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It feels like Apple is caught in the classic "innovator's dilemma" described in Christensen's book. Constantly being pushed to higher margin products by competi

It feels like Apple is caught in the classic "innovator's dilemma" described in Christensen's book. Constantly being pushed to higher margin products by competition which is focused on the low end market. The problem is, at some point, the "low-end" products become good enough, causing a sudden loss of sales. The way out is to come up with entirely new products, which Apple has done remarkably well before. I think it's high time they do so again. I think the drive to create high margin products is making Apple gravitate towards pushing out technologies that differentiate them from the rest, such as the touch bar, or these keyboards. But it may not actually be better.

scarface74 8y ago
People have been saying that for at least 7 years - that Samsung would take over and kill Apple’s margins. He has been consistently wrong about the iPhone https://stratechery.com/2013/clayton-christensen-got-wrong/ https://stratechery.com/2013/clayton-christensen-got-wrong/ He doesn’t have the greatest track record when it comes to the iPhone. https://jeremy.linuxquestions.org/2007/06/28/clayton-christensens-innovators-dilemma-says-iphone-will-fail/ https://jeremy.linuxquestions.org/2007/06/28/clayton-christe... It looks like another case of “No Wireless. Less Space Than the Nomad. Lame”.
- czardoz 8y ago
  Seven years is not that big of a timeline IMO. These changes happen over a couple or more decades. IBM is still around, but it's not really a leader anymore, is it? I'm pretty sure there will be a sizable market for Apple products. It's just that they might lose the edge after some time.
  - scarface74 8y ago
    He was wrong from day one and predicted that the iPhone wouldn’t be successful when it was first introduced before it went on sell.
    - czardoz 8y ago
      Yes, I'm not saying the person you quoted is correct with his failure predictions. But it sure seems that Apple is caught in the innovator's dilemma.
      - scarface74 8y ago
        The person I quoted was the author of the “innovator’s Dilemma”. The symptoms of it is new entrants coming in from below with “good enough” products that are cheaper. Forcing the market leader to lower prices. Apple has been headed in the opposite direction for years. He also predicted that “modularity beats integration” as a market segment matures because you have more companies specializing in parts of the product and putting R&D behind it. But look at what’s happening in the phone market. Apple is consistently bringing out better processors than the rest of the industry. The operating systems are definitely not behind the competitors. By being tightly integrated for instance, they were able to tell developers to submit watch apps using bitcode (?) because they knew four years later they were going to introduce a 64 bit chip got the watch. Another advantage you are seeing in the market because of integration vs. modularity is that Apple can push OS updates for all of its devices that have been introduced since 2013 in one day. The “modular” Android ecosystem, not so much.
        ksec 8y ago
        The theory of innovator's dilemma ignores one of the fundamental issues in today's computing world. And that is software lock in. I think we are only just starting to see good enough products that are cheaper. Huawei, OnePlus, Xiaomi all have better software than Samsung, and arguably better design and hardware at similar price range as well. So it remains to be seen whether innovator’s Dilemma as a theory is wrong. All the three companies are only just setting foot in Europe and need a few more years to play out in other parts of the world. Another thing is that there has never been a company that sell premium products and got 20% of unit sales market share and even higher in usage shares. At least I am not aware of. Apple may very well be the only one in history. And the unit sales, combined with high margin has allowed them to constantly innovate. The original theory behind innovator’s Dilemma never expected the innovator has such high margin and high sales. And I think it is one reason why Wall Street has low valuing Apple Stock. They have never seen it, there are no case studies in all the text book.
  - matt4077 8y ago
