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Comment by czardoz | Hacker News Reader

It feels like Apple is caught in the classic "innovator's dilemma" described in Christensen's book. Constantly being pushed to higher margin products by competition which is focused on the low end market. The problem is, at some point, the "low-end" products become good enough, causing a sudden loss of sales.

The way out is to come up with entirely new products, which Apple has done remarkably well before. I think it's high time they do so again.

I think the drive to create high margin products is making Apple gravitate towards pushing out technologies that differentiate them from the rest, such as the touch bar, or these keyboards. But it may not actually be better.

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People have been saying that for at least 7 years - that Samsung would take over and kill Apple’s margins.

He has been consistently wrong about the iPhone

https://stratechery.com/2013/clayton-christensen-got-wrong/

He doesn’t have the greatest track record when it comes to the iPhone.

https://jeremy.linuxquestions.org/2007/06/28/clayton-christe...

It looks like another case of “No Wireless. Less Space Than the Nomad. Lame”.

Seven years is not that big of a timeline IMO. These changes happen over a couple or more decades. IBM is still around, but it's not really a leader anymore, is it?

I'm pretty sure there will be a sizable market for Apple products. It's just that they might lose the edge after some time.

He was wrong from day one and predicted that the iPhone wouldn’t be successful when it was first introduced before it went on sell.

Yes, I'm not saying the person you quoted is correct with his failure predictions. But it sure seems that Apple is caught in the innovator's dilemma.

The person I quoted was the author of the “innovator’s Dilemma”.

The symptoms of it is new entrants coming in from below with “good enough” products that are cheaper. Forcing the market leader to lower prices. Apple has been headed in the opposite direction for years.

He also predicted that “modularity beats integration” as a market segment matures because you have more companies specializing in parts of the product and putting R&D behind it.

But look at what’s happening in the phone market. Apple is consistently bringing out better processors than the rest of the industry. The operating systems are definitely not behind the competitors. By being tightly integrated for instance, they were able to tell developers to submit watch apps using bitcode (?) because they knew four years later they were going to introduce a 64 bit chip got the watch.

Another advantage you are seeing in the market because of integration vs. modularity is that Apple can push OS updates for all of its devices that have been introduced since 2013 in one day. The “modular” Android ecosystem, not so much.

The theory of innovator's dilemma ignores one of the fundamental issues in today's computing world. And that is software lock in. I think we are only just starting to see good enough products that are cheaper. Huawei, OnePlus, Xiaomi all have better software than Samsung, and arguably better design and hardware at similar price range as well. So it remains to be seen whether innovator’s Dilemma as a theory is wrong. All the three companies are only just setting foot in Europe and need a few more years to play out in other parts of the world.

Another thing is that there has never been a company that sell premium products and got 20% of unit sales market share and even higher in usage shares. At least I am not aware of. Apple may very well be the only one in history. And the unit sales, combined with high margin has allowed them to constantly innovate. The original theory behind innovator’s Dilemma never expected the innovator has such high margin and high sales.

And I think it is one reason why Wall Street has low valuing Apple Stock. They have never seen it, there are no case studies in all the text book.

There is really no software lock in. Very little money is spent on the traditional idea of buying apps. Most people are either paying for services that are available for both iOS and Android (Netflix, Hulu, etc) or are paying for consumables for games.

As far as purchased media, music has been sold DRM free on iTunes for almost a decade and you can transfer most of your purchased movies between iTunes, Google, Amazon, and Vudu using Movies Anywhere (completely legal).

Most consumers in the US don’t pay for their phones. All of the carriers offer zero interest payment plans. The difference between a $300 phone on spread between 24 months and $1200 phone spread over 36 months (not a type. T-Mobile is offering 36 month financing on some high end phones) is a lot easier for people to stomache.

>There is really no software lock in

Tell that to average consumers. There are people who are even reluctant to upgrade their iPhone because they don't want to do Data Transfer. Let alone transferring to another system, say WhatsApp from or to Android. By far most people don't want to relearn what ever it is on a new system.

“Data transfer” for iOS is making sure your old phone is backed up and logging into your new phone with the same account.

Don’t most apps like WhatsApp store your contacts on their server? I don’t use WhatsApp but all of the chat apps I use do.

WhatsApp History, which no one wants to lose. iMessages History, which no one wants to lose.

It is actually easier for WhatsApp history to move from Android to iPhone.

A prediction of Apple losing its dominance "over a couple of decades" is useless. It's almost guaranteed to occur at some point by statistics alone, in exactly the same way as any single wine glass in a restaurant will eventually be dropped. Plus reversion to the mean, obviously.

