From the brink of bankruptcy to being the most valued company in the world, Apple’s journey is a lot to reflect upon and learn from.
In 2001, Apple launched its sleek iPods, which were nothing but portable music players. It continued to build upon the success of its iPods & iTunes to unveil a multi-purpose device called iPhone in 2007. It soon became a darling of the world. The touch interface was magical, it was a music player, Internet device, compass, camera, and a lot more.
A year later on July 10, 2008, Apple launched its App Store. Apple had opened up programmatic access to its ecosystem and allowed developers worldwide to build software programs with a revenue share model. The developers latched onto it. It ended up becoming a key differentiator for Apple as well as fostered innovation from a large community of developers.
It then continued to build upon the ecosystem to launch variations and innovations like iPhone, iPad, Apple Watch, refreshed TV, and others. The juggernaut continues. For a bystander (either me or various businesses), there is a lot to learn about the business models.
#1. Leading with the ecosystem
The unique strength of Apple is its entire ecosystem. It has the devices, the operating system, and services such as iWork, iTunes built on top of it. Apple picks an industry that it can go after and leads with the entire ecosystem. It tries really hard to acquire and tie a customer to the ecosystem. If you buy an iPhone, you may end up with a iPad, then with a Mac, then with a Watch, and/or TV. This seamlessness then ties the customers into using its services. In fact, the model is so successful that we now have Android and Microsoft Windows 10 emerging as viable alternates.
As Organizations envision their digital future, they do need to rethink a way to lead with the ecosystem. The cost? Create complete, delightful, and innovative experiences that Customers love and wouldn’t think about a competitor.
#2: Platform and Apps
This always existed. Microsoft pioneered this by allowing software applications on its Windows Operating System. When Apple launched its App Store in July 10, 2008, Apps (or Applications) became a vogue. Any developer could provision themselves into the Platform and start building these Apps. These Apps could be priced with the ability to up-sell and cross-sell. Apple would just keep a percentage of the revenue earned by the developers.
This Platform business model has expanded beyond the Apple. Almost every software program now positions itself as a Platform and revenue is derived either via a App Exchange (SalesForce’s App Store) (or) by using other Apps and Services as a sales mechanism with revenue sharing agreements.
Similarly, the revenue sharing arrangement is now a very common practice. Uber for example retains a portion of drivers’ fees for every trip and other MarketNetworks such as Fiverr do the same.
As Organizations envision their digital future, they do need to think of building products and services that are a platform and can potentially enable others to build off it. It is a competitive advantage. The cost? Enabling others comes by “opening it up” rather than “keeping a closed guard” on everything, which is the traditional approach to business.
#3: Open Innovation with Developers
You don’t have to do everything yourself — a motto that works well in businesses. The traditional business models are all about owning “soup to nuts” and inserting oneself in every sphere of a customers’ value chain. The contemporary way of thinking about is to focus on a core as a platform and let others build off it. While App store was rejuvenated the open innovation dialog, many software programs like Slack focus on a core and literally allow you to turn on/off any service you’d like.
As Organizations envision their digital future, they do need to rethink how they can expand beyond the employees and source the right resources to to a business outcome. The cost? Providing the best of all as well as myriad of options to let your customers get to the required outcome.
#4: Location & Device based Services
Prior to Smartphones, this couldn’t be this ubiquitous. With the ability to instantaneously know where any given Smartphone user is situated geographically. While Maps are the single largest application of location-based services, it quickly expanded into “check-ins” that allows you to learn about your customers’ habits and send coupons and recommendations, tag just about any activity with a location and mine that information, and the biggest of all Uber — that brings transportation convenience to your doorstep (literally).
Device-based services is a variation of location and proximity. Location can be geographic or proximity to a device. Apple Pay is one of the biggest examples of this. As soon as you get closer to a credit card machine, you wave your iPhone or Apple Watch and that’s it the devices talk to each other and do the magic. Expand this with iBeacons and with the ability to talk with any device — it gives rise to a completely new Industry of products called Internet of Things (IoT).
As Organizations envision their digital future, they do need to rethink how they can build-in location-based (or) device-proximity based technologies. The cost? Expanding beyond “pure” software and view both Customers and Devices they interact with in a context together.
#5: Mobile First/Mobile Everything
Well this is the most obvious of the lot. As Smartphones become omnipresent into our lives, building for the smallest form-factor first and then bringing full capabilities to a users’ pocket via Smartphones is almost an inevitable outcome.
As Organizations envision their digital future, they do need to rethink of Mobile First & Mobile Everything. The cost? A brand new channel with really advanced capabilities means lot more reach. It just needs to be capitalized.
Lastly, are there other business models? Feel free to share via the comments.
Disclaimer:The opinions expressed in this article are mine, and do not reflect in any way those of my employer.
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