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I'll concede the IPhone bit. But the iPad is disruptive. You don't have to dominate a market to be disrupted. You only need to be upset by a "not as good, but

I'll concede the IPhone bit. But the iPad is disruptive. You don't have to dominate a market to be disrupted. You only need to be upset by a "not as good, but more convenient" low margin alternative. That is the iPad.

kenjackson 15y ago
No,the market share is important. Why? Because what's key in a disruptive technology is that it creates a situation where you have a hard decision to make. The reason it is the innovator's DILEMMA is that the company realizes that if this disruptive product suceeds they probably, in the medium-term, lose a lot of money. But its necessary for long-term survival, but doesn't guarantee it. The iPad is a no-brainer. If it does well then Apple does really well. There's no dilemma. It has good margins and out the gate better sales than the Mac. No one at Apple stomped their fist on a table and said, "If the iPad does well, that may spell the end of this company! We can't afford to do this ipad Steve, it's not in our best interest." No one can make that argument. With disruptive technologies you can make that argument. In fact the argument is typically so compelling that it wins.
- scottdw2 15y ago
  I disagree, completely. 1) The iPad is not a no-brainer. Far from it. Apple is a public company, with billions of dollars of revenue and many short-term focused investors it needs to satisfy. The same pressures of "profit maximizing resource allocation" apply to Apple that apply to Microsoft. If apple sells iPads entirely at the expense of Macs, it could go out of business. Someone very well could have made the argument that it would destroy the company. 2) Disruption is about building "more convenient" but "not as good" innovations that target low margin segments of the market. It's not about the % of the market that the largest incumbent holds. You can disrupt an industry with 9 players with 10% of the market just as easily as you can disrupt an industry with 1 player with 90% of the market. For Google to sell netbooks is a no-brainer (they don't disrupt any of Google's existing businesses). For Apple to sell iPads is gutsy.
  - kenjackson 15y ago
    Your point (1) is wrong. From 2010, before the iPad: "A report in the Wall Street Journal notes that in the 2010 Apple fiscal first quarter, which ended Dec. 26, iPhone and related product revenues came to $5.6 billion, 36 percent of Apple’s revenue total. That compares with $4.45 billion for total computers and $3.39 billion for iPods. The iPhone, clearly, is largely responsible for doubling Apple’s sales over the past three years. Even though computer sales are up sharply at Apple, iPod sales have been roughly flat over the same period. The associated increase in gross profit margin is even more impressive. The iPhone carries higher margins than do other Apple products, so the gross revenue of the company has increased from 31 percent to 48 percent over that same three-year period. " http://iphonetouch.blorge.com/2010/01/27/apple-gets-more-revenue-from-iphone-than-from-macs-or-ipods/ http://iphonetouch.blorge.com/2010/01/27/apple-gets-more-rev... Apple only made 33% of their revenue from their computers. And even moreso, as noted in that article, the iPhone carried much higher margins than their other products. I don't think its any stretch to believe that margins on the iPad are similarly large. IOW, even if the iPad cannibalized all of their Mac sales, they were on solid ground, because its clear their revenue and margin growth was not the Mac, but the iPhone and eventually the iPad. It was obvious that iOS was their key platform, not OSX. Nothing is a sure shot in business, but this was about as easy a call as it gets. On (2) we were explicitly not talking about disrupting an industry. We were talking about Apple disrupting itself. I don't think it was at all gutsy for Apple to sell iPads. The market math just made too much sense. WebApps are gutsy for Apple now, since it undermines their huge app ecosystem. New devices that build on their iOS platform are not gutsy nor disruptive (unless they do something like give iOS away for free and make money just from the appstore).
  - scottdw2 15y ago
    Checkout Microsoft's last quarterly report: http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=7885827#D10Q_HTM_TX162483_3 http://apps.shareholder.com/sec/viewerContent.aspx?companyid... The "Microsoft Business Division" (which includes Office) had 5.266 Billion in Revenue, out of 16.428 Billion in total revenue. That's 32% of revenue. Apple disrupting Mac sales is roughly equivalent to Microsoft disrupting Office sales. It's a big deal.

