This is a very interesting data point. Although Nokia sells over a billion phones a year, this proves that you can target a narrow sliver of a huge market with futuristic innovation and still gain the majority of the profit available in the whole market.
Moreover, you create real value by innovating and pushing the future forward, reaping the reward from that. Nintendo has similar strategies.
Agreed, although I suggest that Apple has already proven that "you can target a narrow sliver of a huge market with futuristic innovation and still gain the majority of the profit available in the whole market." Macintosh systems account for 7% of the PC market and 35% of the profit.
More insanely, Apple has a 90% share of the revenue for PCs costing more than $1,000. Although smaller than the market for PCs costing less than $1,000, that's still a huge market and Apple has cornered nearly all of the money in it.
I think an important part that is perhaps underemphasized is that Apple has proven that Apple can do this. It's Apple's singular focus on quality that enables it, and it's surely the hard way to do it.
And Apple can do it precisely because it's hard. If it was simply a matter of targeting the high end, everyone would be doing it.
Fighting for market share and making infinitesimal margins across a large market share is the relatively easy and obvious way to do things, and it involves relatively easy and obvious processes of copying/iteration.
If it was simply a matter of targeting the high end, everyone would be doing it.
Everybody is doing it, but their execution is abysmal. They're trying to go toe-to-toe with the leader in those segments without the business and development processes to support it. Apple has singularly focused their entire company on this problem and have the execution nailed. Motorola, Dell, etc. are distracted by the low-margin high volume part of their business and can't focus enough to get it right.
You can't create a high end when there's a thriving low-end and its all commodity. Apple does this by prohibiting clones. There's no competition to pull down prices.
In the PC market Dell would love to go high-end, but they can't because Acer will ship the same machine, with plastic rather than carbon fibre, and sell it at 1/3 the price. Apple doesn't have that worry.
I'm not convinced that to the average buyer there is enough separation there any more to call them separate markets. I know several people who have bought Apple machines recently because they pretty much wanted "a computer" and as far as they were concerned the Apple machines were better enough than the alternatives to justify their higher price. It running OSX was a point of difference but only in the way that people buy eg. a Dyson rather than some other no-brand vacuum cleaner, not like a decision to buy a car instead of a motorbike.
Dell probably would love to have Apple's revenue share, but they don't have Apple's requirements for style so would make a hash of it. Theirs would also end up being plastic instead of carbon fibre.
Yes you can. Lexus, J Crew, AMC tv and many others have proven you can. THe poor and tasteless go for the Crap while the wealthy/farsighted go for the quality/design.
Technology is an echo-chamber. Step outside it and look at what other people have done, then learn from their success.
Only JCrew is in a commodity market. Lexus is really more like Apple. While made by Toyota it generally have very different designs, for example the LS460. AMC TV is clearly not a commodity at all, even less so than Apple.
JCrew is clearly in a commodity market, but they're not exactly upscale. I'd consider them the $800 laptop. Not Walmart/Netbook, but certainly not expensive. And there are expensive clothing manufacturers, but there's a reason why Gap sells hundreds of millions in jeans, while $500 designer jean brands come and go like the wind.
Fighting for market share and making infinitesimal margins across a large market share is the relatively easy and obvious way to do things, and it involves relatively easy and obvious processes of copying/iteration.
You would think so, but while WalMart has proven that WalMart can do it in retailing, many other businesses have proven that they can't.
So in the end I agree that simply proving such-and-such is possible is not a recipe for any old company doing it.
Although Nokia sells over a billion phones a year, this proves that you can target a narrow sliver of a huge market with futuristic innovation and still gain the majority of the profit available in the whole market.
Apple even pointed this strategy out in the original 2007 MWSF keynote where the iPhone was announced. They showed their math, pointed out the global annual sales volume of phones was almost 1 billion devices. They then said 1% of that would be a great starting point because that's still ten million phones out the door and it's a good place to carve out a high value niche.
Personally I think the claims of Apple's innovation are way overblown. They aren't innovators, they are generally executors. They execute very well, and market very well.
The only innovation I can really find where they were truly leaders is the concept of the app store - which admittedly has been huge - but outside of that they sell an extremely well executed smart phone and tablet.
Aside from that, Nintendo's strategy is miles away from Apple's.
I expected disagreement, but didn't expect it would be so strong as to lead to down votes without discussion.
I am not trying to 'troll' anyone here, but I think if you look at the truly innovative business processes, technologies, and sheer inventions, Nokia as a company has Apple beat hands down over the last few years.
Yes, in some sense, building a better mouse trap is innovation, and no one can deny Apple's success as a company especially over Nokia's, but I would still strongly contend it has more to do with sheer execution and market positioning over sheer innovation.
It's just hard for most people [including me] to look at any smartphone today (essentially all of which are clearly directly descended from the iPhone) and agree with the idea that "Apple is not innovative". I'm not sure what one would have to be looking at to not see the products they ship as innovative.
I'm curious now. What part of the iPhone is innovative? To me it seems like a Palm Pilot with a phone app. Well, and a few hardware updates, but it was released ten years later, so you expect the hardware to be better.
What parts does one have to look at to see the innovation? I feel like I'm missing something obvious...
The multitouch screen interface. A mobile browser that works. Visual voicemail. Text messages threaded in a conversation view like a chat client.
And that was just version 1.0 in 2007, which is still better than most Nokia phones today. Then they launched the App Store and the iPad.
I'm sure someone had a touch screen phone, somewhere, before the iPhone. But no one nailed all those little features of user experience. I'm sure the software/hardware for a consistent multitouch screen capable of being manufactured at scale was alone a very big deal.
The obvious thing is the amazing software coupled with a touchscreen that actually worked. And I don't mean sorta worked, as long as you used a stylus and whacked it hard enough like the Palm Pilot, I mean you glide your hand on the screen and it reacts like a physical piece of paper being dragged around. Nothing like this existed before the iPhone and all smartphones today are clear descendants.
downvoting is endemic lately, dont worry. Apple does innovate too, it's just in sectors that are usually overlooked by rivals: industrial design, form-over-function
Another interesting point about the Nintendo model, their approach is not only more innovative, but it's not cutting edge, and it's cheaper than the competition.
It's also interesting that Nintendo and Apple often innovate with similar technologies. The central innovations of the DS and wii -- touchscreen and motion controls respectively -- would up being tentpoles of the iPhone.
Four years later and Nintendo's been first to mass market with a 3D device and the central innovation for the wii 2/HD appears to be advanced haptics, something we've seen a number of Apple patent applications for. It will be interesting to see if Apple again catches the rest of the phone industry napping with their implementations of these technologies.
Moreover, you create real value by innovating and pushing the future forward, reaping the reward from that. Nintendo has similar strategies.