Friday, May 4, 2012

Building Disruptive Technologies And Products The Apple Way

The term "disruptive technology" or "disruptive innovation" is described as a technological advancement that can or has altered an entire market of consumers and its pattern of consumption.

In this regard, I would like to touch upon how Apple in the last decade, from the inception of the first iPod until its most recent "disruptive product", the iPad has been part of this disruptive wave of technological innovation.

But before we get to 2001, let us take a look at the previous century and examine the various technologies and innovations that have disrupted the mass markets that they were involved with.

The automobile and the aircraft would likely be seen as good examples of disruptive innovations, but while they were both innovative, they were not seen as directly changing an existing automobile or aircraft market. Simply because there were none prior to their invention.

It took until companies like Ford and Mercedes who were able to mass produce cars for a general consumer market that a disruptive nature then took place. This applied to the commercial airliner and airline as well.

So, coming back to 2001 and the introduction of the iPod and its accompanying  iTunes software and iTunes store, we can draw similar inferences about how Apple has created disruptive products for a new generation.

Before the iPod and iTunes, we had the innovation of the mp3 player and we had Napster. Yes, both were breakthroughs and innovative to an extent, but they were not disrupting to neither the existing CD player market, nor the music CD business itself.

But when the iPod and the iTunes came along, almost within a few years, the entire music player market was shaken to its core. CD players and CDs started to decline, and Apple even changed the entire music business itself.

The iPod's success was attributed to a combination of ease of use and a sense of great taste and design, a factor that contributed to all of Apple's subsequent product successes.

Almost overnight, music retailers started to disappear, and consumers began to realize the convenience of digital distribution, which in turn, led to the immense success of the iTunes store.

Music labels who had fought to combat the piracy of Napster were now scrambling to get onboard the digital music store bandwagon, and in effect, chained themselves to the iTunes store till today.

The movie business fared better, simply because movies were harder and larger to send over the Web, and also, old school Hollywood insisted on milking every cent out of its huge libraries of old movies on new formats like DVD and Blu-Ray.

But for Apple, the iPod and the iTunes were only the beginning blocks of their disruptive ambitions. Bigger things were to come in 2007, when Steve Jobs introduced the first iPhone in January 2007.

Before the iPhone, mobile phones were seen as nothing more than communication tools with a little bit of computing power to play mobile Solitaire and reply emails. Carriers rule this industry with an iron grip and dictated the evolution of mobile technology.

The iPhone changed all this, not because it was an innovative mobile phone. It changed the mobile industry because it brought about a desirability that was never before seen for a mobile phone.

It developed technologies which would change the way we not only use a mobile phone, but the way we communicate, the way we work and the way we play.

Suddenly, it was the trend to twit and facebook on the go, while having a shot of Angry Birds at the same time. Mobile gaming began to take off in a huge way. Nokia and gang began to worry.

Apple began to dictate the carriers and carriers who did not have the iPhone lost out, even though the then smartphone market was just a fraction of the entire mobile market.

Just like the iTunes store, Apple launched the equally disruptive App Store and changed the way software was being distributed and sold for the mobile market. It was no surprise then, that Google and its hardware partners began to develop competing technologies and distribution models.

And just when you thought Apple would stop at 2 disruptive phases, Steve Jobs announced the iPad in 2010, exactly 3 years after the iPhone was introduced. And it began a whole new disruptive phase for the PC era.

Today, we are in a what is termed as a post PC era. Does that mean the PC is dying? Well, before the iPad came out, everyone was wondering whether Apple would get into the netbook market.

Do you even remember what a netbook is? Well, let me help you. The netbook was supposed to be a low cost laptop and computing device that would facilitate more of a consumption role and would appeal to those who regularly surf the web for games and entertainment.

In the late 2000s, almost every manufacturer came out with various models of netbooks to flood the market, and yet Apple stayed away. Why? They were working on a product that would not only disrupt the PC market, but kill off the netbook segment in one fell swoop.

The iPad today is seen as a perfect consumption device. Its touchscreen capabilities, coupled with its portability and its built in library of apps can do almost everything a premium netbook could do. And then some.

So much so, that analysts are wondering as each iteration of the iPad gets more powerful processors and more memory, if it can actually remove the need for an actual PC itself.

The iPad has also forced companies and enterprises to look at the way we deploy PCs in our corporations. We used to think that computing comes in a box, with an Intel chip and lots of memory for data storage.

Now, more and more IT managers are coming to the realization that tablets like the iPad are more cost efficient, and can be configured to be more specific in its computing role than a traditional PC can do. Add to that, the emergence of cloud computing, the old client server model is beginning to look very obsolete.

In this sense, the iPad is not only disruptive within its own PC market, but its usage threatens to disrupt the sectors and industries that it is being deployed for.

Take retail for example, retailers are beginning to realize the benefits and cost savings of using just iPads coupled with software like Square to effectively run their business. It may put a lot of old school POS companies out of business.

Speaking of retail, Apple has also been very disruptive in the way it does its retail business. Think of the classic electronics shop. It would be stacked full of TVs, players, mobile phones and digital cameras, all competing for attention in a cramped retail space.

Apple retail stores are anything but cramped, and showcases only a few products when compared to a place like Courts or Denki. I have been to an actual Apple store, and there are literally more Apple staff than Apple products, which is a total contrast to traditional electronics retail shops.

Yet, Apple has been able to generate more profit per square foot than any other existing retailer now. How more disruptive can you get?

So, where does Apple go from here? Will we see another iPad like product that will disrupt another market?

Most analysts are pointing towards Apple manufacturing and selling an actual TV to disrupt the TV market. Maybe this will happen, but it is also a time where Steve Jobs is no longer around to command his team and lead the direction in terms of branding and product marketing.

It is certainly an interesting time to see how Tim Cook and his team of designers and engineers can not only come up with an innovative product, but how they can disrupt an existing market like they have done so in the past 10 years.

Just think about it.

The iPod. The iTunes Store. The iPhone. The App Store. The iPad. The Apple Retail Store.

Each and every one of the above, a disruptive innovation or product in its own right. How many other companies can claim that many disruptive phases in their history?

I suspect, very few.

1 comment:

  1. hi..Im student from Informatics engineering, this article is very informative, thanks for sharing :)

    ReplyDelete