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From Quality to Quantity—and Maybe Back Again

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Posted on Jan 28, 2011

By David Sirota

Amid last week’s flood of business news, one story stood out as reason to hope for more than just a momentary uptick in your 401(k): Apple, you may have heard, announced record first-quarter profits.

This was not some mundane stock market announcement important only to the investor class. In a season of earnings reports that showed our still-financialized economy returning Wall Street to its dangerous too-big-to-fail form, the news that Apple has become a bigger market force than Microsoft may go down as a positive watershed in American consumer history—a paradigm shift in which buyers began choosing value and quality over bargain and volume.

In many ways, Apple is the antithesis of the typical multinational firm. Where many corporations sacrifice craftsmanship and customer service on the altar of low price, Apple does the opposite. For example, according to the market research firm NPD, the average Apple Macintosh computer is double the price of the equivalent Windows-based PC. At the same time, Forrester Research reports that Apple far outpaces its rivals in customer satisfaction, likely because (as any Mac convert knows) Apple products and support are the most reliable and intuitive in the industry.

As business models go, this high-price/high-quality concept is a serious gamble in the age of the big-box store. But when you juxtapose the high concept with the bottom line, you see Apple’s wager is paying off. Not only is the firm generating big returns for shareholders, it is benefiting from a sea change in information-economy preferences. Specifically, technology buyers are increasingly resisting the allure of immediate discounts in favor of enduring value—in this case, the value of machines (whether computers, MP3 players or smartphones) that potentially save more money by lasting longer, wasting less time and not requiring as many costly replacements.

As mentioned, this could end up being a sign of a larger departure from what author Ellen Ruppel Shell’s recent book called the scourge of “cheap.” And it is only one sign of many.

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For instance, reporting on Hollywood trends, The New York Times recently found that “expensive yet middle-of-the-road [films] delivered disappointing results or flat-out flopped” while “gambles on original concepts paid off.” As a result, the paper noted,  “studios are finally and fully conceding that moviegoers [are] holding them to higher standards.”

Similarly, Brandweek reports that a new national survey finds that consumers are no longer “buying based on price alone.” Instead, “they are relying more on their perception of value” in everything from athletic shoes to paper towels—and businesses are now tailoring products to meet the demand.

“It’s not just about lower prices,” said the firm that conducted the study.

That this is happening in a recession is hardly a coincidence. In fact, the moment’s more frugal zeitgeist has probably played a big role in altering behavior. Forced by necessity to make more discerning economic decisions, consumers may be gradually shifting back to our grandparents’ smarter, more utilitarian mindset, willing to pay a little bit more at the store—as long as the additional expense means we get more for our money.

If the trend continues—granted, a big “if”—the corresponding changes will be pervasive.

Sometimes it will mean nothing more consequential than better movies at the local theater. Other times, it will mean loyalty to supermarket brands that finally guarantee minimum standards. And quite often, it will mean long-term savings for customers in the form of better-performing and more durable goods.

In that sense, the now-ubiquitous Apple logo will cease being merely today’s most famous image of computer geekery—it may end up as history-book shorthand for an economic transformation that’s long overdue.

David Sirota is a best-selling author whose upcoming book “Back to Our Future” will be released in March. He hosts the morning show on AM760 in Colorado. E-mail him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

© 2011 CREATORS.COM


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By REDHORSE, January 30, 2011 at 7:03 pm Link to this comment

The idea of shopping “quality” vs. “price” is a good one (if you can afford the choice). Endless comsumption of crap and the industry of illusion that drives it is a distortion of moral reason. Substance vs. appearance is the hallmark of our time. Say, John Edwards vs. Dennis Kucinich.

      I think TROPICGIRL is correct that we don’t “get it” when it comes to gray shades of slavery and human exploitation. In China factory workers literally leap from the dorms they are housed in to protest the violation of their Hearts, Souls and Lives.  The World is now too small to allow anyone a plea of ignorance.

      One of the main accusations made by minorities is against the “sense of entitlement” so many well-to-do Americans hold. It’s a discussion we need to have, especially if it is serving as a firewall between moral conscience and reality. Poverty and injustice wounds us all. It is perhaps “the” major reality of this “new age”. Lip service will no longer balm the disease. How emotionally connected are we to the riots in Egypt/Tunesia—can you relate?

      The entire reality of computers, World economics. social conscience, World consciousness and “World electronic community” scares the s@#t out of the Oligarchy. Our modern counterparts are wired to the max for communication. Why isn’t America? As in the issue of Health Care the Oligarchy is moving to place itself between you and access to the New World Consciousness. That’s why it’s doomed. Don’t die with it.

THE FATES OF ASSANGE AND MANNING DETERMINE YOUR OWN.

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By Anarcissie, January 30, 2011 at 5:36 pm Link to this comment

Wow!  Yes, indeed, a $105,000 electric car definitely ought to float Mr. Sirota’s boat.  Maybe they’ll throw in a platinum-plated iPhone with the car.

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By Fat Freddy, January 29, 2011 at 1:24 pm Link to this comment

Maybe he could also celebrate the new Mercedes Benzes?

No, no, no. The new Teslas.

http://www.teslamotors.com/roadster

$105,000?

Actually, the last time I was in Neiman Marcus (needless markup), I noticed most of the designer clothes were made in Italy, not China. I was looking at a T-shirt from Versace that was $85, I think, and it was made in Italy. It was much better quality than something in Wal-Mart for 3 for $10 that’s made in some shanghai noodle factory:

http://www.youtube.com/watch?v=G4NNkrKVCzM

Anyway, I never really understood the progressive’s “love” of Apple. It is, just a collection of marketing scams, and, they’ve been trying to corner the personal computing market and create a monopoly since they were formed. There’s plenty of other competition for Microsoft if you just look. And IBM doesn’t even make personal computers, anymore. They sold that division to Lonovo, a Chinese company.

