iPhones cannibalizing iPods is true in theory but misses it in spirit. It’s not a hard argument to make to sell a product that is more profitable and a larger addressable market.
The Mac just had its best quarter - ever - before the release of the M1 Macs.
You mean like the iPod was cannibalized by the iPhone, more or less, and it's revenues have been steadily declining (-28% this quarter compared to Q4 2013)?
There is nothing particularly brave about cannibalizing a rather cheap product (iPod) with an insanely more expensive one (iPhone), that also turns out to become obsolete much more quickly. I should know: I bought one iPod Nano and my sister-in-law is still using it today, however I'm on my third iPhone already.
The iPad Mini cannibalizing the iPad, or the iPad cannibalizing the MacBook are much bolder moves. That iPad Mini Retina does look good...
The iPhone is a more profitable platform than iPod. Cannibalizing the iPod market was a move that maximized long-term profit.
Jobs wanted the iPad to represent a unique interface and experience that was distinct from a laptop. They failed to do that and the touchscreen is the only difference that remains. Merging these products is only likely if they doesn't reduce overall expenditure on Apple products in the long-term.
Take the iPod maturation under Jobs - each iPod embodiment had a 'purpose' to fill the music / video need in your life. (One could say the iPod Touch was a 'gateway drug' because of vendor lock-in with Cingular/ATT than actually diluting a lower cost product.) Can we say the same of the iPhone line up? or is it excellently amortizing last years A{#} processor downstream at lower prices?
I think if we peeled back the facade, we can begin to see that it's been an operations play since Jobs died, and though the M1 is pretty dang amazing, what probably brought it over the line is the insane profit margins and 'upcylcing' Mac sales for folks having a M1 vs M3, etc...
But as everyone here has said - it could have been worse.
Companies don't just "abandon" $20B/year businesses, and it will sure take a lot more than a "few years" for that to decline to make a comparison to iPhone's inevitable cannibalization of the iPod. Additionally, they see iOS devices and Macs as completely distinct, thus not merging them into one like the Surface attempts. Your theories… are pretty much ludicrous.
Apple has never been shy to cannibalize their own sales, in fact it's straight out of the Steve Jobs playbook (“If you don’t cannibalize yourself, someone else will”). I'd challenge you to find a company better at it than they are.
Examples include:
iPod mini cannibalizing iPod
iPhone cannibalizing all iPods
iPad cannibalizing Macs
iPad (2017) cannibalizing iPad Pro
iPhone XR cannibalizing iPhone XS
They're even organized to support product cannibalization, being functionally organized instead of divisionally. If they had an 'iPod division', that division would fight tooth & nail against the 'iPhone division' to keep their P&L running.
They're not doing a 2-in-1 because it's not a product they feel makes sense right now. That's all.
No, I do not believe Apple had reason to worry about market cannibalization.
The iPod was a new product. The line was segmented well, with each having clear differences in form factor, eg you wouldn't be confused between what a nano might be useful for vs Touch. This is in contrast to electronic manufacturers that flood the market with an entire spectrum of product capability.
The iPhone and Ipad are again entirely different product lines that share the same codebase. This is not very different to Windows everywhere espoused by Ballmer. The difference is in how capable the entire organisation was in execution. Although Apple is immensely profitable, it is because it focusses on creating highly desirable products in niches that are only profitable through vertical integration.
I recall Jobs lamenting the fact that they barely make any profit on their l
Laserwriterswhile HP makes all the money off toners. Apple today judiciously avoids this type commodity computing markets.
The main take away is to sell clearly differentiated products. Give them different names and use cases so that consumers cannot be confused over what each product does.
Apple will become the Apple of the phone market much as it was the Apple of personal computer market.
I understand the sentiment here, but I don't think it's true. There was a recent quote from El Jobso (can't find off hand, sorry) saying that Apple actually sat on the top end of the market with the Mac (in his absence), got greedy, failed to innovate, and suffered.
Instead, look at what they did with the iPod. They didn't just remain as a high-end mp3 player, they developed products which covered nearly the spectrum of the marketplace, while still remaining the high-end brand.
I think past will be prologue, but it should be the iPod, not the Mac, that will be the best example. That said, when you're taking 50% of the profit in the market with just a 4% share, there's not a lot of reason to be particularly unhappy with your current position!
I'm not entirely sold on the "Innovator's dilemma" argument that "they can’t muster the courage to disrupt their existing revenue streams" in case of Apple - they seem to have been doing plenty of self-cannibalising since Jobs' return - Jobs slashed the numerous product lines to just 4 products when he returned; iPod Mini that cannibalised iPod sales, iPod Nano that cannibalised both of the mentioned, iPhone that cannibalised all iPods. They at least seem to be willing to compete with their own products.
1. The IPAD might did some cannibalization to the mac market but in general, it brought much more profits.It was a pretty good bet that this what it would do(esp. considering apple's supply chain strengths, expected prices for android and IPAD tablets, apple's marketing value and ecosystems, etc).
