Apple has a relatively low market share in personal computers (PCs), about 7.1 per cent in 2016, down from 7.4 per cent in 2015. The company, which pioneered pricey but immensely powerful, cool-looking and easy-to-use Macintosh computers (Macs), has been struggling to sell more computers.
One reason for this is that iPads and iPhones have continued to cannibalise desktop and laptop sales, as global PC shipments keep declining. In fact, this diminishing share would actually have been a lot worse if Apple hadn’t aggressively pursued its strategy of hooking customers on to their products early and young.
At the heart of this strategy is the company’s Apple Distinguished School (ADS) initiative. As a part of this programme, Apple gives away technology to 400 select schools in 29 countries which share Apple’s vision for learning. India, which Apple does not yet consider a big enough market for its products is, unsurprisingly, not on the list. The company says that students use Apple’s iPad and Mac to inspire creativity, collaboration, and critical thinking.
This kind of marketing to schools is brilliant all around. To be sure, it is just not Apple that engages in this approach. All the big tech companies — Google, Microsoft, HP — are involved in early education, but Apple seems to go further than anyone else. A look under the hood shows why.
Catch them young
First, the marginal cost of its generosity is not high. For a company which charges outrageous prices for its products, giving away devices at cost doesn’t amount to much. Apple’s accountants would, of course, list the value of its largesse at market prices so that Apple gets a huge tax break on its giving.
Second, it is not hard for Apple to find partner schools. In a world where investment in infrastructure is a big challenge for school administrations, which school wouldn’t want to partner with the world’s most valuable enterprise to receive free technology and expertise? It is no surprise that there is a long line of schools that want to be part of the ADS programme.
Third, by hooking students on to Apple devices as early as during their kindergarten years, Apple is cleverly developing a loyal following that could span three to four generations. Children growing up using Apple technology would never want to use any other competing product. When they become adults, they begin influencing technology-buying decisions at home or at the office; or, even better, as leaders of organisations who make decisions. Which product are they more likely to choose?
Fourth, parents, teachers and other stakeholders in the ADS schools, upon seeing how Apple’s investment is a critical pillar of their kids’ learning environment, are more eager to invest in Apple products themselves.
Finally, the goodwill that Apple earns from school boards, political leaders, and educators, cements the company’s mindshare as a caring civic partner for years to come. Good samaritans, in such short supply these days, are always valued.
All of these factors aside, what is an Apple Distinguished School anyway?
Hi-tech schools
An ADS bears little resemblance to a traditional school, even by Western standards. This immediately became evident to me when I visited the Richard Lee Elementary School in Irving, Texas, last year. The wide open spaces of learning resemble a Silicon Valley tech company more than a conventional school with a rigid floor plan of corridors and classrooms. The school building is even rated a net-zero energy campus; an impressive designation for any building in a state which requires heating or cooling all year round.
As I walked into the open atrium-type area, children relaxed on bean bags engrossed in their individual iPads, each issued, for free, to students in Std 4 and above. At 7:55 a.m., the school day kicked off with a live videocast from the principal, which is beamed to all classrooms. The recording studio, from which the principal speaks, is full of high-tech equipment, all operated by students, no one older than 11 years. If a video clip, say from YouTube, has to be spliced into the live cast, a 4th or 5th grader does it with consummate aplomb. All school-work and homework involves exclusive use of Apple’s creative tools. Homework assignments are downloaded to students’ devices through the school’s cloud infrastructure.
It is not clear, however, if all of this state-of-the-art technology and infrastructure would make a difference to a child’s learning abilities, or result in learning outcomes that are substantially different from traditional schools. For example, the principal of the school I visited told me that the parents of these children — almost all of them Indian-American, because the school is located in a neighbourhood dominated by Indian families — are heavily involved in the school’s functioning, volunteering their time to assist teachers and staff throughout the school day. The president of the parent-teacher association told me that the organisation raised over $40,000 in private donations last year to add to the school’s already impressive playground infrastructure. When it rains, it pours.
Stakeholder committment
This is where Apple’s marketing excellence comes in. The ADS designation expires after two years and renewal is subject to review by Apple. No school community would want to lose out on associating with the Apple brand, even if mere association does not automatically translate into the vaunted success that Apple is known for. The indirect stick draws in a constant commitment from the stakeholder community, a commitment so strong that ADS schools would probably succeed even without Apple products. This, ultimately, is the biggest intangible benefit that Apple gets — a multiplier effect at promoting the Apple brand, so large that it is not even remotely proportional to the initial investment Apple makes.
In other words, Apple just cannot lose.
It is this kind of exceptional thinking that drives the company every day. Little wonder that the company’s market-cap last week created a record when it briefly crossed $900 billion, an astronomical figure that is larger than the GDP of many countries, including the likes of Turkey, the Netherlands, Switzerland, and Saudi Arabia.