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Apple- Causing Market Disruption, One Product At A Time

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Love it or Hate it, but you can’t deny it. Apple does what no other company can and in fact does it time and again.What exactly are we talking about?

Contents

DISRUPTION

Before getting into the kind of disruption I intend to talk about, lets take the Wikipedia version of Disruption when applied to technological products,

Disruptive innovation is a term used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically by lowering price or designing for a different set of consumers.

Well, Apple sure does not qualify on the ‘lowering price’ grounds but it sure does take the cake for ‘designing for a different set of consumers’. Call it the exclusive price tag or the so-called close ended architecture of Apple products, Apple products do not really appeal to a mass market. Yet, Apple seems to be doing quite well for itself, isn’t it. More than being a company which believes in disruptive innovations, Apple is equally good at creating a disruption in the market segment it operates too.

Let’s take two different products from the Apple stable targeted at a market no one would have imagined Apple to focus on when they launched

iPod:

Sony was the unanimous king of the MP3 market with no other competitor in close sight. Well, Apple caused a whirlwind of sorts with the launch of iPod- a tiny little MP3 player which took the world by storm. Did Sony even think Apple of all the companies would kill its MP3 product? Apple did it by creating a disruptive product by sheer design i would say even though the underlying technology is advanced too. But, it exploited the boundaries of a typical MP3 player by creating a small and handy player which caught everyone’s fancy and made Sony Walkman perish like it was never there.

To justify the disruption of the MP3 market caused by iPod, please find the graph below

MP3 Market Share, 2009

image

(Source)

iPhone:

Do we even need to talk about this one. This beauty from Apple sure shook the Smartphone market big time, at the time when Nokia only thought it had RIM to take care of when it came to Smartphones.

Well, Apple had another armor in its kitty this time for the Mobile Telephone Market called the iPhone. Put together a super sexy design, state of the art technology and throw in the usual Steve Jobs magic of buzz generation, iPhone was making waves in the smartphone market in no time. So much so that Nokia seemingly admitted missing out on the Smartphone bus. The numbers bear the testimony here too with Apple raking in becoming the third largest smartphone manufacturer by worldwide sales with close to 17% marketshare. Well, the numbers in the case may not completely justify the disruption but Apple took this market share in the less than 2.5 half years of its launch.

Smartphone_Sales

(Source)

However, the smartphone market is seeing another disruption in the form of Android based phones with Google at the helm of matters. This will make things interesting for sure in years to come but even then credit goes for iPhone for disrupting the smartphone marketplace like it did.

iPad: Eh,too early to talk about it. May be but may be 1 million iPads sold within a month must mean something right. Apple may have all the hype and buzz for its products but even then the product needs to be good enough to sell at a phenomenal pace right.

What’s even more interesting to me that is that I can’t figure out a single market segment that the iPad operates in. Does it compete in the Netbook/Notebook space or does it compete with the likes of Amazon Kindle in the e-Reader segment. iPad is a device which is evidently battling in a lot of segments even though there have been opinions that it is not a complete “anything”.

Is iPad a disruptive product then?

In my opinion, it sure is. What’s more, it is potentially a product which could cause disruptions in multiple market segments including the ones it already enjoys a leadership position. For starters, iPad was driving close to 26% of the total mobile traffic for www.wired.com in less than 3 weeks of its launch. But then, that’s not an hugely indicative point in justification to iPad being a disruptive product.

But, iPad is indeed causing teething trouble for the Netbook manufacturers as pointed out in this Business Insider article which shows the drastic reduction in Netbook sales in the US after the launch of iPad. So, is Apple out to take on the Netbook marketshare with the iPad. It might be difficult given some definite technical limitations in the iPad when compared to Netbooks but it sure is ringing the warnings bells for the Netbook manufacturers. Moreover, let’s not forget that iPad is not being positioned as a Netbook so that’s not the only market it is trying to disrupt. Given the rave reviews of the iPad as a great eReader, I wouldn’t be surprise if iPad sends the Kindle folks at Amazon in a tizzy too.

Netbook, eReader and what else? Looks like iPad is going to eat marketshares in various other segments too and it is not going to spare other Apple products too. Here is a very interesting chart showcasing the various product that might get cannibalized as the author puts its,

2010-05-06_211755

(Source)

Going by the chart, we are talking about disruptions in as many as 5 markets including the MP3 market which the iPod currently leads. Interestingly, iPad is going to threaten the handheld videogame space too and by a good percentage. The likes of Nintendo might have to watch the iPad closely which thanks to the growing size of the Apple store could very well become a dominant handheld videogame device

I sure don’t understand how Apple is able to pull it off every time but it sure has pioneered the art/science of creating disruptive products. Do you think there is a specific business mantra that helps Apple cause a whirlwind in so many markets.

  1. Manju says

    Nice article !!
    I own ipod touch, iphone but not ipad…I decided not to buy as it did not offer anything more than bigger screen size, better processor & more costlier apps.

    I agree with you – Apple did a good job in terms of putting closing system in a neat, jazzy & quality shell with tons of apps.

    I am going for Android based smart phone in next few days which gives tones of flexibility to play around. It is only a matter of time until Android platform becomes available on netbooks with true productivity apps & flexibility to choose the brand/vendor.

  2. Viral says

    Hi Ankit,

    Welcome back to postings on Trak.in.
    Glad to see you after a long time and what better than Apple posting.

    Hope you’re doing well. Looking forward for more stuff from you.

    1. Ankit says

      Viral, Thanks for the warm welcome. Trying to get back to the groove and improve the quality of the content i write.Hopefully, i will be successful

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