Conflict of Interests Between Apple and Consumers?

Lots of people think there is a conflict of interests between businesses like Apple and consumers. They think it is in the business’s interest to make their products go obsolete quickly, which is counter to the consumer’s interest. This is mistaken. Let’s look at a quote from a recent article by Daniel Eran Dilger at AppleInsider.

For Apple, the more existing iPhones it can keep in active use, the larger the addressable market it can count on to buy upgrades each year. Counterintuitively, rather than making its older phones break early, Apple wants to keep them working, so that even refurbished trade-ins and hand-me-downs keep serving someone with a potential to upgrade to a new iPhone someday in the future.

Existing iPhone users are far less likely to leave iOS because Apple keeps working to make its platform an attractive place to stay. Unlike Android, Apple is cultivating a rich ecosystem, not just the barest compatibility API for running shared software across the device outputs of various Chinese factories.

Lots of people seem to think the only strategy for capitalist companies is short term profit by means of sketchy strategies like crappy build quality and planned obsolescence. But that’s just not true.

Businesses need to satisfy consumers’ preferences if they want to be profitable. They need to offer customers value. The more value they offer, the more consumers will be willing to pay. This is the context every business operates in.

If your thing isn’t as nice or doesn’t work well or doesn’t do as much stuff as another thing, people aren’t willing to pay as much for it (see prices for Kindle Fire tablets vs iPads). So that means if you build relatively nicer stuff, you can charge more than your competitors.

If your thing breaks quickly, people can’t resell it or give it as a hand-me-down. Things like resalability or sufficient durability for hand-me-down purposes are values which increase the price people are willing to pay up front. And as Daniel Eran Dilger says above, long-lasting products can create the possibility of further customers down the line from one product.

Building low-quality crap that is designed to go obsolete quickly is a low profit strategy. You are offering lower value to consumers. Even if you lie and fool some people initially, people will find out, especially nowadays with things like Amazon reviews. And they will accordingly pay less.

A better, more-long-range strategy is to build nice things that work well, that people like, and that they are willing to pay lots of money for. It’s not easy — it can involve things like being an innovator, spending money on R&D, having good ideas about design, pro-actively solving problems consumers don’t even know they have, and being good at things like inventory management and marketing. So like I said, it’s not easy — but it is very profitable.

Apple sees how making a good product that lasts a long time is more profitable long-term: a long-lasting phone satisfies the first owner, making them more likely to get upgrades (which may be more expensive) and can also bring subsequent owners of a particular phone into the Apple ecosystem.

Apple isn’t engaged in range-of-the-moment thinking where they try to sacrifice customer satisfaction tomorrow for some more profit today. They recognize that being a profitable company requires planning for the long range. Apple acts rationally, and sees that there is no conflict of interest between them and their customers.

Leave a Reply

Your email address will not be published. Required fields are marked *