist vision. Steve Jobs and his team wanted to build a computer that would be easy for the average person to set up and use and it would cost under a $1,000. Well, the Mac set a new standard for usability when it was unveiled in 1984 but it cost well over $1,000. It ended up being as expensive as most of the other computers on the market. The price tag plus the fact that it lacked software applications ultimately doomed the Mac to become a niche machine. Still, it's useful to remember that the Mac started out as the populist dream of an inexpensive computer for the masses.

The iPod was the first step

Fast forward a decade and half later when Apple unveiled its first iPod in the fall of 2001 and you see Apple once again debuting a product that was made for the masses, but the initial price tag was too high to become a mass market phenomenon. The first iPod cost $400, and Apple soon released a model with extra storage for $500. It was a very cool luxury product.

But, three years later, Apple released a smaller, cheaper model called the iPod Mini ($250) and sales began to really take off. Eventually, the iPod Mini was replaced by the iPod Nano and an even less expensive model called the iPod Shuffle. Apple went on to dominate the portable media market and sell over 300 million iPods worldwide by January 2011, expanding far beyond its original niche as a luxury gadget.

Take a look at MacBook Air competitors

While the iPod became a product for the masses, the Mac has remained the luxury car of the computer market. A 2009 NPD report suggested that Macs dominate 91% of the market for computers that cost $1,000 or more. While Macs continue to be priced at a premium today, the price disparity with Windows PCs is beginning to shrink, especially in some segments of the market.

For example, with Apple's MacBook Air, which the company holds up as the ultimate laptop for those who want maximum portability, the Apple system is not more expensive than its clones. I recently wrote a piece on Two great laptops for Windows users who have MacBook Air envy, and I discovered that the two best MacBook Air competitors that I could find -- the Sony Vaio X1 and the Acer Timeline X -- were both slightly more expensive than the 11-inch MacBook Air that I compared them to.

Of course, this is a premium segment of the laptop market where Apple has home field advantage, but it's interesting to note that Apple has priced its laptops very competitively here. There's no "Apple Tax" as we've seen in the past -- at least for the MacBook Air.

It remains to be seen whether Apple will go after the market for average laptop buyers between $500-$1,000 -- both consumers and business. I'm skeptical about whether we'll see that. I think it's more likely that Apple bets on a big chunk of that market switching to tablets and it tries to pick up those users there rather than selling them a cheaper version of a Mac.

In tablets, iPad is winning on price

The area where we can see Apple's aggressive new pricing strategy for wooing the masses is, of course, the tablet market. While tablet computers had been around for a decade before Apple launched the iPad in 2010, Apple made a simpler tablet with a multitouch interface and made it far less expensive than the other tablets. And, as I noted in my article The one big reason why iPad rivals can't compete on price, even the latest multitouch tablet clones are having a hard time matching its price tag.

In many ways, the iPad vision is the same vision that went into the first Macintosh -- build a computer for the masses and make it cheap enough for the average person to afford -- only this time Apple nailed the price tag. It also doesn't hurt that Apple has the most third party software for its platform this time, unlike the launch of the Mac. Nevertheless, the iPad's price tag is its greatest marketing asset.

In his report, Sacconaghi also recorded Cook saying that the tablet market would eventually become much larger than the PC market and Apple expected it to be intensively competitive since all of the PC and phone makers will take a shot at it. That's no surprise. But, it is a surprise that a year after the launch of the iPad, Apple still offers the tablet with the most reasonable price tag. That doesn't sound much like a luxury brand.

The big question then becomes whether people will associate extra value with Apple products because of the company's luxury brand reputation or if the masses will look at Apple and snub it as an elitist brand that doesn't apply to them. Naturally, the best way for Apple to control the conversation is to re-run the iPad play -- make a great product and price it better than anyone else.

This was originally published on TechRepublic.

Topics: Tablets, Apple, Hardware, Laptops, Mobility

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  • RE: Will Apple outgrow its reputation as an elitist brand?

    As long as Microsoft puts out their misleading ads, and the Windows Zealots keep repeating the lies, the average person is not going to see the emperor has no clothes on. Remember the lies have been around for so long that many accept them for the truth. My favorite lie, is when they use the specs of an iMac and list the Price of a Mac Pro (which is still common). I believe this is done, out of fear. If the population knew that the cheap PCs they were buying are junk junkware filled bargain bin crap. They might think twice about buying it. But then again, never underestimate the power of stupid people in large numbers. Microsoft has been banking on that for its entire existence.
    Rick_K
    • RE: Will Apple outgrow its reputation as an elitist brand?