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By Anarcissie, January 29, 2011 at 10:59 am Link to this comment

Most of the Apple products I have encountered have been well-made and some of them, like the iPhone, have been pretty clever.  I’m not saying they’re worthless, which for all I know a Gucci handbag may be as far as its mechanical and aesthetic qualities are concerned.  However, the sales success which Sirota celebrates may well reflect social and economic trends which he would normally deplore, like increasing disparities of income and the continuing immiseration of poorer people.  In any case it is odd to observe a supposed progressive celebrating the success of expensive goods promoted by expensive propaganda.  Maybe he could also celebrate the new Mercedes Benzes?

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By Fat Freddy, January 29, 2011 at 10:14 am Link to this comment

My link didn’t work.

Try clicking here.

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By Fat Freddy, January 29, 2011 at 9:41 am Link to this comment

Anarcissie

This suggests that what people are buying is not value but image—an impression reinforced by Apple’s ubiquitous, sophisticated, kicky advertising. 

And what do you think keeps the fashion world afloat? Buying Apple products is like buying a Gucci handbag. You’re paying for the name.

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By Fat Freddy, January 29, 2011 at 9:29 am Link to this comment

Top 150 shareholders of AAPL:

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/AAPL top 150.jpg

1. Fidelity Investments
2. BlackRock Inc.
3. The Vanguard Group
4. State Street Global Advisers
5. T. Rowe Price Group
16. JP Morgan Asset Management Holdings Inc.
24. Goldman Sachs Asset Management
30. Morgan Stanley Investment Banking and Brokerage Investments


You get the picture. Almost all of the 150 are asset management companies/investment banks.

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By SoTexGuy, January 28, 2011 at 6:42 pm Link to this comment

I’m a long time Apple addict.. I do prefer Apple and think it is superior in some ways..

Recently, the Apple OS programs have begun to emulate Microsoft.. so much so that we Mac OS users are now targets of the hackers and spammers and cloners that have so plagued my PC friends for so long!

It’s all a big plan and a scam anyway.. we rely on our computer information systems so therefore we have to continually update and buy add-ons to keep our systems safe.. each ‘upgrade’ of course comes with a new sleeper set of instructions and marketing/harvesting routines.. and each always a potential avenue for hackers and more.. What a game! .. unless you rely on your computer system!

I was key in ‘computerizing’ a modestly large business back in the ‘80s.. Back then it was all viewed as a wonderful new tool! .. now it’s obvious that electronic data and real-time information services to business and individuals is itself an industry! It consumes time and energy and intellect and only indirectly contributes to productivity.. while many aspects of production and service suffer. In terms of real returns to investment it is a complete loser.

But we have bright eyed, attractive people with shiny toys! That’s a good trade off for experienced service-industry employees we know and trust.. right?

Adios!

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By Anarcissie, January 28, 2011 at 1:36 pm Link to this comment

One thing the author omits mentioning is that Apple products embody an enormous difference between cost to the manufacturer and price.  This suggests that what people are buying is not value but image—an impression reinforced by Apple’s ubiquitous, sophisticated, kicky advertising.  Unless, of course, one considers illusion itself to be a dominant value, in which case one could save a lot of time by taking the appropriate drugs.

In looking at Apple’s success, I think one wants to look at pools and flows of disposable income.  Clearly, if someone is willing to pay $600 for a fancy cell phone, they have some money to spare.  One of the things we know is that income disparity is growing in the United States, so that we can attribute some of the success of high-priced goods to the small percentage still successfully on the make.  Another might be consumer debt among the young; I recently met a couple in their twenties, both with crap jobs but advanced degrees, who between them owe more than $100,000.  With that kind of burden, why not spend what little you have to spare on a fancy piece of electronic gear?  There is certainly no point in trying to save anything.  It is rather like the mid-century ‘Negro’ buying a flashy car worth more than his house—a rational decision reflecting dire exigencies.

On the whole, then, I’d say Apple’s current prosperity is a fairly pernicious sign.  No doubt as the rich get richer and the poor get poorer, we’ll see many more fancy, expensive toys brought to market.  So what?

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By tropicgirl, January 28, 2011 at 11:01 am Link to this comment

David, I really have to wonder what planet you are on. I thought the writers on this site had a sense of morality?

Whether quality or quantity, these products are being produced by modern-day slave plantations. No matter where they are produced, its the same story.

I know you and your friends are quick to criticize early slavery in this country, but this only proves to me that you only do it in retrospect, because it has nothing to do with you, today, in the here and now. If you were present back them, perhaps you would have defended the slavers?

I’m sorry. Value is not in THINGS, when it depresses and demoralizes and kills, in many cases, entire groups of PEOPLE, through no fault of their own.

I must say, this is why people are looking at progressives as monsters who have instantly grown horns and turned green, with blood dripping.

Apparently, they have.

(10 suicides, just last year:

http://www.infowars.com/foxconn-suicides-iphone-and-ipad-factory-under-scrutiny/

I’m sorry the rest of the article has been scrubbed, but you get the gist)

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By oddsox, January 28, 2011 at 6:05 am Link to this comment

If you’ve read my prior posts, you know I’m not shy about being critical of David Sirota.
But this is the most upbeat column I’ve ever read from him.
Kudos & hope you’re right about a return to placing value upon value.

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