Why can Apple charge a premium for their hardware?
This is the question you might ponder after your new, ~3-month old Mac Mini dies. And then you might spend most of the next 2 weeks thinking about hardware alternatives for your workflow, which is 95% stuff — writing, Zoom meetings — that would work fine on a $900 Macbook Air but the remaining 5% is video streaming and editing that gets dramatically better if you have desktop hardware and the only computer that Apple ships that isn’t a laptop or mobile computer glued to the back of a very nice display is the Mac Pro. The aforementioned Mac Mini is a laptop motherboard inside a desktop-ey case, with all the attendant expansion, serviceability, and heat dissipation issues that come with that format. I should know. I pulled that sucker apart a half-dozen times to re-seat or swap RAM trying to get it fixed. 🙂
You’ve heard, perhaps, of the Uncanny Valley. Wikipedia:
In aesthetics, the uncanny valley is a hypothesized relationship between the degree of an object’s resemblance to a human being and the emotional response to such an object. The concept suggests that humanoid objects which imperfectly resemble actual human beings provoke uncanny or strangely familiar feelings of eeriness and revulsion in observers. “Valley” denotes a dip in the human observer’s affinity for the replica, a relation that otherwise increases with the replica’s human likeness.
There seems to be something similar with computing systems, and perhaps with services more generally.
Apple ships hardware on both ends of this spectrum and strenuously avoids the middle of it. Want laptop/mobile computer glued to the back of a nice screen that integrates with a very safe, functional services ecosystem? Apple has shipped way over a billion of them. Want something at the extreme other end of the spectrum? Apple offers a Mac Pro, and sells some; certainly a miniscule fraction of what they sell at the low end of the spectrum.
Want a mid-priced computer you can throw a badass GPU into and make a few other tweaks to? Forget about it. This is Apple’s Uncanny Valley.
You could argue a variety of reasons why Apple avoids this part of the spectrum. It’s the “red ocean”, crowded with PC competition. Or it increases support cost. Or Jony Ive didn’t like it.
My current theory — admittedly tinged with a bit of frustration about this Mac Mini — is that Apple wants to make computers for people who want to compute but without having to think about computers. Apple wants to ship devices that compute but do computing so invisibly that you don’t really think of them as computers. Opening up the device — or even being able to open up the device — interferes with this goal.
This approach has been successful! There really is something to this idea of avoiding the Uncanny Valley and providing a “don’t have to think about it” offering to a large market.
Simon Wardley has done a good job of describing how — over time — parts of a value chain move towards commodity or utility status and how this is a good thing because it enables new forms of innovation and value creation.
Normally the move towards commodity/utility status involves a reduction in profit margin. Apple’s ongoing magic trick is avoiding this reduction in profit. There are competing theories about how they do it, but I think offering a “don’t have to think about it” option to the market is part of their success.
How do you make “don’t have to think about it” into a premium price for your services? Here’s an incomplete list of options:
- More/better data, so clients don’t have to trust your judgement as much.
- More charisma, so clients gain trust in your ability to lead them through a change you could never really gather data to support anyway because it’s at the leading edge of innovation.
- More systematized communication throughout a project, so clients feel taken care of in the small things and therefore don’t start to worry about the big things.
- Packaged services with fixed pricing so clients don’t have to wonder about estimating and managing cost during the project.
- An authoritative book on a niche topic, so clients don’t have to wonder if you know what you’re talking about.
I’m not saying any of these are right for you and your business, but all of them could contribute to a “don’t have to think about it” experience for some clients, and that could in many cases be a way to justify more premium pricing.
Events Of Note
- Liston Witherill’s ClientCon event starts later this month. Liston has corralled 30 speakers, and there’s one free online live talk every weekday at 10am Pacific time. I like how he’s taking the idea of a single-track conference and unbundling it over 6 weeks to make participation more flexible. Details: https://clientcon.servedontsell.com/
- I’m livestreaming the next talk in my TEI Talks series this Friday at 10am Mountain time. I’ll be sharing everything I know about creating subscriber value using daily publishing. Details: https://www.mixily.com/event/6375910778643827 (See the previous talk here: https://philipmorganconsulting.com/the-expertise-incubator/tei-curriculum/)
- Starting October 8, my workshop on specialization: https://philipmorganconsulting.com/core-skills-workshops/pmc-csw-specialization/
- On October 6 I’m kicking off my workshop on point of view: https://philipmorganconsulting.com/core-skills-workshops/point-of-view/. Both workshops emphasize experiential learning, which means you learn by doing.
“How to avoid choosing a dead-end area to specialize in.”
That’s a question that rolled in via my post opt-in survey, and I love its brutal honesty.
Dear questioner: you are not alone in this concern. It’s broadly shared by those who are considering specializing.
Here’s a useful way to think about this question: Are you willing to generate demand for your services, or would you rather that be done by others?
If you choose the first option — generating your own demand — then you will be free of specialization dead-ends, at the cost of a challenging but rewarding learning curve.
If you choose the second option — relying on others to generate demand for your services — then you are more likely to face dead-ends when you specialize.
I’m sure there’s a bit more nuance to it than that, but that remains a useful simplification of the choice we all face.
Here’s the additional nuance:
- You can view platform specialization as an automatic eventual dead-end. Details: https://philipmorganconsulting.com/indie-experts-list/the-death-of-a-market-position/
- There are limits to everyone’s ability to generate demand. You can’t force the market to want what you sell if the market simply doesn’t want it.
- That said, when you take responsibility for generating demand for your services, you gain multiple degrees of freedom. The source of that freedom is insight into the market and presence with the market.
- Deep insight into the market requires empathy.
- Cultivating empathy for a market is ultimately what creates freedom from specialization dead-ends because that empathy causes you to be willing to abandon unviable ideas.
- Your entrepreneurial instinct, combined with empathy for a market, both frees you from specialization dead-ends and leads you to opportunities to make real money while serving the market.
Thank you, dear questioner, for this one!
What you are up to — notes from readers
- Pranav Kale is working to help experts improve their email marketing: https://pranavkale.com/email-marketing-for-generous-experts
- Sarah Avenir keeps providing interesting items for this section! She’s working in public on a new book: https://people-first-growth.pubpub.org/. The platform she’s using looks interesting, and I wonder whether folks who are doing scrappy primary research might find it useful for publishing the results of their research: https://www.pubpub.org/about
Here are a few interesting visions for impact contributed via my post opt-in form:
- I help photographers, retouchers, and digital artist gain the confidence to tackle complicated problems in photoshop, reduce the time they spend in photoshop to make more money, and say yes to more of their clients’ requests.
- Catering: An enchased guest experience, Increased sales, loess waste and a more satisfying work environment!
- I wish to help my clients change and transform their inner limiting belief patterns that prevent them from moving forward.
To share your news, projects, and events, fill out this mercifully brief form and I’ll share the relevant ones back to this list: https://airtable.com/shrggV8bWtGa2JMxG
Keep building, keep taking risks y’all,