Is Apple Pivoting?

No.

After the flurry of new product launches this week, I’ve read a few comments suggesting that this is a new strategy for Apple, or a pivot of sorts. The premise is that the 17e and the MacBook Neo are new low-end products that are intending to compete in markets that have been either uninteresting or unattractive to Apple in the past. Thus the company is now turning to either addressing affordability, memory costs or competitive pressures.

The flaw with this argument is that there is an assumption that Apple segments its markets by price. The bigger assumption is that *all* markets are segmented by price. This is naive in the narrow and broad sense. If you ask me, any marketer that segments by price is not very good at their job.

Remember, when you segment, you are making an explicit causal statement describing a purchase decision. In other words you are specifying the reason people buy a product. Price segmentation suggests that the reason for any purchase is that it reflects what the buyer can afford. Rich people buy expensive versions of a product and poor people buy cheap versions of the same product. The problem is that I’ve known many poor people who buy expensive things (actually most luxury brands sell to the less affluent) and many rich people buy cheap things (shunning conspicuity). The correlation is poor and the causation is actually nonexistent. Most importantly, you are missing the ability to create any new products because “new” simply implies higher or lower price.

In the case of technology products, performance is also a factor. Here again, there might or might not be correlation between performance and price and customer income/net worth. Many people of means buy low performance products and many who are constrained financially will pay for performance. For instance, a non-wealthy aspiring YouTube influencer may very well purchase a high performance computer for video editing. And a millionaire pensioner could well opt for a MacBook Neo to communicate with grandchildren.

So what is causation for technology, or, for that matter, any product or service? The answer that comes closest is the “job-to-be-done”. What outcome is desired and circumstances are present when a purchase decision is made? What are the forces pulling and pushing the decider? It might be tempting to generalize and say that the young are poor but it would be wrong to generalize that they don’t demand performance.

So what does this mean for Apple’s portfolio?

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