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Why Do So Few Companies Category Design Markets?

Shipping products and category-designing markets are not the same thing.

On June 5th, Apple announced its latest category-designing product—the Vision Pro spatial computing headset.

Now, a lot of non-pirates immediately compared it to other VR headsets.

But Apple’s Vision Pro is not in the same category as Meta, Oculus, or Sony.

In this week’s Pirates Perspective, we talk about why some companies ship products but category designers (like Apple) take a different approach.

So the next time you launch a product, remember to choose different Languaging.

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Category Pirates

Eddie Yoon

Christopher Lochhead

Katrina Kirsch

P.S. - Have you read The 22 Laws of Category Design? If so, tell us your thoughts!

We know hundreds of you are already working through the in-book exercises and reflecting on the new content. So, we’d appreciate it if you share your honest opinion with us in an Amazon review. Good? Bad? Legendary? Piratey?

Your review will tell other pirates what to expect (beware the rowdy tales!) and also help us get the word out about category design.

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Video Transcript

Katrina Kirsch  00:03

So there seems to be a lot of confusion about companies—some companies ship products and very few companies category design markets. One of the examples that has come up recently is Apple with its Vision Pro spatial computing headset. So given the context of the conversation, what do you all think about that?

Christopher Lochhead  00:26


Eddie Yoon  00:27

Yeah, I mean, Apple's whole history has been...I'm trying to think of the times that they've ever been the first to ship any product. And you think about them as one of the OG category designers. And Christopher, you might know better than I. When the original Mac came out, the PC was already in existence, right? I'm sure the workstation and all that kind of stuff. So this is extraordinary—they’ve never been first to ship anything.

Christopher Lochhead  00:59

No. And people say they "steal" these ideas. And to some degree, I mean, steal might not be the most flattering way to say it. But we all know who created the WYSIWYG. Right? Most people don't even know what a WYSIWYG anymore. Do you know what a WYSIWYG is Kat?

Katrina Kirsch  01:18

I have no idea what that is.

Eddie Yoon  01:19

I don't know what it is.

Christopher Lochhead  01:20

You don't know what it is? For the love of whoever you love. So the WYSIWYG is a What You See Is What You Get interface. So IBM invented the personal computer, there's very little confusion about that. And the story of how they did it is actually incredible. But that's a story for a different day.

There was this company that used to matter called Xerox.

And when Xerox was a company that mattered, that is to say, a company designing different futures, which they today are a company that extends the past. But when they were designing different futures, they had one of the greatest research departments in history called Xerox PARC here in the Silicon Valley area. And they invented an incredible amount of technologies that never became categories designed by them.

And one of them was the WYSIWYG.

The What You See Is What You Get interface.

And before when you turned on a personal computer, you got this one little thing that blinked at you. And that was it. And it was called a prompt, a C prompt, right, and you had to know a bunch of you had to type in command shift, it was called the command line. Well, Apple was the first company where you turn on a computer and you got what today we know as a Windows or a browser-like experience with a mouse. That was the WYSIWYG.

While the technology for the most part, the first iterations of that technology came from Xerox.

So he was saying, and this is the thing they missed—there is a radical difference between inventing a product or shipping a product and designing a market category.

And so what everyone for the most part missed, including very smart people, is they think that Apple shipped a new product, the Vision Pro, which they did, but what they really did was they category designed a new market called spatial computing. And this is the part I love the most. Let me grab the press release because Apple tells you exactly what they're doing. And categories hide in plain sight.

Eddie Yoon  03:30

They have done this over and over with the Mac, not the first to invent the PC, as you said, Christopher. Laptop, not the first to invent the laptop. Their iPod, not the first to invent an mp3 player. The iPhone, not the first to invent the smartphone.

And so why this question keeps coming up and up again.

It's kind of funny because that's kind of been the DNA of Apple is to be very patient.

I mean, Apple is in fact, the greatest argument against this whole idea of first-mover advantage. They have never been the first to move. They are the first to design the category, breakthrough product breakthrough business model, breakthrough category and Data Innovation like they do all of and they do it slowly and purposefully in you can see the fingerprints, even though Steve Jobs isn't around, you can see the fingerprints of their DNA through Tim Cook and spatial computing exactly as you're about to take us through now.

Christopher Lochhead  04:32

So here's the press release. June 5, 2023. "Introducing Apple Vision Pro: Apple's first spatial computer." Again, category design is thinking about thinking. Listen to the words.

"Introducing Apple Vision Pro: Apple's first spatial Ccomputer."

They're fucking telling you, category, product brand together.

And to your point Eddie, Tim Cook's quote is exactly like all of the Steve Jobs type quotes in these types of press releases. "Today marks the beginning of a new era for computing," said Tim Cook Apple CEO. "Just as the Mac introduced us to personal computing. And the iPhone introduced us to mobile computing. Apple Vision Pro introduces us to spatial computing."

And people think they launched a product.

They didn't invent the technology of the smartphone. They didn't invent the technology of the personal computer. They didn't invent a lot of mp3 players.

