We’re very simple people at Apple. We focus on making the world’s best products and enriching people’s lives.
Tim Cook
& Why Apple won’t be disrupted
Everyone is predicting the imminent disruption of Apple
Apple has been incredibly successful, by any measure, over the last decade. Yet, everyday some analyst or pundit questions their strategy and predicts their imminent demise. They say the Apple success was a fluke, or Steve Jobs had magical powers, gone now that he has passed away. They are wrong, and here’s why.
Apple is blessed with a large number of competitive advantages, a superbly talented management team and a sustainable strategy. In order to understand this position, it might be helpful to review strategy lessons learned from other industries.
Apple is blessed with a large number of competitive advantages, a superbly talented management team and a sustainable strategy. Please Click To TweetThe emergence of lower cost watches based on electronics did not disrupt the economics of the watch industry. Sure, quartz electronics were more accurate, less costly and caused more watches to be sold to a market that could not afford a Rolex or a Patek Philippe. But, those luxury companies continued to grow and dominate revenue and profit share of the industry.
Why?
Well, a luxury watch has a cachet, maybe it’s the brand or look, maybe it’s the uniqueness.
Whatever, the higher end watch appeals to a potential owner in a manner as to create immense value to that owner. So much value, that they are willing to part with sums far greater than the cost of the actual product. And in the watch market, no one measures success by units sold.
Why then is it so different for the technology market? Why are analysts so obsessed with the number of phone units sold by Apple versus Samsung or Nokia?
Can technology products have soul, something more intangible than the inherent functions performed by the device? Please Click To TweetI think it’s because those analysts don’t understand that technology products can have soul, that they have something more intangible than the inherent functions performed by the device. To those analysts, a Microsoft window is the same as an Apple window, and if one processor is faster than the other, it must be better.
But why can’t technology products have more than commodity functions, why can’t they have soul?
A Rolex tells time, a simple commodity functionality, yet it still has soul. Couldn’t Apple be designing products with soul that then allow their users to find a value beyond the costs of their components? Couldn’t Apple software and hardware be integrated so well, that a synergy resulted in performance greater than the specifications suggested?
How can we explain the success of the iPod, introduced at a higher price than competing products available in the marketplace?
Look at the early advertising, the product appeal was far greater than specifications and the simple function of playing digital music. The ecosystem had far more enrichments to the user experience of a buyer than they get from the competitors. The iPod was cool and had soul.
When you are a designer of products with soul, like Rolex, you are not competing for the Timex or Swatch buyer. You want that customer to dream of the day they can get their own Rolex.
When you are a designer of products with soul, like Rolex, you are not competing for the Timex or Swatch buyer. You want that customer to dream of the day they can get their own Rolex. Please Click To TweetIn the meantime, you continue to focus on those segments you own and on building new products with soul, one after the other. You are not worried about disruption from the low end, you are interested in making the case for an upgraded experience.
I think Apple is showing great maturity in their strategy by demonstrating technology can have soul and that customers value the user experience. This strategy has been the secret to their success. Apple has much to gain by thinking of ways to enhance and add new experiences so that they maintain their base of loyal owners, while appealing to upgraders. Maybe more to gain by following the strategy, than by figuring out how to win the low end of the market with soul less products. And, as with the luxury watch makers, the strategy has resulted so far in an outsized share of revenue, profit and appeal. Why change now?
Apple won’t be disrupted if it continues delivering products with soul!
That’s what I think.
Do you agree or disagree? Let me know in a comment below.
now i look at apple differently now thanks fr tellings me that The secret of Apple’s success, Why Apple won’t be disrupted.
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You don’t understand how disruptive innovation works, or what it really is. Disruption does not equal bankrupt, or driven out of business, or even pushed out of a market necessarily, although any of those things could be an ultimate impact.
By the definition of market disruption, Apple has already been disrupted in several of the markets where they were the incumbent. With their current strategy, that is not reversible. They will likely survive for some time, with a large share of users willing to pay a premium price, generating 72% of profits with an 8-9% market share in mobile handsets, for example. But, they will never again be the share leader, and soon they won’t even be first to introduce most features.
Before you pronounce on whether Apple has been disrupted or not, you might want to read the books and understand what it means to be a disruptive innovator. Unfortunately, you aren’t alone — most of the pundits and most of the media also portray it inaccurately, which I suspect is the source of your confusion.
Paul, Thank you for visiting and leaving a comment. I have always been an advocate for dissenting opinion and have posted your comments unedited.
It is not clear to me that your reading of the books (which you assume I have not read) has helped your understanding of the “top management” perspective on innovation and disruption. Click on this link to find my discussion on The key to Real Disruption.
My view is that Apple won’t be disrupted if it continues delivering products with soul. Your view is that they already have been disrupted, although you provide no evidence or explanation for your opinion. As for your predictions, that they will never again be the share leader, nor will they even be the first to introduce most feature, indicates your misunderstanding of what Apple is really all about, or what even should matter to top managers. Being first, or even share leadership are of no tangible value if they do not contribute to better results. And, Apple is not about selling the most, they have consistently said they are about making the best!
Can’t agree more. This is about brand identity, premium positioning, margin not market share. It is also about an ecosystem that is sticky with significant switching costs. The analysts mindlessly fill spreadsheet and the market pundits talk gibberish.