TMCnet News
Love it or loathe it, Apple keeps customers happy - and paying a little more each year(Observer (UK) Via Acquire Media NewsEdge) Does the wisdom of crowds apply to Apple? Because there is a large crowd of people who hate it. But usually with American companies that make huge amounts of money - such as mobile carriers or TV companies - the hatred comes from their own customers. In contrast, Apple's growing customer base seems to love it; it is the people who are not customers that don't. Apple's formula sounds simple: keep people happy to pay a premium. But it is a trick that is far from simple to pull off. Last week it announced two new phones in larger sizes: a 5.5in "phablet", the iPhone 6 Plus, which looks tailored to the Asian market, and a smaller 4.7in phone whose size finally catches up with what rival makers have offered for years. The smartphone market might seem played out: ownership is at more than 70% and growth at the premium pounds 400+ end has slowed down; most growth is in the sub-pounds 150 market. Samsung smartphone shipments dipped in the second quarter and the Korean firm's top-end phones aren't grabbing the world as they once did. Yet Apple, whose phones all cost more than pounds 300 (even last year's plastic iPhone 5C is pounds 319), expects the "mother of all upgrades" in the coming four months as people who have held on to older iPhones switch to the new, larger ones. Some analysts even think it could challenge Samsung for smartphone sales leadership over Christmas. How? First, Apple drip-feeds improvements just enough to incentivise some customers, while keeping the rest happy with software updates (where it keeps longstanding customers far better served than Google's Android). Secondly, it has built a powerful ecosystem of app makers who, in the west, build for the iPhone first, Android second. Even while Android phones make up the majority of worldwide sales, Apple's customer loyalty is strong - though data seen by the Observer suggests it has weakened in the past year, perhaps because bigger phones have been slow in coming. Now the new handsets aim to tempt high-end Android owners over and capture a new chunk of the premium sector. Apple simply isn't interested in fighting for the cheap end of the market. The least visible aspect of the whole affair might be the biggest, though. For years, mobile payments - that is, using smartphones as real-life mobile wallets - have slumbered in the west. Google Wallet has been around since 2011, but gained little notice. But a series of high-profile hacks of US retailers' credit card records - 40m at Target last December, at least as many at Home Depot last month, 130m at Heartland in 2008, 94m at TJX in 2005 - have finally persuaded US banks and retailers to adopt the chip and pin system. Millions of US retail outlets will have to upgrade their point-of-sale terminals. And while they're doing that, they might as well add "tap to pay" functionality. Enter Apple, adding that functionality in its new iPhones and negotiating with Amex, Mastercard and Visa for a lower fee per transaction on the basis that it pays the fraud risk for iPhone transactions. Each payment, validated by the fingerprint reader on the phone, creates a one-time code that's useless to hackers even if they capture it, as it doesn't contain the credit card number. Only the receiving bank can decode and verify the transaction. Apple is also emphasising privacy: it won't know or record what or where or who you pay. In a climate fearful of surveillance, it's a neat little fillip, a bonus for buying those shiny phones - or the Apple Watch, which will also feature tap-to-pay. For Apple, it's more money in the bank. And that pattern repeats each year. Perhaps the crowd isn't that wise after all. (c) 2014 Guardian Newspapers Limited. |