of the physical distribution and retail channels as they were replaced
by the virtualization of e-commerce.
Jobs understood, as none of his peers did, that whereas content,
even commodity products, might be sold online, if you wanted to sell
electronics hardware as premium-priced luxury items, you had to sell
them like other luxury items. That is, in shining temples, under
brilliant lights, with ardent young “genius” salespeople at your beck
and call. Most of all, you had to sell those items in glass boxes where
customers could be seen by others: not just other customers, but
passersby, who could peer in and see you among the select. And once
you had accomplished that, you could sell almost anything in that
store—as long as it was elegant, stylishly boxed, and shared the
common design tropes with its more expensive peers.
It is why Apple commands margins that no tech company has ever
enjoyed, having scaled impossible heights—the premium-priced
product, and the low-cost producer. Nothing comes close in other
luxury categories. In handbags, Bottega Veneta, a premium-priced
handbag, is a high-cost producer. In automobiles, the premium-priced
product, Ferrari, is anything but low-cost producer. In hotels, the
premium-priced product, Mandarin Oriental, is far from the low-cost
producer.
Yet Apple manages to be both... and it does so because it
emphasized manufacturing and robotics a generation before most tech
(especially consumer tech) companies; established a world-class
supply chain; and then established a retail presence, backed by a small
army of support and IT experts, that has become the envy of every
brand and retailer.
Chutes, Ladders, and Moats
Firms try to build higher and higher walls to keep enemies (upstarts
and competitors) from invasion. Business theorists call these
structures “barriers to entry.”
They are nice in theory, but, increasingly, traditional walls are
showing cracks, even crumbling—especially in tech. The plummeting
price of processing power (Moore’s Law again), coupled with an