Article: Diluting the Brand

by on October 12, 2010

Often people complain when Apple is too successful in a particular area. Sometimes these are the Wintel or BlackBerry or Android proponents, but what happens when it’s people who are generally pro-Apple? It seems the argument that Apple is positioned as a mid-to-high-level brand and its products should not be inexpensive or sold just anywhere, and two recent announcements have me curious about the implications.

Apple TV

The Apple TV, selling for about a third of the price of its predecessor has been available to the public for about two weeks and has already sold one million units. That’s amazing for a product that Apple regards as a hobby, and is still not available in a number of retail locations. I think if Apple had realized the amount that would be sold, there’d be more in production, and maybe you could get them at places other than an Apple Store (which many are selling out).

What does an $99 Apple TV mean? I think it makes the product affordable that it may actually find its way into the homes of more people. By still requiring an HDMI-equipped television, the Apple TV is still not going to be connected to every television in America, nor will it be seen as a worthwhile purchase for many. However, at that price, more folks who have bought into the Apple ecosystem will find it to be a purchase and product that they can live with, rather than the prior Apple TV being an expensive “toy” for those who wanted a stripped down Mac connected to their TV.

I think once the demand decreases a bit, we’ll see Apple TVs in other stores, and maybe even some more features. Rather than comparing the Apple TV to an iPod touch, iPad, or even a Mac, one should see it as an accessory, such as a Magic Mouse or a dock for an iOS device. It enhances the functionality of another Apple product. Just because Apple is selling some sort of product below $100, doesn’t mean that the company is going to resort to low-quality junk products.

iPads at Walmart

Another argument that often arises is where Apple products are sold. Although the demographic that comes to mind when someone thinks Walmart doesn’t match Apple Stores (or even stores located around Apple Stores), I think this is a bogus and closed-minded approach. I have lived in towns where the only retail store is a Walmart and the closest Target or Best Buy were a half hour or more away. Combine that with Apple Stores being even further scattered and Apple is missing out on a lot of customers who would want to try before they buy. Although I can fault a lot about how certain Walmart stores handle electronics, and I know that the average store will be even less helpful and informative than other non-Apple retailers selling Apple products, I still think this is a great idea.

If you look at what types of products have moved into Walmart stores over the last few years, it makes sense for Apple to bring more consumer electronic products to the retailer. Sony and Samsung, brands seen as more of the higher-end in their segments sell a full array of televisions, Blu-Ray players, and more. Even LG has joined in. Why not bring the iPad to the masses and possibly the Apple TV? Granted, some will see the iPad as less powerful than it is, or a giant iPod touch, or some of the other misconceptions that are often discussed. However, Apple is being brought to a whole other market that may have otherwise only been able to see products online.

Diluting the Brand

This brings up the argument that low-costs and low-cost retailers may “dilute the brand”—what does that even mean? As long as Apple keeps making high-quality products and offering a great value, that’s a winning combination for consumers and investors.

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