Paul Krugman is not a marketer

A marketer would spend more time discussing the tremendous role that brand has played in Apple's success. Other than that Krugman's analysis is spot on.

From On The Symmetry Between Microsoft And Apple

The Microsoft story is familiar. Back in the 80s, Microsoft and Apple both had operating systems to sell; Apple’s was clearly better. But Apple misunderstood the nature of the market: it said, “We have a better system, so we’re going to make it available only on our own beautiful machines, and charge premium prices.” Meanwhile Microsoft licensed its system to lots of people making cheap machines — and established a commanding position through network externalities. People used Windows because other people used Windows — there was more software available, corporate tech departments were prepared to provide support, etc..
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But Microsoft missed the boat on mobile devices, while Apple got temporarily ahead of the curve. I say “temporarily”, because as far as I can tell Apple products no longer have a dramatic quality edge. I’ve had an iPhone — which, sad to say, did not survive dunking in water — and now have a Samsung, and the differences don’t seem huge. I have an iPad 2, which I bought for the picture quality; but when I decided I also wanted a small tablet that I could carry around in my jacket pocket, it turned out that the iPad Mini wasn’t significantly better than several Android competitors, and in fact for my purposes worse in some ways.

Now, unlike Microsoft, Apple isn’t selling an inferior product. But it’s selling products that are little if any better than competitors, at premium prices. How can it do that? Again, network externalities: mainly a much deeper bench of apps, or so I’m told (I actually don’t use many).

[App selection is certainly a selling point for Apple, but I'd say that brand and marketing are currently much bigger factors.]

So how do the prospects for Apple’s reign look compared with those of Microsoft? Let’s not forget that Microsoft is actually an incredible success story — it maintained its PC lock for decades, and in fact still retains that lock today; it’s just that the market is changing. My casual impression is that Apple’s lock isn’t nearly as secure, in part because it’s relying on the loyalty of individual customers — in contrast to Microsoft, which was largely relying on the loyalty of corporate IT managers, who are inherently more conservative.
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So, my problem with Apple. In general, the thing about Apple is that it reflects the spirit of Steve Jobs, who knew what was good for you — and left you no way to do things differently. And if you are an atypical user, you end up putting a lot of effort into fighting iOS in order to do simple things.

Case in point: as regular readers know, I really like watching live performances on YouTube; and I want the best of them available even when I don’t have access to broadband. So I download them onto my PC as MP4s — there are many add-ons that will do this.

But I actually want them on a tablet. To do this in iOS, you first have to import them into iTunes, then synch; not too big a pain, but still a couple of annoying extra steps. The big problem, however, comes when you want to organize your videos: how do I tell iTunes that, say, my 10 favorite Arcade Fire performances are a related set?

Well, the only way I’ve found is to convince iTunes that they are episodes of a nonexistent TV show. It’s doable, but stupid. Whereas on my Nexus 7 I just copy them into a folder named “Arcade Fire”, and there they are.

For more on the appeal of Apple's brand, check out this reflection by Rob Long on the company's near complete dominance of the entertainment industry.