Price, value and practical utility are not really correlated.
A Rolex and a Timex will both tell you the time. An iPhone and a $129 Android will do mostly similar things. A Toyota Camry and a Porsche will both get you to work.
But practical utility and value aren't necessarily the most important thing.
Apple intuitively understood this, at a time when other computer companies didn't. Lots of people look at a Macbook and see an overpriced computer that costs a few hundred dollars more than a similarly equipped PC, albeit in a pretty case. But that's the point - lots of people want their computer to look good!
Apple products are relatively cheap to produce - and they make an enormous margin on their hardware. But it doesn't feel cheap. The boxes are substantial. The finishings are high quality. The user experience is taken care of. Other PC makers might have been much cheaper, but you notice that to do so, they've cut corners in places.
I don't think the lesson here is in what he said, but rather that he made his customers feel like idiots. Only a fool would believe that a ring for £1 has the level of quality and craftsmanship that you'd get with a £100 ring, but you don't want to feel like a dumbass for buying it. You don't go to McDonalds with expectations of buying a Michelin Star meal. You go there for something warm & tasty, that comes out quickly.
>A Toyota Camry and a Porsche will both get you to work.
That's not the practical utility people want out of a Porsche. They want the practical utility of impressing people (including the other sex), appearing well off and sporty, etc.
Those are also practical considerations - just not the first that come to mind when one thinks of cars (although not very far).
(Practical as in: not aesthetic but with real life impact on real life goals).
>Apple products are relatively cheap to produce
So they say, but e.g. other manufacturers tried for the first 2-3 years years to get a tablet with the specs of the iPad, and still couldn't get theirs at a lower price...
Or how if you add the same SSD/video/memory/CPU/etc options to a PC laptop, you get close to the same prices. I know cause I've tried to build an equivalent Lenovo (and a few other brands) and it gets so close I might as well just get the MBP.
> They want the practical utility of impressing people (including the other sex)
And it's not gonna do that if the CEO shits on his own product. Things that are good because they are good are less vulnerable than things whose value comes from being impressive because of marketing.
> A Rolex and a Timex will both tell you the time. An iPhone and a $129 Android will do mostly similar things. A Toyota Camry and a Porsche will both get you to work.
If your priorities are telling time, having a smartphone, and commuting to work, I agree with you. But I think the more expensive products you mention offer things the cheaper products don't.
For example, I'd rather have a Camry if I needed a family car with a reasonable total cost of ownership. I'd want a Porsche if I wanted a fast & sporty car.
I think stronger examples would be comparing cheap & quality products that both cater to the same market segment. For example, making a cheap car that cuts corners on expensive parts like emissions controls, safety equipment, and stitching in the seats, but making it look & feel like a Camry. Eventually that a line of cheap cars will develop a reputation for being an overpriced junky deathtraps, and no amount of marketing will hide that.
Alternatively, you can make a Camry with the same quality and cover it with glitzy trim, market it as a luxury car, and sell it at a premium...which we call a Lexus.
The Lexus LS400 debuted in 1989 with a very high tech v8, with the highest r&d budget of any car engine to date. The 1uz-fe was an outstanding engine however you look at it, and so were its derivatives made well into the 00s. Other auto makers including euro brands like BMW had to play catch up. Lexii weren't just glitzed up cheap cars, nor necessarily high margin. There were some models like that, though. The Lexus GS300 was a Camry, if I remember right. And Scion TCs are Toyota Corollas.
The ES is/was the FWD platform that is said to be related to the Camry. Although I seem to remember that these days the ES is more related to the Avalon, a larger, but also FWD car. The GS is a different, RWD platform.
Also, in many cases, Japanese luxury models under their own nameplate were sold under the parent company name overseas, like in Japan. For instance, the original Acura NSX was the Honda NSX elsewhere.
My takeaway is that between two similar products, once people discover what is really going on, will they feel misled? And can people become informed in the first place?
In the case of Lexus vs Gotta, I'd guess informed consumers won't feel mislead. In the case of quality Camry vs a junky FauxCamry, it's more about being marketing in the FauxCamry that deceptively over promises is on a car that under delivers.
I think I've stretched this analysis about as much as I can.
I feel the argument but I think I would need different examples to better understand.
There are reasons for owning a watch other than "tell the time," which could include "tell the time accurately without ever needing to change batteries," or "tell the time and date," or "tell the time while scuba diving."
Rolex may be overkill but different watches serve different roles, and it's not just brand name alone that makes Rolex cost orders of magnitude more - in many ways, it really is just that much better of a product. Same for Camry vs Porsche.
An Apple product, particularly a Macbook, on the other hand, not so much. It's a nice aluminum chassis over crappy, cheap internals that break so often people throw around words like "class action" to describe the keyboards. It's like cramming a knock-off Timex movement into a Rolex case.
> Rolex may be overkill but different watches serve different roles
A Casio is going to tell the time better than a Rolex. Quartz watches are much more precise, and they’re powered by batteries, so last much longer without any maintenance. Rolex is simply in the segment of high quality, hand made mechanical watches. A segment people like for reasons other than its precision in keeping time.
>Lots of people look at a Macbook and see an overpriced computer that costs a few hundred dollars more than a similarly equipped PC, albeit in a pretty case.
I was shopping for a dev laptop about a year or two ago, and it was more like double the price rather than just a few hundred dollars more.
Definitely. A new MacBook pro with 16GB RAM, a decently speedy 512 GB SSD, the basic display, dedicated graphics, and an 2.3 GHz 8 core i9 costs $2.8K [0].
An XPS 15 with 32GB RAM, a decently speedy 1TB SSD, the basic display, dedicated graphics, and a 5.0 GHz 8 core i9 costs like $2.3K [1].
I couldn't customize the XPS enough to do a direct comparison. But the XPS 15 with the almost the same specs as the MacBook other than having an i7 was about 1.6K.
Rolex is an interesting example, because their value is actually based on utility, not style. People actually (used to) wear them a mile under the sea, measure oxygen with them while diving etc. You can’t trust a Timex with your life, but a Rolex you can. That establishes baseline value, like a finely crafted Japanese chef knife. My dinner won’t taste any better, but the tool I’m holding is valuable to the people who know their stuff.
I have never seen or heard of someone using a Rolex for diving. As you said, maybe they used to. And that’s the point-they used to, so now that value that was utility is now purely style.
Except, of course, that while a Toyota has an excellent reputation for reliability, a Porsche not so much. So the latter may not get you to work at all.
But you'll look damn good sitting at the side of the road...
A Rolex and a Timex will both tell you the time. An iPhone and a $129 Android will do mostly similar things. A Toyota Camry and a Porsche will both get you to work.
But practical utility and value aren't necessarily the most important thing.
Apple intuitively understood this, at a time when other computer companies didn't. Lots of people look at a Macbook and see an overpriced computer that costs a few hundred dollars more than a similarly equipped PC, albeit in a pretty case. But that's the point - lots of people want their computer to look good!
Apple products are relatively cheap to produce - and they make an enormous margin on their hardware. But it doesn't feel cheap. The boxes are substantial. The finishings are high quality. The user experience is taken care of. Other PC makers might have been much cheaper, but you notice that to do so, they've cut corners in places.
I don't think the lesson here is in what he said, but rather that he made his customers feel like idiots. Only a fool would believe that a ring for £1 has the level of quality and craftsmanship that you'd get with a £100 ring, but you don't want to feel like a dumbass for buying it. You don't go to McDonalds with expectations of buying a Michelin Star meal. You go there for something warm & tasty, that comes out quickly.