Apple Loves Your Wallets
Every day, millions of people carry around $1000 “metal bricks” in their pockets. They tap those bricks. They talk to them. However, these bricks are not worth $1000. In fact, the latest brick made by Apple costs them only $400 to make. And with every generation, the upgrades become less and less substantial, so much in fact that Apple now spends most of its keynotes droning on about its cameras instead of talking about the phone itself. And yet these same people continue to give away their wallets to Apple every year. As a value proposition, an iPhone has about the same worth as a rotten banana.
Apple most certainly knows it can effectively lock its customers into buying worthless overpriced junk. Just a week ago, they released a $19 microfiber polishing cloth.
This $19 product is probably worth 19¢ to Apple.
Deliveries of this outrageously simple and overpriced product are now slipping into late December, which means it sits higher on the demand scales than Google and Samsung’s new smartphones. Those phones are more feature-packed and cheaper than Apple’s offerings. And then, there is the question of the ecosystem. If someone buys an Apple Watch, they must buy an iPhone to set up and configure it. If they buy AirPods, they must buy an iPhone to set up and configure it as well. If they’re an app developer, they must buy a Mac to use Xcode, the proprietary development software for Apple devices. Xcode also only supports Swift, Apple’s proprietary coding language. Other popular coding languages such as Python and C only have partial compatibility with Apple devices.
This “closed garden” approach has been a catastrophic failure for other companies. Microsoft discontinued their Windows Phone software after many major developers refused to implement support for their custom software and app store. Nokia, once a titan in the tech world, crumbled into bankruptcy after refusing to switch to Android in favor of their own software. Ironic, as the then-CEO Anssi Vanjoki described Android as “pissing in your pants for warmth.” Ouch. BlackBerry soon followed Nokia into the tech cemetery as well. Samsung is also discontinuing its watch software, Tizen OS, for the same reasons.
That is simply because Apple has a different social standing from other tech companies. When other companies release new phones, only tech nerds get their pants in a twist about it. When Apple releases a phone, it gets on the trending page of every social network, usually for some kind of controversy. As the old saying goes, any press is good, and Apple very much demonstrates that adage.
Spot the difference.
So, when Apple charges $1000 for a phone, it’s not because they are trying to rip you off. It’s because their products carry much more than just a physical value. They give the buyer an increased social standing. It’s also a product that links to other devices, which makes it a bargain because it is essentially a ticket into the ecosystem. $1000 for a social contract and an enticing ecosystem makes the price worth it. Or to put it simply, Apple knows you’ll pay the cost anyway until eventually, even the toilets in the house bear the infamous logo.