The eight secrets that make Apple No. 1

How to succeed in consumer electronics (without really trying)

Look at the iPhone. Or OS X. Or any other product area. The experience of going into an Apple store provides a relief from product variation overload. You can pretty much try every product in the store in 30 minutes, not including content and accessories.

Microsoft should have learned this secret in January. Vista came in so many versions that online experts had to publish tables to explain what was for sale. Consumers still have no clue about the differences between the various versions. Buying Vista isn't a thrill. It's a homework assignment.

Let me make this extremely clear for all you companies out there that still don't get it: All these subtle product variations create anxiety. And anxiety makes people not want your product. Fewer is better.

Secret 3: The experience is the product

Everyone knows this secret, but few actually employ it. But Apple is dead serious about this secret, even to the point of offering US$35,000 to the city of Montreal to remove three parking meters in front of the Apple store there. The city refused, but this is how seriously Apple takes the Apple "experience."

Another example is Apple's packaging. The company's products come in beautifully designed packaging with obviously expensive packaging materials and manuals. Compare that with Apple's competitors, which see packaging as a place to save money or as an afterthought that doesn't matter.

Why raise the price a few dollars and sell something in a better box? Because the box is part of the experience, and the experience is the product.

Secret 4: The product is the product

The bigger companies get, the less energy they seem to spend on creating great products. Instead, whenever the CEOs of most computer and consumer electronics companies speak in public, they blather on about alliances, services, improvements in the sales channel and other things buyers don't care about. Apple CEO Steve Jobs talks about the actual products above all.

One of the weird things about buying a cell phone is carriers are clearly more interested in selling you plans, options and reliability. The physical handsets seem to be an afterthought. But consumers are crying out for better handsets, and the carriers don't seem to notice. Apple does notice.

Secret 5: You can't please everyone, so please people with good taste

Every major company performs many kinds of market research to find out who the buyers are and what they want. But one problem with market research is that people are inaccurate sources of information about their own buying behavior. And that is often reflected in the products these companies offer.

Say you offer survey respondents a choice between Product A and Product B. Both have identical functionality, but Product A looks a lot better and costs more. People are likely to tell you they would choose A, but they'll buy B.

What you do learn from market research is what you already know: People vary. You can go after the high end of the market, the midrange or the low end.

Targeting the low end cheapens the brand. Going after the "average" consumer shrinks margins. Only the high end creates the pixie-dust intangible quality of buzz, brand affinity and, ultimately, brand loyalty, which can be converted into higher margins and higher sales.

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