Why Apple Resorts to Self-Cannibalization
The Rise and Fall of the iPod
Apple’s first breakthrough product was the Mac personal computer (PC) in 1984; it revolutionized the PC market in its day. The iPod was Apple’s second big breakthrough product, which went on to revolutionize the market for portable music players. Simultaneous success was gained when they launched the iTunes Music Store. Apple’s online music store allowed consumers a quick and easy way to purchase digital music legally, which was an important subject at the time, since the internet was rife with music piracy.
The iPod was introduced a mere four years following Steve Jobs’ return during the company’s darkest days. Apple’s brand image was catapulted as the iPod became another category-defining product. The iPod music player product was very innovative at the time as it proved Apple’s capability to actually design a product which the normal consumer didn’t realize they wanted. Most consumers found it harder to live without an iPod as all their neighbors had one, memorializing Steve Jobs’ ability to be a visionary leader. Apple as a company represented a great return on investment for early investors.
Apple quickly commanded over 70% of the market share for portable music players. And Apple’s brand rapidly became the leader for music devices and thereafter Apple’s distinctive headphones became a favorite pop culture item.
IPod sales contributed to boosting Mac unit sales because the Mac and iPod were seamlessly integrated together, since consumers like devices that will work well together. Since Macs and iPods are very complementary products, they helped each other propel more sales of the other. No need for cannibalization was present at that stage of product evolution.
Market rumors and speculation continues today whether Apple might be getting ready a similar move for their iPhone. For the last several years, the iPhone strategy pursued by Apple was to retire older generation models downward. This year could see a change if and when Apple launches a new iPhone model that has a mid-range price point for its target. This would push iPhone sales down, but simultaneously would push up unit sales.
Expert market watchers agreed it was an inevitable prophecy that multifunction smart-phones would come to replace the single-purpose music players. Apple, who was the strongest music player vendor, stood to lose the most from this market change– but that wouldn’t slow it down when it came time to introduce their smart-phone product. The positioning of smart phones in the market is quite different than personal computers (PC’s), wherein the Windows PCs actually have much more to lose from the fast rise in the popularity of mobile devices. Smart phones have been a huge aid to busy persons who need to check the position of their stock’s price or other investments on that particular day or during their lunch hour.
Across the last 15 years, it has been demonstrated that Apple has a unique capacity to self-cannibalize its own fantastic products. They did this with the Mac first and again with the iPod. Currently, the iPhone and the iPad both are undoubtedly the greatest products by Apple. The iPhone made it the normal expectation to have touch-screen interfaces, while the iPad continued to redefine and breakout a market in tablet mini-computers.
Mac’s future sales prospects are even dimmer when apple CEO Tim Cook recently predicted the market for tablets will soon pass up the PC market. Apple itself knew the revolution in mobile devices would act to cannibalize their venerable Mac, but it presents they have no concerns about the Mac’s eventual downfall.
The Mac won’t remain the only victim of Apple’s self-cannibalization…
History has a strong tendency to repeat itself, wherefore Apple will undoubtedly kill their iPhone and iPad by bringing out an even more innovative device soon. This is a foregone conclusion.
We consumers aren’t allowed to know what’s going on behind the curtain or the details about when or how this will take place, or which product will be created by Apple to accomplish the dirty work. The likeliest product categories Apple is probably experimenting with are smart TVs or smart watches. These may break the pattern of cannibalization temporarily by not being a direct threat to the iPad.or iPhone, and acting more as complementary devices rather than substitutes for their highly successful mobile devices.
The idea of a smart watch that is actually wearable computing represents a completely new area of technology that could eventually threaten the smartphones. Although the day is some years distant, eventually the iPhone and iPad will become as unimportant as the iPod is today.
And following the well defined pattern again, the flagship model is expected to be cannibalized to a large degree. Apple appears not particularly concerned with this, due in large part to their secret, that they have figured out the key to successful cannibalization.
The Key to Successful Cannibalization
The key trick for Apple is to maintain its lead in consumer technology trends while it’s able to undermine its previous successful designs. This is the key to successful cannibalization: Apple’s sole focus is simply to create great products, one after another, even if they make former products semi-obsolete. Cannibalization of its own products is merely a byproduct process providing Apple can continue to bring out innovative products consumers like in abundance.
Apple CEO Tim Cook once stated “when cannibalization becomes a determining factor in choosing which products to pursue and which not to, a company has already lost sight of what’s really important: the customer.”
Hockey legend Wayne Gretzky provided one of Steve Jobs’ favorite quotes stating: “I skate to where the puck is going to be, not where it has been.” Steve Jobs maintained it was always “better for Apple to cannibalize itself instead of waiting for a rival to do so.”
Apple remains one of the best performing companies to invest in today in 2013.
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