They never called any of that shit. What people call that shit. They didn't call. They didn't say it was an mp3 player. They said 10,000 songs in your pocket. And and so this is the difference between purposely educating the world about why what you do is different. Why it's radically valuable. The problem and or problems? It's all because if you don't do this, if you just ship products.

Eddie, can you name any of the first mp3 player companies to ship product?

Eddie Yoon  06:28

Rio? I think it was one of them. I think Sony. I mean, Sony talked about the miss with not being able to follow through with the Walkman. And it's incredible. As you said, not only aren't the first they don't call it what it was called beforehand,

Christopher Lochhead  06:44

If my memory is right, Eddie, maybe check me on this. When they launch a new product that they are using as part of a category design. They more often than not price it very high. And over time, they bring down the price and they introduce new models.

Eddie Yoon  07:01

You actually know that what they do with the ingenious thing and what they do they price it higher than the legacy category, but lower than the adjacent category that they're likely stealing from.

Because, I mean, what was so different? I mean, it was such a different press release and announcement. Because will it be used for gaming? I'm sure that was not the dominant thing that they talked about.

What they talked about was movies.

And you know, imagine you know who's getting screwed all the high-end projection projector companies for home theater, Sony and Samsung. If you could short their flat panel TV businesses, you absolutely should. Because all of this stuff of the 85 inch, you know, 3d OLED, OLED TVs that go for our pricing and whatever, are totally irrelevant if they can be infinitely big because they're so close to your eyes. I mean, in fact, I was going to call my buddy who's an ophthalmologist and be like, Hey, how do I invest in your category? Because I suspect there's gonna be a lot more, I promise, as a result of it because he just staring at devices the whole time. The other part of it that I thought was so interesting, was it you know, if you can sit courtside for the NBA Finals without having to drop 10 grand per ticket $3,500 is a total bargain.

Christopher Lochhead  08:23

And this is the other part that people missed. Okay, so when you're designing a new category, what are you attacking? So people who ship products, attack other products? This is why the donkeys in the media and said, "Oh, let's compare Apple Vision Pro to the Oculus." Okay, Apple didn't do any of that. Apple's not attacking Oculus or any other gaming headset. They didn't use any of that language. That's not what they're doing. What are they attacking? Eddie Yoon just said it. The tyranny of the screen. Can I share my screen for a sec here, Kat?

Katrina Kirsch  09:04

Yeah, go for it.

Christopher Lochhead  09:05

So this is Apple's press release website that I just read from. And what Eddie said is exactly what they're showing. And so Apple is attacking the tyranny of the glass screen. They're decoupling us from a screen. And in that sense, to just underscore the genius of Eddie Yoon.

They're damning the demand for screens, be they TVs or monitors.

Because if you just watch this, are you able to are you guys able to see this as it rotates?

To Eddie's point, this is how we're going to watch the NBA Finals. And look, I don't want to sound like a douche bag, but I've had some pretty good tickets to some pretty good sporting events in my life. And is it fun to be there and is it great? Absolutely. And you know what? I choose this nine times out of 10 because I don't want to deal with the traffic and the fans in the way.

Anyway, the point being category designers attack the status quo.

They don't attack another product or a brand.

And yet again, everybody missed it. The one other big thing about this is a lot of people said, people have been doing spatial computing for a long time, Apple didn't invent spatial computing. I never said they did their category designing spatial computing. And that's why nobody can name one other spatial computing company other than Apple, unless you deep in the space. And the spatial computing pioneers are going to turn into the Roku's of the world, the mp3 players whose names we can't even remember. Most people today don't even know what a Blackberry was because Apple designed a category.

Eddie Yoon  10:56

It was nicknamed Crackberry. Right? It was one of the most addictive, high-loyalty products. Obama when he became president was like, "You're gonna pry this thing out of my dead cold hands" to the Secret Service.

Christopher Lochhead  11:09

As a matter of fact, he got into public fights with the Secret Service and forced them to create proprietary software, because he was the first president to ever have a smartphone because he said, I'm not giving this thing up.

Eddie Yoon  11:20

And so how is it possible that a product that was that addictive, and that had such loyalty in such that the President of the United States was going to go to DEFCON one over this thing?

And they still lost because of category design?

Because, I mean, the reality is, spatial computing doesn't really matter, unless you have apps for it. And guess who's going to be the platform that delivers all the developers? The reason why they announced this thing in the first place was so all the developers could get ahead of it.

I look at my son, my teenage son, who has an Oculus, who goes to the PlayStation and plays games on his phone. He's just doing whatever his friends are. It's just, they're all commodities. They're all interchangeable. Not one is more dominant than the other. And you know, what he complains about? They're not enough games on Oculus. And so at the end of the day, spatial computing is largely nothing without the ecosystem of apps. And that's what Apple is amazing at. And so if people really think this through, Apple is going to be a big winner, the developers are going to be a big winner.

Christopher Lochhead  12:25

And so this is the piece that people don't understand. People who ship products are people who ship products. People who design categories are people who earn 76% of the new value that gets created. And what the entire Silicon Valley world and much of the startup and business world and certainly business media world is still confused about is exactly this.

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