Apple, the Halo Effect, and Tal Rasha’s Wrappings

We talk a lot about the Apple halo effect. The problem, well-summarized by Horace Dediu here, is that the idea of a halo effect feels very squishy and intangible, especially to someone like an analyst whose job it is to quantify the company.

I’m not really sure about the brand’s aura and all that, but I’d argue that the reason why selling one Apple product so often leads into the purchase of another Apple product is not intangible at all.  Indeed, consumers get real benefits the more Apple stuff they own.

Think about it like set items in Diablo.  With the imminent release of Diablo 3, I just seem to have Diablo on the brain lately.

In the world of Diablo, there is the concept of set items.  These are special items you can collect that belong together in a set.  On their own, these items can be quite good.  But when you wear more than one piece from a given set, you get an additional “set bonus” that increases the stats with the more pieces that you have.

For example, wearing one item awards no set bonus.  Two items might give you +10% stat bonus.  Three items, +20%.  It goes up until you complete the whole set, after which the stats can get really epic.  The rationale is that, having done the work to complete a set, you should be rewarded.

This is a lot like how Apple designs their products.  Yeah, the iPhone, Macbook, iPad, and iMac are great products on their own.  But when you start getting more of them together into the same room, that’s where the real magic happens.  They design for their own ecosystem – if you are willing to submit yourself and buy everything Apple, you are rewarded.  Things just work better.  There’s less fuss.  Have you ever tried using an iPod or iPhone with a Windows PC?  It’s just so much more of a pain than when you connect it to a Mac.

Bought an iPhone?  Well, if you buy an iMac, that iPhone will be so much better.  Got an iPad?  Well, since you already know how to use iOS, why not get an iPhone as your next phone?

So, instead of a halo effect, I think more of the reason why someone buys multiple Apple products isn’t necessarily because they just love the brand – it’s because they get Apple “set bonuses” that stack the more products they buy.

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