Comment by leoc

I don't think that's the whole story. It's true that companies often buy cost-effective but unsexy computer hardware for their employees (viz. Dell). But back when the Macintosh was getting its market-share crushed by good-enough Win95 PCs, consumers were behaving in a similar price-conscious way. (Though the crashiness of late System 7 probably helped to loosen emotional attachments to the Mac as well.) In fact the Mac had famous bulwarks of continued demand in the institutional education market and among graphics and other "creative" professionals.

However, the situation is different in some ways that favour Apple this time. The shift to smaller, portable devices like the iPod, iPhone and iPad really seems to help Apple to sell premium products, because probably many more people are tempted to choose their phone on emotional (or quality) grounds than their PC. First, people tend to associate the PC with 'work' - in particular, with grinding office documents for work - or with utilitarian duty as a thinnish client for the Web. And unlike a desktop box which sits mostly hidden under your desk, you touch, lift and look at your phone's hardware many times every day. You also take it to public places where other people will get to know about and admire your lifestyle choice. (A laptop is roughly halfway between a phone and a desktop computer in these respects.) And a smartphone still generally costs less than a PC - the price of a whole iPhone after subsidy can easily be less than the price premium for a Mac over a PC. (Back in '96 a desktop computer cost even more than it does now, and better hardware specs could make a big difference to the quality of the user experience, so buyers had a compelling motivation to save their money and/or spend it on specs rather than OS polish or brand mystique.) In the iPhone Apple can sell a glowing, no-compromises 'perfect thing' and at the same time sell it for a lot less.

Which isn't to say that the march of good-enough Android isn't going to squeeze Apple in future: I think it will.