And the fate of Samsung, (and some other company I can't even remember but that was dominant for Android phones before that) shows that the Innovator's Dilemma just doesn't apply, at least not yet. The theory's whole stick is that it describes a mechanism that cannot be defended. That's why it's termed a "dilemma". Apple has successfully withstood dozens of attacks with low-end generics, showing quite clearly that this is currently just a regular market.

Samsung and other competitors also show that it's ridiculous to analyse this market in time frames of "decades". At that resolution, it's quite likely that, when the history of this market is eventually written, Samsung wouldn't even show up! The rather wild swings in profits and market share of all competitors also show that for the market segment in general, a single year (which not coincidently aligns with the product cycle) is the adequate granularity. It's only Apple that somehow manages to show a rather strange stability among this volatility.

Okay, forget about Apple's sales and market position- the average consumer doesn't care about that. The question should be, will Apple innovate and improve as it has in the past in a way that benefits customers? And will it do so in a way that doesn't just serve the higher-end market?

Apple has never served anything but the higher end market that’s where the money is.

Even in the heyday of the Apple //e back in the early 80s, thier computers cost more than thier competitors.

As can be seen in the Android market and the PC market, it’s hard to “innovate” while competing on price.

They should move into other consumer goods. TVs, cars, home appliances, home automation

So many things out there that I think apples ux centric design could really improve.

The weird thing is that there are lots of new things that Apple is in a unique position to make, that people would pay for, and these things aren’t made. Apple could make tons of money.

For example, they should make iOS devices true companions of Macs, to the point where you can simply use iPhone/iPad as a direct input. (Why they went the 1D “Touch Bar” route is beyond me; it makes much more sense to simply assume people already have great 2D touch screens and find a way to bridge to those.) Then laptops wouldn’t have compromises in multiple areas.

Even on the software side. They make money on the App Store but they could make way more money by giving consumers reasons to actually try things, i.e. “try before you buy”, paid upgrades, etc. They have created a software environment where things feel more likely to be scams than useful, which is nuts.

Apple doesn’t really compete on the low end, low margin side. Lower end laptops and phones have been “good enough” for a while. Yet Apple still sales tons of products.

If you look at the last earnings report from Apple, they've now stopped reporting the number of iPhones sold. Yeah, the revenue would be growing (because they keep jacking up the prices), but I'm pretty sure the reason they made this change is that they're no longer selling that many.

Or because no one else is reporting volume and it puts them at a disadvantage.

Yeah.....

No.

PS. Because of downvotes: doing it because of competition is a possible reason, not THE reason if the unit sales are starting to drop after 15 years. See whataboutism: https://nl.m.wikipedia.org/wiki/Whataboutism

Apple’s unit sales of iPads have been declining sense 2012. This wasn’t the first year of iPhone sells decline - they dropped a lot the year the 7 was introduced.

Not to mention that iPod sales dropped from high of almost 55 million a year in 2008 to less than 10 million before they became basically meaningless and they stopped giving numbers.

So if they were going to not give numbers because a product line was declining in volume. They would have done it years ago.

But more importantly, the only product line that Apple has ever had volume dominance in was the iPod. When has Apple ever cared about volume and market share and not revenue?

iPad was never as important as iPhone. Their profit margin on it was not big enough

"Whataboutism" is really more of a moral concept that doesn't quite fit here.

It's probably easier to see when going back to the original word, which (for reasons that must have included either weed or a stroke) was replaced by this historical tragedy of naming that is "whataboutism", i. e. "hypocrisy".

No other manufacturers disclose unit sales numbers. Apple is still selling tons of iPhones because they dominate the top of the market and don’t compete in the bottom, but the market is mostly saturated and now they’re mostly selling replacements to maintain their stock rather than expanding via new markets etc. Most reporting I’ve seen on this suggests Apple expects revenue to shift more toward services and “other products” over time, and they don’t want analysts hammering on unit sales going forward.

They’re surely sensitive to this because Apple has always traded at a low P:E relative to their peers and even the market as a whole. IE. everyone has always tends to bet against Apple and expect them to fall apart “any day now.”

Considering a substantial portion of their compensation to employees is paid in RSUs it makes sense for Apple to try and get out ahead of the narrative and protect their stock price as best they can.

> but I'm pretty sure the reason they made this change is that they're no longer selling that many.

46.89M units last quarter is not that many?

> but I'm pretty sure the reason they made this change is that they're no longer selling that many.

And why they should?

Pretty much everyone has a smartphone now.

Trying to push more and more units is something that only a lousy manufacturer would try.

Apple is trying to make their devices to last longer.

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