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The Key to Apple's Financial Success


Apple's excellence in design begins at the top because Steve Jobs himself is obsessed with visuals and aesthetics.

Apple's Design Obsession

If you've been reading my articles here on Minyanville, you know that I'm an unapologetic Apple (AAPL) fan, a critic of the Microsoft (MSFT) Windows world, and somewhat cranky.

And to the dismay of my family and friends, I've developed an ego so large that I've convinced myself that I actually understand Apple and Steve Jobs.

So I want to dive into one of the most important aspects of Apple's financial success over the past decade: design.

The Apple Way

The most obvious and important design theme in Apple products is minimalism. Apple products tend to be extremely simple, with few buttons and visual distractions.

When Apple debuted the original iPhone in 2007, it immediately stood out because of how bare-bones it was. It had no keyboard and only one front-facing button, paired to the easiest-to-use smartphone operating system ever made.

So why is Apple's focus on minimalism important?

Well, it's important because it gives Apple products their own identity. You know an Apple product when you see one.

Remember the strip-the-computer-logos scenario I proposed in Why Apple's Gross Margins Are So High?

Imagine the following:

You walk into your local electronics retailer on a Saturday morning looking for a new computer, and every logo on every model has been mysteriously covered with duct tape. And there's a challenge. If you can identify a computer's brand without seeing the logo, you take it home for free. You only have one try. Seriously folks, who wouldn't be taking home a Mac in that situation?

But wait! You can actually play at home right now by going to the computer section on Best Buy's (BBY) website.

Without squinting at the logos, how many brands can you identify on that page?

Steve Jobs: Design Geek Disguised as Tech Visionary

Apple's excellence in design begins at the top because Jobs himself is obsessed with visuals and aesthetics.

In the mid-1980s, he placed a Bosendorfer piano and BMW motorcycle in Apple's lobby as displays of fine craftsmanship. And on multiple occasions he has waxed poetic about things like proportionately spaced fonts.

Seriously, the CEO of the most important technology company in the world gave a commencement speech at Stanford and talked about fonts. Who does that?

Jobs' uncommon obsession with visual artistry ensures that everything Apple produces, from lowly mice to desktop icons to multi-million dollar stores, looks great.

And there's another angle here. It's not even necessarily the case that Jobs and his team are design geniuses. One could argue that they're just the only ones that really care!

But What About the Stuff Inside?

It's well-established that Apple can generate sizzle through unique industrial design. But sizzle doesn't go far if it's not backed up by steak.

So let's talk about the other half of the design equation -- the fact that every Apple product is easy to use.

The feature-mongers populating the tech blogosphere seem to miss this important point, and tend to ignore the fact that Apple has had enormous success with feature-light products.

The iPod line was, at times, literally years behind the competition in specs (FM radio, video playback, etc), but it was always way easier to use than anything else on the market.

And look at the iPad. It's missing a camera, Adobe (ADBE) flash compatibility, an SD card slot, and a USB port. But what isn't it missing? People willing to buy it -- something I should have considered when I was doing my own hating (see iPad Is Week, But Apple Is Strong).

You could also look at any of Apple's notebook computers, which offer awful bang for the buck when it comes to features and specifications, but amazing value when it comes to actually getting stuff done.

What Does All This Mean for Investors?

If there's one thing I want you to take away from this article, it's to understand that Apple's success can be summed up in exactly eight words: It makes great stuff that's easy to use. Nobody else is doing it and I can't explain why. Could it be fear of success?

Realizing this gives us a heads-up in figuring out when Apple might lose its way. And don't think it can't happen. Apple is turning into a gigantic company and that means it's even more vital that it keeps its eye on the prize.

When you see Swiss Army knives coming out of Cupertino, sell the stock.

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No positions in stocks mentioned.
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