Apple has long been a disruptive force in the technology market, all the way from its introduction of the Macintosh in 1984 through its announcement of the Apple Watch 30 years later. Let’s take a look at how Apple has disrupted markets in the past and present, along with how it may disrupt them in the future.
Source: MBACentral.org
What Is Disruptive Innovation?
Normally, companies grow by targeting users at the top of the market — the most demanding and sophisticated users. A disruptive innovation, on the other hand, allows a business to target the bottom of the market, giving those users access to a product that normally would be too expensive for them. This upsets the industry by turning the market on its head, and often the disruptive business ends up taking over the market altogether. (1)
Just like a tiny apple seed grows into a big apple tree, Apple has grown from a small startup to a tech giant, thanks largely to its many disruptive innovations.
$983 million
Apple annual revenue in 1983 (2)
$6.21 billion
Apple annual revenue in 2003 (3)
$170.91 billion
Apple annual revenue in 2013 (3)
The Personal Computer Industry
The year: 1984
The product: Macintosh personal computer
The disrupted market: Computer sales
The losing competitor: IBM
The Macintosh wasn’t the first computer to have a graphical interface, but it was the first such computer to be commercially available to the masses, disrupting the computer industry. Apple’s main competitor, IBM, which had gotten its start with mainframe computers for businesses, looked soulless and corporate compared to plucky upstart Apple. While Apple didn’t make a dent on the PC industry all by itself, it helped pave the way for other IBM competitors — or clones — to swoop in and decrease IBM’s market share. (4-5)
50,000
Number of Macintosh computers sold within three months of launching (4)
76%
IBM’s share of the personal computer market in 1983 (6)
26%
IBM’s share of the personal computer market in 1986 (6)
The Music Industry
The year: 2001
The product: iPod
The disrupted market: CD music sales
The losing competitors: Retail music stores
Back in the late 1990s, the only way to purchase music was to buy a cassette tape or CD in a retail store. With the advent of MP3 technology, users were able to download audio files and listen to them on their computers. Apple entered the music game in October 2001 with the introduction of its first iPod, which allowed users listen to their MP3s on the go. And in April 2003, the iTunes store was launched, offering 200,000 songs to the public at 99 cents each. The music industry — previously relying on CD sales — was completely disrupted and has not been the same since. (7)
125,000
Number of iPods sold through December 2001 (8)
More than 375 million
Number of iPods sold through September 2013 (8-9)
1 million
Number of iTunes songs sold within one week of its launch (7)
25 billion
Number of iTunes songs sold by February 2013 (7)
45.4 million
Highest number of CD music albums sold in one week, ever (December 2000) (10)
3.97 million
Lowest number of CD music albums sold in one week, ever (August 2014) (10)
The Mobile Phone Industry
The year: 2007
The product: iPhone
The disrupted market: Cellphone sales
The losing competitors: Wireless carriers not partnered with Apple
Apple did not invent the smartphone, but it reinvented it in a way that turned the cellular market completely on its head, as a result of its exclusive partnership with AT&T. Prior to the iPhone, users would select a wireless carrier first and then a phone based on their carrier’s options. After the iPhone platform was introduced, and later, its competitor Android, users would select a brand first and then a carrier based on that, disrupting and forever changing the mobile phone industry. (11-12)
1 million
Number of iPhones sold within 74 days of hitting the market (7)
10 million
Number of iPhone 6 and iPhone 6 Plus models sold within three days of hitting the market (7)
$15.6 billion
AT&T revenue reported in the third quarter of 2006 (13)
$30.13 billion
AT&T revenue reported in the third quarter of 2007 (13)
14%
AT&T’s share of the U.S. wireless market in 2003 (14)
29%
AT&T’s share of the U.S. wireless market in 2009 (14)
What’s Next?
Is Apple done disrupting markets? Not likely. Let’s take a look at a few industries that could soon see an upset, courtesy of Apple.
Wearables
Wearable technology, such as the Fitbit Flex or Google Glass, turns clothing and accessories into smart devices. The Apple Watch, coming in early 2015, boasts notifications of incoming messages, calls and emails in addition to offering activity tracking and, of course, telling time. (7)
Competing products:
Pebble, Galaxy Gear, Android Wear devices (15)
Television
The Apple TV streams video, music, photos and more to your television set, making just about any TV into a smart TV. While the Apple TV is a $1 billion line of hardware, it’s small enough project that Steve Jobs once dismissed it as a hobby. Still, Apple appears to have something up its sleeve, according to a patent for a modernized digital remote recently made public. (4, 7, 11)
Competing products:
Roku Streaming Stick, Google Chromecast, Amazon Fire TV (16)
Smart Homes
Earlier this year, Apple announced the release of HomeKit, a framework for developers to create applications that interact with smart devices in the home, such as an app that turns your lights on or off or one that operates your garage door. Users can operate these applications through their iOS device, like an iPhone or iPad. (7)
Competing home automation protocols:
ZigBee, Thread, Insteon (17-18)
Sources:
1. http://www.claytonchristensen.com
2. http://www.barrierstoabillion.com
3. http://www.wikinvest.com/
4. http://www.pcmag.com
5. http://parade.condenast.com
6. http://www.pcworld.com
7. https://www.apple.com
8. http://ipod.about.com
9. http://www.cnet.com
10. http://www.billboard.com
11. http://blogs.hbr.org
12. http://techland.time.com
13. http://www.nytimes.com
14. http://venturebeat.com
15. http://mashable.com
16. http://www.bestbuy.com
17. http://www.forbes.com
18. http://www.insteon.com
