> There is perhaps no idea this blog has litigated against more fiercely than the idea of low-end disruption and the inevitable doom of the iPhone.
They have been disrupted in markets where phones compete on price. Their most successful market, by a wide margin, is the one where phones are capped at $200. The comparison to BMW that is often made is laughable. If only BMW sold to dealerships who then turned around and sold the car for the same price as a Toyota. It's a droll-worthy position to be in, that's for sure.
It would be interesting to see how the U.S. market changed if there were no subsidies. My guess is that payment plans would be more common so it wouldn't be such a tremendous blow. But I always wonder if "good enough" Nexus style devices would become more popular and the Galaxy Ses and iPhones a little bit less.
Carriers in the US are already moving away from the subsidized model. Verizon has the Edge program where you make monthly payments on the phone for the duration of your contract, but interest-free. Your payments are setup to last the full length of the contract, if you would like to leave the contract, all you have to do is pay the rest of the balance you owe on the phone.
One of our networks in Switzerland (Sunrise) has a really innovative subscription model: They give you a cheapish subscription that's completely independent of the phone (~25-40$/m depending on whether you need unlimited free calls etc.) and which you can cancel/modify with every month. Then they offer you a leasing contract for your phone where you choose yourself how many monthly payments you'd like to make (payment per month inverse proportionate to the contract duration). At the end you can have about the same total cost of ownership as before, but you're much more flexible. The leasing contract amounts to ~5-8% interest on the upfront price for the whole duration and it's not dependent on how you set it up.
So, I wonder how many people will opt to just buy it up front now, when the subsidy isn't hidden anymore. It could also have a negative impact because some people will find it too complicated, however the widely trusted consumer review and comparison sites all give it a big thumbs up, so I think many will figure out why it's better.
Where have they been disrupted? There are places they've always done worse at but they aren't making 90% of industry profits last quarter just becuase of one region.
We've heard the tired argument before that Apple won't be able to sell in places like China that don't have a subsidized market. How's that prediction actually working out?
Strange that he thinks Xiaomi is the company of reference for this gigantic new market, when Google has very good alternatives for each one of the services. Whatever you might think of the Google versions, hard to see how Xiaomi will get more traction than Google outside of China.
Homekit -- Google Nest with Android Home.
Carplay -- Android Auto, not to mention what crazy things the self driving cars research will provide.
Apple Pay -- Google Wallet
Siri -- Google Now
HealthKit -- Google Fit
EDIT: BTW, I see that his refutation of Christensen hinges on the nebulous "user experience". It is not clear what "user experience" or the often repeated most Apple-like quality "design" actually entails. For a very good analysis of the pitfalls of just using “design” as a strategy to create market-defining products at Path, Dropbox, Square, Medium is by a designer
Basically, he argues that Xiaomi is built around serving a market that neither Apple or Google are serving: young people that are technically savvy but don't have the funds to be early adopters. There's a whole generation of them in China that have grown up during China's boom. There aren't many of them in the US, but that's not the same thing as "outside of China." Xiaomi will probably find a lot of fans in South Asia (particularly India), South America (Brazil) and Africa (Nigeria, South Africa).
I'd hazard to say that the nebulous "user experience" advantage for Apple boils down to consistently committing to integration of a handful of products.
Google seems to have an iterative sink or swim approach with many products (often overlapping) and to a lesser extent, so does Amazon.
Turns out actually meeting a market need is important (Path), having a functional business model (Square), knowing your target customer (Dropbox), and we'll see with Medium.
User experience is a differentiator. It's not the only thing.
It's really hard to build a case against disruption theory, using a single product, especially when the competition has only been "good enough" just since the last year or so, with kitkat and apps using its design language, while there are other strong factors keeping iPhone strong, be it strong brand, stronger app ecosystem, and various lockup effects.
But I'll be happy to be proven wrong with other examples for Thompsons theory.
Technology has a delayed effect. As in what was high-tech back then is low-tech now. Computers have finally become low-tech.
Apple is top heavy, the ones in charge are the ones that scraped to the top and didn't retire or leave. They have with them the ideas that came about and pioneered in the 60's and 70's and are only finally now being in the position and getting around to implementing them.
Underneath them is a cadre of management that grew up and holding on to ideas from the 80's and 90's and only are now in a position to suggesting them to someone else with more power and abilities and getting the okay to try them.
Apple is really a stack of computing ideas from the 50's, 60's, 70's, 80's, and 90's. Starting with the Macintosh derived from the mother of all demos to now we're finally getting around to implementing the idea of a central mainframe with diskless devices accessing it.
A "cloud" with black mirrors everywhere giving you value? Oh, my, that sounds like what Larry Ellison saw as the future with the Network Computer back in 1996.
