Steve Jobs is known for innovation and bringing Apple back to life. He had the vision to make Apple one of the biggest tech companies in the world and indeed he succeeded. At the same time, he had some principles when it comes to product development and organizational culture.
On the surface of it, Apple hasn’t changed strategy since the death of Jobs.
The problem that Apple always had is that it produces end-to-end solutions, just like Palm, BlackBerry, and Nokia.
The building closed end-to-end solutions is a fundamentally weaker business model than building OSs for 3rd party manufacturers like Windows or Android do.
Take the iPhone. It’s not Apple vs Google. It’s Apple vs Google COMBINED WITH Samsung, HTC, Xiaomi, OnePlus, Oppo, Vivo, Huawei and many many more. Who’s going to win?
And why does it matter? Apple’s making more profit from smartphones than all of them combined, right?
Well, it matters if you look a little beyond your nose. I’ll give you one example…
…in a few years time, when Android’s app revenues are 5x that of Apple’s and iPhones makes up only 5% of the smartphone market, you think companies will focus on the App Store version of their app or the Play Store? On which platform will they release their app first? Are shops going to accept Apple Pay or Android Pay first?
The battle will only become more and more uphill for Apple as it loses market share.
Apple does have one huge moat though. With its Watch, iPhone, Macs and iPads Apple has created an entire ecosystem which means its user base is loyal and sticky. And so when Apple starts its decline it won’t be a rapid one.
Ok, so how has Apple managed to become the biggest company in the world with a flawed business model?
Innovation. Apple innovated so damn well. The iPod, iPhone, iTunes, App Store, and iPad were so revolutionary they fundamentally changed the way humanity used technology. So revolutionary they made up for its closed model.
And perhaps the closed model is better suited to innovation.
But, to be clear, an edge-to-edge iPhone isn’t fundamentally changing the way humanity uses technology, neither is removing a headphone jack or making the MacBook Pro look sleeker than the last model.
If Apple doesn’t keep innovating in the way it did when Jobs was around it won’t be able to compensate for its closed model enough, and a decline will begin.
So, Apple’s biggest strategic mistake is that it has become too focused on milking its existing product lines instead of focusing on fundamentally changing the way humanity uses technology like it did in Jobs’ era…