To me, the most interesting thing that was unveiled during the last Apple event was iTunes 9, particularly the Genius Mixes.  I tried them out as soon as I could, and I was really impressed.  iTunes can now scan all my music, find the 12 main types of music I listen to, and put them into newly generated playlists.  It’s all very Apple – these mixes do something very complex yet give the user the impression that it’s the easiest thing in the world to do.  There are no settings or customization offered with these mixes at all.  They just exist on your iTunes, and they work.

Genius Mixes perfectly illustrate why people who buy Apple products tend to become die-hard Apple fans and why Apple is doing so insanely well as a company. Apple is extremely good at adding value to the products you buy from them over the lifetime of that product.  And every time Apple bumps up this value, they usually offer something new you can buy that can make this experience even BETTER!

My experience with Genius Mixes certainly showed me this – and I can only assume others would have similar testimonies.  Prior to iTunes 9, my iTunes music had been governed by select playlists.  So like, since 2002 I was the sole mind behind my music collection organization.  But when I started listening these Genius Mixes, I kept hearing songs that I hadn’t listened to in ages.  There are a number of reasons for this: I might have stopped listening to certain tunes because I actively disliked them.  I could have forgotten to rate them, and since my playlists are largely based on song ratings they were banished from my playlists altogether.  I might have decided that I was tired of certain albums, unchecked them so they would not be included in my playlists, and then forgot about them.  By throwing seven years worth of neglected music into my face, Genius Mixes showed me that my iTunes music collection was way sloppier than I thought it was.

To rectify this, I found and deleted all the music that I simply did not like, I rated songs that had no ratings, and I reevaluated all songs that were unchecked to see if I felt like listening to them again.  As a result, I had an iTunes library that was more organized, more functional, and better than it was before the iTunes 9 update.  Then, after deleting about 10 gigs of tunes off my hard drive, I ended up downloading about 10 new albums.  Of course, I didn’t feel like paying for all of that music, so I yanked 8 out of 10 of those out of bit torrent land.  However, I did end up buying two of them from iTunes.  That is money I would not have given Apple if Genius Mixes hadn’t made me value my music library more than ever.

iTunes is not the only product that Apple makes that gets better with age and really good cheap upgrades.  Snow Leopard was very inexpensive and made me love my Mac more.  The latest OS update to my iPod Touch made me like the device more than ever, which in turn got me to buy even more apps for my Touch.  And the apps themselves illustrate this extremely well, particularly the games.  You buy a game once, and all the many fun updates from then on are free.

In these examples, Apple manages to make people think they are getting things for free or very cheap when they are really not.  They make a low profit on these new additions so that you will enjoy what you have already paid for more.  This in turn boosts your desire to buy from Apple more of what you already have, be it music, videos, applications, and eventually another Mac.  Apple wasn’t the first company to adopt this model, of course.  Netflix’s Watch Instantly service adds a lot of value to the monthly subscription fees its customers pay for DVD rentals, and it will gradually add even more value as more content becomes available.  I’m even now thinking about going out and buying a Ruku player.  Most of Google’s services are free and get better with each update.  And of course the more I use Google services, the more likely I’ll click on their ads.  Apple has borrowed a business model usually reserved for companies mainly selling information goods and expanded it to the sale of its physical goods as well as information goods.

[And here's the obligatory attack on Microsoft]  Most of Apple’s competitors, like, ohhhh, Microsoft, can’t easily compete with this.  Microsoft makes a lot of its money from people purchasing upgrades to its products.  Unlike Apple’s, their software upgrades are usually not a means of getting customers to buy into another revenue stream.  This makes its customers (individuals, computer makers, large companies) reluctant to upgrade, so they force them using various tactics.  This is an old and annoying business model that consumers are increasingly rejecting.  Apple really does “think different”, and it’s making them a hell of a lot of money.  People should pay attention.

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