COMPETITIVE STRATEGY BHR Apple
COMPETITIVE STRATEGY
We Shouldn’t Be Dazzled by Apple’s Earnings Report
Juan Pablo Vazquez Sampere
FEBRUARY 4, 2015
SUMMARY
SAVE
SHARE
COMMENT
TEXT SIZE
PRINT
RECOMMENDED
Playing to Win Strategy Toolkit
STRATEGY & EXECUTION BOOK
Roger L. Martin, Jennifer Riel, A.G. Lafley
250.00 ADD TO CART SAVE SHARE
HBR Guide to Building Your Business Case Ebook + Tools
COMMUNICATION BOOK
Ray Sheen, Amy Gallo
39.95 ADD TO CART SAVE SHARE
HBR Guide to Leading Teams Ebook + Tools
LEADERSHIP & MANAGING PEOPLE BOOK
Mary L. Shapiro
39.95 ADD TO CART SAVE SHARE
Apple’s record Q1 earnings report may have led some consumers to believe that the “old” Apple is back. And the world wants that Apple back. We want the Apple that revolutionized industries and communication in the last decade.
But does the fact that it earned more money in one quarter than any company in history mean that our beloved Apple is alive and well? A look at the bigger picture within which these numbers sit suggests an alternate view.
To see that larger picture, let’s locate Apple within its larger context as a once disruptive innovator that’s now essentially an incumbent.
A fundamental tenet of disruptive innovation is that established firms normally do not react to disruptors. And for a good reason. Generally, disruptors take over the least profitable customers of the industry, and as that happens, established firms usually redirect the resources they might have spent defending their low-value consumers toward their high-value consumers. For instance, when Dell started its upmarket march, Hewlett-Packard’s executives weren’t too concerned. They considered HP to be too premium a brand to justify investing resources in defending the low end. When Southwest Airlines started to occupy the same market space as established air carriers, the incumbents predictably focused more on business class and international routes. When Curves (a gym that specialized in women) started to grow,
We Shouldn’t Be Dazzled by Apple’s Earnings Report
Juan Pablo Vazquez Sampere
FEBRUARY 4, 2015
SUMMARY
SAVE
SHARE
COMMENT
TEXT SIZE
RECOMMENDED
Playing to Win Strategy Toolkit
STRATEGY & EXECUTION BOOK
Roger L. Martin, Jennifer Riel, A.G. Lafley
250.00 ADD TO CART SAVE SHARE
HBR Guide to Building Your Business Case Ebook + Tools
COMMUNICATION BOOK
Ray Sheen, Amy Gallo
39.95 ADD TO CART SAVE SHARE
HBR Guide to Leading Teams Ebook + Tools
LEADERSHIP & MANAGING PEOPLE BOOK
Mary L. Shapiro
39.95 ADD TO CART SAVE SHARE
Apple’s record Q1 earnings report may have led some consumers to believe that the “old” Apple is back. And the world wants that Apple back. We want the Apple that revolutionized industries and communication in the last decade.
But does the fact that it earned more money in one quarter than any company in history mean that our beloved Apple is alive and well? A look at the bigger picture within which these numbers sit suggests an alternate view.
To see that larger picture, let’s locate Apple within its larger context as a once disruptive innovator that’s now essentially an incumbent.
A fundamental tenet of disruptive innovation is that established firms normally do not react to disruptors. And for a good reason. Generally, disruptors take over the least profitable customers of the industry, and as that happens, established firms usually redirect the resources they might have spent defending their low-value consumers toward their high-value consumers. For instance, when Dell started its upmarket march, Hewlett-Packard’s executives weren’t too concerned. They considered HP to be too premium a brand to justify investing resources in defending the low end. When Southwest Airlines started to occupy the same market space as established air carriers, the incumbents predictably focused more on business class and international routes. When Curves (a gym that specialized in women) started to grow,