I'm old though. Accepting this new reality that this red-headed stepchild of a computer we used to argue about during elementary school recess about which is better turns out to become the most valuable company in a world and is finally in a position to push through something as magical as instant access to computing everywhere.
I share the feeling, but at the same time Apple seems to be what Sony was back in the day. They have central very successful products, and are spreading their influence in numerous new markets while betting a lot on artificial restrictions keeping users in their ecosystem.
Sony wasn't the biggest company in the world I think, and the game was a lot more primitive back then, but I remember owning a walkman with a Cybershot, a Sony music compo and at the end a matching laptop because all of there where integrated. If I had the money at the time I'd bought a Handicam and a matching TV in a heartbeat.
Sony seemed unstoppable, until the pieces just crumbled; there would be way better laptops, the camera market evolved and there were far from keeping in touch with the best players in the field, then the music industry moved on, and keeping the integration going on becomes more and more compromising.
With today's Apple, while they are spreading, the same cracks seem to appear to me.
They still have very competitive products on each market, but these are more and more compromised as deep design decisions are made and the competition is getting better.
As an anecdote, a year ago I broke my iPhone and decided to go android for a few month waiting for the iPhone 6, and surprisingly to me it didn't really matter much in my day to day use, except for the artificial limitations (no iCloud, no iMessage) on the integration. But these limitations instead of being a deal breaker, really forced me to go into Google/third party centric services on my laptop/ipad/other family members devices. In a Apple heavy household there is now one device that forces the others to change service providers for central things like email, messaging, calendar, online storage, and the thing is it's not really difficult nor handicapping, the pros and cons balance very well.
Interestingly enough, with Apple Pay, Apple is starting to step on the feet of the new Sony who've been investing in payment processing and ecosystem for so many years now.
TLDR; I think Apple has started playing a game that put them in a position where they have to be better than everyone else at basically everything. Right now I don't think they are at the top of their game, especially in giving options to their customers or software quality/reliability. So, while they have a ton of money and are super successful, I think there is even bigger pitfalls waiting for them ahead. Hope they don't fall.
I recently think one reason that makes Apple to offer larger screen iPhone is that the Apple Watch may compensate the need for a single hand-held device experience.
The Steve Jobs quote mentioned about bicycles for the mind is cool https://www.youtube.com/watch?v=ob_GX50Za6c . I know it's old but I hadn't seen it before. The rest of the article is kind of intellectual mush starting from saying "litigated against" in the first sentence when he hasn't and continuing in a similar vein.
While technically the iPhone keeps getting better and better, and Apple has all these other initiatives that make it and its ecosystem impressive, I would doubt that this has anything to do with their massive profits.
It might be why a lot of techies buy the phone (though I'm still loyal to my Lumia :)) but surely the primary reason remains the fact that the iPhone is a premier fashion item and/or has most of the apps?
> the primary reason remains the fact that the iPhone is a premier fashion item
But what does that mean? _Why_ is the iPhone a fashion item and other phones are not? Why does the iPhone command such a high degree of customer loyalty compared to its competitors?
Perhaps it's not what you meant, but when I read the argument that the iPhone is only/primarily successful because it's a fashion item, I feels like what is implied is that the iPhone as a product is similar to it's competitors and is only differentiated by better marketing. Which I think is BS. But if it were true, it would be even more astounding, considering Apple spends only a fraction of the amount Samsung does on marketing.
Especially now that screen sizes are in the same ballpark, the iPhone and its interface don't look markedly different from competing Samsung/HTC/Nexus phones. People like how iPhones work.
They foresee a dystopian future with driverless cars, intelligent ads, perfect synergy and communication between our brains through implants. It's dystopic not because of what it promises, but how much control these providers will get over public services. Pure Philip K. Dick.
Welcome Google, Apple and Amazon, the companies of the future, the companies that help us on our most mundane and daily tasks. From waking up, drinking coffee, conmuting, working and going to bed. Of course, this keeps their stock value high, not doing it, but reaching for it. Cannot really blame them.
What the article doesn't explain or maybe cannot is that apple's strategy, if correctly stated, depends upon two factors:
1) the willingness of others to produce things that integrate with the iPhone;
2) how much trust end users are willing to place in apple.
Actually the complete opposite is happening. Apple isn't modularising. They are unifying.
Apple has built a unified SDK for iOS and OSX that has been used in the Photos app. This means that going forward we could see a single development platform across all Apple devices. When you combine this with Continuity and iCloud and it's a pretty big deal.
Seamless movement between devices that of course only works with the Apple ecosystem.
You've zoomed in on one aspect of Apple while Ben Thompson is looking at the company as a whole. Apple has integrated on what they perceive to be the important parts of the value chain (which is why Apple designs chips but doesn't manufacture them).
