Three key elements of Apple's product strategy

Apple Inc. is one of the world's most valuable companies. Its name is synonymous with beautiful hardware products, so it’s no surprise that it’s held up as a paragon of product strategy. The company's decades-long focus on innovation, design, and user experience has resulted in a loyal customer base and a portfolio of highly successful products. Its well-executed product strategy has kept it driving growth and market dominance. Let’s talk about those three aspects.

DESIGN

Design and user experience are central to Apple's product strategy and always have been. The company is known for its sleek, intuitive, high quality and user-friendly products that prioritize simplicity and functionality. This focus on design has helped Apple differentiate itself from competitors, command premium price and changed user expectations for tech products across the board.

Design is more than just prettification. A study by the Design Management Institute found that companies that prioritize design significantly outperform their peers on the S&P 500 index. For Apple, design, and focusing on helping groups of users who love design (i.e. designers) helped its computers move out of the stodgy world of word processing and number crunching to become tools synonymous with creativity.

Meanwhile, entire companies producing boxy grey PCs – all running on Windows – rose and fell as they tried to compete on cost and ever thinner marginal performance differentiations. Remember Gatweay? Remember Hewlett Packard? Compaq?

Apple’s most timeless products get iterated on and continue to define the design landscape of their product suite, like the Macbook or the iPhone. Apple's less ensuring designs are relegated to niche nostalgia sites, and the scrapheap.

INNOVATION

One of the cornerstones of Apple's product strategy is its emphasis on innovation. More than 40 years ago, Apple brought the mouse to the fore as a way of interacting with computers, rather than following the trend of adding more and more special keys to keyboards. The company has a long track record of introducing groundbreaking products that revolutionize entire industries. 

The launch of the iPhone in 2007 is a prime example. The iPhone not only redefined the smartphone market, moving the world away from keypads to touchscreens, but also create the appstore environment that laid the foundation for Apple's future growth. According to a report by Statista, Apple's iPhone revenue grew from $6.7 billion in 2008 to a staggering $142.4 billion in 2020, accounting for a significant portion of the company's total revenue [1].

USER EXPERIENCE

The iPhone paved the way for Apple's product strategy of creating and owning an ecosystem of products and services designed to work together seamlessly, providing users with a low-friction, integrated experience.

The company's products include the iPhone, iPad, Mac, and have extended to the Apple Watch, AirPods, Apple TV and Carplay, meaning that Apple has moved out of the office and into the rest of the home, always with similar, familiar, user interface elements.

This ecosystem approach encourages customers to stay within the Apple universe, driving long-term growth. Apple's services revenue, which includes offerings like Apple Music, Apple TV+, and iCloud, reached an all-time high of $24.8 billion for the financial year ended September 2023.

Integration with products across the ecosystem has worked well for products like AirPods, which alone drove more than $12bn in revenue in 2021.

Apple's product strategy involves a disciplined approach to product development and release cycles. The company typically introduces new versions of its core products, such as the iPhone and iPad, on an annual basis, creating a sense of anticipation and excitement among customers. This approach not only helps maintain customer loyalty but also drives a consistent stream of revenue growth. 

THE TAKEAWAY:

• Apple has adhered to strict principles of quality and design throughout its history, allowing it command a premium and create an airgap of perceived value and quality between it and other brands

• Apple decided that it would continuously innovate, priming users for regular, scheduled upgrades of hardware and operating systems - with the result that Apple users are always ready to buy a new version.

• Apple rarely thinks about products in isolation. Everything has to work in concert. Each part strengthens the whole.

GO DEEPER:

• Read about Apple's design team and their processes.