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Åsa Stenström
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I'm a curious multi-consultant in the area of communication. I live and work on Gotland, the biggest Swedish island, right in the middle of the Baltic Sea.
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  • Why Do People Buy Apple? 12 comments
    Jul 22, 2014 3:59 AM | about stocks: AAPL

    Seeking Alpha is full of articles about numbers, which is natural since this is a financial forum. When the article is about Apple you also see a lot of technical features, which of course is because Apple sell technical devices. The assumption is often that "the more technical features, the more devices people will buy". Then some Android fan-person will use the argument "Apple lacks in innovation" and the ones that like Apple will for sure remind everyone of how amazing Apple is, how many new innovations that have been announced and how many more there is to come. The last kind of comment will usually be about Apple's eco-system.

    We seldom talk about the process of buying: why do people end up buying Apple devices? How do they learn about Apple? What makes them curious? What is the final push that makes them buy their first Apple device?

    When we look at customer loyalty, Apple's customers are truly loyal and almost everyone wants to buy an Apple device the next time. This is mostly thought of as a way to get the number of persons that will buy another device from Apple. As far as I can see we seldom talk about the importance of every loyal customer when it comes to how they actually sell Apple every time they say something good about their Apple devices and when they use their devices among others.

    Every person that is satisfied with a device, in fact so happy about it that they know that they will continue to buy from that brand, is probably also proud over the decision to buy from that brand and - here is the best part - will volunteer to work as an ambassador for the brand and sometimes even a sales person. Who can be better at selling Apple devices than a happy Apple user?

    So, customer loyalty is not just about the current customers continuing to buy more of a certain brand, it's also about inspiring and talking to others who in many cases, end up buying the same brand. Loyal customers will bring in more customers.

    Another important factor is: who are using Apple devices? For young people it's a lot about the hotness factor - if their peers use it, then they want it too. Also, if the right celebrities use it, then they want to use it too. Adults might be affected in the same way, but add the fact that a lot of highly valued people, people that is considered to make smart decisions, use Apple: teachers, scientists, pilots, doctors - and in fact, every time a patient sees a doctor using an iPad, the doctor will also be like an ambassador and sales person.

    Now we know that high valued brands of cars have decided to add CarPlay to their cars, which gives people another reason to buy Apple iPads and it also means that now we don't only have to consider the fact that Mac computers, iPhones, iPads and iPods synchronize information with the help of iCloud - now we also have to add cars in that group of things that works well together. Oh, and then all the new tech systems for your home that can be supervised by an iPhone and all the health devices that talks to your iPhone and iPad…

    Apple has built up an incredible infrastructure for technical devices that talk to each other and of course, it's not only Apple that is involved in this development, you can get a lot of it from Windows and Android, but the more important role that tech plays in our life, the bigger is the need to trust your devices. The risk of buying the wrong devices gets higher for every day. Long before the iPhone entered the arena, computer security was an issue and many bought Apple partly because they didn't want viruses and malware. When your iPhone knows everything about your bank accounts, your investments, your travels, your house and your health - then security becomes more important. We trust our lives to those small, shiny devices and that's why the feeling of using a secure device gets more important for every day and also the feeling of understanding the device.

    Apple devices are made to be easy to use and all the devices works smoothly together. Apple is the guarantee that your devices will work together. When you buy smartphones, tablets and computers from other brands, there's no such guarantee. You have to keep your fingers crossed and make a wish that things will work together and if they don't, you can only blame yourself - because there's no one else that will take responsibility.

    Oh yes, sometimes not even Apple devices work as smoothly as we expect, but then we trust Apple to fix it. Actually, we expect so much from Apple. I have seen persons who bought their first iPhone that actually expects "magic" to happen, because "this is an Apple device, then I should be able to do this".

    My point is: humans buy Apple devices, not numbers. Considering that technology makes up such an important part of ours lives today, the decision of what device to buy is not just only a matter of this and that technical feature, it's a matter of fitting into the big system of things. I think that Apple is the leading actor in this new tech infrastructure and it will take a whole lot more than a couple of tech features to rock the boat and make people ditch their Apple devices for something else and as long as they keep on buying Apple, they will continue to be "ambassadors and sales persons" that keep on inspiring and motivating others to buy their first Apple device.

    As long as I see this happen, I will remain long AAPL. I expect that something will rock Apple's boat in the future, but it will take a lot to challenge such a dominating actor as Apple. You can't really compete with just a "new fantastic device" to challenge the tech infrastructure that Apple has created.

    And yes, this blogpost doesn't contain a single number, because sometimes we might have to think in other ways when we talk about the stock market.

    Disclosure: The author is long AAPL.

    Additional disclosure: I am a market communicator and cares a lot about human behavior. That's why I became interested in Apple in the first place, back in 1989, and as far as I can tell, both Apple users and shareholders are humans too. So I try to put in a more human perspective in this world of numbers.

