John Loeber

Apple and Consumer Choice

Much has been already said about what made Apple so wildly successful. Though there are many respects in which Apple did marginally better than its competitors, I believe Apple has two characteristics that are relatively unique:

Among Steve Jobs’ key realizations was that consumers fundamentally do not know what they want. The job of the product designer is not to bend to what the consumers think they want, but to create products that work better. In this way, Apple has historically dominated its industries by making aggressive, envelope-pushing design decisions, which were usually met by initial skepticism, but always won over the vast majority of users. From abandoning FireWire, the CD-drive, and Adobe Flash to creating a phone without buttons, Apple’s decisions have always been controversial, but entirely correct in hindsight. Apple has become an industry leader not by catering to the conscious wants of its customers, but by delivering products that improve their quality of life, thereby defining what the users want. This is the essence of leadership in design. As part of pushing the envelope, Apple crucially never gave its customers much choice in whether to come along. Apple’s product lineup has always been a minimal set of devices that represent the pinnacle of design, with no alternatives supporting outdated technologies. Consumer decision-making was curtailed to a stress-free minimum: buying an iPhone 5, your only choice was whether you wanted extra memory or not. Someone shopping at Apple could trust that they would get a state-of-the-art product, and decisions about what to buy were easy even for non-technical users: there were few options, clearly delineated by use-case (e.g. MacBook Air vs. MacBook Pro). Compare this to going to a generic phone store to buy an Android phone: there are hundreds of brands to choose from, the phones all have slightly different screen sizes and resolutions, some cameras have more megapixels but worse lenses, and they all differ in memory and processing power. To top it all off, every phone has some bizarre “special deal” with a carrier. There is no way that any consumer can make an optimal decision in this domain, and merely writing this paragraph is giving me decision-making anxiety. Windows computers are plagued by the same issue: an overwhelming abundance of options, most of which are garbage. This is a terrible consumer experience: less savvy users will pick a product that disappoints them, more savvy users will waste many hours trying to find the rare product that doesn’t suck.

At the time of writing, it is September 2017. The iPhone 8 has just launched, and the iPhone X is announced for October. By then, the following phones will be available for purchase:

iPhone SE

iPhone 6s/6s+

iPhone 7/7+

iPhone 8/8+

iPhone X

That’s eight different phones. They are marginally differentiated along a number of axes: they differ in physical size, camera quality, memory, shape, headphone jack inclusion, etc. With unclear product differences but considerable price differences, it feels harder to make a choice than it should be. This is unlike the Apple of years past. The veritable explosion of models can be gauged from this iPhone production timeline:

For the laptop line, we currently have the MacBook, MacBook Air, and MacBook Pro. The MacBook and MacBook Air are very similar product lines, essentially for the same use-case, so it’s surprising to see them offered concurrently. There’s a similar, but less convincing argument to be made for the two mid-size products currently offered in the iPad line.

There are two key takeaways from this observation:

Apple is offering more choice than before, which complicates the shopping experience for the consumer: the more options there are, the harder it is to pick the right one. By offering more of these options, Apple itself is showing that it’s having a hard time picking the right one. Historically, when Apple innovated on some design, that would be the only option going forward, and old iterations would be abandoned like the dead weight that they are. As such, I question why the iPhones 6s/6s+ are still being offered: [0] their processors and cameras are all two years old at this point, and they’re embarrassingly short on memory compared to the iPhone 8. In this instance, Apple is offering a clearly inferior product, and the only plausible explanation (other than neglectful product management) is that Apple is providing an option for hold-out consumers insistent on the headphone jack. This is out of character for Apple, and constitutes less confident design leadership than before.

Concerns about the present inform questions about the future. Some friends have suggested that the explosion in model lineup is likely to be met by a subsequent contraction or bifurcation, as has been the case for the MacBook. Apple skipping the number “9” between 8 and X suggests that the X represents a break from previous design philosophy. The notion that the iPhone may split into two separate lines seems plausible, though it’s not obvious how two lines of iPhone would be differentiated by anything other than physical size. It’s also possible that the iPhone X would act as a consolidator: with the physical size of the iPhone 8 and the screen size of the 8+, it seems like the best of both worlds.

Another past trend worth looking at is the iPod: as it matured over the course of the years, the breadth of available models exploded. There were five different lines: classic, mini, nano, shuffle, and touch, with many generations and special editions for each. However, they were never really consolidated: the iPhone obsoleted all of them at once. In this case, it’s hard to see the iPhone lineup being obsoleted by some new device any time soon. [1] As such, I note that Apple has no experience in recent history consolidating a manifold product line into a handful of core models. Granted, this seems to be exceedingly difficult in general — few brands do this well, if at all.

Looking at the iPhone’s current lineup, no definite conclusions can be drawn just yet. Apple’s in an interesting position, and there is much to be learned as we watch Apple manage this product over the next few years.

Similar questions could be raised about the iPhone SE, since it’s a design holdout from the iPhone 5 era. However, it was released in 2016 and it’s a down-market product, so it makes sense that it hasn’t been retired just yet.

Famous last words.