Business model prisoners

While most companies become prisoners of their business models, one way to deal with this is to have a strong strategy that means you know when shift to new models and products when the time is right. 

Broadstuff’s “All you need to know about Apple in 3 easy steps” suggests that the Cupertino giant may have this kind of strategic fortitude, with the consequence that financial markets get huffy because it means quarter-on-quarter performance is not the first priority. 

look at Apple over 35 years and you will see that they:

1. Are typically a very early entrant, integrating a variety of existing systems in a hitherto poorly served early adopter sector with promise, to create an easy-to-use product.

2. Use great design to create a demand for a high margin product. In recent years they have also become “cuter” at doing software as well as hardware after being caught out by the MS-DOS ecosystem

3. As that market matures, retreat to the highest profit quartile. Follow the money, not the volume.

So great has been Apple’s performance in recent years that the markets have created their own expectations bubble about performance. 

One response to “Business model prisoners”

  1. Interesting thoughts. When the media bemoans “OMG Apple’s profit is down 2 billion” (yet their revenue is up) … there’s a neglect on longer term user trends. Imagine the scenario where a new smartphone adopter first buys a Samsung for cost reasons — there’s a likelihood they would “graduate” to an iPhone in a couple of years if the iPhone remains “desirable”. And I think the game changer is really what “desirable” means for these devices in coming years and whether Apple can keep it up.

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