      @Rick_K

      [i]As long as Apple puts out their misleading ads, and the Apple Zealots keep repeating the lies...[/i]

      There I fixed it for you. (Just pointing out that misleading information can come from both sides)

      While apple generally uses high quality hardware in terms of their motherboard parts/design the other parts and chips on that board are the same as any other computer in terms of CPUs, GPUs, hard drives, ram, onboard NICs, LCDs, etc.. so they are really no different than any other high quality Windows PC. The only difference is Apple does not make the low end sub $500 computers which I believe is the main cause of the myth that Apple is always of higher quality. Many people will mistakenly compare the $399 eMachine or other low end computer they bought and failed and replaced with a $1200+ Mac.
      bobiroc
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @bobiroc
        I have seen on this site where the Windows Zealots misrepresent the cost of Macs. I can?t tell you how many times I have seen a Windows Zealot claim an iMac cost $3499 (as though it was the normal price), or claimed that the Mac Pro uses a consumer grade processor (Intel I7), when it uses a server grade (Xeon) processor. When systems are similarly configured, the Windows based PC is often more expensive. When you start comparing a $400 Dell with an Intel Core I3 chip to a Mac Pro and claim the Mac Pro has the same components, and the ?Apple Tax? is the reason for the price difference, then that is a lie.
        Rick_K
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @Rick_K

        I have too and I do my best to stick to the facts and verify information even if it is something as simple as pricing before make a post. I meant no offense so I hope you didn't take any. I was merely pointing out that for years Apple had commercials that greatly over-exaggerated people's beliefs of Windows' shortcomings. Some of the information was downright untruthful. I cannot tell you how many people have come to me with Macs that they have installed Windows on and were infected and were shocked because the commercials told them Macs don't get viruses. Also the Mac Fanboys will argue every MacOS exploit that comes out as a non-issue and say it requires user interaction or it is the user's fault or it is not a virus. The problem with those types of statements is that the average computer user lumps all Malware types as a virus no matter if it is spware, scareware, trojans, worms, etc.. Also while there is considerably more malware and exploits focused on Windows due to it's market penatration and popularity and the length of it's popularity and marketshare the vast majority of the exploits out there (I would say 90%+) also require user interaction like clicking on a suspicious link, going to suspicious or unsafe websites, downloading pirated music, movies and programs or simply running with low security. Malware does not just sneak into a computer anymore like it did 10+ years ago. Well maybe if you run with no security like malware protection combined with firewalls turned off and full admin access to every account.
        bobiroc
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @bobiroc
        None taken, as I was not specifically referring to you. But for years, if you read their posts, they have distorted the facts to fit their agenda. I have priced out a few major OEM PCs and found them to be in the same price range as a Mac. Sure Apple doesn?t do ?Budget? PCs, but that is their prerogative. It would be like asking for an Alienware at a budget price (and they can get real expensive real fast). I have even seen ?gaming PCs? that cost more than Mac Pros and use consumer grade components. What I mean by that is comparing a 4 Core I7 to a 6 Core Xeon. The other day someone typed that Windows PC were getting 6 Core i7s, and someday Macs would catch up. Little did they know, that last year Apple started shipping 6 Core Mac Pros (in single and dual CPU configurations). IN that same thread someone claimed to have a 2.7 GHz quad core Dell, so I went to Dell?s website and found that the Processor in question was only 1.6 GHz. So while it was a Quad Core, it was not the same as the one in the New MaBook Pro.

        So, like you, I just try to cut through the FUD and lies to bring the truth to the surface. I do not mind intelligent discussion, but cannot stand the mindless parroting of lies by anyone, from any group. I personally prefer OS X over Windows, and think that Linux could be better (rather than trying to copy the Windows UI). But each system has it?s strengths and weaknesses. To say that one system can fit everyone?s needs is insane, and I can accept that for some Windows is the tool they need. I have told a few people I know that the cost for them to switch to OS X is outweigh the benefits. For them the additional software cost would be prohibitive. Sure some may say they can simply use Boot camp and install Windows, but that defeats the purpose of switching.
        Rick_K
    • RE: Will Apple outgrow its reputation as an elitist brand?

