Sign up FAST! Login

Does Apple's future depend on income inequality?



It’s been a week, and the tech world has had a chance to digest (and digest and digest) the New Yorker‘s profile of Apple design guru Jony Ive. Most of the reaction so far has focused on Ive’s luxury predilections—his chauffeured Bentley, the Gulfstream GV he bought from Steve Jobs’s widow—and his obsessive approach to the design of his pet project, the soon-to-be-released Apple Watch.

But the most revealing paragraph in the piece wasn’t about the Apple Watch’s modular design, or its sapphire-finished zirconia ceramic, or any of the other minute details Ive and his team have spent years agonizing over. It was this one, about the negotiations between Ive and other Apple executives over how the watch should be priced:

It wasn’t clear how the company would display such things in stores; there were also concerns about creating a divide between wealthy and less wealthy customers. (As [former Apple engineer Bob] Mansfield said, “Apple wants to build products for everybody.”) But Ive won the argument, and in 2013 the company announced the high-level appointments of Angela Ahrendts, the former C.E.O. of Burberry, and Paul Deneve, the former C.E.O. of the Yves Saint Laurent Group. Patrick Pruniaux, from TAG Heuer, a part of the L.V.M.H. luxury conglomerate, was hired last year.

This (emphasis mine) is a very deep and meaningful tension that sits at the core of Apple’s mission: “build products for everyone” versus “build products for everyone, plus some luxury products that only the ultra-rich can afford.” And the fact that Jony Ive won the argument says much more than that he’s good at playing corporate politics. To me, it says that Apple is positioning itself for a world of widening income inequality.

Several weeks ago, New York‘s Annie Lowrey described the economic “barbell effect,” in which companies succeed in a high-inequality environment by catering either to the very high or very low end of a given market. The example she used was gyms — both Planet Fitness ($10 a month) and CrossFit ($100+ a month) are thriving, but the gyms that cost $50 or $60 a month are struggling.

Stashed in: Apple, Luxury, New Yorker, Bling!, Rich people get richer., Smartwatch

To save this post, select a stash from drop-down menu or type in a new one:

Fashion brands often have separate product lines for mainstream and for high end.

Sports stadiums have regular seats and box suites.

Airlines have economy class aand first class.

Apple did not create the inequality trend; it merely is embracing it.

You May Also Like: