How Apple staged an Alien Invasion with the IPhone
An Alien Invader can sometimes be an established enterprise that takes advantage of combining innovations and business model changes into a compelling marketplace transformation that infests and then kills competitors. This series of posts features two case studies of market players who acted like Aliens and disrupted their marketplaces. The third post that illuminates lessons and potential action items for concerned executives.
The iPhone — (and the Appstore, and everything else that came along with it.)
When Apple combined offerings (initially sold to carriers and then to consumers) for a telecommunications ‘slab’ device the impacts weren’t clear. Apple followed on its successful iPod devices with the profit-driving business driving models of the AppStore and advertising. The AppStore, became the defacto standard marketplace for IOS applications. It captured a sizeable cut of the IOS app revenue for Apple.
The Appstore ‘publishing’ model was designed, in 2009, to break Amazon’s dominance in downloadable book-level content. This was done in anticipation of the iPad’s 2010 introduction. Advertising revenue from “search” can be traced largely to highly concentrated AppStore revenue ‘point of download’ purchase advertising.
The entire eco-system of device, manufacturer software, app-software/search/advertising, and business model(s) reduced to irrelevancy major enterprise competitors such as Microsoft/Nokia, Ericsson, Sony, HP/Compaq, Motorola, Siemens, and Blackberry. Once a consumer committed to the new eco-system, the competition became irrelevant.
Apple used:
1) Large amounts of capital to innovate hardware devices, manufacturing supply chains, and volume availability of innovations. This forced competitors to concentrate on their perceived advantages and not broaden their market business models.
2) Prior history and consumer awareness of Apple-style human experience to bring Apple expertise and branding to new market categories outflanking competitors.
3) Perceived technical innovation (‘Apple Standards’) that increased the costs to competitors in manufacturing (the demise of ‘flip phones’ and ‘feature phones’ and ‘music players’), and distribution (iPhones at T-Mobile, carrier financing for smartphones, dedicated smartphones for very large volume carriers (Vodafone and Verizon)).
Using these Alien Invader strengths Apple combined strengths to enter adjoining markets (AppStore to ApplePay). In our next post, we’ll see market players create their own Alien strategy that turned the revenue flow of the industry on its head.
If you’re interested in breaking the mold and capturing disproportionate profit and market share, you can find more about Alien Invaders at our blog – www.ekalore.com/alien-invaders
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