GoKawiilSometimes the cheapest product is actually the coolest in the lineup. But that rarely happens by accident.
I saw this firsthand at the Apple Park Visitor Center, waiting to buy a new MacBook Air. I was told by the staff that I would have to wait a bit while they helped a few other customers. I watched as they enthusiastically purchased the MacBook Neo. When it came my turn, I got to chatting with my Mac Expert and they told me that MacBook Neo was selling like hotcakes. Not only were new customers buying their first Mac, but customers with older Macs were, instead of trading up for a brand new Air or Pro, buying MacBook Neo.
As I pulled out my iPhone Pro to pay, a funny question popped up in my head. How did Apple craft a cool laptop that costs half as much as the phone in my hand?
The problem
Cut back to Porsche in 1992, and you’ll see a similar story playing out in a very different industry. Back then, Porsche was not in the fantastic position it is in today. Its model lineup was aging. The 911 was essentially a derivative of the original from three decades earlier, and the rest of its lineup was, at that point, decades old as well. Unsold inventory was starting to pile up, and people outside of the company were starting to think that Porsche might have to close up shop.
At that point, Kevin Gaskell was part of the senior leadership at Porsche Great Britain and was promoted to managing director to turn around that division of the company. He has told the story of how their entry-level car, the 968, was a derivative of the 924 from 1976. And being priced at around £34,000, it was unfortunately above a very important number: £29,000. This was the threshold at which company-provided cars for personal use incurred a much higher income tax. Clearly, Porsche needed a cheaper 968.
The problem Apple solved is, of course, different as Apple is not in dire straits. Yet, some of the details line up. As John Gruber wrote at Daring Fireball:
“John Ternus took the stage to address the audience. He emphasized that the Mac user base continues to grow, because ‘nearly half of Mac buyers are new to the platform.’ Ternus didn’t say the following aloud, but Apple clearly knows what has kept a lot of would-be switchers from switching, and it’s the price. It’s not that Apple never noticed the demand for laptops in the $500–700 range. It’s that they didn’t see how to make one that wasn’t junk.”
Making it cheap
If Porsche and Apple approached these problems purely as a question of cost, then their solutions would have always felt like a compromise. The key is how they each viewed the problem as an opportunity instead.
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