The Manolo Blahnik of computers

How does Apple sustain a business ? a business that even makes a profit occasionally ? on a market share of less than 3% (so low, in fact, that it just fell off the bottom of the list of the top five suppliers)? I’ve been thinking about this for ages. Consumer brands (and Apple is a consumer brand) with market share below, say, 20%, are irrelevant, invariably destined for oblivion – and the smaller the percentage, the quicker the death – vicious circles and all that.

So how does Apple do it? Well it’s obvious when you think about it: Apple is a consumer brand all right, but it’s a luxury consumer brand. Hold on, I hear you say, even luxury brands with 3% market share are doomed, aren’t they? Yes, you’re right. Anyone with an ‘O’ level in business studies will tell you that 3% is never enough. But Apple is not doomed. And the reason is that there is no luxury computer category. if there were, Apple would own at least 90% of it and, finally, its market share would match its extraordinary mind share. Apple is the Manolo Blahnik of computers.

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  1. Well said. That’s obviously the answer to a question that’s been puzzling me all week.

    Yet why do journalists suspend their normal scepticism when it comes to Steve Jobs and Apple?

    Great website (can’t make the Trackback link work…)

  2. The point is not to compare Apple to PC-manufacturers – it’s not comparing like-to-like – so it stops being a question of market share but simply one of scale.

  3. I think you’re right: Apple is a luxury consumer brand, and it is not doomed, at least in the short term. But it is not succeeding on a three percent market share – it’s losing money, and can’t allow the share to fall much further. There are too many high fixed costs in the business – not least the estimated ?100m p/a it takes to maintain the OS, and the startup costs of a retail chain – to allow share to fall much further.

  4. i love apples, but nothing, i mean nothing can be compared to manolo blahnik!

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