Is Apple forcing us to rethink on how to innovate
There is something very disturbing about the success of Apple. Many a management guru has talked about the importance of openness, listening to customer and building partnership in fostering innovation. Here are 3 strongly held beliefs which Apple had been ignoring with impunity.
- Openness and diversity fosters innovation
- Listening to customer is stepping stone to great product
- Building an ecosystem around your product is prerequisite for market domination
Just look at these actions of Apple in the recent past.
- Blocking Palm from accessing music from iTunes – “…The iPod would have fizzled if Microsoft had blocked it from hooking up to Windows PCs…”
- Refusing to support Adobe Flash – “…Apple does not need to provide reasons for its decisions about what software they will allow you to run on a device you own…”
- Stopping developers from using any tools other than its own to develop application – “…you have to build iPhone apps within Apple’s pre-approved programming languages or watch your app be denied access to Apple’s app stores…”
- Making it difficult for developers to earn ad revenue from any source other than Apple’s – “…your apps can’t deliver ads through any service affiliated with a company that makes mobile devices or platforms — unless that company happens to be Apple…”
- Arm-twisting record companies – “…investigators had asked in particular about recent allegations that Apple used its dominant market position to persuade music labels to refuse…”
- Barring innovation if it comes from the competitor – “…the thing that really bothers me about the move is that Apple is now actively stifling innovation…”
- Complicating the process of getting applications approved for App Store – “…I’ve been twiddling my thumbs waiting for Apple to approve my iPhone App version of my book, ‘Free for All’…”
- Acting as a moral censor – “…Apple’s attempt to impose moral and behavioral “quality” rules will drive away customers…”
These steps appear to be whimsical and there are unhappy users who are even willing to switch. Here is one – “…I used to feel that, to get the best Smartphone software and hardware experience, I had to live in Apple’s walled garden. Now, the walls are getting higher and life outside the garden looks better and better…” – Apple is erecting a walled garden around its platform. If Apple wanted they could have easily retained these people – all they had to do was to relax the iron grip a little. Also, Apple could have taken several steps to increase their market share like signing up with more carriers.
So … Is their success “because of” or “in spite of” these actions?
It depends on what you define as success. Though there is lot of commotion in the internet about Apple overtaking Microsoft on market cap, if you take a dispassionate look their financial success is not really spectacular.
- Market capitalization – It is like saying Juan Martín del Potro is more successful than Roger Federer because he has beaten Federer in 2009 US Open. Microsoft had held that position for years. Only during the dotcom boom in 2001 Cisco overtook Microsoft for a brief period. Microsoft.
- Revenue – Apple is definitely not the leader. Top 5 IT companies are HP, IBM, Dell, Microsoft & Oracle!
- Profitability – There is a company called Google whose profitability is 35%+ compared to Apple which is around 20%.
- Market share – I vaguely recall that there is a company called “Research In Motion which” has 7% more smart phone market share compared to Apple.
So, Apple’s success is not very unique if you only take these financial parameters into account. However, if you measure it by the loyal fan following, I do not think anybody can come close to Apple.
Here are 3 interesting quotes I have picked up from a post by Farhad Manjoo – Invincible Apple: 10 Lessons From the Coolest Company Anywhere
- “…That’s Apple’s audience: high-end mainstream, the folks who buy — or aspire to buy — Porsches…”
- “…Apple cultivates religious fervor among its adherents in a number of subtle ways, including its mysteriousness and its suggestion that customers are among the chosen ones…”
- “…If you want to live in the creative universe where anyone with a cool idea can make it and give it to you to run on your hardware, the iPad isn’t for you…”
Apple chases away customers who are not diehard Apple fans. Apple fans will gladly pay premium for anything. Apple is also systematically plugging holes for possible revenue leakage. What Steve Jobs is saying is – “I am only interested in the premium segment and I do not want to share any part of the kitty”.
Should we learn from and emulate them?
Farhad offers 10 lessons but what he forgets to say is that to make use of this advice you need to…
- … be a genius like Steve Jobs (there is no doubt that he is a genius – nobody else in the history has designed 5 path breaking product)
- … hit upon a technology which your competitors cannot match even after 2 years (nothing yet comes close to iPhone/iPad touch screen)
- … be at the right place at the right time where you can redefine a product category (iPhone did exactly that)
Otherwise, it would be wiser to stick to the traditional mantra of “Openness”, “Listening to Customer” & “Building Eco-System” for product innovation. Even Apple does not always get it right. They always designed beautiful products but it did not help them to get even 10% market share in the PC market.
Finally – If you are an Apple fan DO NOT read this – Apple’s iPhone 4: The joke’s on us.