kenjackson 15y ago

No,the market share is important. Why? Because what's key in a disruptive technology is that it creates a situation where you have a hard decision to make. The reason it is the innovator's DILEMMA is that the company realizes that if this disruptive product suceeds they probably, in the medium-term, lose a lot of money. But its necessary for long-term survival, but doesn't guarantee it. The iPad is a no-brainer. If it does well then Apple does really well. There's no dilemma. It has good margins and out the gate better sales than the Mac. No one at Apple stomped their fist on a table and said, "If the iPad does well, that may spell the end of this company! We can't afford to do this ipad Steve, it's not in our best interest." No one can make that argument. With disruptive technologies you can make that argument. In fact the argument is typically so compelling that it wins.

scottdw2 15y ago
I disagree, completely. 1) The iPad is not a no-brainer. Far from it. Apple is a public company, with billions of dollars of revenue and many short-term focused investors it needs to satisfy. The same pressures of "profit maximizing resource allocation" apply to Apple that apply to Microsoft. If apple sells iPads entirely at the expense of Macs, it could go out of business. Someone very well could have made the argument that it would destroy the company. 2) Disruption is about building "more convenient" but "not as good" innovations that target low margin segments of the market. It's not about the % of the market that the largest incumbent holds. You can disrupt an industry with 9 players with 10% of the market just as easily as you can disrupt an industry with 1 player with 90% of the market. For Google to sell netbooks is a no-brainer (they don't disrupt any of Google's existing businesses). For Apple to sell iPads is gutsy.
- kenjackson 15y ago
  Your point (1) is wrong. From 2010, before the iPad: "A report in the Wall Street Journal notes that in the 2010 Apple fiscal first quarter, which ended Dec. 26, iPhone and related product revenues came to $5.6 billion, 36 percent of Apple’s revenue total. That compares with $4.45 billion for total computers and $3.39 billion for iPods. The iPhone, clearly, is largely responsible for doubling Apple’s sales over the past three years. Even though computer sales are up sharply at Apple, iPod sales have been roughly flat over the same period. The associated increase in gross profit margin is even more impressive. The iPhone carries higher margins than do other Apple products, so the gross revenue of the company has increased from 31 percent to 48 percent over that same three-year period. " http://iphonetouch.blorge.com/2010/01/27/apple-gets-more-revenue-from-iphone-than-from-macs-or-ipods/ http://iphonetouch.blorge.com/2010/01/27/apple-gets-more-rev... Apple only made 33% of their revenue from their computers. And even moreso, as noted in that article, the iPhone carried much higher margins than their other products. I don't think its any stretch to believe that margins on the iPad are similarly large. IOW, even if the iPad cannibalized all of their Mac sales, they were on solid ground, because its clear their revenue and margin growth was not the Mac, but the iPhone and eventually the iPad. It was obvious that iOS was their key platform, not OSX. Nothing is a sure shot in business, but this was about as easy a call as it gets. On (2) we were explicitly not talking about disrupting an industry. We were talking about Apple disrupting itself. I don't think it was at all gutsy for Apple to sell iPads. The market math just made too much sense. WebApps are gutsy for Apple now, since it undermines their huge app ecosystem. New devices that build on their iOS platform are not gutsy nor disruptive (unless they do something like give iOS away for free and make money just from the appstore).
- scottdw2 15y ago
  Checkout Microsoft's last quarterly report: http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=7885827#D10Q_HTM_TX162483_3 http://apps.shareholder.com/sec/viewerContent.aspx?companyid... The "Microsoft Business Division" (which includes Office) had 5.266 Billion in Revenue, out of 16.428 Billion in total revenue. That's 32% of revenue. Apple disrupting Mac sales is roughly equivalent to Microsoft disrupting Office sales. It's a big deal.