The “Competitive Intel” Episode 29 Transcript – Thinking about Apple: Don’t Generalize from a Specific
Business people commonly discuss how to emulate Apple’s success. Let us be clear, there’s probably little that many businesses can learn from Apple. In point of fact, both of Apple’s wildest successes have held the seeds of their own undoing. Just as Apple’s success at the dawn of the personal computer era was eclipsed by Windows PCs, the iPhone and iPad are being overtaken by Android devices.
The Reality of Shaping New Market Segments
Apple’s strategy has always included end-to-end control over the ecosystem, as opposed to the multi-vendor approach associated with Windows PCs or Android devices. With the iPhone and iPad, that model made Apple enormous amounts of money and redefined the industry. How did they do it? In short, they got lucky. They seized a once-in-a-decade product opportunity by modifying an existing product. In other words, they jumped into smartphones by modifying the iPod. If your industry is ripe for a once-in-a-decade innovation, and you already have a product ready-made to build on, then you too can be like Apple.
In opening new potential in the smartphone segment, Apple also set the stage for competitors to benefit, which has contributed to the rise of Android devices.
The Oft-Overlooked Writing on the Wall
Analysts tend to conflate the brilliant user experiences of products such as the iPhone or Tivo with an apparent invulnerability. In reality, the risk of being displaced by alternatives is present for any product, no matter how innovative and unique it may be.
Being a first mover is ultimately a temporary advantage, even though it may generate dramatic success for a time. First movers such as Apple often seek to control the ecosystem to protect the intellectual property of their innovation. That approach leaves them vulnerable to open, multi-vendor alternatives, which have advantages such as economies of scale and customer choice that can create strong competition for market segment share.
Precious Pearls of Wisdom
While a huge portion of Apple’s success is due to luck, there are a few true strategies they employed for a sustained competitive advantage. For example, Apple simplified the supply chain and controlled costs by offering only a small number of iPhone variations, which it manufactures at very high volume. It’s better to buy 12 million of one screen than 1 million of 12 screens.
More importantly, Apple did not let the fear of cannibalization prevent it from bringing a blockbuster product to market. Most companies are unwilling to take this risk. But as Tim Cook said during an earnings call, “If this is cannibalization, it feels pretty good!”
By Sean Campbell
By Scott Swigart
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