Apple’s secret sauce revealed

If you want a tablet computer, there’s really only one choice right now — the iPad. The same could be said of the original iPhone and iPod when they launched. Although it’s easy to see how Apple hooks us, how do they not only keep us but keep us coming back again and again?

Fortune, quoting some tasty data compiled by Deutche Bank’s Chris Whitmore, is offering insight on how Apple keeps its legions of iPod-iPhone-iPad fans faithful. There isn’t a single element at work here — no, it can’t tied to simply “drinking the Kool-Aid.”

Apple’s perfected a clever combination of cutting edge devices, content tie ins and top-shelf customer service. Specifically, it’s the stickiness engendered by the company’s secret sauce that sets the mothership apart in the rapidly developing mobile and media marketplace.

First off, Whitmore documents the growing installed based of Apple devices, which he estimates to currently be in the 150-million unit range. And, not just any devices, iTunes dependent devices.

Further, this installed base of iTunes dependent devices is expected to grow to more than 200-million units by the end of 2011. Now, that number alone, remarkable thought it is, gets all the more interesting when Whitmore uses it to parse Apple’s “Other music related products and services” revenue line (i.e. movies, apps, music, TV shows, books, etc.).

Yup, iPod, iPhone and iPad buyers has also invested in content to the tune of $15-billion already. Moreover, Whitmore estimates that users will increase this investment in apps, movies, music, shows and books to $25 billion by the end of the next year.

“This averages to about $100 of content for each installed device,” writes the analyst, “suggesting switching costs are relatively high (not to mention the time required to port). When Apple’s best in class user experience is combined with these growing switching costs, the resulting customer loyalty is unparalleled.”

Importantly, most of this money isn’t ending up in Apple’s hands — it’s the content owners and developers that take 70 percent of this revenue. Lastly, Whitmore doesn’t take into account the huge amount people spend of peripherals, which is another area where third parties are swimming in gravy.

Lined with velvet…

Although the haters will say the content tie ins handcuff users to the platform, that’s hardly the most important reason the vast, overwhelming majority don’t jump ship. In fact, I doubt it’s even a consideration.

Why? Because Apple has superior, category defining products that are matched with industry best customer service ratings in every category it competes in — desktop, mobile, content.

For example, in the smartphone category, the iPhone has earned “very satisfied” marks from 77 percent of users. Its closest competitor is the Android and only 67 percent of users of that briar patch of devices are similarly satisfied. And, these results are mirrored almost precisely in computers, portable media players and tablets (except that there aren’t any competing tablets yet — shnork!).

Lastly, whereas some iTunes purchased content can only be consumed on the iPod, iPhone or iPad, getting your stuff into these devices no more or less difficult than it is on any other device, which themselves have content lock ins.

The difference between Apple and Microsoft, for example, is that Redmond’s products aren’t as good, their service is inferior and their locked content plays on fewer devices. Whose fault is that? Certainly not Apple’s.

So, seriously, why should we go anyplace else? The sauce is so irresistibly tasty right where we are…

What’s your take?

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