> Apple has built a unified SDK for iOS and OSX that has been used in the Photos app.
I think the important point about modularizing was about Apple Pay, HomeKit, etc. Apple's interfaces with 3rd party components are modular. Apple is setting up the modular infrastructure for other people to take advantage, not necessarily being modular about how you develop apps for their platform.
[+] [-] Touche|11 years ago|reply
They have been disrupted in markets where phones compete on price. Their most successful market, by a wide margin, is the one where phones are capped at $200. The comparison to BMW that is often made is laughable. If only BMW sold to dealerships who then turned around and sold the car for the same price as a Toyota. It's a droll-worthy position to be in, that's for sure.
It would be interesting to see how the U.S. market changed if there were no subsidies. My guess is that payment plans would be more common so it wouldn't be such a tremendous blow. But I always wonder if "good enough" Nexus style devices would become more popular and the Galaxy Ses and iPhones a little bit less.
[+] [-] dntrkv|11 years ago|reply
[+] [-] m_mueller|11 years ago|reply
So, I wonder how many people will opt to just buy it up front now, when the subsidy isn't hidden anymore. It could also have a negative impact because some people will find it too complicated, however the widely trusted consumer review and comparison sites all give it a big thumbs up, so I think many will figure out why it's better.
[+] [-] mikeyouse|11 years ago|reply
Just not true.. Here's how they're doing in China: http://i.imgur.com/cVKCJmO.png
And their global marketshare is dramatically increasing in spite of nearly ubiquitous dirt-cheap android competition: http://i.imgur.com/QbUmJkk.png
(From Benedict Evans' excellent blog: http://ben-evans.com/benedictevans/2015/1/27/chart-dump-appl...)
[+] [-] Steko|11 years ago|reply
We've heard the tired argument before that Apple won't be able to sell in places like China that don't have a subsidized market. How's that prediction actually working out?
[+] [-] npalli|11 years ago|reply
Homekit -- Google Nest with Android Home.
Carplay -- Android Auto, not to mention what crazy things the self driving cars research will provide.
Apple Pay -- Google Wallet
Siri -- Google Now
HealthKit -- Google Fit
EDIT: BTW, I see that his refutation of Christensen hinges on the nebulous "user experience". It is not clear what "user experience" or the often repeated most Apple-like quality "design" actually entails. For a very good analysis of the pitfalls of just using “design” as a strategy to create market-defining products at Path, Dropbox, Square, Medium is by a designer
http://mokriya.com/designer-duds-losing-seat-table/
Why Apple is successful today, when its core principles have remained pretty much constant over the entire history is to be found outside Apple.
[+] [-] cwp|11 years ago|reply
Basically, he argues that Xiaomi is built around serving a market that neither Apple or Google are serving: young people that are technically savvy but don't have the funds to be early adopters. There's a whole generation of them in China that have grown up during China's boom. There aren't many of them in the US, but that's not the same thing as "outside of China." Xiaomi will probably find a lot of fans in South Asia (particularly India), South America (Brazil) and Africa (Nigeria, South Africa).
[+] [-] schoolixer|11 years ago|reply
Google seems to have an iterative sink or swim approach with many products (often overlapping) and to a lesser extent, so does Amazon.
[+] [-] bobbles|11 years ago|reply
[+] [-] monkbent|11 years ago|reply
User experience is a differentiator. It's not the only thing.
[+] [-] minthd|11 years ago|reply
But I'll be happy to be proven wrong with other examples for Thompsons theory.
[+] [-] alaskamiller|11 years ago|reply
Apple is top heavy, the ones in charge are the ones that scraped to the top and didn't retire or leave. They have with them the ideas that came about and pioneered in the 60's and 70's and are only finally now being in the position and getting around to implementing them.
Underneath them is a cadre of management that grew up and holding on to ideas from the 80's and 90's and only are now in a position to suggesting them to someone else with more power and abilities and getting the okay to try them.
Apple is really a stack of computing ideas from the 50's, 60's, 70's, 80's, and 90's. Starting with the Macintosh derived from the mother of all demos to now we're finally getting around to implementing the idea of a central mainframe with diskless devices accessing it.
A "cloud" with black mirrors everywhere giving you value? Oh, my, that sounds like what Larry Ellison saw as the future with the Network Computer back in 1996.
I'm old though. Accepting this new reality that this red-headed stepchild of a computer we used to argue about during elementary school recess about which is better turns out to become the most valuable company in a world and is finally in a position to push through something as magical as instant access to computing everywhere.
That is freakin' amazing.