      @Rick_K,
      Microsoft and Apple are both guilty of spinning their ads in a misleading way. The "I'm a PC" ads over blew the issues with Vista and have over emphasized the whatever security/stability advantage Apple has had over the PC (Not to mention the repeated use of a sterotype that IT professionals should find offensive).
      bmonsterman
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @bmonsterman <br>There were a few blog authors on ZDNet, that would cherry pick stats and often tell outright lies to make OS X look inferior. My personal favorite was George Ou, as he was good for misrepresenting just about everything. John Carroll used to tell us how much better programming was on a Microsoft system (and Im sure it is when you only know one system to program for). The only thing that made John worth reading is he did not lie about his bias. Then you have the legions of Zealots that post comment here, which I would at least hope they were getting paid to spread the Microsoft truth, as opposed to the real truth. Sure there are some that are just as bad when it comes to Apple, or Linux, but the truth of the matter is OS X is nowhere near as bad as some would make it out to be. Granted Windows 7 is not as bad as others make it out to be (even though Vista was as bad, as it was made to to be). <br><br>On this site people want to make Apple the villain for not testing an OS update on jailbroken iPhones. When Microsofts first minor update bricks 10% of the cellphones, suddenly its someone else fault. Micd you none of these phones were rooted, just there was an issue with the update.
        Rick_K
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @Rick_K<br>If you are going to be fair, the zealotry on either side is basically the same. You have a choice, either participate, or seek meaningful dialog with those posters who are willing to engage in it. <br><br>Apple vs Microsoft largely boils down to personal preference. There is little you can do with one that can't be done on the other. In the past, Apple product have been sold at a premium. That gap has narrowed, yet the image of being "only" a premium product still remains. Rebranding takes time.

        As far as Vista being as bad as it was made out to be, I'm not so sure. I used Vista from RTM all the way to the RTM of Win7 and I never had any problems.
        bmonsterman
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @bmonsterman Actually, my favorite add was for iMovie. Apple is a beautiful model and PC is a guy in drag... If you ever used a PC for editing videos and also used the iMovie on a Mac, you will see that Apple was not exaggerating...
        prof123
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @prof123,
        Yea...I don't do alot of video editing. It wouldn't surprise me if Apple has better software for that, imaging, editing and design work has always been Apple's forte. All of the other commercials feature the PC guy as incompetent, manipulative, malicious, dishonest...etc. It was actually a cute commercial at first, but overtime the stereotype was wearing thin.
        bmonsterman
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @Rick_K
        I sit here and read your posts. And you come off as bad as some of the zealots here, and rather defensive.

        Windows does somethings better than OS X/Linux they do somethings better than Windows. I would agree with the development statement. Windows development tools are much better than OS X version and Linux. Big deal - but to make a bold statement puts you in the same category as the people your criticizing. And the topic above about the parts was accurate. Most of the discussions are around the Mac Books and they do use industry standard parts., the desktops are a whole other game. You can do a side-by-side comparison with a Dell/HP and look at the specs, then ask why so high?
        ItsTheBottomLine
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @bmonsterman
        I agree. I had Vista from RTM and then purchased Pro. The only issue I had was with nVidia drivers. And that was their fault not MS. The only crappy version of Windows I have experienced was Me. brrr. that was stupid release.
        ItsTheBottomLine
    • RE: Will Apple outgrow its reputation as an elitist brand?

      @Rick_K And you dare to talk about zealotry... Look in the mirror... You just started a war that should have took at least 10 posts ITT.

      Custom Windows/Linux PCs pwns in term of hardware quality and performance for the same price over anything.

      To me Dell = Apple = HP
      Tommy S.
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @Tommy S.
        You must be new here. Over the last 10 years many Windows Zealots outright lie about things that are easily verifiable. AS for the lies, ever watch those Laptop Hunters ads Microsoft ran? First they showed at lower spec MacBook Pro, and listed the price of a hlgher spec unit. In one ad the woman says she wants to edit video. She ended up with a Dell notebook that had not only a slower Processor (1.73 GHz compared to the MacBook Pro?s 2.4 GHz), but it also had slower RAM (2GB of DDR2 compared to the MacBook Pro?s 2 GB of DDR3).