    A prediction of Apple losing its dominance "over a couple of decades" is useless. It's almost guaranteed to occur at some point by statistics alone, in exactly the same way as any single wine glass in a restaurant will eventually be dropped. Plus reversion to the mean, obviously. And the fate of Samsung, (and some other company I can't even remember but that was dominant for Android phones before that) shows that the Innovator's Dilemma just doesn't apply, at least not yet. The theory's whole stick is that it describes a mechanism that cannot be defended. That's why it's termed a "dilemma". Apple has successfully withstood dozens of attacks with low-end generics, showing quite clearly that this is currently just a regular market. Samsung and other competitors also show that it's ridiculous to analyse this market in time frames of "decades". At that resolution, it's quite likely that, when the history of this market is eventually written, Samsung wouldn't even show up! The rather wild swings in profits and market share of all competitors also show that for the market segment in general, a single year (which not coincidently aligns with the product cycle) is the adequate granularity. It's only Apple that somehow manages to show a rather strange stability among this volatility.
- Apocryphon 8y ago
  Okay, forget about Apple's sales and market position- the average consumer doesn't care about that. The question should be, will Apple innovate and improve as it has in the past in a way that benefits customers? And will it do so in a way that doesn't just serve the higher-end market?
  - scarface74 8y ago
    Apple has never served anything but the higher end market that’s where the money is. Even in the heyday of the Apple //e back in the early 80s, thier computers cost more than thier competitors. As can be seen in the Android market and the PC market, it’s hard to “innovate” while competing on price.
vondur 8y ago
Apple doesn’t really compete on the low end, low margin side. Lower end laptops and phones have been “good enough” for a while. Yet Apple still sales tons of products.
- czardoz 8y ago
  If you look at the last earnings report from Apple, they've now stopped reporting the number of iPhones sold. Yeah, the revenue would be growing (because they keep jacking up the prices), but I'm pretty sure the reason they made this change is that they're no longer selling that many.
  - scarface74 8y ago
    Or because no one else is reporting volume and it puts them at a disadvantage.
    - NicoJuicy 8y ago
      Yeah..... No. PS. Because of downvotes: doing it because of competition is a possible reason, not THE reason if the unit sales are starting to drop after 15 years. See whataboutism: https://nl.m.wikipedia.org/wiki/Whataboutism https://nl.m.wikipedia.org/wiki/Whataboutism
      - IBM 8y ago
        Apple's unit sales for iPad were declining YoY for a few years (after rocketing out of the gate) before they stabilized. iPhone unit sales have been more or less flat for the past 3 years (with YoY declines against comps). They still reported units during that period. It's possible that they've decided to stop reporting unit sales because they're anticipating that they'll decline from here, but it's unlikely considering that this has already happened and they reported them anyway. The actual reason why they've stopped reporting units is because they're retraining the shareholder base to look at Apple and the ecosystem of products holistically.
      - scarface74 8y ago
deelowe 8y ago
They should move into other consumer goods. TVs, cars, home appliances, home automation So many things out there that I think apples ux centric design could really improve.
makecheck 8y ago
The weird thing is that there are lots of new things that Apple is in a unique position to make, that people would pay for, and these things aren’t made. Apple could make tons of money. For example, they should make iOS devices true companions of Macs, to the point where you can simply use iPhone/iPad as a direct input. (Why they went the 1D “Touch Bar” route is beyond me; it makes much more sense to simply assume people already have great 2D touch screens and find a way to bridge to those.) Then laptops wouldn’t have compromises in multiple areas. Even on the software side. They make money on the App Store but they could make way more money by giving consumers reasons to actually try things, i.e. “try before you buy”, paid upgrades, etc. They have created a software environment where things feel more likely to be scams than useful, which is nuts.