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  • Anyoption
    , contributor
    Comments (585) | Send Message
     
    Very interesting. While I prefer Android, I do believe in your additional disclosure that there needs to be a human element in all of these analyses. Some writers here get so technical bordering on irrational.
    22 Jul 2014, 06:57 AM Reply Like
  • Åsa Stenström
    , contributor
    Comments (225) | Send Message
     
    Author’s reply » Thank you! Yes, I believe that humans buy Android too actually!
    22 Jul 2014, 09:55 AM Reply Like
  • inside man 55
    , contributor
    Comments (835) | Send Message
     
    Hi Åsa, nice blog. Let me share some of the human reasons why I bought all the Apple products I have own.

     

    iPod Touch - This was our first Apple product. I gave it as a gift to my wife. I was attracted by the sleekness of the product and was just curious about Apple's mystique. Later, it served well as a music player before we had streaming radio until my daughter poured soda on it.

     

    Mac Mini - I had an HP laptop, failed horribly in two years due to poor build quality or Windows problems. We were living in an apartment at the time and didn't have much space. I liked the compactness of the Mini, how powerful it was, and how little power it used. To pack all that technology into a small form factor was amazing at the time (5 years ago).

     

    iPhone - My wife got an iPhone two years ago. I resisted because the iPhone was tiny, I wanted a big screen, large battery, and good camera. So I decided to be a contrarian and got a Windows Phone. I like it, but I am missing numerous apps available to my wife (like Seeking Alpha). Apple products also have a larger ecosystem for cases and covers, which Windows Phone will never get. iCloud backup of photos makes things so easy. Safari integration into iCloud makes it a breeze to open secure websites without entering passwords all over again.

     

    iPad - We got an iPad last Thanksgiving. My wife convinced me that a lot of the educational apps for young kids are only available on iOS devices. Then the old iPad mini went on sale with a $100 gift card if you bought one. Sold! My daughter loves it. Now we can load it up with her favorite shows and games and take it on the road.

     

    Here are some of the reasons I am looking forward to moving towards more Apple devices. Continuity is a big one. I know I could have used Continuity earlier to transfer items back and forth from my phone and computer. Now I have to resort to handwritten notes, or typed notes on my phone, or re-entering the information. Another reason is cheaper, more plentiful, better integrated iCloud. It just makes it easier to store photos and documents. Once I make the switch to a new iPhone I can use FaceTime to keep in touch with my wife and relatives. In my experience it works much better than Skype. Last, I know the new family sharing will make things easier for my family to use and for me to keep track of as my kids grow older.
    22 Jul 2014, 01:50 PM Reply Like
  • Åsa Stenström
    , contributor
    Comments (225) | Send Message
     
    Author’s reply » Thanks for your comment inside man 55!
    I think your comment point at the fact that when the devices works smoothly, we focus more on the content with apps, music and movies. We download it, sometimes we pay for it and we expect it to be available from any of our devices. The same goes for the content that we create: notes, mind maps, drawings, photos, texts, keynotes and spread sheets… When the system doesn't work, we have to spend time and energy on fixing it and I don't think that I'm the only one that doesn't like to spend my time and energy on fixing things that should work.

     

    So, we expect Apple to be good at handling our content and when we get the hang of it, we are not so interested in changing from the Apple system to something else. We have invested our time in Apple. They really have to disappoint us a lot before we take the decision to move to another system. So far I have been a happy Apple user since 1989…
    22 Jul 2014, 02:10 PM Reply Like
  • inside man 55
    , contributor
    Comments (835) | Send Message
     
    You are welcome! Thanks for hosting this discussion! Correct, when things work smoothly we can use the device as intended rather than troubleshooting. That saves us time and aggravation. The problem is so many devices have poor quality, or poor support, or poor integration, or poor re-sale value. Apple products stand out like a beacon to those that want their devices to do as they say so they can enjoy their life. You are not the only one, it is one of my big peeves that companies are focused on profits (that's good) at the expense of ease of use, service, and reliability (that's bad).

     

    I am also drawn to Apple because of their commitment to leaving the earth better than they found it, sanctity of human rights, and reducing their environmental impact (which is also good for their profits and image).

     

    Correct, at this point the usability, the reliability, the commitment to technology, the integration among devices, advanced project management, concern for others and the drive for perfection would all have to fail in short order for me to leave Apple. And if I did, what then? Everyone else is bumbling along. I hope that doesn't happen, that would be like a technology dark age. I haven't been an Apple user for as long as you (I was a skeptic for a very long time), I have been using Apple products since 2009.
    22 Jul 2014, 02:34 PM Reply Like
  • Åsa Stenström
    , contributor
    Comments (225) | Send Message
     
    Author’s reply » Oh, and now you add another aspect of what we humans like: we like to be part of something good. Human rights and reducing their environmental impact might have been something that ”extreme people” looked for 10 years ago, but today it's part of what we generally expect from decent companies. We want to be proud over not only the products but also over the company behind them.