[+] [-] hrktb|11 years ago|reply
Sony wasn't the biggest company in the world I think, and the game was a lot more primitive back then, but I remember owning a walkman with a Cybershot, a Sony music compo and at the end a matching laptop because all of there where integrated. If I had the money at the time I'd bought a Handicam and a matching TV in a heartbeat.
Sony seemed unstoppable, until the pieces just crumbled; there would be way better laptops, the camera market evolved and there were far from keeping in touch with the best players in the field, then the music industry moved on, and keeping the integration going on becomes more and more compromising.
With today's Apple, while they are spreading, the same cracks seem to appear to me.
They still have very competitive products on each market, but these are more and more compromised as deep design decisions are made and the competition is getting better.
As an anecdote, a year ago I broke my iPhone and decided to go android for a few month waiting for the iPhone 6, and surprisingly to me it didn't really matter much in my day to day use, except for the artificial limitations (no iCloud, no iMessage) on the integration. But these limitations instead of being a deal breaker, really forced me to go into Google/third party centric services on my laptop/ipad/other family members devices. In a Apple heavy household there is now one device that forces the others to change service providers for central things like email, messaging, calendar, online storage, and the thing is it's not really difficult nor handicapping, the pros and cons balance very well.
Interestingly enough, with Apple Pay, Apple is starting to step on the feet of the new Sony who've been investing in payment processing and ecosystem for so many years now.
TLDR; I think Apple has started playing a game that put them in a position where they have to be better than everyone else at basically everything. Right now I don't think they are at the top of their game, especially in giving options to their customers or software quality/reliability. So, while they have a ton of money and are super successful, I think there is even bigger pitfalls waiting for them ahead. Hope they don't fall.
[+] [-] LiweiZ|11 years ago|reply
[+] [-] LiweiZ|11 years ago|reply
[+] [-] tim333|11 years ago|reply
[+] [-] monkbent|11 years ago|reply
Or this one, linked a few paragraphs later: http://stratechery.com/2013/obsoletive/
Here's another one, for good measure: http://stratechery.com/2014/best/
So actually, I have. Mush indeed.
[+] [-] AdeptusAquinas|11 years ago|reply
It might be why a lot of techies buy the phone (though I'm still loyal to my Lumia :)) but surely the primary reason remains the fact that the iPhone is a premier fashion item and/or has most of the apps?
[+] [-] adamlett|11 years ago|reply
But what does that mean? _Why_ is the iPhone a fashion item and other phones are not? Why does the iPhone command such a high degree of customer loyalty compared to its competitors?
Perhaps it's not what you meant, but when I read the argument that the iPhone is only/primarily successful because it's a fashion item, I feels like what is implied is that the iPhone as a product is similar to it's competitors and is only differentiated by better marketing. Which I think is BS. But if it were true, it would be even more astounding, considering Apple spends only a fraction of the amount Samsung does on marketing.
[+] [-] mattmcknight|11 years ago|reply
[+] [-] saturdaysaint|11 years ago|reply
Especially now that screen sizes are in the same ballpark, the iPhone and its interface don't look markedly different from competing Samsung/HTC/Nexus phones. People like how iPhones work.
[+] [-] Glyptodon|11 years ago|reply
[+] [-] walterbell|11 years ago|reply
[+] [-] kh_hk|11 years ago|reply
They foresee a dystopian future with driverless cars, intelligent ads, perfect synergy and communication between our brains through implants. It's dystopic not because of what it promises, but how much control these providers will get over public services. Pure Philip K. Dick.
Welcome Google, Apple and Amazon, the companies of the future, the companies that help us on our most mundane and daily tasks. From waking up, drinking coffee, conmuting, working and going to bed. Of course, this keeps their stock value high, not doing it, but reaching for it. Cannot really blame them.
[+] [-] bobbles|11 years ago|reply
[+] [-] squozzer|11 years ago|reply
[+] [-] threeseed|11 years ago|reply
Apple has built a unified SDK for iOS and OSX that has been used in the Photos app. This means that going forward we could see a single development platform across all Apple devices. When you combine this with Continuity and iCloud and it's a pretty big deal.
Seamless movement between devices that of course only works with the Apple ecosystem.
[+] [-] IBM|11 years ago|reply
[+] [-] bsilvereagle|11 years ago|reply
I think the important point about modularizing was about Apple Pay, HomeKit, etc. Apple's interfaces with 3rd party components are modular. Apple is setting up the modular infrastructure for other people to take advantage, not necessarily being modular about how you develop apps for their platform.
[+] [-] benwen|11 years ago|reply
http://blog.benwen.com/opinion/product/2015/01/29/apple-pock...
[+] [-] BobMarz|11 years ago|reply
[+] [-] IBM|11 years ago|reply
[+] [-] bobbles|11 years ago|reply