When the Going Gets Tough, The Tough Get an Apple

Oct.22.09 | About: Apple Inc. (AAPL)

I've been ruminating the past few days on why Apple (NASDAQ:AAPL) is doing so well with it's pricey high-end products and services during a recession. The answer came as I was reading Wednesday's New York Times column by Thomas Friedman, whom I deeply admire and read anything and everything he puts out.

Friedman points out that the winners in today's fast-shifting U.S. job market are the ones demonstrating "entrepreneurship, innovation and creativity." He says, "They are the new untouchables," in contrast to other still highly educated but less creative types.

Friedman cites Harvard University labor expert Lawrence Katz, who explains in the column that the now disadvantaged are "those engineers and programmers working on more routine tasks and not actively engaged in developing new ideas or recombining existing technologies or thinking about what new customers want. ... They’ve been much more exposed to global competitors that make them easily substitutable.”

They are also more likely to be using personal computers with nine-year-old operating systems, with little choice but to take what their companies provide in terms of personal productivity IT. They are the 90 percent for whom good enough IT has made them as good as anyone anywhere.

In contrast, it's the "top half" of the labor pool, and more specifically the apparent 10 percent that are "entrepreneurship, innovation and creativity"-focused among them, that know to succeed and win they need the very best computer and associated services, even if it costs $500 more. Nowadays there's no better way to gain an advantage in business and life than to have the best technology.

The people who are succeeding are buying Macs, iPhones, iPod Touches and Apple's services and applications. A flight to quality is usually spurred by disruption and uncertainty. It's not about brand religion or pretty graphics. It's about survival and success when the going gets tough. It works for me, it has to.

A chef doesn't buy the cheapest knifes. A painter doesn't buy the cheapest brushes. A carpenter doesn't buy the cheapest hammer. And all the winners in the economy today -- those that have a say in what they use to do all the digital things so critical now to almost any knowledge- and services-based job -- need the best tools. And they will upgrade those tools just as fast as they can (hence the rapid adoption of Apple's Snow Leopard OS X upgrade in recent months).

So for all those millions of newly laid off workers who know that "entrepreneurship, innovation and creativity" is their only ticket to a new, fresh start -- those that no longer have an IT department to tell them what to do (at lowest cost) -- they seem to be making a new move to a Mac. I expect they won't soon go back, once they taste the fruits of heightened knowledge productivity.

Because when failure is not an option, you have to have the best tools, especially when the going gets tough. The sad part is that Apple does so well when so many are not.