How Apple solved the biggest problem of aging businesses

Story image for Apple from Yahoo Finance

No technology firm has solved the problem of aging—losing relevance. As a luxury brand, Apple is the first technology company to have a shot at multigenerational success.

Apple did not start as a luxury brand. It was the best house in a shitty neighborhood, tech hardware. A world of cables, geekware, acronyms, and low margins.

In the early days, Apple simply made a more intuitive computer than its competitors. Steve Jobs’s notions about elegant packaging only appealed to a minority of customers; it was Steve Wozniak’s architecture that drew the rest. Back then, the company appealed largely to consumers’ brains. Many early Apple lovers were geeks (which did nothing for its sex appeal). Apple, to its credit, gazed across the tracks at luxury town and thought: Why not? Why can’t we be the best house in the best neighborhood?

In the 1980s, the company declined. Machines running Microsoft Windows with Intel chips were faster and cheaper and began to win over the rational organ (the brain). Word and Excel became global standards. You could play most games on the Intel computers, not Apple’s. This was when Apple began its move down the torso, from the brain to the heart and genitals—and just in time: the company was destined to sink below 10 percent market share from over 90 percent.

The Apple Macintosh computer, launched in 1984, had attractive icons and a personalized look that appealed to the heart. A computer, it turned out, could be friendly. It talked—at its introduction the computer famously wrote “Hello” on its screen. Artists could express themselves on the Mac, create beauty, and change the world. Then the big breakthrough: desktop publishing. Adobe software was uniquely suited to the Mac’s precise, bitmapped display.

Owning an Apple, as embodied in the infamous “1984” commercial, reinforced our belief that Apple users were NOT another brick in the wall.16 The result was that I, and the employees of my startups, struggled through two decades of underpowered and overpriced products just so we could claim we were thinking differently.

But it wasn’t sexy. Most people back then didn’t go anywhere with their computers. They put them in computer rooms. And dragging a potential mate in there to show off some hardware wasn’t practical or romantic.

To become a true luxury item, the computer would need to shrink, learn new tricks, be more beautiful, and be in, near, or on your person to signal success to peers in public and private. The transformation began with the iPod, a glossy white block the size of a deck of cards that placed an entire music library in your pocket.

Among other mp3 players, all of them awkward gray, navy, and black, the iPod was also a technological miracle—5GB of memory vs. the second largest competitor, Toshiba’s 128MB. Apple searched the electronics industry to find a company willing to make a disk drive so tiny, almost jewel-like.

Eventually, Apple would drop “computer” from its corporate name in recognition that the concept of the computer was anchored in the past. The future would be about stuff, from music to phones, powered by computers. The customer could carry these branded products around, even wear them. Apple began its march toward luxury.