scarface74 8y ago

People have been saying that for at least 7 years - that Samsung would take over and kill Apple’s margins. He has been consistently wrong about the iPhone https://stratechery.com/2013/clayton-christensen-got-wrong/ https://stratechery.com/2013/clayton-christensen-got-wrong/ He doesn’t have the greatest track record when it comes to the iPhone. https://jeremy.linuxquestions.org/2007/06/28/clayton-christensens-innovators-dilemma-says-iphone-will-fail/ https://jeremy.linuxquestions.org/2007/06/28/clayton-christe... It looks like another case of “No Wireless. Less Space Than the Nomad. Lame”.

czardoz 8y ago
Seven years is not that big of a timeline IMO. These changes happen over a couple or more decades. IBM is still around, but it's not really a leader anymore, is it? I'm pretty sure there will be a sizable market for Apple products. It's just that they might lose the edge after some time.
- scarface74 8y ago
  He was wrong from day one and predicted that the iPhone wouldn’t be successful when it was first introduced before it went on sell.
  - czardoz 8y ago
    Yes, I'm not saying the person you quoted is correct with his failure predictions. But it sure seems that Apple is caught in the innovator's dilemma.
    - scarface74 8y ago
      The person I quoted was the author of the “innovator’s Dilemma”. The symptoms of it is new entrants coming in from below with “good enough” products that are cheaper. Forcing the market leader to lower prices. Apple has been headed in the opposite direction for years. He also predicted that “modularity beats integration” as a market segment matures because you have more companies specializing in parts of the product and putting R&D behind it. But look at what’s happening in the phone market. Apple is consistently bringing out better processors than the rest of the industry. The operating systems are definitely not behind the competitors. By being tightly integrated for instance, they were able to tell developers to submit watch apps using bitcode (?) because they knew four years later they were going to introduce a 64 bit chip got the watch. Another advantage you are seeing in the market because of integration vs. modularity is that Apple can push OS updates for all of its devices that have been introduced since 2013 in one day. The “modular” Android ecosystem, not so much.
      - ksec 8y ago
        The theory of innovator's dilemma ignores one of the fundamental issues in today's computing world. And that is software lock in. I think we are only just starting to see good enough products that are cheaper. Huawei, OnePlus, Xiaomi all have better software than Samsung, and arguably better design and hardware at similar price range as well. So it remains to be seen whether innovator’s Dilemma as a theory is wrong. All the three companies are only just setting foot in Europe and need a few more years to play out in other parts of the world. Another thing is that there has never been a company that sell premium products and got 20% of unit sales market share and even higher in usage shares. At least I am not aware of. Apple may very well be the only one in history. And the unit sales, combined with high margin has allowed them to constantly innovate. The original theory behind innovator’s Dilemma never expected the innovator has such high margin and high sales. And I think it is one reason why Wall Street has low valuing Apple Stock. They have never seen it, there are no case studies in all the text book.
- matt4077 8y ago
  A prediction of Apple losing its dominance "over a couple of decades" is useless. It's almost guaranteed to occur at some point by statistics alone, in exactly the same way as any single wine glass in a restaurant will eventually be dropped. Plus reversion to the mean, obviously. And the fate of Samsung, (and some other company I can't even remember but that was dominant for Android phones before that) shows that the Innovator's Dilemma just doesn't apply, at least not yet. The theory's whole stick is that it describes a mechanism that cannot be defended. That's why it's termed a "dilemma". Apple has successfully withstood dozens of attacks with low-end generics, showing quite clearly that this is currently just a regular market. Samsung and other competitors also show that it's ridiculous to analyse this market in time frames of "decades". At that resolution, it's quite likely that, when the history of this market is eventually written, Samsung wouldn't even show up! The rather wild swings in profits and market share of all competitors also show that for the market segment in general, a single year (which not coincidently aligns with the product cycle) is the adequate granularity. It's only Apple that somehow manages to show a rather strange stability among this volatility.
Apocryphon 8y ago
Okay, forget about Apple's sales and market position- the average consumer doesn't care about that. The question should be, will Apple innovate and improve as it has in the past in a way that benefits customers? And will it do so in a way that doesn't just serve the higher-end market?
- scarface74 8y ago
  Apple has never served anything but the higher end market that’s where the money is. Even in the heyday of the Apple //e back in the early 80s, thier computers cost more than thier competitors. As can be seen in the Android market and the PC market, it’s hard to “innovate” while competing on price.

vondur 8y ago

Apple doesn’t really compete on the low end, low margin side. Lower end laptops and phones have been “good enough” for a while. Yet Apple still sales tons of products.

czardoz 8y ago
If you look at the last earnings report from Apple, they've now stopped reporting the number of iPhones sold. Yeah, the revenue would be growing (because they keep jacking up the prices), but I'm pretty sure the reason they made this change is that they're no longer selling that many.
- scarface74 8y ago
  Or because no one else is reporting volume and it puts them at a disadvantage.
  - NicoJuicy 8y ago
    Yeah..... No. PS. Because of downvotes: doing it because of competition is a possible reason, not THE reason if the unit sales are starting to drop after 15 years. See whataboutism: https://nl.m.wikipedia.org/wiki/Whataboutism https://nl.m.wikipedia.org/wiki/Whataboutism
    - IBM 8y ago
      Apple's unit sales for iPad were declining YoY for a few years (after rocketing out of the gate) before they stabilized. iPhone unit sales have been more or less flat for the past 3 years (with YoY declines against comps). They still reported units during that period. It's possible that they've decided to stop reporting unit sales because they're anticipating that they'll decline from here, but it's unlikely considering that this has already happened and they reported them anyway. The actual reason why they've stopped reporting units is because they're retraining the shareholder base to look at Apple and the ecosystem of products holistically.
    - scarface74 8y ago

deelowe 8y ago

They should move into other consumer goods. TVs, cars, home appliances, home automation So many things out there that I think apples ux centric design could really improve.

makecheck 8y ago

The weird thing is that there are lots of new things that Apple is in a unique position to make, that people would pay for, and these things aren’t made. Apple could make tons of money. For example, they should make iOS devices true companions of Macs, to the point where you can simply use iPhone/iPad as a direct input. (Why they went the 1D “Touch Bar” route is beyond me; it makes much more sense to simply assume people already have great 2D touch screens and find a way to bridge to those.) Then laptops wouldn’t have compromises in multiple areas. Even on the software side. They make money on the App Store but they could make way more money by giving consumers reasons to actually try things, i.e. “try before you buy”, paid upgrades, etc. They have created a software environment where things feel more likely to be scams than useful, which is nuts.