Apple Offers Lesson in Building Loyalty

Apple(AAPL Quote), once again, has the gear heads all a-twitter.

The debut this week of the video-equipped iPhone 3GS raised the smart-phone ante by offering competition for Research in Motion's(RIMM Quote) BlackBerry Storm and the Pre from Palm(PALM Quote). To lure customers on a budget, the company also cut in half the price of its original iPhone.

The new iPhone 3G S.

But look behind the headlines, and you'll discover that Apple's success rests on more than just a new cell-phone launch. Just as the iPhone itself encourages multitasking, Apple has multitasked as a company, moving quickly and efficiently within target markets.

Such nimbleness can pay off for any small business. Developing a breakthrough product or service is great. But if you're also able to expand your reach, improve customer service and reinvent the shopping experience so customers keep coming back, you'll be on solid footing for years to come.

It seems to be paying off for Apple. The company's most recent earnings announcement showed an 8% growth in earnings, despite dismal times for tech sales.

Bill Nygren, manager of the Oakmark and Oakmart Select funds at Harris Associates, says Apple's key to success has been its excellence in separate, yet interconnected, areas.

Apple's earliest competitive advantage was its focus on clean, user-friendly devices. "You talk to people in the tech industry, they're all envious of Apple's design expertise," Nygren says.

But great design can only take you so far. Sure, it might persuade graphic designers and filmmakers to buy your computers. It brings waves of early adopters who like to be seen toting the latest cool gadget. But design awards alone won't bring the millions of buyers you need to build a profitable company.