NPD Group Blog » Customers Know Best

Customers Know Best

Friday, June 25th, 2010
By Stephen Baker, Vice President, Industry Analysis

Those of us in retail and consumer marketing are often confronted with this truism. And while consumers are the ones plunking down their hard earned money on the latest (or cheapest) tech gadget, we in the business often think we know what the consumer wants better than the consumer does. Sometimes we are right, and then sometimes we are wrong. And the best companies move to take advantage of that customer feedback and can accept that sometimes their initial marketing or sales tactics missed the mark.

I say all of this in light of last week’s refresh of the Mac Mini. It certainly has gotten buried under a mound of iPad and iPhone hype, but this refresh is a reflection of the very best (and very worst) of Apple’s ability to discern what the customer wants, accept that sometimes they are wrong, and move towards giving the customer what they want. Apple does a lot of product planning without research and focus groups as other companies might, and as a result came the flawed original Mac Mini. First positioned as Apple’s low-cost desktop, designed to compete with other low-cost desktops, it quickly found itself on the periphery of Apple’s product line as sales slowed and it became apparent that one thing customers did not want was a cheap low-cost Apple desktop. Unfortunately, there it languished in Apple’s mind for quite awhile, although not among its consumers. Mac Mini buyers recognized a very different value proposition. They saw it as a low-cost set-top box replacement, an ideal HTPC (home theater PC) during a point in time when early adopter customers were looking to bring the first hints of video on the web directly to their TV. Small size and quiet operation made it ideal for this, and increasingly as a small home server type product, again appealing to those early adopters. These same trends were playing out in the PC market as well, as HP especially sought to gain some ground in the market for these management-type computing devices. But its Digital Entertainer and the MediaSmart Home Server both sold in low volumes (probably ones around where the Mini ended up). In the PC world that level of volume is not sufficient, and as HP changed direction these products either were cancelled or settled into low volume mode.

This is when Apple’s patience, or lack of attention, began to pay off. Last fall Apple finally recognized this emerging home server market and recast the Mini as a home server complete with Apple’s server OS and started the process to upgrade the Mini as well. And customers noticed too, as the sales in the Mini line began to revive as Apple started to remove the stigma of being the cheap computer in the otherwise high rent Apple line of products. Finally, last week Apple gave in to its customers completely. While not admitting it directly Apple fully abandoned the low price focus of the Mini, raising its price by $100, upgrading its case and finally adding an HDMI port. With the addition of this ubiquitous video connector it is apparent to all that Apple is finally embracing the positioning that its customers wanted for the Mini i.e. as a fully functioning HTPC (or home server) with the price and specs to match. Rarely does Apple give in to its customers and rarely does it acknowledge a mistake. But this time it did and the results for the Mini are likely to continue to improve because today, as it is more appropriately positioned, there is a much bigger, and emerging market for the PC under the TV. And Apple has finally admitted that in this case, its customers knew best.

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