Apple and the user experience business model

I have conversations about Apple with investors, competitors, developers, fans, venture capitalists, and more. These conversations are always revealing as to how much people understand, or think they understand, Apple. Inevitably these conversations turn to Apple's business model. One of the most common debates is whether Apple's business model is hardware or software. My own angle is neither—Apple's business is actually user experience.

It seems obvious in some ways—Apple emphasizes user experience over many other things. The company prides itself on elements of design and interactivity. Yet it didn't completely click with me until I was able to participate in specific research with over 800 Apple Watch owners. A company I'm working with called Wristly—If you own an Apple Watch please consider joining the panel—has built the largest independent panel of Apple Watch owners, now over 1,100 people.

Apple Watch customer satisfaction

We just published the first customer satisfaction report on the Apple Watch and, contrary to much published opinion, the Apple Watch has the highest customer satisfaction level of any previous first generation Apple product. (Note it is common practice for customer satisfaction surveys to add the first two satisfaction options below).

While we may not be able to measure the Apple Watch's success by metrics of sales (yet), we can now measure it by the level of current Apple Watch customer satisfaction, which speaks for itself.

Things get even more interesting when we contrast our current Apple Watch satisfaction score with the customer satisfaction scores of other first generation Apple products, namely the iPhone and iPad.

Here is how the Apple Watch stacks up against the customer satisfaction levels for the first generation iPhone and iPad.

The Apple Watch, as a version one product, has a closer customer satisfaction rating to the current iPhone at 99% than it does the version one iPhone or iPad. That is remarkable to me. That's the kind of customer satisfaction ratings you get when user experience is a company's highest priority.

Premium products

When it comes to the sale of PCs, smartphones, and tablets, Apple sells the majority of "premium" products sold. More than 60% of the premium smartphones sold each year are iPhones. More than half of all premium priced PCs are Macs. More than 70% of premium priced tablets are iPads.

This trend plays out it every market where Apple competes. The company successfully, and regularly, charges premium prices for its products and its customers remain satisfied. This is where the business model of user experience comes into play.

Integration all the way down

There is no other consumer tech company on the planet that is oriented like Apple. Apple doesn't just make hardware and software, but they also develop their own services. By optimizing the software to the hardware, and tightly integrated their services, they are in sole control of the user experience. And for Apple, that goes all the way down to the silicon: one of the most important products Apple creates are its A-series processors.

It's all part of the same strategy. What Apple does in silicon design is focused on the user experience. What it does in hardware is focused on the user experience. What it does in software is focused on the user experience. What it does in services—and yes they will get better—is focused on the user experience.

Because of its integration and focus, Apple doesn't have to fight with nearly all other hardware companies in the race to the bottom of the price curve. Instead, Apple can target the growing number of customers globally—beyond the over 480 million they currently have—who are maturing their interests in consumer technology products and will also value user experience enough to pay more for it.

Market momentum

The questions and doubts surrounding whether or not a post-Steve Jobs Apple could still launch successful new product categories has been answered: Yes.

The Apple Watch has the highest customer satisfaction rating of any first generation Apple product. The user experience business model works for Apple. Customers love their Apple products and Apple's momentum is not slowing down.

Here is the full Wristly report on Apple Watch customer satisfaction. If you have an Apple Watch and would enjoy additional insights and full reports, please join the panel.

Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, a market research firm based in Silicon Valley. His primary focus is to study global consumer markets for personal computing. You can read him on Tech.pinions and follow him @benbajarin.

