The Street: Features can't sway Apple customers' trust

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Jason Schwarz over at TheStreet has written an article analyzing Apple's current position in the marketplace and what Apple's competition needs to do in order to catch up.

The article focuses mostly on Apple's iPhone/iPod + iTunes ecosystem, which isn't surprising. Though Mac sales bring in a fair amount of cash to the company, Apple's handheld market is the company's most current success story, and everyone from Microsoft to Palm to Google has spent the past several years trying (and failing) to duplicate that success.

Schwarz notes that Steve Jobs's recent claim that, "We see no signs of the competition catching up anytime soon," doesn't necessarily apply to the feature set of the iPhone or its integration with iTunes, but rather Apple's financial success and brand impression. He has a point. Recent ads have been trying to sell the Droid on its feature set, telling us all the things that Sega does that Nintendon't - er, I mean, all the things Droid does that the iPhone doesn't, but trying to sell the Droid on features hasn't exactly toppled the iPhone's dominance quite yet, and all indications are that the Nexus One isn't likely to take a big chunk out of Apple's smartphone sales, either.

Schwarz argues that more and/or better features don't mean a thing if the public has a poor impression of your product. For supporting evidence, look no farther than Windows Vista. Vista may or may not have deserved all the rabid criticism it received, but even if it had been the best thing to ever come out of Redmond, the damage to its reputation sealed its fate in consumers' minds. Meanwhile, Schwarz writes that "Apple currently holds a monopoly on brand trust," a claim borne out in numerous consumer satisfaction surveys. Google's phones may not have a Vista-esque reputation, but they definitely have a very long way to go before they can approach the success of the iPhone in either marketshare or mindshare.

All of that having been said, even though Apple finds itself at the top of the music player market and within spitting distance of the top of the smartphone market (not to mention atop a gargantuan heap of cash), all it takes is one botched product to tarnish a formerly sterling reputation. That's why I feel a slight trepidation about Apple's supposedly forthcoming iSlate. Pundits the world over have been hyping this product and claiming it'll be the Next Big Thing, that it'll revolutionize the industry the same way the iPod and iPhone did for their respective markets. For Apple's sake, I hope they're right, because if the iSlate bombs, there's every chance Apple could experience the inverse of the vaunted "halo effect" that brought increased Mac sales thanks to positive impressions of the iPod.

Brand loyalty is indeed crucial to Apple's success. It is for any company, of course, but in Apple's case, where it sells its entire product line as a tightly integrated ecosystem of products, it becomes even more critical. It seems highly unlikely that any of Apple's competitors will catch up to or surpass Apple's success in the near term on their own merits, in which case Apple's only real threat to continued prosperity is Apple itself. It's had a spectacular run over the past decade, but if Apple stumbles now, the company has no one but itself to blame.
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