     

    I think that Tim Cook does a great job!
    22 Jul 2014, 02:44 PM Reply Like
  • cgoldman2895
    , contributor
    Comments (5) | Send Message
     
    Expectations for Apple's earnings at 5 PM EST? Will we see the stock surge? Opinions
    22 Jul 2014, 02:51 PM Reply Like
  • Åsa Stenström
    , contributor
    Comments (225) | Send Message
     
    Author’s reply » cgoldman2895, I was going to make a reply on your company yesterday, but there was an ”internal error” every time I tried and now we all know about Apple's earnings.

     

    I think that the announced earnings are pretty good, but that even better times will come during the second half of the year. There are a couple of exciting products to come and also new iOS and OS. iPad will probably keep expanding their market in schools and the deal with IBM will begin to give some financial results too. Then we have China too, Apple has only begun to work on that market.

     

    Will the stock surge? If everyone thought like me, then yes – but I have learned that investors think in mysterious ways and have incredible expectations from Apple, so I think the big surge will come later this year, but I think it will come.
    23 Jul 2014, 02:36 AM Reply Like
  • inside man 55
    , contributor
    Comments (835) | Send Message
     
    Spot on. I will add that the Genius Bar is a unique draw. Having help available if you need it, from a company not trying to sell you some add on you don't need, I think that engenders trust.

     

    I also think Mr. Cook has done a great job. It is not easy to step into such a prominent role after having a famous founder depart. I am very excited at how they are able to keep so many things going at once along with having so many opportunities to grow available to tap into. The integration of OS X and iOS, the deal with IBM, the acquisition of Beats, third party extensions, all would not have happened with Mr. Jobs. He is putting his own unique spin on the company while preserving what makes Apple great.
    22 Jul 2014, 02:53 PM Reply Like
  • inside man 55
    , contributor
    Comments (835) | Send Message
     
    @cgoldman I personally expect a great quarter and lousy forward guidance. I don't know why, too much optimism and too many high expectations from funds, analysts, and the general public. I expect the stock to go down after earnings.

     

    I do believe that whatever would profit me the most on earnings day the opposite will happen. Not sure why I have that feeling. I am prepared to buy if it dips strongly lower as the next year I expect Apple to move strongly up.
    22 Jul 2014, 03:22 PM Reply Like
  • CandleFlight
    , contributor
    Comments (302) | Send Message
     
    Thank you for your thoughtful article. While I'm typing this on an iPad, there are also Windows computers, 1 Android book reader, an iPod, and my woman friend's Mac laptop and iPhone. Oh, and there is a Garman GPS used in flying with its own OS. All of these function, and at the time of purchase were leading edge products.

     

    There is a comfort level instilled by the Apple products that doesn't seem to carry over to the Windows machines. I think this comes from what I think of as a "quick and dirty" approach to the Microsoft environment.

     

    For example, Microsoft recently came out with a line of products called the Surface. They apparently gave these to Delta Airlines either for free or at a rock-bottom price. As part of this deal, Delta agreed that the Windows Surface would be the standard electronic flight bag component, and others were not allowed to be used in the cockpit. Microsoft made a commercial making it look as if Delta was one happy family of pilots using the surface for such things as filing and checking weather forecasts and such. In fact, Delta pilots started a blog about how their dysfunctional management was making them use Surface tablets instead of the more application rich and reliable iPads that they had grown to love on their own dime.

     

    The bottom line in this case is comfort level, and that derives from what some call an ecosystem. Microsoft has done many things very well, but they have also shown a willingness to introduce product that they would have to know is crap. All you have to do is try typing on a Surface keyboard to know it doesn't even begin to come close to being their claim of a "laptop replacement". I think Apple has been much better in this regard, but certainly aren't perfect (such as the iPhone antenna problem and problematic mapping software) either.
    28 Jul 2014, 10:04 AM Reply Like
  • Åsa Stenström
    , contributor
    Comments (225) | Send Message
     
    Author’s reply » CandleFlight, this was interesting information! Both fun and sad. I can give an example of a media company that made a deal with the mobile carrier to let all their staff use HTC smartphones. They didn't start a blog to share their complaints, but every time they were among other people and had to use their HTC smartphone, they made excuses and blamed their management that they didn't have iPhones.

     

    It happens that people call their smartphones and tablets for iPhones and iPads, even if they have another brand. As long as they continue to do that, Apple is the most wanted brand.
    28 Jul 2014, 11:37 AM Reply Like
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