        Sure Apple played up on the XP problems that had happened over the years. And they sure did play on the Perception of Vista?s flaws, it?s called salesmanship. I personally found those ads funny, but never did Apple claim that these were ordinary people, as opposed to paid actors reading scripts. There was also a campaign in the early 2000s called ?True confessions of a Mac to PC switcher?. Did you see that one? The so-called switcher was a person at an ad agency, writing a script, and the person in the ad was a stock picture taken off of an Internet site (I believe it was stock photo).

        Pointing this out, does not make me a Zealot, but you attacking the messenger, rather than the message, make you look like a Zealot.
        Rick_K
    • RE: Will Apple outgrow its reputation as an elitist brand?

      @Rick_K

      [i]As long as Microsoft puts out their misleading ads, and the Windows Zealots keep repeating the lies, [/i]

      You, sir, need psychiatric help.
      Hallowed are the Ori
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @Hallowed are the Ori <br>I was trying to figure that out as well. I think this is a situation of a person pointing a finger, and three are pointing back.
        ItsTheBottomLine
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @Hallowed are the Ori
        So are you denying that Microsoft tells lies about the competition? You know like the fake ad ?confessions of a Mac to PC switcher?. Or how Steve Ballmer said Linux is cancer. Or how out the laptop hunters commercials where the ?real person? (paid actor) bought a PC laptop that was better than the Mac laptop, even though it did not match up? Defending your abuser, and saying someone else needs <i>psychiatric help</i> is a sign that you might need to take a long look in the mirror.
        Rick_K
    • RE: Will Apple outgrow its reputation as an elitist brand?

      @Rick_K You fool.
      turning this into an Apple vs. _____ (Microsoft? Were they even mentioned here?)

      This is a well-written article that has nothing to do with your fanboy fantasy.

      This article has to do with the perception of Apple as a high-end, high-priced company - and how the iPad is starting to change that perception, as the first product Apple has made with a price tag

      But
      - you fool -
      commenting about Microsoft putting out lies? Apple is notorious for publishing sweeping public statements about how certain things they are being criticized for are "design features", and making other statements about how certain other issues just "really don't exist", etc.

      Apple, beyond all other tech companies and inherently by a wide margin, is a marketing company first, and a tech company second. No other company attempts to manage it's public image within tighter control than Apple. it is notorious for it's secrecy that it shrouds itself in, and public statements are so tightly controlled as to be as suspect as a public statement made by the CIA... no other company exerts such propagandized control over what they say as Apple.

      To criticize Microsoft in a rant appearing to attempt to defend Apple is like One Flew Over the Cuckoo's Nest... wildly disconnected from reality. Is your last name Sheen, by chance?
      geolemon
      • RE: Will Apple outgrow its reputation as an elitist brand?

        @geolemon
        And the fool chips in?
        <i>commenting about Microsoft putting out lies?</i>
        At least I can back up my statements.
        <I> Although the ad appears to be from a "real person," similar to the Apple campaign, Microsoft said it commissioned the posting from a freelance writer who was paid for her work, although the company claims her experience was genuine. Microsoft also said that the photograph of the "convert" was actually a stock photograph</I>
        http://news.cnet.com/2100-1001-961994.html
        Mind you this was before the I?m a Mac ads (see the date of the article), and shows that Microsoft has no problem lying about the competition. So you must be thinking it?s okay for Microsoft to lie outright, but if Apple exaggerated a common perception it?s not okay?

        Instead of refuting what I wrote, you just attack the messenger? Nothing like an ad homonym attack, instead of using facts.

        I remember when the G4 PowerMacs came out. There were no local Apple stores, so I went to a CompUSA to look at one. The sales person, told me that OS X was a sad copy of Windows XP (even thought OS X came out before XP). Then I was told that Macs had absolutely no software, and were prone to failure within the first two months. He said he would show me a ?Real computer that would mop the floor of the one I was looking at? This fool went on to tell me that Mac OS X was not capable of using any software, and peripherals. I later found out he was instructed to say these things, and had been given a PowerPoint presentation by the Microsoft representative to the store.
        Rick_K
    • RE: Will Apple outgrow its reputation as an elitist brand?

      @Rick_K
      johnny co