  • Count me in as one who's pretty happy with my watch. Luckily, I got it as a birthday present so I didn't have to come up with the money... (Thought I love my watch, I really do feel they are too expensive.) Oh, wait, no, I mean "Did Apple pay you to write this article?" Sorry, I just wanted to be the first to say it. :-)
  • Yes, I'm also very happy with my  watch. (Except that I just did something stupid the other day and scratched it. :-( ) It hasn't taken long to say, "How did I get along without it?!" due to how many fewer times I have to pull out my iPhone.
  • Current iPhone at 99% what a load of BS.
    My own anecdotal research;
    Out of say 50 people that own iPhones I’d say 10 to 15 have changed to either Windows Phone or something Android based in the last year. Extrapolate for 100 users and that means 20-30 people. Stop and think for a second people, try and find 100 of your smartphone owning friends and find out how many have changed away from Apple. If it’s any more than one…………….. Apple are feeding you more cool aid BS. Back to the watch. I absolutely love the look of it on the Apple website. In reality somehow it isn’t so good looking.
  • Not sure about the phone. Still like the iPhone but sold my Apple Watch after 8 weeks of use. Was NOT worth the money. At least I received what I paid for it, but it just isn't a great smartwatch yet. Honestly, after a week I thought I might miss it and yet I found that I didn't miss it at all. Not even a little bit. Maybe a future iteration, but the price is way too high for what you get. This of course is MHO.
  • Certainly agree with that. I like my iPhone, (5S), but I don’t love it. Something I feel I love is something I couldn’t do without.
  • The 99% satisfaction was for the iPhone 6. Not all models. Sent from the iMore App
  • I still don’t believe it. Why not be transparent and indicate where the figures came from and how?
  • It takes a strong will to dismiss research and replace it with anecdotal evidence. Apple has equally touted customer sat when it's in the high 80's/low 90's. I see no believable reason why they would fabricate numbers to suddenly go to 99%. Since we're talking anecdotes, FWIW my entire circle of friends and family use iPhones except for one friend in the PC gaming industry. My immediate family, all my in-laws, my college buddies, my wife's co-workers are all on iPhone. It's not that they're hardcore Apple people - they're not - it's that the phone has come to represent ease of use, quality design, good cameras, etc. and probably 85%+ couldn't identify another mobile OS by name.
  • You seriously think that 99% is accurate? The president of the US lied for Petes sake so can the CEO of a business.
  • It's 99% of people who own iPhones, not 99% of all people who own smartphones or 99% of all people. So with your anecdotal evidence, your friends who switched out iOS are not included in the survey population. The iPhone has been out in the market for a while now; pretty much everyone knows about it which means there are few major surprises anymore for first timers. So 99% satisfaction by the people who own one isn't as incredible as it sounds. They're mostly loyal customers or new ones who have a very good idea of what they're buying. Only a fool would keep buying an iPhone if he or she isn't happy with it.
  • Well aware of that. Read the post again. Then get some sleep, then come back and comment.
    I’ll quote an important part of it to help you;
    “Out of say 50 people that own iPhones"
  • What sort of response were you looking for here? You acknowledge that this is anecdotal and then want to debate it.. Maybe now you see the uselessness in anecdotal evidence.
  • Someone has a little sand in their pussy.
  • Not sure who that’s aimed at if I’m honest but I would like to know what it means?
  • And I bet your friends are most likely geeks considering you're on iMore. You're just comparing a survey to what you've seen in the wild with about 50 people. That doesn't mean that the 50 people represent everyone who owns an iPhone. Sent from the iMore App
  • If that’s aimed at me, please say where in my post I mentioned the word friends, or colleagues or even enemies for that matter.
  • Anecdotal..
  • I'm not sure how comparing results from one survey with another completely different survey is valid, but kudos for an analyst for trying. Somehow I doubt iMore will criticize this.
  • Speaking from someone that has switched over to Android from Apple in the last year for my phone, I disagree with the premise of the article. Granted, the satisfaction value of the iWatch probably is close to what they are reporting, but I am sceptical of the validity of the data, as most people that own iWatches are probably hardcore apple apologists and would be biased towards a positive review.
  • "most people that own iWatches are probably hardcore apple apologists and would be biased towards a positive review"
    A detail 'conveniently' absent from most sources. It would seem likely that most surveys (from any given manufacturer) would be biased in favor of the product (as most 'meh'/'that sorta sucked' users would not bother filling it out, Apple even more so due to the prevalence of fanboyism) The same can be applied (though far less so) to the other products mentioned.
  • It's actually not the number per se that is important. It's how this number (97%) compares with the number generated by comparable surveys of competing or similar products.
  • Thank you for adding that. You are, of course, correct.
  • I've always been under the impression that people are more likely to fill out negative responses when they're dissatisfied.
  • Another one.
  • Any first gen product is going to be composed of early adopters, by definition. But it's fair that the Apple Watch customer sat is compared to the first gen iPhone and iPads.
  • I have owned the Gear S (liked it) and Moto 360 twice (was not satisfied either time) And now an Apple Watch, I think I can say what I like and dont like.. First, I came from Android (Note 4, Moto X before that) and I bought a used iPhone 5 32GB for $100 and an apple watch 42MM sport.
    My experience with the apple watch is 100% positive. my experience with the Gear S was about 80% positive. what I didnt like was the flimsy yet good charger and the monthly service (I wouldnt leave home without my phone anyways. but I loved the idea of answering a quick phone call on my wrist) the battery on both the gear s and moto 360 left a lot to be desired. The apple watch has better battery life, ability to make phone calls without paying for a separate plan, and it adds apple pay to its magical powers without buying the newest iphone. I am very happy with it and plan on keeping it EDIT: I think I see the value of the watch as the opposite of many other people. Id rather do most of my interactions on the watch and only use the phone when a larger device is required. i.e. browsing the internet, watching a video, taking a long phone call, taking notes. etc. is it weird that my watch cost 4 times what my phone did?