Hi Jezra, thanks for the tip to the New Yorker article. I read it with interest.
It touches a spot in my professional past. My first career was in the ballpoint pen business, beginning around 1970. My dad was in it before me, starting in 1947, so I sort of grew up in the business. My Dad's company was a non-branded manufacturer of pens sold as advertising specialties, today called promotional products. In the 1950's there were few retail brand names in the low-price category. Brands like Parker, Sheaffer, and A.T. Cross were the high-end "jewelry" gifts and names like Scripto and Paper Mate were the popular affordable stationery brands ... but nothing was sold retail for under a dollar. Scripto bought my Dad's company in 1958 and kept it running for 20 years as a private label subsidiary.
My Dad saw the Bic phenomenon in England in 1961 and tried to urge Scripto to awaken to the market rival before Bic bought Waterman to enter the US market. Scripto was content with their $1.59 product and refused to put their famous name on something so low-priced. My Dad urged them to use his factory to create a new retail brand name for inexpensive pens but Scripto stubbornly declared that Americans would never settle for a 19¢ product.
To be sure, the early Bic products were inferior to high quality fountain pens or even the good-quality ballpoints. But on television, American consumers saw Bic pens fastened to ice skates and subjected to other destructive punishment like being shot through plywood … and they still wrote. (Of course the TV viewer didn't see how a minute later, the same pen also leaked ink everywhere.) Paper Mate countered with TV ads and Art Linkletter showing how their pens could write on butter or under water, and Americans responded by buying Bic and Paper Mate pens while the Scripto brand faded into oblivion.
Today, nobody under the age of 50 even remembers that the brand name they see on barbecue/fireplace lighters was once the most popular writing instrument brand in America. Meanwhile, the Bic and Paper Mate brands have increased their quality and now dominate the stationery market with only a few foreign competitors.
I think Apple has sometimes been able to avoid being disrupted by being the disruptor themselves. The consumer loyalty to the Apple brand has kept customers interested in whatever new item Apple introduces, even if it displaces a product line that Apple previously relied on. Look at each successive generation of iMacs,for example. We've seen the X-Serve come and go. We're now on the 6th generation of the iPod Nano, which has gotten smaller, then bigger, then smaller again.
But the one thing that has always sustained the company when its products commanded a slightly higher price is the quality and user satisfaction.
I have always wondered why the same people who would brag about how much money they spent on a vacation or a stereo or a fur coat or a bottle of wine will also brag about how much money they saved on their computer purchase. I was a guest at the home of someone in the Bay Area where there were 3 Porsches in the garage. When the owner asked me what I do for a living and I said graphic design, he said: "Oh, you probably have a Mac." I asked, "Is there something wrong with that?" He said he would never use a product that has only a 50% market share, so I responded: "Yes, I know what you mean. That's why I drive a Plymouth, not a Porsche"
People will always pay more for quality. Bang & Olufsen has no problem selling all the units it can produce. Hyatt Regency hotels commanded a higher price and had higher occupancy rates because the customer experience was worth the price. When airlines found that they could sell more business class tickets by giving more value, they added more seats and enlarged the business class cabin.
I just hope that there is a next-generation at Apple that is not so insulated from its customers that it fails to see itself in the mirror.