2. The iPhone was launched when it was clear that mobile phone would integrate MP3 functions, and the iPod market would die. But it was more profitable than the iPod, so no dilemma here.
The real test for the innovator's dilemma is:you develop and sell a new product that might HURT your profits ,but is the future of the industry because it's better or cheaper, and you understand that having some some slice of the(smaller) future is better than nothing.
Apple has repeatedly said they are not worried about this on their conference calls. The consensus is that the iPhone has been cannibalizing sales since its release.
Unfortunately apple doesn't have courage to cannibal their other devices contrary to Steve Jobs that allowed iPhone kill iPod. Which is weird considering Macs (especially iMacs and Macs mini) are really tiny part of their revenue and apple is trying to diversify and earn from services. They sell just around 25m macs per year comparing to 250m iphones. MacOS still has around 10% market share. They definitely have big opportunity to grow here and move more people to their ecosystem.
Similarly with Apple TV - great specs and cheap device but too much restricted. Wish they make tvOS more open, apple TV having at least one usb-c port and allow to add some magnetic modules to add smart speaker, router, local backup (with removable ssd), wireless charging for smart devices.
Apple's shown some willingness in the past to cannibalize their own sales (the iPod is a prime example), so my take is less pessimistic than yours. Though I also really want such a device (at least in theory), I think it's likely there are a lot of technical hurdles and trade-offs Apple finds unacceptable.
> Under Steve Jobs, Apple had a track record of cannibalizing its own products. In 2005, when the demand for the iPod Mini remained huge, the Nano was launched, effectively destroying the revenue stream of an existing product. And while iPod sales were still going through the roof, Jobs launched the iPhone which combined iPod, cell phone, and Internet access into a single device. Three years after the iPhone’s launch, iPad made its debut and raised the prospect of cutting into Mac desktop computer sales. So resolute was Apple’s determination in trading a highly profitable business for an unknown future that Jobs reportedly said “If you don’t cannibalize yourself, someone else will.”
> "The iPhone has to become so great that you don't know why you want an iPad," Schiller explained. "The iPad has to be so great that you don't know why you want a notebook. The notebook has to be so great that you don't know why you want a desktop. Each one's job is to compete with the other ones."
> Apple has shed light on this way of thinking before. During a quarterly earnings call with investors in early 2013, Apple CEO Tim Cook said the company's "base philosophy is to never fear cannibalization."
> "If we do, somebody else will just cannibalize it, and so we never fear it," Cook said. "We know that iPhone has cannibalized some iPod business. It doesn’t worry us, but it’s done that. We know that iPad will cannibalize some Macs. That doesn’t worry us."
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Meanwhile, Google is very cannibalization reluctant to the point of throwing away products that may impact its main revenue sources.
Apple famously cannibalizes their existing products deliberately, so I don't think that's what's holding them back. It's also strongly possible that Apple's eventual product will require an iPhone to function, so cannibalization might not even be an issue.
Apple also famously tries not to release products first, waiting until they can deliver something that fits well into their ethos. How well they succeed at that is an open question, and whether it's a wise approach is an open question, but it's their approach.
I'm not sure Apple can deliver another home run, but so far they've delivered more than anyone else I can think of, so I wouldn't bet against them either.
The truth probably lies somewhere in between what the flaming fanboy and Mr.Disgruntled are saying.
Apple seems to make the most money when they open up a new market and lock out the competition for a long period of time, as they did with the iPod. The iPhone's dominance was challenged quicker than the iPod's, and the iPad's quicker still. If you consider 7" tablets their own market, Apple is actually late to the party. Why are other manufacturers catching up quicker or even taking the lead? They all remember the iPod.
So what does this mean for Apple? The profits aren't going to come as easy as they did before because the competition moves a lot quicker than they used to. If Apple opens up a new market they're going to face competition in it almost immediately because the competition knows they have to move fast and is capable of doing so. No more decades of dominance and easy-money. Does that mean Apple is doomed? Absolutely not. Apple is still wildly profitable even though they are no longer completely dominant in even one market they make products for. Their production chain is lean enough that they can compete in markets dominated by commodity pricing. That focus on production efficiency is not going to change under Tim Cook. Quite the opposite!
There does seem to be evidence that we'll see an extended period of decline for Apple under Cook though. In the last couple years Apple has released several half-baked products and polish seems to be declining. e.g. OSX Lion and Mountain Lion have both had an aberrant number of bugs, even by the standards of other OS's. Jobs, unlike what many people think, was never an idea man. His value was in knowing who to copy and when to say "No", and Cook needed to say no to things like Apple Maps, or at least give them more time to bake. Even if Cook has truly horrible tech instincts it will probably take a very long time for Apple to decline to the point of losing money. Despite how far MS fell in some people's eyes, they never failed to turn a profit. Apple is also sitting on such a gargantuan pile of cash that they could lose money hand-over-fist for decades before running into real trouble.
Apple might not continue to be the leading juggernaut it's been for the last decade, but they're in no danger of going out of business.
The Mac just had its best quarter - ever - before the release of the M1 Macs.
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